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CASE NO.: Appeal (civil)  4531 of 2003

PETITIONER: Mylapore Club                                                    

RESPONDENT: State of Tamil Nadu & Anr.                                       

DATE OF JUDGMENT: 28/10/2005

BENCH: CJI R.C. LAHOTI,G.P. MATHUR & P.K. BALASUBRAMANYAN

JUDGMENT: J U D G M E N T  With  (C.A. No.6385/2003, C.A.No. 6386/2003, C.A. No. 7905/2003, C.A. No.  8853/2003, C.A. No.9400/2003, C.A. No.193/2004, C.A. No.1231/2004,  C.A. No.1232/2004, C.A. No.5404/2004, C.A. No.4458/2004, C.A.  No.191/2004)

P.K. BALASUBRAMANYAN, J.

                1.              These appeals challenge the decision of the Full Bench of the  Madras High Court dated 4.3.2003 upholding the validity of Sections 2 and  3 of the Madras City Tenants’ Protection (Amendment) Act, 1994 (Act 2 of  1996) published in the Official Gazette on 11.1.1996.  By virtue of Section  2, Section 1 of the Madras City Tenants’ Protection Act, 1921 was amended  and in the sub-Section providing for exemptions from the operation of the  Act, clause (f) was added and in that process exempting tenancies of land  owned by religious institutions or religious charities belonging to Hindu,  Muslim, Christian or other religions.  By Section 3, it was declared that any  proceeding instituted by a tenant in respect of any land owned by such a  religious institution or religious charity, which was being exempted from the  operation of the Act pending before any Court or other Authority, would  stand abated and all rights and privileges conferred by the extension of the  Madras City Tenants’ Protection Act, 1921 would cease and would become  unenforceable.  However, a proviso was added to the effect that nothing  contained in Section 3 shall be deemed to render invalid, any suit or  proceeding in which a decree or order passed has been executed or satisfied  in full before the date of the coming into force of the Act.   It is not  necessary to set out in detail the history of the legislation since the same has  been set out in S.M. Transports (P) Ltd. V. Sankaraswamigal Mutt [AIR  1963 SC 864) and in M. Varadaraja Pillai Vs. Salem Municipal Council  [85 Law Weekly 760].  It is only necessary to notice a few salient aspects.   The present amendment, more or less, resembling the amendments  introduced by Amendment Act 13 of 1960 exempts lands belonging to a  religious institution or religious charity, from the operation of the Act and  also provides for abatement of pending proceedings and saving of completed  transactions as against lands belonging to the Corporation of Madras,  Municipalities and certain other entities under Act 13 of 1960.   

2.              The Madras City Tenants Protection Act, 1921 was enacted  with the avowed object of giving protection against eviction to tenants who  in Municipal towns, townships and adjoining areas in the State of Tamil  Nadu have constructed buildings on other’s lands, so long as they pay a fair  rent for the land.  It applied to all leases created before its commencement  and initially it applied only to the City of Madras.  Section 1(2) gave power  to the State Government to extend the applicability of the Act as amended to

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other areas in the year 1955.  By virtue of Section 3, every tenant on  ejectment was entitled to be paid as compensation, the value of any building  which may have been put up by him.  Compensation was liable to be paid  for the trees planted and other improvements effect by him.  This was  included by the amendment in the year 1926.  Section 9 enabled a tenant  who was entitled to compensation and against whom a suit in ejectment had  been filed, to apply to the court to direct the landlord to sell to him the  optimum area out of the leasehold wherein the building of the tenant stood.   By the Amending Act of 1955, the Act was made applicable to constructions  put up before the Amending Act.  Hence the Act had no application to  tenancies created or constructions made after 12.9.1955.  Notifications were  issued extending the operation of the Act to various towns.  The Act was  further amended in the year 1960, by Act 13 of 1960.  A proviso was added  to Section 1(3) by providing that the Act shall not apply to tenancies of land  owned by the Corporation of Madras, by the Municipalities, by the local  Panchayats and certain other public bodies.  Section 9 of that Amending Act  provided for abating of certain pending proceedings affecting the rights and  privileges which may have accrued to the tenant immediately before the  commencement of Act 13 of 1960.   

3.              The amendment introduced by Madras Act 13 of 1960 taking  away the protection of the Madras City Tenants’ Protection Act, 1921  (hereinafter referred to as the "Parent Act") as amended, was the subject of a  challenge in this Court in S.M. Transports (P) Ltd. V. Sankaraswamigal  Mutt (supra).  This Court repelled a challenge to the exclusion of non- residential tenants from the umbrella of protection afforded by the parent  Act as amended.  From the suits instituted by the Salem Municipality, a  landlord, in respect of lands covered by the parent Act as amended, appeals  reached the Madras High Court and that Court in M. Varadaraja Pillai Vs.  Salem Municipal Council (supra) rejected all the contentions and upheld  the validity of the Amending Act of 1960 including the exemption and the  abatement of proceedings under Section 9 of that Act and upheld the validity  of the decrees passed in the suits.   The decision in M. Varadaraja Pillai  Vs. Salem Municipal Council (supra) was sought to be challenged in this  Court by way of appeals.  But those appeals were dismissed without going  into the question whether the Amendment Act was valid or not on the  ground that the State of Madras had not been impleaded therein.  Thus, the  decision in M. Varadaraja Pillai Vs. Salem Municipal Council (supra)  stood affirmed, but without consideration of the merits of the judgment  therein.    When the present enactment exempting tenancies created by  religious institutions or religious charities came into force, Writ Petitions  were again filed in the Madras High Court challenging the constitutional  validity of the Amending Act practically on the same basis as raised when  Amending Act 13 of 1960 was brought into force.  Those writ petitions were  dismissed on the basis that the judgment in M. Varadaraja Pillai Vs. Salem  Municipal Council (supra) had been affirmed by this Court and in view of  it, nothing remains to be decided since the very reasoning adopted therein,  would apply to the present amendments.  Feeling dissatisfied, the Writ  Petitioners took up the matter in appeal to this Court.  This Court in S.  Shanmugavel Nadar Vs. State of T.N. and anr. [(2002(8) SCC 361] took  the view that since the appeals from M. Varadaraja Pillai Vs. Salem  Municipal Council (supra) were not disposed of on merits, but were  dismissed on technical grounds, the present batch of writ petitions which had  been referred to a Full Bench for decision had to be decided by the full  bench on merits and it was not correct to say that the Court could not go into  the correctness of the decision in M. Varadaraja Pillai Vs. Salem  Municipal Council (supra), the question referred to the full bench, since  that decision had been affirmed by the Supreme Court.  The case was  remanded to the High Court for a decision on merits by the full bench.   Thereafter, the full bench considered the question in detail.  It held that the  validity of the amendments could not be successfully challenged by the Writ  Petitioners, the appellants before us, and that the challenges have to be  thrown out, based on the principles of law as settled by the decisions of this  Court in various decisions including the decision in S.M. Transports (P)  Ltd. V. Sankaraswamigal Mutt (supra).  It is the correctness of this

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decision of the Full Bench that is challenged in these appeals.   

4.              Before proceeding to discuss the merits of the contentions, we  may notice that on behalf of the appellant in Civil Appeal No. 4531 of 2003,  shown as the leading appeal, learned counsel for the appellant-Mylapore  Club submitted that the club, the tenant, had approached the landlord with a  proposal for renewal of the lease and in that situation, no particular argument  was being addressed on behalf of that appellant.  Learned counsel in the  other appeals made elaborate submissions on the question of validity of the  Amending Act, Act 2 of 1966 and assailed the decision of the Full Bench  upholding its validity.   

5.              Initially, we may notice that in some of these cases, the  landlords, exempt institutions under the present Amendment, had filed suits  for recovery and some of the tenants had sought to purchase the rights of the  landlord by invoking Section 9 of the Parent Act as earlier amended.  The  proceedings in that behalf had not become concluded and had stopped  midway and in some cases had gone to the extent of fixing the area to be  conveyed and the price to be paid by the tenants, when the Amending Act  came into force.  The challenge before us, as it was before the High Court,  essentially related to the validity of the very exemption being granted to  such institutions and the provision made for the abatement of pending  proceedings even though the tenant had put forward his right under Section  9 of the Act and steps have been taken in furtherance of the exercise of that  right.  The deprival of the right to compensation on eviction under Section 3  of the Parent Act was also attacked.  The challenge to Section 3 of the  Amending Act relating to deletion of rights under Section 9 of the Act which  conferred the right to the tenant to offer to purchase the required land  considering the building put up by the tenant was somewhat muted in view  of the fact that that aspect was clearly covered by the ratio of the earlier  decision of this Court in S.M. Transports (P) Ltd. V. Sankaraswamigal  Mutt (supra) and the fire was concentrated on depriving the tenant of the  benefit under Section 3 of the Act which provided for payment of  compensation to the tenant for the building which he had put up in case of  his being evicted.   

6.              A few aspects may be referred to at this stage.  Section 3 of the  Parent Act as amended, conferred a right on the tenant to claim as  compensation, the value of the building which he might have erected in the  property leased.  By virtue of Section 4 of the Act, it was provided that in a  suit for ejectment against a tenant in which the landlord succeeded, the Court  shall ascertain the amount of compensation payable under Section 3 and the  decree in the suit shall declare the amount so found due and direct that, on  payment by the landlord into Court, within three months from the date of the  decree, of the amount so found due, the tenant shall put the landlord in  possession of the land with the building and trees thereon.  If the amount  was not paid within the time, the suit was to stand dismissed and a bar was  created in the landlord filing a fresh suit for a period of five years from the  date of such dismissal.  Section 5 indicated the manner of determination of  the compensation payable under Section 4.  If a landlord was unwilling to  pay the compensation, then under Section 6, he had the right to seek the  determination of rent for the land held by the tenant on lease.  Section 7  contemplated the filing of an application by the landlord for fixing the rent.   Section 9 provided that any tenant entitled to compensation under Section 3  and against whom a suit in ejectment had been instituted, could, within one  month of the date of the Madras City Tenants’ Protection (Amendment) Act,  1955 coming into force or of the date with effect from which the Parent Act  was extended to the concerned town or village or within one month after the  service on him of summons in a suit, apply to the Court for an order that the  landlord shall be directed to sell for a price to be fixed by the Court, the  whole or part of the extent of land specified in the application.  If such an  application was made, the Court had first to decide the minimum extent of  land which may be necessary for the convenient enjoyment by the tenant,  and then fix the price for that minimum extent to be retained by the tenant.   The price had to be the average market value for the three years immediately

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preceding the date of the order.  The Court was given the discretion, subject  to an outer limit of three years, to grant time to the tenant to pay into the  Court the price so fixed.  It was further provided that in default of payment  by the tenant, the application under Section 9 shall stand dismissed. The  earlier decision in S.M. Transports (P) Ltd. V. Sankaraswamigal Mutt  (supra) related to the validity of the amendment which withdrew the  applicability of the Act which had been extended earlier to various towns, in  respect of lands belonging to local authorities.  This Court upheld the  validity of the withdrawal.  This Court held that the withdrawal of the  benefits conferred by the Act, the benefit of which had been extended at an  earlier point of time, could not be held to be violative of the fundamental  rights of the tenant who could have claimed the protection of the enactment  if the withdrawal amendment had not come into force.  This Court referred  to Kavalappara Kottarathil Kochuni & ors. Vs. The State of Madras  and ors.  [(1960) 3 SCR 887] and noticed that it was held in that case that a  law depriving a person of his property must be a valid law and, therefore,  it  should not infringe Article 19 of the Constitution.  It was then postulated  that a law depriving a person of his property would be bad unless it  amounted to a reasonable restriction in the interest of the general public or  for the protection of the interests of scheduled tribes.  Proceeding on that  basis and after referring to the decision in Jayvantsinghji Vs. State of  Gujarat [(AIR 1962 SC 821] and distinguishing the same, the Court held  that if the Act as amended by the Act of 1955 had held the field, the tenants  could have purchased the land.  But by reason of the 1960 Amendment,  tenants could no longer do so.  Neither the 1955 Act conferred any right as  to superstructure under Section 9 of the Parent Act nor did the 1960 Act take  away that right.  If this distinction between the land and the superstructure is  borne in mind, the untenability of the argument on behalf of the tenants  would become obvious.  This Court held that the 1960 Amendment did not  in any way affect the fundamental rights of the tenants. The challenge to the  deprival of the right earlier granted under Section 9 of the Act had hence to  be rejected.  It was thus rejected.   

7.              In the order of reference to the Full Bench, the Division Bench  of the Madras High Court felt that even though the decision in M.  Varadaraja Pillai Vs. Salem Municipal Council (supra) regarding the  validity of Section 9 of the Act may be unexceptionable in the light of the  decision of this Court in S.M. Transports (P) Ltd. V. Sankaraswamigal  Mutt (supra), the Division Bench might not be correct in thinking that the  withdrawal of the protection of Section 3 was also covered by the decision in  S.M. Transports (P) Ltd.’s case.  The Division Bench pointed out that this  Court in S.M. Transports (P) Ltd.’s case had distinguished the case in   Jayvantsinghji Vs. State of Gujarat (supra) and had specifically stated that  the Court was not concerned with the validity of the withdrawal of Section 3  of the Parent Act.  The Division Bench noticed the following sentence in  S.M. Transports (P) Ltd.’s case: "This Court’s opinion on the question of the  constitutional validity of the Act in so far as it deprived  the appellants of their right under Section 3 of the  Principal Act is not called for: that will have to be  decided in an appropriate case."   It is thus that the Full Bench of the Madras High Court was called upon to  decide the constitutional validity of the provision which resulted in  withdrawal of the benefit made available to tenants under Section 3 of the  Act by the earlier extension of the Act to such tenancies and to answer the  argument that the exemption granted to religious institutions and charitable  trusts was violative of Article 14 of the Constitution and the further  challenge to Section 3 of the Amending Act of 1996 to the extent it provided  for abatement of proceedings initiated under Section 9 of the Parent Act as  amended, even while saving concluded transactions.   

8.              The Full Bench of the High Court has referred to the various  decisions of this Court wherein exemptions granted in respect of institutions  from the purview of an Act were upheld by repelling challenges based on

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Articles 14 and 19 of the Constitution.  Moreover, it is seen that this aspect  of the case is also to a great extent covered by the decision of this Court in  S.M. Transports (P) Ltd. V. Sankaraswamigal Mutt concerning the very  Act.   Whereas that was a case of an amendment, exempting lands belonging  to the Corporation of Madras, municipalities and other local authorities from  the operation of the Act, now it is a case of exempting lands of religious and  charitable institutions from within the purview of Act.  We see no difference  in principle while considering the validity of such an exemption provision  whether it be relating to the tenancies created by local authorities or  tenancies created by religious institutions or religious charities.  The only  available argument in that situation that was urged was that there was  discrimination in the matter of exempting religious institutions.  But the  Court held that there was a reasonable classification and there was no  discrimination by preferring one religious institution to another or one  religion to another and in that context, there was no merit in the challenge  based on Article 14 of the Constitution.  In the light of the reasoning adopted  by this Court in various decisions referred to in the decision of the Full  Bench of the Madras High Court, we find that there is no reason to differ  from the views so taken by the High Court.  The power to exempt buildings  belonging to religious institutions or religious charities is available to the  legislature, based on the fact situation arising out of the extension of the Act.   Earlier views on such tenancies and the extension of the legislation, cannot  be held to be a ground for holding the present withdrawal arbitrary or  unconstitutional.  Nor can a tenant raise a contention that he had a vested  right to the protection of a statute the benefit of which had been extended to  him in between and in the absence of any such vested right, it is also not  open to him to raise a contention that the Act should not be made  inapplicable to tenancies crated by certain religious institutions or religious  charities.

8.              In S. Kandaswamy Chettiar Vs. State of Tamil Nadu & Anr.  [(1985) 1 SCC 296], this Court upheld the power given to the Government  by the concerned statute to exempt buildings belonging to public trusts from  the purview of the Tamil Nadu Buildings (Lease and Rent Control) Act.   Here, the legislature itself has exempted the tenancies created by religious or  charitable institutions.  The grant of exemption to such tenancies has to be  held to be having rational nexus to the objects sought to be achieved by the  Act.  The ratio of the decision in S.M. Transports (P) Ltd. V.  Sankaraswamigal Mutt covers that position also.     9.              It was argued that the object of the Parent Act was to ensure  that the expectation of a tenant, who has put up a superstructure, that he  would not be evicted is not belied, and that pulling down of the  superstructure which was the only option available to a lessee if the lease did  not contain a contract to the contrary, would result in congestion causing  serious detriment to public health. This object would not be subserved by  exempting leases of lands belonging to religious institutions or religious  charities.  It is a matter for the legislature to balance the object of the parent  Act with the object of protecting the rights of religious institutions and  religions charities and on the basis of the material available to the  legislature, the decision to exempt the buildings of such religious institutions  and religious charities has been taken.  The power to legislate is a plenary  power vested in the legislature and unless those who challenge the  legislation clearly establish that their fundamental rights under the  Constitution are affected or that the legislature lacked legislative  competence, they would not succeed in their challenge to the enactment  brought forward in the wisdom of the legislature.   Conferment of a right to  claim the benefit of a statute, being not a vested right, the same could be  withdrawn by the legislature which made the enactment.  It could not be said  that the Amendment Act lacked either legislative competence or that it is  unconstitutional.   

10.             The argument that that the withdrawal of the benefit that might  have been available under Section 9 of the Parent Act was invalid and  unconstitutional could not be pursued successfully in the light of the

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decision in S.M. Transports (P) Ltd.’s case.  The challenge based on that  argument, was rightly repelled by the High Court.

11.             The two main challenges before us, related to the question  whether the High Court was right in holding that the withdrawal of the  benefit available under Section 3 of the Act to the tenant was valid and  constitutional.  The second was whether the provision in the Amending Act  for abating all proceedings initiated under Section 9 of the Act at the  instance of the tenant, did not amount to interference in the decision making  process and hence invalid in law.  It was submitted that the provision in that  behalf was beyond the power of the legislature and was even otherwise  arbitrary and unreasonable.   

12.             Once the power to exempt an institution or entity from the  operation of the Act is conceded to the legislature, it cannot be argued that  the benefit of one section in that enactment could not be withdrawn.  The  right under Section 3 itself was extended only by the extension of the Act.   The reasoning in S.M. Transports (P) Ltd. V. Sankaraswamigal Mutt   would cover the situation.  The full bench of the High Court in the judgment  under appeal has rightly noticed that the right of the tenant in respect of the  building put up by him will be governed by the terms of the contract and by  general law.  The position so adopted is unexceptionable.   

13.             It was contended that Section 3 of the Amending Act which  provided for certain pending proceedings to abate was a legislative act to put  an end to a judicial proceeding and was clearly unconstitutional.  Such an  exercise of power was not an enactment of a law but was an exercise of a  judicial act which a legislature was incompetent to exercise.  Passages in  Basanta Chandra Ghose Vs. Emperor [AIR 1944 Federal Court 86] at  pages 89 to 91 and from Indira Nehru Gandhi Vs. Raj Narain [(1975)  Suppl. SCC 1] at page 40 were relied on in support.   14.             It is open to the legislature to bring in a law that has  retrospective operation.  That position is not disputed.  When it affects the  vested rights or accrued rights, that question will have to be considered in  that context.  But the right to take advantage of a statute has been held to be  not an accrued right.  The matter has been discussed in detail in M.  Varadaraja Pillai Vs. Salem Municipal Council  (supra)  by the Madras  High Court after referring to Abbot Vs. Minister of Land and the  subsequent decisions.  But Section 3, which was in pari materia with Section  9 of the Amending Act of 1960, the legislature had intended that pending  proceedings should be affected.  Even otherwise, once the applicability of  the Act itself is withdrawn, no relief can be granted to a person who could  have been or who was earlier a beneficiary under that enactment, after such  withdrawal.  Here, the Section provides that even if some steps have been  taken pursuant to the claim by the tenant under Section 9 of the Parent Act,  the proceeding cannot be continued in view of the exemption enacted in  favour of the institutions.  But the legislature has taken care to save the  concluded transactions by providing that nothing contained in the Section  shall be deemed to invalidate any suit or proceeding in which a decree or  order passed has been executed or satisfied in full before the said date.   Reading Section 3 of the Amending Act 2 of 1966, it could not be said that it  is a legislative intervention with a judicial decision.  The proviso has saved  concluded transactions based on judicial adjudications.  All that Section 3  does is to make it explicit that the amendment is intended to apply to  pending proceedings.  In the context of Section 6 of the General Clauses  Act, unless it is shown that any right has accrued to the claimant under  Section 6 of the General Clauses Act, unless it is shown that right has  accrued to the claimant, such a provision making it clear that the Act could  not be applied anymore to pending proceedings is not in any way invalid or  incompetent.  Unless the proceedings have concluded and the rights of the  landlord has passed to the tenant, no right accrues to the tenant.  He is only  in the process of acquiring a right, the process having been set in motion at  his instance.   When pending proceedings are affected by an amendment, it  is open to the Legislature to provide that the said process cannot continue.    That alone has been done by Section 3 of the Amending Act of 1996.   As

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far as concluded judicial proceedings are concerned and cases where orders  for possession have been executed or decrees satisfied in full before the date  of the amendment, they have been saved by the proviso thereby ensuring  that there was no interference by the legislature with judicial proceedings  which had reached a conclusion, even though that judicial proceeding related  to a religious or charitable institution exempted by the amendment from the  purview of the Parent Act.  We are, therefore, not in a position to find any  merit in challenge to Section 3 of the Amending Act.  

15.             Having considered anxiously the relevant aspects urged before  us and on considering the reasoning adopted by the full bench of the High  Court while turning down the challenge to the constitutional validity of Act  2 of 1966, we are satisfied that no grounds is made out for interference with  the decision of the High Court.  We find that the reasoning adopted by the  High Court is clearly sustainable in the light of the decisions of this Court  referred to by it and its conclusion is in accord with the law emerging from  the various decisions of this Court and the earlier decisions of the Madras  High Court.  We, therefore, confirm the decision of the High Court and  dismiss these appeals.  In the circumstances, we make no order as to costs.