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PETITIONER: S. KANDASWAMY CHETTIAR

       Vs.

RESPONDENT: STATE OF TAMIL NADU AND ANR.

DATE OF JUDGMENT12/12/1984

BENCH: TULZAPURKAR, V.D. BENCH: TULZAPURKAR, V.D. PATHAK, R.S. MUKHARJI, SABYASACHI (J)

CITATION:  1985 AIR  257            1985 SCR  (2) 398  1985 SCC  (1) 291        1984 SCALE  (2)933  CITATOR INFO :  F          1987 SC2117  (20)

ACT:      Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 (Tamil Nadu  Act 18 of 1960). Section 29-Notification issued thereunder granting  total exemption  to all buildings own-d by the  Hindu, Christian  and Muslim religious Public Trusts and Public  Charitable Trusts from all the provisions of the Act- Whether  suffers from  the vice of excessive delegation of legislature  powers, and therefore, violative of, Article 14  of  the  Constitution-Whether  the  total  exemption  is excessive unwarranted  and unsupportable  in as  much  as  o partial exemption would have sufficed.

HEADNOTE:      In exercise  of the  powers conferred  by section 29 of the Tamil  Nadu Buildings (Lease and Rent Control) Act, 1960 the Government  of Tamil Nadu issued a Notification G.O. Ms. 2000 (Homo Department) dated 16th August, 1976 exempting all the buildings  owned by  the  Hindu,  Christian  and  Muslim religious public  trusts and  public- charitable trusts from all the  provisions of  the Act.  The tenants challenged the Notification  granting  total  exemption  through  the  said Notification on three grounds namely; (a) that section 29 of the Act  suffers from  the vice  of excessive  delegation of legislative powers  in as  much as  it vests  in  the  State Government  unguided  and  uncontrolled  discretion  in  the matter of  granting exemptions  and is, therefore, violative of Article 14 of the Constitution; (b) that the Notification dated 16th  August, 1976  deprives the  tenants of  all such buildings  (belonging   to  Hindu.   Christian  and   Muslim religious public trusts and public charitable trusts) of the equal protection  of the  beneficial provisions  of the  Act which is  available to the tenants of other buildings and as such the  same is discriminatory offending against the equal protection clause  of Article  14; and (c) that in any event the total  exemption from  all the  provisions  of  the  Act granted to  such buildings,  where partial  exemption  would have sufficed is excessive, unwarranted and unsupportable.       The State Government and the respondent landlords have refuted all  the grounds  on which  the exemption  has  been

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challenged and  further sought to justify the grant of total exemption mainly  on the  basis that  the freedom (right) to recover the  reasonable market  rent  would  be  ineffective without the freedom to evict the tenant.       Dismissing  the writ  petitions and  the civil appeals the Court, 399 ^             HELD: 1.1 In view of the decision of the Supreme Court in P.J. Irani v. The State of Madras, [1962] 2 SCR 169 dealing with an identical provision contained in the earlier Madras  enactment   the  challenge   to  the  Constitutional validity of section 29 cannot be sustained. [405A-B]       P.  J. Irani  v. State  of Madras,  [1962] 2  SCR 169; State of Madhya Pradesh v. Kanhaiyalal, 1970 (15) M.P.L.U SC 973 relied on.       1.  2. The rationale behind the conferal of such power to grant  exemptions  or  to  make  exceptions  is  that  an inflexible application  of the  provisions of  the  Act  may under some  circumstances  result  in  unnecessary  hardship entirely disproportionate to the good which will result from a literal  enforcement of  the Act  and also  the  practical impossibility of  anticipating in  advance such  hardship to such  exceptional   cases.  In   the  matter  of  beneficial legislations also  there are  bound to  be cases in which an inflexible application  of the  provisions of  the enactment may  result   in  unnecessary   and   undue   hardship   not contemplated  by   the  legislature.   The  power  to  grant exemption under  section 29  of the Act, therefore, has been conferred not  for making any discrimination between tenants and tenants  but to  avoid undue  hardship or  abuse of  the beneficial  provisions   that  may   result   from   uniform application  of  such  provisions  to  cases  which  deserve different treatment. Of course, the power to grant exemption has to be exercised in accordance with the policy and object of the enactment gatherable from the preamble as well as its operative provisions  without subverting the general purpose of the enactment. [406G-H, 407A-B]       P.  J. Irani  v. State  of Madras,  [1962] 2  SCR  169 relied on.       Gorieb  v. Fox, [1926] 71 Lawyers Edition at page 1230 quoted with approval .         2. That  Tamil Nadu  Act is  a piece  of  beneficial legislation intended  to remedy the two evils of rackrenting (exaction of  exhorbitant rents)  and unreasonable  eviction generated by  a large  scale of  influx of population to big cities and  urban areas  in the post Second World War period creating acute  shortage of  accommodation in such areas and the enactment  avowedly protects  the rights  of tenants  in occupation of  buildings in  such areas  from being  charged unreasonable  rents  and  from  being  unreasonably  evicted therefrom.  The  Legislature  itself  has  made  a  rational classification of  buildings  belonging  to  government  and buildings belonging  to religious,  charitable,  educational and other  public institutions  and the  different treatment accorded to  such buildings  under section  10(3) (b) of the Act, which obviously proceeds on the well-founded assumption that the  government  as  well  as  the  landlords  of  such buildings are not expected to and would not indulge in rack- renting or  unreasonable eviction.  This and  similar  other provisions crystalize the policy and the purposes of the Act and furnish  the requisite  guidance which  can legitimately govern  the   exercise  of  power  conferred  on  the  State Government under  section 29  of the  Act The power to grant exemptions  or   make  exceptions   could  be   legitimately

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exercised by  the State  Government in  areas or cases where the mischief sought to be remedied by 400 the Act  is neither  prevalent nor  apprehended as  also  in cases (individual  or class  of cases)  where a  uniform  or inflexible application  of the  law is  likely to  result in unnecessary or  undue hardship  (here the  landlords) or  in cases where  the beneficial  provision is likely to be or is being abused  by persons  for whom  it is intended there the tenants) [407D-E, 408F-H, 409A]       3.1.  Public religious  and charitable  endowments  or trusts constitute   a  well recognised  distinct group in as much  as  they  not  only  serve  public  purposes  but  the disbursement of their income is governed by the objects with which they  are created  and  buildings  belonging  to  such public religious and charitable endowments or trusts clearly fall into a distinct class different from buildings owned by private landlords.  Therefore, their classification into one group  done  by  the  State  Government  while  issuing  the impugned notification  must be regarded as having been based on an intelligible differentia. [409F-G]       3.2.  In view  of the  counter affidavit  filed by the State  Government  dated  10-2-1981  and  the  supplementary counter affidavit  dated 24th  September, 1983 to the effect that the  government was satisfied that "in all these cases, the rent  paid by  the tenants was very low, meagre and that the provisions  of fixation of fair rent under the Act would not meet  the ends  of justice  and the situation will still continue  in   which  the  tenant  will  be  exploiting  the situation and  the  helplessness  of  the  public  religious trusts and charitable institutions and hence they decided to withdraw the  protection given  under the Act to the tenants of such  buildings", not  having been  challenged by  way of rejoinder affidavits  by the  petitioners/appellants, it  is clear that  buildings belonging to such public religious and charitable endowments  or trusts  clearly fell  into a class where undue hardship and injustice relating to them from the uniform application  of the beneficial provisions of the Act needed to be relieved and the exemption granted will have to be regarded  as being  germane to the policy and purposes of the Act. In other words, the classification made has a clear nexus  with  the  object  with  which  the  power  to  grant exemption has been conferred upon the State Government under section 29 of the Act. [411C, 412B-G]       State  of Rajasthan v. Mukanchand and Others, [1964] 6 SCR 903; held inapplicable.          3.3. Granting total exemption cannot be regarded as excessive  or   unwarranted.  The   two  objectives  of  the enactment,  namely,   to  control   rents  and   to  prevent unreasonable eviction  are interrelated  and the  provisions which subserve  these objectives supplement each other It is obvious that  if the trustees of the public religious trusts and public  charities are  to be given freedom to charge the normal market  rent then  to make  that freedom effective it will be  necessary to  arm the  trustees with  the right  to evict the  tenants for  non-payment of such market rent. The State  Government   on  materials  before  it  came  to  the conclusion that  the ’fair  rent’ filled  under the  Act was unjust in  case of  such buildings  and it  was necessary to permit the  trustees of such buildings to recover from their tenants reasonable  market rent  and  if  that  be  so  non- eviction when  reasonable market  rent is  not paid would be unreasonable and if the market rent is paid by the 401       tenants no trustee is going to evict them. Further, it

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is conceivable  that trustees of buildings belonging to such public religious institutions or public charities may desire eviction of  their tenants  for the  purpose of carrying out major  or   substantial  repairs   or  for  the  purpose  of demolition and  reconstruction and  the State Government may have felt that the trustees of such buildings should be able to effect  evictions without  being required to fulfil other onerous conditions  which must  be complied  with by private landlord when they seek evictions for such purpose. [413D-E, 414C-G]       3.4.  The manner  in which exemption from rent control provisions should be granted, whether it could be partial or total and  if so  on what  terms  and  conditions  would  be matters for  each State Government to decide in the light of the scheme and provisions of the concerned enactment and the facts and  circumstances touching  the classification  made. And if  the State  of Madras  has thought  fit to  grant the exemption  in   a  particular   manner   by   the   impugned notification is  cannot  be  faulted.  if  to  exemption  so granted is not illegal or unconstitutional. [415A-B]

JUDGMENT:       ORIGINAL  JURISDICTION: W.P. Nos 4433,4642-57/78, 337- 339, 757-58,  943, 291  and 1351  of 79,4103 and 6271/80,731 and 1943/81,  8274 and  9879/83 and  C.A. NOS.  3108-3109/81 with W.P. NOS. 7941 and 7883/81.       N.  Natesan, A.  T. M Sampath and P. N. Ramalingam for the petitioners in W.P. NOS. 4642-57 and 4433 of 1978       Dr.  Y S. Chitale, A T.M. Sampath, S.A. Rajan and P.N. Ramalingam for the petitioners in W.P. NOS. 337-339 of 1979.       M.  Natesan, and Raghuraman for the petitioner in W.P. No. 1943 of 1981.       A.T.M.  Sampath and P.N. Ramalingam for the petitioner in W.P. NOS. 757-58 of 1979.       S.  Srinivasan for  the petitioner  in W.P. NO. 943 of 1979.       P.R.  Ramasesh for  the petitioner  in W.P. NO. 731 of 1982.       A.T.M.  Sampath and P.N. Ramalingam for the petitioner in W.P. NO. 7941 and 7883 of 82.       A.T.M.  Sampath and P.N. Ramalingam for the petitioner in W.P. NOS. 1357-58 of 79.       P. Sinha for the petitioner in W.P. NO. 8274 of 83.       P.N.  Ramalingam for  appellants in C. NOS. 3108-09 Of 81, 402               R.S.  Ramamurthy,  P.  Govindan  Nair,  M.K.D. Namboodry,  S.   Balakrishnan  and  E.C.  Agarwala  for  the respondents in W.P. Nos. 6271/80 and 4642-57 and 4433 of 78.       T.S.  Krishnamoorthy, Mrs. S. Gopalakrishnan and Gopal Subramanian for the respondents is W.P. No. 4103180.       Shanker  Ghosh, and  D.N. Gupta for the respondents in W.P. No. 943/79.              S.T. Desai, T.S. Krishnamurthy, A.V. Rangam, K. Ramamurthy and  S.Balakrishnan for  the respondents  in W.P. No. 731182.       Mohan Pandey and Ali Ahmed for the interveners in W.P. Nos. 4642-57  of 78. K. Ram Kumar for the respondent in C.A. Nos. 3108-3109/81 and W.P. Nos. 7941 and 7883/82.       The Judgment of the Court was delivered by            TULZAPURKAR, J. In these writ petitions and civil appeals by special leave the petitioners and appellants, who are tenants  of several  buildings belonging  to the  Hindu,

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Christian and  Muslim religious  public trusts  as  also  to public charitable trusts in the State  of Tamil Nadu, have challenged the legality and or validity of the  total exemption  granted to  all such buildings from all the  provisions of  the Tamil  Nadu Buildings (Lease and Rent Control)  Act, 1960  (Tamil Act  18 of 1960) (for short ’the Act’)  in exercise  of the  powers conferred  upon  the State Govt. under s. 29 of the Act.       Section 29 of the Act runs thus:                   "22.  Exemptions-Notwithstanding  anything      contained in  this Act,  the Government may, subject to      such condition  as  they  deem  fit,  by  notification,      exempt any  buildings or class of buildings from all or      any of the provisions of this Act"       It appears that initially by G. O. Ms. No. 1998 (Home) dated 12th  August,  1974,  the  State  Government  had,  in exercise  of  its  powers  under  s.  29  exempted  all  the buildings owned  by the Hindu Christian and Muslim religious trusts and  charitable institutions  from all the provisions of the  Act; in  other words  the exemption was available to buildings  of  private  religious  trusts  as  also  private charitable trusts.  But later  on by  a fresh  G. O. Ms. No. 2000 403              (Home)  dated  16th  August,  1976,  the  State Government, in  super- A session of the earlier Notification dated 12th  August, 1974,  confined  the  exemption  to  all buildings owned by the Hindu, Christian and Muslim religious public trusts  and public  charitable trusts.  ’the relevant Notification which is being impugned herein runs thus:       "G  O. Ms  . No. 2000, Home, 16th August, 1976) No. II (2)/HO/4520/76.-In  exercise  of  the  powers  conferred  by section 29  of the  Tamil Nadu  Buildings  (Lease  and  Rent Control) Act,  1960 (Tamil  Nadu Act  18 of  1960),  and  in supersession of  the Home  Department  Notification  No.  II (2)/HO/3811/74, dated  the 12th  August, 1974,  published at page 444  of Part  ll-section 2 of the Tamil Nadu Government Gazette, dated  the 12th August, 1974, the Governor of Tamil Nadu hereby  exempts all  the buildings  owned by the Hindu, Christian and  Muslim religious  public  trusts  and  public charitable trusts from all the provisions of the said Act."       The tenants have challenged the aforesaid Notification granting total  exemption to  all buildings belonging to the Hindu, Christian  and Muslim  religious  public  trusts  and public charitable  trusts from all the provisions of the Act on three  grounds-(a) that s. 29 of the Act suffers from the vice of  excessive delegation  of legislative  powers in  as much as  it vests  in  the  State  Government  unguided  and uncontrolled discretion in the matter of granting exemptions and is, therefore, violative of Art. 14 of the Constitution, (b) that  the Notification  dated 16th August, 1976 deprives the tenants  of all  such buildings (buildingsr belonging to Hindu, Christian  and Muslim  religious  public  trusts  and public charitable  trusts) of  the equal  protection of  the beneficial provisions  of the  Act which is available to the tenants  of   other  buildings  and  as  such  the  same  is discriminatory offending against the equal protection clause of Art.  14 and  (c) that  in any  event the total exemption from  all   the  provisions  of  the  Act  granted  to  such buildings, where  partial exemption  would have sufficed, is excessive, unwarranted and unsupportable.       On  the other hand, the State Govt. and the respondent landlords  have   refuted  all  the  grounds  on  which  the exemption has  been challenged.  It is  denied that unguided and uncontrolled  discretion has  been  conferred  upon  the

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State Govt.  by s.  29 of  the Act  and it is contended that enough  guidance   is  afforded  by  the  Preamble  and  the operative provisions of the Act for the exercise of the 404 discretionary power  vested in the State Govt. It is pointed out that  in P.  J. Irani  v.  The  State  of  Madras(’)  an identical provision  contained  in  the  earlier  enactment, namely, the  Madras Buildings  (Lease and Rent Control) Act, 1949  was   upheld  in   the  context  of  Art.  14  of  the Constitution by  this Court  on the  basis that the Preamble and the  operative provisions  of that  Act gave  sufficient guidance for  the exercise of the discretionary power vested in the  State Govt.,  namely, that  the said power was to be exercised in  cases where  the protection  given by  the Act caused great  hardship to the landlord or was the subject of abuse by  the tenant;  and it is urged that similar guidance is afforded  by the Preamble and the operative provisions of the instant Act and s. 29 cannot be said to be violative  of Art. 14.  The respondents  have further  contended that even the point  regarding the constitutional validity of granting exemption to  buildings belonging to charities, religious or secular in  the context  of the  equal protection  clause of Art. 14  could be  said to  have been  concluded against the tenants of  such buildings by the observations of this Court in P.J.  Irani’s case (supra), it is pointed out that though in that  case this  Court was  dealing with  a  Notification granting exemption  in favour  of  a  particular  individual building, the  Court has  made  observations  which  clearly indicate that  where it  is a  case of granting exemption in favour of  a class of buildings all that is required is that the classification  must be  based on  rational grounds i.e. grounds germane  to carry  out the  policy or the purpose of the Act  and by  way of  illustration the Court has in terms stated that  if such  exemption were to be granted in favour of  all  buildings  belonging  to  charities,  religious  or secular, such classification would be reasonable and proper, being based on intelligible differential having nexus to the object sought  to be  achieved by  the exercise  of power of exemption. Even otherwise, the State Govt. in their counter- affidavit  dated   10th  February,  1981  and  supplementary counter-affidavit dated  24th September, 1983 have furnished material on  the basis of which it has sought to justify the said exemption  and it has been urged that the same conforms to  and  falls  within  the  guidelines  indicated  in  that decision  governing   the  exercise   of  the   power.   The respondents have  further sought  to justify  the  grant  of total exemption mainly on the basis that the freedom (right) to recover  the reasonable market rent  would be ineffective without the freedom to evict the tenant.       As regards the attack directed against s.29 of the Act itself we  would like  to observe  at the outset that though the challenge to the          (1) [1962] 2 SCR 269. 405 section under Art. 14 has been made in the petitions and the appeals A  Counsel appearing  for the  petitioners  and  the appellants fairly stated before us, and in our view rightly, that in  view of  the decision  of the Constitution Bench of this Court  in P.  J. Irani’s  case (supra)  dealing with an identical  provision   contained  in   the  earlier   Madras enactment (Madras  Act XXV  of 1949) the challenge cannot be sustained. Section  13 of  the Madras  Act XXV  of 1949 with which this Court was concerned in that case ran thus:              "Notwithstanding anything contained in this Act      the State  Government may by a notification in the Fort

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    St. George  Gazette exempt  any building  or  class  of      buildings from  all or  any of  the provisions  of this      Act."       This  Court upheld the constitutional validity of that provision in   the  context of  the challenge  thereto under Art. 14  on the  basis that sufficient guidance was afforded by the  Preamble and the operative provisions of the Act for the exercise  of  the  discretionary  power  vested  in  the Government  in  the  matter  of  granting  exemptions  to  a building or  class of  buildings from  all  or  any  of  the provisions of  the Act.  It may be stated that following the said decision  this Court  in the  case of  State of  Madhya Pradesh v.  Kanhaiyalal(l) did  not find any infirmity in s. 3(2) of  the Madhya  Pradesh Accommodation Control Act, 1961 (Act 41 of 1961) which ran thus:            "The  Government may, by notification exempt from      all  or   any  of   the  provisions  of  this  Act  any      accommodation  which   is  owned  by  any  educational,      religions or  charitable institution  or by any nursing      or maternity home, the whole of the income derived from      which is  utilised for that institution or nursing home      or maternity home."       ’the  challenge to s. 29 of the instant Act, which was not pressed, has therefore to be rejected.       Even so, since the Notification dated 16th August 1976 issued under s. 29 has been challenged the guidance afforded by the Preamble and the operative provisions of the Act will have a  bearing on  the  question  Whether  this  particular exercise of  the power conforms to such guidance or not and, therefore, it  will be  useful  to  advert  briefly  to  the guidance so  afforded. At  the outset we would like to point out that the rationable behind the conferal of such power to      (1) [1970] IS M.P.L.J. 973 406 grant  exemptions  or  to  make  exceptions  has  been  very succinetly elucidated  by the  American Supreme Court in the leading case  of Gorieb  v. Fox.  (1) In that case the Court was  concerned  with  an  Ordinance  which  related  to  the establishment of  a building  line on  public streets but it contained a reservation of power in the City Council to make exceptions and  permit the  erection of  buildings closer to the street.  It was contended that this reservation rendered the Ordinance invalid as denying the equal protection of the laws, Negativing  the contention  Sutherland J. speaking for the court, observed thus:            "The  proviso under  which the Council acted also      is attacked as violating the equal protection clause on      the  ground  that  such  proviso  enables  the  Council      unfairly to  discriminate between  lot-owners by fixing      unequal distances  from the  street for the erection of      buildings   of    the   same   character   under   like      circumstances.. The proviso evidently proceeds upon the      consideration that  an inflexible  application  of  the      Ordinance  may   under  some  circumstances  result  in      unnecessary hardship  In laying  down a  general  rule,      such as  the one  with which we are here concerned, the      practical impossibility  of anticipating in advance and      provi- ding in  specific terms for every exceptional case which may arise, is  apparent. And yet the inclusion of such cases may well  result   in  great  and  needless  hardship,  entirely disproportionate to  the  good  which  will  result  from  a literal enforcement  of the  general rule.  Hence the wisdom and necessity  here of  reserving the authority to determine whether, in  specific cases  of need, exceptions may be made

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without subverting the general purposes of the ordinance. We think it entirely plain that the reservation of authority in the present  ordinance to deal in a special manner with such exceptional  cases   is   unassailable   on   constitutional grounds."      In our  view the  same  rationale  must  apply  to  the conferal of  such power  on the  State Government  to  grant exemptions or to make exceptions even in cases of beneficial legislations like  the present  enactment. In  the matter of beneficial legislations  also there are bound to be cases in which an  inflexible application  of the  provisions of  the enactment may result in unnecessary and undue hard-      (1) [1926] 71 Las Ed. 1228 at 1230. 407 ship not  contemplated by  the  legislature.  Obviously  the power to  grant exemptions  under s.  29 of the Act has been conferred not  for making any discrimination between tenants and tenants  but to  avoid undue  hardship or  abuse of  the beneficial  provisions   that  may   real  it  from  uniform application  of  such  provisions  to  cases  which  deserve different treatment. Of course, as observed by this Court in P. J.  Irani’s case (supra) the power has to be exercised in accordance with  the policy  and  object  Or  the  enactment gatherable from  the  preamble  as  well  as  its  operative provisions or  as said  in  the  American  decision  without subverting the general purposes of the enactment.       As  the preamble  of the  instant Act  shows the three purposes, to  achieve which it has been enacted are the same as those  under the earlier enactment, the Madras Act XXV of 1949, namely,  (1) the  regulation of letting of residential and non-residential  buildings, (2)  the control of rents of such buildings,  and  (3)  the  prevention  of  unreasonable eviction of  tenants from  such buildings,  except that  the enactment is  of a  comprehensive nature  by way of amending and consolidating  the rent-control  law  obtaining  in  the State till  then Unquestionably  it is a piece of beneficial legislation intended to remedy the two evils of rack-renting (exaction of  exhorbitant rents)  and unreasonable  eviction generated by  large scale  of influx  of population  to  big cities and  urban areas  in the post Second World War period creating acute  shortage of  accommodation in such areas and the enactment  avowedly protects  the rights  of tenants  in occupation of  buildings in  such areas  from being  charged unreasonable  rents  and  from  being  unreasonably  evicted therefore; it  further protects  their possession even after the  determination   of  their   contractual  tenancies   by enlarging the  definition of  a ’tenant’  so as  to  include persons  who   have  held  over  after  such  determination. Sections 3 and 3-A deal with the regulation of letting while ss.4 to  8 effectuate the objective of controlling the rents and ss.l0  and 14  to 16  confine eviction  of a  tenant  to stated grounds  subject  to  certain  terms,  qualifications and/or reservations thereby preventing unreasonable eviction In other  words a  landlord’s freedom  of contract to charge even the  market rent  (if it is in excess of ’fair rent’ as defined) and  his freedom  to  evict  a  tenant  on  several grounds available  to him either nuder his lease-deed or the Transfer of  Property Act have been curtailed to a large and substantial extent.  At the same time the enactment contains other  significant   provisions  which   indicate  that  the legislature itself  felt that there might be areas and cases where the  two evils  were neither prevalent nor apprehended and as such the landlord’s 408 freedom need  not be  curtailed at  all, as also cases where

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attenuated freedom  could be  allowed to  the  landlord  and limited protection  be extended to the tenant. not instance, under s.1  (2) (a)  (i) of  the Act itself does not apply to the entire State but only to the city of Madras, the city of Madurai and  to all  Municipalities  (i.e  Municipal  areas) which shows that non-urban areas or rural areas are excluded from   the operation  of the Act, presumably because in such areas the evils of rack-renting and unreasonable eviction do not obtain;  and under  the proviso  there to power has been reserved to  the Government  to withdraw  the application of the Act  to any  municipal areas or to the city of Madras or to the  city of  Madurai from such date as may  be mentioned in the  notification as  also to reintroduce the Act in such areas where  it  has  ceased  to  apply  by  reason  of  the notification issued  under the  proviso; similarly,  s.1 (2) (c) confers  powers on the Government to apply all or any of the provisions  of the Act by notification to any other area in  the  state  to  which  it  has  not  already  been  made applicable by  the Act  itself and  to cancel  or modify any such notification.  Again by  the proviso  to s.10  (1)  the restrictions imposed  by ss.10 and 14 to 16 (which enumerate the grounds and the circumstances under which alone eviction can be  sought under the Act) have been made inapplicable to tenants  in   buildings  of   which  the   landlord  is  the Government. Similarly,  under s.10  (3)  (b)  a  much  wider latitude to  evict a  tenant is  afforded  to  landlords  of religious,   charitable,   educational   or   other   public institutions if   possession is required for the purposes of such institutions,  inasmuch as, unlike in the cases falling under  s.  10  (3)(a)  (i)  (ii)  and  (iii),  there  is  no insistence that  such landlords  should not be occupying any other building  of his  own in  the city,  town  or  village concerned. In  other words the legislature itself has made a rational classification of buildings belonging to Government and   buildings    belonging   to   religious,   charitable, educational and  other public institutions and the different treatment accorded  to such  buildings obviously proceeds on the well-founded  assumption that  the Government as well as the landlords  of such  buildings are  not expected  to  and would not  indulge in rack-renting or unreasonable eviction. These and  similar other provisons crystalize the policy and purposes of the Act and furnish the requisite guidance which can legitimately  govern the  exercise of  power confered on the State  Government under  s 29  of the  Act. The guidance thus afforded  may illustratively  be indicated  by  stating that the  power to grant exemptions or make exceptions could be legitimately  exercised by  the State Government in areas or cases where the mischief sought to be remedied by the Act is neither 409 prevalent nor  apprehended as  also in  cases (individual or class of  A cases) where a uniform or inflexible application of law  is likely to result in unnecessary or undue hardship (here  to  landlords)  or  in  cases  where  the  beneficial provison is  likely to  be or is being abused by persons for whom it  is intended  (here the  tenants). The  question  is whether in  issuing the  Notification dated 16th August 1976 the State  Government has  exercised the power in conformity with such  guidance and  the same  is valid as not offending Art. 14 of the Constitution.       We  have already  stated  that  the  respondents  have contended that  the question  of constitutional  validity of granting exemption  to  buildings  belonging  to  charities, religious  or  secular  from  rent  control  legislation  as offending the  equal protection  clause of  Art. 14 has been

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concluded by  the observations  made by  this Court  in P J. Irani’s case  (supra) while  Counsel for the petitioners and the appellants  on the other hand have urged that it is not; according to  Counsel for the petitioners and the appellants all that  the observations  made by  this Court in that case decide is  that the classification of buildings belonging to Hindu, Christian  and Muslim religious public trusts as also to  public   charitable  trusts   could  be  regarded  as  a reasonable classification  based on intelligible differentia but that  test  of  nexus  which  is  also  required  to  be satisfied for  purposes of  Art. 14  has not been pronounced upon by  this  Court  and  this  aspect  is  still  open  to argument- We shall proceed on the basis that the question is res  integra   and   consider   whether   the   respondents, particularly the  State  Government  have  furnished  proper material on  the basis of which the exemption granted can be justified.       lt  cannot  be  disputed  that  public  religious  and charitable endowments or trusts constitute a well recognised distnict group  inasmuch  as  they  not  only  serve  public purposes but the disbursement of their income is governed by the  object  with  which  they  are  created  and  buildings belonging to such public religious and charitable endowments or trusts  clearly fall into a distinct class different from buildings owned  by private  landlords  and  as  such  their classification into  one group  done by the State Government while issuing  the impugned notification must be regarded as having been  based on  an intelligible  differentia. Counsel for the  petitioners and the appellants also fairly conceded that such classification would be a rational one, more so in view of  the observations  made by this Court in that behalf in P.J.  Irani’s case  (supra). The  question is whether the said classification has any nexus with the object with which the powers to H 410 grant  exemptions   has  been   conferred  upon   the  State Government under  s. 29  of the  Act. On  this aspect of the matter before  we go  to the material furnished by the State Government on  the basis of which such nexus is sought to be established  it   will  be   useful  to   refer  to  certain observations made  by this  Court in  the case  of State  of Madhya Pradesh  v. Kanhaiya Lal (supra) which afford a clear indication as to what kind of material would go to establish such nexus,  The facts  of that  case were these. Respondent No. 4  in that  case was a public trust registered under the Madhya Pradesh  Public Trusts  Act  and  it  owned  a  house property, one  portion whereof was occupied by girls school, the rest  being let  out to tenants. Since the rents issuing from the property were wholly utilised for the pure poses of the  schools   respondent  No.  4  became  entitled  to  get exemption from  the provisions  of the  M. P.  Accommodation Control Act  under s.  3(2) thereof for that house-property. On an  application made  in that  behalf by respondent No. 4 the State  Government granted  the exemption  by  issuing  a notification under  that  provision.  The  notification  was challenged on two grounds, (i) that s. 3 (2) was void on the ground of  the excessive delegation of Legislative powers to the State  Government; (ii) that the notification itself was discriminatory as  the grant of exemption was not germane to the policy of the Act. The High Court upheld the validity of s.  3   (2)  but  struck  down  the  notification  as  being discriminatory. This  Court confirmed  the High Court’s view eon both  the points.  While holding the notification bad on the ground that the exemption granted was not germane to the policy of the Act this Court observed thus:

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          "In  this case  there  is  no  affidavit  by  any      officer who  had anything to do with the order granting      exemption. The  returns filed  on behalf  of the  State      Government do  not throw any light on this question. It      would appear  that in  granting the exemption the State      applied  merely   a  rule   of  thumb  and  issued  the      notification on the basis of the assertion by the trust      that the  entire rental  income from  the property  was      being applied to meet the expenses of the trust. Such a      statement  on   allows  an  institution  to  apply  for      exemption. It  was not  the case of the trust that they      wanted to  evict the  tenants because  they wanted  the      whole of the accommodation itself nor was it their plea      that the income according to them was very low compared      to prevailing  rates of  rent and  that it  was  wholly      inadequate for  meeting the  expenses of  the trust. If      grounds like these or other relevant grounds had 411      been alleged  it would  have been  open  to  the  State      Government to  consider the  same  and  pass  an  order      thereon. In our view the State Government did not apply      its mind  which it  was required  to do  under the  Act      before issuing  a notification  and the return does not      disclose any  ground which  was germane to the purposes      of the  Act to  support  the  claim  for  exemption  ."      (Emphasis supplied)      The above  observations clearly  indicate what  kind of material the  State Government  is  required  to  take  into consideration which  would justify the grant of an exemption in  favour   of  a  particular  ill  building  or  class  of buildings. C      Coming  to   the  material   furnished  by   the  State Government on  the basis  of which the impugned exemption is sought to  be justified it may be stated that in paragraph 4 of  its   Counter  Affidavit   dated   10.2.1981   Shri   J. Ramachandran, Joint  Secretary, Home Department, has stated: D           "The prime object behind the grant of exemption to      the buildings belonging to religious institutions is to      enable J  the institutions  to get  enhanced income  by      increasing their  rents. The  buildings were endowed to      the public religious and charitable trusts for carrying      out certain  religious or charitable purposes. With the      escalation of  prices,  the  religious  and  charitable      trusts  are   not  in  a  position  to  carry  out  the      endowment, if  the income  of the  property  is  not  -      increased suitably  and  this  nullifies  the  specific      purpose of endowment." In para 13 the deponent has further stated:           "As stated  already, numerous representations were      made to  the Government about the plight of the temples      and the  public charities  like poor  feeding, etc. and      the ridiculous  position which  is prevailing,  and the      Government on a consideration of all the aspects of the      matter was  fully satisfied  that the tenants are fully      exploiting the  situation and  the fixation  of a  fair      rent under  the Rent Control Act is no criterion at all      and that it would cause immense in justice and would be      highly oppressive  so  far  as  temples  and  religious      endowments and  public charities  are concerned.  lt is      only in the context of such a serious predicament and 412      critical situation  that the  Government intervened and      issued the  notification under  s. 29  of  the  Act  to      relieve the hard ship and injustice."

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     It  has also  been pointed  out that the procedure and machinery indicated  in s.  4 of  the Act  and the concerned Rules for fixing fair  rent only yields on the total cost of the building  together with  the market value of the site, a gross return  of 9 per cent for residential buildings and 12 per cent  for non-residential buildings which is very low as compared to the bank rate of interest and grossly inadequate when compared  to the  reasonable rents  at the  market rate obtaining in  the locality  or the neighbourhood (i.e., rent which a  willing land  lord will charge to a willing tenant) and it  was a  case of  the tenants  of all  such  buildings exploiting  the   situation  arising   from  the  beneficial provisions  of   the  Act.   In  the  supplementary  counter affidavit dated the 24th September 1983, Shri N. Srinivasan, Deputy  Secretary.   Home  Department,   has   categorically asserted that  "in all  these  cases    the  Government  was satisfied that  the rent  paid by  the tenants was very low, meager and  that the  previsions of  fixation of  fair  rent under the  Act would  not meet  the ends  of justice and the situation will  still continue  in which  the tenant will be exploiting the  situation and the helplessness of the public religious trusts  and  charitable  institutions"  and  that, therefore, the Government felt that it was  necessary to withdraw the protection given under the Act to the tenants of such buildings.       It  may be stated that no rejoinder affidavit has been filed on  behalf of  the writ  petitioners or the appellants and as  such the  before said  material furnished by the two counter affidavits  and the averments made therein have gone unchallenged. In  our view,  the aforesaid  material clearly shows that  buildings belonging to such public religious and charitable endowments  or trusts  clearly fell  into a class where undue  hardship and  injustice resulting  to them from the uniform  application of the beneficial provisions of the Act needed  to be  relieved and  the exemption  granted will have to  be regarded  as being   germane  to the  policy and purpose of  the Act.  In other words the classification made has a  clear nexus  with the  object with which the power to grant exemption has been conferred upon the State Government under s. 29 of the Act.       It  may be stated that counsel for the petitioners and the apple  lands during  the course  of the  hearing  placed reliance upon a decision of this Court in State of Rajasthan v. Mukanchand and Others(l)          (1) [1964] 6 S.C.R. 903. 413 where the  impugned part  of s.  2(c) of the Jagirdar’s Debt Reduction A  Act (Rajasthan  Act 9  of 1937)  was held to be violative of Article 14 on the ground that the test of nexus between the  classification made and the object sought to be achieved by  the statute in question had not been satisfied. The ratio  of the  decision  was  that  Jagirs  having  been deprived of their lands were entitled to the benefits of the Act  providing  for  reduction  of  debts  and  it  made  no difference whether  the debts were owed to the Government or local authority  or other  bodies mentioned  in the impugned part of  s. 2(e)  of the  Act and  such  debts  due  to  the Government, local  authority and  other bodies  could not be excluded while  granting the  benefit of reduction of debts. The ratio, in our view, is clearly inapplicable to the facts of the  instant  case  inasmuch  as  we  have  come  to  the conclusion that  the classification of buildings made in the impugned notification has a clear nexus with the object with which the  power to  grant exemption has been conferred upon the State Government.

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    It was  next contended  that  If  the  main  object  of granting  exemption   to  buildings   belonging  to   public religious institutions  or public  charities was  to  enable these institutions  to augment  their income  by  increasing rentals of  their buildings  such  object  could  have  been achieved by  granting exemption from these provisions of the Act which  deal with the controlling of rents (ss 4 to 8 and the Rules made in that behalf) but a total exemption granted to them  from all  the provisions  of the  Act  particularly those which prevent unreasonable eviction of tenants must be regarded as  excessive and  unwarranted. And  in this behalf counsel for the petitioners and the appellants referred to a Saurashtra Notification  No. AB/15(17)/54-55  dated the 27th December, 1954  issued by  the State Government under s.4(3) of the Saurashtra Rent Control Act, 1954 where under partial exemptions p from changing only the standard rent subject to certain conditions  was granted  to buildings  belonging  to public trusts  for religious  and charitable purpose. It was pointed  out   that  the   Notification  provided  that  the provisions of  the Act except provisions in ss 23, 24 and 25 shall not,  subject to conditions and terms specified in the schedule thereto  apply to  such buildings and term No. l in schedule A  stated that  no tenant  of such premises to whom the same  has been  leased on  or before 30th December, 1948 shall be evicted provided such tenant agrees to increase the monthly rent paid by him immediately before the said date by 50 per  cent and  does not  allow, except for valid reasons, the rent  amount due  at any time to run in arrears for more than two  consecutive months." In other words the Saurashtra Notification was relied upon as an illustration where 414 partial exemption  from the  provisions of  the Rent Control enactment subject  to terms and conditions could be granted. Thus counsel  urged that  similarly in  the instant case the State Government  of Tamil  Nadu could  have  given  partial exemption  to   buildings  belonging   to  public  religious institutions and  public charities  only in  the matter   of ’fair rent’  and need  not have  taken away  the  protection available  to   the  tenants   under  the  provisions  which prevented unreasonable eviction.       In  our view  there is no substance in the contention. It cannot  be  disputed  that  the  two  objectives  of  the enactment,  namely,   to  control   rents  and   to  prevent unreasonable eviction  are interrelated  and the  provisions which subserve these objectives supplement each other. Tn P. J. Irani’s  case (supra),  Sarkar, J,  has also  observed at page 193  of the  Report that "the purpose of the Act, quite clearly, is  to prevent  unreasonable eviction  and also  to control rent.  These two  purpose are  intertwined."  it  is obvious that if the trustees of the  public religious trusts and public  charities are  to be given freedom to charge the normal market  rent then  to make  that freedom effective it will be  necessary to  arm the  trustees with  the right  to evict the  tenants for  non-payment of such market rent. The State  Government   on  material   before  it  came  to  the conclusion that  the ’fair  ’rent’ fixed  under the  Act was unjust in case of such buildings and it was  necessary  to permit  the trustees  of  such  buildings  to recover from  their tenants  reasonable market  rent and  if that be  so non-eviction  when reasonable market rent is not paid would be unreasonable and if the market rent is paid by the tenants  no trustee  is going  to  evict  them.  It  is, therefore, clear  that granting  total exemption  cannot  be regarded as excessive or unwarranted.      Apart from  this aspect of the matter it is conceivable

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that  trustees   of  buildings   belonging  to  such  public religious  institutions   or  public  charities  may  desire eviction of  their tenants  for the  purpose of carrying out major  or   substantial  repairs   or  for  the  purpose  of demolition and  reconstruction and  the State Government may have felt that the trustees of such buildings should be able to effect  evictions without  being required to fulfil other onerous conditions  which must  be complied  with by private landlords when  they seek evictions for such purpose. In our view,  therefore,   the  total  exemption  granted  to  such buildings  under  the  impugned  notification  is  perfectly justified.       The  reliance on Saurashtra Notification, in our view, would be  of no  avail to the petitioners or the appellants. The manner in 415 which exemption  from  rent  control  provisions  should  be granted,   whether it could be partial or total and if so on what terms  and conditions  would be  matters for each State Government  to  decide  in  the  light  of  the  scheme  and provisions of  the concerned  enactment and  the  facts  and circumstances touching  the classification  made. And if the State of  Madras has thought fit to grant the exemption in a particular manner  by the  impugned notification  it will be difficult  to find fault with it if the exemption so granted is not  illegal or  unconstitutional. It will be interesting to note that even under the Saurashtra Notification the term or condition  contained in  Schedule ’A’  thereto also makes the position clear that eviction may follow if the permitted enhanced rent  is not paid or allowed to fall in arrears for two consecutive  months by  the  tenant  of  such  buildings belonging to public religious or charitable trusts. In the  result the  challenge to impugned notification fails and the  writ petitions and the civil appeals are dismissed. All interim  orders, if  any, are  vacated. where will be no order as to costs. S. R.                         Petition and Appeals dismissed 416