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PETITIONER: STATE OF ANDHRA PRADESH

       Vs.

RESPONDENT: KANNAPALLI CHINNA VENKATACHALAMAYYA SASTRI

DATE OF JUDGMENT: 30/03/1962

BENCH: WANCHOO, K.N. BENCH: WANCHOO, K.N. AIYYAR, T.L. VENKATARAMA SINHA, BHUVNESHWAR P.(CJ) GAJENDRAGADKAR, P.B. AYYANGAR, N. RAJAGOPALA

CITATION:  1962 AIR 1687            1963 SCR  (1) 155  CITATOR INFO :  R          1978 SC 771  (61)

ACT: Land-lord  and  a Tenant-Estate-Reduction of rent  of  ryoti land--Whether  unreasonable restriction-Madras Estates  Land (Reduction of Rent) Act, 1947 (Mad.  XXX of 1947), s. 3(4)-- Constitution of India Art 19(1) (f).

HEADNOTE: The  Respondent,  the  sole inamdar  of  village  Chinnaven- katapuram  in the Parlakimidi Zamindari in the  District  of srikakulam filed a Writ Petition before the High Court chal- lenging lnter-alia the notification issued under s. 3 (4) of the Madras Estates Land (Reduction of Rent) Act by which the rents in respect of ryoti lands included in his Estate  were reduced.  He also challenged the provisions of the Act.  The High Court accepted the challenge to the notification on the ground  that the net income from rents was reduced  to  less than  25% of the original income and that the reduction  was so  substantial as to amount to an unreasonable  restriction on the respondent’s right to hold property under Art. 19 (1) (f ) of the Constitution.  On appeal by a certificate. Held, that the provisions of the Act were valid as they laid down reasonable restrictions in the interest of ameliorating the  conditions  of tenants of ryoti land in  ’Estates’  who were  at  a  disadvantage compared to  tenants  of  ryotwari lands. Held, further, that it is only in a theoretical case where a land-holder  would be virtually’ deprived of his  income  by the  reduction  of  rents  that it  can  be  said  that  the reduction was unreasonable.  By the reduction the income  of the Respondent was brought on a par with that of the highest prevailing rents in ryotwari lands and so it cannot be  said that  the  reduction of rents made by the  notification  was violative  of the land holders’ rights under Art. 19  (f  ). The  method of comparing the rents prior to  reduction  with the  rents after reduction for the purpose of  deciding  the unreasonableness  of  the restriction was not sound  as  not humane    landholders   but   those   who   were    charging

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unconscionable rents would benefit thereby. 156

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 242 of 1960. Appeal from the judgment and order dated September 11, 1957, of the Andhra Pradesh High Court in Writ Petition No. 201 of 1952. R.   Can-apathy  Iyer, T. V. R. Tatachari,  D.  Venkatappaya Sastri and P. D. Menon, for the appellants. K.   Bhimasankaram and T. Satyanarana, for the respondent. 1962., March 30.  The Judgment of the Court was delivered by WANCHOO,  J.-This  appeal on a certificate  granted  by  the Andhra   Pradesh  High  Court  raises  a  question  of   the constitutionality  of the Madras Estates Land (Reduction  of Rent)  Act,  No.  XXX  of  1947,  as  amended,  (hereinafter referred   to  as  the  Act)  and  a   notification   issued thereunder.  The brief facts necessary for present  purposes are  these.  The respondent was the sole inamdar of  village Chinnavenkatapuram  in  the  Parlakimidi  zamindari  in  the district of Srikakulam.  The legislature the composite State of Madras passed the Act, which came into force from January 7,  1948, to provide for the reduction of rents  payable  by ryots  in estates governed by the Madras Estates  Land  Act, No. 1 of 1908, approximately to the level of the assessments levied  on lands in ryotwari areas in the  neighborhood  and for  the collection of such rents exclusively by  the  State Government.  The Act applied to all estates as defined in s. 3  (2) of the Madras Estates Land Act.  Section  2  provided for  the appointment of a special officer for any estate  or estates  for the purpose of recommending fair and  equitable rates of rent for the ryoti lands in such estate or  estates and  laid down the procedure to be followed by  the  Special officer for                             157 such  purpose,  and  gave power to the  special  officer  to determine  after  necessary enquiries the extent if  any  to which  the  rates of rent payable for each  class  of  ryoti lands should in his opinion be reduced and to fix the  rates of  rent  payable  for  each  class  of  ryots  after   such reductions.  Under a. 3, the special officer had to submit a report  after  completion  of  his  inquiry  to  the   State Government  on  the  two points mentioned  above  and  after considering  the recommendations of the special officer  and the  remarks  of  the Board of Revenue  thereon,  the  State government  was empowered by order published in the  gazette to  fix the rates of rent in respect of each class of  ryoti land in each village in the estate, and the order so  passed by  the  State  Government  was  to  take  effect  from  the commencement  of  the Fasli year 1357.  Section 3  (4)  then provided  for  the recovery of rents so fixed by  the  State Government  and the amount so recovered in respect  of  each year, after deducting therefrom the cost of such recovery as may  be determined according to the Rules to be  framed  and also  after deducting the peshkash, cesses and other  moneys due  from the landholder to the State Government, was to  be paid  to the landholder.  Section 3 (7) laid down  that  the landholder   shall   not  be  entitled  to   collect   rents thereafter.   Sections 5 and 6 made special provisions  with regard    to   religious,   educational    and    charitable institutions.   Section 7 provided for the framing of  rules and sections 4, 8 and 9 made incidental provisions which are however not material for our purposes.

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In  pursuance of the provisions of the Act  a  notifications was  issued  by  the State Government with  respect  to  the estate  of  the  respondent fixing the  rates  of  rent  for various  classes of ryoti lands in the estate.  In the  case of  wet  and dry lands the rate was reduced to half  of  the then  existing  rates  and in the case  of  dry  land  (when agraharam well water 158 was used) the rate was reduced to one-sixth of the  existing rate.   Thereupon  the respondent filed a writ  petition  on March  21.  1952, challenging the above  notification.   The first  challenge was on the  ground that the  estate  of the respondent  was  not  an estate within the  meaning  of  the Madras  Estates.   Land Act and therefore the  Act  was  not applicable  to  it.   Secondly, it was  contended  that  the reduction  in  the ’rents made by the  notification  was  so drastic  as to result virtually in depriving the  respondent of  his  right  to  hold and  enjoy  his  property,  as  the out  goings  were  far in excess of  the  income  after  the reduction in rents.  Consequently, the notification amounted to   an  unreasonable  restriction  on  the  right  of   the respondent  to  hold property under Art. 19 (1) (f)  of  the constitution. The  petition was opposed on behalf of the State and it  was contended  that it was incorrect to say that  the  outgoings were more than the income after the reduction of rents  made by the impugned notification.  It was pointed out that after meeting  the  cess,  the quit-rent and ten  per  centum  for collection  charges, the respondent would have a net  income of  Rs. 603/- and the reduction in the  circumstances  could not  be  said to be so drastic as to virtually  deprive  the respondent  of his right to hold property under Art. 19  (1) (6). When  the  matter came to be argued before the  High  Court, three points were raised by the respondent, namely, (i) that the village in dispute was not an estate, (ii) that even  if it  was  an estate the notification under the  Act  offended Art. (19) (1) (f) of the Constitution because of the drastic nature  of the reduction, and (iii) that the Act itself  was ultra vires for the reason that it was contrary to the terms of Art. 31 of the Constitution and s. 299 of the  Government of India Act, 1935.  The third of these contentions,  though it  was  not raised in the petition by the  respondent,  was eventually referred to a Full  159 Bench  and the question put to the Full Bench was  in  these terms:-               "Whether  the decision in Rajah of Bobbili  V.               State of Madras (1) insofar as that Madras Act               XXX  of 1947 does not offend  against  section               299  of the Government of India Act, 1935,  is               good law?" It  may be mentioned here that the Act was  challenged  soon after  it  was  passed by the Rajah of  Bobbili  on  various grounds  one  of  which  was that the  Act  was  bad  as  it contravened s. 299 (2) of the Government of India Act.  This challenge  to the Act was repelled by the Madras High  Court in the case of Rajah of Bobbili(1) and it was held that mere reduction of rent was not acquisition of property within the meaning of s. 299 (2) of the Government of India Act and the effect  of  the  Act  was held to  be  that  the  landholder continued to be the owner of the estate as before, his title being  left untouched.  It was further pointed out  that  it was the tenant who was entitled ’to possession, the right of the  landholder  being only to recover rent and  that  right

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again  was  left  unaffected by the  legislation,  the  only change being that the collection of rent was to be made  not by the landholder but by the Government.  Further though the learned   Judges  in  Rajah  of  Bobbili’s  case  (1)   were apparently  of opinion that the acquisition contemplated  by s. 299 (2) of the Government of India Act was acquisition of title,  they went on to say that even assuming that  s.  299 (2) of the Government of India Act, covered cases of posses- sion,  there  was no such taking of possession in  the  case before them tinder the Act as would attract that provision. The reference to the Full Bench in the High Court was due to the  challenge to the narrow view of the word  "acquisition" which was said to have been taken in Rajah of Bobbili’8 case (1) in view of (1)  (1952) 1 M.L.J. 174. 160 certain later decisions of this Court.  Eventually, however, the Full Bench held that even if a wider interpretation  was given to the word "’acquisition’ as used in s. 299(2) of the Government  of  India Act, there was no deprivation  of  the property of the landholder by the Act within the meaning  of s.299(2)  and  therefore  the  decision  in  the  Rajah   of Bobbili’s case (1) was still good law.  The Full Bench  also held  that  the  provisions of the Act  only  regulated  the relationship  of landholder and tenant and as there  was  no acquisition  by the Government even in the wider meaning  to be  given  to  the word "acquisition" in s.  299(2)  of  the Government  of  India  Act,  the Act was  not  hit  by  Art. 19(1)(f)  and was a reasonable restriction on the  right  to hold  property  and in the interest of the  general  public. The  Full Bench further held that, though prima  facie  .the reduction  of rents to the ryotwari level could not be  said to  be  unreasonable,  the view expressed in  the  Rajah  of Bobblli’s  case (1) that if in a particular case the  result of the reduction of rates of rent had the effect of total or substantial deprivation of the landholder of his net  income it would offend Art. 19(1)(f) of the Constitution. After  this opinion of the Full Bench, the matter was  again placed before a Division Bench, for final decision.  At that stage  it seems that the point that the village  in  dispute was not an estate was given up and the only point urged  was that the reduction was so drastic as to amount to an  unrea- sonable  restriction  on  the  fundamental  right  to   hold property under Art. 19(1)(f).  The learned Advocate  General placed before the Bench the effect of the reduction based on the  notification of June 27,1950.  It was found that  prior to  the reduction the net income of the respondent  was  Rs. 3,875/-, and after the reduction his net income was  reduced to  Rs.  457/13/8.  It was urged by’. the  learned  Advocate General  that  the respondent was getting the  rent  at  the highest rate prevalent in- the ryotwari (1)  (1952) 1 M.L.J. 174.                             161 areas of the district and that it could not be said that the reduction  of  rates  of rent to the level  of  the  highest ryotwari  rate was an unreasonable restriction on the  right of  the  respondent to hold property.  The  Bench,  however, observed  that though ordinarily the reduction of  rates  of rent of the ryotwari level might be reasonable, there  might be  circumstances  in a particular case to  hold  that  the. reduction  was so drastic that it would be  an  unreasonable restriction.   It was observed that the State  might  reduce the  rent to such a level after deducting the legal  charges and the cost of collection fixed on an arbitrary basic  that there  might be nothing left to the landholder.  In  such  a

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case  in  the  name of regulation of  rents  and  collection thereof  the State took away the grain and gave the husk  to the  landholder.   The Bench then added that though  it  was easy to state the principle it was difficult to apply it  to the  facts of each case.  It then :went on to  consider  the circumstances  under which it could be held  that  reduction was  so  drastic  that  the  landholder  was   substantially deprived  of  his income., and was of  opinion  that  having regard  to  the  object of the Act, if  the  income  of  the landholder  after reduction of rents did not fall  below  25 per centum of his previous income it could be held that  the reduction  was not an unreasonable restriction on the  right to  hold property enshrined in Art. 19 (1) (f).  As in  this case,  however, the income of the respondent fell far  below 25 per centum of the income which be was getting before  the reduction,  the  Bench held that the notification  was  bad. Thereupon  the State Government asked for a  certificate  to appeal to this Court, which was granted; and that is how the matter has come up before us. So  far  as the constitutionality of the Act  is  concerned, there was no serious challenge to it by the respondent.   If one  refers  to the main provisions of the Act  relating  to reduction of rents 162 which we have already set out above, it will appear that the object  of  the Act was to put a check  on  rack-renting  in estate  as defined in the Madras Estates Land Act.  As  such agricultural   tenants  formed  a  considerable   group   of cultivators  in  the  State, it  was  thought  necessary  to ameliorate  their condition.  The Act was therefore  enacted under  the  powers conferred on the  provincial  legislature under item 21, of List II of Schedule VII to the  Government of  India Act dealing with land.  It provided for  reduction of  rent  to the level at which the rents prevailed  in  the neighbouring  area where there was ryotwari settlement.   In these  circumstances  it cannot possibly be  said  that  the reduction of the prevailing rents to the ryotwari level  was an  unreasonable restriction on the right of the  landholder of  an  estate to hold property under Art. 19 (1)  (f).   We must therefore hold that the Act is constitutional and  lays down reasonable restrictions on the right of the  landholder to hold his estate. The attack based on reading the term ’,acquisition" in s.299 of  the Government of India Act, 1935 in the wide  sense  of any  interference with property even when the title  thereto does  not  pass to the State, which was  the  point  debated before  the Full Bench is no longer a live issue since  the matter  is concluded against the respondent by the  decision of this Court in Guru Dutt Sharma v. State of Bihar (1). This brings us to the main point that has been argued before us by counsel for the parties.  It is urged on behalf of the appellant  that  the High Court was wrong  in  holding  that where the reduction is such that the previous net income  is reduced  below 25 per centum there would be an  unreasonable restriction on the right to hold property, merely because of this  circumstances  It is said that the  fixation  of  this percentage at 25 per centum is more (1)  [1962] 2 S. C. R, 29                             163 or  less  arbitrary.   In any case it  means  that  where  a landholder had been successful enough previously to practice rack-renting  as  an art and to increase the  rents  of  his tenants  unconscionably, he would get protection because  in such  a  case  it was likely that  the  reduction  would  be drastic and may even result in the reduced net income  being

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less than 25 per centum of the previous net income.  On  the other  hand  in the case of a landholder who  was  a  humane person  and did not increase his rents  unconscionably,  the reduction  of  ’rents on the basis of the  same  rate  which might be used in the case of the former landholder who was a rack-renter may not be hit because in his case the reduction may not be below 25 per centum.  So it is urged that if  the reasonableness  is to depend upon by how much  the  previous net  income is reduced after the reduction, it  will  always work  in favour of a landholder who was a  rack-renter  even though  the basis of reduction may be on the same  rates  in the  case of a rack-renting landholder and in the case of  a humane  landholder.   Therefore,  it is urged  that  if  the reduction  is reasonable in the case of a humane  landholder because it is brought into line with the prevailing rates of rent   in   the  neighbouring  areas  under   the   ryotwari settlement, there is no reason why such reduction should not continue  to  be  reasonable  in  the  case  of  the   other landholder.  The fact that in one case the reduction may not be  below  25 per centum while in the other case it  may  go below 25 per centum will make no difference to the reasonab- leness of the reduction, for in either case the basis of the reduction  is  the same.  We are of opinion  that  there  is force  in  this argument and it must be accepted.   What  we have  to  see  is  whether the  Act  when  it  provides  for reduction  of  rent  proceeds on  a  reasonable  basis  i.e. whether the reduction of rent to the level of the prevailing rent  for the same class of land in the  neighbouring  areas where  ryotwari settlement prevails is reasonable.  This  in our      164 opinion  is a reasonable basis on which the rent in  estates covered by the Madras Estates Land Act can be reduced.  Once this  basis is accepted ’as reasonable, we fail to  see  how the ratio between what the landholder was getting before the reduction  and what he gets after the’ redaction will’  make what is per se reasonable into an unreasonable  restriction. Theoretically. it may be possible to say that the  reduction may  be so much that nothing may be left to the  landholder. This  is what the respondent tried to make out in  his  writ petition,  for his case therein was that the rents  were  so far  reduced  in his case that instead of getting an  income of  Rs.  3,875/- he would be getting no income  at  all  and would  be actually suffering a net loss of Rs. 655/- by  his holding  the  estate  after reduction of  rents.’   This  of course has been found by the       High    Court    to    be incorrect and in actual fact the   landholder is left with a net income of Rs. 457/-       and odd after the reduction in rent. Therefore.         except    for    the    theoretical possibility where the    landholder may be left with nothing on reduction of rents, it cannot be said from the mere  fact that  in  some cases the ratio- of net  income  falls  after reduction of rent as compared to the net income before reduction below 25 per centum that the restrictions imposed by the Act are unreasonable. , Actually ’we   feel  that  there  cannot possible be any case where after the reduction there will be nothing left   to the landholder. We cannot therefore  agree with the High Court that simply because in a particular case the net income after reduction falls below 25 per centum  of the  net  income  before reduction  the  notification  which results  in such a position, is an unreasonable  restriction on  the right of the land-holder to hold his estate.  As  we have  said already, the ratio by which the net  income  will fall after     reduction   will  depend  upon  whether   the landholder          whose rents are being reduced was a rack

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renter or humane person; in the case of a rack-renter the 165 fall may be heavier while in the case of a humane person the fall may be less.  But if the basis on which the,  reduction is made is the same in both cases and is reasonable, we  see no  reason  for holding that a notification which may  in  a given case result in a fall of the net income which is  even below  25  per  centum  of the  previous  net  income  would necessarily  be  bad as an unreasonable restriction  on  the right of the landholder to hold his estate.  It is important in this connection to remember that the rent allowed to  the respondent compares favorably with the highest rent  payable by  the  ryotwari tenants in the locality.   Therefore,  the basis  on which rents are being reduced under the Act  being good  and reasonable the result of such reduction would  not make the,notification in a particular case bad except  where that  theoretical case is reached where there is  no  income left to the landholder after reduction, which in our opinion is  impossible.  We therefore allow the appeal  and  setting aside the order of the High Court dismiss the writ  petition with costs throughout. Appeal allowed. 166