1. By this application under Article 226 of the Constitution the petitioners, who are in occupation as tenants of three tenements in a building owned by the respondent No. 1, the Gulab Bai Digumbar Jain Kanya Vidyalaya, Bhopal (hereinafter referred to as the Vidyalaya), pray for the issue of a writ of ceiliorari for quashing a notification issued by the State Government on 22nd May, 1963 under Section 3(2) of the Madhya Pradesh Accommodation Control Act. 1961 (hereinafter referred to as the Aet) exempting the said building from all the provisions of the Act.
2. The long title of the Act is:
'An Act to provide for the regulation and control of letting and rent of accommodation and the eviction of tenants therefrom.' With this view provisions have been inserted in Chapter II of the Act regarding fixation of standard rent and prohibition of recovery of rent in excess of standard rent and unlawful charges. Section 12 lays down restriction on eviction of tenants. There are other provisions in the Act, all intended to regulate the control of letting, rent of accommodation and eviction of tenants therefrom. Section 3 (2) of the Act is as follows:--
'The Government may by notification, exempt from all or any of the provisions of this Act any accommodation which is owned by any educational, religious 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.'
3. On 5th March, 1962 an application was made to the Government by the Secretary of the Vidyalaya stating that the Vidyalaya had been founded by one Seth Gokulchand by a deed of trust; that in a portion of the building donated by the creator of the trust the Vidyalala was located and other portions of it were let out to tenants; that the whole of the income derived by the trust as rent from the building was being utilised for the running of the Vidyalaya; that the Vidyalaya did not have any other source of income; and that the Government had been empowered under Section 3 (2) of the Act to exempt from all or any of the provisions of the Act any accommodation owned by an institution such as the Vidyalaya; and praying that the building owned by tbe trust be exempted under Section 3 (2). Tbe Government sent the application to the Collector, Sehore, for enquiry who submitted a report recommending the grant of exemption under Section 3 (2) of the Act. The Government, after considering the report of the Collector, issued on 22nd May, 1963 the impugned notification in the following terms:--
'In exercise of the powers (sic) by Sub-section (2) of Section 3 of the Madhya Pradesh Accommorlation Control Act, 1961 (No. 41 of 1961), the State Government hereby exempt House No. 43 of Ward No. 16 in Bhopal Municipal area (Ibrahimpura Bhopal) owned by Gulab Bai Digambar Jain Kanya Vidhyalaya, Bhopal, an educational institution from all the provisions of the said Act.'
Some time after the issue of the notification the Vidyalaya served on the petitioners notices terminating their tenancies and instituted a suit for eviction of the first petitioner Kanhaiyalal from the tenement in his occupation. On 18th September, 1963 the petitioners made a representation to the State Government protesting against the grant of exemption. In their representation they stated that they were in possession of the tenements tor a long time: that there was aeute shortage of non-residential accommodation for business purposes in Bhopal; that the premises could not be put to any use except for shop-purposes, that the landlord respondent No. 1 was demanding from them exorbitant rent; that the exemption sought and granted was not bona fide and was granted by the State Government without hearing the petitioners; and that the impugned order did not also state any reasons for tbe grant of the exemption. The petitioners prayed that the exemption should be rescinded. On this representation being made, the. State Government, after calling the reports from the Collector, Sehore, and the Commissioner, Bhopal Division, heard the petitioners; and ultimately made an order on 8th April 1964 rejecting the representation.
4. The petitioners question tbe validity of the notification, dated 22nd May, 1963 on the grounds that Section 3 (2) of tbe Act gave to the Government unchannelled and uncontrolled power of granting exemption; that in delegating this power to the Government the Legislature did not indicate either the policy or the limits of the exercise of the power; that Section 3 (2) was nothing but a provision by which the Legislature delegated its legislative function to tbe Government; and that it also vested in the Government an unguided and arbitrary discretion which was unconditional and violative of Article 14 of tbe Constitution. They further aver that the grant of exemption by tbe Government to the building in question from all the provisions of the Act just to enable the Vidyalaya to charge exorbitant rent without giving a hearing to them and without considering all the facts and circumstances of the matter was not a bona fide exercise of the power given by Section 3 (2). The first petitioner has also complained that taking advantage of the impugned notification the Vidyalaya instituted a suit for eviction against him mainly in retaliation of his own suit against the Vidyalaya for injunction restraining it from removing the roof of the tenement in his occupation.
5. In the return filed on behalf of the State it has been stated that the impugned notification was issued by the Government after reaching the satisfaction that the Vidyalaya was an educational institution and the whole of tbe income of the building owned by it was being utilised for the institution: and that in issuing the notification the Government did not act mala fide or take into account any extraneous masters. It has been admitted that the petitioners were not heard before the notification was issued. But it has been added that it was not obligatory on the State to give a bearing to the petitioner before exempting the building in their occupation from the operation of the Act. The State contends that Section 3 (2) of the Act docs not offend Article 14 of the Constitution and that the power conferred by it on the Government is within the limits of permissible, delegation.
6. In the return filed on behalf of the Vidyalaya it has been averred that in the trust deed itself founding the institution a clear intention was ex-pressed that the building in question should be reconstructed and altered so as to augment its rental income; and that it was in accordance with this intention tbat the Board of Trustees took all the preliminary steps for starting the reconstruction work and applied for exemption of the building from all the provisions of the Act. The first petitioner's allegation that the respondent No. 1's action in filing a suit for ejectment against him was prompted out of revenge has been denied and it has been said that the other petitioners have also been served with notices under Section 106 of the Transfer of Property Act determining their tenancy and it is intended to institute suits for their eviction also. The, said respondent has also averred that Section 3 (2) is a valid provision; and, in regard to it, it cannot be said that there is in it any delegation of the legislative function or any vice of excessive delegation.
7. The mam submissions made by Shri Dabir, learned counsel appearing for the petitioners, while challenging the legality and propriety of the impugned notification were three. First, the power given to the Government by Section 3 (2) was void as it amounted to abdication by the Legislature of its legislative function in favour of the Government, and the provision also suffered from the vice of excessive delegation as it gave unfettered and un-canalised power to the Government without affording any guidance for the exercise of the power. Secondly, Section 3 (2) conferred an unguided and arbitrary power on the Government to discriminate between one educational, religious or charitable institution and another and choose at their will and pleasure any particular institution for granting exemption; and even after such a selection the Government could pick and choose one building or another building to the selected institution for granting exemption under Section 3 (2) from all or any of the provisions of the Act; the Government's power of granting exemption was not restricted to a class of institutions or a class of buildings; the exercise of the power by the Government to grant exemption to an individual building or a particular institution would necessarily be an arbitrary exercise of power discriminating between one building and another belonging to the institution and one Institution and another; and, therefore, the very conferment of the power was repugnant to Article 14 of the Constitution and was thus invalid. Thirdly, it was said that assuming that there was a valid conferment of power by Section 3 (2), the notification issued by the Government in the present case granting exemption to the building in occupation of the petitioners was discriminatory and invalid as it did not fall within the policy and purpose of the Act. The order itself did not give any reason for granting the exemption and no reasons had been disclosed by the Government which ied to the grant of exemption. The decision of the Supreme Court in P. J Irani v. State of Madras, AIR 1961 SC 1731: (1962) 2 SCR 169, was relied on by learned counsel for the applicants as supporting his contention that the notification issued by the Government under Section 3 (2) of the Act on 22nd May, 1963 was invalid.
8. There is no substance in the challenge to the vires of Section 3 (2) on the ground of abdication by the Legislature of its legislative function or of excessive delegation. The principle is now well established that the Legislature cannot delegate its essential legislative function in any case; and that it must lay down the legislative policy and principle and must afford guidance for carrying out the said policy before it delegates its subsidiary powers in that behalf. See fiarishankar Bagla v. State of M. P., (1955) .1 SCH 380: (AIR 1954 SC 465) and Vasanlal Maganbhai v. State of Bombay, (1961) 1 SCR 341: (AIR 1961 SC 4). Now, Section 3 (2) does not give to the Government unfettered and un-canalized power to exempt from the operation of the Act accommodation belonging to any institution. The power of exemption can be exercised only in relation to that acommodation which is owned by any educational, or religions or charitable institution, or by any nursing or maternity home, and the whole of the income of which is utilized for that institution or nursing or maternity horn.
Thus, the Legislature, itself laid down the policy and principle of granting exemption to institutions of certain types. The only discretion given to the Government in the matter of the exercise of power is in the selection of the institution satisfying the conditions mentioned in Section 3 (2) for the grant of exemption and in the selection of the accommodation belonging to the institution for being exempted from all or any of the provisions of the Act. The delegation of this power of selection does not involve any delegation of an essential legislative function or power. The question as to which institution fulfilling the conditions mentioned in Section 3 (2) is entitled to the benefit of that provision and which accommodation belonging to it should be granted exemption, and whether the exemption should be from all or any of the provisions of the Act are all matters of detail. It was clearly impossible for the Legislature to visualize and contemplate the nature of each and every educational, religious or charitable institution or a nursing or maternity home and the nature of accommodation belonging to it and to make specific provisions covering all the contingencies in regard to the grant of exemption. In our opinion, Section 3 (2) enunciates with sufficient accuracy and clarity the legislative principle and policy in the matter of granting exemption and the delegation of power to the Government contained in that provision is inira vires.
9. The contention that Section 3 (2) is constitutionally invalid as it offends Article 14 of the Constitution cannot be allowed to prevail in view of the decision of the Supreme Court in Irani's Case, AIR 1961 SC 1731: (J962) 2 SCR 169 (supra). That was a case where the validity of Section 13 of Madras Buildings (Lease and Rent Control) Act, 1949 and of an order made by the Madras Government under that provision was challenged on grounds similar to those raised before us. Section 13 of the Madras Act was in the following terms:--
'Notwithstanding anything contained in this Act the State Government may by a notification in the Fort St. George Gazette exempt any building or class of buildings from all or any of the provisions of this Act.'
On 2nd May, 1940 in proceedings for the administration of the property of the deceased Sir Haji Ismail Sait the Madras High Court passed an order for the granf of a rase of a there to one Chidambaram Chetty for a period of seven years from that date, and further directed that on the expiry of the sewn sears' period the lease would be included in the lease of Irani.
Before the expiry of the seven years' period on ist May 1947, the Madras (Lease and Rent Control) Act, 1946, came into force, which also contained a provision similar to that contained in Section 13 of the Madras Act of 1949 ; and which Act was repealed by the later Act of 1949. Chidambaram Chetty was entitled to continue in possession of the theatre even after the expiry of the lease on 1st May, 1947 because of the provisions of the Acts of 1946 and 1949. But in 1951 Irani moved the Madras Government for exemption of the theatre From the provisions of the Act of 1949. On 4th June, 1952 the Madras Government issued a notification exempting the theatre from all the provisions of the Act of 1949. Chidambaram Chetty then filed a petition under Article 226 of the Constitution challenging the legality and propriety of the order of exemption on the principal ground that the provision contained in Section 13 of the Act enabling the Government to exempt particular buildings from the operation of the Act vested in them an unguided and arbitrary discretion which was unconstitutional as violative of the equal protection of the laws guaranteed by Article 14 of the Constitution. The Madras High Court held that Section 13 of the Madras Act of 1949 was constitutionally valid; but that the order of the Government granting exemption in the particular case was invalid as the reasons on which the exemption was granted were not germane to the purpose for which the power of exemption had been vested in the Government and quashed the order of exemption. Irani then went up in appeal before the Supreme Court. The appeal was dismissed and the decision of the Madras High Court was uphold.
10. In Irani's Case, AIR 1961 SC 1741: (1962) 2 SCR 169 (Supra), the Supreme Court, after pointing out that the object of the Madras Act which the Madras Legislature enacted, was for achieving three purposes: the regulation of letting, the control of rents and the prevention of unreasonable eviction of tenants from residential and non-residential buildings, proceeded to say-
'Though the enactment thus conferred these rights on tenants, it was possible that the statutory protection could either have caused great hardship to a landlord or was the subject of abuse by the tenant himself. It was not possible for the statute itself to contemplate every such contingency and make specific provision therefor in the enactment. It was for this reason that a power of exemption in general terms was conferred on the Stale. Government which, however, could be used not for the purpose of discriminating between tenant and tenant, but in order to further the policy and purpose of the Act which was, in the context of the present case, to prevent unreasonable eviction of tenants. The learned Judges of the High Court, therefore, held that while Section 13 of the Act was constitutionally valid, any individual order of exemption passed by the Government could be the subject of judicial review by the Courts for finding out whether (a) it was discriminatory so as to offend Article 14 of the Constitution, (b) the order was made on grounds which were germane or relevant to the policy and purpose of the Act, and (c) it was nut otherwise mala fide. We find ourselves in complete agreement with the approach and conclusion of the learned Judges of the High Court to the consideration of the question of the constitutional validity of Section 13 of the Act.'
The Supreme Court then observed that enough guidance was afforded by the preamble and operative provisions of the Madras Act for the exercise of the discretionary power vested in Government so as to render the impugned section, namely, Section 13, not open to attack as a denial of the equal protection of the laws.
11. The decision of the Supreme Court on the validity of Section 18 of the Madras Act is, in our opinion, decisive of the question of the validity of Section 3 (2) of the Act raised before us. It will be observed that Section 14 of the Madras Act of 1949 was in very general terms. The exemption under that provision was not restricted to a building or class of buildings belonging to a type of institutions or owners. It did not also put any restriction such as the one to be found in Section 3 (2) with regard to the whole of the income of the property for which exemption is sought being utilized for the purpose of the institution owning the building. The exemption under Section 13 was not again confined to a class of buildings only. It could bo granted in regard to any building also. Section 3 (2) of the local Act thus docs not permit that wide latitude of discretion which Section 13 of the Madras Act conferred on the Madras Government. The Madhya Pradesh Accommodation Control Act is also, like the Madras enactment, a legislation enacted For the regulation and control of lotting, control of rent, and for the prevention of unreasonable eviction of tenants from residential and non-residential accommodation. That being so, the observations made by the Supreme Court in Irani's Case, AIR 1961 SC 1731: (1962) 2 SCR 169 (supra), upholding the validity of Section 13 of the Madras Act of 1949 a fortiori apply here; and on the strength of those observations it must be held that Section 3 (2) of the Act is constitutionally valid.
12. The observations made by the Supreme Court in Irani's Court AIR 1961 SC 1731: (1962) 2 SCR 169 (supra), while upholding the view of the Madras High Court that the order passed by the Madras Government on 4th June, 1952 exempting the theatre from all the provisions of the Madras Act was not valid as it was based on reasons which were not germane to the purpose for which the power of exemption had been vested in the Government, no doubt, place the petitioners before us on a firm footing m regard to their contention that the order passed by the Government on 22nd May, 1963 exempting die building in the petitioners' occupation from all the provisions of the Act is invalid. While dealing with the validity of the order passed by the Madras Government on 4th June, 1952 the Supreme Court again emphasized the point that the entire basis for upholding the constitutional validity of Section 13 of the Act was that the discretion or the power conferred on the Government was not unguided, uncanalized or arbitrary, but that it had to be exercised in accordance with the policy and object of the enactment gatherable from the preamble as well as its operative provisions; and that the power of exemption had to be used not for the purpose of discriminating between tenant and tenant but in order to further the policy and purpose of the Act, namely, to prevent unreasonable eviction of tenants and control rent. It was held by the Supreme Court that if au individual order exempting certain premises was passed on grounds not germane to the purpose for which the power was conferred, then the order itself would be bad as being one discriminatory of the tenant occupying the premises and as violating his fundamental right to equal protection of the laws. As to the party on whom lay the responsibility of showing whether the order passed by the Government was bona fide or mala fide the Supreme Court said:--
'The order itself might on its face have shown that it conformed to this requirement, in which event it would have been for the party challenging tho validity of the order to establish to the satisfaction of the Court that it was mala fide or had been passed on grounds not contemplated by or extraneous to, the object and purpose of the enactment or the principles which should have governed the exercise of the power. For instance, if the exemption had been in favour of a particular class of buildings, say those belonging to charities--religious or secular--the classification would have been apparent in the very order of exemption. Where, however, the exemption granted is not of any class of buildings which would ex facio disclose a classification, but the exemption is of a specified building nwncd by A or in which B is a tenant, then prima facie it would be discriminatory and when the legality of tho order is challenged, its intra vires character could be sustained only by disclosing the reasons which led to the passing of the order.'
13. These observations show that in dealing with the challenge to the vires of an individual order under Section 3 (2) of the Act it is necessary to enquire into the question whether the grounds on which it was passed were germane to the purpose for which the power was conferred and whether the order made was for furthering the policy and purpose of the Act; and that if the order does not ex facie disclose the reasons and an exemption is granted to a specified building owned by an institution, then the Government must disclose the reasons which led to the passing of the order when its legality is challenged.
14. In the present case, the impugned order of the Government granting exemption does not state the grounds on which the exemption was granted. In the return filed by the State, also, there is no statement of any grounds which led to the making of the impugned order. As is clear from the return, the enquiry, which was held by the State after receiving the respondent No. 1's application for exemption, was confined only to the question whether the Vidyalaya was an institution fulfilling the condition laid down in Section 3 (2) of the Act. Even in the supplementary statement filed by the State in the course of the hearing of this petition, no reasons for granting the exemption are to be found from which it can be inferred that the exemption was granted to further the policy and purpose of the Act.
In the supplementary return of the State it has been stated that when the petitioners filed a representation after the exemption was granted, they were given a hearing and their contention that if the institution wanted to enhance its rental income, it could be achieved by granting exemption from the provisions of Chapter II of the Act, was considered; and the State Government came to the conclusion that the grant of such a limited exemption would be an empty formality. Assuming that this consideration was in the mind of the Government even at the time of the making of the impugned order, that could not have been regarded us a reason germane to the purpose for which the power of exemption was conferred by Section 3 (2) of the Act. It is clearly not possible to lay down a general rule enabling one to say whether this or that reason for granting exemption would or would not be germane to the purpose for which the power of exemption has been conferred. Each ease has to be decided on its own facts and circumstances and in accordance with the rule laid down by the Supreme Court iu Irani's Case, AIR 1961 SC 1731 : (1962) 2 SCR 169 (supra), that the reasons for exemption must be germane to the purpose for which the power has been conferred and must further the policy and object of the Act.
The observations of the Supreme Court in paragraphs 17, 18 and 19 of the majority judgment in Irani's Case indicate as to how the difficult problem of working out Hie provisions granting exemption from the operation of the Madras Act, or such as the one before us, to further the policy and purpose of the Act is to be solved. In Irani's Case, AIR 1961 SC 1731: (1962) 2 SCR 169, the Supreme Court considered the question of exemption granted therein in relation to the policy and purpose of the Madras Act, namely, the prevention of unreason able eviction of tenants. While dealing in paragraph 17 with the reasons given by the Madras Government for granting exemption and saying that they were all irrelevant, the Supreme Court, with reference to one of the grounds [ground No. (3)] given by the Madras Government, namely, that Chidambaram Chettiar was only an absentee lessee and that he had several other businesses in South India, said:--
'(19) We also agree with the learned Judges of the High Court that ground No. 3 is not germane for granting an exemption. As was pointed out, 'the important point to be considered by the Government was whether the appellant had not other theatres at which he could carry on the business which he was carrying on at the Gaiety theatre', and this they omitted to consider. The reason why the posse^ion of the tenant whose term had expired was afforded statutory protection was his inability to secure alternative accommodation in which either to reside in the case of residential buildings or to cany on the business which he was carrying on in the case of non-residential buildings. This was, therefore, a relevant matter which the Government had failed to take into account.'
15. It is plain from this observation that where the exemption intended to be granted is likely to result in the eviction of tenants, the relevant matter to be considered is the ability or inability of the tenant to secure alternative accommodation in which he can either reside if the accommodation la residential or cany on the business which he was carrying on in a non-residential building. Thus, exemption under Section 3 (2) of the Act cannot be granted for defeating the provisions of the Act. It can only be granted for furthering the policy and purpose of the Act, namely, the regulation and control of letting, control of rent, and prevention of unreasonable eviction of tenants. In other words, it can be granted for reasonable eviction of tenants, and reasonable, but not fanciful, fixation of rent. Again, it would be relevant and necessary to consider before granting an exemption under Section 3 (2) of the Act whether the object tor which the landlord-institution is seeking an exemption under Section 3 (2) of the Act cannot be achieved by resorting to appropriate proceedings permissible under the Act for the purpose.
In this case, it is clear that while granting the exemption the Government did not take into consideration any relevant matters, such as, whether alternative accommodation was available to the petitioners, whether the rent being paid by them was low or high, and whether the Vidyalaya did or did not make any attempt to secure the eviction of the petitioners or an enhancement of rent by taking appropriate proceedings under the Act. Shri Bhave, learned Government Advocate, suggested that the word 'may' used in Section 3 (2) of the. Act should be read as having the meaning of 'must' and that, therefore, for granting an exemption under that provision, all that was necessary for the Government to sec was whether the institution claiming an exemption satisfied the requirements of that provision. We are unable to accept this contention. There is nothing in Section 3 (2) of the Act to show that the word 'may' has been used as imposing an obligation on the Government to exempt the accommodation of every institution fulfilling the conditions laid down in that provision. It cannot, therefore, be held that the grant of exemption to the respondent No. 1 was founded on, grounds germane to the purpose for which the power under Section 8 (2) has been conferred, or that it was for furthering the policy and purpose of the Act.
16. Shri Sen, learned counsel appearing for the Vidyalaya said that the exemption was granted because the Vidyalaya desired to reconstruct the building so as to augment its rental income, and that this could not be done unless the accommodation was vacated by the petitioners. As is clear from the application, dated 5th March, 1962 made by the Vidyalaya to the Government, it was on this ground that the Vidyalaya sought an exemption from the provisions of the Act. The Government also did not base its decision to grant exemption to the Vidyalaya on this ground. If such a ground had been urged, by the Vidyalaya for the grant of exemption, then it would have been necessary for the Government to consider whether keeping iu view the provisions of Section 12(1)00 and Section 18 of the Act the grant of exemption from the provisions of the Act would be in (sic) of the policy and purpose of the Act.
17. For the foregoing reasons our conclusionis that the order, dated 22nd May, 1963 of theState Government exempting the building owned bythe respondent No. 1 from all the provisions of theAct is illegal and void. The order, dated 22nd May,1963 is, therefore, quashed by the issue of a writof certiorari. The petitioners shall have costs ofthis application from the respondent No. 1.Counsel's fee is fixed at Rs. 100. The outstandingamount of the security deposit shall be refunded tothe petitioners.