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Elliot Waud & Hill Pvt. Ltd. v/s Life Insurance Corporation & another

    Miscellaneous Petition No. 458 of 1978

    Decided On, 06 March 1981

    At, High Court of Judicature at Bombay

    By, THE HONOURABLE MR. JUSTICE N.K. PAREKH

    For the Petitioner: H.M. Seervai with F.H.J. Talyarkhan, i/b. Crawford Bayley & Co., Advocate. For the Respondent: Advocate General with R.L. Dalal, i/b. Little & Co., A.J. Rana with Mrs. Shashi A. Rana, J.J. Bhatt, Porus A. Mehta with V.C. Kotwal and A.M.M. Mohan, Advocates.



Judgment Text

N.K. PAREKH, J.


This is a petition filed by the petitioners (a) for a declaration that the provisions of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 do not apply to the premises of the petitioners, (b) for a writ prohibiting the respondents from taking any steps against the petitioners under the provisions of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 in respect of the premises of the petitioners, (c) and for such and further reliefs. The petition is resisted by the respondents.


2. The case of the petitioners is that they carry on business at 2, Lakshmi Building, Sir Pherozshah Mehta Road, Bombay. That the petitiners were the sub-tenants of one R.K. Dundas (Eastern) Private Limited. That the said R.K. Dundas (Eastern) Private Limited went into liquidation in or about 1962. That the assets of the said company, including the tenancy rights of the premises were purchased by the Hindustan Importing Company. That the petitioners became the sub-tenants of the Hindustan Importing Company.


3. The petitioners have stated that at all times, the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947, applied to these premises and hence, they were and are entitled to protection, both from eviction and increase of rent.


4. That the said building was the property of the insurance company, known as 'Laxmi Insurance Company'. On nationalisation, the building came to be vested in respondent No. 1.


5. That after the nationalisation of the Life Insurance Companies, the petitioners received a letter on or about the 10th of June, 1976 from the respondent No. 1, calling upon the petitioners to furnish all particulars with regard to the occupancy of the petitioners in respect of the said premises. By their letter dated 14th September, 1976, the petitioners furnished the said particulars.


6. That something in 1958, the Parliament enacted the Public Premises Act, 1958. In 1971, the Parliament repealed the said Act of 1958 and enacted the Public Premises (Eviction of Unauthorised Occupants) Act, 1971. The said Act was made applicable to the premises of statutory corporations and certain Government companies.


7. That in view of the provisions of the said Act, the 2nd respondent issued a notice dated 4th November, 1977, inter alia, contending that the petitioners were in unauthorised occupation of the premises and calling upon them to show cause as to why they should not be evicted therefrom. The petitioners replied to the said letter.


8. It is the petitioners' case that in view of the threats of the respondents they filed the present petition, inter alia, challenging the said Act and/or its provisions and for the reliefs mentioned hereinabove.


9. The respondents have denied the correctness of the several contentions of the petitioners and have maintained that the petitioners are entitled to no relief whatsoever.


10. It may here be added that some others have also filed petitions challenging the applicability of the provisions of this Act, in respect of the premises occupied by them, and since in all the petitions the challenge was and is the same viz., the legislative competency of Parliament to enact the said Act insofar as it applied to immoveable properties of the corporations or companies in the States of India, and hence it was felt that this matter was of considerable importance looking to the acute shortage of accommodation, it was agreed between Counsel, that such Counsel who wish to intervene in this matter may do so. In view of this, Mr. Porus Mehta took part in the arguments in this matter and so did Mr. Rana and Mr. J.J. Bhatt.


11. The petition raises the question about the validity of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 (hereinafter referred to as "the said Act") on 3 principal grounds (a) that Parliament has no legislative competence to enact the said Act insofar as it applies to immoveable properties of the corporation or companies in the States of India (b) that the said Act violates Article 14 of the Constitution of India and (c) that the said Act violates Article 19(1)(f) and (g) of the Constitution.


12. The question of legislative competence of Parliament is raised with regard to the said Act and its application to the immoveable properties of the Corporation and Companies in the State of India, on the ground that the subject of the legislation of the said Act, viz., the relationship of landlord and tenant to determine lease and eviction of tenants, etc., falls in Entry No. 18, List II (State List) and not in Entry 6, 7 and 13 of List III (Concurrent List) of the Seventh Schedule of the Constitution of India. It is not in dispute that all the States have enacted Rent Acts in the exercise of their legislative powers. Insofar as the Bombay Rents Hotels and Lodging House Rates (Control) Act, 1947 (hereinafter referred to as the Bombay Rent Act) is concerned, it is not in dispute that this was enacted with the Government of India Act, 1935, "(The G.I. Act") was in force. Hence, in considering the question of legislative competency, the scheme of the Government of India Act must be referred to.


13. The scheme for the distribution of legislative power adopted by the G.I. Act is contained in section 100. Section 100(1) conferred exclusive legislative power on the Federal Government to make laws in respect of matters List III (the Concurrent List) This power was conferred notwithstanding anything contained in sub-section (3) and subject to the provisions of section (1). Sub-section (3) conferred exclusive legislative power on Provincial Legislature to make laws in respect of matters in list II. Sub-section (4) conferred on the Federal Legislature the power to make laws with respect to matters in List II except for a province or any part thereof. Section 104 conferred on the Governor General a power to be exercised in discretion to put a subject not provided for in any of the 3 Lists either in the Federal or in the Provincial Lists. Section 107 provided for resolving any inconsistency between Federal and Provincial Laws.


14. This scheme has been adopted in the Constitution of India, save and except the residual power of legislation is conferred on Parliament under Article 248 and Entry 97, List I of the Seventh Schedule. Article 247 corresponds to section 100, Article 248 (residual power) corresponds to section 101 and Article 254 corresponds to section 107.


15. The relevant entries of the G.I. Act and the Constitution which require consideration in the present case are set out here under :---


THE GOVERNMENT OF INDIA ACT, 1935

LIST I :


ENTRY 2 : Naval, military and air force works, local self-Government in cantonment (areas not being cantonment areas of Indian State Troops) (the Constitution and powers within such areas of cantonment authorities) the regulation of house accommodation in such areas, and within British India, the delimitation of such areas.


ENTRY 10: Works, lands and buildings vested in, or in the possession of His Majesty for the purposes of the Federation (not being naval, military or air force works) but as regards property situate in a province, subject always to Provincial legislation, save in so far as Federal law otherwise provides, and, as regards property in a Federal State held by virtue of any lease or agreement with that State, subject to the terms of that lease or agreement.

LIST II:


ENTRY 8: Works lands and buildings vested in or in the possession of His Majesty for the purpose of the province.


ENTRY 21:

Land, that is to say, rights in or over land, land tenures, including the relation of landlord and tenant, and the collection rents transfer, alienation and devolution of agricultural land; land improvement and agricultural loans; colonization; courts of wards, encumered and attached estates, treasure trove.


LIST III:

ENTRY 4 :

Civil Procedure, including the law of limitation and all matters included in the Code of Civil Procedure at the date of the passing of this Act; the recovery in a Gover nor's Province or a Chief Commissioner's Province of claims in respect of taxes and other demands, including arrears of land revenue and sums recoverable as such, arising outside that Province.



ENTRY 7 :

Wills, intestacy, and succession, save as regards agricultural land.


ENTRY 8 :

Transfer of property other than agricultural land; registration of deeds and docu ments.


ENTRY 10 :

Contracts, including partnership, agency,

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contracts of carriage and other special forms of contract, but not including contracts relating to agricultural land.


THE CONSTITUTION OF INDIA

LIST I :


ENTRY 2 :

Naval, military and air forces; and other armed forces of the Union.



ENTRY 3 :

Delimitation of cantonment areas, local self-Government in such areas, the Con stitution and powers within such areas of cantonment authorities and the regula tion of house accommodation (including the control of rents in such areas).


ENTRY 32 :

Property of the Union and the revenue thereof, but as regards property situated in a State, subject to legislation by the State have in so far as Parliament by law otherwise provides.


ENTRY 34 :

Courts of wards for the estates of Rulers of Indian States.

LIST II :


ENTRY 18 : Land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents; transfer and alienation of agricultural loans, colonization.


ENTRY 22 :

Courts of wards subject to the provisions of Entry 34 of List I; encumbered and attached estates.


ENTRY 35 :

Works, lands and building vested in or in the possession of the State.


ENTRY 44 :

Tresure Trove.


LIST III :


ENTRY 6 : Transfer of property other than agricultural land; registration of deeds and documents.


ENTRY 7 :

Contracts, including partnership, agency, contracts of carriage, and other special forms of contracts, but not including contracts relating to agricultural land.

ENTRY 13 :

Civil Procedure, including all matters included in the Code of Civil Procedure at the commencement of the Constitution, limitation and arbitration.


16. Now, before dealing with the question of legislative competency, it is necessary to refer to the judgment of the Supreme Court in (Jain Ink Mfg. Co. v. L.I.C.)1, 1980(4) S.C.C. 435. That case related to premises in Delhi which is a Union Territory and the question arose therein was whether the enacted Act prevailed upon the Rent Act in force in the Union Territory of Delhi. Admittedly, both Acts were of the same legislature viz., the Parliament and the only limited question was which Act prevailed over the other. In that matter, it was held that the impugned Act was valid, but then that case was decided with reference to the properties situate in the Union territory of Delhi. That case did not decide the question insofar as the States are concerned. In other words, in Union Territories, Parliament's legislative competence to enact any law is not open to challenge because it has power to make laws under all the 3 lists.


17. The petitioners have accepted the position that Parliament is empowered to enact the impugned Act (a) for Union Territories and (b) also for "the property of the Union and revenue therefrom, subject as regards property situate in a State subject to legislation by the State, save insofar as Parliament by law otherwise provides" (Entry 32, List). What the petitioner shave contended is that the impugned law is a law which otherwise provides. That the Bombay Rent Act and the Rent Acts of various States exempt the properties of the Union from the operation of the Act. That the legislative competence of Parliament to enact the impugned law does not extend to premises belonging to companies as defined in section 3 of the Companies Act in which not less than 51% of the paid-up capital is held by the Central Government, and to any Corporation not being a company as defined in section 3 of the Act, established by or under the Central Act and owned or controlled by a Central Government, because the property of such a company or such a corporation is not the property of the Union, and is not covered by Entry 32, List I.


18. In considering the legislative competence, it would first be necessary to consider the import of the word 'land'. The meaning given to 'land' (law) in the following dictionaries is :


Random House Dictionary.---(a) Any part of the earth's surface which can be owned as property and everything annexed to it, whether by nature or by the hand of man; (b) any legal interest held in land.

Collins English Dictionary.---(a) Any tract or ground capable of being owned as property, together with any buildings on it, extending above and below the surface; (b) any hereditament, tenement or other interest; reality.


A New English Dictionary by Murray.---(8) A building divided into flats or tenements for different house-holds, each tenements being called a house.


Webster's Third International Dictionary.---4-B. Any ground, soil or earth whatsoever regarded as the subject of ownership (as meadows, pastures or woods) and everything annexed to it whether by nature (as trees, water) or by man (as building, fence) extending indefinitely vertically up-wards or downwards.


Hence, according to the dictionaries, the word 'land' must include building as a matter of ordinary meaning of 'land'. Bearing in mind the principal that in determining legislative competency, the widest meaning must be given to a word unless the meaning is cut-down by the provisions of the entry itself or by other provisions of the Constitution, it is clear that land includes buildings.


19. Then again, whilst the general clauses Act does not define land. It defines immoveable property as follows :


"(26) "immoveable property" shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth".


Here again, it will be seen that "land" include buildings (attached to the earth) and includes fixtures (what is fastened to the building) which is attached to the earth.


20. Thirdly, the basic scheme of our Constitution is the same as that of the Government of India Act and the provisions of the Constitution must be interpreted in the light of the Government of India Act. In the Government of India Act, the word 'land' includes Houses and Buildings by virtue of the Interpretation Act. This meaning of the word 'land' was known to the framers of the Constitution since the identical language is retained in Entry 18, List II of our Constitution, and it can now be concluded that Entry 18, List II bears the same meaning. It may here be added that Mr. Seervai, the learned Counsel for the petitioners argued that this must be so, because certain items from Entry 21, List II of the Government of India Act were removed from Entry 18, List II of our Constitution and put as separate entries, namely, Entry 22, List II (Court of Wards subject to the provisions of Entry 34 of List I; encumbered and attached estates) and Entry 44 (Treasure Trove) as also in Entry 34, List I. That when the powers under an entry were to be altered, the Framers of the Constitution expressly did so, as pointed out in (Sundarramier's case)2, 1958 S.C.R. 1478-79). This then is the interpretation of the word 'land' by the legislature.


21. It is now necessary to see the judicial construction insofar as this word is concerned. In this context, it would be necessary to look at the decision of the Privy Council in (Meghraj v. Alla Rakhia)3, 74 Indian Appeals, page 12. In that case, it was contended that having regard to the several matters specifically mentioned in Entry 21, List 11 of the Government of India Act, a narrower meaning should be given to land which must be confined to agricultural land. It was submitted by Upjohn K.C. appearing for the appellant therein that "if it be held that the opening words of Item 21 include both agricultural and non-agricultural land, there is no more in the case". The Privy Council rejected the submission that land should be limited to agricultural land and held that the word 'land' was sufficient in itself to include every form of land whether agricultural or not. The Privy Council held that in the words "that is to say, rights in or over land", "rights in land" must include the general rights like full ownership or leaseholds. The subsequent words in Entry 21 were not words of limitation but of explanation or illustration and the words "relation of landlord and tenant" and "collection of rent" were appropriate to lands which were not agricultural, equally with agricultural land. Hence, the words "non-agricultural land" must mean "land used for purposes other than those of agriculture, namely, land with buildings upon it. This judgment has been approved by the Supreme Court in two other cases as discussed hereinafter.


22. In support of the contention that the word 'land' included, both agricultural and non-agricultural land, the petitiners relied upon the case of (Atma Ram v. State of Punjab)4, (1959) Supp. 1 S.C.R. 748. The impugned law in that case was the Punjab Security of Land Tenures Act of 1953. That law was enacted after the Constitution had come into force. In that case, the Supreme Court referred to the decision of the Privy Council in Meghraj v. Alla Rakhia (supra) and quoted with approval a passage from that judgment.


23. It was urged on behalf of the respondents that the said judgment was of no relevance as it related to agricultural land only and, therefore, it was not contrary to respondents' argument that land in Entry 18, List II should be limited to agricultural land.


24. In the context of this argument, it would be necessary to look at the decision of the Supreme Court in (Maneklal Chhottalal v. M.C. Makwana)5, A.I.R. 1967 S.C. 1373, wherein the Supreme Court reproduced the passage of the judgment in the Privy Council which had been quoted in Atmaram's case. The law there impugned was the Bombay Town Planning Act, 1954 and that Act applied not only to the agricultural land but to non-agricultural land also, i.e. to say land with buildings thereon.


25. What is more is that the following sections of the Bombay Town Planning Act clearly indicate that the Act dealt with lands together with buildings thereon, section 2(3) (definition of "land"); section 2(6) (definition of "plot"), section 18(2)(a) (the allotment of reservation of land for roads, open spaces, gardens, recreations grounds, schools, markets, green belts and dairies, transport facilities and public purposes of all kinds); section 21(1) (A town planning scheme may be made in accordance with the provisions of this Act in respect of any land which is (i) in course of development, (ii) likely to be used for building purposes or (iii) already built upon); section 23 (which provides for contents of the draft scheme); section 50, section 51, section 52, section 54 (summary eviction) and section 68. Hence, the case of Maneklal Chhottalal clearly deal with an Act which related not only to agricultural land but also to lands and buildings. In the said case, the Court (after referring to the passage from Alla Rakhaia' case), submitted up the results in paragraph 41 by saying that "various aspects dealt with in the Act in question can be considered to deal with 'land' and accordingly, the competency of the State Legislature to enact the measure in question can be found in Entry No. 18. This, to my mind, is a clear finding.


26. It may here be added that section 54 of the Town Planning Act dealt with summary eviction. The respondents contended that the Court had held not only that 'land' fell within Entry 18, List II of the Constitution but it also fall under Entry 20, List III.


27. Now, the fact that a law can fall also under Entry 20, List II does not militate against the express finding after a survey of the Act that the law related to land and the State Legislature had competence to enact it under Entry 18, List II.


28. The sum total of this discussion is that not only the Privy Council but also our Supreme Court has held that "land" under Entry 21, List II and under Entry 18, List III includes both lands and buildings.


29. Now, the petitioners contend that the Bombay Rent Act was enacted in the exercise of the legislative power under the "Entry 21, List II, Seventh Schedule of the Government of India Act". That it has been so held by two Division Benches of this Court, viz., (A.C. Patel v. Vishwanath Chadda)6, 55 Bom.L.R. p. 941 and (Darukhanawala v. Khemchand)7, 56 Bom.L.R. p. 105. I shall, hence, deal with these two cases.


30. In the case of A.C. Patel v. Vishwanath Chadda, it was held that (a) that the Bombay Rent Act was enacted in the exercise of the legislative power conferred by Entry 21, viz., land, that the English Interpretation Act, 1889 applied to the interpretation of the G.I. Act and section 3 of the Interpretation Act provided that the expression "land" included messages, tenements and hereditaments, houses and buildings of any tenure. Chagla, C.J., want on to hold that the Bombay Rent Act dealt with the relationship of landlord and tenant and the recovery of rent and fell within Entry 21, (b) it was also held that Entry 2, List I, Schedule 7 of the G.I. Act which referred to the control of house accommodation did not regulate the relation to landlord and tenant in Cantonment areas but only applied to the requisition or acquisition of property in cantonment areas, for, house accommodation would remain the same even if rents and evictions were controlled.


31. In Darukhanawala's case Chagla, C.J. and Shah, J. had to deal with the same question as in the case of A.C. Patel's (referred to above) but then by that time, the Constitution had come into force and Entry 3, List I contained the additional words "including control of rent". It was contended that having regard to the addition of these words, the decision in A.C. Patel's case could no longer apply and the extension of the Rent Act to the Cantonment area was void because Parliament had exclusive legislative power under Entry 2, List I. This contention was rejected.


32. Mr. Seervai, the learned Counsel for the petitioners, argued that as two Division Benches of this Court had decided that the Rent Act insofar as it applies to the State concerned is enacted under the entry 'land' and since the cases have not been overruled on that point, they were still good law and binding on a single Judge.


33. The respondent, on the other hand, contended that the decisions in these two cases were expressly overruled by the decision in (Indu Bhushan v. Ramasundari)8, A.I.R. 1970 S.C. 228. The respondents contended that in that case, the Supreme Court considered the scope of Entry 3, List I and Entries 6 and 7 of List III, vis-a-vis Entry 18 of List II. That after considering all the entries, the Supreme Court in the said judgment, at page 235 observed as follows :---


"We have felt considerable doubt whether the power of legislating on relationship between landlord and tenant in respect of house accommodation or buildings would appropriately fall in Entry 21 of List II of the Seventh Schedule to the Government of India Act, or in the corresponding Entry 18 of List II of the Seventh Schedule to the Constitution. These entries permit legislation in respect of land and explain the scope by equating it with rights in or over land, land tenures, including the relation of landlord and tenant and the collection of rents. It is to be noted that the relation of landlord and tenant is mentioned as being included in land tenures and the expression "land tenures" would not, in our opinion, appropriately cover tenancy of buildings or of house accommodation. That expression is only used with reference to relationship between landlord and tenant in respect of vacant lands. In fact, leases in respect of non-agricultural property and dealt with in the Transfer of Property Act and would much more appropriately fall wtihin the scope of Entry 8 of List III in the Seventh Schedule to the Government of India Act read with Entry 10 in the same list. Leases and all rights governed by leases, including the termination of leads and eviction from property leased, would be covered by the field of transfer of property and contract relating thereto. However, it is not necessary for us to express any definite opinion in this case on this point because of our view that the relationship of landlord and tenant in respect of house accommodation situated in cantonment areas is clearly covered by the Entries in List I".

That again, in the same judgment, at paragraph 18 at page 236, the Supreme Court observed as follows :---


"On the other hand, the Rajasthan High Court in (Nawal Mal v. Nathu Lal)9, I.L.R. 1961(II) Raj. 421 : A.I.R. 1962, Raj. 190, held that the power of the State legislature in respect of landlord and tenant of buildings is to be found in Entries 6, 7 and 13 of the List III of the Seventh Schedule to the Constitution and not in Entry 18 of List II, and that the power was circumscribed by the exclusive power of Parliament to legislate on the same subject under Entry 8 of List I. That is also the view which the Calcutta High Court has taken in the judgment in appeal before us. We think that the decision given by the Calcutta High Court is correct and must be upheld".


34. The respondent contended that the Supreme Court in the said case has approved the view of the Rajasthan High Court reported in A.I.R. 1962 S.C. 193, viz., that the power of the legislature to legislation in respect of landlord and tenant of non-agricultural buildings was to be found in Entries 6, 7 and 13 of List II of the Seventh Schedule of the Constitution and not in Entry 18 of List II. That the Rajasthan High Court had, in that said case, taken the view following their earlier judgment in the case of A.I.R. 1954 Raj. 252, viz,. Legislation with respect to landlord and tenant of building in urban areas falls in Entries 6, 7 and 13 of List III of the Seventh Schedule of the Constitution and not in Entry 18 of List II.


35. The respondent contended that the Supreme Court had hence expressly laid down that the subject of landlord and tenant other than agricultural tenancies fell or falls within Entries 6, 7 and 13 of List III (Concurrent List) and not Entry 18, List II. That the Supreme Court had also clarified the power to legislative with regard to relation of landlord and tenant in cantonment raised clearly fell or falls within Entry 3, List I of the Constitution and that it was an exclusive power and that the State Legislature had no power under Entry 18, List II or under Entries 6, 7 and 13 of List III. The respondents contended that there was no power much less exclusive power in the state to legislate with regard to non-agricultural property in relation to landlord and tenant under Entry 18, List II.


36. Now, the word 'overrule' is ambiguous with reference to a case which decides two or more distinct and separate points. In the two cases of the Division Bench of this High Court, referred to above, Chagla, C.J., held as follows :---


"(a) That the Bombay Rent Act was enacted under Entry 21, List II, Schedule 7 of the G.I. Act, and under entry "land" an Entry 18, List II, Schedule 7 of our Constitution.

(b) That Entry 2, List I of the G.I. Act and Entry 3 List I of our Constitution did not confer upon Parliament the power to legislate in cantonment areas so as to control rents and prevent eviction offenants."


The Supreme Court had clearly overruled the decision of the Bombay High Court in respect of the findings in (b) above, the Supreme Court holding that even without the additions of the words "including the control of rents", Parliament had exclusive power under Entry 2, List I, Government of India Act and Entry 3, List I of our Constitution. However, as the question raised in (a) above is concerned, the Supreme Court expressly observed :


"However, it is not necessary for us to express any definite opinion in this case on this point because of our view that the relation of landlord and tenant in respect of house accommodation situate in cantonment areas is clearly covered by the entries in List I".


After expressing these doubts, the Court refused to lay down a rule of law in question, whether the Bombay Rent Act was enacted in exercise of legislative power relating to land albeit because the Court was satisfied that as regards the cantonment areas, Parliament had exclusive power to tenant law relating to landlord and tenant, the controls of rents, and eviction under Entry 2, List I of the Government of India Act and Entry 3, List I of our Constitution.


37. Before discussing Indu Bhushan's case further, I shall deal with the decisions of the Calcutta High Court in A.I.R. 1967 Cal. 355, and the Rajasthan High Court in A.I.R. 1962 Raj. 190 since much stress has been laid on the same.


38. In (Rama Sundari v. Indu Bhushan)10, A.I.R. 1967 Cal. 355 what was held was as follows :


"(a) that the West Bengal Premises Tenancy Act, 1956 which was a State Law could not be made applicable to cantonment area nor could it be extended to cantonment area by the State for, whatever may, have been the position under the Government of India Act, 1935, the addition of the words "control of rent" in Entry 3, List I of our Constitution showed clearly that Parliament alone had power to legislate in a cantonment area for control of rents of eviction of tenants.

(b) The Central Government, had in fact, by Notification extended such a law to cantonment area, the only way in which that can be alone.

(c) The Calcutta High Court considered the Bombay decisions and held that there was a "basic differences" between Entry 2, List I of the G.I. Act and Entry 3, List I of our Constitution, because of the addition of the words "control of rent".


(d) As to the decision of the Rajasthan High Court in A.I.R. 1962 Raj. 190, the Calcutta High Court explained that in that case the question about List III arose because in the Rajasthan case it was found that a Central Act, namely, the Delhi and Ajmer Rent Control Act, 1952 was in force in the Nazindabad Cantonment area and a question arose whether in view of the Central Act, the state Act was valid.

(e) In the Calcutta case it is expressly stated "in the present case before us the learned Munsiff has rightly held that there was no question of the matter falling under the Concurrent List. This had not been disputed before us by either party ........ For the instant case were are only concerned with the competition between Entry 2 in the Union List and Entry 18 in the state law".


In the result, the Court declared that the notification whereby the State Government had extended the provisions of the West Bengal Premises Tenancy Act, 1956 to the Barrakpore Cantonment was ultra vires and must be held to be void. The reference by the Munsiff was answered accordingly. However, it is apparent that no question arose in the Calcutta High Court about any conflict between the power of the State under Entry 18, List II and one or more entries in List III. When, therefore, the Calcutta case was approved by the Supreme Court, the said approval could only relate to the proposition that at any rate, after the addition of the words "Control of rents" in Entry 3, as compared with List I of the Union List and Entry 2 of the Federal List in the Government of India Act, Parliament alone had power to legislate in relation to landlord and tenant in a cantonment area.


39. Turning next to the decision in Nawal Mal v. Nathu Mal, A.I.R. 1962 Raj. 190, it may be stated that in that case two questions were referred to the Division Bench by a Single Judge of the said High Court. The first question was whether Parliament, by virtue of Article 246 read with Entry 3, List I, Schedule 7 had the power so far as cantonment area was concerned to extent the State Act to the cantonment area. The second question arose from the fact (explained in the Calcutta Judgment) that there was a competition between a Central Law and a State law in respect of rent control. In paragraph 5 of the judgment, it has been observed as follows :---


"The central question which emerge for decision, these circumstances, is : what is the true import and scope of Entry No. 3 of List I of the 7th Schedule, and whether a law relating to control of rents in a cantonment area even between private landlords and tenants falls within the scope of this Act. Entry No. 3 of List I of the 7th Schedule read as follows" : (A.I.R. Raj. 1962 at Raj. 192).

The Division Bench referred to the two Bombay judgments and to a Nagpur judgment and held that :


"........... whatever might have been the correct State of law under the corresponding entry in List I of the 7th Schedule of the Government of India Act, 1935, it is difficult to hold, except, by a certain straining of the language, that a law pertaining to the control of rents in cantonment areas does not squarely fall within the ambit of Entry 3 of List I of the Seventh Schedule under the Constitution (ibid p. 194), para 11".


As to question whether the Rent Control Act of the State were enacted in the exercise of the legislative power relating to land, the Court referred to the judgment of the Rajasthan High Court in (Milapchand's)11, case A.I.R. 1954 Raj. 252. In other words, for the purpose of answering the reference, the Court did not to into the merits of the Bombay view which the Rajasthan High Court had rejected in its earlier judgment but merely adopted the Rajasthan judgment. The first question was answered by showing that Parliament alone had power to make a law in respect of cantonment area or to extent a state law to a cantonment area to regulate house accommodation control of rents and eviction. As regards the second question, viz., competition between entries in List II and List III, the Court held that it is unnecessary to answer that question.


40. Hence, what comes about is that the question decided in Rajasthan case was that Parliament had and the State legislature had not the power to enact a law relating to the control of rent and eviction of tenants in cantonment area, and if the Rajasthan case is approved by the Supreme Court, it can only be on the matter which it actually decided.


41. To hark back to Indu Bhushan's case (A.I.R. 1970 Page 228), (in appeal from the judgment of the Calcutta High Court) and in Rama Sundari v. Indu Bhushan, A.I.R. 1967. Cal. 355 it may be stated that the contention of the appellant in that case was that the High Court erred in holding that the field of legislation covered by the local Act was for regulation of housing accommodation in Entry 3, List I. The appellant's contention on Entry 3, List I was that Parliament could legislate under Entry 3, only to the extent that house accommodation was needed for military purposes and lands were required for requisitioning or otherwise, accommodation for such purpose. The question of the State's legislative power to enact the Rent Act for areas in the State other than the cantonment area was not raised. The Supreme Court rejected the narrow contention suggested by the appellant. The argument in the absence of the word "control of rents" in Entry 2, List I of the G.I. Act showed that the control of rents was not included, was rejected and it was held that the control of house accommodation could not be made effective without regulation of rents and preventing eviction of tenants. The concluding part of paragraph 9 (in the said case) harmonizes with the express decision of the Court not to decide the question whether the control of rents and eviction of tenants fell under List II or List III. The Court went on to observe as follows :


"Of course, it has to be remembered that this power reserved for Parliament is to be exercised in respect of house accommodation situated in cantonment areas only and not other areas the legislative power in respect of which is governed by entries either in List II or in List III".


From what has been stated above and the express observations of the Court, it is clear that the Court did not express any definite opinion in the case on the point, viz., the relationship of landlord and tenant, and it would be wholly inconsistent to read paragraph 13 as deciding that question "by a side wind" by approving the Rajasthan and the Calcutta decisions. Therefore, the following passage in paragraph 13 requires to be interpreted consistently with what the Court had side earlier :

"On the other hand, the Rajasthan High Court in Nawal Mal v. Nathu Lal, A.I.R. 1962 Raj. 190 held that the power of the State legislature to legislate in respect of landlord and tenant of buildings is to be found in Entries 6, 7, and 13 of the List III of the Seventh Schedule of the Constitution and not in Entry 18 of List II, and that power was circumscribed by the exclusive power of Parliament to legislate on the same subject under Entry 3 of List I. That is also the view which the Calcutta High Court has taken in the judgment appeal before us. We think that the decision given by the Calcutta High Court is correct and must be upheld".


The expression "that is also the view of the Calcutta High Court" shows that the approval of the decision of the Rajasthan High Court related to that part of its decision, which held that the provision to legislate on the relation of landlord and tenant was to be found in Entry 3, List I. As that was the view of the judgment of the Calcutta High Court under appeal, the Supreme Court said "we think that the decision given by the Calcutta High Court is correct and must be upheld".


42. The Supreme Court did not decide the question that the Rent Acts of various States were enact under Entry 'land' in the Government of India Act (Entry 21) or in our Constitution (Entry 18) because not only would it have necessitated an inquiry in the history of the law of transfer of property in India but it would have involved a consideration of Megh Rai v. Alla Rakhia, 74 I.A. 12 and the decisions of the Supreme Court in Atmaram's case, 1959 Suppl. 1 S.C. Reports 748, 756 and Maneklal Chhotalal's case, A.I.R. 1967 S.C. 1373, 1381, more particularly when those decisions directly laid down the law of interpretation on the entry alone.


43. Mr. Seervai, the learned Counsel for the petitioners, urged that the Supreme Court has expressed doubts and expressly stated that it was not necessary for the Court "to express any definite opinion on this point because of our view that the relationship of landlord and the tenant in respect of house accommodation situated in cantonment areas is clearly covered by entries in List I" A.I.R. 1970 S.C. 235, and that the doubts would have dispelled if the Court had found it necessary to decide the following questions :


(a) Since the English Interpretation Act, 1889, applied to the G.I. Act the definition of "land" applied to Entry 21, List I, Schedule 7 and that definition would have shown that the view of the Supreme Court that land tenure would not appropriately cover tenancy of buildings or house accommodation was contrary to section 3 of the Interpretation Act which expressly provides that "land" includes, inter alia "houses and buildings" of any tenure". Mr. Seervai invited attention to paragraphs 1 and 2 (pp. 1 and 2) of Woodfall, Landlord and Tenant, 27th edition (27th edition paragraphs 1 and 2), pages 1 and 2) which, he submitted made it clear that the relation of landlord and tenant arises from a tenure; that it was and is essential for establishing the relation of landlord and tenant that there should be a demise and the relationship could and can, therefore, exist in respect of land, including in the word "land" corporeal hereditamens such as buildings; (pages 1 and 2).

(b) Secondly, the Supreme Court's observation that leases of non-agricultural property are dealt with in the Transfer of Property Act would much more appropriately fall within Entry 10, List III read with Entry 7 not only run counter to the Privy Council and Supreme Court decisions but are in direct conflict with the provisions of the Transfer of Property Act, 1882, which was enacted at a time when there was no division of legislation powers between the Federation and the Provinces, and British India had a unitary from a Government. Section 106 of the Transfer of Property Act provides that in the absence of contract or local law or usage "a lease of immoveable property for agricultural or manufacturing purposes should be deemed to be a lease from year to year ..... terminable either on the part of the leassor or lessee by six month's notice ............. section 117 which exempts agricultural leases from the provisions of the chapter on leases itself show that agricultural leases without otherwise fall within the chapter. An express power is conferred on local (State) Governments to apply all or any of the provisions of the chapter on leases to leases of agricultural land".


44. Mr. Seervai also urged that where the Supreme Court did not decide a question and lay down the law, but merely expressed doubt about a particular question, it was and is permissible to show that the doubts are unforunded if the matter directly arises before a Court. In support of this contention Mr. Seervai relied upon the case of (Mohandas v. Sattanathan)12, 56 Bom.L.R. 1956 decided by Chagla, C.J.


45. The respondents then urged that the two Bombay decisions, viz., A.C. Patel v. Vishwanath Chhada, 55 Bom.L.R. 941 and Darukhanawala v. Khemchand, 56 Bom.L.R. 105 stood overruled by the Supreme Court, by reason of the decision in the case of (Hari Singh v. Military Estate Officer, Delhi)13, A.I.R. 1972 S.C. 2205. Now, in that case what was argued was that Parliament could not retrospectively validate a law which had been struck down by the Supreme Court for violating Article 14. In the said case, the Supreme Court observed as follows :---


"The Legislature had legislative competence to enact the 1971 Act. It means that it could legislate on the subject of providing a speedy procedure for eviction of persons in unauthorised occupation of public premises. The Legislature had power to pass laws with retrospective operation".


There was clearly no question of legislative competence with arose or was argued. The Supreme Court was not asked to determine the Rents Act enacted by various States fell under Entry 18 of List II or otherwise. The limited question was whether there was a power to validate the Act retrospectively and it was not in dispute that for any Union Territory, the Parliament had power to legislate in respect of matters in List I, II and III. The said decision does not, hence, assist the respondents.


46. The respondents then relied upon a decision in (V. Dhanapal Chettiar v. Yesodai Ammal)14, A.I.R. 1979 S.C. 1745. The respondents urged that in that case, the Supreme Court dealt with the question of Rent Act and the Transfer of Property Act and in paragraph 5 or the judgment, observed as follows :---


"Under the Transfer of Property Act the subject of "leases of Immoveable Property" is dealt with in Chapter V.S. 105 defines the lease, the lessor, the leasee and the rent. Purely as a matter of contract, a lease comes into existence under the Transfer of Property Act. But in all social legislation meant for the protection of the needy, not necessarily the so called weaker section of the society is as commonly and popularly called, there is appreciable in road on the freedom of contract and a person becomes a tenant of a landlord even against his wishes on the allotment of a particular premises to him by the authority concerned. Under section 107 of the Transfer of Property Act a lease of immoveable Property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument. None of the State Rent Act has abrogated or affected this provision. Section 108 deals with the rights and liabilities of lessors and lessees. Many State Rents Acts have brought about considerable changes in the rights and liabilities of a lessor and a lessee, largely in favour of the latter, although not wholly. The topic of transfer of Property other than agricultural land is covered by Entry 6 of List III in the Seventh Schedule to the Constitution. The subject being in the concurrent list, may State Rent Acts have by necessary implication and many of them by starting certain provisions with a non obstante clause have done away with the law engrafted in section 108 of the Transfer of Property Act except in regard to any matter which is not provided for in the State Act either expressly or by necessary implication."


That in view of this, the contention of the petitioners could not survive.


47. In dealing with this, Mr. Seervai, the learned Counsel for the petitioners, urged that the only question which was decided by a larger Bench of 7 Judges of the Supreme Court related to the question whether in respect of properties governed by the Rent Act it was necessary to determine the tenancy of the tenant by a notice as required by section 106 of the Transfer of Property Act. No question arose in that case, and none was argued and discussed, as to whether the Rent Act was enacted under the exclusive legislative power of the State under Entry 18, List II, Schedule 7, or whether it was enacted in the exercise of the concurrent legislative powers of the state under Entries 6 and 7 of the concurrent list. The larger bench was constitued because there was a conflict of views between various High Court and also in the judgments of the Supreme Court itself. That one view was that a notice of termination under section 106 of the Transfer of Property Act was necessary; the other that it was not. That the respondent had relied upon the aforesaid passage to show that the Supreme Court held that Rent Act fell in entries in List III. That it was clear that the Supreme Court was merely considering two laws, one the Rent Acts and the other the Transfer of Property Act and it merely stated the fact that the Rent Acts had made encroachments on the provisions of the Transfer of Property Act by preventing eviction even if notice terminating tenancy had been given. That no question arose before the Court whether the Rent Acts were enacted in the power of the State Legislature under Entry 18, List II and the encroachments were the results of the exercise of the State Legislature under Entry 18, List II or in the exercise of their concurrent legislative power under entries in List III. That since the Rent Acts did not apply to all house accommodation because Union and State Government's property and property belonging to local authorities is exempted from their provisions, the provisions of the Transfer of Property Act relating to leases would operate in respect of the premises not covered by the Rent Act. That since no question arose of the legislative power under which the Rent Acts were enacted, the Supreme Court could not lay down any law on the subject that question never called for a decision.


48. Mr. Seervai further argued that even if the Rent Act were enacted under Entry 18, List II, the question whether a notice under section 106 terminating the tenancy was necessary or unnecessary would still arise. All that the Supreme Court held was that having regard to the fact that even by terminating the tenancy the landlord could not recover possession of the premises because of the Rent Acts, there was no need for a notice under section 106 which would be an empty or an idle formality. Mr. Seervai submitted that the said case did not touch the question of legislative powers of the State under Entry 18, List II. Mr. Seervai's submission is in order and I accept the same.


49. The respondents next relied upon the case of (Jaisingh Jairam Tyagi v. Maman Chand)15, A.I.R. 1980 S.C. 1201, wherein a reference to Indu Bhushan's case was made and Counsel for the respondents particularly relied on the following passage :


"On the other hand, the High Courts of Calcutta and Rajasthan held that the power of State Legislature to legislate in respect of landlord and tenant of buildings was to be found in Entry 18 of List II, but in Entries 6, 7 and 13 of List III of the 7th Schedule to the Constitution and that the same was circumscribed by the exclusive power of Parliament to legislate on the same subject to Entry 3 of List I. The view expressed by the Calcutta and Rajasthan High Court was accepted as correct by this Court in Indu Bhushan v. Ramasundari Devi."

The respondents urged that this must also nullify the petitioner's contention.


50. Mr. Seervai urged that the case in question related to the situation created by the decision in Indu Bhushan's case in which the Supreme Court held that the Rent Act of the State Legislature did not extend to Cantonment areas because the power to control house accommodation, rents and eviction vested exclusively in Parliament under Entry 2, List I of the Government of India Act and Entry 3, List I of our Constitution. That although Parliament had passed an Act in 1957 conferring power on the Executive to extend the operation of State Rent Control Acts to Cantonment areas, the Union Government had not taken action because of the consistent view of the Bombay High Court that the Rent Control Act extended to cantonment areas. That after setting out the complicated history of the attempts to extent the Rent Control Acts to cantonment areas, the Supreme Court observed that by the cantonment (Extension of Rent Control Laws) Act, 1957, section 3 amended by Act 23 of 1972, the newly added section 3(4) of the Act of 1972 retrospectively validated decrees and orders passed before the Amending Act. That the question for the consideration of the Court was whether the decrees and judgment could be retrospectively validated by the Amending Act of 1972. That Indu Bhushan's case was referred to in paragraph 2 of the judgment (at page 1202) and its effects was correctly set out in that paragraph by saying that---


"This Court held that Parliament alone had, and the State Legislature did not have the necessary competence to make a law in regard to the regulation of house accommodation in cantonment area".

That the contentions of the appellants were set out in paragraph No. 2. That the first objection was that subsequent to the compromise decree that was a fresh agreement of lease between the landlord and himself, an allegation that the landlord denied. The second objection was that the provisions of the Amending Act of 1972 were not wide enough to save the decrees. The third objection was that the decision in the Miscellaneous Application No. 597 of 1970 holding the decree to be a nullity operated as res judicata. The first objection was left open by the Court and only the second and third objections survived. These objections did not require any question to be decided about the legislative entry under which various Rents Acts of various States were enacted. That the Court in considering the validation of the decrees by way of history, referred to the conflicting views taken by Courts before Indu Bhushan's case and observed that---


"The view expressed by the Calcutta and Rajasthan High Courts was accepted as correct by this Court in Indu Bhushan's v. Ram Sundari".

That this was obviously a reference to paragraph 13 in Indu Bhushan's case, A.I.R. 1970 S.C. 228. That the Court merely stated what is contained in paragraph 13 in the following words :


"On the other hand the High Courts of Calcutta and Rajasthan held that the power of the State Legislature to legislate in respect of landlord and tenant of buildings was to be found not in Entry 18 and List II but in Entries 6, 7 and 13 of List III of Seventh Schedule to the Constitution and that such power was circumscribed by the exclusive power of Parliament to legislate on the same subject under Entry 3 of List I. The view expressed by the Calcutta and Rajasthan High Courts was accepted as correct by this Court in Indu Bhushan v. Rama Sundari Devi".


That the said passage referred to paragraph 13 of the judgment in Indu Bhushan's case, and as submitted by him in the Calcutta case there was no question of entries in List III, and that in the Rajasthan case though the question was raised in the order of reference to a Division Bench, it was found unnecessary to answer to because of the view of the High Court that Parliament had and has exclusive power under Entry 3 List I to legislate in respect of house accommodation, control of rents and eviction, and the statement of objects and reasons for the Act of 1957 expressly so stated.


51. Mr. Seervai urged that Indu Bhushan's case made it essential for the union to actively provide for the extension of the State Rent Acts to cantonments. That this was so done by a notification but a notification could not have retrospective effect. There is no law laid down by an Amending Act. That the question of the legislative power under the Rent Acts that were passed by various States was not raised and argued and did not call for any decision. That the Supreme Court was not called upon to decide on the effect of Indu Bhushan's case except what the Court actually decided, namely, that Parliament had and the State Legislature did not have the power to control house accommodation, rents and eviction of tenants in cantonment areas. That this did not decide what the Supreme Court left open. I accept Mr. Seervai's submission on this aspect.


52. In meeting the challenge of legislative competency canvassed by the petitioners the respondents next relied upon an unreported judgment of a Division Bench of this High Court (Deshpande and Gadgil, JJ.) in (Special Civil Application No. 2564 of 1974, and connected cases delivered on 18-2-1978)16. The respondent submitted that this judgment had overruled the judgment of our Division Benches in A.C. Patel's case and in Darukhanawala's case delivered by Chagla, C.J. and hence those two judgments were not longer valid. The respondents particularly relied upon the following observations in the said unreported judgment :


"The house in dispute in this case as also the houses in other connected cases are all situated in the cantonment areas. Power to legislate delimination of cantonment areas and regulating of house accommodations therein vest in the Parliament under Entry 3, List I of the 7th of Schedule to the Constitution, while legislative power in regard to (1) relationship between landlord and tenant as to the agricultural and (2) transfer of non-agricultural properties vests in the State Legislature respectively under Entry 18 List II and Entry 6, List III. Doubts were therefore entertained if the State Legislations as to the control of rent and eviction, hereinafter referred to as the State Rent Act, such as the Rent Act of Bombay, would be applicable to houses in cantonment areas at all. In the case of A.C. Patel v. Vishwanath, A.I.R. 1954, Bombay 204, this Court held that it would. Entry 18 in List II relied on as a source of the legislative power".

Counsel for the respondents urged that the said observations were made by the Division Bench of the Bombay High Court in the judgment after noting fully well the implications of the Bombay judgment in A.C. Patel. That the Division Bench of the Bombay High Court had considered the decision of the Bombay High Court in A.C. Patel's case as overruled by the Supreme Court in Inbhushan's case.


53. In dealing with this aspect of the matter, Mr. Seervai, the learned Counsel for the petitioners, contended that the judgment shows that the matter was referred to a Division Bench because of conflict of views between Judges of this High Court. That the question for consideration of the Division Bench is set out in paragraph 1 of the judgment of Deshpande, J. (as he then was) which reads as follows :---

"This case and the group of connected case is referred to this Division Bench. It raises an important question as to the true interpretation of section 3(4) of the Cantonments (Extension of Rent Control Laws) Act being Act No. 46 of 1957 (hereinafter referred to as "the Central Act"), as amended by Amended Act No. 22 of 1972. The question is whether fresh notification under amended section 3 of the Central Act extending the Act retrospectively, is necessary to validate the decree, etc. passed before the prospective extension of the Rent Act under earlier notification dated 27-2-1979".


That the facts which raised the question to be decided by the Division Bench were that the petitioner who was the landlord of a house in the cantonment area of Kirkee filed a suit for eviction under the Bombay Rent Act against the respondent and the suit was decreed under the belief that the Bombay Rent Act applied to Kirkee. In paragraph 3 of the judgment, Deshpande, J., (as he then was) observed as follows :

"The house in dispute in this case as also the houses in other connected case are all situated in Cantonment areas. Power to legislate delimitation of cantonment areas, and regulating of house accommodation therein, vests in the Parliament under Entry 3, List I of the Seventh Schedule of the constitution, while legislative power in regard to (1) relationship between the landlord and tenant as to the land or (2) Transfer of non-agricultural properties, vests in the State Legislature respectively under Entry 18, List II and Entry 6, List II. Doubts were, therefore, entertained if the State Legislations as to the control of rents and eviction, hereinafter referred to as the Rent Act of Bombay, would be applicable to houses in Cantonment areas at all. In the case of A.C. Patel v. Vishwanath, A.I.R. 1954 Bom. 204, this Court held that, it would, Entry 18 in List II was relied on as the source of the legislative power".


54. That having set out the history of the belief that the Bombay Rent Act applied to Kirkee, Deshpande, J., gave the history of the Central Act, and explained why after Indu Bhushan's case it became necessary to pass the Amending Act of 1972 which had given rise to the question to be decided by the Division Bench. That Deshpande, J., observed as follows :---


"The Parliament, however, appears to have thought and passed the Central Act. It is a short enactment consisting only of five sections. Rather than itself legislate on the topic directly, it empowers the Central Government under section 3 thereof, to extend the concerned State Rents Act to the cantonment areas, lying within the said State, as in force "on the date of notification". The Central Government did not exercise this power, qua cantonment areas in the State of Maharashtra, till Supreme Court by its decision dated 28-4-1969 in Indu Bhushan's case, A.I.R. 1970 S.C. 228 overruled A.C. Patel's case (supra) and laid down that not the State Legislature but the Parliament alone was competent to legislate in this behalf (underlining mind). The Central Government then extended the Rent Act to the cantonment areas on 27-12-1969 with certain modifications which are not relevant in this case. However, this extension was prospective with effect from 27-12-1969. Section 3 of the Central Act, is it then stood did not authorise retrospective extension. The proceedings initiated and the orders and decree passed under the Rent Act, prior to such extension, on the assumption of it being effective in such areas, had become ineffective and void as a result of Indu Bhushan's judgment. Act No. 46 of 1957 came to be amended on 2-6-1972 under the Act No. 22 of 1972 to revive and validate the same. Admittedly no fresh notification under amended section 3 extending the Rent Act retrospective effect is issued till this day".


That in the case before the Division Bench, no objection was raised whether the Bombay Rent Act was enacted under List II, Schedule 7 of our Constitution or whether it was enacted under one or more entries of List III of Government of India Act and of our Constitution. No such question was raised and none argued, and no such question called for a decision by the Division Bench. Paragraph 3 merely referred to the history of the belief that the Bombay Rent Act applied to Cantonments and the reference made to Entry 3, List of the 7th Schedule of the Constitution about the Legislative Power of Parliament qua the cantonment area; and the power of the State to legislate on landlord and tenant and on transfer of property under Entry 18, List II and Entry 6, List III, respectively were merely set out for showing why a doubt arose whether the Bombay Rent Act applied to the Cantonment area of Kirkee. Whether the Bombay Rent Act was enacted under Entry 18 in List II or under Entry 6 in List III was immaterial to the decision of the question once the Supreme Court held that Parliament had exclusive legislative power under Entry 3, List I to legislate on house accommodation and control of rents and eviction in Cantonment areas. Having stated the history of the application of the Bombay Rent Act to Kirkee, Deshpande, J., observed that Indu Bhushan's case, A.I.R. 1970 S.C. 228 overruled A.C. Patel's case and laid down that not the State Legislature but Parliament alone was competent to legislate in this behalf. That this was an accurate statement of what Indu Bhushan's case decided. That Indu Bhushan's case did not overrule that part of the decision of the Bombay High Court which held that the power of control house accommodation, including the control rents, did not confer on Parliament the power to legislate on the relation of landlord and tenant. Deshpande, J., was not concerned with the further question whether the Bombay Rent Act in its application to areas other than Cantonment areas was enacted in the exercise of legislative power under Entry 18, List II or any one or more of the entries in List III, because the genesis of the Amending Act of 1972 was based on the finding of Indu Bhushan's case that Parliament had, under Entry 3, List I, and the State Legislature did not have power to enact a Rent Act applicable to the Cantonment areas. The arguments in the judgment shows that no such question was raised or decided; all that was decided is thus set out in the unreported judgment :


"We are inclined thus to prefer the view of Shah, J., and other two learned Judges in substance to that of Chandjurkar, J., and to hold that the extension of the Rent Act by notification dated 27-12-1969 is effective enough to bring into operation the validations and statutory fictions under section 3(4) of the Act introduced subsequently by the amendment in the Act. It is unnecessary to have any fresh notification extending the Act with any retrospective effect to invoke the same". (page 22 of the judgment).


55. I accept Mr. Seervai's argument on this point, and do not see how the above judgment assists the respondents.


56. There is yet another case on which the respondents have placed reliance and that is (L.S. Nair v. Hindustan Steel Ltd., Bhilai)17, A.I.R. 1980 M.P. page 106.


57. In that case, the facts were as follows :---


That the petitioner was employed in the Bhilai Steel Plant, owned by Hindustan Steel Ltd., a Government Company. That as an employee, he was allotted a quarter. That his services were thereafter terminated on payment of 1 month's salary. That the allotment of the quarter was subject to the petitioner's agreeing to pay rent at the rate fixed by the company and to abide by the rules and regulations governing the allotment of the company's property. One of the rules relating to the allotment of quarter was that an employee who resigns or retires himself or is terminated or transferred shall not be allowed to retain the quarter for a period exceeding one month from the date of the occurrence of the event and that an employee who retains quarter beyond this period excepting with the permission of the management will be treated as an unauthorised occupant and eviction proceedings would be taken against him. That in view of this position, the company filed an application (on the expiry of the stipulated period) before the Estate Officer appointed under the Public Premises (Eviction of Unauthorised Occupants) Act, 1977 claiming eviction of the petitioner. The company also made a money claim comprising of standard rent as damages and electricity and other charges, and for further damages till possession was handed over. The company's application was allowed by the Estate Officer. The employee went in appeal which was dismissed by the District Court. He then filed a petition under Article 226 of the Constitution. In this petition also, the legislative competency was considered and the petition was finally dismissed.


In the said case, it was inter alia, observed as follows :---


"It seems, however, more appropriate that in so far as the Act deals with the lessee or licensee of premises belonging to a Government Company, the subject matter of the Act would be covered by Entries 6 and 46 of List III. These entries particularly deal with transfer of property, contracts and jurisdiction and powers of courts with respect to any of the matters in List III. Taking either view in our opinion it is not correct to say that the Act in so far as it relates to premises belonging to a Government Company suffers from want of a legislative competence."


It was strenuously argued by the respondents that the Court had negatived the contention raised in the said case that Madhya Pradesh Accommodation Control Act, 1961 was passed by State Legislature in exercise of Legislative power under Entry 18 of List II. That the Madhya Pradesh High Court had also referred to the judgment in Indu Bhushan's case in support of this conclusion and quoted with approval, the passage of the Supreme Court judgment in the said case above referred to.


58. Mr. Seervai, the learned Counsel for the petitioners in reply to this, stated that this was a case directly against the petitioners but then it was wrongly decided on the question of legislative powers to enact Rent Act and that in any event that judgment could not prevail over the two Division Bench judgments of this High Court directly on the point. Mr. Seervai argued that Indu Bhushan's case was referred to by the Madhya Pradesh High Court in paragraph 7, and in L.S. Nair v. Hindustan Steel Ltd., Bhilai, A.I.R. 1980 M.P. 106. That from this, it would be noticed that the doubts expressed by the Supreme Court were set out in extenso, but the Court had inadvertently failed to reproduce the observations of the Supreme Court that it was not necessary to express a final decision on the question on the view they took of Entry 3, List I. That the judgment, therefore, on the point was incorrect as omitting a crucial part of the Supreme Court's decision in Indu Bhushan's case. I accept Mr. Seervai's submission on this point.


59. Whilst still on the subject it may be stated that in support of the respondents case, the learned Advocate General cited a passage from the Constitutional Law of India by Mr. Seervai (Second Edition, Volume II, page 1300) reading as follows :---


"22.122 The Supreme Court doubted whether the power to legislate on the relation between landlord and tenant in respect of house accommodation or buildings could be derived from entry 21, List II, Schedule 7 of the G.I. Act, 35 (corresponding to Entry 18, List II of our Constitution) as held in (A.C. Patel v. Vishwanath Chadda). Without expressing a definite opinion, the Supreme Court pointed out that the words in Entry 18, namely, "land tenures including the relation of landlord and tenant"..........were inappropriate to cover that relation in respect of buildings or house accommodation, because the expression "land tenures" is appropriately used with reference to vacant land. In fact, the law relating to non-agricultural property is contained in Transfer of Property Act, and the legislative power in respect of it would fall under Entry 6, read with Entry 7 of List III in our Constitution. The power of the State Legislature to legislate on the relation of landlord and tenant under Entry 18, List II, or Entries 6 and 7 of List III, was subject to the overriding power of Parliament in respect of matters in List I. This interpretation does not lead to a conflict of powers, because Entry 3 itself gives Parliament power to make laws for local Government in Cantonment areas, thereby curtailing the power of the State Legislature to enact laws for local self-Government in the State, under Entry 5, List II. And there are other entries in List II which are expressly made subject to the power of Parliament to make laws under List I.

22.123 The supreme Court disapproved of the decision in (A.C. Patel v. Vishwanath Chadda), (Kevalchand v. Deshrathlal) and in (Babu Jagtanand v. Satyanarayanji and Laxmiji) etc., when they held that under Entry 2, List I, Schedule 7, G.I. Act 35, (corresponding to Entry 3, List I, of our Constitution) the power to legislate was limited only requisitioning, acquiring and allocating property, and approved the view of the Rajasthan High Court in Nawal Mal v. Nathus Mal that the power of the State Legislatures to legislate on the relation of landlord and tenants of buildings was to be found in Entries 6, 7 and 13, List III of our Constitution and not in Entry 18, List II and that the power of the State Legislatures was circumscribed by the exclusive power of Parliament to Legislature on the same subject matter under Entry 3, List I".


The learned Advocate General submitted that this passage would clearly support the respondents argument.


60. In reply to this passage, Mr. Seervai, the learned Counsel for the petitioners stated that he had indeed made observations in his book but at that stage, he had not considered the matter from the angle which he now does in this case and added that had he done so, his conclusion would have been the same as he is now canvassing before this Court. He further added that the words written by him are as an author and hence the value to be attributed would be the same as words written by any other reputable author, neither more nor less, and it was open to him in a given case to setforth matters in a correct perspective. In support of this submission, Mr. Seervai relied upon a passage from (Cordell v. Second Clanfield Properties)18, the Law Reports, Chancery Division Vol. 2, 1969 page 9, at Pages 16 and 17 reading as follows :---


"I would here add one comment, in amplification of certain observations that I made when during the argument Counsel cited a passage from the 3rd edition of Megarry & Wade's Real Property. It seems to me that words in a book written or subscribed to by an author who is or becomes a Judge have the same value as words written by any other reputable author, neither more nor less. The process of authorship is entirely different from that of judicial decision. The author, no doubt, has benefit of a broad and comprehensive survey of his chosen subject as a whole, together with a lengthy period of gestation, and intermittent opportunities for reconsideration. But he is exposed to the peril of yielding to preconceptions, and he lacks the advantage of that impact and sharpening of focus which the detailed facts of a particular case bring to the Judge. Above all, he has to form his ideas without the aid of the purifying ordeal of skilled argument on the specific facts of a contested case. Argued law is tough law. This is true today as it was in 1409 when Hankford, J. said : "Home ne scaveroit de quel metal un campane fuit, bien batu, quasi diserit, le lay per bon disputation serra bien conus (Y.B. 11 Hen. 4, Mich., fo. 37); and these words are none the less apt for a Judge who sits, as I do, within earshot of the bells of St. Clements. I would, therefore, give credit to the words of any reputable author in book or articles as expressing tenable and arguable ideas, as fertilisers of thought and, as conveniently, expressing the fruits of research in print, often in an apt and persuasive language. But I would do not mere than that; and in particular I would expose those views to the testing and refining process of argument. Today, as of old, by good disputing shall the law be well known".


So much for the observations made by Mr. Seervai in his book, Constitutional Law of India.


61. The sum total of this discussion is that the decisions in A.C. Patel's case and Darukhanawala's case insofar as the Bombay Rent Act was enacted under the entry "land" (the relation of landlord and tenant and the recovery of rent) have not been overruled by any Supreme Court decision or by the Division Bench decision of Deshpande, J. and the decision in Patel's case and Darukhanawala's case are binding on this Court.


62. It was argued on behalf of the respondents that even if the subject of control of rents and eviction of tenants fell under the subject matter of "land" under Entry 18, List II, this power is subject to the power of the Union to legislate in respect of matters in List I, by virtue of the opening words of Article 246(1). That the impugned laws fall under Entry 32, List I of the Constitution, namely "Property of the Union and the revenue therefrom but as regards property situate in a State, subject to Legislation by the State save in so far as Parliament by law other provides". Now be that as it may, it is not disputed by the petitioners that there is Legislative Power to enact the impugned law in respect of property of the Union, nor has it been disputed by the petitioners that the impugned law otherwise provides within the meaning of Entry 32, List I.


63. Mr. Seervai added that the property belonging to the Union which would include property held on lease by the Union is exempt from the Bombay Rent Act as also from other Rent Acts. Therefore, in regard to the property of the Union, the tenants of such property do not have substantive protection of the Rent Act and if a speedy procedure for obtaining eviction of tenants is provided, the same would be valid.


64. However, insofar as the property belonging to the companies and corporations referred to in section 2(3)(1) and (2) of the impugned Act is concerned, it is not the property of the Union. For, the property of the company belongs to the company and not to shareholders and the same is true of the property of the Corporation.


65. In (Sabhajit Tiwary v. Union of India)19, A.I.R. 1975 S.C. 1329, it was held that the companies and bodies corporate had existence independent of Government. In paragraph 5, it was observed as follows :


"This Court has held in (Praga Tools Corporation v. C.B. Imanual)20, 1969(3) S.C.R. 773: A.I.R. 1969 S.C. 1306 (Heavy Engineering Mazdoor Union v. State of Bihar)21, 1969(3) S.C.R. 995 : A.I.R. 1970 S.C. 82 and In (S.L. Agarwal v. General Manager, Hindustan Steel Ltd.)22, 1970(3) S.C.R. 363 : A.I.R. 1970 S.C. 1150 that the Praga Tools Corporation, Heavy Engineering Corporation Ltd., and Hindustan Steel Ltd., are all companies incorporated under the Companies Act and the employees of these companies do not enjoy the protection available to Government servants as contemplated in Article 311. The companies were held in those cases to have existence independent of the Government and by the law relating to Corporations. These could not be held to be departments of the Government". A.I.R. 1975 at. p. 1331.


67. It was then contended by the respondents that "the property of the Union" must be interpreted in its widest sense including all ancillary and subsidiary matters on the principle that the legislative entries must be read in their widest sense. Now this principle of the widest meaning being given to a legislative entry as a general rule is not disputed. Therefore, the word "property" in the expression "property of the Union" must be given the widest meaning so as to include every kind of property moveable, or immovable, tangible, or intangible, corporeal or incorporeal. But, however, wide the meaning which can be properly given to the word "property", it is quite clear the words "of the Union" as qualifying property are words of limitation and it is obvious that the property of the Union cannot include the property vested in companies in which the Union holds more than 51 per cent of the issued capital of a company or has contributed the whole or the major part of the capital of a Corporation. Mr. Seervai, the petitioners Counsel stated that the widest construction of the entry "property of A" does not admit of the construction "property of A and the property of B in which A has some interest".


68. Now, it has been repeatedly held that the shareholders of the Company have no interest in the assets vested in the company and in the income derived by the company. This is clear from the judgment of the Supreme Court in (Bacha F. Guzdar v. Commissioner of Income-Tax, Bombay)23, 1955(1) S.C.R. 876. In that case, rejecting the contention of the appellant, the Court held that the income of the Company did not belong to the shareholders except to the extent that a dividend was declared and paid. Nor had the shareholders any interest in the assets of the Company except in the event of the distribution of the assets of the company. This conclusion followed from the well-known proposition laid down by the Supreme Court that a company is a juristic person distinct and separate from its members.


69. In the case of (A.P. State R.T. Corporation v. I.T.O.)24, A.I.R. 1964 S.C. 1486, the Court observed as follows :---

"The Corporation, though statutory, has a personality of its own and this personality is distinct from that of the State or other shareholders. It cannot be said that a shareholder owns the property of the corporation, or carries on the business with which the corporation is concerned. The doctrine that a corporation has a separate legal entity of its own is so firmly rooted in our notions derived from common law that it is hardly necessary to deal with it elaborately; and so, prima facie, the income derived by the appellant from its trading activity cannot be claimed by the State which is one of the shareholders of the corporation: ibid. p. 1492, para 17."


70. At this juncture, it would be necessary to add that the respondents herein cited decisions to show that the Corporations were held to be "other authorities" within the definition of "the State" in Article 12 of the Constitution. But these decisions are not relevant because the definition given in Article 12 is limited to Part III (Fundamental Rights) and to Part IV (Directive Principles of State Policy). The decisions cited proceed on the footing that the increase of State activity in a welfare State has led to the creation of State Corporations and Companies. That having regard to the nature of the work done by some of those Corporations and some of those companies, it must be held that they are subject to the discipline of Fundamental Rights and the Union and the States cannot avoid their obligations to conform to Fundamental Rights by creating Corporations and Companies. The Fundamental Rights are not to be drained substantially of their content. However, the definition of "State" is expressly limited to Part III and Part IV. In (Sukh Dev Singh v. Oil and Natural Commission)25, A.I.R. 1975 S.C. 1331, the Supreme Court in its majority judgments expressly stated that by way of abundant caution it should be observed that the servants of the Corporation are not servants in the civil employee of the Union or the State within the meaning of Article 311.


71. All this goes to point out that just as the property of the corporation or its profits are not the profits of its shareholder, viz., the Union or the State, equally the employees of such Corporation are not employees of the State but of the Companies or the Corporation.


72. The question that still needs to be examined is whether there is a conflict between entry 18 List II and Entries 6 and 7 of List III. Now, in this context what needs to be looked at is the judgment of the Privy Council in Megh Raj v. Alla Rakhia. In that case it was held that in Entry 21, List II, Schedule 7, G.I. Act, the key to the item was to be found in the opening word "land" which word was sufficient in itself to include every form of land whether agricultural or not, and that land was essentially a matter of provincial concern and that in each province there were local customs and provisions relating to land holding and particular problems of provincial or local concern which requires provincial consideration. The words "rights in or over land" introduce the widest concept. The rights in land include free holds and leaseholds. The words which follow were not words of limitation but of explanation or illustration and the words "relation of landlord and tenant" and "collection of rents" were appropriate both to agricultural and non-agricultural land. The item in Entry 21 which refers specifically to agricultural land had to be read with Entries 7, 8 and 10 of List III (Entry 7: Wills, interests succession save as regards agricultural land; Entry 8: Transfer of Property other than agricultural land; Entry 10 : Contracts..........not including contracts relating to Agricultural land). The Privy Council held that Items 7, 8 and 10 dealt with "methods of transfer or alteration or devolution which may be subject to Federal legislation but did not concern the land itself, a sphere in which the Provincial and Federal Powers are concurrent": The Privy Council held that mortgages of land as they are mortgages fell in Item 21, though in certain aspects they include elements of transfer of property and contract, but mortgages are incidental to land and included within it (Item 21). The Privy Council expressly held that mortgages of land do not fall under the entry relating to contract by observing :


"If, as their Lordships think, the impugned Act is limited to Agricultural land, Items 7, 8 and 10 of List III do not affect the position, since agricultural land is excluded in these entries. But in any event, the Act does not deal with wills or the transfer of property at all; it does certainly deal with mortgages, but as their lordships have already stated, mortgages though not expressly mentioned in the Constitution Act are properly to be classified not under the head of contracts, but as special transactions ancillary to the entry of 'land: 74 I.A. 22".

Mr. Seervai submitted that it was clear from this judgment which has been twice approved by the Supreme Court that whatever touches land in the sense of raising problems of a social, economic or political nature in relation to land is included in the legislative entry "land". Modes of transfer of devolution or succession would fall under the entry relating to transfer of contracts. The Rent Act provides for matters which directly touch land, which includes lands and buildings, and the Act deals with problems peculiar to such State. Further, the Rent Act comes into operation after the relation of landlord and tenant has been established and controls rents which a landlord can charge and for the limited cases in which the tenant can be evicted. It controls rents and it controls eviction in view of acute scarcity of accommodation.

72-A. Mr. Seervai further argued that assuming while denying that there is a conflict between the legislative entry "land" and the entry "transfer of property", how is that conflict to be resolved? First, Entry 6, List III relates to "transfer of property other than agricultural land". The words "transfer of property" cannot be limited to matters contained in the Transfer of Property Act as pointed out by Chagla, C.J. in (Abdul Majid's)26, case 58 Bom.L.R. 639-40, Chagla C.J. had rightly pointed out that where it was intended to refer to the matters contained in particular Acts in a legislative entry, the Constitution had so provided, as in Entries 1, 2 and 13 of List III, Schedule 7, G.I. Act (add the same is true of Entries 1, 2 and 13, List III Schedule 7 of our Constitution).


73. Mr. Seervai further argued that the "transfer of property" must, therefore, mean transfer of every kind of property, moveable and immoveable corporeal and incorporeal, tangible and intangible. It is a general entry covering transfer of every kind of property. The entry 'land' which includes the relation of landlord and tenant, and the collection of rent falls in the entry 'land', but this does not deprive the entry 'transfer of property' of its content. The element of transfer involved in the relation of landlord and tenant and the collection of rent is a small part of the law of transfer. Every kind of property other than land and/or land and buildings will fall within the entry "transfer of property". Land and lands and buildings cover a special area of property, whereas transfer of property generally covers every other kind of property. The special entry "land" must prevail over the general entry "transfer of property".


74. Mr. Seervai submitted that in the circumstances, the State Rent Acts fell under the entry "land" in List II; and he submitted further that the impugned Act insofar as it applies to companies and corporations in the States is outside the legislative competence of the Parliament whether the under Entry 32, List I, Schedule 7, or under any entry in List III. I accept Mr. Seervai's contention.


75. The sum total of this discussion is that the State Rent Act (for areas other than cantonments) falls under the Entry "land", List III. The impugned Act insofar as it applies to companies and corporations in the State is outside the legislative competence of Parliament whether under Entry 32, List I, Schedule 7 or under any entry in List III. That in view of the fact that it is an accepted position that "the Parliament has powers to enact the impugned Act in Union Territories and also for the property of the Union and revenue there from subject as regards property situate in State subject to legislation by the State same is so far as Parliament by law otherwise provides" (and the impugned Act otherwise provides), there is no mandate to roam at will and strike down the Act in its entirety. It would only be necessary to injunct the companies and corporations in the State from implementing or acting upon the provisions of this act and more particularly in respect of the premises in question.


76. In view of this, it is not necessary for me to deal with the challenge under Article 14 and Article 19 of the Constitution.


77. In the result, the rule is made absolute in terms of prayers (a) and (b).


78. As regards the quantum of costs are concerned Mr. Dalal on behalf of the respondents has stated that this would be a "test case", and Mr. Seervai on his part has also said so. In view of this, I make no order as to costs.


Rule made absolute.
O R