Holding

The exemption notification is constitutionally valid as the classification of co‑operative societies has a rational nexus with the Act’s purpose and does not infringe Article 14.

Summary

The petitioners, tenants in a building owned by an Apex Co‑operative Society, challenged a 1976 notification issued under section 29 of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 which exempted all buildings owned by co‑operative societies from the Act’s provisions. They argued that the blanket exemption violated Article 14 of the Constitution because the classification of all co‑operative societies had no rational nexus with the Act’s purpose of curbing rack‑renting and unreasonable eviction. The Court examined the nature of co‑operative societies under the Tamil Nadu Co‑operative Societies Act, 1961, noting statutory restrictions on profit distribution that distinguish them from commercial landlords. It held that these statutory features justify the assumption that co‑operative societies would not indulge in the evils the Act seeks to prevent, giving the classification a valid nexus with the legislative intent. Consequently, the notification was upheld as a legitimate exercise of power under section 29 and not violative of Article 14. The writ petitions were dismissed.

Issues considered

Whether the 1976 notification exempting all buildings owned by co‑operative societies from the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 violates Article 14 of the Constitution.
Whether the classification of all co‑operative societies has a rational nexus with the object of the Act—curbing rack‑renting and unreasonable eviction.

Legislation cited

Subjects

Article 14classificationco-operative societiesrent controlexemptionTamil Nadu Buildings Actconstitutional validityequalityrack‑rentingunreasonable eviction

Judgment

416
Jo-.
''
A

S. M. MAHENDRU AND COMPANY ETC.

v.

B STATE OF TAMIL NADU AND ANR. '
December 12, 1984.

(V. D. TuLZAPURKAR, R. S. PATHAK AND
SABYASACHI MuKHARJl JJ.]
c
Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 (Tamil Nadu
Act 18 of 1960)-S. 29-Scope of-Government of Tamil Nadu issued >- •
Notification No. 11 (2) H. O. 6060/76 dated 21st November, 1976 exempting
buildings owned Inter alia by co·operative societies from all the provisions of
the Act 18 of 1960-Validity of notification-Notification held valid and not
violative of Art. 14 of the Constitution.
D
In exercise of the powers conferred by section 29 of the Tamil Nadu
Buildings (Lesse and Rent .Control) Act, 1960 (Tamil Nadu Act 18 of
J960), the Government of Tamil Nadu by a Notification No. II (2) H. O.
6060/76 dated 21st November, i976 exempted the Buildings owned, Inter
a/la by all the co-operative societies from all the provisions of the said
Act. Since the protection available to tb:: petitioners, who were tenants
E in a building belonging to respondent No. 2, an Apex Society registered
under the Tamil Nadu Co-operative Societies Act, 1961 and covered by
the said notification, had been withdrawn and .since the petitioners were
facing the imminent prospect of suffering eviction decrees against themJ
they filed the present writ petitions chaJieaging the constitutional validity of
the impugned notification on the ground that the same was vio_lative of Art.
14 of the Constitution. The petitioners contended that treating the
buildings owned by aU the co-operative societies in the State of Tamil N adu
F as falling into one group while exercising the power uader sec. 29 of the
Act will have to be regarded as a rational classification bas-:d on an intelli·
gible differentia but the differentia on which this classific_ation was based had
nO nexus with the object of curbing the two evils of rack-renting and unrea-
sOoable eviction for which the power to grant exemption h1d been coaferred
upon the State Government under sec. 29 or tbe Act and since the in1pugned
notification did not satisfy the test of nexus the exemption granted to all such
buildings CC"uld not be sustained and will have to be regarded as discrimi-
G natory and violative of Art. 14. In other word<; Counsel urged that there
was and is no warrant of any presumption that co-operative societies qua
landlords will not indulge in rack-renting or will not unreasonably evict te~
nants; in fact they would not be different from other private landlords so
far as the two evils sought to be curbed by the Act are concerned and
therefore Counsel urged that the exemption granted could not be said to.1 be
in conformity with the guidance afforded by the scheme and the provisiQoS
H of the Act.
S. M. M. & CO. V. TAMiL NADU 417

Dismissing the petitions, A
HELD: It is true th>t under sec. 4 of the Tamil Nadu Co-operative
Societies Act the very object of every co-operative society registered there-
under is the promotion of economic interests of its members and sec. 62
of the Act provides for payment of dividends on shares to its members as
also for payment of bonus to its members and paid employees. But these
aspects of a co-operative society do not mean that it could .be likened to
any other body undertaking similar activities on commercial hoes and to do
B
so would be 'to miss the very basis on which the co-operative movement was
launched and propagated and has been making progress in lhe country
during the last several decades. Indisputably, co·operative societies which·
carry on their activities in various fields do so for the purpose of attaining
the social and economic welfare of a large section of the people belonging
to the middle-class and the rural class by encouraging thrift, self-help and
mutual aid amongst them, especially by eliminating the middle-man. But
c
the object of promoting the economic interests of the members has to be
achieved by following co-operative principles where the profit motive will be
restricted to a reasonable level unlikC other commercial bodies where sky
is the limit so far as their desire to earn profits is concerned. Sections 4
and 62 of the Act and Rule 46 of the Rules make it clear that in the
matter of distributi.on of profits by way of payment of dividend to members
and payment of b"anus to members as well as paid employe·es restrictions
D
bave been placed by law and the saroe is maintained at a reasonable level
and collsiderable portion of the net profits :is apportioned '8.Dd required to
be carried to various kinds of funds, like co-operative development fuad,
co-operative education ·fund, reserve fund etc. In fact it is su6h _statutory
appropriations and restrictions on payment of dividends and bonus ·which
differentiates co-operative sccieties from other bodie~ undertaking siffiilar
activities on commercial lines and therefore, the buildings belonging to such
co-operativo societies are ~ubstantially different from the buildirigs owned by
private landlords. Further it bas to be appreciated that these statutory pro- E
visions are applicable to all types of co-operative societies specified in Rule
14 whatever be their nature or functions.· The profit element being maintain..:
ed at a reasonable level by provisions of law in all types of co-operative
. " societies there is every justification for tho assumption tbat no co-operative
society will indulge in rack-renting or unreasonable eviction. In this view of
the matter if the State Government came to the conclusion that in the cas~ F
of co-operative societies there being no apprehension that they would indulge
• in either of these two evils exemption from the provisions of the Tamil Nad 11
Act No. 18 of 1960 should be granted in favour of buildings belonging to
such co-operative societies it will have to be regarded as a legitimate exer~
cise of the power conferred on it under sec. 29 of the Act, th,e same being
in conformity with the guidance afforded by the preamble and provisions
of the Act in that b•half. [422D-G; 424C·G]
G
Besides, on the factual side of the issue the facts nod circumstaDces
put forward by the State Government in its counter affidavit which have
gone unchallenged clearly show that the differentia on the basis of which
the classification was made had a clear nexus with the object with which
the power to grant exemption bas been conferred upon the State 11M
tberefore the impugned notification will have to be regnded as valid.
[4HE-FJ

' .•.,,
418 SUPREME COURT REPORTS [1985!1 2 s.c.R•

ORIGINAL JURISDICTION: w. P. No. 893 and 967 of 1979 and
W. P. No. 295 of 1980.

Under Article 32 of the Constitution of India

Dr. Y. S. Chitale, and Vineet Kumar for the petitioners m
B W. P. Nos. 823 & 967 of 1979. '
A. ·r. M. Sampat and P. N. Rama/ingam for the Petitioners
in W. P. No. 295/80.

Anil Devan, K. S. Ramamurthy, V. M. Tarkunde, M. K. D.
c Namboodry and S. Ba/aKriShnan for the respondents in W. P. Nos. :
893 & 967 of 1979 and W. P. No 295 of 1980.
J..'
The Judgment of the Court was delivered by

D TULZAPURKAR, J. By these three writ petitions filed under Art.
32 of the Constitution the petitioners, who are tenants in a building
belonging to respondent No. 2 Society, have challenged the validity
of the exemption granted to all buildings owned by all Co-operative
Societies in the State of Tamil Nadu from all the provisions of the
T. N. Act 18 of 1960 under sec. 29 thereof.
~
'
E
The facts giving rise to the aforeiaid challenge lie in a narrow
compass. The petitioners are. tenants in different portions on the
ground floor of the building bearing Door No. 188, Mount Road,
Madras belonging to second respondent which is an Apex Society
registered under the Tamil Nadu Co-operative Societies Act, 1961.
.,,.
F It appears that the property was purchased in 1961 by the second
respondent from its previous owners M/s. Mohammed Ibrahim and
Ail
Company, and soon thereafter the second respondent applied to the
State Government under sec. 29 of the A ct and sought exempt10n •
for it from all the provisions of the Act. But on hearing the objec·
tions raised by the petitioners and other tenants the application was
rejected. Respondent No. 2 thereupon made two attempts to evict
G
the petitioners from their respective premises. The first was on the
ground that the premises are required by it for its own occupation
but at the end of a long drawn out litigation respondent No. 2 failed )-..
'
to obtain possession ; the second was on the ground that it required
the premises for demolition and new construction and it was during
the pendency of this litigation that the State Government issued its
H Notification No. II (2) H.O. 6060/76 dated 21.l! .!976 under sec. 29
s. M. M. & co. v. TAMIL NADU (Tulzapurkar, J.) 419

of the Act whereby the State Government exempted the buildings A
belonging to all Co-operative Societies in the S'.ate of Tamil Nadu
from all the provisions of the Act. On the issuance of this Notifica-
tion respondent No. 2 withdrew its eviction petitions preferred on
the ground of demolition and new construction and served notices
upon the petitioners under sec. 106 of the Transfer of Property Act
terminating their tcnancfos and filed civil suits against them in the B
City Civil Court, Madra' for recovery of vacant posses~ion of the
premises in their respective occupation.. The petitioners have filed
their written statements and suits are awaiting trial. But since the
protection available to them has been withdrawn the petitioners are
facing the imminent prospJct of suffering eviction decrees against
them and therefore, have approached this Court by means of these c
writ petitions challenging the constitutional validity of th~ Notifi-
cation in question of the ground that the same is violative of Art.
14 of the Constitution and have obtained stay of further proceedings
• J in the suits.
D
The impugned Notification dated 21st November, 1976 runs
thus:

.,.
"No. II (2)H.O. 6060/76-In exercise of the powers
conferred by Sec. 29 of the Tamil l'adu Buildings \Lease
and Rent Control) Act 1960 (Tamil Nadu Act 18 of 1960), E
the Government of Tamil Nadu hereby exempts the build-
ings owned by all Government Undertakings including
Government Companies registered under the Indian Com-
panies Act 1956 Central Act I of 1956) and by alJ the ·
Co-operative Societies from all the provisions of the said
Act." F

As was done in the earlier case dealing with the total exemption
granted in favour of all buildings belonging to public religious trusts
and public charities, here also Counsel for the petitioners fairly
•• stated that treating the buildings owned by all the Co.-operative
Societies in the State of Tamil Nadu as falling into one group while
exercising the power under sec. 29 of the Act will have to· be G
regarded aq a rational classification based on an intelligible differentia
inasmuch as Co-operative Societies while carrying on their activities
in various fields do serve a great public purpose of attaining the
social and economic welfare of a large section of the people belonging
to the middle. cla~s and the mral class by encouraging thrift, self-
help and mutual aid amongst them and by eliminating the middle-
u
420 SUPRJlMB COURT REPORTS [1985] 2 s.c.R.
A man and as such do form a distinct group different from other bodies
undertaking similar activities on commercial lines and as snch
buildings belonging to Co-operative Societies may need special or
preferential treatment in some matt ors like registration of documents,
payment of stamp duty, recovery of their dues etc. at the hands of
B the State Government but according to Counsel the differentia on
which this classification is based has no nexus with the object with
which the powers to grant exemption has bee11 conferred upon the
State Government under sec. 29. of the Act and since the impugned
Notification does not satisfy the test. of nexus the exemption granted
to all such buildings cannot be sustained and will have to be regard-
ed as discriminatory and violative of Art. 14.

By way of elaborating the aforesaid contention Counsel for
the petitioners urged that the Act was put on the stature book for
the purpose of curbing the two evils of rack-renting and unreasonable
D eviction and that the power to grant exemption could as per the
guidance afforded by the scheme and the provisions of the Act be
exercised by the State Government in cases where the mischief
sought to be remedied by the Act is neither prevalent nor appre-
hended or in cases where an inflexible application of the law is
likely to result in undue hardship or in cases where the beneficial
provision of the Act is likely to be or is being abused by persons· for
whom it is intended and according to Counsel the exemption in
...
favour of the buildings belonging to all Co-operative Societies in
the State of Tamil Nadu does not conform to such guidance,
Counsel pointed out that Rule I 1 of the Rules made under the T.N.
co-operative Societies Act 1961 specifies as many as 13 different
classes of Co-operative Societies, such as farming society, credit
F society, housing society, marketing society etc. and the impugned
Notification indiscriminately and unconditionally exempts all build-
ings belonging to all types of Co-operative Societies with no regard
to their nature or functions. Further, according to sec. 4 of the T.N.
Co-operative Societies Act the very object of every Co-operative
Society is the promotion of the economic interest of its Members
G and sec. 62 of that Act provides not only for payment of dividends
0 :1 shares to members but also for payment of bonus to members
and paid-employees of the Society. Hence it is unrealistic to assume
that Co-operative Societies are not or will not indulge in rack·
renting or unreasonable eviction or will be ideal landlords whose
tenants will not be in need of any statutory protection. In other
H words Counsel urged that there was and is no warrant of any
'
s. M. M. & co. v. TAMIL NADU (Tu/zapurkar, J.) 421

presumption that Co-operative Societies qua landlords will not A
indulge in rack-renting or will not unreasonably evict tenants ; in
fact they would not be different from other private landlords so far
as the two evils sought to be curbed by the Act are concerned and
therefore Couooel urged that the exemption granted could not be
said to be in conformity with the guidance afforded by the scheme
and the provisions of the Act. B

Jn support of the abDvc contention Counsel relied upon a
decision of this Court in Baburao Shantaram More v. The Bombay
Housing Board and Anr.(1) where the validity of sec. 3-A of the
Bombay Housing Board Act, 1951 was challenged as infringing Art.
\J. It was urged in that case that sec. 3-A exempted lands and
c
buildings belonging to the Bombay Housin11 Board from the operation
of the Bombay Rent Act, 1947 while lands and buildings belonging
to numerous Co-operative Housing Societies, which were similarly
situated and whose object was also to solve housing problems, were
not given any exemption from the operation of the Rent Act and
D
the result was that while tenants of the Co-operative Housing Socie-
ties were fully protected against unreasonable eviction and enhance-
ment of rent, the tenants of the Housing Board were denied such
protection and therefore sec. 3-A was violative of Art. 14. The
contention was negatived on the ground that the Housing Board and
the Co-operativ~ Housing Societies incorporated under the Co-
" . operative Societies Act were not similarly situated and in that behalf
this Court observed thus :
E

"Further, though these Co-operative Housing Societies
are no doubt incorporated bodies, they nevertheless may
earn profits which may be distributed amongst their F
members. The Board, on the other hand, is incorporated
body brought into existence for the purpose of framing
housing schemes to solve the problem of acute shortage of
housing in Bombay. There are no share-holders interested
in the distriblltion of any profits. It is nuder the control of
• the Government and acts under the orders of the Govern- G
ment. In effect, it is a Government sponsored body not
having any profits making motive. No material has been
placed before us which may remotely be regarded as
suggesting, much less proving, that Co-operative Housing

(ll [1954] S.C.R. 572
422 · SUPREMI! COURT RBPORTS (1985] 2 s.c.R.

A Societies or their members stand similarly situated vis-a-vis
the Board and its tenants."
.>< '
Relying upon the above · observations Counsel for tbe petitioners '
submitted that this Court bad recognised the position that various
activities are undertaken by Co-operative Societies with the motive
B of earning profits and as such there was and is no warrant for treat-
ing them differently from other private landlords in tbe context
of two evils sought to be remedied by the Act and in this sense the
exemption granted does not satisfy the test or nexus and therefore '
the same infringes Art. 14.

c The above contention so presented, though seemingly plausible,
will, on deeper scrutiny, be found to be without substance and we
shall pr~sently indicate our reasons for saying so. It is true that
nnder sec. 4 of the Tamil Nadu Co-operative Societies Act the very
object of every Co.operative Society registered thereunder is the
promotion of economic interests of its members and s. 62 of the Act
.D provides for payment of dividends on shares to its members as also
for payment of bonus to its members and paid employees. But
these aspects of a Co-operative Society do not mean that it could be
linkened to any other body undertaking similar activities on commer-
cial Jines and to do so would be to miss the very basis on which the
E cooperative movement was launched and propagated and has been
making progress in the country during the last several de.cadcs.
Indisputably, Co-operative Societies which carry on their activities in
. ..
various fields do so for the purpose of attaining th~ social and
economic welfare of a large section of the people belonging to the
midle•class and the rural chss by encouraging thrift, self-help and
mutual aid amongst them, especially by eliminating the middle-man.
But the object of promoting the economic interests of the members
has to be achi,eved by following cooperative principles where the
profit motive will be restricted to a reasonable level unlike other
commercial bodies where sky is the limit so far as their desire to
earn profits is c:oncerned. Sections 4 and 62 of the T.N. Co·opera-
tiv~ Societies Act and Rule 46 of the Rules made under that Act , '

G bring out this aspect ·of the matter very eloquently. Section 4 itself
states that a society, ivhich has. as its object the promotion of economic
interest of Its members in accordance with cooperatives principle, may,
subject to the provisions of the Act be registered thereunder. In
other words the promotion of economic interests of the members has
to be achieved in accordance with co-operative principles and the
iH realisation thereof has been made subject to the provisions of the
s. M. M· & co. v. TAMIL NADU (Tulzapurkar, J.) 423

Act. Section 62 which deals with disposal of net profits puts
restrictions on the disbursement of such profits and it runs as
follows :

"62. Disposal of net profits-(!) (a) A registered
society shall out of its net profits as declMed by the Regis-
trar for the pucposes of this Act in respect of any co- ll
operative year contribute such amount not exceeding,-

(i) five percent of the net prolits to the co-operative
development fund; and

(ii) two per c·~nt of the net pro\its to the co-operative C
education fund,

as may be specified in the Rules.

.... (b) Such contribution shall be made within such time and
in such manner as may be prescribed. D

<2) The balance of the net profits so declared shall be
appropriated-

firstly, for being credited to a reserve fund, the amount so
credited being not less than twenty per cent, but not exce-
eding thirty per cent, of the net profits ;

secondly, towards contribution to such other funds and
at such rates as may be specified in the Rules ;

thirdly, towards payment of dividends on shares to members
at such rate as may be specified in the Rules ;
• fourthly, toward' p,ymrnt of bonus to members and paid
employees of the registered society at such rate and subject
to such conditions as moy bo specifiecl in the Rules ;
• G
fifth!'', towards contribution to such other funds and such
rates as may he specified in the by-laws;

sixthly, towards contribution to the common good fund at
such rate not exceeding ten per cont of the net profits as
may be specified in the Rules ; and H
:;;-

424 , SUPREME COURT REPORTS [1985] 2 S.C R·.

"' seventhly, the remainder, if any, of the net profits being
credited to the reserve fund."

Rule 46 prescribes the limits on payment of dividends on shares to
its members as also on payment of bonus to its members and paid
employees. Sub-Rule (3) of Rule 46 says that the payment of
B
dividends on shares to members by a Society shall not exceed 6
per cent per annum on the paid up value of each share ; provided
that the Government may by special or geueral order permit any
Society or class of Societies to pay dividend at the rate exceeding
6 per cent. Similarly under Sub:Rules (4) and (5) restrictions have
c been placed on payment of bonus to members and to paid em·
ployees. In view of these provisions it will appear clear that in the
matter of distribution of profits by way of payment of d.ividend to
members and payment of bonus to members as well as paid emp-
loyees rc:strictions have been placed b: law. and the same is main·
tained at a reasonable level and considerabk portion of the net
D profits is apportioned and required to be carried to various kinds of
funds, hke co-operative development fund, co-operative education
fund, reserve fund etc. In fact it is such statutory appropriations
and restrictions on payment of dividends and bonus which differen-
tiates Co-operative Societies from other bodies undertaking similar
activities on commercial lines and therefore, the buildings belonging
E to such Co-operative Societies are substantially different from the
buildings owned by privat<: landlords. Further, it has to be
appreciated that these statutory provisions are applicable to all types
of Co-operative Societies specified in Rule 14 whatever be their
nature or functions. The profit element being maintained at a
reasonable level by provisions of law in all types of Co-operative
F Societfos there is every justification for the assumption that no
cooper.ttive society will ir1dulge in rack-renting or unreasonable
eviction. In this view of the matter if the State Government came
to the conclusion that in the case of Co-operative Societies there being
no apprehension that they would indulge in either of these two evils
exemption from the provisions of the T.N. Act No. 18 of 1960
G should be granted in favom of buildings belonging to such Co-opera- •
tive Societies it will have to be regarded as a legitimate exercise of
the power conferred on it under s. 29 of the Act, the same being in
conformity with the guidance afforded by the preamble and pro-
visions of the Act in that behalf.

Besides, on the factual sides of the issue it has been. specifically
II averred in the counter affidavit filed. on behalf of the State Govern-
s. M. M. & co. v. TAMIL NADU (Tulzapurkar, J.) 425

.... men! that it duly took note of the fact that all types of Co-operative
Societies functioning in Madras City and at rnveral centres through-
A

out the State as a class were engaged in various kinds of activities
promot;ng social welfare, rural-development and economic good by
providing employment to lacs of pe0ple and were doing excellent
work hy way of impl,,menting one of the Directive Principles of
B
.- State Policy embodied in Art. 43 of the Constitution, tbt several
complaints were received from these C> operative Societies that they
were facing problems arismg out of a literal application of the T.N.
Act 18 of 1960, particularly in the ,n,ttter of securing accommoda-
I tion in their own buildings for carrying on their activities and that
they got involved in long drawn out litigations in that behalf and
requesting for an exemption from the provisions of the Act so that c
they could be relieved of the hardships from which they were
• suffering ; it has been further averred that the Government also
took note of the fact that it was not the business activity of any
• .l Co.operativ~ Soc!ety including even a Cu~operative Housing Society
to purchase buildings for the purpose or letting them out and earn-
D
ing: inco1ne ther:!from and as such ther4 was no apprehension of
indulging in rack renting on their behalf and that on a consideration
of all the relevant factors the Government was satisfied that the
protection given to the tenants of such buildings, if withdrawn,
wonld not result in rack renting or unreasonable eviction and that
the granting of exemption to them was necessary to relieve them of E
great hardship. It may be stated that all these averments have gone
unchallenged and in our view the facts and circumstances put for-
ward by the State Government clearly show that the differentia on
the basis of which the classification was made had a clear nexus with
the object with which the power to grant exemption has been con-
ferred upon the State and therefore the impugned Notification will
have to be regarded as valid. F

In regard to respondent No. 2 being the Apex Society herein,
the additional factors taken into consideration were that out of its
•
total share capital of 13. 78 crores the State Government's contribution
was to the tune of 12.81 crores, that the Government had guaranteed
G
the Joans borrowed by it for its working capital, that as the apex
body it had nwmbership of about 1488 primary societies (Handloom
Weavers Co-operative Societies) and that it had 34 branches and
two godowns in Madras and wa; required to pay for its rented
premises rent at the mte of Rs. 2.50 per sqnare foot while the tenants
of their own building were paying rent at the rate of 20 paisa per H
square feet : respondent No. 2 society was also involved in a long
426 SUPREME COURT RJ!POR1S [1935] 2 ~.C.R.

A drawn out litigation under the provisions of the T.N. Act 18 of 1960.
/ Jn other words,· respondent No. 2 society was a glaring instance of
undue hardship being suffered by a Co-operative Society as a result
of the literal application of the Act. We are sure that a large number
of similar instances must have prompted the State Government to
issue the impugned Notification which as we have said above will
8
have to be regarded a legitimate exercise of power conferred on the
State G overnmcnt uncler sec. 29 of the Act.

Counsel has of course placed strong reliance upon the obser-
vations made by this Court in Baburao Shantaram's case (supra)
c which have been quoted above in support of his coJJtention but in
our view neither the ratio nor the observations are of any avail to
the petitioners. It will be clear at once that the decision in qucst10n
is no authority for the proposition that exemption from the provi-
sions of any rent-control enactment cannot be granted in favour of
the.buildings owned by Co-operative Societies. 1he case was con-
u cerned with the constitutional validity of sec. 3-A of the Bombay
Housing Board Act, 1951 where-under exemption had been granted
to lands and buildings belonging to the Bombay Housing Board
from the operation of the Bombay Rent Act, 1947 and its validity
was upheld by this Court. One of the contentions urged before the
Court was that buildin3s belonging to Co-operative Housing Socie-
ties in Bombay were similarly situated as the buildings belonging
E to the Housing Board inasmuch as the object served by Co-opera-
tive Housing Societies and the Housing Board was the same namely,
solving the housing problems of the city of Bombay and even so,
though the tenants of Co-operative Housing Societies were fully
protected agaiust unreasonable eviction and enhancement of rent,
the tenants of Housing Board were denied such protection and ·
F
therefore sec. 3-A was discriminatory and this contention was
negatived by the Court by observing that the Co-operative Housing
Societies and their members were not similarly situated vis-a-vis the
Board and its tenants and while pointing out the difference the Court
stated that while Co-operative Housing Societies may earn profits
distributable among 1ts members there was no question of the
Housing Board making ?.ny profits. The Court was not concerned
G with the question as to whether a simiar exemption if granted to
buildings belonging to Co-operative Societies would be valid or not.
The difference pointed by this Court was sufficient to refute the
charge of discrimination levelled against the particular piece of
legislation (sec. _3-A of the B'bay Housing Boards Act 1951) but it
B will be fallacious to rely upon this difference for the purpose of
s. M. M. & co. v. TAMiL NADU (Tulzapurkar, J.) 427
. /
stxil:i'>~ down the exemption granted in favour of buildings of Co;/ A
operative Societies under another enactment if such excmptioll)s /
otherwise justified on the facts and circumstances obtaining in·
regard to such buildings. In fact as explained earlier the ~o-opera·
tive principles which govern the functioning of these Co-operative
Societies put a curb on their profit motive and as pointed there are
statutory provisions which maintain their" profit element at reason- B
able level which warrant the assumption that Co-operative Societies
would not indulge in rack-renting or unreasonable eviction and it
was in the light of this position as also after careful study of all
relevant factors obtairung in their case th• State Government was
satisfied. that the grant of total exemption in favour of the buildings
of all Co-operative Societies functioning in the entire State was C
necessary. The observations relied upon cannot therefore support.
the petitioners' contention.

In the result the writ petitions are dismissed. Interim orders,
if any are vacted. There will be no order as to costs. ·

~
I .
H.S.K. Pell/Ions dismissed

'