Holding

A building intended to be used as a cinema with plant and apparatus leased together falls within the exemption of section 2(1)(d) of the U.P. Urban Buildings Act, rendering the Act inapplicable and the District Magistrate without jurisdiction to allot the premises.

Summary

The landlords of Prem Talkies obtained vacant possession of the building in 1984 and later intended to let it out as a fully equipped cinema theatre to the Mehrotras. The appellant, Satya Narain Pandey, applied for allotment of the building under the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972, claiming the building was still subject to the Act. The landlords argued that the building fell within the exemption under section 2(1)(d) because it was to be used as a cinema with plant and apparatus leased together with the building. The Supreme Court examined the scope of the exemption clause and held that once a landlord intends to let a building for a purpose specified in clause (d) together with the requisite plant, the building is automatically excluded from the Act, irrespective of its earlier status. Consequently, the District Magistrate had no jurisdiction to declare a vacancy or to allot the premises, and the High Court's order setting aside the vacancy declaration was affirmed. The appeals and special leave petitions were dismissed.

Issues considered

The building Prem Talkies is exempt from the U.P. Urban Buildings Act under section 2(1)(d) when intended for cinema use with plant and apparatus.
Whether the District Magistrate had jurisdiction to declare vacancy and allot the premises under the Act.
Whether the landlord’s intention to let the building as a cinema defeats the applicability of the Act.

Legislation cited

Factories Act, 1948
U.P. Cinemas (Regulation) Act, 1955
U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972s. 1, s. 11, s. 13, s. 15, s. 16, s. 17, s. 2(1)(d), s. 31

Subjects

Section 2(1)(d) exemptionurban building regulationvacancy declarationallotment under rent controlcinema licencelandlord intentionrent control Act

Judgment

A SATYA NARAIN PANDEY
V.
STATE OF U.P. & OTHERS r
JANUARY 13, 1988 ,...,
B [SABYASACHI MUKHARJI AND S. RANGANATHAN, JJ.]

U.P. Urban Buildings (Regulation of Letting, Rent and Eviction)
Act, 1972-Section 2( J)(d)-lnter-pretation of. 1I
These matters involved the interpretation of section 2(1)(d) of the ·l-
c U.P. Urban Buildings (Regulation of Letting, Rent & Eviction) Act, .....,..
1972 (Act No. 13of1972).

D
The landlords of a building known as Prem Talkies had let out
the building to Sunil Sharma and another, and the lease to the Sharmas
was a lease of the building simpliciter. The building was subject to the
provisions of the ,Act above-said. The landlords obtained delivery of
"'
~

vacant possession of the building on 30.09.1984 through a suit for evic-
tion instituted by the landlords. The revision petition filed by the ..._
Sharmas in the High Court against the order of eviction was dismissed
on lst August, 1985. After the Revision Petition of the Sharmas was
dismissed, landlords proceeded with the renovation of the building,
E installation of plant, machinery, new furniture and electrical fittings, as
they wished to let out the building alongwith the pfant, machinery, y
furniture and apparatus installed for running a cinema theatre.

On February 5, 1986, an agreement of lease was executed between
the landlords and the Mehrotras--respondents before this Court under
F which the Mehrotras agreed to take the building fully equipped with •·
projector, machines, fixtures and furniture for a period of five years~
with an option to renew. A lease-deed pursuant to the agreement of the \
lease between the landlord and the Mehrotras was entered into on
30. 12.86 and actual possession of the bui(ding, it was claimed, was
given to the Mehrotras on the 8th January, 1987.
G
In the meantime, the appellant, Salya Narain Pandey, appeared
to have made an application under s. 16 of the Act for allotment of the
building in question to him. He claimed to have filed that application on
25.9.86 and that, on the basis of that application, the Additional Dis- y
trict Magistrate had called for a report from the Rent Control & Evic-
H tion Inspector, who had submitted a report dated 28. 10.86, stating that
678
SATYA NARAIN PANDEY v. STATE OF U.P. 679

the building was vacant as on that date. On the other hand, the land·_ A
lords fr ;m-:: .that the vacancy of the building had been declared on
6.3.8~. :-. ll. notification calling for applications for allotment had
been ,:.:ieu on 9.3.87 and the application by Pandey for allotment had
been made only on 9.3.87. They also applied to the Additional District
l\lagistrale on 23.3.87, requesting that a high-placed official
should be sent to inspect the premises and submit a report, as the report B
of the Eviction Inspector. had been obtained behind their back. The
application was granted and the Sub-Divisional l\lagistrate submitted a.
report on 28.4.87, which said that as on that date the building was a
full-fledged building with all the equipments and was not vacant as it
appeared to have been let out to the l\lehrotras under the agreements of
5.2.86 and 30.12.86. In the meantime, the l\lehrotras, in pursuance of
the lease deed entered into by them with the landlords, had applied on
c
8. I.87 for the grant of a licence for running a cinema in the building in
question. The application was granted by the Additional District
l\lagistrate.

Pandey, who had applied for the allotment of the building fo him, D
~ felt aggrieved by the grant of the cinematographic licence to the
· i\lehrotras. He filed a writ petition in the High Court, challenging the
grant of the licence. The High Court dismissed the writ petition.
Pandey, the appellant, then filed in thi~ Court Civil Appeal No. 1502 of
~~ 198_7 by Special Leave against the decision of the High Court.
E
The Writ Petition of the landlords filed in the High Court against
the order dated 6.3.87 of the Additional District l\lagistrate, declaring a
)i vacancy of the building in question and the notice dated 9.3.87 inviting
applications for allotment of accommodation in respect thereof, and a
similar writ petition filed by the l\lehrotras in the High Court, were
disposed of by the High Court by a consolidated order dated 20.1 l.87, F
by which the High Court had accepted the contentions of the petitioners
and allowed the writ petitions setting aside the order dated 6.3.S7 and
the notice dated 9.3.87 and directing the Rent Control & Eviction Ins·
pector to proceed with the allotment of the cinema building under the
Act. One of the respondents in those two writ •petitions was Pandey, the
~,appellant, who then also filed two petitions for special leave in this G
. r Court against the said decision of the High Court in the two writ peti·
·' lions above-said.

Dismissing the appeals out of the two petitions for special leave •
(wherein· leave to appeal was granted) and, consequently; the Civil
Appeal No. 1502/87, the Court H
680 SUPREME COURT REPORTS (1988) 2 S.C.R.

HELD: The short question that arose for decision in these mat-
y
A
ters_was whether the cinema building in question was exe.,,.;t f . m the '
purview of the U.P. Urban Buildings (Regulations of Lett:ng; ;<ent &
Eviction) Act, 1972; by reason of the exemption con.ained in section
2(l)(d) thereof. As regards the controversy regarding the grant of the
cinema licence to the l\Iehrotras, the High Court was clearly right in
B holding that Pandey had no locus stai:idi in the matter. However, the \_-.
issue of a valid licence to J\lehrotras would ultimately depend upon the
outcome of their right to occupy the premises in question. If had Pandey
succeeded in his contention that the building continued to be subject to
the provisions of the Act, then, the allotment of the building on its.
vacation by the Sharmas would have t:> be made in accordance with law
/ and the Mehrotras would not be able to occupy the building in
c pursuance of the.lease deed and run the cinema, as they would not be '!-·
. entitled ~o a licence, as, a condition precedent for w·hich was the availa~
bility to the exhibitor of a building in which he had a right to exhibit
cinema shows. This was clear from the provision ins. 13 of the Act. If,
on the other hand, Pandey's contention was not acceptable, then, the
D l\lehro.tras would be entitled to run the theatre. The Court, therefore,
granted leave to Pandey in the two petitions for special leave and took
up those appeals for consideration in the first place. (686E-H; 687A·Bl 'r
On a careful consideration of the scheme and language of the Act,
the Court was of the opinion· that ihe judgment of the High Court
should be affirmed and the appeals, dismissed_. (6900) ~
E
Section 2( 1) of the Act exempts from the operation of the Act
various types of buildings set out in clauses (a) to (0 of the sub-section.
The initial attempt of the appellant was to suggest that the above J(
exemptions were available only where the premises in question was of a
nature specified in one or the other of those clauses as on the date of the
'F commencement of the Act, namely, 15th July, 1972; The Court could
nof accept this contention. A perusal of the various .clauses makes it
clear that the building should fulfil the character indicated therein on
the date on which the provisions of the Act are sought to be made
applicable thereto. It was clear, in the opinion of the Court, that even a
building which might have belonged to private individuals since 1972
G would automatically fall within the exemption clause (a) as soon as it
. ~
was purchased by the Government or a local authority or a public
. sector corporation. It would not be correct to read the section as confer-
't
ring an exemption only on the buildings which belonged to the Govern-
ment, etc., on 15th July, 1972 and not on those acquired by them
thereafter. The position must be construed likewise in respect of the
H other clauses too. (690E-H)
SATYA NARAIN PANDEY v. STAIB OF U.P. 681

It was strongly urged by the appellant that the nature of the A
building had to be determined as on the 30th September, 1984, on
..--, which date the building was vacated by the Sharmas, and on that date,
the building was subject to the provisions of the Act. A vacancy having
arisen in such a building, it was the duty of the landlord to have
intimated the same to the District Magistrate and then followed the
procedure under the Act. Any letting out of the property by them to the l3
'r Mehrotras was unlawful in view of s. l3 of the Act, and on the strength
• of an unlawful letting, the IMdlords could not contend that the building
! was outside the purview of the Act. There was a plausibility about this con-
tention but the Court could not accept it as thi' construction of the provisions
.~ would render the exemption section totally unworkable. [690H; 691A-C I

,4_ Section 2( l) of the Act takes out of the provisions of the Act
c
certain classes of buildings. Some of these exemptions are based on the
nature of the ownership of the property and some of them, on the
nature of the use to which the property is either put or intended to be
put. In the view of the Court, even in respect of a building covered by
the Act, the Act would cease to be applicable if, on a vacancy occurring D
therein, the landlord intended to put it to the use specified in clauses (c)
to (0 of the section and in cases covered by clauses (c) and (d) of the
section, also intended to let it out for such use along with the plant and
apparatus therefor. The Court favoured this interpretation of an auto-
matic exclusion of certain classes of buildings from the purview of the

-
Act. [691D; 692G-H) E

How would the question of the applicability of the Act be
... determined? It could certainly not be ipsi dixit of the landlord. If a
' landlord let out his property or otherwise dealt with it on his own, and
_;..,-.,was found at fault, he would not only be punishable but would also be
unable to resist an allotment of the property by the District Magistrate F
"I
in due course. Since the District Magistrate was empowered to deal with
buildings to which the Act applied it was for the District Magistrate to
satisfy himself, after hearing the landlord, that it was in fact a building
to which the Act was applicable. It was open to the landlord to intimate
the vacancy but make a claim before the District Magistrate that the
'T'-'(
Act had ceased to be applicable to his building. Where the landlord G
·y failed to do so, the Magistrate might consider the issue if vacancy in
respect of the bmlding was brought to his notice. The District Magistrate
could inspect the building and then decide whether the A"' continued to
apply or not. It was for the District Magistrate to satisfy himself that the
landlord intended to let out the premises and he intended to let it out not

..
as a mere building but with plant and apparatus. The District Magis- H
682 SUPREME COURT REPORTS 119881 2 S.C.R.

A trate had to satisfy himself on the materials made available to him. But }-
it would not be incumbent or proper for him to give notice to the
proposed allottees of the property and hear them. An application for !4
allotment merely conferred on the applicant a right to be considered for
allotment of a building to which the Act was applicable, and he had no
right qua any property until the District Magistrate came to the conclu-
B sion that the building was one which he could allot. l694C-HI

The Court did not accept the contention of the appellant for
remanding the case to the District Magistrate for a determination after
hearing the appellant also on the question whether the landlords in this
case were entitled to an exemption. This determination had to be ar- '~
c rived at by the District Magistrate after hearing the landlord and on the ( '
basis of such inspection or enquiries as he might consider necessary. At )._
this stage, he should not permit the intervention of any other party; a
contrary interpretation would make the provisions almost impossible of
being worked. There might be several applicants for allotment, some
general, and some with regard to specific property. If they were con-
D sidered as having a right to be heard on the availability of a property for
allotment, every one must be allowed to intervene. The landlord might "'--
have to face innumerable challenges by the various applicants at diffe-
rent points of time, resulting in the proceedings being delayed. All this
was not envisaged under the Act. Once the District Magistrate decided
that a building was not one to which the Act applied, there was an end )--
E of the matter. If the District Magistrate decided that the bnilding fell ·
within the provisions of the Act, an aggrieved landlord's remedy was
only by way of a writ petition, where such conclusion was on the face of
it erroneous or perverse or based on 110 material. l695B-E]
).
-
In this case, the District Magistrate, after registering the vacancy<'°\"-
F on 6.3.1987, came to the conclusion on the basis of the appellani's
averments that the Act continued to be applicable to the premises. The 'y
landlords challenged this conclusion successfully by a writ petition.
Subsequent to 6.3.1987, the District Magistrate himself had the prop-
erty inspected, and, apparently, he did not apply his mind to the terms
of the report of the inspection. In normal course, perhaps, the Court
G would have sent the matter back to enable him to do this, but in the ¥ "'
present case, the Court thought no useful purpose would be served by
remanding the matter to the District Magistrate for a fresh considera- Y
tion. The repqrt of the Sub-Divisional Magistrate, the terms ofthe lease
agreement, the registered lease-deed and the application for, and the
grant of, a cinematograph licence in the name of the Mehrotras, clearly
H showed that the landlord intended to let out the property as a fully
SATYA NARAIN PANDEY v. STAIB OF U.P. IRANGANATIIAN, J.J 683

equipped cinema theatre. In the fact of this, the District Magistrate had A
clearly no jurisdiction to proceed with the allotment of the premises in
question. 695F-H; 696A-B]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1502
of 1987 etc.
B
From the Judgment and order dated 14.7.87 of the Allahabad
;>- • High Court in C.M.W.P. No. 11907of1987.
j

Rajinder Sachhar and K.C. Dua for the Appellant.

Raja Ram Aggarwal, Salman Khurshid, Ishad Ahmed, S.
Wasim, N .A. Siddiqui and Mrs. Rani Chhabra for the Respondents .. c
The Judgment of the Court was delivered by

RANGANATHAN, J. These matters involve the interpretation
of section 2(1)(d) of the U .P. Urban Buildings (Regulation of Letting, D
Rent and Eviction) Act, 1972, (Act No. 13 of 1972), (hereinafter refer-
red to as 'the Act'). Section 2(1) of the Act exempt certain classes of
buildings from the application of the Act. One such exemption, under
clause ( d), is in respect of:

"(d) any building used or intended to be used for any other E
industrial purpose (that is to say, for the purposf of man-
ufacture, preservation or processing of any goods) or as a
cinema or theatre, where the plant and apparatus installed
for such purpose in the building is leased out along with the
-~ building."
F
Though the question for our ultimate decision is a short one, there has
been a multiplicity of proceedings between the concerned parties. The
relevant facts, therefore, need to be set out at some length.

2. The building known as Prem Talkies, situated in Mohalla
Sahadatpura, Maunath Bhanjan, District Azamgarh, U.P., belongs to G
Behari Lal Tandon and five others, (hereinafter referred to as 'the
landlords'). They had let out the building to Sunil Sharma and
another. Though the landlords claim that the lease was of the building
along with certain fixtures, it has to be taken for the purposes of the
present proceedings that the lease to the Sharrnas was the lease of the
building simpliciter and that the building was then subject to the provi- H
684 SUPREME COURT REPORTS [1988) 2 S.C.R.

A sions of the Act. This was the finding given in the suit for eviction
which the landlords had instituted against the Sharmas. That decree
has since become final and the respondents have made out before us
no grounds to differ from that finding. The landlords succeeded in
obtaining delivery of vacant possession of the building from the
Sharmas on 30.09.1984.
B
3. It appears that the Sharmas had filed a revision petition in the
High Court against the eviction order, which was eventually dismissed
on lst August, 1985. The landlords claim that, subsequent to the
recovery of possession, they wished to let out the building along with
plant, machinery, furniture and apparatus installed therein for running
C a cinema theatre. However, steps in this direction by way of renova-
tion of the building, installation of plant, machinery, new furniture
and electrical fittings and the execution of a lease deed could be
embarked upon only after the revision petition of the Sharmas was
dismissed. They claim that they proceeded to do the needful. Thereaf-
ter on 5th Feb., 86, an agreement of lease was executed between the
D landlords and the Mehrotras (respondents in the matters before us).
Under this agreement, the Mehrotras agreed to take the building fully
equipped with projector, machines, fixtures and furniture in full run-
ning condition for a period of five years with an option to renew for a
further period of two years, on certain terms and conditions which are
not relevant for our present purposes. It was provided that the Mehro-
E tras should obtain a cinematographic licence from the appropriate
authorities by the end of the year 1987, failing which the lease agree-
ment would stand cancelled. It is claimed that a generator was
purchased on 20th June, 1986 and a projector on 22.9.19S6 and that
these were duly installed in the building on 26.10.86. A lease deed
pursuant to the agreement of lease between the landlords and the ~
F Mehrotras was entered into on 30.12.1986, more or less broadly on the \,
same terms as the agreement of lease earlier referred to. It is claimed \
that actual physical possession of the building was given to the
Mehrotras on the 8th of January, 1987.

4. In the meantime, it appears, the present appellant, Satya Na-
G rain Pandey had made an application under s. 16 of the Act, praying
that the building in question should be allotted to him. There is a
y
dispute regarding the date of the application. Pandey claims that the
application was filed on 25.9.86 and that, on the basis of this applica-
tion, the Additional District Magistrate had called for a report from
the Rent Control and Eviction Inspector, who submitted a report on
H 28.10.86, stating that the building was vacant as on that date. On the
SATYA NARAIN PANDEY v. STATE OF U.P. (RANGANATHAN, J.J 685
...,·
1 other hand, the landlords claim that the vacancy of the building had A
been declared on 6.3.1987, that a notification calling for applications
for alJotment had been issued on 9.3.87 and that the application by
Pandey for alJotment has been made only on 9.3.87. The landlords,
thereupon filed W.P. No. 10346/87 in the Allahabad High Court pray-
ing that the order dated 6.3.87 and the notification dated 9.3.87 be
quashed. They also say that, on coming to know of the alleged report B
of the Rent Control and Eviction Inspector dated 28.10.86, they had
applied to the Additional District Magistrate on 23.3.1987, pointing
out that the report of the Eviction Inspector had been obtained behind
their back and requesting that a fairly high-placed official should be
sent to inspect the premises again and submit a report. This applica-
tion was granted by the Additional District Magistrate and, in pur-
suance of the said order, the Sub-Divisional Magistrate submitted a
c
report on 28.4.87. Accordingto this report, the building as on that date
was a full-fledged cinema building fully equipped with projector.
exhaust and electric fans, electric fixtures, diesel generating set, etc.,
and the building was not vacant. He also reported that the landlords
appeared to have let out the building to the Mehrotras under the D
agreements of 5.2.86 & 30.12.86.

5. When these proceedings were taking place, the Mehrotras, in
pursuance of the lease deed entered into by them with the landlords.
applied for the grant of a licence for running a cinema in the premises
in question under the U.P. Cinemas (Regulation) Act, 1955. They did E
this on 8.1.1987. This application was granted by the Additional Dis-
trict Magistrate, Azamgarh by his order datd 22.6.1987. Pandey, who,
as mentioned above, had applied for the allotment of the premises to
himself. considered himself aggrieved by the grant of the cinemato-
"7-\ graphic licence to the Mehrotras on 22.6.1987. He, therefore, filed
1
Writ Petition No. 11907/87 before the Allahabad High Court. This F
writ petition was dismissed. The Court held that the order granting a
licence to the Mehrotras could not be quashed on the ground of the
pendency of the allotment proceedings before the Rent Control &
Eviction Officer and that Pandey did not have any right to challenge
.. the grant of licence merely because the vacancy of the building was
' declared at his instance, particularly when the dispute as to whether G
·1'· the Act applied or not to the premises in question is yet to be decided
C.A. no. 1502187 has been preferred against the judgment of the Divi-
sion Bench in the above writ petition. This court granted special leave
to Pandey by its order dated 14.7.87 and also directed, that, in the
meantime the proceedings for the grant of .the cinema licence be
stayed. H
686 SUPREME COURT REPORTS [1988) 2 S.C.R.

A 6. We have mentioned that the landlords had filed Writ Petition
No. 10346 of 1987 in the Allahabad High Court against the order of the
Additional District Magistrate declaring a vacancy in respect of the
premises in question by the order dated 6.3.87 and notice dated 9.3.87
inviting applications for allotment of accommodation thereto. Their
contention was that the cinema building stood excluded from the
B purview of the Act by virtue of section 2(J){d) and that, therefore, the
question of declaring a vacancy or allotting it to any person did not
arise. The Mehrotras also filed Writ Petition No. 12263 of 1987 raising
the same pleas and seeking the same relief. These writ petitions
were heard together and disposed of by a consolidated order of the
High Court dated 20.11.87. The High Court accepted the contentions
of the petitioners and allowed the writ petitions. The order dated
c 6.3.87·and notice dated 9.3.87 were.·set aside and the Rent Control &
Eviction 0fficer, Azamgarh, was directed not to proceed with the
allotment of the cinema building in question under the Act. Pandey,
who, was one of the respondents in the above writ petitions, has filed
SLP nos. 15030-31of1987 for leave to appeal from the decision of the
D Allahabad High Court in these writ petitions.

7. From the above narration of facts, it will be seen that the
short question that arises for decision in these matters is as to whether
the cinema building in question is exempt from the purview of the Act
by reason of the exemption contained in section 2(l){d). The other
E controversy in C.A. 1502/87 regarding the grant of the cinema licence
to the Mehrotras need not detain us long. The High Court was clearly
right in holding that Pandey had no locus standi in the matter. How-
ever, the issue of a valid licence to Mehrotras will ultimately depend
on the outcome of their right to occupy the premises in question. If
Pandey succeeds in his contention that the building continues to be ~
F subject to the provisions of the Act, then, obviously, the allotment of
the building on its vacation by the Sharmas will have to be made by the
Additional District Magistrate in accordance with law and the Mehro-
tras will not be in a position to occupy the building and run the cinema
theatre in pursuance of the lease deed and the licence obtained by
them. This is clear from the provision contained in S. 13 of the Act. If, '.

G on the other hand, the contention of Pandey is not acceptable, then the
Mehrotras will be entitled to run the theatre in pursuance of the lease '(
deed in exercise of the cinematographic licence obtained by them. In
this view of the matter, the grant of licence to the Mehrotras recedes to
the background and is only relevant to this extent that, in case the
lease of the building to the Mehrotras is held to be contrary to the
H provisions of the Act, they may not be entitled to the licence, a condi-
SATYA NARAIN PANDEY v. STATE OF U.P. IRANGANATHAN, J.! 687
-.;'
tion precedent for which will be the availability, to the exhibitor, of a A
building in which he has a right to exhibit cinema shows. We may,
~- therefore, leave the controversy in Civil Appeal No. 1502/87, aside for
the time being. We shall, therefore, grant special leave to Pandey in
the Special Leave Petitions and proceed to dispose of the same, as we
have heard the learned counsel on both sides.
. B
r 8. We may, at this stage, outline the scheme and salient provi-
sions of the Act. Like other enactments of its type, it was a measure
designed to meet the acute shortage of urban accommodation in U.P.
during and after the Second World War. The continuing increase in
urban population and the relatively slow pace of house-building activ-
ity mainly due to shortage of materials had rendered it necessary to c
continue the controls on rents, letting and eviction imposed earlier as a
war measure or temporary legislation. The long title of the Act shows
that one its objects was to provide "for the regulation of letting certain
classes of buildings situated in urban areas" and this object is given
effect to by the provisions of Sections 1 & 2 of the Act. By section l,
the Act is _made applicable to all buildings in the urban areas of the D
State. However, section 2 exempts certain buildings form the opera-
tion of the Act. It is sufficient here to extract the provisions of section
2(1), which read thus:

.... "Exemptions from operation of Act: (1) Nothing in this
Act shall apply to the following namely: E
'

.. . (a) any building of which the Government or a local
authority or a public sector Corporation is the land-
lord; or
~
(b) any building belonging to or vested in a recog- F
1
nised educational institution, the whole of the income
from which is utilised for the purposes of such institu-
tion; or

,,, ; (c) any building used or intented to be used as a
factory within the meaning of the Factories Act, 1948 G
(Act No. LXIII of 1948) (where the plant of such
1 factory is leased out along with the building); or

(d) any building used or intented to be used for any
other industrial purpose (that is to say, for the pur-
pose of manufacture, preservation or processing of H
688 SUPREME COURT REPORTS [1988) 2 S.C.R.

any goods) or as a cinema or theatre, where the plant
A
and apparatus installed for such purpose in the build-
ing is leased out along with the building:

Provided that nothing in this clause shall apply in relation
to any shop or other building, situated within the precincts
B of the cinema or theatre, the tenancy in respect of which
has been created separately from the tenancy in respect of {
the cinema or theatre; or

( e) any building used or intended to be used as a
place of public entertainment or amusement (includ-
ing any sports stadium, but not including a cinema or
c theatre), or any building appurtenant thereto; or

(f) any building built and held by a society registered
under the Societies Registration Act, 1860 (Act No.
XXI of 1860) or by a cooperative society, company or
D firm and intended solely for its own occupation or for
the occupation of any of its officers or servants,
whether on rent or free of rent, or as a guest house,
by whatever name called, for the occupation of per-
sons having dealing with it in the ordinary course of
business."
E
9. The clear effect of this section is that if any building falls
under any one of the above clauses, it is exempt from the operation of
the Act. The whole case of the landlords here is that the premises in
question falls under clause (d). The appellant, on the other hand,
starts from the uncontroverted position that, as on 30.09.1984, the
F building was covered by the provisions of the Act. It is contended that,
once this position is admitted, there is no escape from the conclusion
that any subsequent letting of the premises can only be in the manner
prescribed in Chapter III of the Act, which contains provisions for the
regulation of letting of premises governed by the Act. The scheme of
these provisions is that the District Magistrate maintains two registers,
G one of all vacancies of buildings to which the Act applies and the
other, of all applications, by needy persons, for allotment. The vacan-
cies come to the notice of the District Magistrate by reason of an
obligation imposed on landlords and tenants to notify the vacancy or
r
expected vacancy to him within a stated period (s. 15). There are also
provisions of deemed vacancy and a provision to ascertain whether a
H building is vacant or not, with the details of which we are not con-
SATYA NARAIN PANDEY v. STATE OF U.P. \RANGANATIIAN, J.\ 689

cerned. The requirements of accommodation are known from applica-
A
tions in prescribed forms received from needy persons from time to
time seeking an allotment in general or of a specific building which is.
or is likely to fall, vacant. The vacancies are notified to public specify-
ing a date on which allotment will be considered, with notice also to
the landlord. On the date fixed, the District Magistrate allots the
vacant building to the applicants in accordance with the procedure and B
priorities outlined in the rules. The District Magistrate, under s. 17, is
required to make an allotment order within a specified period. Failing
this, the landlord is entitled to require that the building shall be allot-
ted to a person of his choice and the District Magistrate shall comply
with his request unless there are special and adequate reasons not to
do so but to allot the building to some other person. The landlord can
also apply to the District Magistrate to release the building to himself. c
The landlord, however, can secure a release order only in certain
circumstances outlined in sub-section (2) of section 16. It is unneces-

I sary to set out these circumstances here and it is sufficient to say that
these circumstances do not exist in the present case. Teeth are pro-
vided for the enforcement of the above scheme by providing that, once D
there is a vacancy, the building can be dealt with only on the basis of a
release or allotment order (s. 16); that it cannot be Jet out to any
person other than allottee (s. 11); and that any person occupying it
otherwise than in pursuance of an allotment qr release order shall be
deemed to be an unauthorised occupant of the building or part thereof
(s. 13). Any contravention of the provisions of the Act is made punish- E
able as a criminal offence (s.31). On the strength of these provisions, it
is contended that, when the premises became vacant on 30.9.84, the
provisions of the Act were applicable to it. It was not open to the
landlords to flout the requirements of this Act and to proceed to let

i
----A out the premises to persons of their own choice. There was no alterna-
tive for them but to let out the premises to an allottee or, if they could, F
to obtain release of the premises to themselves. They are not entitled
to place the building outside the purview of the Act by merely declar-
ing that they intended to let the premises thereafter along with the
plant and machinery thus attracting the exemption under section
2(1)(d). To permit the landlords to do so would facilitate easy avoi-
dance of the provisions of the Act by landlords purporting or claiming G
to change the nature or use of the property or the nature of the Jetting
in such a way as to fall under the terms of one clause or other of the
exemption section. This, it is urged, should not be permitted.

10. On the other hand, the stand taken by the landlords is that
section 2( 1) exempts certain categories of buildings altogether from H
690 SUPREME COURT REPORTS (1988] 2 S.C.R.

A the purview of the Act. In the present case, on the date c , '· :"ation
o
of the vacancy, namely, 6.3.87, the building let out"'..'".-, ··..._ with
Y
full cinematographic equipment and furniture installe.; ~>·:: .. : .vas
also the subject matter of lease, as a running cinema theatre, in favour
of the Mehrotras. This being so, the building fell within the class of
buildings exempted under. section 2(l)(d). It is submitted that, the
B moments. 2(1)(d) is attracted, the building is automatically taken out- ~
side the purview of the Act, even if, earlier, it had been a building to
which the provisions of the Act were applicable. It is submitted that
the Act is intended to regulate only the letting of buildings and not to
regulate _or control the development of commerce or to impair the

c
rights of the landlords to deal with their property in any manner they
like. It is, therefore, contended that the High Court was right in hold-
ing that the District Magistrate had no jurisdiction to deal with the
"f-·
building under the provisions of the Act. ·

11. Though there is a plausibility in the contention urged on
behalf of the appellant, we are of opinion, on a careful consideration
D of the scheme and language of the Act, that the judgment of the High
Court should be affirmed and t_he appeals dismissed.
. ' ,;-___ .·· . .
12. Section 2( 1) of the Act exempts from the operation of the
Act various clauses of. buildings_ set out in clauses (a) to (f) of that .
sub-section. The initial attempt on behalf of the appellants was to
E suggest that the above exemptions are available only where the pre-
mises in question ·was of the nature specified in one or the other of
those clauses as on the date of the commencement of the Act, namely,
15th.July, 1972. We cannot accept this contention. A perusal of the
various clauses makes it clear that the building should fulfill the
character indicated therein on the date on which the provisions of the
'·· F Act are sought to be made applicable thereto. To give an illustration,
'·.clause (a) exempts "any building of which the Government or a local
authority or a public sector corporation is the landlord."-In our opinion
it is clear that even a building which might have belonged to private
·individuals since 1972 will automatically fall within this exemption
clause as soon as it is purchased by the Government or a local author-
G ity or a public sector corporation. It will not be correct to read the
section as conferring an exemption only on the buildings which
belonged to the government etc. on 15th July, 1972 and not to those
·+
acquired by them thereafter. The position must be construed likewise
in respect of the other clauses too.

H 13. It is, however, strongly urged on behalf of the appellants is
....

SATYA NARAIN PANDEY v. STATE OF.U.P. IRANGANATifAN, J.I 691

··--1 that in any event, the nature of the building has to be determined as on A
30th September, 1984 on which date the premises were vacated by the
Sharmas. There is no dispute that, as on that date, the building was
subject to the provisions of the Act. That be!ng so, and a vacancy
having arisen in such a building, it was the duty of the landlords to
have intimated the same to the District Magistrate and then gone
through the procedure prescribed under the Act before letting out the B
y property to any person. Any letting out of the property by them to the
Mehrotras was unlawful in view of s. 13 of the Act and the landlords
'J· , cannot be heard to contend, on the strength of such an unlawful letting
that the premises stand outside the purview of the Act. There is, as we
4 said earlier, a plausibility about this contention but, in our opinion, it
1
\ cannot be accepted as this construction of the provisions would render C
.->{ the exemption section totally unworkable.

14. We may first consider the nature of the exemption conferred
by s. 2(1). It takes out of the provisions of the Act certain clauses of
buildings. Some of these exemptions are based on the nature of the
ownership of the property and some of them on the nature of the use D
_., to which the property is either put or intended to be put. So far as the
former is concerned, there can be no doubt that any building that
satisfies the ownership requirements set out therein automatically goes
outside the purview of the Act. Thus, under clauses (a) and (b ), even if
"{ a building was previously subject to the provisions of the Act, it will
cease to be so the moment it is purchased by a Government or a local E

- authority or a public sector corporation or a recognised educational
institution. The vesting of the ownership of the premises in one of the
categories of bodies mentioned effects a statutory cut off of the build-
~ ing from the applicability of the provisions of the Act. The exclusion of
· -.- cthe
. . Act would be automatic and does not need any application by the

· previous or subsequent landlord or any order by the Additional Dis- F
1 trict Magistrate under any of the provisions of the Act. So far as
clauses (e) and (f) are concerned the exemption depends upon the
nature of the use to which the property is put. There is no difficulty in
cases where the building, at the time it falls vacant, was actually used
...,,.._ 4
for the purposes specified in these clauses: say, as a place of public
entertainment or amusement. It would, like the buildings described in G
clauses (a) and (b) fall outside the provisions of the Act. So far there is
l no difficulty. But the exemption conferred by these clauses takes in
not only actual user but also intended user; that is, the use to which the
property is proposed to be put, whatever may have been the use it was
put to earlier. Thus, if a building let out privately earlier, is intended to
be used as a place of amusement or entertainment or a Cooperative H
692 SUPREME COURT REPORTS [1988) 2 S.C.R.

A r
Society decides to convert a flat let out to an outsider earlier into one
for occupation by its own officer, it will stand outside the purview of
the Act. Now we come to clauses (c) & (d) which not only talk of user "'""
or intended user but also impose a further requirement that plant and
apparatus "is leased out along with the building". This creates a some-
what anomalous situation. It is argued that, if the building had been
B leased out earlier without the plant and machinery, it would be subject
to the provisions of the Act and cannot be leased out without the 1
permission of the District Magistrate; any such lease as may have been '
purportedly enterd into without such permission would be contrary to l,.'
the provisions of s. 11 and therefore, invalid and illegal. It is argued
that where the building is let out wrongfully without an authorisation'•
by the District Magistrate, such letting should be ignored and it cannot r'
c be said that the building "is let out" along with plant and machinery. \.
In our opinion this is not the correct interpretation of these clauses. r-
What they exempt are: "a building intended to be used as a factory
. . . . . where the plant of such factory is leased out along with the
building" and a "building intended to be used for any other industrial
D purpose or a cinema or theatre where the plant and apparatus installed
for such purpose in the building is leased out along with the building". .._
Each of these clauses should be read as a whole and doing so, the
exemption is not restricted only to cases where there is a prior valid
lease of the building with plant and apparatus but would also extend to
cases where, though the building earlier was without such plant and '(
E apparatus or was not being used for such purposes as are specified, the
owner intends to put them to the specified uses by letting them out
with the necessary plant and apparatus. The words "is leased", there-
fore, do not connote the idea of a valid actual subsisting lease of the
building with plant on the date of vacancy; they are only descriptive of ~
-
the manner in which the building is intended to be used. What is _
F needed is (a) that the building should be intended to be used by~\_
prospective tenant, for the purpose specified in either of the clauses ~
and (b) that in order to facilitate the purpose being achieved the build-
ing is intended to be let out to him along with necessary plant and
apparatus. In our view, therefore, even in respect of a building
covered by the Act, the Act will cease to be applicable if, on a vacancy
G occurring therein, the landlord intends to put it to the use specified in • f
clauses (c) to (f) and, in cases covered by clauses (c) and (d), also r-
intends to let it out for such use along with the plant and apparatus
necessary therefor.
15. We lean in favour of this interpretation, of an automatic
exclusion of certain classes of buildings from the purview of the Act,
H for the following reasons:
SATYA NARAIN PANDEY v. STATE OF U.P. IRANGANATIIAN, J.] 693
~
(i) The declaration ins. 2(1) that nothing in the Act applies to A
.... the classes of buildings mentioned therein has to be given effect
to. It is patent that buildings falling under clauses (a) and (b) go
out automatically. A different rule cannot apply in respect of the
other clauses.

(ii) The Act does not contain any provision or machinery B
r
). .J
whereby the owner of a building subject to the provisions of the
Act can ask the District Magistrate or other authority to record
the purchase of the property by the bodies specified in clauses (a)
.~
and (b) or to grant permission for converting it into a category of
I~ building for which exemption would be applicable under clauses
(c) to (f). It does not specifically confer jurisdiction on any
authority to adjudicate upon a claim that a building falls within
c
-'{
the exemption clause and that the provisions of the Act are,
therefore, not applicable to it.

(iii) On the other hand, under the scheme of the Act on
there being a vacancy in a building to which the Act applies, it D
can only be re-occupied in terms of either an allotment order or a
release order. A release order under s. 16 can be only got in
certain circumstances. It cannot be obtained by a landlord for the
mere asking. The District Magistrate cannot release the building
'' 'f to the landlord, even if he is satisfied of the landlord's intention
to use the building in the manner specified in one of the clauses E
...
-.>
of section 2(1) and his intention to let it out with plant and
apparatus. This being so, the interpretation suggested by the
A
appellants would mean that, once a building is subject to the
provisions of the Act, it can never be taken out of the Act even if

r the requirements of clauses (a) and (b) or the intended user in
terms of clauses (c) to (f) of s. 2(1) can be established. F

(iv) The above interpretation does not result in facilitat-
ing any avoidance of the provisions of the Act as contend~d for
by the appellants. As rightly pointed out on behalf of the land-
"}--. lords, the Act is intended to regulate the letting of the premises
but it is not intended to curb commercial activities or to impair G
the right of the landlord to change the nature of the use to which
l' his building should be put. Rather, the manner in which clauses
(c) to (f) are phrased would show that the intention of the Legis-
lature was to exempt buildings used or intended to be used for
commercial or industrial purposes and that intention should be
given effect to. A lease given by the landlord in this manner H
694 SUPREME COURT REPORTS I19881 2 S.C.R.

cannot be attacked as illegal or collusive to get over the provi-
A
sions of the Act as there is nothing in law to prevent the landlord
from doing so.

(v) The appellant's argument overlooks that the restric·
tions in ss. 11, 13, 16 and other provisions are all applicable only
B where the building does not fall under s. 2(1). When it does, the
right of the landlord to let it out to a tenant of his choice cannot
be defeated by continuing to read those restrictions merely
because they were applicable at one time to the property.

16. Naturally the question would arise as to how the question a,
regarding the applicability of the Act is to be determined. It can cer· 1' 1
C tainly not be ipsi dixit of the landlord. If a landlord acts on. his own and
lets out the porperty or otherwise deals with it, he takes the risk and, if
he is found at fault, will not only render himself. punishable but will
also be unable to resist an allotment of the property by the District
Magistrate in due course. Since the District Magistrate has been
D empowered to deal with buildings to which the Act applies, it is for the
District Magistrate to satisfy himself, before he proceeds to deal with
any premises, that it is in fact a building to which the provisions of the
Act are applicable. It is open to the landlord to intimate the vacancy
but make a claim before the District Magistrate that the Act has ceased
to be applicable to his building but he is not obliged to do this. Where
E the landlord fails to do so, the Magistrate may consider the issue if the
vacancy in respect of the building is brought to his notice. The District
Magistrate has powers to inspect the property and then decide whether
the Act continues to apply or not. It is for the District Magistrate to
consider the circumstances and to satisfy himself that the landlord "'
intends to let out the premises for one of the purposes specified and, in
F respect of clauses (c) & (d), that he intends to let it out not as a mere
building but with plant and apparatus. We would like to make it clear,
however, that, in this process, the District Magistrate has to satisfy
1
himself on the materials made available to him. But it will not be
incumbent or proper on his part to give notice to or convene any of the
proposed allottees of the property and hear them on this issue.
G Whether a building is one to which th<: provisions of the Act are
applicable or not is a matter which has to be decided by the District
Magistrate after hearing the landlord. It fa a matter between the land-
lord and the Government. An application for allotment merely confers
on the applicant a right to be considered for allotment of a building to
which the provisions of the Act are applicable,, and he has no rights
H qua any property until the District Magistrate comes to the conclusion
SATYA NARAIN PANDEY v. STATE OF U.P. [RANGANATHAN, J.) 695

that the building is one which he can deal with by way of allotment. A
17. It was contended on behalf of the appellants that the present
case may be remanded back to the District Magistrate for a determina-
tion, after hearing the appellants, also on the question whether the
landlords in the present case are entitled to an exemption. We are
unable to agree. We are of the opinion that this determination has to B
I' be arrived at by the District Magistrate after hearing the landlord and
). on the basis of such inspection or enquiries as he may consider neces-
... j
sary. We are clearly of the opinion that at this stage he should not
permit the intervention of any other party. A contrary interpretation
• .(; would make the provisions almost impossible of being worked. There
may be several applicants for allotment, some general and some with
( c
' -{ regard to the specific property. If they are considered as having a right
to be heard on the availability of a property for allotment, every one of
them must be allowed to intervene. Different persons might come in at
~ different stages and challenge the contention of the landlord that the
~ building is not available for allotment. The landlord may have to face
_. innumerable challenges by various applicants at different points of D
time and they might claim that they want to lead evidence and thus
delay the proceedings. We do not think that all this is envisaged under
the Act. It is for the District Magistrate to come to the conclusion
whether a building is available for allotment or not, and once he
decides that it is not a building to which the Act applies, that is an end
of the matter. If he comes to a conclusion that the building falls within E
the provisions of the Act and the landlord is aggrieved, the landlord's
remedy has only to be by way of a writ petition where such conclusion
is on its face erroneous or based on no material or perverse.

~- 18. In the present case, the District Magistrate registered the
1· vacancy on 6.3.87; in other words, he came to a conclusion, mainly on F
the basis of the appellant's averments, that the Act continues to be
applicable to the premises. The landlords challenged this conclusion
successfully in the writ petition. As pointed out by them, subsequent
to 6.3.87, the District Magistrate himself had the property inspected
-:-~ < and there is a report available on record. Apparently, the District
Magistrate has not applied his mind to the terms of the report. G
l Perhaps, in the normal course, we would have sent the matter back to
enable him to do this. However, in the circumstances of the present
case, we think no useful purpose would be served by remitting the
matter back to the District Magistrate for fresh consideration. As
pointed out by the High Court, the report of the Sub-Divisional Magis-
trate, the terms of the lease agreement and the registered lease deed as H
696 SUPREME COURT REPORTS [1988) 2 S.C.R.

A well as the application for, and the grant of, a cinematographic licence
in the name of the Mehrotras, clearly show that the landlord intended
to let out the property as a fully equipped cinema theatre and that
they have done so. In the face of this evidence, the District Magistrate
had clearly no jurisdiction to proceed with the allotment of the pre-
mises in question. We would, therefore, uphold the findings of the
B
High Court in this regard.
'I
19. In the result the appeals against the order dated 20.11.87 are \."
dismissed. In consequence of the view taken by us, C.A. No. 1502/87 ~

has also to be dismissed. We direct accordingly. In the circumstances,

c
however, we make no order as to costs.

S.L. Appeal and petitions dismissed.
>" "
~-

~
',...

y