Holding

The Bombay Rents, Hotel and Lodging House Rates Control, Bombay Land Requisition and Bombay Government Premises (Eviction) (Amendment) Act, 1996 is intra‑vires and valid.

Summary

The Supreme Court examined the constitutional validity of the Bombay Rents, Hotel and Lodging House Rates Control, Bombay Land Requisition and Bombay Government Premises (Eviction) (Amendment) Act, 1996, which converted occupants of requisitioned premises into statutory tenants and ended the requisition. The petitioners, representing owners, argued that the Act exceeded the State Legislature’s competence under entries 6, 7 and 13 of List‑III and amounted to colourable legislation that overruled the Supreme Court’s earlier judgments in H.D. Vora and Grahak Sanstha Manch. The Court applied the pith‑and‑substance test, interpreted the relevant entries broadly, and held that the Act fell within the State’s power to regulate landlord‑tenant relations and to pursue economic and social planning. It further found that the legislation did not conflict with the earlier judgments nor was it an impermissible encroachment on the judiciary, and that the classification of occupants was reasonable under Article 14. Consequently, the Act was declared intra‑vires and the High Court’s decision striking it down was set aside.

Issues considered

The State Legislature’s competence to enact the 1996 Amendment Act under entries 6, 7, 13 of List‑III and entry 18 of List‑II.
Whether the Amendment Act is colourable legislation that indirectly overturns the Supreme Court’s rulings in H.D. Vora and Grahak Sanstha Manch.
Whether the Act violates Article 14 of the Constitution by arbitrary or unreasonable classification.

Legislation cited

Subjects

legislative competencecolourable legislationpith and substanceArticle 14rent controlrequisitionevictionconstitutional validityState ListList IIIlandlord-tenant

Judgment

WELFARE ASSOCN. A.R.P., MAHARASHTRA A
AND ANR. ETC. ETC.
v.
RANJIT P. GOHIL AND ORS. ETC. ETC.

FEBRUARY 18, 2003
B
[R.C. LAHOTI AND BRIJESH KUMAR, JJ.]

Bombay Rents, Hotel, Lodging House Rates Control, Bombay, Land
Requisition and Bombay Government Premises (Eviction) (Amendment) Act, C
1996-Act amending certain provisions of Bombay Rents, Hotel and Lodging
House Rates (Control) Act, 1947, Bombay Land Requisiiion Act, 1948 and
Bombay Government Premises (Eviction) Act, 1955-Altering the basis of
occupation of premises by occupants and declaring that requisitioning shall
come to an end-Constitutional validity of-Held: The Act is intra vires the
Constitution and thus valid. D
Constitution of India, 1950:

Article 246, Entries 6, 7, 13 ofList 111 and Entry 18 ofList 11 of Seventh
Schedule-Legislative competence-Held: Power ofthe State Legislature is to
legislate in respect of landlord and tenant found in entries 6, 7 and 13 of List- E
111 of the Seventh Schedule-No voluntary transfer ofproperty between owners
and allottees-State Government in exercise of its power of eminent domain
requisitioned the properties in public interest and allotted to occupants and
paid compensation-Also privily of estate was compulsorily converted into
privily of contract-Thus within the legislative competence of the State- F
Bombay Rents, Hotel, Lodging House Rates Control, Bombay, Land Requisition
and Bombay Government Premises (Eviction) (Amendment) Act, 1996.

Articles 245 and 246-Amending Act is merely placing additional
restrictions on the right of the owners to seek eviction of the premises, thus
is neither in conflict with the judgments of Supreme Court nor a piece of G
colourable legislation-Bombay Rents, Hotel, Lodging House Rates Control,
Bombay, Land Requisition and Bombay Government Premises (Eviction)
(Amendment) Act, 1996.

Article 246, Schedule Vll:
139 H
140 SUPREME COURT REPORTS (2003] 2 S.C.R. ~

A Enactment challenged with reference to entries in Schedule VII-Held:
In such cases it is necessary to examine the pith and substance of the Act.

Legislative entries-Interpretation of-Held: Entries should be widely ...
interpreted making them meaning/UI and effective-Transgression into the
field of another entry placed in another list is to be avoided-Interpretation
B of statutes.

Articles 141, 245 and 246-Enactment of /aw-Competency of-Held:
Legislature can enact a law, subject to its legislative competence, which will
withdraw or fundamentally alter the very basis on which a judicial
pronouncement has proceeded and create a situation which if it had existed ......,.,
c earlier, the Court would not have made the pronouncement.

Article 14-Reasonab/e classification-Validity of-Held: Legislation
enacting a law interJding to apply to or benefit the 'well defined class'-
premises whose occupants are under threat of eviction, thus not violative of
Article 14-Bombay Rents, Hotel, Lodging House Rates Control, Bombay,
D
Land Requisition and Bombay Government Premises (Eviction) (Amendment)
Act, 1996.

Doctrines:

Doctrine of colourable legislation and doctrine of Pith and Substance-
E ~

Discussed

Paucity of accommodation and severe population and habitation
conditions in Bombay led to enactment of Bombay Rent Restriction Act -->
1939.. This was followed by Bombay Rents, Hotel Rates and Lodging
F Houses Rates (Control) Act, 1944. Both these acts were repealed and
Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947 was
enacted to amend and consolidate the law relating to control of rents and
repairs of premises, rates of hotels and lodging houses, evictions and
charges for licenses of premises etc. There was lot of pressure of
accommodation in the State and thus, Bombay Land Requisition Act, 1948
G was enacted to provide for requisition of land which was to continue upto
31.3.1950. Due to shortage of accommodation requisition properties
continued under requisition for endless period of time and also the Act
was amended from time to time. In H.D. Vora v. The State of Maharashtra*
this Court struck down the requisition and directed derequisitioning of
H the flats. Thereafter the derequisitioning was upheld by this Court in
WELFARE ASSOCN. A.R.P., MAHARASHTRA"· RANJ!T P. GOH!L 141

Grahak Sanstha Manch v. The State of Maharashtra case*. However by A
virtue of interim order the aHottees in requisitioned premises continued .
in occupation which stood vacated and Court allowed time till 30.11.1994
to derequisition such properties. The period of requisition was to expire
on 31.12.1994. Several persons were in the requisitioned accommodation
and the Government was facing difficulties ou account of paucity of funds B
and ever rising prices in constructing alternative accommodation to
accommodate Government employees in service and others. Ordinance of
1994 was then issued and the period of requisition was extended.
Subsequently the Ordinance was replaced by the Maharashtra Act No VII
of 1995. Thereafter the derequisitioning process was completed. However
many premises continued under requisitioning including the premises C
allotted to government servants. As such certain provisions of Bombay
Rents, Hotel and Lodging House Rates (Control) Act, 1947, Bombay Land
Requisition Act, 1948 and Bombay Government Premises (Eviction) Act,
1955 were amended and Ordinance of 1996 was promulgated which was
later replaced by the Bombay Rents, Hotels, Lodging House Rates Control, D
Bombay Land Requisition and Bombay Government Premises (Eviction)
(Amendment) Act, 1996. Amending Act declared that the requisitioning
shall come to an end and conferred the status of tenants to the occupants
under the owners who would become the landlords and the amount of
compensation shall become rent and also the time to vacate was extended.
Respondent-owners challenged the constitutional validity of the Act. High E
Court struck down the Act as ultra vires· the Constitution. Hence the
present appeals by State of Maharashtra, the Welfare Association of
Allottees of Requisitioned Premises, Maharashtra and others.

Respondents-owners contended that within the meaning of entries 6
and 7 of List-III of the Seventh Schedule to the Constitution a law dealing F
with any existing transfer of property or an existing contract can be
enacted and the legislation cannot by itself create a transfer of property
or bring a contractual relationship in existence; that the owners have not
transferred any property in the premises to the occupants nor does any
contractual relationship exist between the owners and the occupants on G
the date of coming into force of the Amending Act and, therefore, the
Amending Act cannot be said to be a law governing transfer of property
or contract and hence does not fall within the purview of entries 6 and 7;
that the impugned judgment has the effect of nullifying· or overriding the
mandate of this Court issued in H.D. Vora and Grahak Sanstha Manch cases
which could not have been done directly but was sought to be done H
"1(

142 SUPREME COURT REPORTS [2003) 2 S.C.R.
A Indirectly by resorting to amendment which is colourable exercise of
legislative power.

Allowing the appeals, the Court

HELD: I. The Bombay Rents, Hotels, Lodging House Rates Control,
B Bombay Land Requisition and Bombay Government Premises (Eviction)
(Amendment) Act, 1996 is intra vires the Constitution and the impugned
judgement is unsustainable and liable to be reversed. (178-F)

2.1. In every case where the legislative competence of a Legislature
in regard to a particular enactment is challenged with reference to the
C entries in the various Lists, it is necessary to examine the pith and
substance of the Act and to find out if the matter comes substantially
within an item in the List. The express words employed in an entry would
necessarily include incidental and ancillary matters so as to make the
legislation effective. The scheme of the Act under scrutiny, itS object and
D purpose, its true nature and character and the pith and substance of the
legislation are to be· focused at. It is a fundamental principle of
Constitutional Law that everything necessary to the exercise of a power
is included in the grant of the power. (161-H; 162-A, BJ

2.2. The expression •transfer of property' in entry 6 and the term
E 'contracts' in entry 7 of List -III are to be widely interpreted. Such wide
meaning has to be assigned to the said expression and term as would make
the entries meaningful and effective. The entries must certainly take colour
from the Directive Principles of State Policy in Articles 38 and 39 of the
Constitution. There was no voluntary transfer of property by the owners
or property in favour of the occupant-allottees of the premises. The State
F Government in exercise of its power of eminent domain, recognized
statutorily, had requisitioned the properties in public interest and allotted
to the occupants. The Government paid compensation to the owners. Out
of the requisitioned premises some were occupied by State itself. As to the
premises which were allotted, the allottees in occupation were liable to pay
G compensation in lieu of their occupation of the premises. There was no
privity of contract between the owners and the occupants, yet a privity of
estate was brought into being by acts of State supported by law. Possession
is nine points in law and to that extent a transfer of property had resulted
and brought into being. Such privity of estate was compulsorily converted
into privity of contract by operation of law as a consequence of the
H impugned Amending Act. The Act also provided civil procedure by which
WELFARE ASSOCN. A.R.P, MAHARASHTRA v. RANJ!T P. GOHIL 143
the landlords were entitled to snap the relationship of landlord and tenant A
deemingly created by the statute and seek eviction subject to making out
a ground therefor under the pre-existing Rent Control Legislation.
Therefore, such legislation would clearly fall within the purview of entries
6,7 and 13 of List-III. (164-H; 165-A-D[

2.3. A grim and emergent situation was created on account of threat B
posed before the likely evictees who were in occupation of requisitioned
premises. The impugned Amending Act also seeks to bring into effect a
scheme of equitable redistribution of wealth and shelter so as to protect
the licencee-occupants by giving them the status of tenant and regulating
the right to eviction exercisable by the landlords by making it conditional C
upon availability of grounds under a pre-existing rent control law already
governing similar properties in the city of Bombay. The statutory goal
'from each according to his capacity, to each according to his needs' was
sought to be achieved. The essential need of shelter for other segments of
society such as the State Administration, Semi-Government bodies, PSUs
and the likes were also protected in public interest as otherwise their D
activities would have been jeopardized, which in turn would have had an
adverse effect on the society. Thus, if any grey area of impugned amending
Act is left out uncovered by entries 6,7 and 13 of List-III it is covered by
entry 18 of List-II i.e. 'economic and social planning'. Therefore, the
impugned Amending Act is intra vires and within the legislative competence
of the State Legislature. (166-H; 167-;\-CJ E
*H.D. Vora v. The State of Maharashtra and Ors., 11984) 2 SCC 337;
*Grahak Sanstha Manch and Ors. v. The State of Maharashtra, (1994) 4 SCC
192; Accountant and Secretarial Services (P) Ltd and Anr. v. Union ofIndia and
Ors., (1988) 4 SCC 324; Dhanapal Chettiar.v. Yesodai Ammal, 11979) 4 SCC
214; lndu Bhusan Bose v. Rama Sundari Debi and Anr., 11970) 1 SCR 443; F
Chaturbhai M Patel v. Union of India and Ors., (1960) 2 SCR 362; Diamond
Sugar Mills Ltd and Anr. v. State of Uttar Pradesh and Anr., 11961) 3 SCR 242;
Synthetics and Chemicals Ltd etc. v. State of UP. and Ors., 11990) 1 SCC 109;
United Provinces v. Mt. Atiqa Begum and Ors., AIR (1941] FC 16; Lingappa
Pochanna Appealwar v. State ofMaharashira and Anr., (1985) 1 SCC 479 and G
Maneklal Chhotalal and Ors. v. M G. Makwana and Ors, referred to.

Prout v. Hunter, (1924) 2 KB 736; Property Holding Co. Ltd. v. Clark,
(1948( 1 KB 630 and Curl v. Angale and Anr., (1948) 2 All England Reports
189, referred to.
Principles of Statutory Interpretation by Justice G.P. Singh (Eighth· H
144 SUPREME COURT REPORTS (2003) 2 S.C.R.

A Edition, 2001, pp. 36, 453,454), referred to.

3.1. It is permissible for the Legislature, subject to its legislative
competence otherwise, to enact a law which will withdraw or
fundamentally alter the very basis on.which a judicial pronouncement has
proceeded and create a situation which if it had existed earlier, the Court
B would not have.made the pronouncement. [169-H; 170-AJ

3.2. The law enunciated by this Court in H.D. Vora and Grahak
Sanstha Man~h* cases was that the Executive was exercising power of
requisitioning the premises in such a manner that the premises were in
fact acqu_ired under the guise or pretext of requisitioning. It was a
C colourable and hence a ma/a fide exercise of its executive power by the
State, thus was struck down by this Court as ultra vires the Constitution.
As' a consequence such invalid requisitioning came to an end. It followed
as a natural corollary .that the premises in occupation of the allottees
became liable to be restored to the possession of the owners. By virtue of
D interim orders passed by the Court, the possession of the occupants was
protected and that protection was continuously enjoyed by the occupants
upto the date of the decision. To relieve the occupants from the hardship
of sudden eviction caused by its judicial pronouncement, the Court allowed
some more time to the occupants by directing the protection under the
interim orders of the Court to remain in operation for some more period
E of time in spite of the cases having been disposed of. Allowing time to
vacate the premises under the protection of the interim orders is not the
same thing as issuing mandamus to vacate the premises by certain date.
[173-C-F)

3.3. The impugned Amending Act fundamentally altered the very
F basis of occupation of the premises by the occupants. Instead of their
remaining in occupation by virtue of orders of allotment of requisitioned
premises, the Act declared that the requisitioni,ng shall come to an end
and the occupants shall become tenants under the owners who would
become the landlords and the amount of compensation shall become rent.
G Right of landlords to seek revision of rent was not taken away but became
subject to the provisions governing the standard rent or controlled rent
determinable by the competent authority under the Rent Control
Legislation by which the relationship of the owners and the occupants was
to be governed henceforth as one of landlord and tenant. The right of the
owners to seek eviction of occupants and have the premises restored to
H their possession was also not taken away but was made subject to the pre-
WELFAREASSOCN. A.R.P., MAHARASHTRA v. RANJITP. GOHIL 145
existing law governing eviction of tenants. Privity of estate ·was converted A
into privity of contract and the foundation for pre-existing transfer of
property underwent a fundamental change. (173-F, G, H; 174-C, DJ

3.4. The Statement of Objects and Reasons of the Bombay Rents,
Hotel, Lodging House Rates Control, Bombay Land Requisition and
Bombay Government Premises (Eviction) (Amendment) Act, 1996 makes B
a reference to the two decisions delivered by this Court but that Is only
by way of narration of facts. The judgments of this Court are nowhere
referred to in the body of the provisions introduced by the Amendment
Act so as to spell out any motive of overruling the judgment. (174-F, G)

3.5. Merely because the indirect effect of the amendment would be to C
place additional restrictions on the right of the owners to seek eviction of the
premises consequent upon the judgment of this Court, it cannot be held that
the Legislature has overruled the judgment of this Court or made an inroad
on the doctrine of separation of powers. If the Amendment Act had been
enacted on the dates of decision in HD. Vora 's case or Grahak Sanstha Manch D
case, the Court would not have been called upon to adjudicate upon and
invalidate the unreasonably stretched requisitioning providing cloak for
acquisition without adequate compensation and the occupants would have
been held protected as tenants under the Rent Act. Thus, the Bombay Rents,
Hotels, Lodging House Rates Control, Bombay Land Requisition and Bombay
Government Premises (Eviction) (Amendment) Act, 1996 is neither in conflict . E
with the HD. Vora 's case or Grahak Sanstha Manch case of nor can it be said
to be a piece of colourable legislation. [175-F-HJ

HD. Vora v. The State of Maharashtra anc/ Ors., (1984) 2 SCC 337;
Grahak Sanstha Manch and Ors. v. The State ofMaharashtra, (1994) 4 SCC F
192; Dhanapal Chettiar v. Yesodai Ammal, (1979) 4 SC 214; K.C. Gajapati
Narayan Deo and Ors. v. State of Orissa, [1954) SCR l; R.S. Joshi, S.T.O. v.
Ajit Mills Ltd., (1977) 4 SCC 98; Naga People's Movement of Human Rights
v. Union ofIndia, [1998) 2 SCC 109; Shri Prithvi Cotton Mills Ltd. v. Broach
Borough Municipality and Ors., (1969) 2 SCC 283; Indian Aluminium Co.
and Ors. v. State of Kera/a and Ors., [1996) 7 SCC 637 and State of Tamil G
Nadu v. Arroran Sugars Ltd., (1997) 1 SCC 326, referred to.

Calley's Constitutional Limitations Vol. I, p.379, referred to.

4.1. Article 14 of the Constitution permits reasonable ·classification
for the purpose of legislation and prohibits class legislation. A legislation H
146 SUPREME COURT REPORTS [2003] 2 S.C.R.

A intended to apply or benefit a "well defined class" is not open to challenge
by reference to Article 14 on the ground that the same does not extend a
similar benefit or protection to other persons. Permissible classification
must be founded on an intelligible differential, which distinguishes persons
or things grouped together from others left out of the class, and such
B differential must have a rational relation with the object sought to be
achieved by the legislation. It is difficult to expect the Legislature carving
out a classification which may be scientifically perfect or logically complete
or which may satisfy the expectations of all concerned still the court would
respect the classification dictated by the wisdom of Legislature and shall
interfere only on being convinced that the classification would result in
C pronounced inequality or palpable arbitrariness on the touchstone of
Article 14. [177-C-F)

4.2. The requisitioning did not solve the problem of shortage of
accommodation but continued to persist resulting in endless renewals of
requisitioning which was held by this Court to be vitiated on account of
D virtual acquisitioning without payment of compensation resulting from
recurring and non-intermittent cycles of requisitioning and was struck
down. Consequent upon constitutional interpretation and adjudication by
this Court thousands of persons and substantial activity of government,
semi-government bodies and PSU's ran the risk of being rendered roofless.
E They all needed to be protected by State intervention and constituted a
class by themselves. All such premises whose occupants were under the
threat of eviction also constituted property capable of identification by a
well defined classification. The Legislature chose to step in and enact a
legislation, which would protect the threatened evictees from likely
eviction. The persons and premises-both constitute a well defined class by
F themselves and the classification cannot be said to be arbitrary; it is
capable of being distinguished from others not included in that class. Such
classification has an apparent and clear nexus with the object sought to
be achieved. Thus the impugned legislation does not suffer from either
arbitrariness or invidious discrimination and is not violative of Article 14.
of the Constitution. [177-H; 178-A-D)
G
Charan) it Lal Chowdhary v. Union ofIndia and Ors., [1950) SCR 869;
Kishan Singh and Ors. v. State of Rajasthan and Ors., [1955) 2 SCR 531 and
Maneklal Chhotalal and Ors. v. MG. Makwana and Ors., (1967) 3 SCR 65,
referred to.

H 5. The reversal of the impugned judgment of the High Court and
I

)-
WELFARE ASSOCN. A.R.P ., MAHARASHTRA v. RANJIT P. GOHIL [LAHOTI, J .] J47
upholding the validity of the impugned legislation shall not have the effect A
of undoing or overruling the mandate of this Court in Grahak Sanstha
Manch 's case that the occupants of requisitioned premises and the State
Government which were protected in Bombay and other large cities in
Maharashtra until 30.11.1994, and with effect from that date directed that
"all occupants of premises the continued requisition of which has been B
quashed" shall be bound to vacate and hand over vacant possession to the
State Government so that the State Government may on or before
31.12.1994 derequisition such premises and hand back vacant possession
thereof to the landlords. (178-G .. H; 179-A)

Grahak Sanstha Manch and Ors. v. The State of Maharashtra, [19941 4 C
sec 192, referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5168 of 1998.

From the Judgment and Order dated 27.7.1998 of the Mumbai High
Court in W.P. No. 1886 of 1997.
D
WITH
C.A. Nos. 5169, 5170/98, 920/99, 2484/99, 1405-1407/2003, 5692,
5681-5691/98, 6145, 6146, 7879/2001, 4091/2002, 1408-1409/2003, 5334 of
2002.

Soli J. Sorabjee, Attorney General, and Altaf Ahmed, Additional Solicitor
E
General, A.J. Rana Shekhar ·Naphde, S.K. Dholakia, Yageshwar Prasad,
Bhargava V. Desai, Arun Pednekar, Ashim Sood, Anand Mishra, Sunil
Mathews, V.N. Raghupathy, Mahesh Agarwal, Alok Agarwal, Dipak Chitnis,
Ashwini Kumar, E.C. Agrawala, Deepak M. Nargolkar, S.V. Deshpande,
Anuradha Rustgi, Shivaji M. Jadhav, Ms. Indu Malhotra, Sushil Karanjkar, F
Venkateswara Rao Anumolu, Shiv Kumar Suri, Guru Krishna Kumr; Mrs.
Srikala, S.R. Setia, Sakesh Kumar, Ashok Kr. Singh, S.N. Bhat, Ms. S. Manda!,
Ms. Sushmita Kapoor, Anindya Banerjee, Mrs. Rachna Gupta, Dr. LP. Singh,
R.S. Lambat, Sri Narain, Sandeep Narain, Gopal Jain, Mrs. Nandini Gore,
Sridhar Y. Chitale, Ms. Jayshree Navinchandra, Uday Umesh Lalit, Gopal G
Balwant Sathe, Ms. Anitha Shenoy, with them for the appearing parties.

The Judgment of the Court was delivered by

R.C. LAHOTI, J. Leave granted in all SLPs.

The Bombay Rents, Hotel and Lodging House Rates Control, Bombay H
148 SUPREME COURT REPORTS [2003] 2 S.C.R.

A Land Requisition and Bombay Government Premises (Eviction) (Amendment)
Act, 1996 (Act No. XVI of 1997) having been struck down as ultra vires of
the Constitution and as being beyond legislative competence of the State
Legislature, the State of Maharashtra, the Welfare Association of Allottees of
Requisitioned Premises, Maharashtra and several others have come up in
B appeal. The decision by the Division Bench of the High Court of Judicature
at ~ombay was delivered on 27th July 1998. The judgment posed the threat
of eviction against several allottees in occupation of premises requisitioned
by the State Government. Several Writ Petitions were filed which were all
disposed of by the impugned judgment of the· Division Bench. The principal
question which arises for decision in the batch of appeals is the constitutional
C validity of Amendment Act No. XVI of 1997 abovesaid. (hereinafter referred
to as the Amendment Act, for short).

Historical background : Two decisions of this Court :-

A brief statement of historical background leading to the present
D controversy is apposite.

In the year 1948, Bombay Land Requisition Act, 1948 (Act No. XXXIII
of 1948) was enacted to make provision for the requisition of land and for
the continuance of requisition of land and for certain other purposes. 'Land'
E was widely defined so as to include therein building also and 'premises' were
defined to mean building or part of building intended to be let separately and
other things appurtenant (as defined). Land and vacant premises could be
requisitioned by the State Government for any public purpose. Provision was
also made for continuance of requisitions made under the Requisitioned Land
(Continuance of Powers) Act, 194 7 and the Defence of India Act, 1962 and
F the rules made thereunder. Section 8 of the Act made provision for payment
of compensation to persons whose property was requisitioned or continued to
be subjected to requisition to be determined by an officer authorized in this
behalf by the State Government. The basis of compensation can be spelt out
from the following part of sub-Section (1) of Section 8 :-

G "The officer shall determine such amount of compensation as he
deems just having regard to all the circumstances of the case; and in
particular he shall be guided by the provisions of sub-Section (I) of
.
Section 23 and Section 24 of the Land Acquisition Act, 1894 (as in
force in the Bombay area of the State of Maharashtra) in so far as
H they can be made applicable."
WELFARE ASSOCN. A.R.P., MAHARASHTRA v. RANJIT P. GOHIL [LAHOTI, J.] 149
It appears that the shortage of accommodation in Bombay and the A
difficulties likely to be faced by the occupants to whom the requisitioned
land and premises were allotted by the State Government resulted in the
requisitioned properties continuing under requisition for endless periods of
time. The constitutional validity of such requisition was put in issue before
the High Court in the following factual background. On 2nd April, 1951 a
flat was requisitioned by the State Government and allotted to a person. The B
owner made a request in 1964 to the Competent Authority for derequisitioning
the flat, which was rejected. A purchaser of the property in 1973 once again
made a request to derequisition the flat, which too was turned down. The
owner filed a Writ Petition in the year 1980 under Article 226 of the
Constitution, laying challenge to the validity of the requisition. One of the C
grounds of challenge was that the requisition order cou,ld not survive for such
a long period of time and the Government was bound to derequisition the
flat. The Writ Petition was allowed. The occupant came in appeal by special
leave to this Court. Vide its judgment dated February 22, 1984 (H.D. Vora
v. The State of Maharashtra and Ors., [1984] 2 SCC 337 this Court held that
the power of requisitioning is exercisable by the Government only for a D
public purpose which is of a transitory character. If the public purpose of
requisition is of a perennial or permanent charac!er from the very inception,
.. no order can be passed requisitioning the premises and in such a case the
order of requisition, if passed, would be a fraud upon the statute; further
Government would be requisitioning the premises when really speaking they E
want the premises for acquisition as the objective of taking the premises was
not transitory but permanent in character. This Court upheld the decision of
the High Court allowing the Writ Petition and directing the State Government
.- to derequisition the flat and to take steps to evict the appellant and to handover
possession of the flat to the owner.
F
Following the decision of the Bombay High Court in H.D. Vora's case
(supra) the Bombay High Court in numerous cases struck down the continuance
ofrequisition orders made in the late 1940s and early 1950s particularly of
residential premises. Two Writ Petitions, relating to premises requisitioned
under Bombay Land Requisition Act, 1948 one of which was requisitioned G
for purposes of residential use and the other was requisitioned for commercial
use of running fair price ration shop by a co-operative society, came to be
filed in this Court which were heard and decided on April 27, 1994 by the
decision reported as Grahak Sanstha Manch and Ors. v. The State of
Maharashtra, [1994] 4 SCC 192. The Writ Petitions in effect had sought
reconsideration of decision in H.D. Vora's case (supra), which was a two H
150 SUPREME COURT REPORTS [2003] 2 S.C.R.

A Judges Bench decision, and therefore, were placed for consideration and
hearing by a Constitution Bench. The findings of the Constitution Bench may
briefly be summed up as under:-

(i) That the purpose of a requisition order may be permanent yet an
order of requisitioning cannot be continued indefjnitely or for a
B period of time longer than that which, in the facts and
circumstances of the particular case, is reasonable. The concept
of requisitioning is temporary. The concepts of acquisition and
requisition are altogether different as are the consequences that
flow therefrom. A requisitioning which in effect and substance
results in acquisition and thereby depriving an owner of property
c of hi.s rights and title to. property without being paid due
compensation is bad;
(ii} That the decision in H.D. Vora's case does not require
reconsideration.

D However, the Constitution Bench did not approve the two Judges Bench
observation in H.D. Vora's case that requisition orders under the said Act
cannot be made for a permanent purpose. The Constitution Bench also held
that the period of 30 years has not been laid down in H.D. Vora 's case as the
outer limit for which a requisition order may continue. An order of requisition
E can continue for a reasonable period of time; what period is reasonable would
depend on the facts and circumstances of each case; and in H.D. Vora 's case
the continuance of an order of requisition for as long as 30 years was rightly
held to be unreasonable.

What is of significant relevance is the operative part of the order of the
F Constitution Bench. The same (paras 20 and 21 of sec, at p.205) is extracted
and reproduced verbatim as under:-
"The continuance of requisition orders made in the late 1940s
and early 1950s and thereabouts, particularly of residential
premises, have been struck down by the Bombay High Court in
G numerous cases following the judgments in H.D. Vora case.
There are no appeals there against (except one which was, by a
separate order of this Bench, dismissed). The allottees of these ...
requisitioned premises (except retired government servants
allotted premises requisitioned for the purpose of housing
government servants) and their~ legal representatives have
H continued in occupation thereof by reason of the interim orders
WELFARE ASSOCN. A.R.P., MAHARASHTRA v. RANJIT P. GOHIL [LAHOTI, J.) 151
of this Court passed from time to time in Writ Petition No. 404 A
of 1986. Having regard to the known difficulty of finding
alternate accommodation in Bombay and other large cities in
. Maharashtra, the protection of these interim orders is hereby
continued until 30-11-1994, on which date all occupants of
premises the continued requisition of which has been quashed B
as aforesaid shall be bound to vacate and hand over vacant
possessiqn to the State Government so that the State Government
may, on or before 31-12-1994, derequisition such premises and
hand back vacant possession thereof to the landlords.

The writ petitions are, accordingly, dismissed. There shall be no order C
as to costs."

[N.B. : The portion which we have underlined to emphasise will be
of significance in constructing the operative part of our judgment.]

The majority opinion endorsed by four out of five Judges constituting
the Constitution Bench was delivered by S.P. Bharucha, J. (as his Lordship D
then was) which we have noticed and reproduced hereinabove. P.B. Sawant,
J. in his separate opinion agreed with the findings on the questions of law
recorded in the majority opinion bJJt expressed dissent with the operative part
of the order. His Lordship observed:-

"I am of the view that notwithstanding the legal position, the following E
directions can be given to mitigate the hardship of the allottees of the
requisitioned premises. These directions will in no way prejudice the
interests of the landlords of the premises. At present they are receiving
the same rent from the allottees as from the other tenants. On account
of the Rent Act, they will not receive more rent from the new tenants F
whom they may indm;t after the premises are released from requisition.
It is in rare cases that the premises would be required by the landlords
for bona fide personal requirement. All that, therefore, they will be
deprived of for some time more, on account of these directions, is the
right to induct new tenants of their choice. It is a notorious fact that
such choice is, more often than not, exercised in favour of those who G
can offer competing illegal consideration, commonly known as
"pugree" which is escalating with passage of time."

His Lordship noticed that there were two sets of allottees before the
Court:
H.
152 SUPREME COURT REPORTS [2003] 2 S.C.R.

A (i) Consumer Cooperative Societies running fair price ration shops
in the allotted premises,

and

(ii) Individuals who are allotted residential premises.

B As to category (i) his Lordship opined that the Consumer Cooperative
Societies were running ration shops and shall have to be wound up. The
employees of such societies should be allowed sufficient time to find out
alternative employment and the State Government should also make alternative
arrangements for housing ration shops and for that purpose the derequisition
C and eviction should not take place before 31-5-1996. As to category (ii), his
Lordship opined that they should be given preference in allotment of plots
and flats by making suitable arrangement with City and Industrial Development
Corporation of Maharashtra Limited and Maharashtra State Housing Board.
Alternative accommodation to such occupants should be made available by
the State Government latest by 31-5-1996 and till then there should be no
D derequisition and eviction. The premises other than those covered by the said
two categories may be derequisitioned as directed in the order proposed by
the majority.

It is pertinent to note that the two writ petitions were directed to be
dismissed by the Constirution Bench. To mitigate the hardship likely to be
E caused to the occupants - the allottees in requisitioned premises continuing
in occupation by virtue of interim orders of the Court which stood vacated
.>
by dismissal of the writ petitions, this Court allowed time until 30-11-1994
for vacating the premises by the occupants and for restoring of possession of
the premises by the State Government to the owners.

F Rent Control Legislations leading upto the impugned amendment :-

Now the relevant Rent Control Legislations in their chronological order
leading upto the enactment of the impugned Amendment Act held ultra vires
by the impugned judgment of the High Court, may be noticed.

G The Bombay Land Requisition Act, 1948 as originally enacted was to
remain in force upto 31-3-1950. The Act was amended from time to time
extending its life. Section 9 of the Act empowered the State Government to
release from requisition at any time the land requisitioned or continued to be
subject to requisition under the Act. By Section 2 of Maharashtra Act 51 of
H 1973, sub-Section (IA) was inserted below sub-Section (I) of Section 9
WELFARE ASSOCN. A.R.P., MAHARASHTRA v. RANJIT P. GOHIL [LAHOTI, J.] 153

which made it obligatory for the State Government to release land from A
requisition on the expiry of the stated period. The said period was extended
from time to time by successive amendments. The period of requisition was
to expire on 31-12-1994 when the matter came up for consideration and
disposed of by the Constitution Bench in Grahak Sanstha Manch case (supra).

The paucity of accommodation and the impact of war on the population B
and habitation .conditions in Bombay led to the enactment of the Bombay
Rent Restriction Act, 1939 followed by the Bombay Rents, Hotel Rates and
Lodging Houses Rates (Control) Act, 1944 ·to curb the sky rocketing greed
of the landlords pitted against the miseries of roofless. Both these Acts were
repealed by a more comprehensive legislation namely, the Bombay Rents, C
Hotel and Lodging House Rates (Control) Act, 1947 which was enacted to
amend and consolidate the law relating to the control of rents and repairs of
certain premises, of rates of hotels and lodging houses and of evictions and
also to control the charges for licenses of premises etc. The Act protected
tenants and licensees in occupation of the premises. Section 13 made provision
for the events and contingencies on proof whereof the landlord could recover D
) .,
... possession. Maharashtra Act 17 of 1973 conferred the status of tenant on
certain licensees in occupation of any premises or any part thereof, which is
not less than a room since 1st February 1973 or before. Several .other
amendments and enactments were also passed by the State Legislature
beneficial in nature to the tenants, licensees and occupants of the premises, E
the details whereof are being omitted as not necessary for our purpose. What
is relevant for our purpose is to note that the life of requisition or continued
requisition of any land which was coming. to an end by virtue of sub-section
(I-A) as inserted in Section 9 of the Bombay Land Requisition Act, 1948 by
Maharashtra Act 5 of 1973, further amended by Maharashtra Act 29 of 1990
was given an extension by issuing an ordinance, namely, the Bombay Land F
Acquisition (Amendment) Ordinance, 1994 (Maharashtra Ordinance No. XX
of 1994) which extended the life of such requisitions for a period of 24 years
from 27-12-1973 that is upto 27th December, 1997. The statement of objects
and reasons accompanying the said Ordinance referred to the two decisions
of this Court in H.D. Vora (supra) and the subsequent decision of this Court G
dated 27-4-1994 in Grahak Sanstha Manch and Ors. case (supra). The
preamble noticed the difficulty which was likely to be faced by several persons
in occupation of the accommodation requisitioned and allotted by the State
Government and the difficulties which the Government was facing on account
of paucity of funds and ever rising prices in constructing alternative
accommodation to accommodate Government employees in~service and others. H
154 SUPREME COURT REPORTS [2003] 2 S.C.R.

A The statement noticed the factum of both Houses of the State Legislature
being not in session and the Governor of Maharashtra having felt satisfied of
the existence of requisite circumstances for issuing the Ordinance and
concluded by stating :-

"In the facts and circumstances as aforesaid, it is considered expedient
B to extend the period of requisition under the Act for a further period
of three years beyond the 26th December, 1994, so as to enable the
State Government to complete the process of derequisitioning during
the extended period of three years. It is, therefore, proposed to suitably
amend sub-Section (IA) of Section 9 of the principal Act extending

c the total period of requisition from twenty-one years to twenty-four
years."

The Ordinance was replaced by Maharashtra Act No. VII of 1995. The
assent of the President of India under Article 254(2) of the Constitution of
India was received.
D Now the crucial amendment. On 7-12-1996, the Governor of
Maharashtra promulgated the Bombay Rents, Hotel and Lodging Houses
Rates Control, Bombay Land Requisition and Bombay Government Premises
(Eviction) (Amendment) Ordinance, 1996 (Maharashtra Ordinance XXIII of
1996) whereby certain amendments were incorporated in the Bombay Rents,
E Hotel and Lodging House Rates Control Act, 1947 (hereinafter referred to as
"the Principal Act, 1947") by Section 2 of the Ordinance. It is not necessary
to burden the judgment by extracting and reproducing the entire text of the
Ordinance (which is published in Maharashtra Government Gazette
Extraordinary-Part VIII-dated December 7, 1996). It would suffice for our
purpose to note the following effect of the Ordinance and consequences
F flowing therefrom (as crystalised and agreed to by the learned counsel for all
the parties, at the hearing):-

I. Section 5 of the Principal Act, 1947 was amended so as to
confer the status of the tenant of the landlord on such person or
his legal heir as was allotted by the State Government for
G residential purpose any premises requisitioned or continued under
requisition. The status conferred on them by amending Section
5 of the Principal Act and by inserting Section 15B in the
Principal Act was that the allottee or his legal heir in occupation
or possession of the allotted premises for own residence 'shall,
H notwithstanding anything contained in this Act, or in the Bombay
J

WELFAREASSOCN. A.R.P., MAHARASHTRA v. RANJJT P. GOHIL [LAHOTI, J.] JSS
Land Requisition Act, 1948, or in any other law for the time A
being in force, or in any contract, or in any judgment, decree or
order of any court passed on or after the 1 Ith June, 1996, be
deemed to have become, for the purposes of this Act, the tenant
of the landlord; and such premises shall be deemed to have been
let by the landlord to the State Government or, as the case may
be, to such Government allottee, on payment of rent and
B
"--
permitted increases equal to the amount of compensation payable
in respect of the premises immediately before the said date."

2. All the premises re.quisitioned or continued under requisition
under the Bombay Land Requisition Act, 1948 and allotted to
Government allottees and allowed by the State Government to c
continue or to remain in occupation or possession of such
premises were deemed to have been released from requisition.

3. The premises requisitioned and continued under requisition and
allotted by the State Government for any non-residential purpose
to any department or office of the State Government or Central D
Government or any public sector undertaking or Corporation
owned or controlled fully or partly by the State Government or
any registered co-operative society or any foreign consulate and
allowed by the State Government to remain in their occupation
or possession were included in the definition of 'Government E
Premises' within the meaning of Section 2 clause (b) of the
Bombay Government Premises Eviction Act, 1955.

4. In spite of such status of tenant having been conferred on the
person in occupation or possession and the owner of the property
having been declared to be landlord, the Ordinance took care to F
clarify (by sub-section (2) of Section 3) :-

"Save as otherwise provided in this section or any other
provisions of this Act, nothing in this Section .shall affect:-

(a) the rights of the landlord including his right to recover G
possession of the premises from such"tenant on any of the
grounds mentioned in Section. 13 or in any other Section;
the right of the landlord or such tenant to apply to the court
for the fixation of standard rent and permitted increases
under this Act, by reason only of the fact that the amount
of the rent and permitted increases, if any, to be paid by H
156 SUPREME COURT REPORTS (2003] 2 S.C.R.

A such tenant to the landlord is determined under sub-Section
(I);

(c) the operation and the application of the other relevant
provisions of this Act in respect of such tenancy.'

B Certain consequential amendments were also effected in the Bombay
Land Requisition Act, 1948 and the Bombay Government Premises (Eviction)
Act, 1955, which it is 11ot necessary to notice and reproduce.

The statement Of objects and reasons accompanying the Ordinance is
very relevant and shall h!lve to be referred to while dealing with the contentions
C raised by the contending parties before this Court and therefore the same is
reproduced hereunde~ :-
i
STATEMENT

"The Bombay Land Requisition Act, 1948 is enacted to provide
D for requisition of land for relieving the pressure of accommodation,
especially in urban areas, by regulating distribution of vacant premises
for public purposes, and for certain other purposes incidental thereto.
Certain premises which have been requisitioned or continued under
requisition under the said Act have been allotted for non-residential
purpose to many departments or offices of the State Government or
E Central Government or public sector undertakings, corporations owned
or controlled fully or partly by the State Government or co-operative
societies or foreign consulates and for residential purpose to different
categories of persons such as employees of the State or Central
Government, public sector undertakings, corporations, or homeless
persons, etc. Many of these premises have since been derequisitioned
F
by the Government, as per Court orders or having regard to certain
other circumstances. But still there are quite a large number of allottees
in occupation of such premises, for a number of years, on payment
of compensation as determined under the said Act. The allottees of
such premises include Government servants who are still in
G Government service and others.

2. Under the existing provisions of Section 9 of the Bombay
Land Requisition Act, 1948, as last amended by Mah. Act No. VII of
1995, the premises which have been requisitioned on or before 27th
December, 1973 will have to be released from the requisition on or
H before 26th December, 1997 and those which have been requisitioned
WELFAREASSOCN. A.R.P., MAHARASHTRA v. RANJIT P. GOHIL [LAHOTI, J.] 157
after 27th December, 1973, within twenty-four years from the date A
on which possession of such land was surrendered or delivered to, or
taken by, the State Government. Further the Supreme Court in Writ
Petition No. 404 of 1986 filed by the Association of Allottees of the
Requisitioned Premises and Writ Petitions No. 53 of 1993 and 27 of
1994 filed by the Grahak Sanstha Versus State of Maharashtra, has B
given a final decision on the 27th April, 1994 in the matter of
requisitioned premises AIR (1994) S.C., 2319), upholding the decision
in the H.D. Vora's case [1984] 2 S.C.C. 337] and has directed that
the occupants of the requisitioned premises, the continued requisition
of which was quashed, were bound to vacate and hand over vacant
possession of such premises to the State Government on or before C
30th November, 1994 so that the Government cou,Id derequisition
such premises and hand over the vacant possession thereof to the
landlords. Accordingly, derequisitioning process, in respect of all such
premises and applying the ratio of the said Supreme Court Judgment,
in several other premises, has already been completed by the State D
Government. There are however as aforesaid, nearly 604 residential
premises and about 90 non-residential premises which are still under
requisition in Brihan Mumbai and 13 8 in other districts which include
requisitioned premises allotted to Government servants who are still
in Government service and others.
E
3. As a matter of policy, the State Government has stopped
requisitioning of new premises except in some special cases. As a
result of this policy and also due to continued acute shortage of
accommodation with Government and astronomical rise in the cost of
properties in Mumbai, it would not be possible for Government to
give suitable alternative accommodation to all such allottees if, F
applying the ratio of the said Supreme Court Judgment the Government
has to vacate all the requisitioned premises. The situation is, therefore,
likely to result in the Government allottees presently in occupation of
the requisitioned premises being rendered without any office
accommodation or homeless. It is imperative to find a solution to this G
grave situation and to give some kind of statutory protection to these
allottees of the requisitioned premises.

4. As the landlords ·are generally unwilling to accept such
Government allottee, as contractual tenants, on payment of the standard
rent and permitted increases, Government considers it expedient, in H
•
158 SUPREME COURT REPORTS (2003] 2 S.C.R.

A greater public interest, to make suitable provisions for providing the
protection of statutory tenancy under the Rent Act to the State
Government and to such Government allottees; and consequently to
provide for the release of such premises from requisition.

5. As many landlords have already approached the High Court
B seeking eviction orders of the allottees of the requisitioned premises
and the possibility of others also approaching the Court for such
eviction orders cannot be ruled out, thereby frustrating the very object
of this legislation, it is also considered expedient to provide in the
proP,osed section 3 of this Ordinance that, such conferral of statutory
c tenancy rights on the allottees shall not be affected by any eviction
orders passed by the Court on or after 11th June, 1996 (being the date
• of the Government decision to undertake such legislation) .

6. As both Houses of the State Legislature are not in session and
the Governor of Maharashtra is satisfied that circumstances exist which
D render it necessary for him to take immediate action further to amend
the Bombay Rents, Hotel and Lodging House Rates Control Act,
1947, the Bombay Land Requisition Act, 1948 and the B~mbay
Government Premises (Eviction) Act, 1955, suitably for the purposes
aforesaid, this Ordinance is promulgated.

E Mumbai: P.C. ALEXANDER
Dated the 7th December 1996. Governor of Maharashtra

By order and in the name of the Governor of Maharashtra,

JAYANT DESHPANDE,
F Secretary to Government."

In due course of time, the Ordinance was replaced by the Bombay
Rents, Hotel, Lodging House Rates Control, Bombay Land Requisition and
Bombay Government Premises (Eviction) (Amendment) Act, 1996
(Maharashtra Act XVI of 1997).
G
The vires of this Amendment Act XVI of 1997 is under challenge and
arises for consideration by this Court in these appeals, in view of the High
Court having upheld the challenge. The vires of the Ordinance need not be
gone into as the same has lapsed with the passage of time and its provisions
H merged into the provisions of the Amendment Act above-said. ---
WELFARE ASSOCN. A.R.P., MAHARASHTRA v. RANJIT P. GOHIL [LAHOTI, J.) 159
Though the challenge before the High Court was laid on very many A

- grounds, in view of the findings arrived at by the High Court all the learned
counsel for the parties agreed that only the following three issues survive and
are relevant for decision in these appeals, namely,

(i) whether the State Government has requisite legislative B
competence to enact the impugned amendments?

(ii) .whether the impugned legislation is a colourable one and is an
interference with the judicial mandate of Supreme Court
contained in H. D. Vora 's case and Grahak Sanstha Mancha and
Ors. case or has the effect of overruling the decisions of this C
Court and hence violative of doctrine of separation of powers?

and

(iii) whether the impugned enactment is violative of Article 14 of
the Constitution as being arbitrary and unreasonable? D
We proceed to deal with each of the three issues seriatem.

(i) Legislative competence ?

While the writ petitioners challenged the legislative competence of the E
State Legislature to enact the impugned Amendment Act, the State of
Maharasthra and the beneficiaries of legislation have defended the impugned
legislation by attributing legislative competence to State Legislature by
reference to entries 6, 7 and 13 of List-III and entry 18 of List-II of Seventh
Schedule which are reproduced hereunder for ready reference:-
F
'List-III Concurrent List

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

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

13. Civil procedure, including all matters included in the Code of
Civil Procedure at the commencement of this Constitution,
limitation and arbitration. H
160 SUPREME COURT REPORTS [2003] 2 S.C.R.

A List-II State List

18. Land, that is to say, right in or over land, land tenures including
the relation of landlord and tenant, and the collection of rents;
-
transfer and alienation of agricultural land; land improvement
and agricultural loans; colonization."
B
So far as entry 18 of List-II is concerned, we may repel the defence
summarily by referring to three decisions of this Court, namely, Accountant
& Secretarial Services (P) Ltd & Anr. v. Union of India and Ors., (1988] 4
SCC 324, Dhanapal Chettiar v. Yesodai Ammal, [1979) 4 SCC 214 and Jndu
Bhusan Bose v. Rama Sundari Debi and Anr., [1970) I SCR 443, wherein
C it has been categorically held that tenancy of bu_ildings or of house
accommodation or leases in respect of non-agricultural property are not
included in Entry 18 of List-II and that they more appropriately fall within
the field of eatrks b, 7 and 13 of List-III.

What should be the approach of the Court dealing with a challenge to
D the constitutionality of a legislation has been succinctly set uut in Principles
of Statutory Interpretation by Justice G.P. Singh (Eighth Edition, 2001 at pp
453-454 and 36). A statute is construed so as to make it effective and operative
on the principle expressed in the maxim "ut res megis valeat quam pereaf'.
(It is better to validate a thing than to invalidate it). There is a presumption
E that the Legislature does not exceed its jurisdiction. The burden of establishing
that the Act is not within the competence of the Legislature, or that it has
transgressed other constitutional mandates, such as those relating to
fondamental rights, is always on the person who challenges its vires. If a case
of violation of a constitutional provision is made out then the State must
justify that the Jaw can still be protected under a saving provision. The courts
F strongly lean against reducing a statute to a futility. As far as possible, the
courts shall act to make a legislation effective and operative.

In Charanjit Lal Chowdhary v. Union of India and Ors., [1950) SCR
869, the Constitution Bench held that the presumption is always in favour of
G the constitutionality of an enactment, and the burden is upon him who attacks
it to show that there has been a clear transgression of the constitutional
principles.

It must be mentioned in all fairness to the writ petitioners and their
learned counsel that the challenge to the constitutional validity of impugned
H Amendment Act was pursued and pressed by resting submissions not on the
~·
\

WELFARE ASSOCN. A.R.P., MAHARASHTRA v. RANJIT P. GOHIL [LAHOTI, J.] J6 J
~ ground of violation of any property rights of the owner-landlords but mainly A
on the ground of the lack of legislative competence in State Legislature by
reference to the relevant entries in Seventh Schedule. The submission of the
learned counsel for the writ petitioners - respondents has been that within the
meaning of entries 6 & 7 of List-III what can be enacted is a law dealing with
any existing transfer of property or an existing contract; the legislation cannot
by itself create a transfer of property or bring a contractual relationship in B.
existence which if done would fall outside the scope of entries 6 & 7 abovesaid.
It was submitted that the owners have not transf~rred any property in the
premises to the occupants nor does any contractual relationship exist between
the owners and the occupants on the date of coming ·into force of the Amending
Act and, therefore, the Amending Act cannot be said to be a law governing c
transfer of property or contract and hence does not fall within the purview
of these entries 6 & 7. To test the validity of such submission forcefully
advanced it wiU be useful to have a recap of certain well-established principles.

The fountain source of legislative power exercised by the Parliament or
the State Legislatures is not Schedule - 7; the fountain source is Article 246 D
and other provisions of the Constitution. The function of the three Lists in
Seventh Schedule is merely to demarcate legislative fields between Parliament
and States and not to confer any legislative power. The several entries
mentioned in the three Lists are fields of legislation. The Constitution makers
purposely used general and comprehensive words having a wide import without
E
trying to particularize. Such construction should be placed on the entries in
the Lists as makes them effective; any construction which will result in any
of the entries being rendered futile or otiose must be avoided. That
interpretation has invariably been countenanced by the constitutional jurists,
which gives the words used in every entry the widest possible amplitude.
Each general word employed in the entries has been held to carry an extended F
meaning so as to comprehend all ancillary and subsidiary matters within the
meaning of the entry so long as it can be fairly accommodated subject to an
overall limitation that the courts cannot extend the field of an entry to such
an extent as to result in inclusion of such matters as the framers of the
Constitution never intended to be included within the scope of the entry or
so as to transgress into the field of another entry placed in another List. G

In every case where the legislative competence of a Legislature in
regard to a particular enactment is challenged with reference to the entries in
the various Lists, it is necessary to examine the pith and substance of the Act .
and to find out if the matter comes substantially within an item in the List. H
,_,...-
162 SUPREME COURT REPORTS [2003] 2 S.C.R.

A The express words employed in an entry would necessarily include incidental
and ancillary matters so as to make the legislation effective. The scheme of
the Act under scrutiny, its object and purpose, its true nature and character
and the pith and substance of the legislation are to be focused at. It is a
fundamental principle of Constitutional Law that everything necessary to the
B exercise of a power is included in the grant of the power (See the Constitution
Bench decision in Chaturbhai M Patel v. Union of India and Ors., [1960]
. 2 SCR 362.

In Diamond Sugar Mills Ltd. and Anr. v. State of Uttar Pradesh and
Anr., [1961] 3 SCR 242, the Constitution Bench defined the two bounds
C between which the stream of interpretative process dealing with entries in
Seventh Schedule must confine itself and flow. One bank is the salutary rule
that the words conferring the right of the legislation should be interpreted
liberally and the powers conferred should be given the widest amplitude; the
other bank is guarding against extending the meaning of the words beyond
their reasonable connotation in an anxiety to preserve the power to legislate.
D The working rule of the game is to resolve, as far as possible, in favour of
the legislative body any difficulty or doubt in ascertaining the limits.

A note of caution was sounded by Constitution Bench in Synthetics &
Chemicals Ltd etc. v. State of U.P. and Ors., [1990] I SCC 109. The
Constitution must not be construed in any narrow or pedantic sense and that
E construction which is most beneficial to the widest possible amplitude of its
power must be adopted. An exclusionary clause in any of the entries should
be strictly and, therefore, narrowly construed. No entry should be so read as
to rob it of its entire content. A broad and liberal spirit should inspire those
whose duty it is to interpret the Constitution. The Constitution is a living and
F organic thing and must adapt itself to the changing situations and pattern in
which it has to be interpreted. To bring any particular enactment within the
purview of any legislative power, it is the pith and substance of the legislation
in question that has to be looked into by giving widest amplitude to the
language of the entries. The Constitution must be interpreted in the light of
the experience gathered. It has to be flexible and dynamic so that it adapts
G itself to the changing conditions in a pragmatic way. The undisputed
constitutional goals should be permitted to be achieved by placing an
appropriate interpretation on the entries. The Constitution has the greatest
claim. to live. The claim ought not to be throttled. Directive Principles of
State Policy can serve as potent and useful guide for resolving the doubts and
H upholding constitutional validity of any legislation if doubted.
WELFARE ASSOCN. A.R.P., MAHARASHTRA v. RANJIT P. GOHIL (LAHOTI, J.l 163
- In United Provinces v. Mt. Atiqa Begum and Ors., AIR (1941) FC 16, A
their Lordships upheld the principle that the question w_hether any impugned
Act is within any of the three Lists, or in none at all, is to be answered by
considering the Act as a whole and deciding whether in pith and sub.stance
the Act is with respect to particular categories or not and held that in doing
so the relevant factors are: (i) the design and the purport of the act, both as
disclosed by its language, and (iii) the effect which it would have in its actual B

- operation.

Article 37 provides that the Directive Principles of State Policy though
not enforceable by any court, yet the principles laid down therein are

-- fundamental in the governance of the country and the State is obliged to
apply these principles in making laws. Article 38 inspires the State to strive
to promote the welfare of the people by securing and protecting as effectively
c
as it may, a social order in which justice, social, economic and political
prevails and citizens, men and women are treated equally and so share the
material resources of community as to result in equitable judicious and
balanced distribution of means of livelihood - food, cloth and shelter - the D
bare essentials for living as human being. Inequalities in status, facilities,
opportunities and income are to be eliminated and minimized. The systems
in a democratic society ought not to operate to the detriment of individuals
or groups of people.

The Constitution Bench decision of this Court in Jndu Bhushan Bose v. E
Rama Sundari Debi and Anr., [ 1969] 2 SCC 289 needs a special mention. A
Rent Control Legislation enac~ed by State Legislature was sought to be
extended to cantonmel)t area. The High Court held that the same was not
permissible inasmuch as so far as the cantonment area is concerned, legislation
touching regulation of house accommodation is governed by Entry 3 of List- F
I which reads, inter a/ia, 'the regulation of house accommodation (including
the control of rents) in such areas' i.e. cantonment areas. During the course
of its judgment, the Constitution Bench held that the entry has to be liberally
and widely interpreted. Regulation of houses in private occupation would fall
within the entry. The word 'regulation' includes power to direct or control
all housing accommodation in cantonment areas, which in its tum, will include G
within it all aspects as to who is to make the construction, under what
• conditions the constructions can be altered, who is to occupy the
accommodation and for how long, on what terms it is to be occupied, when
and under what circumstances the occupant is to cease to occupy it, and the
manner in which the accommodation is to be utilized. All these are ingredients H
~
164 SUPREME COURT REPORTS [2003] 2 S.C.R.

A of regulation of house accommodati~n in its wide sense. The Parliament
could legislate in respect of house accommodations in cantonment areas in
all its aspects, including regulation of grant of leases, ejectment of lessees
and ensuring that the accommodation is available on proper terms as to rents.
The power of the State Legislature to legislate in respect of landlord and
B tenant of buildings is to be found in entries 6, 7 & 13 of List-III of the
Seventh Schedule to 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.

Before the Constitution Bench in lndu Bhushan Bose's case (supra) the
C English decisions in Prout v. Hunt~r. (1924) 2 KB 736, Property Holding
Co. Ltd. v. Clark, (1948) 1 KB 630 and Curl v. Angale and Anr., (1948) 2
All England Reports 189 were cited with approval. In Prout Vs. Hunter
(supra), Rent Restrictions Act was held to have been passed by the Parliament
with the twofold object · (i) of preventing the rent from being raised above
the pre-war standard, and (ii) of preventing tenants from being turned out of
D their houses even if the term for which they had originally taken them had
expired. In Property Holding Co. Ltd. Vs. Clark (supra), the objects of policy
underlying rent restriction legislations were stated to be (i) to protect the
tenant from eviction from the house where he is living, except for defined
reasons and on defined conditions; (ii) to protect him from having to pay
E more than a fair rent. The latter object is achieved by the provisions for
standard rent with (a) only permitted increases, (b) the provisions about
furniture and attendance, and ( c) the provisions about transfers of burdens
and liabilities from the landlord to the tenant which would undermine or
nullify the standard rent provisions. Such acts operate in rem upon the house
and confer on the house itself the quality of ensuring to the tenant a status
F of irremovability. Tenants security of tenure is one of the distinguishing
characteristics conferred by statute upon the house. In Curl v. Angelo and
Anr., (supra), Lord Greene, M.R., dealing with Rent Restrictions Act, held
that the overriding purpose ani;t intention of such acts are to protect the
person residing in a dwelling house from being turned out of his home. In
G the opinion of Constitution Bench these cases are a pointer to the principle
that Rent Control Legislations can be effective and purposeful only if they
also regulate eviction of tenants. Regulation of house accommodation,
therefore, includes within its sweep the power to regulate eviction of tenants.

The expression 'transfer of property' in entry 6 and the term 'contracts'
H in entry 7 of List-III are to be widely interpreted. Such wide meaning has to
WELFARE ASSOCN. A.R.P., MAHARASHTRA I'. RANJITP. GOHIL [LAHOTI, J.] J65
·- be assigned to the said expression and term as would make the entries A
meaningful and effective. The entries must certainly take colour from the
Directive Principles of State Policy specially those contained in Articles 38
and 39 of the Constitution. True that there was no voluntary transfer of
property by the owners of property in favour of the occupant allottees of the
premises. The State Government in exercise of its power of eminent domain,
recognized statutorily, had requisitioned the properties in public interest and B
allotted it to the occupants. The Government paid compensation for
requisitioning to the owners. Out of the requisitioned premises some were
occupied by State itself. As to the premises which were allotted, the allottees
in occupation were liable to pay compensation in lieu of their occupation of
_\ the premises. There was no privity of contract between the owners and the C
occupants, yet a privity of estate was brought into being by acts of State
supported by law. Possession is nine points in law and to that extent a transfer
•.
of property had resulted and brought into being. Such privity of estate was
compulsorily converted into privity of contract by operation of law as a
consequence of the impugned Amending Act. The Act also provided civil
procedure by which the landlords were entitled to snap the relationship of D
landlord and tenant deemingly created by the statute and seek eviction subject
to making out a ground therefor under the pre-existing Rent Control
Legislation. Such legislation would clearly fall within the purview of entries
6, 7 & 13 of List-Ill.

There is yet another angle of looking at the issue. In Lingappa Pochanna
E
Appealwar v. State ofMaharashtra and Anr., [1985] l SCC 479, the provisions
of Maharashtra Restoration of Lands to Scheduled Tribes Act, 1975 came up
for consideration which Act related to transfers and alienation of agricultural
lands by members of Scheduled Tribes in the State to persons not belonging
to Scheduled Tribes. The legislation fell in entry 18 in List-II. Certain F
provisions of the Act trenched upon the existing law, namely, the Transfer of
Property Act and the Specific Relief Act, both made by Parliament. It was
held that the power of the State Legislature to make a law with respect to
transfer and alienation of agricultural land carries with it not only a power to
make a law placing restrictions on transfers and alienations of such lands G
including a prohibition thereof, but also the power to make a law to reopen
such transfers and alienations. The legislative competence was spelt out from
entry 18 in List-II of Schedule 7. The Court observed :-

"Moreover, the legislation is a typical illustration of the concept of
distributive justice, as modern jurisprudents know it. Legislators, H
166 SUPREME COURT REPORTS [2003] 2 S.C.R.

A Judges and administrators are now familiar with the concept of
distributive justice. Our Constitution permits and even directs the
State to administer what may be termed "distributive justice". The
concept of distributive justice in the sphere of law-making connotes,
inter alia, the removal of economic inequalities and rectifying the
injustice resulting from dealings or transactions between unequals in
B society. Law should be used as an instrument of distributive justice
to achieve a fair division of wealth among the members of society
based upon the principle : "From each according to his capacity, to
each according to his needs". Distributive justice comprehends more
than achieving lessening of inequalities by differential taxation, giving
c debt relief of distribution of property owned by one to many who
... _
have none by imposing ceiling on holdings, both agricultural and
urban, or by direct regulation of contractual transactions by forbidding
certain transactions and, perhaps, by requiring others. It also means
that those who have been deprived of their properties by
unconscionable bargaining should be restored their property. All such
D laws may take the form offorced redistribution of wealth as a means
of achieving a fair division of material resources among the members
of society or there may be legislative control of unfair agreements."
(emphasis supplied)

E In Maneklal Chhotalal and Ors. v. MG. Makwana and Ors., [1967] 3
SCR 65, the constitutional validity of Bombay Town Planning Act, 1954 as
amended by Gujarat Act 52 of 1963 was put in issue. The legislation fell
within entry No. 18 of List-II. The Court also held after elaborately referring
to the various provisions contained in the Act that it was passed with a view
to regulate ·the development of certain areas with the general object of framing
F proper schemes for the healthy orderly development of the area in question
and it is with a view to achieve this purpose that a very elaborate procedure
and machinery have been prescribed under the Act. For this reason it was
held that the competency of the State Legislation aimed at equitable distribution
of landed property resulting in partial deprivation of proprietary rights can
G also be rested under entry No. 20 of List-III which is "economic and social
planning".

A grim and emergent situation was created on account of threat posed
before the likely evictees who were in occupation of requisitioned premises.
The impugned Amending Act also seeks to bring into effect a scheme of
H equitable redistribution of wealth and shelter so as to protect the licensee -
WELFARE ASSOCN. A.R.P., MAHARASHTRA v. RANJIT P. ClOHIL [LAHOTI, l.] 167

occupants by giving them the status of tenant and regulating the right to A
eviction exercisable by the landlords by making it conditional upon availability
of grounds under a pre-existing rent control law already governing similar
properties in the State of Bombay. The salutary goal of 'from each according
to his capacity, to each according to his needs' was sought to be achieved.
The essential need of shelter for other segments of society such as the State B
-- \
Administration, Semi-Government bodies, PSUs and the likes was also
protected in public interest as otherwise their activities would have been
jeopardized, which in turn would have had an adverse effect on the society.

'
Thus, if any grey area of impugned Amending Act is left out uncovered by

-\' entries 6, 7 & 13 of List-III, it is covered by entry 18 of List-II, i.e. 'economic
and social planning'. C

) For all the foregoing reasons, we are of the opinion that the impugned
Amending Act is intra vires and within the legislative competence of the
i State Legislature.

(ii) whether the impugned legislation is in conflict with the judicial D
mandate of Supreme Court or a colourable exercise of power?
,,
It was submitted on behalf of the writ petitioner-respondents that the
impugned judgment has the effect of nullifying or overriding the mandate of
this Court issued in H.D. Vora and Grahak Sanstha Mancha and Ors. cases
(supra). It was submitted that the Legislature could not have directly overruled E
the decisions or mandate of this Court but the same thing is sought to be
achieved indirectly by resorting to device of an amendment in the legislation
which is nothing but colourable exercise of legislative power which ought
not to be countenanced by this Court.

The doctrine of Colourable Legislation came to be examined by a F
Constitution Bench of this Court in K.C. Gajapati Narayan Deo and Ors. v.
State of Orissa, [1954] SCR I. It was held that the doctrine of colourable
legislation does not involve any question of' bona jides' or ''ma/a jides" on
the part of the Legislature. The whole doctrine resolves itself into the question
of competency of a particular Legislature to enact a particular law. If the G
Legislature is competent to pass a particular law, the motives which impelled
it to act are really irrelevant. On the other hand, if the Legislature lacks
competency, the question of motive does not arise at all. Whether a statute
is constitutional or not is thus always a question of power ( Vide Cooley's
Constitutional Limitations, Vol. I, p. 379). The crucial question to be asked
is whether there has been a transgression of legislative authority as conferred H
168 SUPREME COURT REPORTS (2003] 2 S.C.R.

A by the Constitution which is the source of all powers as also the separation
of powers. A legislative transgression may be patent, manifest or direct or
may also be disguised, covert and indirect. It is to this latter class of cases
that the expression 'colourable legislation' has been applied in certain judicial
pronouncements. The expression means that although apparently a Legislature
in passing a statute which purports to act within the limits of its powers, yet
B in substance and in reality it transgresses those powers, the transgression
being veiled by what appears, on proper examination, to be a mere pretence
or disguise. The discerning test is to find out the substance of the Act and not
merely the form or outward appearance. If the .subject matter in substance is
something which is beyond the legislative power, the form in which the law
C is clothed would not save it from condemnation. The constitutional prohibitions
cannot be allowed to be violated by employing indirect methods. To test the
true nature and character of the challenged legislation, the investigation by
the Court should be directed towards examining (i) the effect of the legislation
and (ii) its object, purpose or design. While doing so, the Court cannot enter
into investigating the motives, which induced the Legislature to exercise its
D power.

The abovesaid view was reiterated by Larger Bench (Seven Judges) in
R.S. Joshi, S.T.O. v. Ajit Mills Ltd, (1977] 4 SCC 98, 108 and by Constitution
Bench in Naga People's Movement of Human Rights v. Union of India,
E (19981 2 sec 109, 137.

In K.C. Gajapati Narayan Deo and Others case (supra), the Constitution
Bench quoted with approval the statement by Lefroy in his work on Canadian
Constitution that even if the Legislature avowed on the face of an Act that
it intends thereby to legislate in reference to a subject over which it has no
F jurisdiction, yet if the enacting clauses of the Act bring the legislation within
its powers, the Act cannot be considered ultra vires.

In Shri Prithvi Cotton Mills Ltd. and Anr. v. Broach Borough
Municipality and Ors., (1969] 2 SCC 283, a legislation by way of Validation
Act was passed because of a decision of the Court declaring a certain
G imposition of tax as invalid. The question arising before the Court was, when
a Legislature sets out to validate a tax declared by a Court to be illegally
collected under an ineffective or an invalid law, then how is the validity of
such Validation Act to be tested? It was held that the cause for ineffectiveness
or invalidity must be removed before validation can be said to' take place
H effectively. The most important condition, of course, is that the Legislature
. ~·
\

WELFARE ASSOCN. A.R.P., MAHARASHTRA v. RANJIT P. GOHIL [LAHOTI, J.] 169

must possess the power to impose the tax, for, if it does not, the action must A
ever remain ineffective and illegal. The Constitution Bench held :-

"Granted legislative competence, it is not sufficient to declare merely
that the decision of the Court shall not bind for that is tantamount ~o
reversing the decision in exercise of judicial power which the
Legislature does not possess or exercise. A court's decision must B
always bind unless the conditions on which it is based are so
fundamentally altered that the decision could not have been given in
the altered circumstances. Ordinarily, a court holds a tax to be invalidly
imposed because the power to tax is wanting or the statute or the
rules or both are invalid or do not sufficiently create the jurisdiction. C
Validation of a tax s.o declared illegal may be done only ifthe grounds
of illegality or invalidity are capable of being removed and are in fact
removed and the tax thus made legal. Sometimes this is done by
providing for jurisdiction where jurisdiction had not been properly
invested before. Sometimes this is done by re-enacting retrospectively
a valid and legal taxing provision and then by fiction making the tax D
already collected to stand under the re-enacted Jaw. Sometimes the
Legislature gives its own meaning and interpretation of the Jaw under
which tax was collected and by legislative fiat makes the new meaning
binding upon courts. The Legislature may follow any one method or
all of them and while it does so it may neutralise the effect of the E
earlier decision of the court which becomes ineffective after the change
of the law. Whichever method is adopted it must be within the
competence of the Legislature and legal and adequate to attain the
object of validation. If the Legislature has the power over the subject-
matter and competence to make a valid law, it can at any time make
such a valid law and make it retrospectively so as to bind even past F
transactions. The validity of a Validating Law, therefore, depends
upon whether the Legislature possesses the competence which it claims
over the subject-matter and whether in making the validation it removes
the defect which the courts had found in the existing law and makes
adequate provisions in the Validating Law for a valid imposition of G
the tax."

(emphasis supplied)

Thus, it is permissible for the Legislature, subject to its legislative
competence otherwise, to enact a law which will withdraw or fundamentally
alter the very basis on which a judicial pronouncement has proceeded and H
"l

170 SUPREME COURT REPORTS [2003) 2 S.C.R.

A create a situation which if it had existed earlier, the Court would not have
made the pronouncement.

In Indian Aluminium Co. and Ors. v. State of Kera/a and Ors., [1996]
7 SCC 637, the Government of Kerala issued a statutory order levying
surcharge on electricity. The order was declared by the court to be ultra vires
B followed by a direction to refund the amount collected thereunder. The State
Legislature introduced a Validating Act, which was impugned unsuccessfully
before the High Court as also this Court. This Court laid down the following
tests for judging the validity of the Validating Act: (i) whether the Legislature
enacting the Validating Act has competence over the subject-matter; (ii)
C whether by validation, the Legislature has removed the defect which the
court had found in the previous law; {iii) whether the validating law is
inconsistent (sic consistent) with the provisions of Part III of the Constitution.
If these tests are satisfied, the Act can with retrospective effect validate the
past transactions which were declared to be unconstitutional. The Legislature
cannot assume power of adjudicating a case by virtue of its enactment of the
D law without leaving it to the judiciary to decide it with reference to the law
in force. The Legislature also is incompetent to overrule the decision of a
court without properly removing the base on which the judgment is founded.
The court on a review of judicial opinion, proceeded to lay down the following
principles among others so as to maintain the delicate balance in the exercise
E of the sovereign powers by the Legislature, Executive and Judiciary :-

"(i) in order that rule of law permeates to fulfil constitutional
objectives of establishing an egalitarian social order, the
respective sovereign functionaries need free play in their joints
so that the march of social progress and order remains
F unimpeded;
(ii) in its anxiety to safeguard judicial power, it is unnecessary to be
overzealous and conjure up incursion into the judicial preserve
invalidating the valid law competently made;
(iii) the court, therefore, needs to carefully scan the law to find out:
G (a) whether the vice pointed out by the court and invalidity
suffered by previous law is cured complying with the legal and
constitutional requirements; (b) whether the Legislature has
competence to validate the law; (c) whether such validation is
consistent with the rights guaranteed in Part III of the
Constitution;
H
WELFAREASSOCN. A.R.P., MAHARASHTRA v. RANJ!T P. GOHIL [LAHOTI, J.] 171

(iv) the court does not have the power to validate an invalid law or A
to legalise impost of tax illegally made and collected or to remove
the norm of invalidation or provide a remedy. These are not
judicial functions but the exclusive province of the Legislature.
Therefore, they are not encroachment on judicial power.

(v) in exercising legislative po~er, the Legislature by mere B
declaration, without anything more, cannot directly overrule,
revise or override a judicial decision. It can render judicial
decision ineffective by enacting valid law on the topic within its
legislative field fundamentally altering or changing its character
retrospectively. The changed or altered conditions are such that
the previous decision. would not have been rendered by the court, C
if those conditions had existed at the time of declaring the law
as invalid........ It is competent for the Legislature to enact the
law with retrospective effect;
(vi) the consistent thread that runs through all the decisions of this
Court is that the Legislature cannot directly overrule the decision D
or make a direction as not binding on it but has power to make
the decision ineffective by removing the base on which the
decision was rendered, consistent with the law of the Constitution
and the Legislature must liave competence to do the same."

(emphasis supplied) E
In State of Tamil Nadu v. Arroran Sugars Ltd., [1997] 1 SCC 326, the
Constitution Bench made an exhaustive review of all the available decisions
on the point and summed up the law by holding:-

"It is open to the Legislature to remove the defect pointed out by the F
court or to amend the definition or any other provision of the Act in
question retrospectively. In this process it cannot be said that there
has been an encroachment by the Legislature over the power of the
judiciary. A court's directive must always bind unless the conditions
on which it is based are so fundamentally altered that under altered G
circumstances such decisions could not have been given. This will
include removal of the defect in a statute pointed out in the judgment
in question, as well as alteration or substitution of provisions of the
enactment on which such judgment is based, with retrospective effect."

Recently a Constitution Bench in Naga People's Movement of Human H
172 SUPREME COURT REPORTS (2003) 2 S.C.R.

A Rights v, Union of btdia, (1998] 2 sec 109, held that 'colourable legislation'
is enacting by the Legislature of a legislation seeking to do indirectly what
it cannot do directly. But ultimately, the crucial question would be - Whether
the Legislature had the competence to enact the legislation ? If the impugned
legislation falls within the competence of the Legislature, the question of
B doing something indirectly which cannot be done directly becomes irrelevant.
Here we may, with advantage, quote certain observations of the larger
Bench (7 Judges) of this Court in Dhanapal Chettiar v. Yesodai Amma/,
(supra). In all social legislations meant for the protection of the needy, not
neces~arily the so-called weaker section of the society as is commonly and
C popularly called, there is appreciable inroad on the freedom of contract and
a t>etson becomes a tenant of a landlord even against his wishes on the
allotment of a particular premises to him by the Authority concerned. When
the State Rent Act provides under what circumstances and on what grounds
a tenant can be evicted, it does provide that a tenant ·forfeits his rights to
continue in occupation of the property and makes himself liable to be evicted
D on fulfillment of those conditions. Once the liability to be evicted is incurred
by the tenant under the State Rent Legislation, he cannot tum around and say
that the contractual lease has not been determined under the provisions of the
Transfer of Property Act and, therefore, he is not liable to be evicted. Various
State Rent Control Acts make a serious encroachment in the field of freedom
E of contract. The landlord is not permitted to snap his relationship with the
tenant merely by his act of serving a notice to quit on the tenant. tn spite of
the notice, the Rent Control Law says that the tenant continues to be tenant
enjoying all the rights of a lessee but at the same time deemed to be under
all the liabilities such as payment of rent etc. in accordance with the law.
Various Rent Acts confer immunity on tenants from eviction whether in
F execution of a decree or otherwise except in acc9rdance with the provisions
of the Act and/or liability for eviction being incurred on one of the grounds
provided for by the Act. Some Rent Control Acts provide that no landlord
can treat the building to have become vacant by merely terminating the
contractual tenancy as the tenant still lawfully continues in possession of the
G premises. The tenancy actually terminates on the passing of the order or
decree for eviction and the building falls vacant by his actual eviction. All
such provisions have been held to be constitutionally valid.

The Constitution Bench in Dhanapa/ Chettiar 's Case (supra) continues
to observe that Rent Acts do encroach upon to a very large extent on the field
H of freedom of contract but the encroachment is not entirely and wholly one-
I

~

WELFARE ASSOCN. A.R.P., MAHARASHTRA v. RANJJT P. GOHIL [LAHOTI, J.. ] 173

sided. Some encroachments are envisaged in the interest of the landlord also A
and equity and justice demand a fair play on the part of the Legislature not
to completely ignore the helpless situation of many landlords who are also
compared to some big tenants, sometimes weaker section of the society.
Finding fault with the Rent Acts and doubting their constitutional validity is
at times founded on stretching too far the theory of double protection or
additional protection and without a proper and due consideration of all its · B
ramifications.

We have already seen that the impugned Amending Act is within the
legislative competence of the State Legislature. The impugned Amending
Act does not either directly or indirectly overrule the judgments of this Court. C
The law enunciated by this Court in the two decisions was that the Executive
was exercising power of requisitioning the premises in. such a manner that the
premises were in fact acquired under the guise or pretext of requisitioning.
It was a colourable and hence a mala fide exercise of its executive power by
the State. Such tainted requisition was struck down by this Court as ultra
vires of the Constitution. The consequence of invalidating and striking down D
the requisitioning continuing for unreasonable length of time was that such
invalid requisitioning came to an end. It followed as a natural corollary that
the premises in occupation of the allottees became liable to.be restored to the
possession of the owners. By virtue of interim orders passed by the Court, the
possession of the occupants was protected and that protection was continuously E
enjoyed by the occupants upto the date of decision. To relieve the occupants
from the hardship of sudden eviction caused by its judicial pronouncement,
the Court allowed some mor-e time to the occupants by directing the protection
under the interim orders of the Court to remain in operation for some more
period of time in spite of the cases having been disposed of. Allowing time
to vacate the premises under the protection of the interim orders is not the F
same thing as issuing mandamus to vacate the premises by certain date. What
the impugned Amending Act has done is to fundamentally alter the very
basis of occupation of the premises by the occupants. Instead of their remaining
in occupation by virtue of orders of allotment of requisitioned premises, the
Amending Act declared that the requisitioning shall come to an end and the G
occupants shall become tenants under the owners who would become the
landlords and the amount of compensation shall become rent.

The privity of estate was converted into privity of contract. The
foundation for pre-existing transfer of property underwent a fundamental
change. The separ\lte concurring opinion recorded by P.B. Sawant, J. in H ·
174 SUPREME COURT REPORTS [2003) 2 S.C.R.
A Grahak Sanstha Manch and Ors. case (supra) records that the landlords were
receiving the same rent from the allottees as from the other tenants (i.e. non-
allottees). The effect of allowing more time to vacate the premises in spite
of the requisitioning having been struck down was, as stated by P.B. Sawant,
J., that what the landlords will be deprived of for some time more on account
B of the directions made by \he Cmtrt, is the right to induct new tenants of their
choice and tOOseqUMtlally ~lso deprived of the illegal consideration commonly
known a'S 'ptigrt '. Such tiltle to vacate the premises as was allowed by the
Court stood extended oli account of the Amending Act. The compensation
Which the landlords were receiving earlier stood converted into rent payable
by the occupants, whosoever they might be, to the landlords. The right of
C landlords to seek revision of rent was not taken away but became subject to
the provisions governing the standard rent or controlled rent determinable by
the competent authority under the Rent Con't~ol Legislation by which the
relationship of the owners and the occupants was to'be governed henceforth
as one of landlord and tenant. The right of the owners to seek eviction of
occupants and have the premises restored to their possession was also not
D taken away but was made subject to the pre-existing law governing eviction
of tenants. The larger Bench in Dhanapal Chettiar 's case (supra) has opined,
as already stated, that there is nothing objectionable, much less
unconstitutional, in the right to recover possession which accrued under the
general law from being made dormant and made subject to a special law so
E as to become conditional and dependant on availability of certain statutory
grounds to eviction as provided for by the State Rent Act. The object, purpo~e
and design of the Amending Act is to extend protection of existing Rent Act
to such occupants who, on account of declaration of law made by this court,
ran the risk of being rendered suddenly shelterless. We have already pointed
out while dealing question No. 1 that the impugned legislation is squarely
F covered by entries 6, 7 & 13 of List-III and hence within the legislative
competence of the State Legislature. So long as the legislative competence is
available, the motive behind enactment cannot be enquired into. Though the
Statement of Objects and Reasons makes a reference to the two decisions
delivered by this Court but that is only by way of narration of facts. The
G judgments of this Court are nowhere referred to in the body of the provisions
introduced by the Amendment Act so as to spell out any motive of overruling
the judgment. The writ petitioners cannot make any capital out of the fact
that two decisions have been referred to in the Statement of Objects and
Reasons. On the contrary, what is relevant in the State of Objects and Reasons
is the factual statement to the following effect (i) that the State Government
H has honoured the decisions of this Court and commenced derequisitioning
WELFARE ASSOCN. A.R.P., MAHARASHTRA v. RANJIT P. GOHIL (LAHOTI, J.] 175

process and taken a policy decision not to continue with such requisitionings A
for future, except in some special cases; (ii) that in spite of the said process
having been commenced there were 604 residential premises, above 90 non-
residential premises still under requisition in Greater Bombay and 138 in
other districts of the State of Bombay, most of them occupied by Government
servants and departments, the eviction whereof would have imperatively
resulted into creation of a grave situation much to the detriment of public B
interest; (iii) that the landlords were rushing to the High Court seeking mass
evictions from the premises under requisition; (iv) that the likely evictees
need to be protected from imminent eviction solely on ground of requisitioning
coming to an end, unless and until liability for eviction was incurred under
a pre-existing Rent Control Act; (v) that there existed a continuing acute C
shortage of accommodation and astronomical rise in the cost of properties in .
Mumbai, and unless the State intervened through an Ordinance followed by
an Act, •a grim and emergent situation was likely to emerge; and (vi) that
such premises as were specifically covered by any specific order of eviction
of the Court of a date prior to I Ith June 1996 (being.the date of Government
decision to undertake such legislation) were left untouched and unaffected by D
the impugned Amendment.

We are definitely of the opinion that the impugned Amending Act is
neither in conflict with the judgments of this Court nor can it be said to be
a piece of colourable legislation. E
The Amending Act has altered the basis of occupation of the occupants
over the premises. So long as the legislation is within the legislative
competence of the State Legislature, which it is, as we have already held,
merely because the indirect effect of the amendment would be to place
additional restrictions on the right of the owners to seek eviction of the F
premises consequent upon the judgment of the Supreme Court, it cannot be
held that the Legislature has overruled the judgment of this Court or made
an inroad on the doctrine of separation of powers. If the Amendment Act had
been enacted on the dates of decision in H.D. Vora's case or Grahak Sanstha
Mancha and Ors. case, the Court would not have been called upon .to
adjudicate upon and invalidate the unreasonably stretched requisitioning G
providing cloak for acquisition without adequate compensation and the
occupants would have been held protected as tenants under the Rent Act. The
situation is squarely covered by the law laid down by three Constitution
Benches of this Court and other decisions of this Court referred to hereinabove.
We do not think that the impugned Amendment Act is 'colourable legislation' H
176 SUPREME COURT REPORTS (2003] 2 S.C.R.

A or is in conflict with the decisions of this Court.

(iii) The impugned legislation if arbitrary and unreasonable ?

Tenancy laws and rent restriction legislations in the country, whenever
f
enacted, have almost invariably been challenged either as violative of the
B fundamental right guaranteed by Article 19(1 )(t) of the Constitution (so long
as the Clause existed in the body of Article 19) or as arbitrary and unreasonable
on the touchstone of Article 14 of the Constitution. However, the history of
precedents shows that, by and large, such challenges have failed as often as
laid. It is the angle with which the issue is approached that makes the
C difference. The Legislatures showing pro-activeness in the field have been
motivated not with the idea of destroying or jeopardizing the property rights
of the landlords but rather with the benevolent desire of extending the
protective umbrella of legislation to the tenants so as to save them. from
unscrupulous evictions and rack-renting mentality of greed which clings to
the owning of the property, and, for achieving the avowed object of striking
D a judicious balance of equity between two sections of the society, i.e. the
landlords, generally called haves, and tenants, generally called have nots, so
far as the urban property is concerned. The courts while upholding the
constitutionality of such legislations have referred to the statements of objects
and reasons and the preambles for the purpose of finding out the conditions
E prevailing at the time when the bills were sponsored and the evils which were
prevailing and which were sought to be remedied. Whenever the courts ~ave
felt doubt about the constitutionality of certain provisions in Rent Control
Legislations, th~y have been read down so as to save them from the vice of
unconstitutionality.

F In Charanjit Lal Chowdhary v. Union of India and Ors., (supra), Fazl
Ali, J. opined that Article 14 lays down an important fundamental right,
which should be closely and vigilantly guarded but in construing it, the Court
should not adopt a doctrinaire approach which might choke all beneficial
legislation.

G In Kishan Singh and Ors. v. State of Rajasthan and Ors., (1955] 2 SCR
531, the Constitution Bench held that a legislation whose object is to fix fair
and equitable rent and which regulates the relation of landlord with his tenant
cannot be said to be a legislation interfering with the fundamental right of a
citizen to hold and enjoy property even though the legislation has the effect
H of reducing or diminishing the rights hitherto exercised by the landlord.
WELFARE ASSOCN. A.RP., MAHARASHTRA v. RANJJT P. OOHIL [LAHOTI, J.] 177

In Maneklal Chhotalal and Ors. 's case (supra), the Constitution Bench A
thus summed up the principles to be borne in mind when applying Articles
14 and 19 of the Constitution - "A fundamental right to acquire, hold and
dispose of property, can be controlled by the State only by making a law
imposing, in the interest of the general public, reasonable restrictions on the
exercise of the said right. Such restrictions on the exercise of a fundamental B
right shall not be arbitrary, or excessive, or beyond what is required in the
interest of the general public. The reasonableness of a restriction shall be
tested both from substantive shall be tested both from substantive and
procedural aspects. If any uncontrolled or unguided power is conferred, without
any reasonable and proper standards or limits being laid down in the enactment,
the statute may be challenged as discriminatory". C
Article 14 of the Constitution permits reasonable classification for the
purpose of legislation and prohibits class legislation. A legislation intended
to apply or benefit a 'well defined class' is not open to challenge by reference
to Article 14 of the Constitution on the ground that the same does not extend
a similar benefit or protection to other persons. Permissible classification D
must satisfy the twin tests, namely, (i) the classification must be founded on
an intelligible differential, which distinguishes persons or things grouped
together from others left out of the class, and (ii) such differential must have
a rational relation with the object sought to be achieved by the legislation. It
is difficult to expect the Legislature carving out a classification which may E
be scientifically perfect or logically complete or which may satisfy the
expectations of all concerned, still the court would respect the classification
dictated by the wisdom of Legislature and shall interfere only on being
convinced that the classification would result in pronounced inequality or
palpable arbitrariness on the touchstone of Article 14.
F
Bombay as a State and also as a cosmopolitan city-unofficially crowned
as commercial capital of the country, has its own peculiar problems. People
from all over the country rush to Bombay in search of employment and
·opportunities. Not all are blessed enough to find shelter much less of their
own. A huge administrative set up in the governance is needed involving a
large number of personnel to manage the huge population accompanied by G
evergrowing influx of people. Accommodation is needed to house the people
and activities including official ones catering to the needs of people. The
premises were liberally requisitioned to satisfy the needs of the needy. The
requisitioning did not solve the problem which continued to persist resulting
in endless renewals of requisitioning which was held by this Court to be H
178 SUPREME COURT REPORTS [2003] 2 S.C.R.

A vitiated on account of virtual acquisitioning without payment of compensation
resulting from recurring and non-intermittent cycles of requisitioning. It was
struck down. Consequent upon constitutional interpretation and adjudication
by this Court thousands, if not lakhs of persons and substantial activity of
government, semi-government bodies and PSU's ran the risk of being rendered
B roofless and out of gear. They all needed to be protected by State intervention
and constituted a class by themselves. All such premises whose occupants
were under the threat of eviction also constituted property capable of
identification by a well defined classification. The Legislature chose to step
in and enact a legislation, which would protect the threatened evictees from
likely eviction. The persons and premises - both constitute a well defined
C class by themselves and the classification cannot be said to be arbitrary; it is
capable of being distinguished from others not included in that class. Such
classification has an apparent and clear nexus with the object sought to be
achieved. The impugned legislation does not, therefore, suffer from either
arbitrariness or invidious discrimination. The challenge that the impugned
Amendment Act falls foul of Article 14 of the Constitution must therefore
D fail.
The contention that the impugned Amending Act cannot withstand the
test of Article 14 of the Constitution was raised in the High Court but was
not dealt with for the reason that even otherwise, in the opinion of the High
E Court, the impugned legislation was unconstitutional. However, in view of
the submissions made, we have dealt with the issue and disposed of the same.

Conclusion '

Thus the challenge to the constitutional validity of the impugned
F Amending Act fails on all the counts, The decision of the High Court wherein
view to the contrary has been taken is held unsustainable and liable to be
reversed, However, this is subject to a clarification,

We have in the earlier part of this judgment extracted and reproduced
para 20 of the Constitution Bench decision in Grahak Sanstha Manch 's case
G containing some categorical and definite directions given by the Supreme
Court to the occupants of requisitioned premises and the State Government,
which protected the occupants in Bombay and other large cities in Maharashtra
until 30.11.1994, and with effect from that date directed that 'all occupants
of premises the continued requisition of which has been quashed' shall be
bound to vacate and hand over vacant possession to the State Government so
H that the State Government may on or before 3 L12.1994 derequisition such
i
WELFARE ASSOCN. A.R.P., MAHARASHTRA v. RANJIT P. GOHIL [LAHOTI, J.) 179

premises and hand back vacant possession thereof to the landlords. The reversal A
of the impugned judgment of the High Court and upholding tl\e validity of
the impugned legislation shall not have the effect of undoing or overruling
the abovesaid mandate of the Supreme Court contained in the decision of
Grahak Sanstha Manch 's case.

Accordingly. all the appeals are allowed and the impugned judgment of B
the High Court is set aside subject to the clarification made hereinabove.

It was stated at the Bar, during the course of hearing that the impugned
judgment decided only the question of vires of the impugned Amending Act.
Some of the writ petitions filed in the High Court raised the question of vires
of the impugned Act as the sole issue for decision which writ petitions shall C
stand dismissed in view of this judgment. Some of the writ petitions filed in
the High Court raised other issues as well which in the event of the impugned
judgment being set aside shall have to be remanded to the High Court for
hearing on issues other than the issue as to vires of the impugned Amendment
Act. All the appeals shall therefore now be listed for appropriate consequential D
directions before the Court.

N.J. Appeals allowed.