Andhra HC (Pre-Telangana)
Suresh Gir vs K. Ahadev on 25 September, 1997
Equivalent citations: 1998(1)ALD25, 1997(6)ALT436
Author: P. Venkatarama Reddi
Bench: P. Venkatarama Reddi, K.B. Siddappa
ORDER
P. Venkatarama Reddi, J
1. There are three revision petitions before us filed under Section 22 of the A.P. Buildings (Lease, Rent and Eviction) Control Act, 1960 (hereinafter referred to as 'the Act'). CRP No.346 of 1996 and CRP No.2384 of 1996 are filed by the tenant. CRP No.2306 of 1996 is filed by the landlord. Both the tenant and the landlord question the order of the appellate Authority under the said Act (Addl. Chief Judge, City Small Causes Court) fixing the rent of the demised building at Rs.650/- per month and directing payment of arrears at that rate from the month of December, 1991. Whereas the landlord contend that the enhancement or fixation is too law, the tenant complains that the enhancement from Rs.210/- to Rs.650/- is quite high. It is the contention of the tenant that such enhancement is not warranted and the Rent Controller or the Appellate Authority have no jurisdiction to do so.
2. The decision of the appellate authority fixing the rent as above is a sequel to the judgment of the Supreme Court in a Special Leave Petition filed by the landlord i.e., SLP (Civil) 22602 of 1994. Earlier, the revision petition filed by the tenant against determination of fair rent was allowed by the learned single Judge of this Court who issued directions to the Rent Controller to determine fair rent in accordance with Section 4 of the Act. In doing so, the learned single Judge came to the conclusion that the decision in Md. Ataur Rahman Khan v. Md. Kamaluddin Ahmed, 1987 (1) APLJ 215 striking down Section 4 of the Act was no longer good law in view of the decision of the Supreme Court in Sant Lal Bharti v. Sate of Punjab, . The Supreme Court allowed the appeal filed by the landlord on the following ground :
"....., the declaration given by it that Section 4 was ultra vires could not be put at naught by a decision given by this Court in respect of another Act. The proper course for the learned single Judge was to refer the matter to the Division Bench. In absence of any such decision by a larger Bench, the section could not revive.'' So holding, the Supreme Court further held that the following direction issued by the High Court should stand deleted :
"The Rent Controller is directed to proceed with the determination of fair rent in terms of Section 4 of the A.P.Rent Control Act expeditiously."
The Supreme Court left it open to the appellate Court to decide the correctness of the order passed by the Rent Controller fixing the fair rent. This decision of Supreme Court is reported 1995(3) SCC (Supplement) Page 668.
3. After the arguments in the C.R.Ps. were heard in part, the landlord, by way of abundant caution filed W.P.No. 14813 of 1997 challenging sub-sections (2)(3) & (4) of Section 4 of the Act and seeking a declaration that the said provisions are violative of Articles 14 and 19 of the Constitution of India. S.R. Nayak, J., having admitted the Writ Petition directed it to be tagged on to CRP No.346/96 etc. Hence that writ petition has also been posted for hearing before us.
4. A reference made by the Prl. Subordinate Judge, Guntur under Section 113, read with Order XLVI, Rule 1 of CPC while dealing with a rent appeal is also before us. It is R.C.No.8 of 1985. The learned Subordinate Judge entertained a doubt whether sub-section (1) of Section 4 of the Act remains intact and whether the decision of this Court in AtaurRahman Khan's case (supra) should be understood as declaring sub-sections (2) to (4) only as unconstitutional, In other words, the question on which reference has been made is whether the Rent Controller has jurisdiction to fix fair rent under sub-section (1) of Section 4 of the Act without reference to the criteria laid down in sub-sections (2) to (4). The Subordinate Judge expressed the prima facie view that this Court intended to declare subsections (2) to (4) as unconstitutional leaving intact sub-sections (1) and (5) of Section 4 on the Statute book.
5. We shall briefly refer to the provisions contained in Section 4 of the Act. Section 4 deals with determination of 'fair rent'. Sub-section (1) thereof reads as follows :' "The Controller, shall, on application by the tenant or landlord of a building fix the fair rent for such building after holding such inquiry as the Controller thinks fit."
Sub-section (2) enjoins that "In fixing the fair rent, the Controller shall have due regard-(a) to the prevailing rates of rent in the locality for the same or similar accommodation in similar circumstances during the twelve months prior to the 5th April,1944.
(b) to the rental value as entered in the property tax assessment book of the concerned local authority relating to the period mentioned in clause (a);
(c) to the circumstances of the case, including any amount paid by the tenant by way of premium or any other like sum in addition'to rent after the 5th April, 1944.
6. Thus, the period of twelve months prior to 5th April, 1944 is the crucial period taken into account by the Legislature and the prevailing rates of rent of the same or similar accommodation at that time is to be taken as the basis for fixation of fair rent.
7. Sub-section (3) provides for increase of fair rent of residential building by a certain percentage over and above the rent arrived at under sub-section (2) depending on the rate ofrent. If the rate of rent or rental value referred to in sub-section (2) exceeds Rs.25/- per month, an increase not exceeding 12.5% can be allowed; if it exceeds Rs.25/- but does not exceed Rs.50/- an increase upto 18 3/4% can be allowed and if the rent arrived at under Sub-section (2) exceeds Rs.50/-, an increase not exceeding 37 1/2% can be allowed. The proviso says that in the case of a residential building which has been constructed after the 5th April, 1944, the percentage of increase can go upto 37 1/2%, 56 1/4 and 75 respectively. Sub-section (4) provides for a similar increase in rent in the case of non-residential buildings. The rates of increase in terms of percentage could go upto 56 1/4% if the rent arrived at under sub-section (2) does not exceed Rs.50/-, 75/- if the rent exceeds Rs.50 per month. In the case of non-residential building constructed after 5th April, 1944, the percentage of increase shall not exceed 75 and 150 respectively.
8. Sub-section (5) provides for the increase in the fair rent in respect of buildings for which the fair rent was fixed before the commencement of the Act. This sub-section is not of practical importance as the case that arise under this sub-section will be rare.
9. Where the Controller has fixed the fair rent of the building, the landlord is prohibited from claiming or receiving anything in excess of fair rent and if it is not fixed, the landlord shall not, after the commencement of the Act, claim or receive any sum in addition to the agreed rent (vide Section 7).
10. Section 5 provides for increase in fair rent in cases where some additional, improvement or alteration of the building has been carried out at the landlord's expense. Here also, the ceiling on the increase in fair rent has been prescribed.
11. Section 6 deals with a situation where the taxes and cesses payable by the landlord in respect of the building is enhanced after the fixation of fair rent under Section 4.
12. Thus, Sections 4 to 7 together constitutes a package of measures to control the rents chargeable in respect of the buildingscovered by the Act and to ensure a fair rent which may not be the same thing as open market rent.
13. The constitutional validity of Section 4 of the Act came up for consideration before P. Rama Rao, i. in Ataur Rahman' case (supra). The learned Judge referred to the aims and objectives of the Act in the following words:
"Apart from regulating the tenancy and safeguarding the rights of the tenants against unreasonable or oppressive attempts at evictions and also taking are of the legitimate rights and needs of the landlord, the provision is made for fixation of fair rent for the premises under occupation of the tenant. The Act is a self-contained enactment providing reliefs and remedies before the heirarchy of authorities constituted under the Act. The object of the Act is to interdict unreasonable eviction of tenants and though the slant towards tenants is clearly discernible from the provisions of the Act, the corresponding obligations of tenants with reference to punctual payment of rent, embargo on subletting without express consent of landlord and keeping the demised premises in a fit condition and attempting to defy the title of the landlord are provided. Equally the provision enabling the fixation of fair rent at the instance of either landlord or tenant is made to ensure just and equitable rent."
14. The learned Judge took the view that the criteria laid down in Section 4 for the calculation of fair, rent has become wholly unreasonable and the provision is violative of Article 14 of the Constitution, It was observed :
"It is fairly settled that the validity of the provision or Act at the inception may not continue for ever and the entire complexion may change by efflux of time and changed circumstances. Section 4 envisages the modulation of fair rent in consonance with the rents prevailing in the locality during the period of 12 months prior to 1-4-1944 with marginal increase. This provisionevolved at the time when the Act was enacted continued to be same without responding to the sea change in the price structure. It cannot be gainsaid that there is galloping increase in prices and the value of rupee has been eroding fast and the rupee value has fallen down to l/8th of its original value. In view of the high inflationary tendencies and the rupee value de-generating, the continued adherance to the rents prevailing in 1944 is far removed from real state of affairs. The value of the building is appreciating by leaps and bounds and the cost of living index has been on tremendous increase, thanks to inflation, and the amount fixed with relation to rents in 1944 is depreciating in terms of money value.
In view of current economic standards and spiraling prices, it is highly unrealistic to cling to old values and rentals in 1944. It looks odd that the rents prevaiting in 1943-44 with consolation increase should be applied in 1985-86 and the provision is screaming manifest unreasonableness. In view of the rigidity and chillness and lack of response to changed conditions and pattern of life, Section 4 is stripped of realistic and rational approach. Section 4 by adherence to the rentals of 1944 is totally indifferent to the real state of affairs in the real estate matters. The mode of fixing the fair rent envisaged in Section 4 of the Act is anything but fair."
15. So holding, Section 4 was declared unconstitutional and the matter was remitted to the Rent Controller for fresh consideration without reference to Section 4 of the Act. In the course of judgment, the learned Judge referred to the report of the A.P.Law Commission submitted in the year 1977. The Law Commission frowned on the existing provisions of Section 4. The Law Commission observed:
"Fixation of fair rent on the basis of rent prevailing in or around the year 1944 would have the effect of giving undue concession to the tenant at the expense of the landlord when in fact, fair rent, whichrelates to building should be fair both to the landlord and tenant as has been pointed out in a series of cases including Rawal & Co. v. K.G. Ramachandran ....."
16. The Law Commission also referred to the amendments made in the Tamil Nadu Act and exhorted the State Government to take steps for a radical change of Section 4.
17. Before we proceed further, we must clarify one aspect, In Ataur Rahman's case (supra) the learned single Judge, no doubt, declared Section 4 of the Act invalid. If we read the judgment literally, it may appear that UK entirety of Section 4 including sub-section (1) there to the validity of which was neither assailed nor discussed by the learned Judge goes out of the Statute book. But, we do not think that the learned Judge intended to strike down sub-section (1) as well. The target of attack and the striking blow was on subsections (2) to (4) which speak of outmoded criteria for the fixation of fair rent. Whether sub-section (1) falls with the other sub-sections or whether it survives was not discussed by the learned Judge. But the direction in the operative part of the judgment to the effect that the Rent Controller should decide the question of fair rent afresh without reference to Section 4 of the Act, by necessary implication, means that the learned Judge did not doubt the power of the Rent Controller to fix the fair rent in terms of sub-section (1); otherwise, there was no point in remitting the matter to the Rent Controller for fresh decision vis-a-vis the fair rent of the building. But for sub-section (1), there was no power vested with the Rent Controller - a designated authority acting within the four comers of the Act to determine the fair rent. By using the words "without reference to Section 4 of the Act" the learned Judge who decided Ataur Rahman 's case (supra) merely meant, in our view, "without reference to the offending provisions of the Act" which obviously means, according to the tenor of the judgment, sub-sections (2) to (4). We may mention that the reference Court entertained a doubt on mis aspect and the above clarification will dispel that doubt.
In any case, this judgment of ours on the larger question of vires of Section 4 will set at rest the doubt in this regard.
18. The question of constitutional validity of sub-sections (2) to (4) of Section 4 is raised before us in the form of writ petition. When the CRPs were" being argued, the learned Counsel for the tenant (who is impleaded as 2nd respondent in the W.P.) raised a preliminary objection that the question as to the vires of the legislative provision cannot be gone into by the revisional Court exercising jurisdiction under the special Act- In fact, it was contended by one of the learned Counsel for tenant Mr. Ramakrishna Rcddy that in Ataitr Rahman's case (supra), the learned single Judge exceeded his jurisdiction in pronouncing upon the constitutional validity of Section 4 in a revision petition arising under the A.P. Buildings Act. It is, therefore, contended that the judgment in Ataur Rahman 's case (supra) has practically no value either as a binding judgment or as a precedent. These objections are no longer available with the filing of the writ petition. It is conceeded that we can go into the question of constitutional validity de novo. Incidentally, we, sitting in the Division Bench, are not powerless to express our view as regards the correctness of the decision rendered by the learned single Judge in Ataur Rahman's case (supra). In fact, that is what the Supreme Court indicated while disposing of the SLP between the same parties, (vide 1995 (3) SCC, supplement, page 668, quoted supra).
19. Now, the pivotal question to beconsidered is whether sub-sections (2) to (4) of Section 4 of the Act are constitutionally valid. If what is ordained in Section 4(2) to (4) is to be taken as the fair rent, there can be no two views that highly anamolous and inequitous result would follow, In order to determine the fair rent of the year 1997, the Rent Control Courts has to set the clock back to half-a-century or more and probe into the factual position obtaining in the year 1943 to 1944 to arrive at the 'fair rent'. Is it not abhorrent to notions of justice, morality and common sense to ascertain the rent prevalent more than 50 years back, add a little more to that and then to say that the rent so arrived at is the fair rent of the building? Docs it not virtually make a mockery of the concept of 'fair rent'? No doubt, fair rent can be less than the open market rate. But, it cannot be illusory or unrealistic. In the year 1960 when the Act was passed, the rent prevalent for the same or similar accommodation during twelve months prior to 5-4-1944 was the basis adopted. In other words, the Legislature did not want to adopt the rates of rent prevalent in I960 (when the Act was passed) as the crucial criterion. Having regard to the situation then obtaining, the legislature would have thought that they should traverse about 16 years backward for the purpose of arriving at the fair rent, because, after that date, on account of the conditions created by the second world war, there was an unprecedent demand for houses in towns and urban areas and after the formation of the State of Andhra Pradesh, the rents became abnormally high. It may be noticed here that the fore-runner to the A.P. Act is the Madras Buildings (Lease & Rent) Control Act, 1949. In that Act, the Legislature considered it fit to go back to ten years and to take 1939-40 as the basic year for the purpose of fixation of fair rent. In 1960, when the A.P. Act was passed, the Legislature did not want to peg down the rents to 1939 level. It added five years more, keeping in view the passage of time between 1949 and 1960. The Legislature would have never envisaged that the same criterion should hold good for all the time to come may be decades and centuries. Though the Legislature had intended to control the rent and fix the fair rent without correlating it to open market rent, it would not have been the intention of the Legislature to make the fair rent a pittance, stripping it of all the vestiges of fairness and reasonableness. As rightly pointed out by Rama Rao, J. the A.P. Buildings Act, though meant to protect the interests of the tenant primarily, it also takes care of the interests of the landlord to a certain extent. Otherwise, there is no need to provide that even a landlord can apply for determination of fair rent. The preamble of the Act refers to control of rent. 'Control' docs not mean making the rent illusory orkeeping it at a grossly low level thereby facilitating an unfair advantage to the tenant. As pointed out by the Supreme Court in Ganpat Ram v. Gayatri Devi, ), the Rent Control Act is a legislation beneficial to both the landlord and tenant. There is no presumption in all cases that the tenants arc weaker sections (vide observations in Inder Mohan Lal v. Ramesh Khanna, . Instances are many where the tenants many of whom fortunately placed in business gain an undue advantage over less fortunate landlords by taking shelter under Section 4(2) of the Act. The rent which the landlord would be getting by application of sub-sections (2) to (4) may not be sufficient even to carry out the bare minimum repairs and maintenance which he is bound to. It is implicit in the very nomenclature of 'fair rent' that the rent determined should be fair. How can it be fair when the Court has to project the yardstick imbedded in sub-sections (2) to (4), for all the time to come?
20. It is well settled that a legislation which was valid and reasonable at the inception might become invalid, arbitrary or discriminatory by efflux of time. That is exactly the situation here. An instance of this nature is to be found in Motor General Traders v. State of Andhra Pradesh, AIR 1984 SC 121 wherein Section 32(b) of the Act was struck down. Rattan Arya v. State of Tamil Nadu, is yet another instance. Section 30(ii) of Tamil Nadu Buildings Act was invalidated therein.
21. In Rattan Arya's case (supra), the principle was summarised thus:
"As held by this Court in Motor General Traders (supra) at page 130, a provision which was perfectly valid at the commencement of the Act could be challenged later on the ground of unconstitutionality and struck down on that basis. What was once a perfectly valid legislation may, in course of time, become discriminatory and liable to challenge on the ground of its being violative of Article 14."
22. The patent unreasonableness and the discriminatory potential of Section 4(2) will appear to be more pronounced in the light of the notification issued by the State Government on 29-12-1983 granting the exemption to the buildings upto 10 years after completion of their construction and for the buildings with monthly rent exceeding Rs.1,000/-. That means, buildings of modest size constructed even during 1980s will be covered by the provisions of the A.P. Buildings Act. The landlords can charge only the maximum rent contemplated by sub-sections (2) to (4) of Section 4. When such is the case, no prudent landlord will be willing to let out the premises at pre-1944 rental level. If sub-sections (2) to (4) are allowed to be implemented, the rent control legislation may become counterproductive. The intended beneficial effects of the legislation will suffer an irretrievable set back.
23. Though time has come to take stock of the present situation and mould the law suitably so as to make it more realistic and responsive to the present day needs, the Executive Government and the Legislature remained as silent spectators. The age old law remained unaltered despite the need to alter it. The exhortations of the Law Commission were in vain. But, from what is stated in the counter filed on behalf of the State Government, we perceive a silver lining in the cloud. The State Government did initiate some action in the year 1987 to appoint a Cabinet Sub-Committee to suggest amendments to the Act including Section 4. It appears that the Committee did make the recommendations. It also appears that the Government of India circulated a model Rent Control Bill for the consideration of the State Government. But, nothing more has been done. Probably, a sense of complacence would have set in after this Court struck down Section 4 in the year 1987 in Ataur Rahman's case (supra). The Rent Control Courts are now left to search and choose the right criteria for the fixation of fair rent. It is pertinent to mention that the Madras Legislature introduced an amendment to the Act in the year 1960 by prescribing the fair rent with reference to the return at a certain percentage of the cost. Theold yardstick of 1939-40 rent was done away with by the Madras Legislature, even in the year 1960.
24. It is, however, heartening to learn from the counter affidavit "that the matter is under examination to enact a new Rent Control Act for this State in place of existing Act based on the suggestions made by the Cabinet Sub-Committee and Government of India". We do hope that the days of examination will be soon over and the Legislature will step in atleast before the end of this century to amend the taw so as to make the concept of fair rent more sensible and realistic.
25. In Rattan Arya 's case (supra), the Supreme Court while striking down Section 30(ii) of the Tamil Nadu Buildings (Lease & Rent Control) Act as unconstitutional made these pertinent observations :
"We must also observe here that whatever justification there may have been in 1973 when Section 30(ii) was amended by imposing a ceiling of Rs.400/- on rent payable by tenants of residential buildings to entitle them to seek the protection of the Act, the passage of time has made the ceiling utterly unreal. We are entitled to take judicial notice of the enormous multifold increase of rent throughout the country, particularly in urban areas. It is common knowledge today that accommodation which one could have possibly got for Rs.400/- per month in 1973 will today cost at least five times more. In these days of universal day to day escalation rentals, any ceiling such as that imposed by Section 30(ii) in 1973 can only be considered to be totally artificial and irrelevant today."
26. It is apposite to refer to the observations of a Division Bench of Kerala High Court in Issac Ninan v. State of Kerala, 1996 (2) RCR 109 while striking down a provision similar to Section 4(2);
"Considering the word 'control' in the above perspective, we are of the view that rent control legislation cannot be used to make the rent amount to remain tatic alwaysunmindful of the vicissitudes in economic conditions, plummeting money value and improvements of the locality from commercial angles. We are also inclined to accept the contention of learned senior Counsel for the petitioner that if the effect of the provision is to keep the rent static by fixing fair rent, it would not be fair at all when situation changes on account of the factors mentioned above. On the contrary it would become unfair rent then."
27. Kerala High Court accordingly struck down Sections 5, 6 and 8 of the Kerala Buildings (Lease and Rent) Control Act, 1965 as violativc of Article 14 and 19(1) of the Constitution. Respectfully, we endorse the reasoning of the learned Judges of Kerala High Court and share the same view.
28. We may mention that in the counter filed by the Deputy Secretary to Government (GAD) in W-P. 14813/97, no attempt has been made, for obvious reasons, to justify the offending provisions of Section 4. On the other hand, the statement in the counter that "this Act was enacted in the year 1960 keeping in view the circumstances prevailing during that period" coupled with the statement that the proposal to amend Section 4 is under examination is a tacit recognition of the unconstitutional propensities of sub-section (2) read with sub-sections (3) and (4).
29. Viewed in the present day context and setting, the irresistible conclusion that follows is that Section 4(2) and its allied provisions, namely, sub-sections (3) and (4) violate Article 14 of the Constitution. The differential treatment given to the buildings covered by the Act i.e., the building aged more than 10 years and fetching monthly rent of Rs.1,000/- and less cannot be supported on the basis of reasonable classification. The irrationality of unreasonableness of the impugned provision providing for determination of fair rent of the buildings in the manner in which it is envisaged by sub-sections (2) to (4) of Section 4 results in unjustifiable discrimination. It is trite to say that in order to pass the test of permissible classification, two conditions must be satisfied; (i) that the\classification must be founded on an intelligible differentia which distinguishes persons or tilings that are grouped together from others left out of the group and, (ii) that differential must have a rational relation to the object sought to be achieved by the statute. As pointed out by Venkataramaiah, J in Motor General Traders'case (supra), "While the classification may be founded on different bases, what is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration". Judged from this standard, we are unable to say that sub-sections (2) to (4) of the A.P. Buildings Act pass the tests of valid classification so as to save them from the infraction of Article 14. Pegging down the rates of rent to 1943 level subject to a slight increase as provided for by sub-sections (3) and (4), can no longer be regarded as valid basis for classification though it was so at the initial stages of the operation of the Act. Far from achieving the desired objective, it runs counter to the whole idea of fixation of rent which can be said to be fair rent. It would be contradiction in terms to call the rent contemplated by sub-section (2) of Section 4 as 'fair rent'. If the said provisions are allowed to operate, the resultant rent, which is bound to be an absurdly low figure will be shorn of the clement of fairness and propriety. The clement of discrimination stemming from irrationality and unreasonableness is writ large on the face of the impugned provisions.
30. The case on hand best illustrates how the fixation of fair rent with reference to the criteria laid down in sub-sections (2) to (4) will lead to an inequitous and incongrous result. The building in question is located admittedly in a prime and central locality in Hyderabad. It has 660 sq.feet of plinth area, as seen from the evidence. The landlord is a retired government employee. It is borne out by the evidence that the tenant is a fairly rich person having 30 acres of agricultural land at Vikarabad-which is not far from the city. Applying the criteria laid down in sub-sections (2) to (4), the Rent Control Court fixed the fair rent at Rs.210/- per month, that too taking into account the rent of 1970 in the absence of evidence as to rents prevailing in 1944.
31. Viewed from the angle of Article 19(1)(g) also, sub-sections (2) to (4) of Section 4 cannot be allowed to remain on the Statute book. To let out a house can be a part of the business of its owner. His right to carry on such business can only be curtailed by reasonable restrictions imposed in public interest. The impugned provisions of Section 4 have the effect of permitting the landlord to get a pittance or an illusory amount. Such return on the investment made by him would hardly be sufficient even to pay the tax or to meet the maintenance expenses. By no stretch of imagination can it be said that the restriction on the quantum of rent receivable is reasonable. Nor it is in any way conducive to public interest, as already pointed out.
32. The only attempt made by the learned Counsel for the tenant to sustain the validity of sub-sections (2) to (4) of Section 4 was to rely on the observations of Supreme Court in Saul Lal Bharti's case (supra) an attempt successfully made before the learned single Judge in the previous round of litigation that went upto the Supreme Court. We do not think that the dicta or the observations of the Supreme Court in Sant Lal Bharti's case (supra) would save Section 4(2) from the infraction of Article 14 of the Constitution. The main question that was considered in that case was whether for the purpose of testing the constitutional validity there could be comparison of the provision contained in the legislation of one State to a corresponding provision obtaining in other States. In that contest, the Supreme Court observed that ' 'Article 14 does not authorise the striking down of a law of one State on the ground that in contrast with a law of another State on the same subject its provisions are discriminatory or different." It was further observed that "the source of authority for the two statutes being different, Article 14 can have no application" The same idea was amplified by their Lordships in the penultimate paragraph in the following word:
"It must be the function of the Legislatures of each State to follow the methods considered to be suited for that State, that would be no ground for judging thearbitrariness or unreasonableness of a particular legislation in question by comparison. What may be the problem in Madras may not be the problem in Punjab.''
33. Immediately following the above passage, there are some observations on which reliance is placed by the Counsel appearing for the tenant.
"It must, however, be bom in mind that the Act in question was passed in 1949 and it pegged the rent prevalent in the similar houses in 1939 and as such is not unreasonable per se. The rises "started tremendously after the end of the Second World War after the partition of the country. In that view of the matter, we cannot say that per se, there is unreasonableness in fixing the prices in 1938 level. Having regard to the specific preamble of the Act we find nothing unreasonable in the Scheme contemplated under Section 4 of the present Act."
34. It is submitted that the object of the A ,P .Act being the same, the observations made above will apply with full force and make Section 4(2) immune from attack. However, we are of the considered view that the isolated observation in the above passage will not take Section 4(2) of the A.P. Act out of the gamut of Article 14 of the Constitution. We do not think mat the Supreme Court intended to lay down the broad proposition that the basic rent fixed as per the rates prevalent in 1938 shall always be deemed to be reasonable irrespective of long passage of time. The observation made by their lordships about the reasonableness of me provision was with reference to the point of time when the Act was passed in 1949. Traversing a decade backwards for the purpose of arriving at the basic rent was considered to be not unreasonable per se having regard to the avowed objective of the Act. While expressing the opinion on this aspect, their lordships took into account the conditions prevailing in the post-war scenario. The question whether projection of basic rent to the 1938 level 40 or 50 years after the advent of the Act can pass the test of 'reasonableness' or 'reasonable classification'was not considered by their lordships. The principle laid down in Motor General Traders' case (supra) and reiterated in Rattan Arya 's case (supra) that a non-discriminatory piece of legislation may in course of time become discriminatory in view of the change of circumstances was not adverted to by the Division Bench which decided Sant Lal Bharti's case (supra) because no such argument was raised therein. We do not, therefore, think that the said decision can be regarded as an authority for the proposition that irrespective of the passage of time, a provision fixing fair rent decades or centuries back would continue to have an clement of reasonableness or rationality in it. It is also significant to note that the preamble of AP.Act uses the words 'Control of rent' against the terminology-"increase of rent" used in East Punjab Act.
35. In the light of the foregoing discussion, we hold that sub-section (2) of Section 4 of the A.P. Buildings (Lease, Rent and Eviction) Control Act, 1960. is unconstitutional. Sub-sections (3) and (4) have no independent existence apart from subsection (2). The learned single Judge was right in striking down the said provisions Ataur Rahman 's case. We further make it clear that sub-sections (2) to (4) of Section 4 do not get revived by reason of the subsequent pronouncement of Supreme Court in Sant Lal Bharti 's case (supra), as discussed above.
36. The next aspect which calls for our decision concerns with sub-section (1). If subsections (2) to (4) are declared unconstitutional in tune with the decision in Atattr Rahman's case (supra), the question will arise whether sub-section (1) which empowers the Rent Controller to fix fair rent survives? We have to examine this question on the touch-stone of the doctrine of severability. The predominant test applied to Judge whether a valid provision could be severed from an offending provision of the statute is this :
"In determining whether the valid parts of a statute are separable from the invalid parts thereof, it is the intention of the Legislature which is the determining factor.The test to be applied to whether the Legislature would have enacted the valid part if it had known that the rest of the statute was invalid."
(vide the decision of Constitution Bench in RMDC v. Union of India, The same test was expressed in a different language in State of Bihar v. Kameswar Singh, , in the following manner:
"Whether what remains is so inextricably bound up with the part declared invalid that what remains cannot independently survive or, whether on a fair review of a whole matter it can be assumed that the Legislature would not have enacted at all that which survives without enacting the part that is ultra vires."
37. An allied test laid down in R.M.D. C. case should also to be kept in view :
"Even when the provisions which are valid arc distinct and separate from those which are invalid, if they all form part of a single scheme which is intended to be operative as a whole, then also the invalidity of a part will result in the failure of the whole."
38. We have no difficulty in holding the view that sub-section (1) to Section 4 can remain on the Statute book without any legal objection and effectively operate without being subject to the clogs envisaged by subsections (2) to (4). If we hold that sub-section (1) docs not survive, there will be no provision at all to fix: the fair rent. That means that agreed rent will prevail. Neither the tenant nor landlord can apply to the Court for fixation of fair-rent. Such a situation would undoubtedly frustrate the objectives of the rent legislation, control of rent being one of the objectives. We are inclined to think that the Legislature would have still thought of enacting the provisions like sub-section (1) even without framing the criteria governing fair rent. It is true that the conferment of power to determine the fair rent sans the guidelines or criteria for such determination leads to the situation of the Courtfixing the fair rent according to its own perceptions of what should be the fair rent. An uniformity in approach may not be possible. But, the uncertainties or grey areas that might surface in the course of adjudication by the Rent control Court does not make it a futile provision operating at a cross-purpose with the legislative intention. It may be that subsection (1), if it stood in the company of valid guidelines or norms, the legislative purpose could have been better achieved and its utility would have been far greater. But the total removal of sub-section (1) would do far more damage to the legislative intent and social purpose sought to be achieved than its extrication from the allied provisions prescribing guidelines. The Legislature would not have contemplated a vacuum in the arena of fixation of fair rent, when it is the avowed objective of the legislature to provide a remedy both to the extent and the landlord in the matter of fixation of fair rent.
39. It is to be noted that sub-section (1) of Section 4 confers a substantive power on the Controller to fix the fair rent of a building after holding an enquiry as may be considered necessary. The factors and norms that have to be kept in view by the Controller in the exercise of jurisdiction to fix the fair rent are set out in sub-section (2). It cannot be said that subsection (1) falls or survives along with subsection (2). Be it noted that sub-section (1) does not contain any restrictive words indicating that the exercise of power under sub-section (1) is made conditional upon the Court following the legislatively ordained criteria. The retention of sub-section (1) and the preservation of the power of the Rent Controller to fix the fair rent on ordinarily accepted notions will not in any way defeat the legislative intent. On the other hand, the absence of such a provision will stifle one of the objectives of legislation. We have, therefore, no hesitation in holding that sub-section (1) survives notwithstanding the declaration that sub-sections (2) to (4) are ultra vires the Constitution. That is not to say that the Legislature should get reconciled to this situation, As already observed, for the better fulfillment of the objectives of the rent legislationand the interests of certainty and uniformity of law, it is highly desirable that the Legislature steps in at the earliest and undertakes the exercise of evolving new criteria in keeping with the objectives of the Act and the change in living conditions.
40. It is not necessary for us to expound the concept of fair rent and to dwelt at length on the modalities of arriving at the fair rent in the absence of definite criteria. Suffice it to say that the expression fair rent in synonymous with 'reasonable rent' - reasonable from the point of view of both tenant and landlord. It undoubtedly excludes from its fold exorbitant rent and the abnormal or extraordinary circumstances.
41. What remains now is the question whether on merits the order of the appellate authority fixing the fair rent at Rs.650/- per month merits interference.
42. The Rent Controller applied the criteria laid down in sub-sections (2) to (4) in view of the direction of the learned single Judge in C.R.P.No.3894 of 1993 to determine the fair rent in terms of Section 4 of the Act. It may be recalled that the learned single Judge took the view that in the light of the decision of the Supreme Court in Sant Lal Bharti 's case (supra,) the decision of this Court in Ataur Rahman 's case (supra) is no longer good law and Section 4 is not unconstitutional. The appeal against that decision of the learned single Judge in CRP No.3894 of 1993 was allowed by the Supreme Court and the direction given by the learned single Judge was set aside. The Rent Control Court decided the matter before the Supreme Court's decision was rendered on 6-2-1995. In view of this development, the quantum of rent fixed by the Rent Control Court cannot be sustained. The Appellate Court which was left free to decide the appeal on merits as per the observations of the Supreme Court fixed the rent at Rs.650/- per month without regard to the offending provisions contained in sub-sections (2) to (4). In doing so, the Court took into account the location of the house, the plinth area of the building, the lack of certain amenities, normal rent for a residential building of this type andthe factum of escalation in rents. He took clue from the decision of this Court in Ataitr Rahman's case (supra) and felt that Re.1/-per Sq.ft is reasonable rent on the date of filing the application i.e., in November, 1991. The appellate Court concluded :
".... considering the minimum rent that could be expected in the locality where the house in situated is Re. 1/- per Sq.ft. and on that basis the reasonable rent is likely to be Rs.660 the rent can be fixed at Rs,650/- per month."
43. It was noted that the constructed area after making additions in the year 1978 is 660 sq.feet. The landlord let in evidence to show that 2000 sq.feet would fetch the rent of Rs.3,000/- per month in that locality. Having noted that the proportionate rent would be at Rs.990/- the learned Appellate Judge was not inclined to fix that much of rent for the reason mat the rental value as on the date of filing the petition i.e., in November, 1991 should be taken into account.
44. The learned Counsel for the landlord Mr. T.Bali Reddy has vehemently contended that the rent of Rs.650/- is too low having regard to the prime location of the house in Domalguda locality, very near to Liberty Theatre. With equal vehemence, the learned Counsel appearing for the tenant M/s. M.P. Ugle and K.Ramakrishna Reddy have argued that the reasonable rent on the date of filing the petition would not be more than what has been fixed by the appellate Court, even after excluding the criteria laid down in sub-section (2) of Section 4. We arc of the view that the learned appellate Judge fell into an error in applying the rate of Re. 1/- per Sq. ft. based on the observations in Ataur Rahman's case (supra). There is nothing in that judgment which indicates that the house is situated in a prime and central locality as is the case with the house with which we arc concerned. The central location of the house in question makes a lot of difference in the fixation of rent. However, we must take note of the fact that according to the evidence on record, there is no borewell nor over-head tank for the buildingand the tenant has to fetch water from the ground-floor. Thus, the lack of an important amenity like water supply has also to be kept in view. One more aspect which deserves notice is that the learned Judge fixed the rent as on the date of filing of application i.e., in 1991 on a misunderstanding of the ratio of the decision in Liza Arulcnandam v. A.S. Sulochana, . In that case arising under the Tamil Nadu Building Act the Supreme Court held that the cost of construction has to be ascertained with reference to the date of filing the application in view of the specific provision to that effect introduced in 1973. That decision cannot be treated as an authority for the proposition that in a fair rent application, the Court cannot go beyond the date of filing the application.
45. Considering all the relevant factors and taking an overall view, we feel that the fair rent of the building ought to be fixed at Rs.750/- per month. We are thus inclined to make a marginal increase in the quantum of rent fixed by the appellate Court.
46. In the result, CRP Nos.346 & 2384 of 1996 filed by the tenant are dismissed; CRP No.2306 of 1996 filed by the landlord is partly allowed by modifying the rent from Rs.650/-to Rs.750/- per month.
47. Incidentally, we may mention that both the Counsel have brought to our notice that eviction order has already been passed against the tenant and this Court while disposing of the CRP granted two years time to the tenant to vacate the premises. The rent fixed by us will be operative during this grace period given to the tenant.
48. The writ petition is allowed and we declare sub-sections (2), (3) and (4) of Section 4 of the Act as unconstitutional, thereby affirming the judgment of Rama Rao, J. in Ataur Rahman 's case (supra).
49. The Reference Case is answered by clarifying mat sub-section (1) of Section 4 always remained and continues to remain on the Statute book as a valid provision and theRent Control Court has power to determine the fair rent without regard to the criteria laid in sub-sections (2) to (4) of Section 4 of the Act.
50. We make no order as to costs in all these matter.