Appeal No 171 of 1958
Appeal by special leave from the Judgment and order dated March 7 1956 of the Punjab High Court Circuit Bench at Delhi in Civil Misc
No 249 D of 1956
WITH Civil Appeals Nos 172 to 186 of 1958
Appeals from the judgment and order dated August 26 1954 of the Punjab High Court in Civil Revisions Nos 243 274 276 277 281 to 286 288 290 and 293 and 295 of 1951
Anoop Singh for the appellant in Civil Appeal No 171 of 1958
Basant Kumar Jaggi for the respondent
In Civil Appeals Nos 172 to 186 of 1958
AV Viswanatha Sastri R Ganapathy Iyer and O Gopalakrishnan for the appellants in Civil Appeals Nos 1722 to 186 of 1958
CK Daphtaru Solicitor General of India CB Aggarwala and KP Gupta for the respondent Nos 1 to 4
949 1961
August 2
The Judgment of the Court as delivered by SK DAS T These are 16 appeals which have been heard together
For facility of considering them on merits it would be convenient to classify them into three categories
In the first category fall Civil Appeals Nos 172 to 184 of 1958
In the second category are two appeals Civil Appeals Nos 185 and 186 of 1958
In the third category falls Civil appeal No 171 of 1958
The appeals in the first two categories arise out of a judgment in revision rendered by the High Court of Punjab at Simla on August 26 1954
That decision was reported in British Medical Stores vs L Bhagirath Mal 1
The appeal in the third category arises out of a short order of the said High Court dated March 7 1956 by which it dismissed an application made by the appellant tenant under article 227 of the Constitution
It appears that the order war based on the decision given by the High Court in the first two categories of cases
The appeals in the first two categories have been brought to this Court on a certificate granted by High Court and have been consolidated by an order made by the said Court
Civil Appeal No 171 of 1958 has been brought to this Court in pursuance of special leave granted by
this Court on November 19 1956
The reason why these appeals have been put in three categories is this
The judgement of the High Court against which appeals are really directed is the judgment rendered in the first two categories of eases reported in Messrs British Medical Stores vs L Bhagirath Mal 1
That judg ment related to four sets of  buildings of Chandini Chowk in Delhi
In Civil Appeals Nos 172 to 186 we are concerned with two of these buildings owned by the landlord Bhagirath Mal who has since died 1 Punjab 639
950 and is now represented by some of the respondents
For convenience however we shall refer to him as the landlord
The two buildings we are concerned with are called 1 Chemists  Market also known as Medicine Market and 2 Prem Building
Both these buildings are part of a colony called  Bhagirath Colony
Several tenants took on rent flats or rooms in the said buildings and the question which fell for determination was the fair and standard rent payable for the said flats or rooms under section 7A of the Delhi and Ajmer Marwara Rent Control Act 1947 Act XIX of 1947 hereinafter referred to as the Control Act 1947
In the first two categories of appeals the main point for consideration before us is whether the judgment rendered by the High Court on August 26 1954 was correct the High Court having held that the whole proceedings taken before the Rent Controller were ultra vires and without jurisdiction The reasons given for this finding by the High Court were not quite the same in respect of the two buildings somewhat different reasons were given in the cases of the two tenants in the Prem Building
Therefore it would be convenient to deal with the main judgment of the High Court in Civil Appeals Nos 172 to 184 of 1958 of the tenants in the building known as Chemists  Market
We shall then deal with the special considerations arising in the two appeals preferred by the tenants of the Prem Building
Lastly we shall deal with Civil Appeal No 111 of 1958 which relates to a different building altogether belonging to a different proprietor namely two ground floor flats of a house on plot No 20 Block No 13 in Western Extension Area Karolbagh New Delhi
shall later state the facts of that appeal but it is sufficient to state here that the application for fixation of standard rent for the flats in the Karolbagh house was dismissed on the ground that the High Court had held earlier in the first two categories of cases that section 7A of the Control Act 1947 was unconstitutional and 951 void after the coming into force of the Constitution of India on January 26 1950
Civil Appeals Nos
172 to 184 of 1958 Having made these preliminary remarks with regard to the classification of the appeals we proceed now to state the facts with regard to the first category of appeals relating to the Chemists  Market in Bhagirath Colony
On July 30 1948 nine tenants made an application to the Rent Con troller Delhi asking for a determination of fair and standard rent of the tenements shops rented to them by the landlord on the ground that under the stress of circumstances which resulted from the partition of the country and scarcity of business premises available in Delhi after partition they were forced to take on rent the shops in question on an excessive and exorbitant rate of rent charged by the landlord
They alleged that the premises were completed after March 24 1947 and they were entitled to have the fair and standard rent determined for the shops in question by the rent Controller
On August 1 1948 the Rent Controller recorded an order to the effect that in order to fix the rent of the shops in question in accordance with section 7A read with Sch
TV of the Control Act 1947 a summary enquiry would be held on August 18 1948
A notice was issued to that effect to the landlord directing him to attend and bring all relevant authenticated records such as plans account books vouchers etc showing the cost of construction of the building the landlord was also asked to bring documentary evidence relating to the date of completion of construction of the building
It is necessary to explain here why the date of completion of construction of the building was important
The Control Act 1947 came into force on March 24 1947
By section 12 thereof as it originally stood it was not applicable to any premises the construction 952 of which was not completed by March 24 1947 and which was not let to a tenant before the enforcement of the Act
Later there was an Ordinance Ordinance No XVIII of 1947 followed by all Act Act L of 1947by which enactment only constructed buildings were brought within the purview of the Control Act 1947 by repealing section 12 of the Act in so far as it affected buildings iii
Delhi and by introducing s7 A and Sell
IV to the Act
We shall presently read section 7 A and the relevant provisions of Sch
We may just state here that s7A laid down that the fair rent of the constructed buildings shall be fixed according to the provisions set forth in Sch
Buildings which were completed earlier than March 24 1947 had to be dealt with by the Civil Court under s7 of the Act
Under s7A read with
IV the Rent Controlled had jurisdiction to fix the fair and standard rent in respect of buildings which were not completed before the commencement of the Act
Therefore the Rent Controller had to determine the date of completion of the building in order to have jurisdiction under s7A of the Control Act 1947
We have referred to the notice which the Rent Controller had directed to be issued to the landlord on August 12 1948 fixing August 18 1948 as the date for the hearing of the case
On August 18 the landlord made an application by means of a letter sent to the Rent Controller in which he asked for postponement of the case to some date in September
The case was postponed to August 26 1948 but on that date the landlord again asked for an adjournment
Then on September 1 1948 an application was made on behalf of the landlord in which there was a reference to 14 tenants who had applied for fixation of standard rent for the shops in the Chemists  Market
In this application the landlord stated that he himself had applied for fixation of 953 standard rent under section 7 of the Control Act 1 947 in the Court of the Subordinate Judge Delhi and as those applications were pending he prayed that the proceedings for determining the identical question of fixation of standard rent by the Rent Controller tinder s7A should be stayed
The printed record does not clearly show how and when tenants other than the 9 tenants who had originally applied for fixation of standard rent on July 30 1948 had also applied for fixation of standard rent for the shops in their occupation
It is clear however from the application of the landlord dated September 1 1948 that 14 tenants including some of those who had applied on July 30 1948 had applied for fixation of standard rent for the shops occupied by them
On November 9 1948 the Rent Controller wrote a letter to the landlord in which he referred to some enquiry held in his officer on September 1 1949 and said
On that day you promised to produce some papers to show that these shops were completed before March 24 1947
As the case is unnecessarily being delayed you are requested to appear in my office with all the necessary document at 3 Pm on Wednesday the 17th November 1948
It may please be noted that no further adjournment will be possible
Your failing to comply with this notice ex parte decision will be given
On November 15 1948 the Rent Controller again wrote to the landlord that on a representation by the landlord s representative the date had been extended to November 19 1948 and the landlord should produce all necessary documents relating to the building in quest ion
The Rent Controller again reminded the landlord that there would be a final hearing on November 19
On that date however the landlord again made an application saying that as there were regular suits for the determination 954 of the standard rent pending in the Court of the Subordinate Judge Delhi the proceedings before the Rent Controller should be stayed
On November 26 1948 the Rent Controller wrote to the landlord to the following effect  As you have failed to attend my office personally on the fixed date and your attorney did not possess any information or documents regarding the newly constructed Chemists  Market you are now directed to submit your written statement on oath duly countersigned by your advocate giving full details regarding the date of construction of the said building
Please note that your statement must reach this office before the 3rd December 1948
Then on December 3 1948 the Rent Controller wrote to the landlord saying that he would be visiting the premises on December 5 1948
On December 3 a telegram was sent on behalf of the landlord saying that lie was out of station
On that date the Rent Controller recorded the following order These shops were first let out from 1st April 1948
The Advocate for the landlord was requested to tell the landlord that he must submit his statement in writing countersigned by the
Advocate within the next 15 days whether he contends or does not contend that this building was completed after 24th March 1947
The Advocate for the landlord gave an application asking for staying the proceedings as he had applied to the Sub Judge for fixa tion of standard rent of the premises
He was told that I was not prepared to stay the pro ceedings unless he or his client were prepared to say on oath that the building was completed before the 24th March 1947
 955 On December 9 1948 the Rent Controller again wrote to the landlord to the following effect  I am in receipt of your telegram dated the 3rd December 1948
On 19th November 1948 the last date of hearing your Advocate Shri Jugal Kishore and your General Attorney Shri Kundal Lal were given definite instruction to see that your written statement as to when the construction of  the Chemists  Market was started and when completed was sent to me within 15 days
These instructions were later confirmed in writing vide this office No R C 42 Camp
dated the 26th November 1948
My instructions however have not been complied with so far and it is presumed that you are try g to evade the issue
I however give you another final opportunity and direct you to submit your written statement on oath within one week from the receipt hereof showing the date of completion of construction of  your building known as Chemists  Market in Bhagiratli Colony Chandni Chowk Delhi
Please take notice that your failure to comply with torn within the stipulated period will amount to disobeying the orders of this Court and the case will be referred to appropriate authorities for necessary action in the matter
 The landlord took no steps whatsoever to furnish any written statement
In these circumstances the Rent Controller passed his final order on January 10 1949
In that order he recited the facts stated above and ended up by saying that though the landlord had been given sufficient oppor tunity he had not made any statement in writing or 956 otherwise and that the landlord was clearly trying to avoid the trial of the issue
The Rent Controller had inspected the building on December 12
194S and made local enquiries
He came to the finding that the shops in question were completed only in the beginning of 1948
He said I inspected this building on 12th December 1948 and made local enquiries when it transpired that the building shops was com pleted only in the beginning of 1948
The very look of the building also confirms this information
On the other hand no data has been placedbefore me by the landlord his attorney or the advocate to show that the construction of the building was completed
before 24th March 1947
According to the admitted statement of the attorney the shops have been let out for the first time in 1948 and otherwise too his statement of 19th Novem ber 1948 shows that the building had not beencompleted before 24th March 1947
No completion certificate or house tax receipts have been produced in support of this conten tion
It is therefore not understandable how it is claimed that the shops were comple ted before 24th March 1947
The owner is knowingly avoiding to give a statement himself that the shops were completed before 24th March 1947
Evidently because he realises that this is not true
It has also not been stated what use was made of these shops till January 1948 when they were first let out if they had been completed before 24th March 1947 as alleged
It is unbelievable that shops like these could remain unoccupied for nearly 9 to 10 months after completion
I am therefore convinced beyond a shadow of doubt that the construction of there shops was completed long after 24th March 1947 and the fixation 957 of their standard rent definitely falls within the scope of section 7 A of the Delhi and Ajmer Marwara Rent Control Act 1947as amended
Itherefore proceed to fix the rent accordingly
 After taking into consideration the nature of the construction and the fittings etc and other relevant considerations the Rent Controller fixed the valuation at Rs 9 7 0 per sq
ft of plinth area for working out the probable cost of the construction of the building
The cost of the land he estimated at Rs 275 per sq
 but he allowed only one third of the estimate inasmuch as the building was one storeyed and all the buildings in the vicinity were mostly three storeyed
On these calculations lie held that the standard rent for all the shops in the building work out at Rs 335 per month including 10 for repairs but excluding house tax and charges for consumption of water and electricity
A calculation sheet was prepared fixing the standard rent for each of the shops including some shops which were vacant oil the aforesaid  basis
The calculation sheet showed that the standard rent of 18 shops in the building varied from Rs 10 per month to Rs 50 per month
Against the order of the Rent Controller dated January 10 1949 nineteen appeals were taken to the District Judge
One of the points taken before the District Judge was that the Rent Controller had no jurisdiction to fix the standard rent inasmuch as the building had been completed before March 24 1947
The learned District Judge dealt with this point at length and held that the Rent Controllers finding on the question of jurisdiction was correct
As to fair rent he held that though the building was single storeyed there was no reason why the landlord should not be allowed the full value of the land on which the building
stood
Allowing full value for the land and having regard to the rent of premises in the neighbouring area the learned 958 District Judge modified the order of  the Rent Controller and fixed the standard rent of the building at Rs 670 per month viz double
of what was fixed by the Rent Controller
The learned District Judge passed his order on January 15 1951
It appears that from the order of the District Judge Delhi dated January 15 1951 certain applications in revision were
made to the Punjab High Court
Most of the applications were by the landlord but one of them was by a tenant
These applications were heard together by the High Court
The High Court allowed the applications of the landlord and held in effect that the proceedings before the Rent Controller violated the principles of natural justice and were therefore bad and without jurisdiction
The High Court it appears travelled over a wide field and dealt with a number of questions though its decision was based on the finding stated above
The first question which the High Court considered was whether s7A read with Sch
IV of the Control Act 1947 prescribed a discriminatory procedure without a reasonable classification in respect of premises completed after March 24 1947 and thus violated the guarantee of equal protection under article 14 of the Constitution
Along with this question was canvassed another connected question viz whether these cases would be governed by the law in force at the time of the decision given by the Rent Controller or by the law existing at the time when the District Judge heard the appeals
It may be here noted that the Constitution of India came into force on January 26 1950 and at the date of decision of the Rent Controller article 14 of the Constitution was not in force
The High Court expressed the view that the law to be applied was the law in existence at the time when the District Judge decided the appeals
It further held that section 7A read with Sch
IV of the Control Act 1947 was violative of the guarantee of equal protection 959 of laws under article 14 of the Constitution there being no rational nexus between the classification made regarding premises old and new and the objects of the statute
Having given these two findings the High Court said however that it would prefer not to base its judgment on these findings because to do so might be giving retrospective effect to the Constitution
The High Court then went on to consider the further contention urged before it that in the proceedings before the Rent Controller there was a violation of the principles of natural justice inasmuch as all recognised principles governing tribunals which exercise quasi judicial powers or follow a procedure subserving the orderly administration of justice had been
disregarded
On this point the learned Judge delivering the judgment of the Court expressed himself as follows In the present case no evidence as to rent was called from the parties or recorded by the  Controller nor was any opportunity afforded to the parties to adduce such or any evidence which they considered necessary to submit
The Controller made private enquiries and his order shows that he has based his decision on the cost of the building which he himself calculated without allowing the petitioner an opportunity to show that such calculation was wrong or its basis erroneous
Of course there is no procedure prescribed by the Schedule and whatever procedure was followed does not subserve the orderly administration of justice
So that the determination is based oil private enquiries unchecked calculations and no evidence of the parties who were afforded no opportunity of proving their respective cases
 With regard to the flats in Prem Building a farther ground given by the High Court was that they were 960 not now construction as held by the District Judge and therefore s7A was not applicable for determination of fair and standard rent in respect thereof
We may first dispose of the constitutional point that s7 A read with Sch
IV of the Control Act 1947 violated the fundamental right guaranteed under
article
14 of the Constitution
We may here read s7A and some of the provisions of Sch
7A The provisions set out in the Fourth Schedule shall apply to the fixation of rent and other matters relating to the premises in Delhi hereinafter referred to as the newly constructed premises the construction of which was not completed before the commencement of this Act
The Fourth Schedule 1Rent Controller or the purposes of this Schedule means the person appointed by the Central Government as the Rent Controller
2If the Rent Controller on a written complaint or otherwise has reason to believe that the rent of any newly constructed premi ses is excessive he may after making such inquiry as he thinks fit proceed to fix the standard rent thereof
3The Rent
Controller in fixing the standard rent shall state in writing his reasons therefor
4In fixing the standard rent the Rent Controller shall take into consideration all circumstances of the case including any amount paid or to be paid by the tenant by way of premium or any other like sum in addition to rent
961 5 and 6
x x x x x 7For the purposes of an inquiry under paragraphs 2 5 and 6 the Rent Controller may arequire the landlord to produce any book of account document or other information relating to the newly constructed premises benter and inspect such premises after due notice and eauthorise any officer subordinate to him to enter and inspect such premises after due notice
8 to 10
x x x x x 11
Any person aggrieved by an order of the Rent Controller may within thirty days from the date on which the order is communicated to him appeal to the District Judge Delhi
 This very question was considered by a Full Bench of the same High Court in a later decision see G D Soni vs section N Bhalla1
In that decision the High Court went into the entire history of legislation with regard to the control of house rent in both old Delhi and New Delhi from 1939 onwards when the second world war broke out
The High Court pointed out that the New Delhi House Rent Control Order 1939 made under r 81 of the Defence of India Rules was the first Control Order seeking to control rent of houses in New Delhi and the Civil Lines
From 1939 till 1942 no Rent Control Act applied to the municipal area of Delhi
On October 16 1942 the Punjab Urban Rent Restriction Act 1941 with suitable adaptations was extended to that area
Under that Act a landlord could recover only standard rent from the tenant and the term standard rent  was defined as meaning the rent at 1 A IR 1959 Punj
381 962 which the premises were let on January 1 1939 and if not so the rent at which the were last let
In cases not governed entirely by this definition the Court was given the power to fix standard rent
In 1944 the then Governor General promulgated the Delhi Rent Control Ordinance 1944
Under this Ordinance the Chief Commissioner could apply it to any area within the Province of Delhi and whenever the Ordinance was made applicable to any area the Punjab Urban Rent Restriction Act 1941 ceased to be operative
In the Ordinance also standard rent was defined substantially in the same terms as in the Punjab Act
The Central legislature then enacted the Control Act 1947 which repealed the Punjab Act as extended to Delhi and also the Rent Control Order of 1939 and the 1944 Ordinance
By s12 the Act was made inapplicable to any premises the construction of which was not completed by March 24 1947 and under s7 of the Control Act 1947 at Court in case of dispute had to determine the standard rent on the principles set forth in the Second Schedule
We have already stated earlier that s1 2 of the Control Act 1947 was later repealed so far as it affected buildings in Delhi and newly constructed buildings were brought within the purview of the Control Act 1947 by introducing s7A and Schedule IV to it
From this brief survey of the legislative history of the control of rent of premises situated in the Province of Delhi it is clear that the Control Act 1947 brought about uniformity in the law relating to rent control by laying down that the standard rent of newly constructed premises shall be fixed by the Rent Controller while the Court will fix the standard rent in respect of other premises
There is no doubt that a classification was made between premises the construction of which was completed before March 24 1947 and those the construction of which was completed after that date
The question is whether this classification is based on 963 intelligible differentia having a rational nexus with the objects of the statute
Dealing with this question Bishan Narain J delivering the judgment of of Full Bench said The learned counsel for the landlord challenged the validity of these provisions on the grounds 1 that there is no reasonable basis for fixing the standard rent of newly constructed premises differently on a different principle from the principle on which standard rent is fixed for old buildings in the same locality and 2 that there is no reason for discriminating against the landlords of newly constructed buildings by laying down that their standard rent shall be fixed by Rent Controllers appointed by the Central Government while the standard rent of other buildings is to he fixed by courts of law which are bound to follow procedure laid down in the the Civil Procedure It is urged that the Rent Controller is not bound by any procedures laid down by the Civil Procedure Code or the Punjab Courts Act
x x x Section 7 says that the standard rent shall be determined in accordance with the principles set forth in the Second Schedule
The Second Schedule fixes basic rent as determined tinder the Control Order of 1939 or under the 1944 Ordinance and in other cases the contractual rent on 1 11 1939 or if not on that day then on the date first let after 1 11 1939
The standard rent thus fixed is to be increased by certain percentage specified in the Schedule
If the premises were let after 2 6 1944 then the basic rent and the standard rent were to be the same
Obviously this principle for fixation of standard rent could not possibly have any application to premises constructed and let after 964 24 3 1947
Section 7 then proceeds
to lay down that if for any reason it is not possible to determine the standard rent of any premises set forth in the Second Schedule then the courts shall determine it having regard to the standard rent of similar premises in the same locality and other relevant considerations
Para 4 of Schedule IV lays down In fixing the standard rent the Rent Controller shall take into consideration all the circumstances of the case including any amount paid or to be paid by the tenant by way of premium or any other like sum in addition to rent  It was argued on behalf of the landlord that the critera laid down in s72 and para 4 of Schedule IV of the Act is substantially different and that there is no valid reason for such a differentiation
He urgent that the Rent Controller 1 may ignore the standard rent of similar premises in the same locality while he is under an obligation to take into consideration any amount Paid or agreed to be paid by the tenant by way of premium etc
in addition to rent and that the Rent Controller 2 cannot interfere with the agreed rent unless he finds it excessive and in that he can only reduce the rent fixed between the parties and cannot increase it
It is urged that under section 72 it is open to the Court to increase the standard rent and also not to take into consideration any amount paid by the tenant as premium in addition to rent
Now the Rent Controller is enjoined by para 4 to take into consideration all the circumstances of the case when fixing standard rent
It is not understood how a Rent Controller can omit to consider the standard rent of similar premises in the same locality
This is obviously a relevant consideration though para 4 does not specifically mention it
It is true that this criteria has been 965 specifically mentioned in s72of the Act and has not been so mentioned in s7Abut
this circumstance cannot lead to the inference that it is open to the Rent Controller to ignore it
The words of para 4 are in fact aswide in effect as the words used in s72 of the Act
In this context it must not be forgotten that if such a mistake is made by the Rent Controller then the aggrieved party may he be landlord or the tenant can appeal to the District Judge whose powers are co extensive with those of the Rent Controller and who can set right any mistake made by the Rent Controller
I am therefore of the opinion that the criterion laid down for fixation of standard rent in s72 and para 4 is substantially the same in scope and is not different
x x x x x Undoubtedly under Schedule IV the Rent Controller can fix standard rent only if he finds that the rent agreed upon between the parties is excessive
This provision is to protect the landlord from frivolous applica tions by tenants and it is not clear why a landlord should object to this provision
The reason for this provision is intelligible
It is
well known that rents in Delhi prior to 1 11 1939 were very low and in some cases uneconomic
Therefore the legislature decided that in such cases a landlord should be
in a position to got standard rent fixed at a rate higher than fixed by agreement of the parties in 1939 or earlier
No such consideration arises in the case of buildings constructed
or completed after 1947
In 1947 there existed an acute shortaae of accommodation in Delhi and the landlords were in a position to dictate terms and there fore presumably the fixed between the parties were not so low as to require in 966 considered unnecessary to provide for increase of rent in Schedule IV
I am therefore of the opnion that it is not possible on these grounds to hold that s7 A and Schedule IV are unconstitutional
The learned counsel then brought to our notice two other matters in which the newly constructed buildings have been treated differently from the old buildings
He pointed out that under para 102 of Schedule IIV the standard rent fixed by Rent Controller must necessarily be retrospective in effect while under s75 the Court can fix the date from which the payment of Estandard rent would become effective
He further pointed out that under section 42 a landlord on making improvements can increase the standard rent by an amount not exceeding 61 per cent of the cost of improvement while under para 6 of the Schedule IV the Rent Controller can increase the standard rent in such circumstances to an amount not exceeding 7 12 per cent of the cost of improvement
These are however no grounds for hold
ing the impugned provisions to be unconstitu tional  The Delhi and Ajmer Marwara Rent Control Act 1947 came into force on 24 3 1947 originally for two years only and s7 A with Schedule IV were introduced in September 1947
Therefore the standard rent for new buildings could well be fixed from the beginning of the lease
The old buildings were let long before 1947 and therefore it was considered advisable to leave it to courts to fix the date from which the payment of standard rent would become effective
This is a rational difference
So is the Matter of differenace of return on the cost of 967 improvements
There is no reason for equating the return on cost of improvements of old buildings with the return oil  the cost of improvements of new buildings
This is a matter for the legislature to consider and this possible slight difference in returns cannot be said to be discriminatory and violative of Article 14 of the Constitution
For these reasons I am of the opinion that the criteria for the fixation of standard rent for new and old buildings is substantially the same and does not violate Article 14 of the Constitution and there is no valid reason for coming to the conclusion that the standard rent of old and new buildings of the same type and in the same locality would necessarily be different
The first ground therefore fails and rejected
The second ground also has no force
It is urged that in Schedule TV there is no provision for recording the evidence of the parties nor is it laid down whether the evi dence is to be on oath
It is futher urged that the principles of natural justice have been disregarded by Schedule IV and it is open to the Rent Controller to fix standard rent arbitrarily without recording any evidence
Now para 2 Schedule IV says that the Rent Controller shall make such enquiry as he considers fit to fix the standard rent
x x x x x In fixing standard rent the Rent Controller decides a dispute between a landlord and a tenant
To do this effectively he has to take evidence and to hold a judicial inquiry particularly when he has to give reasons for his decision
Para 7 is also indicative of such a judicial
inquiry
There is no reason for Presuming and assuming that the 968 Rent Controller would not hold s a oh an inquiry
If he doesnot do go then the aggrieved party can always appeal to the District Judge Delhi who invariably is a very senior and experienced judicial officer
x x In this context it must not be forgotten that considering the  recent rise in prices of land building material and labour costs in Delhi the standard rent should be correlated to these costs
In the circumstances the legislature in its wisdom has thought fit that the enquiry into standard
of new building should continue to remain with the Rent Controllers who can expeditiously decide the matter
In this context it can be reasonably expected that the Central Government will appoint only those persons as Rent Controllers who can use their own knowledge and experience to calculate these costs
In these circumstances it cannot be said that the differentiation in the procedure adopted in the statute has no rational relation to the object sought by the legislature
We agree with these observations of the Full Bench and we further accept the view expressed by it that the criteria for the fixation of standard rent for both new and
old buildings under the Control Act 1947 are not substantially different
The minor differences that exist in the matter which have been adverted to in the judgment of the High_ Court can be justified on the grounds of a difference in the
cost of construction of old and new buildings b difference in the rate of return on investments made in building houses before and after 1947c the need to encourage the building of houses to meet the acute shortage of 969 accommodation in Delhi after 1947 and d the opportunity presented of charging excessive tent after 1947
Perhaps it is also necessary to emphasise again that the provisions in Schedule IV of the Control Act 1947 do not give an arbitrary power to the Rent Controller
Paragraph 3 of the
Schedule requires the Rent Controller to state in writing his reasons for fixing the standard rent
Paragraph 4 states that in fixing the standard rent the Rent Controller shall take into consideration all the circumstances of the case including any amount paid or to be paid by the tenant by way of premium or any other like sum in addition to rent
Paragraph 7 gives the Rent Controller power to require the landlord to produce any book of account document or other information relating to the newly constructed premises to enter and inspect such premises after due notice and to authorise any officer subordinate to him to enter and inspect any such premises after due notice
Paragraph
II provides for an appeal to the District Judge by any person aggrieved by an order of the Rent Controller
These provisions clearly indicate that the power given to the Rent Controller is not an arbitrary power
The power has to be exercised by the Rent Controller on a judicial consideration of all the circumstances of the case
We think that the High Court was in error in the view it expressed that no reasonable procedure is prescribed by the provisions of Schedule IV and the Rent Controller is at liberty to do whatever he likes
This brings us to the main question for decision in these appeals was there a violation of the principles of natural justice in the procedure which the Rent Controller actually followed in fixing the standard rent  We are unable to agree with the High Court that there was any
such violation
On behalf of the landlord it has been contended before us that in respect of both the matters 970 completion of construction of the building and fixation of standard rent the Rent Controller proceeded on i private enquiries ii local inspection without notice and iii inadmissible evidence
Before we deal with this argument it is necessary to say a few words about the principles of natural justice
This Court considered the question in New Prakash Transport Co Ltd vs New Suwarna Transport Co Ltd 1
After a review of the case law on the subject it pointed out that the rules of natural justice have to be inferred from the nature of the tribunal the scope of its enquiry and the statutory rules of procedure laid down by the law for carrying out the objectives of the statute
The mere circumstance that the procedure prescribed by the statute does not require that evidence should be recorded in the manner laid down for ordinary courts of law does not necessarily mean that there is a violation of the principles of natural justice
In Union of India vs T R Varma 2 this Court said Stating it broadly and without intending it to be exhaustive it may be observed that rules of natural justice require that a party should have the opportunity of adducing all relevant
evidence on which he relies that the evidence of the opponent should be taken in his presence and that he should be given the opportunity of cross examining the witnesses examined by that party and that no materials should be relied on against him without his being given an opportunity of explaining them
If these rules are satisfied the enquiry is not open to attack on the ground that the procedure laid down in the Evidence Act for taking evidence was not strictly followed
 Judged in the light of the observations referred 1 2 1958 section C R 499 507
971 to above was there a violation of the principles of natural justice in the cases under our consideration We have pointed out earlier that the landlord was repeatedly given an opportunity of producing such evidence as he wished to produce
On August 12 1948 be was asked to bring all relevant records including account books vouchers etc
He did not choose to do so
He asked for an
adjournment which was granted to him
On September 1 1948 the landlord again asked for time
This was also granted to him and he was told that the cases would be finally heard on November 171948 He was also informed that no further adjournment would be given
It appears from the record that on September 1 1948 some statements were recorded in the presence of the representative of  the landlord
On November 19 1948 which as the date fixed for final hearing the landlord again asked for time and time was again granted to him
On December 3 1948 the landlord was told that the Rent Controller would inspect the house on
Sunday December 5 1948 between 9 A m and 1 P m
The landlord was asked to be present
On December 3 the Advocate of the landlord was present and was informed that the landlord must submit his written statement in writing within 15 days
The Advocate however gave an application for postponement of the cases on the ground that certain proceedings were pending before the Subordinate Judge Delhi
On December 9 1948 the landlord was again given one A week s time to file his written statement and produce such other evidence as he wished to produce
In these circumstances it is difficult to understand how the landlord can complain that there has been a violation of the principles of natural justice and that he had no opportunity of producing evidence or of cross examining the witnesses whose statements were recorded by the Rent Controller
It is indeed true that the Rent Controller made some local enquiries when he inspected the building on December 12 1948
If however 972 the landlord chose to be absent in spite of repeated intimation to him he cannot be heard to say that the enquiries were made in his absence and are therefore bad
To bold in such circumstances that there has been a violation of the principles of natural justice would be to put a premium on the recalcitrance of a party
Even in the ordinary courts of law if a party chooses to be absent in spite of notice evidence is recorded ex parte and the party who chooses to be absent cannot be heard to say that he had no opportunity of being present or of cross examining the persons whose statements were recorded by the court
After all what natural justice requires is that a party should have the opportunity of adducing all relevant evidence and that he should have an opportunity of the evidence of his opponent being taken in his presence
Such an opportunity was clearly given to the landlord in the present cases
If anybody is to blame for the ex parte order of the Rent Controller it is the landlord himself
It appears from the order of Rent Controller that the attorney or advocate of the landlord did appear on several dates and even made a statement as
to the letting out of the building in question but
took no other part in the proceeding except asking repeatedly for adjournment
The Rent Controller was not far wrong when he said that the landlord was bent upon avoiding a trial of the issue before the Rent Controller on the ground that be had made applications under section 7 to the Subordinate Judge Delhi for fixation of  standard rent
In view of the recalcitrant attitude which the landlord adopted the Rent Controller did his best in the circumstances
He took into consideration such relevant circumstances as the cost of the land cost of construction cost of fittings the open
area in front of the shops cost of repairs etc
The learned District Judge also took in to consideration the return which the landlord could reasonably expection his outlay and also
the rent of other premises in the area
Taking these 973 additional circumstances into consideration the District Judge doubled the standard rent which the Rent Controller had fixed It does not appear from the order of the learned District Judge that any objection was pressed before him on the ground that in the actual proceedings
before the Rent Controller there was a violation of  the principles of natural justice though in paragraph 7 of the grounds of appeal it was stated that the procedure adopted by the Rent Controller was contrary
to the provisions of law etc
A ground appears to have been seriously pressed for the first time I in the revision applications to the High Court
Some grievance has been made before us of the circumstance that in his letter dated December 3 1948 the Rent Controller said that be would inspect the building on December 51948
He however actually inspected the building oh December 12 1948 as his order shows
Our attention has been drawn to para 7 b of So IV and it has been contended that the inspection was made without notice to the landlord 
This it is stated has
vitiated the entire proceedings
This argument might have had some force but for the attitude adopted throughout the proceedings by the landlord
On the very date on which the Rent Controller intimated to the landlord that he would visit the building on December 5 1948 the landlord sent a telegram purporting to be on his behalf stating that he was out of station
The Rent Controller then noted an order on that very date stating that the advocate for the landlord gave an application for staving the proceedings
The application was rightly refused by the Rent Controller
In these circumstances we do not think that the landlord can make any complaint that the inspection was without notice or that he had no opportunity of being present at the time of the inspection
It is obvious that from the very beginning the landlord had taken up an attitude of non co operation in the proceedings before the 974 Rent Controller
It is worthy of note that even in statement of the case in this Court the landlord has made No grievance that the inspection was held without notice to him nor did he take any such plea before the District Judge
A further contention urged on behalf of the landlord arises out of para 2 of Sch
IV That paragraph says that if the Rent Controller has reason to believe that the rent of any newly constructed premises is excessive he may after making such enquiry as he thinks fit proceed to fix a standard rent thereof
The argument before us is that before proceeding to fix the standard rent the Rent Controller did not bold a preliminary enquiry nor did be record a finding to the effect that the rent charged by the landlord was excessive  therefore
 the provisions of para 2 were violated
We do not think that there is any substance in this contention
In the application which 9 tenants made on July 30 1948 they definitely stated that under the stress of circumstances resulting from a partition of the country and the heavy demand for business premises in Delhi they were forced to accept the excessive and exorbitant rent which the landlord was charging from them
On this appli cation a note was recorded by the Rent Controller s office to the effect that the entire case relating to the fixation of standard rent for the building in question was already under consideration presumably because other tenants had also made similar applications
The Rent Controller thereupon recorded an order which said that in order to fix the rent of the premises in accordance with section 7A of the Control Act 1947 a summary enquiry would be held by him
It is obvious from this order that the Rent Controller was prima facie satisfied that the rent charged was excessive and action was required under s7A of the Control Act 1947
The argument urged
on behalf of the landlord really comes to this viz that under para 2 of Sch
IV there must always be  two 975 enquiries first an enquiry as to whether there are reasons to believe that the rent charged is excessive and secondly an enquiry for fixing the standard rent
We do not think that para 2 necessarily involves two enquiries in all circumstances
In a case where the Rent Controller has a written complaint as in these cases the complaint itself may give reasons which the Rent Controller may prima facie accept that the rent charged by the landlord is excessive
In the cases before us the tenants had stated the reasons which were common to all why they had to submit to excessive and exorbitant rate of rent charged by the landlord
It was we think open to the Rent Controller to accept those reasons as prima facie good reasons for proceeding to make an enquiry to fix the standard rent in that enquiry it was open to the Rent Controller to give the necessary finding that the rent charged by the landlord was excessive
The final order of the Rent Controller shows with out doubt that he was satisfied that the rent charged by the landlord was exorbitant and excessive
We are unable to hold that in these circumstances there has been any contravention of para 2 of Sch
IV of the Control Act 1947
Another objection taken by the landlord to the proceedings before the Rent Controller arises out of the circumstance that the Rent Controller in fixing the standard rent for the entire building had fixed the rent even for vacant shops ie shops which were not in occupation of any tenant at the time
In the final order which the Rent Controller passed he fixed the standard rent for all the shops at RS
335 per month and in the calculation sheet which was part of the final order made by the Rent Controller on January 11 1949 three shops have been shown to be vacant
It has been contended before us that the Rent Controller had not jurisdiction to fix the standard rent for vacant shops and the argument is that the way he proceeded to fix 976 the rent for the entire building vitiated the proceedings before him
It has further been argued that only 9 tenants six of whom are appellants before us applied for the fixation of standard rent on July 30 1948
Therefore the Rent Controller had no jurisdiction to fix the standard rent in respect of persons who had not applied for such fixation
It has been contended before us that in six of the appeals before us viz
Civil Appeals Nos 176 178 181 189 183 and 184 of 1958 the appellants had made no application for fixation of standard rent
We take up first the question of vacant shops
It is clear from s7A and the provisions of Sch
IV that the Rent Controller has to fix the standard rent of newly constructed premises if the condition stated in para 2 of Sch
TV is satisfied
The word Premises as defined in s2 of the Act means any building or part of a building which is or is intended to be let separately for use as a residence or for commercial use or for any other purpose etc
 Each shop let out or intended to be let out separately is therefore premises within the meaning of the Control
Act 1947
It may therefore be correct to say that it was not necessary for the Rent Controller to fix the standard rent for vacant shops
It is obvious however that for shops which had been let out to tenants the Rent Controller had to take into consideration the cost of the entire building value of the land the fittings etc
In other words he had to take the entire building into consideration for the purpose of fixing the standard rent of the shops in the building let out to various tenants
That being the position we do not consider that the proceedings before the Rent Controller were rendered abortive merely because the Rent Controller also fixed the standard rent for some of the vacant shops
For the purpose of these appeals the standard rent fixed for the vacant shops may well be ignored that will not 977 affect the rent fixed for the shops which had been let out to tenants
As to the point that some of the appellants had made no application for fixation of standard rent we are unable to accept the contention as correct
It is indeed true that 9 tenants had made an application for fixation of standard rent on July 30 1948 but it appears that there were other applications also from other tenants
This is clear from the office note to which we have already referred earlier appended to the application of 9 tenants
Moreover the application which the landlord himself had made on September 1 J948 showed that 14 tenants had made applications for the fixation of standard rent of their shops in Chemists  Market in Bhagirath Colony
Unfortunately all the applications have not been printed in the paper book
The order of the Rent Controller shows that he treated all the applications as  though they gave rise
to a single proceeding because they related to the same building
This point which has now been taken before us does not appear to have been taken before the District Judge who said that there were 19 appeals before him arising out of a single order of the Rent Controller fixing rent for 18 different shops of a building belonging to the landlord
In the calculation sheets which the Rent Controller and the learned District Judge had prepared and which give the names of all the tenants the standard rent for whose shops was
fixed are shown the names of all the appellants
It is me think too late in the day for the landlord to contend that some of the appellants had not applied for the fixation of standard rent In any view of the matter the landlord has not placed sufficient materials before us in support of that contention
We may point out here
that Ms Narang Medicine Co appellant in Civil Appeal No 182 of 1958 did not join in the application made on July 30 1948
Yet we find from the 978 record that a copy of the letter which the Rent Controller wrote to the landlord on November 9 1948 was sent to Ms Narang Medicine Co As we have earlier pointed out the very petition of the landlord dated September 1 1948 shows that many more than 9 tenants had applied for fixation of standard rent for their shops in Chemists  Market Bhagirath Colony
Therefore we are unable to uphold the  contention of the landlord that the Rent Controller had fixed the standard rent of some of the shops tenants whereof had not applied for the fixation of the standard rent
This concludes the discussion with regard to the Chemists  Market in Bhagirath Colony
In these appeals we have come to the conclusion for reasons given above that the High Court was wrong in interfering with the order of the District Judge in appeal
We would therefore set aside the order of the High Court dated August 26 1954 and restore that of the learned District Judge in appeal so far as the appellants herein are concerned
Civil Appeals Nos 185 and 186
of 1958
We now turn to the two appeals relating to Prem Building
The two tenants are Ms Dhawan  Co and Firm Gokal Chand Madan Chand
Ms Dhawan  Co had made in application for fixation of standard rent on June 14 1948
A Similar application was made by Firm Gokal Chand Madan Chand on the same date
In the applications an averment was made that the flats were completed after March 24 1947 and that the tenants being without any accommodation and under the pressure of circumstances were forced to accept the exorbitant rent of Rs 360 per month in one case and Rs 350 per month in the other
Both of them asked for fixation of standard rent under s7A of the Control Act 1947
Both the landlord and the tenants appeared before the Rent Controller and 979 made statements before him
The main question taken before the Rent Controller on behalf of the landlord was that the second floor on which the two flats of the tenants were situated as completed before March 24 1947 and therefore no proceeding in respect thereof was maintainable under s7A of the Act
The Rent Controller vent into the evidence adduced before him very carefully and came to the conclusion that though the ground floor and the first floor of the building were old the second floor was constructed some time
in August 1947
He therefore held that the second floor was a new construction within the meaning of s7A of the Control Act 1947 and be fixed the standard rent for each flat at Rs 96 8 0
The matter wasthen taken in appeal to the District Judge
Again the main contention before the District Judge was that the Rent Controller bad no jurisdiction as the premises in question were not newly constructed
The District Judge dealt with this point in the following way The premises are two flats on the second floor of a large building belonging to the appellant and the rent Controller has found that these flats were constructed after 24th March 1947
The record shows that the general attorney for the appellant admitted before the Rent Controller that only a temporary construction was in existence on the second floor before 24th March 1947 and that temporary construction consisted of wooden purlins with corrugated iron sheets and stone slabs on top of them
Subsequently however this construction was brought down and proper flats were built with reinforced concrete roofs and it is in evidence that the first tenant who occupied one of the flats did so in September 1947 and a second tenant went into occupation in January 1948
It is on
this evidence abundantly clear that 980 the premises or the flats now in dispute were in every sense newly constructed premises and the Rent Controller was competent to fix the rent
 It is clear from the orders of the Rent Controller and of the District Judge in appeal that the question whether the second floor was newly constructed or not was really a question of fact though undoubtedly a jurisdictional fact on which depended the power of the Rent Controller to take action under s7A
If the Rent Controller had wrongly decided the fact and assumed jurisdiction where he had none the matter would be open to reconsideration in revision
The High Court did not however go into the evidence nor did it say that the finding was not justified by the evidence on record
The High Court referred merely to certain submissions made on behalf of the landlord and then expressed the opinion that what was done to the second floor was mere improvement and not a new construction
We think that the High Court was in error in interfering with the finding of fact by the Rent Controller and the District Judge in support of which finding there was clear and abundant evidence which had been carefully considered and accepted by both the Rent Controller and the District Judge
In these two appeals we have come to the conclusion that the judgment of the High Court dated January 26 1954 should be set aside and that of the District Judge restored
We may here note that so far as the standard rent fixed by the Rent Controller was concerned the District Judge himself noted that the learned advocate for the landlord was not able to find any fault with the assessment made by the Rent Controller
Civil Appeal No 171 of 1958
We now come to Civil Appeal No 171
The facts of this appeal are somewhat different
We 981 have already stated that this appeal relates to two flats on the ground floor of plot No 20 Block No 13 Western Extension Area Karolbagh
The tenant who is the appellant before us took the flats on a rent of Rs 220 per month including tax on December 151950
On May 15 1951 he made an application for fixation of standard rent under s7A of the Control Act 1947 on the ground that the rent charged was excessive and exorbitant
The application was contested by the landlord
On December 7 1951 the Rent Controller fixed Rs 150 per month as the standard rent inclusive of tax
The landlord filed an appeal to the District Judge Which was dismissed on May 12 1953
The landlord then filed an application in revision to the High Court and the High Court accepted the application on May 10 1954 and remanded the case for afresh trial
When the case came back to the Rent Controller the landlord made an application to the Rent Controller to the effect that s7A read with Schedule IV of the Control Act  1947 was rendered unconstitutional and void on the coming into force of the Constitution of India
Apparently this point was taken in view of the judgement of the Punjab High Court dated August 26 1954 already discussed in the other appeals
On May 30 1955 the Rent Controller held on the basis of the aforesaid decision that section 7A read with Schedule IV of the Control Act 1947 was unconstitutional and therefore the application was not maintainable Accordingly he dismissed the application
The matter was then taken to the District Judge in appeal
The learned District Judge who was bound by the decision of the Punjab High Court also held that s7A of the Control Act 1947 was unconstitutional and therefore the application was not maintainable
The tenant appellant then made an application under article 227 of the Constitution to the Punjab High Court
That application was summarily dismissed on March 71956 982 We have already dealt with the constitutional point as to whether s7A read with Sch
IV of the Control Act 1947 is void after the coming into force of the Constitution of India by reason of a violation of the fundamental right guaranteed under article 14 of the Constitution and we have come to the Conclusion that s7A and the relevant provisions of Sch
IV of the Control Act 1947 are not unconstitutional
That being the position the main ground on which the application of the appellant was dismissed disappears and the application must now be dealt with in accordance with law
Our attention has however been drawn to the Delhi and Ajmer Rent Control Act 1952 Act No XXXVIII of 1952 which by s46 repealed the Control Act 1947
That section however contains a saving clause which is as follows  46
Repeals and savings1 x x x 2Notwithstanding such repeal all suits and other proceedings pending at the commencement of this Act whether before any court or the Rent Controller appointed under the Fourth Schedule to the said Act shall be disposed of in accordance with the provisions of the said Act as if the said Act bad continued in force and this Act had not been passed  Provided that the procedure laid down in this Act shall as far as may be apply to suits and other proceedings pending before an Court
 We consider it unnecessary to determine the effect of the aforesaid saving clause in the present appeal
Neither the Rent Controller nor the District Judge nor the High Court considered the effect of the saving clause
The application of the appellant was dismissed on the simple ground that s7A read with Sch
TV of the Control Act 1947 was unconstitutional
We consider that that ground is not 983 correct and the application of the tenant appellant for fixation of standard rent must now be deter 
mined in accordance with law
It would be for the competent authorities to consider now the effect of s46 of the Delhi and Ajmer Rent Control Act 1952 or of any other law bearing on the question which may have come into existence since then
We would therefore allow this appeal and set aside the orders of the Rent Controller the District Judge and the High Court dismissing the application of the appellant
The application must now be dealt with in accordance with law by the authority competent to do so in the light of the observations made above
In the result the appeals in all three categories are allowed as indicated above
The appellants in all the appeals will be entitled to their costs but there will be one set of hearing fee for each of the three categories of appeals
Appeals allowed


Summary:
The appellants applied to the Rent Controller for fixation of fair and standard rent of certain shops and other premises alleging that the rent charged by the landlords was exorbitant
The questions arising for determination were 1 whether the Delhi and Ajmer Marwara Rent Control Act 1947 in so far as it provided for the fixation of standard rent in respect of premises the construction of which was completed after March 24 1947 by the Rent Controller violated the fundamental right guaranteed under article 14 of the Constitution and 2 whether the procedure to be followed by the Rent Controller violated the principles of natural justice
Held that section 7A and the relevant provision  of Sch
IV of the Act laying down the procedure for fixing standard rent by the Rent Controller are not unconstitutional and do not violate article 14 of the Constitution
The classification between premises the construction of which was completed before March 24 1947 when the Act came into force and those which were completed thereafter is reasonable and the criteria for the fixation of standard rent for both old and new buildings under the Act were not substantially different
The procedure laid down under those provisions does not violate the principles of natural justice
The power given to the Rent Controller is not arbitraly and he has to exercise it on a judicial consideration of all the circumstances of the case
948 GD Soni vs section N Bhalla AIR 1959 Punj
381 approved
New Prakash Transport Co Ltd vs New Suwarna Transport Co Ltd  Union of India vs TR Verma 1958 SCR 499 followed
In the instant case ample opportunity was given to the landlord for producing all relevant evidence in the case which he did not avail himself of
It was not necessary under para 2 Sch
TV to have two enquiries one for ascertaining whether there were good reasons for believing that the rent charged was exorbitant and another for fixing the standard rent
The proceedings before the Rent Controller were not vitiated merely because standard rent of certain vacant shops was also
 fixed in the process of fixing the standard rent for the entire building in which those shops were situated that would not affect the legality of the fixation of the rent for the shops which had been let out to tenants