Case: Saraswat Co-Op. Bank Ltd.  Vs. State Of Maharasthra

on which the legislation is founded fulfils this requirement, then the differentiation which the legislation makes between the class or persons or things to which it applies and other persons or things left outside the purview of the legislation cannot be regarded as a denial of the equal protection of the law, ...................." 13. Learned counsel appearing for the State adopted Mr. Ramachandrans submissions. Mr.Soli J. Sorabjee, learned senior advocate, who appeared for the landlords-respondents in the appeal filed by Hindustan Petroleum Corporation Ltd. (Civil Appeal Nos. 4830-4831/2005) urged that the Legislature was fully aware of the prevailing economic conditions while including public sector undertakings with those institutions which were kept out of the protection of the 1999 Act. He urged that petrol pumps, such as the one being run by the appellant, require a good deal of open space, which the landlord could better utilize for getting higher returns. The amount of rent paid for the utilization of such lands were extremely meagre in relation to the value of the property and the very object of the 1999 Act would be frustrated if such lands were not kept out of the purview of the Act so that the same could be utilized by the landlords for constructing new buildings which would ensure a fair return to them. Mr. Sorabjee submitted that some of the petrol pumps were of necessity, situated in prime areas within metropolitan cities and the Legislature had very correctly excluded them from the protection of the 1999 Act. Much the same views were expressed by Mr. Gaurav Agarwal, who appeared for the respondent No.2 in Civil Appeal No. 4830-31of 2005. It was pointed out that 1228 Sq.Ft. of a commercial premises in the Fort area in Mumbai had been let out initially for a sum of Rs.2732/- per month and the present valuation in terms of the Valuers report suggested that the rent should be Rs.2,45,600/- per month. 14. As will be evident from the submissions made on behalf of the appellants and the writ petitioner, the main challenge is to the constitutionality of Section 3 (1) (b) of the 1999 Act. In view of the categorization of different premises, some of which have been excluded from the protection of the Act, an attempt has been made to establish that the Legislature had acted arbitrarily in discriminating between the different sets of premises and tenants and in prescribing the standard for the purpose of excluding certain companies from the protection of the Act. Although, earlier a view had been taken by this Court that prescribing such a standard or differentiating between categories of tenancies was violative of Article 14 of the Constitution, the subsequent view taken by this Court is that so long as the classification sought to be made was based on an intelligible differentia and had a nexus with the object sought to be achieved by the statute, the same would not offend the equality clause contained in Article 14 of the Constitution. 15. Resultingly, it is quite clear that it is within the legislative competence of the State to enact laws for the protection of certain sections of society on the basis of economic criteria and so long as it does not result in unreasonable classification, it is for the Legislature to decide whom it should include or exclude from the application of such laws. Although, the decision to exclude private limited companies and public limited companies having a paid up share capital of Rs. One crore from the protection of the Act has been questioned on the ground of discrimination, we are unable to accept such contention, since in our view, it is in consonance with the object sought to be achieved by the Act as indicated in its preamble. In order to achieve such object, a cut-off point has to be settled and the Legislature in its wisdom has settled such cut-off point in excluding companies having a paid up share capital of Rs. One crore or more from the protection of the Act. 16. We are also unable to accept the contention that the paid up share capital of the company is not a fair indicator of a companys worth and that its net worth is a better indicator. As submitted by Mr. Ramachandran, the net worth of a company may vary from time to time, but its paid up share capital is more stable. Which of the two methods ought to have been adopted by the Legislature is not for us to decide once we have taken a view that the method as adopted is not arbitrary or violative of Article 14 of the Constitution. Of the two methods available, the Legislature has chosen the one which appeared to it to be reasonable. 17. The other submission relating to the inclusion of scheduled banks, along with other banks, which have been excluded from the protection of the Act, is also without substance since clause (iv) of Section 3 (1) (b) is, in our view, of general application intended to cover all banks forming part of the Schedule of the Reserve Bank of India Act which may or may not overlap those banks which have been indicated in clauses (i) (ii) and (iii). 18. The submission of Mr. Jaspal Singh that the 1999 Act would not apply to the appellant-bank represented by him, appears to be an argument of desperation and not of conviction. Once the Act of 1999 was enacted and came into force, it would have equal application to all premises let out either before or after the commencement of the Act. 19. The issues raised before us have been elaborately considered by the High Court, and, in our view, no fault can be found with the findings arrived at by the High Court. The provisions of Section 3(1)(b) of the Maharashtra Rent Control Act, 1999, are intra vires and as has been held by the Bombay High Court, they do not violate Article 14 of the Constitution.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]In view of the categorization of different premises, some of which have been excluded from the protection of the Act, an attempt has been made to establish that the Legislature had acted arbitrarily in discriminating between the different sets of premises and tenants and in prescribing the standard for the purpose of excluding certain companies from the protection of the Act. Although, earlier a view had been taken by this Court that prescribing such a standard or differentiating between categories of tenancies was violative of Article 14 of the Constitution, the subsequent view taken by this Court is that so long as the classification sought to be made was based on an intelligible differentia and had a nexus with the object sought to be achieved by the statute, the same would not offend the equality clause contained in Article 14 of the Constitution15. Resultingly, it is quite clear that it is within the legislative competence of the State to enact laws for the protection of certain sections of society on the basis of economic criteria and so long as it does not result in unreasonable classification, it is for the Legislature to decide whom it should include or exclude from the application of such laws. Although, the decision to exclude private limited companies and public limited companies having a paid up share capital of Rs. One crore from the protection of the Act has been questioned on the ground of discrimination, we are unable to accept such contention, since in our view, it is in consonance with the object sought to be achieved by the Act as indicated in its preamble. In order to achieve such object, a cut-off point has to be settled and the Legislature in its wisdom has settled such cut-off point in excluding companies having a paid up share capital of Rs. One crore or more from the protection of the Act16. We are also unable to accept the contention that the paid up share capital of the company is not a fair indicator of a companys worth and that its net worth is a better indicator. As submitted by Mr. Ramachandran, the net worth of a company may vary from time to time, but its paid up share capital is more stable. Which of the two methods ought to have been adopted by the Legislature is not for us to decide once we have taken a view that the method as adopted is not arbitrary or violative of Article 14 of the Constitution. Of the two methods available, the Legislature has chosen the one which appeared to it to be reasonable17. The other submission relating to the inclusion of scheduled banks, along with other banks, which have been excluded from the protection of the Act, is also without substance since clause (iv) of Section 3 (1) (b) is, in our view, of general application intended to cover all banks forming part of the Schedule of the Reserve Bank of India Act which may or may not overlap those banks which have been indicated in clauses (i) (ii) and (iii)18. The submission of Mr. Jaspal Singh that the 1999 Act would not apply to the appellant-bank represented by him, appears to be an argument of desperation and not of conviction. Once the Act of 1999 was enacted and came into force, it would have equal application to all premises let out either before or after the commencement of the Act19. The issues raised before us have been elaborately considered by the High Court, and, in our view, no fault can be found with the findings arrived at by the High Court. The provisions of Section 3(1)(b) of the Maharashtra Rent Control Act, 1999, are intra vires and as has been held by the Bombay High Court, they do not violate Article 14 of the Constitution