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

Having regard to the existence of different rent control laws in the State of Maharashtra, The Maharashtra Rent Control Act, 1999, (hereinafter referred to as "the 1999 Act") was enacted to unify, consolidate and amend the law relating to the control of rents and repairs of certain premises and of eviction and for encouraging the construction of new houses by assuring a fair return on the investment by landlords and to provide for matters connected with the said purposes. The said Act came into force on 31st March, 2000, and repealed the existing Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, the Central Provinces and Berar Regulation of Letting of Accommodation Act, 1946, including the Central Provinces and Berar Letting of Houses and Rent Control Order, 1949; and the Hyderabad Houses (Rent, Eviction and Lease) Control Act, 1954. With a view to achieving the objects for which the Act was enacted, certain premises, as indicated in Section 3 thereof, were exempted from the provisions of the Act2. The exclusion of certain premises from the protection provided under the Act gave rise to litigation in which challenge was thrown by different litigants to the vires of the new Act as also Section 3 (1) (b) thereof as being arbitrary and discriminatory and without having any nexus with the object sought to be achieved by the Act. Of the several writ petitions filed in the Bombay High Court, the Writ Petition of M/s. Crompton Greaves Ltd. was taken up for decision and it was held that the classification made in Section 3 with regard to different types of tenants was on the basis of an intelligible differentia having nexus with the object sought to be achieved by the Act. It was held that the provisions of the new Act were intra vires and did not offend Article 14 of the Constitution3. Several writ petitions were thereafter decided on the basis of the decision arrived at in the aforesaid writ petition filed by M/s. Crompton Greaves Ltd. and some of them have been carried to this Court by way of Special Leave Petitions which are now being analogously heard as civil appeals along with a writ petition filed under Article 32 of the Constitution, being No.164/2003, wherein also the vires of Section 3 (1) (b) of the new Rent Act has been challenged.

Reasoning: 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