Case: Motor General Traders &amp; Another Etc Vs. State of Andhra Pradesh &amp; Others Etc

On October 1, 1953, the State of Andhra came into existence under the provisions of the Andhra State Act, 1953 comprising the area specified in section 3 of that Act which formerly formed a part of the then State of Madras. By virtue of the provisions contained in Part VI of that Act, the Madras Buildings (Lease and Rent Control) Act, 1949 (Madras Act XXV of 1949) continued to be in operation in the State of Andhra. On November 1, 1956 under the States Reorganisation Act, 1956 with the merger of the area known as the Telangana area, which formerly formed a part of the erstwhile State of Hyderabad, with the territories of the State of Andhra the new State of Andhra Pradesh came into existence. By virtue of section 119 of the States Reorganisation Act, the Hyderabad House (Rent, Eviction and Lease) Control Act, 1954 (Hyderabad Act XX of 1954) continued to be in force in the Telangana area even after the new State of Andhra Pradesh came into existence. In the Andhra area, the Madras Buildings (Lease an d Rent Control) Act, 1949 also continued to be in force. By a notificationMay 9, 1956 issued by the Government of Andhra Pradesh under the said Madras Act, all buildings in the Andhra area, the construction of which was completed on or after October 1, 1953 were exempted from all the provisions of that Act for a period of three years from theof such completion. On August 26, 1957 the State Government issued another notification under the Hyderabad Act exempting buildings in the Telangana Area for a period of five years from the operation of that Act. Both the said Madras Act and the Hyderabad Act were repealed and replaced by the Act which came to be passed in 1960. It appears that at the time when the Bill which later be came the Act was being considered by the Joint Select Committee of the State Legislature, the Chairman of the Committee informed the Committee that the Government of India had advised that new buildings should be exempted from the Act as it would be an incentive to the house building activity and he also brought to its notice that the State Government had issued the above said orders exempting the new building from the provisions of the respective Acts for a limited period. Thereupon Joint Select Committee recommended that in order to afford an incentive to the house building activity, all buildings constructed after August 26, 1957 should be exempted from the scope of the Bill. Ultimately section 32 of the Act was enacted asAct not to apply to certain buildings:-The provisions of this Act shall not apply:-(a) to any building owned by the Government;(b) to any building constructed on and after the 26th August 1957".

Court's reasoning:
At this stage we shall deal with a very persuasive argument addressed by learned counsel for some of the respondents. Drawing support from the observations in Bhopal Sugar Industries Ltd.s case (supra) and in H.H. Shri Swamiji of Shri Admar Mutts case (supra) they cont ended thus. As in the above two decisions this Court had declined to strike down the impugned legislation as it found that there was no adequate material to do so, in the cases before us also we should follow the same course of action. The learned counsel argued that the State Legislature had deliberately granted the exemption in order to encourage construction of new houses in view of the acute shortage of housing accommodation and since the shortage has become more and more acute, the Court should not interfere with the legislative judgment and allow the owners of buildings covered by section 32(b) of the Act to continue to enjoy the exemption until there is evidence to show that there is no longer any such shortage. W e find it difficult to accept this argument because it overlooks one essential distinction between the facts of those two cases and the facts of the present cases. The two decisions referred to above arose in the context of reorganisation of St ates. The State of Madhya Pradesh was formed by integrating areas which formed parts of the British India and a number of Indian States. Similarly the State of Karnataka was formed by merging five integrating units which again formerly formed parts of the British India and Indian States. There were on the same subject laws of different patterns in force in the several integrating units on the eve of reorganisation. Those laws were allowed to continue in force as a matter of necessity in the different local areas until the State Legislature concerned passed a common legislation on each subject for the whole State. The Legislature had to consider which of the different laws should be selected for enforcement in the entire State either with or without modifications. This certainly needed enquiry and investigation because of the diversities prevailing in each reorganised State. On enquiry probably the Legislature might have preferred to apply the very legislation impugned before the Court for the entire State. In these circumstances, this Court felt that it was not possible to decide whether a particular law which was challenged before them was discriminatory or not in the absence of necessary pleadings and relevant material. In the instant cases, the question is not one of selecting any particular local law for extension to the other parts of a State. This is a case where the Legislature while passing the law had given the exemption apparently as an incentive to encourage building activity. The learned counsel were not able to show how the continuance of the exemption in the case of persons who have built houses more than two decades ago will set as an incentive to builders of new houses now. If that is really so, then there is no justification to continue to have the restrictions imposed by the Act on buildings built prior to August 26, 1957 also and the whole Act should have to be repealed for if the impugned exemption can act as an incentive the repeal of the Act should also act as an incentive. We are of the view that in the instant cases no investigation as contemplated in the above two decisions of this Court is necessary. The long period that has elapsed after the passing of the Act itself serves as a crucial factor in deciding the question whether the impugned law has become discriminatory or not because the ground on which the classification of buildings into two categories is made is not a historical or geographical one but is an economic one. Exemption was granted by way of an incentive to encourage building activity and in the circumstances such exemption cannot be allowed to last for ever.It is argued that since the impugned provision has been in existence for over twenty three years and its validity has once been upheld by the High Court, this Court should not pronounce upon its validity at this late stage. There are two answers to this proposition. First, the very fact that nearly twenty three years are over from thedate of theenactment of the impugned provision and the discrimination is allowed to be continued unjustifiably for such a long time is a ground of attack in these cases. As already observed, the landlords of the buildings constructed subsequent to August 26, 1957 are given undue preference over the landlords of buildings constructed prior to that date in that the former are free from the shackles of the Act while the latter are subjected to the restrictions imposed by it. What should have been just an incentive has become a permanent bonanza in favour of those who constructed buildings subsequent to August 26, 1957. There being no justification for the continuance of the benefit to a class of persons without any rational basis whatsoever, the evil effects flowing from the impugned exemption have caused more harm to the society than one could anticipate. What was justifiable during a short period has turned out to be a case of hostile discrimination by lapse of nearly a quarter of century. The second answer to the above contention is that mere lapse of time does not lend constitutionality to a provision which is otherwisedoes not run in favour of legislation. If it is ultra vires, it cannot again legal strength from long failure on the part of lawyers to perceive and set up its invalidity. Albeit, lateness in an attack upo n the constitutionality of a statute is but a reason for exercising special caution in examining the arguments by which the attack is supported." (See W.A. Wynes: Legislative Executive and Judicial Powers in Australia Fifth Edition p. 33).We are constrained to pronounce upon the validity of the impugned provision at this late stage because the garb of constitutionality which it may have possessed earlier has become worn out and its unconstitutionality is now brought to a successful challenge.It was, however, contended on behalf of some of the respondents (landlords) that if clause (b) of section 32 of the Act was void then the entire Act may be struck down so that all the tenancies may be regulated by contracts entered into by the parties in accordance with their free will. In other words it was submitted that even the limited operation of the rent control legislation in Andhra Pradesh on buildings constructed prior to August 26, 1957 may be lifted b y declaring the whole Act as invalid on the ground that Legislature would not have passed the Act if it had known that exemption could not be given for ever to buildings constructed on and after August 26, 1957. On behalf of the petitioner s it was urged that the primary object of the Legislature was to continue to give protection to the tenants against their unreasonable evictions from and recovery of unconscionable rents from them for the buildings more or less on the same lines as it was under the Madras Buildings (Lease and Rent Control) Act, 1949 and the Hyderabad House (Rent, Eviction and Lease) Control Act, 1954 which were in force in the two areas of the State which were merged into one State on November 1, 1956 and that in any event clause (b) of section 32 i.e. the offending provision alone can be struck down without doing any violence to the rest of the statute. It was argued that the operation of the Act would in any way not be affected thereby and the only result of striking down clause (b) of section 32 would be that the rest of the Act would become applicable to all buildings which are now exempted by clause (b) of sectiondo realize the adverse effect of this decision on many who may have recently built houses by spending their life savings or by orrowing large funds during these inflationary days at high rates of interest, on the expectation and belief that they would not be subjected to the restrictions imposed by the Act. The incentive to build provides a rational basis for classification and it is necessary, in the national interest, that there should be freedom from restrictions for a limited period of time. It is always open to the State Legislature or the State Government to take action by amending the Act itself or under section 26 of the Act, as the case may be, not only to provide incentive to persons who are desirous of building new houses, as it serves a definite social purpose but also to mitigate the rigour to such class of landlords who may have recently built their houses for a limited period as it has been done in the Union Territory of Chandigarh as brought out in our recent judgment in M/s. Punjab Tin Supply Co. Chandigarh etc. v. The Central Government & Ors. The question whether new legislation should be initiated to exempt newly constructed buildings for a limited period of time on the pattern of similar legislation undertaken by different States or to exempt such class of buildings for a given number of years from the provisions of the Act by the issue of a notification under section 26 of the Act is one for the State Government to decide.In the result these petitions succeed. Clause (b) of section 32 of the Act is hereby declared as unconstitutional and it is quashed. We, however, make it clear that this declaration would not affect the validity of any proceedings in which the decree for eviction passed by a civil court has become final and the landlord has already taken possession of the building in question pursuant thereto.