This Revision has been filed against the Order passed by the http://www.judis.nic.in 2 trial Court rejecting the application filed by the Defendant in the suit to refer the matter to the High Court under Section 113 r/w Order 46 Rule 1 of CPC.
2. The suit has been filed by the Respondent herein for a declaration that the Plaintiff is entitled to occupy the suit property for a further period of 40 years commencing 01.02.2004, in terms of the provisions of
Section 5(2) and
7(3) of the Burmah Shell (Acquisition of Undertakings in India) Act, 1976, and for consequential relief. The fact remains that the Plaintiff was a lessee with the defendants. They filed a suit on the basis of the statutory right provided to the above Act for renewal of lease for a further period mentioned in the original lease. At this stage an application has been filed by the Defendant to refer the matter for opinion of this court, since it is the matter involved the constitutional validity of
Sections 5 and
7 of the Burmah Shell (Acquisition of Undertakings in India) Act, 1976 and the same is liable to be struck down. The trial Court has dismissed the application as against which the present Civil Revision Petition is filed.
3. The learned Senior Counsel has submitted that the Act is expropriatory legislation, it deprives a person of his land without consent. It is the further contention of the learned counsel, the http://www.judis.nic.in 3 renewal of lease for further period will take away the rights of the lessor. The right of property although is not a fundamental right nonetheless remains not only as constitutional right but also human right. It also violate Article 19 of the Constitution when the legal right and human right were violated the provision of such Act held to be unconstitutional. Hence, it is the contention of the learned Senior Counsel the Provision of
Section 5 and
7 of the Act has to be declared as ultra virus keeping in mind the right of the citizen guaranteed under
Article 19(i)(f) and also the constitutional right under Article 300-A of the Constitution. In support of his contention he placed reliance of the following judgments:
1. Chairman, Indore Vikas Pradhikaran v. Pure Industrial Coke & Chemicals Ltd.,and others [(2007) 8 SCC 705]
2. D. Packiaraj and another v. P.Kulanthaivel Nadar and another [2001-1-L.W.789]
3. Bharat Petroleum Corporation Ltd., v.
Maddula Ratnavalli and others [(2007) 6 Supreme Court Cases 81]
4. There is no reasonable fairness on the part of the Plaintiff and if the lease is renewed for further period of 40 years which http://www.judis.nic.in 4 amounts to lease and perpetuity and deprives the right of the person to hold the property. Merely because the company was conferred with statutory power, same does not mean that exercise thereof in any manner whatsoever will meet the requirements of law. He has also relied upon the judgment reported in Hindustan Petroleum Corporation Ltd., v. Darius Shapur Chenai and others [(2005) 7 SCC 627].
5. The learned counsel appearing for the respondent submitted that in the reference the constitutional validity of the Act cannot be gone into. The constitutional validity of the Acts have already been upheld by various judgement and Apex Court is also considered the above judgments now merely on the basis of unreasonableness the constitutional validity cannot be gone into. Hence prays for dismissal of the Revision. He has also placed reliance of judgments reported in
1. 1999 (2) CTC 145
2. 2004 (8) SCC 579
3. 2004 (9) SCC 772
4. (1995) 6 SCC 605
6. Since the matter relates to the validity of the provisions http://www.judis.nic.in 5 under
Section 5 and
7 of the Burmah Shell (Acquisition of Undertakings in India) Act, 1976, the reasons for such legislation also to be gone into. The Act, Burmah Shell (Acquisition of Undertakings in India) Act, 1976, (ACT 2/1976), Similarly ESSO (Acquisition of Undertakings in India) Act, (Act 14/1974) and Caltex (Acquisition of Shares of Caltex Oil Refining (India) Limited and Undertakings in India of Caltex (India) Limited Act, (Act 17/1997) were enacted in order to give effect to the directive principles contained in Article 39(b)and (c) of the Constitution to secure the ownership and control of the production of nation's petroleum resources and to secure ownership and control of the undertakings carrying on the business of distributing and marketing of petroleum products which would sub-serve the common good. All three enactments the provisions are in pari materia.
7. On and from the appointed date, the right title and interest of the company got transferred and vested in the Central Government under
Section 5 of the Act. Similarly all the right and interest in respect of the properties including lease tenancy also transfer to this Government as per
Section 7(1) and as per
Section 7(3) any tenancy or lease that subsisted on the appointed day shall stand renewed or continued. By operation of
Section 5 and
7 of the Act the http://www.judis.nic.in 6 Government or company to be a statutory tenant. The First challenge to the provisions of
Section 5 and
7 of the Caltex (Acquisition of Shares of Caltex Oil Refining (India) Limited and Undertakings in India of Caltex (India) Limited Act, (Act 17/1997) came in Manoharsing v. Caltex Oil Refining (India) Ltd., Bombay, reported in AIR 1981 MP 123, challenge was made on the ground of violations of Articles 14 and 19(1)(f) of the Constitution. The Division Bench has rejected such challenge and held that the Act was enacted with the avowed purpose of effect to a directive principle viz., Article 39(b) and
(c) and held that the provisions are immune to attack on the ground of violations of articles 14 and
19 of the Constitution in view of the protective umbrella afforded by
Article 31-C of the Constitution. The court also found that
Section 7(3) had a reasonable nexus with the object of the Act as it facilitated continuity and prevented the Central Government from suffering hardships faced by sudden termination of leases. Thereafter,
Section 5(2) of the ESSO Acquisition Act, and Burmah Shell Acquition Act and
Section 7(3) of Caltex Acquisition Act was also called into question before a Division Bench of Andhra Pradesh High Court reported in Mustafa Hussain v. Union of India (AIR 1981 AP 283). Main challenge on the ground that grant of compulsory lease at the desire of the Government under
Section 7(3) violates
Article 14, 19(1)(g) and
21 of the Constitution. The Division http://www.judis.nic.in 7 Bench rejected the challenge held that Corporation can exercise this option only once on the same terms and conditions of the lease or tenancy was existing on the appointed day. The Division Bench of Andhra Pradesh High Court also held that the Act fell within the protection of
Article 31-C and was immune from challenge under
Article 14 and
19 of the Constitution.
8. Thereafter, in a Division Bench of Bombay High Court reported in Trade Centre Developers and Builders Private Limited v. Union of India [AIR 1985 Bombay 4] following the Madhya Pradesh and Andhra Pradesh High Courts held that the act cannot be challenged under Articles 14 and 19 of the Constitution since it came within the protective umbrella of
Article 31-C. While rejecting, the Bench also rejected a challenge to the validity of the Act on the touchstone of Article 300-A. Subsequently, the constitutional validity of
Section 5(2) and
Section 7(3) in ESSO (Acquisition of Undertakings in India) Act, 1974 (Act No.4 of 1974) and the Burmah Shell (Acquisition of Undertakings in India) Act, 1976 (Act No.2 of 1976) were called into question on two grounds:-(i) Legislative competence and (ii) violation of Articles 14 & 19(1)(g) of the Constitution. The Division Bench of Kerala in P. SankaranarayananNambiar v. Union of India, [AIR 1990 Ker http://www.judis.nic.in 8 5, ] upheld the constitutional validity of the Act.
9. Thereafter, the constitutional validity of ESSO (Acquisition of Undertakings in India) Act (4 of 1974) came before the Division Bench of this Court in G. SundararajAchari v Hindustan Petroleum Corporation Limited [(1997) 3 LW 788] in para 3 this Court has held as follows:
“3. Heard the learned counsel for the petitioner. The Constitutional validity of the very provision and also similar legislation relating to Burmah Shell (Acquisition of Undertakings in India) Act (2 of 1976) came up for consideration before several High Courts. We have been taken through by the learned counsel for the petitioner the relevant decisions, of course, of different High Courts and we are of the view that the decisions in Mustafa Hussain v. Union of India (AIR 1981 AP 283 (DB) and P. Sankaranarayanan Nambiar v. Union of India (AIR 1990 Kerala 5(DB) have exhaustively as also elaborately analysed the identical grounds of challenge to the very provisions and allied legislations in respect of other similar undertakings and substained the constitutional validity of the said provisions. In our view, the ratio of the decisions and the principles laid down therein are squarely applicable to the present cases on hand also and we are in respectful agreement with the views expressed in the above referred two Division Bench judgments, reselling the change to the Constitutional validity of the Act in question.
Consequently and applying the ratio laid down therein, we are http://www.judis.nic.in 9 of the view that the challenge made to the Constitutional validity of
Section 5 and
7(3) of the Act is not well merited and does not serve countenance, in our hands. We hold on the question referred to us that the provisions of ESSO (Acquisition of Undertakings in India) Act (4 of 1974), particularly
Section 5 and
7(3) of the Act are Constitutionally valid and do not suffer any infirmity as being violative of the provisions of the Constitution of India, particularly Articles 14 and 19 of the Constitution and answer the question accordingly. However, we make no order as to costs.”
10. From the above judgments, the position is therefore clear that the constitutional validity of all the three Acts have been upheld by 5 High Courts. In subsequent, the decision of the Apex Court to dilute rigour of
section 7(3) of the Act, the Apex Courts have evolved various checks to ensure that the power to renew leases are not exercised arbitrarily. In Bharat Petroleum Corporation Ltd., v. Maddula Ratnavalli and Others [(2007) 6 SCC 81], the apex Court has held that reasonableness and non-arbitrariness are the hallmarks of an action by the State and held that reasonable action is required on the part of the State even where it is acting as a landlord or tenant in contractual matters and observed that merely because the company was conferred with a statutory power, the same by itself would not mean that exercise thereof in any manner whatsoever http://www.judis.nic.in 10 would meet the requirements of law and courts also held that more than one occasion the power under
section 7(3) can be exercised only once.
11. In Chairman, Indore Vikas Pradhikaran v. Pure Inudstrial Coke & Chemicals Lts., and others [(2007) 8 SCC 705] the Honourable Supreme Court has held that right of property is now considered to be not only a constitutional right but also a human right. Further, in HPCL v. Annadurai [1994 2 L.W.96] and T.G. Alamelu Ammal vs. Bharat Petroleum Corporation Ltd., Madras [ AIR 1992 Kerala 253] Kerala High Court following its earlier decision reported in 1985 KLT 1081 followed its earlier decision in Mariamma Thomas v. Bharat Refineries Ltd., 1985 KLT 1081 and held that that the lessee can insist for a renewal only if he agrees to a reasonable revision.
12. As already stated in BPCl v. Mathua reported in 200
7 6 SCC 81 The supreme Court reiterate the power of renew leases cannot be exercised arbitrarily. From the above judgment it is very clear that though
Section 5 and
7 were upheld by all the High Courts whereas in the Judgment of Orissa High Court reported in HpC Ltd v.Dolly Das is observed as follows:
http://www.judis.nic.in 11
14. Before parting with this case, we think it appropriate to observe that the Hindustan Petroleum Corporation is a Government Company on whom the Central Government by notification vested the right, title and interest and the liabilities of the foreign company called the Caltex Petroleum Corporation. The said Government Company is not entitled to forcibly occupy the leasehold property of the petitioner in the garb of exercising a right under the Act which right the Company does not possess, as discussed earlier. The rights of a citizen to hold its property cannot be abridged or infringed in the manner in which the Corporation has been forcing itself in the pretended exercise of a power referable to an enactment which it does not possess. The Court cannot be a mute spectator when it is brought to the notice that a public sector undertaking is exercising a colourable power or an arbitrary power which on the face of the statute it does not possess. A Government Company like the Hindustan Petroleum Corporation is not expected of forcibly occupying the property of a citizen. In the aforesaid premises, we allow this writ application with the directions and observations made earlier. We, however, make no order as to costs.”
13. Judgment of the above high Court was upheld with minor modifications, by the Apex Court in in HPCL Ltd v.Dolly Das (1999) 4 SCC 450) http://www.judis.nic.in 12
14. As pointed out by the Orissa High court the exigencies that necessitated the vesting of power to renew leases under
Section 7(3) in the late 1970’s may no longer survive with the efflux of time with the result that in the changed circumstances, its continuance will amount to the perpetuation of arbitrariness and unreasonableness. In MalpeVishwanath Acharya v. State of Maharashtra, (1998) 2 SCC 1 the Supreme Court observed that there wasconsiderable judicial authority in support of the proposition that with the passage of time a legislation which was justified when enacted may become arbitrary and unreasonable with the change in circumstances. The Court said “In the State of M.P. v. Bhopal Sugar Industries Ltd. [AIR 1964 SC 1179 : (1964) 6 SCR 846 : (1964) 52 ITR 443] dealing with a question whether geographical classification due to historical reasons would be valid this Court at SCR p. 853 observed as follows:
“Differential treatment arising out of the application of the laws so continued in different regions of the same reorganised State, did not therefore immediately attract the clause of the Constitution prohibiting discrimination.
But by the passage of time, considerations of necessity and expediency would be obliterated, and the grounds which justified classification of geographical regions for historical reasons may cease to be valid. A purely http://www.judis.nic.in 13 temporary provision which because of compelling forces justified differential treatment when the Reorganisation Act was enacted cannot obviously be permitted to assume permanency, so as to perpetuate that treatment without a rational basis to support it after the initial expediency and necessity have disappeared.”
9. In Narottam Kishore Deb Varman v. Union of India [AIR 1964 SC 1590 : (1964) 7 SCR 55] the challenge was to the validity of Section 87-B of the Code of Civil Procedure which granted exemption to the rulers of former Indian States from being sued except with the consent of the Central Government. Dealing with this question it was observed at SCR p. 60 as follows:
“If under the Constitution all citizens are equal, it may be desirable to confine the operation of Section 87-B to past transactions and not to perpetuate the anomaly of the distinction between the rest of the citizens and Rulers of former Indian States. With the passage of time, the validity of historical considerations on which Section 87-B is founded will wear out and the continuance of the said section in the Code of Civil Procedure may later be open to serious challenge.”
10. In H.H. Shri Swamiji of Shri Amar Mutt v. Commr. H.R.E.
Deptt. [(1979) 4 SCC 642 : 1980 SCC (Tax) 16 : (1980) 1 SCR 368] http://www.judis.nic.in 14 this Court was called upon to consider the validity of the continued application of the provisions of the Madras Hindu Religious Endowment Act, 1951 in the area which had formerly been part of State of Madras and which had latter become part of the new State of Mysore (now Karnataka) as a result of the States Reorganisation Act, 1956. In this connection at SCR pp. 387-88 it was observed by this Court as follows: (SCC pp. 658, para 29) “An indefinite extension and application of unequal laws for all time to come will militate against their true character as temporary measures taken in order to serve a temporary purpose. Thereby, the very foundation of their constitutionality shall have been destroyed, the foundation being that
Section 119 of the States Reorganisation Act serves the significant purpose of giving reasonable time to the new units to consider the special circumstances obtaining in respect of diverse units. The decision to withdraw the application of unequal laws to equals cannot be delayed unreasonably because the relevance of historical reasons which justify the application of unequal laws is bound to wear out with the passage of time. In Broom’s Legal Maxims (1939 Edn., p. 97) can be found a useful principle, ‘Cessante Ratione Legis Cessat Ipsa Lex’, that is to say, ‘Reason is the soul of the law, and when the reason of any particular law ceases, so does the law itself’.” http://www.judis.nic.in 15
11. This Court in Motor General Traders v. State of A.P. [(1984) 1 SCC 222 : (1984) 1 SCR 594] had to consider the validity of Section 32-B of the Andhra Pradesh Buildings (Lease, Rent and Eviction) Control Act, 1960. This section provided that the Act would not apply to buildings constructed after 26-8-1957. This exemption had continued for nearly a quarter of a century and it was argued that because of shortage of housing accommodation since the section had been valid from the commencement of the Act, therefore, it could not be struck down at any time after it came into force. While referring to earlier decisions in Bhaiyalal Shukla v. State of M.P. [AIR 1962 SC 981 : 1962 Supp (2) SCR 257 : (1962) 13 STC 236] and Bhopal Sugar Industries Ltd.[AIR 1964 SC 1179 : (1964) 6 SCR 846 : (1964) 52 ITR 443] it was observed at SCR p. 606 as follows: (SCC p. 232, para 16) “16. What may be unobjectionable as a transitional or temporary measure at an initial stage can still become discriminatory and hence violative of
Article 14 of the Constitution if it is persisted in over a long period without any justification.” Dealing with the contention that the impugned provisions had been in existence for over 23 years and had once been held to be valid by the High Court and therefore this Court should not pronounce upon its http://www.judis.nic.in 16 validity at this late stage, it was observed at SCR p. 614 that: (SCC p. 239, para 24) “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. … We are constrained to pronounce upon the validity of the impugned provision at this late stage because of garb of constitutionality which it may have possessed earlier has become worn out and its unconstitutionality is now brought to a successful challenge.”
12. In Rattan Arya v. State of T.N. [(1986) 3 SCC 385] this Court had to consider the validity of
Section 30(ii) of the Tamil Nadu Buildings (Lease and Rent) Control Act, 1960 which provided that tenants of residential building paying monthly rent exceeding Rs 400 were exempted from the protection of the Act whereas no such restriction was imposed in respect of tenants of non-residential buildings under the said Act. Holding that the tenants of the residential buildings required greater protection and that there was no justification in picking out the class of tenants of residential buildings paying a rent of more than Rs 400 per month and to deny them the right conferred generally on all tenants of buildings, residential or non-residential, and for this reason holding
Section 30(ii) of the said Act as being violative of
Article 14 at pp. 389 and 390 it was observed http://www.judis.nic.in 17 as follows: (SCC para 4) “It certainly cannot be pretended that the provision is intended to benefit the weaker sections of the people only. We must also observe here that whatever justification there may have been in 1973 when
Section 30(ii) was amended by imposing a ceiling of Rs 400 on rent payable by tenants of residential buildings to entitle them to seek the protection of the Act, the passage of time has made the ceiling utterly unreal. We are entitled to take judicial notice of the enormous multifold increase of rents throughout the country, particularly in urban areas. It is common knowledge today that the accommodation which one could have possibly got for Rs 400 per month in 1973 will today cost at least five times more. In these days of universal day-to-day escalation of rentals any ceiling such as that imposed by
Section 30(ii) in 1973 can only be considered to be totally artificial and irrelevant today. As held by this Court in Motor General Traders v. State of A.P.[(1984) 1 SCC 222 : (1984) 1 SCR 594] a provision which was perfectly valid at the commencement of the Act could be challenged later on the ground of unconstitutionality and struck down on that basis. What was once a perfectly valid legislation, may in course of time, become discriminatory and liable to challenge on the ground of its being violative of
Article 14.”
13. Lastly reference need be made to Synthetics and http://www.judis.nic.in 18 Chemicals Ltd. V. State of U.P. [(1990) 1 SCC 109] where at pp. 156- 57 it was observed that “restriction valid under one circumstance may become invalid in changing circumstances”. Reliance in support of this view was not only placed on some American decisions but also on the decision of this Court in Motor General Traders case [(1984) 1 SCC 222 : (1984) 1 SCR 594] .
15. In Satyawati Sharma v. Union of India, (2008) 5 SCC 287 at page 320it was reiterated as under:
32. It is trite to say that legislation which may be quite reasonable and rational at the time of its enactment may with the lapse of time and/or due to change of circumstances become arbitrary, unreasonable and violative of the doctrine of equality and even if the validity of such legislation may have been upheld at a given point of time, the Court may, in subsequent litigation, strike down the same if it is found that the rationale of classification has become non-existent.
In State of M.P. v. Bhopal Sugar Industries Ltd. [AIR 1964 SC 1179] this Court while dealing with a question whether geographical classification due to historical reasons could be sustained for all times observed: (AIR p. 1182, para 6) “6. … Differential treatment arising out of the application of the laws so continued in different regions http://www.judis.nic.in 19 of the same reorganised State, did not, therefore immediately attract the clause of the Constitution prohibiting discrimination. But by the passage of time, considerations of necessity and expediency would be obliterated, and the grounds which justified classification of geographical regions for historical reasons may cease to be valid. A purely temporary provision which because of compelling forces justified differential treatment when the Reorganisation Act was enacted cannot obviously be permitted to assume permanency, so as to perpetuate that treatment without a rational basis to support it after the initial expediency and necessity have disappeared.”
16. However, the difficulty in applying the tests of unreasonableness and manifest arbitrariness under Article 14 lies in the fact that the Acts have been enacted to give effect to the directive principles under Article 31-C and are hence immune from challenge on the ground of violation of fundamental rights under
Article 14. Article 31-C (unamended) was introduced by the Constitution (Twenty-fifth Amendment) Act, with effect from April 20, 1972. The last clause of that Article, which gave conclusiveness to the declaration regarding the policy of the particular Act, was struck down as invalid in KesavanandaBharati[(1973) 4 SCC 225 : 1973 Supp SCC http://www.judis.nic.in 20 1] . That part now lives an italicized existence in official publications of the Indian Constitution. The words “the principles specified in clause (b) or clause (c) of Article 39” were substituted by the words “all or any of the principles laid down in Part IV”, by the 44th Amendment, with effect from June 20, 1979. This amendment was struck down by a Constitution Bench of the Supreme Court in Minerva Mills Ltd. v. Union of India, (1980) 3 SCC 625, with the result that the position post KesavanandaBharati and pre-44thAmendment has now been restored.
17. In State of Karnataka v. Ranganatha Reddy [(1977) 4 SCC 471 : (1978) 1 SCR 641] Krishna Iyer, J., speaking for himself and two other Judges propounded the view that material resources of the community referred to in
Article 31-C covered all resources, natural and man-made, publicly and privately owned. In view of this judgment the natural corollary was that compulsory statutory renewal of privately owned leases would also come within the net of
Article 31-C and would, thus, be immune from attack under Article
14. This position was reiterated by another bench in Sanjeev Coke Mfg. Co. v. Bharat Coking Coal Ltd., (1983) 1 SCC 147.
18. However, in 2002, a 7 judge bench found themselves in http://www.judis.nic.in 21 disagreement with the judgmentin Sanjeev Coke and the decision of Krishna Iyer, J in Ranganatha Reddy’s case. The 7 judge bench opined that it had some difficulty in accepting the ratio that the protection under
Article 39 of the Constitution extended to private property also. Consequently, the matter was referred to a 9 judge bench vide the following order reported in Property Owners' Assn. v. State of Maharashtra, (2013) 7 SCC 522 :
“2. Put shortly, the question is as to the interpretation of
Article 39(b) of the Constitution which speaks of the distribution for the public good of the ownership and control of the material resources of the community. In State of Karnataka v. Ranganatha Reddy [(1977) 4 SCC 471 : (1978) 1 SCR 641] two judgments were delivered. In the judgment delivered by Krishna Iyer, J., speaking for himself and two other Judges, the view was taken that material resources of the community covered all resources, natural and man- made, publicly and privately owned. The other judgment, delivered by Untwalia, J., on behalf of himself and three other Judges, did not consider it necessary to express any opinion with regard to Article 39(b); it was, however, made clear in this majority judgment that the learned Judges did not subscribe to the view taken in respect of
Article 39(b) by Krishna Iyer, J.
5. Having given due consideration, we http://www.judis.nic.in 22 are of the opinion that this interpretation of
Article 39(b) requires to be reconsidered by a Bench of nine learned Judges: we have some difficulty in sharing the broad view that material resources of the community under
Article 39(b) covers what is privately owned.”
19. The reference is still pending before the Supreme Court as on date. However, if it is eventually held that the words “material resources” do not include private property, with the result that the protection under
Article 39 and 31-C will no longer apply to private leases statutorily renewed under
Section 7(3), the Act will then be open to challenge under Articles 14 and 19. Furthermore, the rationale for the earlier judgments would vanish as the immunity afforded by
Article 31-C can no longer shield the law from the test of manifest arbitrariness under
Article 14 evolved by the Supreme Court post 1997. However, these are academic questions since the Constitution Bench is yet to answer the reference that was made in 2002 .
20. In view of the above position, though the Act is the constitutional validity of the High Court, still the validity can be gone http://www.judis.nic.in 23 into on the ground of unreasonable or arbitrariness. However in view of the reference pending before the constitutional bench of 9 Judges, this Court cannot go into the constitutional validity. This court at this stage cannot decide the above issue, in view of the matter already pending before the Constitutional Bench i.e., larger bench of the Supreme Court. Accordingly the Revision is dismissed. No costs.
26.04.2019 Index:Yes/No Internet:Yes/No Speaking order/Non-speaking order ggs.
To The District Munsif, Tambaram.
http://www.judis.nic.in 24 N. SATHISH KUMAR, J.
ggs.
Order in:
C.R.P.(PD).No.3363 of 2009 http://www.judis.nic.in 25 26.04.2019 http://www.judis.nic.in