Full Judgment Text
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PETITIONER:
VIVIAN JOSEH FERREIRA & ANR.
Vs.
RESPONDENT:
MUNICIPAL CORPORATION OF GREATER BOMBAY & ORS.
DATE OF JUDGMENT04/11/1971
BENCH:
SHELAT, J.M.
BENCH:
SHELAT, J.M.
SIKRI, S.M. (CJ)
DUA, I.D.
ROY, SUBIMAL CHANDRA
MITTER, G.K.
CITATION:
1972 AIR 845 1972 SCR (2) 257
1972 SCC (1) 70
CITATOR INFO :
R 1972 SC1982 (47)
R 1976 SC 670 (24)
RF 1987 SC1527 (21)
ACT:
Constitution of India, 1950, Articles 14 and 19(1)
(f)--Bombay Building Repairs and Reconstruction Board Act,
XLVII of 1969--Ss. 27, 28, 29--Enactment to solve housing
problem in the city and the danger arising from collapse of
old buildings--Tax on all residential buildings occupied by
tenants at the time of the commencement of the Act--Classi-
fication of buildings according to age and type of
construction--Varying percentage of the rateable value of
buildings charged as basic levy--Constitutional validity of.
Bombay Building Repairs and Reconstruction Board Act XLVII
of 1969--Constitutional validity of.
Taxing Statute--Principle for determination of the validity
of.
HEADNOTE:
The Bombay Building Repairs and Reconstruction Board Act,
XLVII of 1969 was brought into force on October 1, 1969. It
was enacted as a temporary measure and was to expire on
December 31, 1970. The preamble of the Act recites
collapses of residential buildings, acute shortage of
housing accommodation and the problem of law and order
arising from the increasing influx of persons into the city
of Bombay in search of work as having necessitated its
enactment. It also recites the recommendations, suggestions
and objections received by the government in response to the
proposals made by it and its conclusion after considering
them, as to the necessity for establishing a Board to deal
with the problems. The Act is confined to residential
buildings occupied by tenants at the time of the
commencement of the Act. Section 28 cls. (a) to (J) exempts
buildings exclusively occupied by the owners, buildings
exclusively used for non-residential purposes, buildings
exclusively occupied on leave and licence, open land not
built upon, buildings vesting in or leased to cooperative
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societies and buildings which might be erected after the
commencement of the Act. Section 27 provides for the levy
of tax on buildings and lands, save those exempted under s.
28, at rates of percentum of the rateable value of the
properties as laid down in the Schedule to the Act, Section
29 divides the buildings so taxed into categories A, B and
C.Buildings built prior to September 1, 1940 fall into
category A; those built between September 1, 1940 and
December 31, 1950 fall into category B; and those built
between January 1, 1951 and the date on which the Act was
brought into force fall into category C, Varying percentage
of the rateable value of the buildings is charged as a basic
levy and at a higher rate when any such building is
structurally repaired. The Act thus makes three kinds of
classifications namely, (1) by confining the tax to the
residential tenanted buildings it classifies buildings which
are used for residential purposes and are tenanted, from the
rest; (2) by confirming the tax to such existing building it
classifies them from those built after the date on which the
Act is brought into force and (3) by dividing those which
are liable to tax into three categories according to the
three periods in which they were constructed. The amount
recovered under the levy
258
is to be first credited to the Consolidated Fund of the
State, and, thereafter, to be transferred by a suitable
appropriation to the fund designated as the Bombay Building
Repairs and Reconstruction Fund. An owner who is required
to pay the tax pays only 10% of the rateable value of .the
building and is entitled to recover the balance from the
tenant by making a corresponding increase in the rent
payable by such tenant. During the life of the Act such an
owner is not bound to keep the premises let in good and
tenantable repair.
Owners of two residential buildings in the city of Bombay
neither of which was, by reason of its having been recently
constructed, either dilapidated or in dangerous condition
challenged the constitutionality of the Act on the grounds
(i) the tax amounted to unreasonable restriction and could
not be said to be for a public purpose in that it benefited
neglectful and defaulting owners, and, therefore, violated
Art. 19(1)(f) of the Constitution; (ii) the Act was
discriminatory and, therefore, infringed Art. 14 because,
(a) the classification of buildings into three categories
and imposition of different rates of tax was not based on
any rational principle; and (b) the exemption given to
buildings under cls. (g), (h), (i) and (i) of s. 28 and the
classification between buildings constructed before the Act
and those constructed thereafter was irrational without
being founded on any principle.
HELD : The Act is valid and the petitions unsustainable.
(1) The principles arising from the decisions of this Court
wherein the question of validity of taxing statutes have
arisen are : (i) in order that a tax may be valid it must
be, first, within the competence of the Legislature imposing
it, secondly, it must be for a public purpose and thirdly,
it should not violate the fundamental rights guaranteed by
Part III of the Constitution. (ii) a taxing statute is as
much subject to Art. 14 as any other statute; but in view of
the inherent complexity of fiscal adjustment of diverse
elements a larger discretion has to be permitted to the
legislature for classification so long as there is no.
transgression of the fundamental principle underlying the
doctrine of classification; (iii) a taxing statute is not
invalid on the ground of discrimination merely because other
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objects could have been, but are not taxed by the
legislature; (iv) when a statute divides the objects of tax
into groups or categories so long as there is equality and
uniformity within each group the tax cannot be attacked on
the ground of its being discriminatory; and (v) the mere
fact that a tax falls more heavily on some in the same group
or category is by itself not a ground for its invalidity.
[268 E-269 D]
K. T. Moopil Nair v. State of Kerala, [1961] 3 S.C.R. 77,
Raja Jagannath v. U.P., [1963] 1 S.C.R. 220, East India
Tobacco Co. v. Andhra Pradesh, [1963] 1 S.C.R. 404, Khandige
Sham Bhatt v. Agricultural income-tax Officer, [1963] 3
S.C.R. 809, Andhra Pradesh v. Nalla Raja Reddy, [1967] 3
S.C.R. 28, Ravi Varma v. Union of India. [1969] 3 S.C.R.
827, and Twyford Tea Co. Ltd. v. State of Kerala, [1970] 3
S.C.R. 282, referred to.
Where the object of a tax is directly private, indirect and
incidental benefits which may result to the public do not
make a public purpose. But the purpose of a tax would not
be regarded as private merely because some persons might
receive more benefits from the use of its proceeds than
others or, is imposed for a purpose other than revenue.
But. the principle that funds raised by taxation cannot be
expended for private use does not prevent the legislature
from looking at the ultimate rather than the immediate
result of the expenditure, and incurring an expense
259
or creating a liability on the part of the public which it
was under no constitutional obligation to incur or create if
the ultimate effect will be beneficial to the public. The
fact that a statute authorising an expenditure of public
tunas for a public purpose may foster another enterprise
which is not a public one does not invalidate the statute if
the purpose of the expenditure is legitimate because it is
public. The test is not as to who receives the money but
the character of the purpose for which it is expended. What
is to be borne in mind is the distinction between the
purpose and the method of its implementation. [272 B-E)
Cooley on Taxation (4th ed.), Vol. 1, Ch. 4, Arts. 174 to
221; American Jurisprudence Vol. 51, paras 321 and 329.
lbid, para 330 at p. 381; and Carmichael v. Southern Coal a
Coke Co. 81 L. Ed. 1245 and American Jurisprudence,
Taxation, Vol, 51 para 353 at 396.
The incidence of tax may fall upon a class or individuals
who derive no benefit from its expenditure or who are not
responsible for the mischief to remedy which the tax is
imposed.. Besides, in the present case the doctrine of
benefits cannot apply first, because the cess goes directly
to the Consolidated Fund and, secondly, because the
legislature has the power to authorise expenditure out of
the consolidated fund on any public purpose. [272 G]
Carmichael v. Southern Coal & Coke Co., 81 L. ed 1245, at
pp. 1261 and 1265, referred to.
Both the purpose of the tax and its use are, without doubt,
for public purpose., The purpose is to prevent collapses and
the suffering they must cause. The use is for preservation
and prolonging the life of teh buildings existing at the
date of the enactment. if, in implementing the purpose,
which is demonstrably public, some benefit reaches
particular individuals, the statute which does not directly
purport so to do, cannot be invalidated. [273 C]
(ii) When a combination of various factors raised problems
which are of imminent concern to the state as well as the
municipal authorities, if the legislature took a policy
decision to give priority to the residential tenanted
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premises, in respect of which in its opinion, the danger was
graver and imminent no challenge to the division between
residential and non-residential premises can be sustainable
particularly when dealing with a part of the problem and
confining its treatment to residential premises only was
considered feasible. In the light of the studies undertaken
by the government and the corporation if legislature thought
it best to preserve and prolong the life of existing
structures no challenge on the ground of discrimination or
arbitrariness can legitimately be made. Therefore the
classification of residential premises from the rest and
that between those existing at the time when the Act was
brought into force from the new ones which might be built
thereafter can be regarded as based on intelligible
differentia and related to the objectives and their
feasibility which the legislature bad in mind while
undertaking the questioned legislation. [275 A-G]
The classification of buildings into three categories is
based on their age and the construction current during the
period of their erection. It is therefore based on
intelligible differentia and is closely related to the
objects of the legislation. There is, therefore, no
question of unequals being treated as equals as each
building in respect of which the tax is payable falls within
the surveillance of the Board and has to be structurally
repaired if the need were to arise. Further, the tax is
payable on
260
the rateable value of each building which differs from
building to building and it is distributed between owners
and the tenants, the former bearing 10% of it only. [275 H,
276 C, 277D]
The grievance that individual tax-payers get more or less
return from the tax proceeds would not be a sustainable
ground for a challenge against its constitutional validity.
The primary object of the Act is not to repair all buildings
subject to cess but to prevent the annually recurrent
mischief of house collapses and the human tragedy and
deprivations they cause. The tax being thus levied to
prevent such disasters, there is no question of unequal
treatment between one class of owners and another. [276 F]
Moopil Nair v. State of Kerala, [1961] 3 S.C.R. 77, New
Manck Chowk Spinning & Weaving Mills Co. Ltd. v. Municipal
Corporation of the City of Ahmedabad, [1967] 2 S.C.R. 679
and Railroad Retirement Board v. Alton Railroad Co., 79
L.ed. 1468, held inapplicable.
The buildings in each of the categories exempted under s 28,
form a distinct class by themselves., Buildings in cls. (a)
to (f) are buildings to which Rent Act does not apply and
therefore the considerations for which the cess is levied do
not apply to them. Buildings used for nonresidential
purposes do not fall within the scope of the Act and
therefore had to be excluded from the levy of the cess,
Buildings vesting in or leased to cooperative societies form
a class by themselves and cannot be equated with buildings
built by individuals. The relation between a society and
its members are not the same as those between landlords and
tenants and besides, there is considerable control by the
registered over .the administration of the funds of the
societies and overall supervision over their affairs. The
premises occupied by licences form a distinct class by
themselves, and could not have been lumped together with
tenanted premises without the danger of a challenge under
Art. 14. The circumstances which led to the imposition of
the cess do not apply to premises in the occupation of
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licensees because such licensees have no rights such as the
tenants have, namely, irremovability and the freezing of
rents, and the consequential reluctance or inability of the
landlords to maintain their premises tenantable repairs. If
buildings used for non-residential purposes on the basis of
leave and licence are validly treated differently,
buildings, if used partly for one and partly for another
such purpose or purposes can also be similarly treated
provided that no part or parts thereof are occupied or used
for a purpose other than those specified in the three
clauses. Since these buildings form separate classes by
themselves from the tenanted residential premises, the
provisions for exempting them cannot be held as violative of
the equal protection clause. [277 F-278 G]
JUDGMENT:
ORIGINAL JURISDICTION : Writ Petitions Nos. 187 and 188 of
1970.
Petition under Art. 32 of the Constitution of India for
enforcement of the fundamental rights.
S. J. Sorabjee and B. R. Agarwala, for the petitioner (in
both the petitions).
M. C. Bhandare, P. C. Bhartari, J. B. Dadachanji and
261
Ravinder Narain, for respondent no. 1 (in W.P. No. 187 of
1970).
P . C. Bhartari, J. B. Dadachanji and Ravinder Narain, for
respondent no. 1 (in W.P. No. 188 of 1970).
M. C. Setalvad, P. K. Chatterjee and B. D. Sharma, for
respondent no. 3 (in W.P. No. 187 of 1970).
M. C. Bhandare and B. D. Sharma, for respondent no. 3 (in.
W.P. No. 188 of 1970).
S. J. Sorabjee, R. D. Diwan and 1. N. Shroff, for the
intervener(in W.P. No. 187 of 1970).
The Judgment of the Court was delivered by
Shelat, J. These petitions by owners of two residential
buildings, in the city of Bombay, neither of which is, by
reason of its having been recently constructed, either
dilapidated or in dangerous condition, challenge the
validity of the Bombay Building Repairs and Reconstruction
Board Act, XLVII of 1969.
The preamble of the Act recites collapses of residential
buildings, acute shortage of housing accommodation, and the
problems of law and order arising from the unceasing influx
of persons into the city of Bombay in search of work as
having necessitated its enactment. It also recites the
recommendations, suggestions and objections received by
Government in response to the proposals made by it and its
conclusion after considering them as to the necessity for
establishing a Board to deal with the said problems by
carrying out structural repairs to dangerous buildings, by
acquiring and reconstructing buildings which are beyond
repair and by providing for the rehousing of occupiers, who,
because of such repairs would be dishoused, and to provide
for the temporary levy of an additional cess on buildings
and lands to meet the expenditure for the aforesaid
purposes. The Act was brought into force on October 1, 1969
and the cess payable thereunder became operative as from
November 1, 1970.
The Act by s. 1(4) is declared to be a temporary one and’
would expire on December 31, 1979. Structural repairs are
defined by s. 2 (s) as meaning repairs or replacement of
decayed, cracked, or out of plumb structural components of a
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building or any substantial part thereof or any part to
which the occupiers have common access, by new ones of the
like materials, or of different materials including change
in the mode of construction such as converting load bearing
wall type or timber framed structure to an R.C.C. one, which
repairs or replacement, if not carried out expeditiously,
may result in the collapse of the building or any-
262
part thereof. Ss. 3 and 4 provide for the establishment and
composition of the Bombay Building Repairs and
Reconstruction Board. Ss. 21 and 22 lay down the duties,
powers and functions of the Board including the power to
carry out structural as also tenantable repairs, to move the
State Government to acquire old and dilapidated properties
in respect of which the cess is levied and which, in the
opinion of the Board, are beyond repair and to reconstruct
new buildings thereon, to establish transit camps to
temporarily accommodate persons dishoused and to demolish
dangerous and dilapidated buildings incapable of being
repaired at reasonable cost. S. 27 provides that subject to
the provisions of S. 28 there shall be levied a tax on
buildings and lands called the Bombay Buildings Repairs and
Reconstruction Cess at the rate of so many percentum of the
rateable value of the concerned property as is prescribed
therefor under the Schedule to the Act. Sub-s. 4 of s. 27
provides that the share of the owner shall be 10 per cent.
of the rateable value of the property and confers a right on
such owner to recover the balance from the tenant by making
a proportionate increase in rent and recovering it as such.
S. 28 ,,enumerates various classes of buildings which are
exempted from the enforcement of the levy. S. 29 lays down
three categories of buildings to which the Act applies. The
Schedule to the Act provides different rates at which
buildings falling in each category would be subject to the
cess. The Schedule also provides in respect of each
category of buildings different rates at which the cess
would be payable if structural repairs are carried out to
such building. The proceeds of the cess would be first
credited to the ,consolidated fund of the State and
thereafter under an appropriation duly made by law in that
behalf would be transferred to a fund, the amount of which
would be placed at the disposal of the Board for carrying
out its several functions. (S. 31). Lastly, s. 71 provides
that in the case of any building subject to the cess, the
owner shall not be bound to keep the premises let to any
occupier in good and tenantable repair and accordingly S. 23
of ,the Bombay Rents, Hotel and Lodging House Rates Control
Act, 1947 shall be deemed to have been suspended and the
provisions of the Transfer of Property Act, 1882 relating
thereto shall apply.
Counsel for the petitioners challenged the validity of the
Act principally under three heads : (1) that in the context
of the ,existing legislation, i.e., the Bombay Municipal
Corporation Act, III of 1888 and the Bombay Rent Control
Act, 1947, the imposition of a cess on residential
buildings, which are in sound and good condition, and which
would not require structural repairs for the entire period
of the Act, amounts to an unreasonable restriction, and
therefore, violates Art. 19(1)(f) of the Constitution; (2)
that the Act is also violative of Art. 14, in that, it fails
to recognise the material differences between various
buildings
263
with regard to their physical conditions and treats unequals
as equals; and (3) that the exemption provided by S. 28 are
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arbitrary and without any principle, and therefore, violate
Art. 14. Counsel argued that by subjecting residential
buildings in sound condition to the cess, the Act in
substance and effect provides bounties for those owners who
have been neglectful of their buildings and have infringed
requisitions issued to them by the Municipal Corporation.
Counsel for the respondents, on the other hand, urged (1)
that the imposition of the tax was by virtue of power under
Art. 246(3) read with entry 49 in List II of the Seventh
Schedule of the Constitution, and being for a public purpose
cannot be challenged as an unreasonable restriction, (2)
that there is an intelligible classification of the
buildings and such classification having a rational nexus
with the objects of the Act and the mischief it seeks to
avert, it is not challengeable on the ground of its being
discriminatory; and (3) that the exemptions in s. 28 are
provided for in the light of the objects and the scope of
the Act and being in consonance with them, S. 28 is not open
to such a challenge.
The argument of Mr. Sorabji, however, was that the cess
amounted to unreasonable restriction and could not be said
to be for a public purpose, in that, it benefits neglectful
and defaulting owners at the cost of owners who have been
looking after their properties and consistently carrying out
tenantable repairs, thus preventing their buildings from
being reduced to dangerous conditions. In this connection,
he relied on certain passages from Cooley on Taxation (4th
ed.), vol. 1, American Jurisprudence, vol. 51 on Taxation
and the Commissioner, Hindu Religious Endowments v.
Lakshmindra.(1) The argument was that the tax was
objectionable as it equated buildings in dangerous and
dilapidated conditions with those in good and sound
condition, thus, laying down a fictional equality in the
teeth of factual and physical inequality. Counsel relied
for that argument on K. T. Moopil Nair v. The State of
Kerala(2) and urged that the tax should be declared invalid
on the principles laid down therein. He also argued that
the classification of buildings into three categories
imposing different rates of tax was not based on any
rational principle as even recently constructed buildings
and buildings not needing or likely to need structural
repairs were brought into the class of buildings subject to
the cess. There was next an assumption, he argued, not
based on realities, that a building constructed before a
certain number of years would need structural repairs
although it has been kept in proper condition and therefore
not needing such structural repairs. A building constructed
several years ago might be in better condition if
consistently taken care
(1) [1954] S.C.R. 1005,1040.
(2) [1961] 3 S.C.R. 77.
264
of than the one built later but not taken care of, yet such
a building, only because it was built earlier, is subjected
to a higher rate of tax. Sec. 27 and the Schedule created
discrimination between properties (a) inter se in the same
category, (b) between buildings in different categories, and
(c) in imposing the same percentage, on buildings in the
same category though their actual conditions are totally
different and also between buildings in different
,categories. Thus, buildings in category A, built say in
1900 and those built in 1939 are treated as equals. Even
buildings erected ,at about the same time need not be equal
in condition, as, in the ,case of one tenantable repairs
might have been consistently carried ,out or structural
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repairs might have recently been carried out than the one in
which no such repairs, tenantable or structural, have so far
been carried out. Even if such a tax was necessary, its
levy should have been made dependable on the actual condi-
tions of the buildings and after a survey of the necessity
and the extent of structural repairs required. Further,
buildings in sound condition and not needing structural
repairs ought to have been ,exempted. The Act, thus, does
not take notice of the actualities in the sense that though
a building built in 1939 but wherein extensive repairs have
been carried out in 1968 would be a better building than
another built in 1950, yet the former has to pay .the tax at
a higher percentage than the latter. The categorisation ,of
the buildings, therefore, was arbitrary and not based on any
rational principle. Counsel also attacked the exemptions
given :to buildings falling under cls. (g), (h), (i) and (j)
of S. 28 as being irrational and without being founded on
any principle. Lastly, he urged that the classification
between buildings constructed before the Act and those
constructed thereafter was not valid since there was no
nexus between the date fixed under the Act and the objects
of the Act. Even assuming that the Act were to be found to
be valid, those buildings which were sound in condition and
were likely to remain so throughout the life of the Act
,could be separated from the rest and a restraint against
tax being enforced in respect of them can be imposed. The
attack against ,the validity of the Act thus falls under two
heads : (a) that the cess is not for a public purpose as it
results in bounties to owners whose buildings need
structural repairs at the expense of those whose buildings
are sound and are not likely to need any such repairs, and
(b) that it suffers from arbitrariness and is violative of
Art. 14.
Before these contentions are examined it is necessary to
consider the background in which the Act was passed as that
would throw light upon the targets which the Legislature had
in mind while enacting it.
Prior to the last World War, buildings had been one of the
major investments in the city of Bombay. The cost of
construc-
265
tion, owing to the easy availability of building materials,
was fairly reasonable and the cost of upkeep and maintenance
correspondingly low. It was then a tenant’s market as there
was then no pressure of population on the city as it is now
due to rapid industrialisation, concentration of industries
and other allied reasons. The owners of properties then had
sufficient incentives to keep their properties in
satisfactory repairs. The situation, however, was
completely reversed at the end of the last World War as the
gap between the demand and supply had by then widened at an
alarming rate. The result was the emergence of the Rent
Control Act which froze the rent at the pre-war level and
gave security to the tenants by conferring on them the
status of irremovability. The building materials in the
meantime became scarce, and consequently, with the freezing
of rents and the rising costs of materials, the incentive to
maintain properties in good repair gradually vanished. As
the gap between demand and supply of accommodation grew
wider, the pressure on the existing premises substantially
increased. The situation got worsened by reason of the
reluctance of the owners of the buildings to maintain their
properties in tenantable repairs as they found carrying out
the repairs uneconomical. A more comprehensive Rent Control
Act then replaced in 1947 the existing 1939 Act which had by
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them, been found inadequate. But while it guaranteed to the
tenants security of tenancy rights it generated an
increasing reluctance on the part of the owners to invest
any more capital on their buildings as that type of
investment was found to be less and less attractive.
One of the features of the city is that a large percentage
of the existing residential buildings in it had been
constructed several years ago. Being almost an island city
with limited construction space, the buildings had to expand
vertically, a feature not then prevalent in other cities.
These buildings were built on timber frames as R.C.C.
construction had not then come into vogue. Several of them
had been built upto five or six storeys having mostly one or
two rooms tenements, each of which was habited by a large
number of persons. The saline atmosphere of the city
coupled with the absence of repairs carried out on this type
of structures began to have its inevitable consequences.
Collapses of houses which were almost unknown in pre-war
days began to occur in increasing numbers till the figures
rose to about 125 on an average per year. These collapses
had their toll in the loss of human life, physical injuries
to the residents of those buildings and the dishousing of a
large number of persons from amongst the teeming population
residing in them.
The problem became so alarming that the city Corporation
carried out in 1956 a comprehensive survey of buildings in
all its
266
seven words. The survey was confined mainly to building used
for residential purposes. That was not due to the absence
of likelihood of human loss, suffering and deprivation of
accommodation occurring in non-residential premises, but
presumably because the need for such a survey of residential
premises was found to be of a more urgent character. The
survey revealed that there were within the city 36,000
residential buildings, of which 17,490 were built prior to
1905. The survey showed that residential buildings fell
into six categories, namely, 7.48% being buildings in steel
or R.C.C. frame, 1.58% with external masonry walls and steel
or R.C.C. frame, 33% with timber frames, 42% with external
masonry walls and internal timber frames, 1% with masonry
walls and jackarch floors and 15% temporary tin sheds. The
report further revealed that of the said 17,490 buildings,
(a) 5,081 of them had a future life of five years only, (b)
3,549 a future life of six to ten years, (c) 3,286 a future
life of eleven to fifteen years, (d) 3,583 a future life of
sixteen to twenty-five years, (e) 1,716 a future life of
more than twenty-six years, and (f) 275 in a sound
condition. Therefore, by 1969 when the impugned legislation
was undertaken, buildings in (a), (b) and (c) and partly in
(d) classes had already outlived the period of their
survival. The total number of families living in buildings
which imminently required substantial repairs, if they were
to survive, came to 1,04,270, 80% of whom were occupying one
room tenements.
The Report on the development plan for Greater Bombay,
submitted to the State Government in 1964, stated that out
of about seven lacs tenements in Greater Bombay as on March
31, 1961, 23% of them containing 18,000 buildings would need
extensive repairs in the next fifteen years and about 1,000
of them would have to be immediately demolished. 10,000
buildings would have a life of about ten years, and 7,000 a
life of fifteen years.
With such a situation it was no wonder that collapses of
buildings became almost an annual occurrence particularly
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during rainy seasons. In 1965, the State Government
appointed the Bedekar Committee to examine the problem. The
Committee reported the following principal causes of
collapses;
1. Indifference of owners to repair due to the freezing of
rents, on the one hand, and the rise in the cost of building
materials, on the other;
2. Resulting leakages in sanitary blocks;
3. Failure to demolish buildings even where they were
incapable of being sustained with repairs only;
4. Overcrowding in the tenements, and the consequent
increasing pressure on sanitary services therein, and
267
5. Soaring land values tempting owners to let
their buildings collapse rather than continue
to have them let out on frozen rents.
Amongst the difficulties presented by the current law, the
Committee found one of them in the absence of an independent
agency to finance and execute repairs on behalf of owners or
tenants who have no means to carry them out even when
otherwise willing to do so. Such was the reluctance of the
owners to invest capital in these buildings that though
18,000 notices for major repairs were issued by the
Corporation since 1960, only one third of them were complied
with. The Committee also noted that according to the
Municipal engineering staff incharge of the several wards in
Greater Bombay, 386 buildings had already been declared
unsafe and by 1970 and 1980 751 and 2416 more buildings
would respectively be due for demolition. Thus, a total of
3,600 buildings having about 2 lacs of people living in them
would be threatening collapse and would have either to be
demolished or repaired in time to prolong their lives. On
the several recommendations made by the Committee, one was
to have a separate department to deal with problems
connected with the demolition of old structures,
construction of new buildings replacing old ones, and annual
and special inspection of buildings. For prevention of
collapses it suggested, (a) timely demolition where
collapses were inevitable, (b) special repairs where it was
possible to prolong the life of old structures, (c)
acquisition of old buildings and replacing them with new
ones, (d) provision for temporary transit accommodation for
persons dishoused in this process, and (e) encouragement to
local bodies and housing cooperatives to construct
residential accommodation, since that was the only way of
augmenting residential premises.
The problem confronting the State Legislature as appearing
from these reports was that of the 17,490 buildings out of
the total 36,000 surveyed by the Corporation, barring only
1991 such buildings, the rest of them would have outlived
their lives by about 1980. On June 3, 1968 the Government
Published certain proposals for eliciting public opinion for
a legislation to prevent collapses and salvaging dilapidated
structures. It was after considering the recommendations,
suggestions and objections received by the Government that
the impugned Act was brought before the Legislature. The
Act was confined to the problem of residential houses only.
That was not because there was no danger of collapses of
non-residential buildings, but because it was considered
feasible to deal with a limited problem, namely, that of
residential Premises in respect of which the distress was
accuter As the Minister for Housing said during the Passage
of the bill. the intention of the Government was "to bit the
evil where it is 500SUP.CI/72
268
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greatest". It is also clear that following the reports,
such as the survey report, and the report of Bedekar
Committee, the Act placed the residential buildings into
three categories according to the periods during which they
were constructed and the construction in vogue during those
periods. The date, September 1, 1940, in respect of
category A was chosen as it was from that date that the
rents were frozen under the Rent Control Act.
The life of the Act upto 1979 only, restricting it to
residential buildings only, their division into three
categories, the raising of the fund for implementing the
purposes of the Act from three agencies immediately
concerned with the problem, the Government, the Corporation
and the owners and occupiers, the exemptions from the
operation of the Act in s. 28, all these emerge from the
earlier investigations and reports of which the Legislature
and the Government were aware of. As aforesaid, the
mischief which the Legislature intended to avert applied
also to non-residential premises. But the Legislature was
entitled to choose priorities according to the degree of
danger apprehended by it, and therefore, no infirmity,
constitutional or otherwise, can be attributed to such
priority if it chose a part of the problem which it thought
should be dealt with immediately, not because it was blind
to the larger problem but because it considered dealing with
a part of it as feasible.
The question of validity of taxing statutes has arisen
before this Court in a number of cases. The principle
emerging from them is that in order that a tax may be valid,
it is firstly, within the competence of the legislature
imposing’ it, secondly, that it is for a public purpose, and
thirdly, that it does not violate the fundamental rights
guaranteed by Part III of the Constitution. The taxing
statute is as much subject to Art. 14 as any other statute.
(K. T. Moopil Nair v. Kerala(1), Raja Jagannath v. U.
P(2), East India Tobacco Co. v. Andhra Pradesh(8), Khandige
Sham Bhatt v. Agricultural Income Tax officer(4) and Andhra
Pradesh V. Nalla Raja Reddy(5). But in view of the inherent
complexity of fiscal adjustment of diverse elements a
larger discretion has to be permitted to the Legislature
for classification so long as there is no transgression of
the fundamental principles underlying the doctrine of
classification. (cf. Khandige Sham Bhatt v. Agricultural
Income Tax Officer (4) . These principles are that the
classification must be based on an intelligible differentia
which distinguishes persons or objects grouped together from
others left out of the grout), and that differentia- must
have a rational nexus with the object of the statute. So
long as these principles are properly
(1) [1961] 3 S C R. 77.
(4) [1963] S.C.R. 809.
(2) [1963] 1 S.C.R. 220.
(3) [1963] 1 S.C.R. 404.
(5) [1967] 3 S.C.R. 28.
269
followed in classifying persons or objects for taxation, the
power to classify must be wide and flexible so as to enable
the Legislature to adjust its system of taxation in all
proper and reasonable ways. (see Khandige Sham Bhatt v.
Agricultural Income Tax Officer(1)
It is well recognised that a Legislature does not have to
tax everything in order to tax something. It can pick and
choose districts, objects, persons, methods and even rates
of taxation as long as it does so reasonably(2). A taxing
statute is not invalid on the ground of discrimination
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merely because other objects could have been, but are not
taxed by the legislature.(Ravi Varma v. Union of India (3)].
When a statute divides the objects of tax into groups or
categories, so long as there is equality and uniformity
within each group, the tax cannot be attacked on the ground
of its being discriminatory, although due to fortuitous
circumstances or a particular situation some included in a
class or group may get some advantage over others, provided
ofcourse they are not sought out for special treatment.
Khandige Sham Bhatt v. Agricultural Income Tax Officer(1).
Likewise, the name fact that a tax falls more heavily on
some in the same group or category is by itself not a ground
for its invalidity, for then hardly any tax, for instance,
sales tax and excise tax, can escape such a charge. [Twyford
Tea Co. Ltd. v. State of Kerala(4)].
Definition of taxation imply that a legislature can impose a
tax for public purpose only. A tax for purposes other than
public purposes would constitute taking of property without
due process of law within the meaning of the Fourteenth
Amendment in the United States. It would be objectionable
in this country by reason of Art. 31(1) of the
Constitution("). Taxation, however, is, nonetheless, for
public purpose even if particular persons receive more
benefit from the use of the tax proceeds than others(6).
A perusal of the provisions of the Act makes it clear that
its objects were : ( 1 ) to preserve the residential and
tenanted buildings existing at the date of its enactment,
(2) for that purpose, to set up a special agency, the Bombay
Buildings Repairs and Reconstruction Board, whose duties and
functions would be, (a) to undertake and carry out
structural repairs to buildings in respect of which the
impugned tax is levied, (b) to provide temporary or
alternative accommodation to occupiers of any such buildings
where any such building collapses, (c) to undertake and
carry out tenantable repairs to buildings placed at its
disposal, (d) to move the Government to acquire old and
dilapidited buildings in respect
(1) [1963] 3 S.C.R. 809. (2) Willis, Constitutional
Law of the United States, 587.
(3) [1969] 3 S.C.R. 827. (4) [1970] 3 S.C.R. 282.
(5) Cooley on Taxation (4th ed.), vol. 1, 381, 382.
(6) Ibid, 392.
270
of which the cess is levied and which are beyond repairs or
buildings in which structural repairs have once been carried
out but further repairs are not possible, (e) to reconstruct
new buildings, (f) to set up transit camps for those
dishoused on account of collapses, fire, rain or tempest,
and (g) to undertake demolition of dangerous buildings or
portions thereof. These objects obviously were, fixed upon
as a result of the earlier studies undertaken by the Govern-
ment and the Corporation and the recommendations made by
members of the public in answer to the proposals published
by Government in connection with collapses of residential
buildings and the tragic consequences following them.
To ensure implementation of these functions and duties, the
Act provides the levy of tax on buildings and lands, save
those exempted under s. 28, at rates of percentum of the
rateable value of the properties as laid down in the
Schedule to the Act. Under S. 27 and the Schedule the
properties are grouped into three categories in respect of
which varying percentage of the rateable value of the
buildings is charged as a basic levy and at a higher rate
where any such building is structurally repaired. The three
categories are formulated on two principles, the age of the
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buildings and the type of construction in vogue during the
periods when they were constructed. These principles appear
to have been adopted from the earlier studies made at the
instance of the Government and the Corporation. The amount
recovered under this levy is to be first credited to the
Consolidated Fund of the State, and thereafter to be
transferred by a suitable appropriation to the fund
designated as the Bombay Building Repairs and Reconstruction
Fund. (S. 31). For providing initial expenditure of the
Board, the Government and the Corporation have been
empowered to make advances. (s. 48). The Act also provides
that the Government may and the Corporation shall make an
annual grant of Rs. 1,00,00,000/- each.
Two further provisions in this connection need be noted.
The first is S. 27(4) under which an owner who is required
to pay the cess pays only 10% of the rateable value of his
building and is entitled to recover the balance from the
tenant by making a corresponding increase in the rent
payable by such a tenant. Default by the tenant gives him
the right to sue for eviction under s. 12 of the Bombay Rent
Act, 1947, or, on intimation to the Municipal Commissioner,
for recovery thereof as arrears of tax due under the Bomay
Municipal Corporation Act. The second is that during the
life of the Act such an owner is not bound to keep the
premises let to any occupier in good and tenantable repair
and S. 23 of the Bombay Rent Act is deemed to have been
suspended and s. 108 (m) of the Transfer of Property Act is
to apply, which means that it is the obligation of the
tenant to keep the premises in tenantable
271
repairs. It is, however, true that s. 5 8, as amended by
Act 6 of 1971, saves the power of the Commissoner under the
Bombay Municipal Corporation Act to require the owner to
carry out repairs to such things as drains, water-closets,
latrines etc., to pull down or repair dangerous structures
and to prevent causes of danger by such structures, to stop
nuisance caused by a leaking roof or by a ditch, tank etc.
or by collection of water, and also saves his powers to
enforce his orders to execute works, and the right of the
occupier to execute any such work in the event of default by
the owner. The section also saves the right in such an
event of a tenant to execute such work required by the
Commissioner under s. 10-D of the Bombay Rent Act. This
saving of cannot be equated the powers of the Commissioner,
however, with the obligation to carry out tenantable repairs
under s. 23 of the Bombay Rent Act or the right of the
tenant to carry out such repairs in the case of the
landlord’s default and to reimburse himself to the extent of
two months’ rent.
Such being the scheme and the objects of the, Act, can it be
said that the cess imposed thereunder is not for a public
purpose ? It may be that some of the existing buildings, by
reason of their having been recently constructed or their
having been properly cared for or structural repairs having
been recently made therein, might not require repairs
contemplated by the Act. Yet, their owners are required to
pay the cess from out of which the Board would carry out
structural repairs to buildings whose owners have been
neglectful or even defaulters in carrying out the Municipal
requisitions. Does it, however, follow from such a result
that the purpose of the Act is to confer bounty on such
owners, and that therefore, the purpose of the tax is to
serve a private and not a public purpose, and therefore,
violative of Art. 19 (1) (f) ?
The rule, no doubt, is that taxes can be levied for public
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purposes and indirect and incidental benefits which may
result to the public do not make a public purpose, where the
object is directly private. But the purpose of a tax would
not be regarded as private merely because some persons might
receive more benefits from the use of its proceeds than
others or is imposed for a purpose other than revenue, such
as tarff duties for encouragement of manufactures or licence
fees with a view to regulate a particular trade or industry.
A law, not only exempting from taxation the limited means of
poor and afflicted persons but providing public funds to
ameliorate their conditions, is undoubtedly one for public
purpose. A clear example of such a tax is the provision for
hospitals and asylums where medical and other aid is given
to the poor and the dependent free of any charge. A tax in
aid of private enterprises would undoubtedly be regarded as
272
loading "the table of the few with bounty that the many may
partake of the crumbs that fall therefrom", unless such an
enterprise is one of such magnitude or promise that its
prosperity constitutes a substantial element of public
welfare or which renders it important to national defence or
other such national interest(1). But the principle that
funds raised by taxation cannot be expended for private use
does not prevent the Legislature from looking at the
ultimate rather than the immediate result of the
expenditure, and incurring an expense or creating a
liability on the part of the public which it was under no
constitutional obligation to incur or create if the ultimate
effect will be beneficial to the public. Upon this theory
laws establishing minimum wage or limiting the hours of
labour have been sustained. The fact that a statute
authorising an expenditure of public funds for a public
purpose may foster another enterprise which is not a public
one does not invalidate the statute if the purpose of the
expenditure is legitimate because it is public. It will not
be defeated merely because the execution of it involves
payments to individuals. The test is not as to who receives
the money but the character of the purpose for which it is
to be expended(2). What is to be home in mind is the
distinction between the purpose and the method of its imple-
mentation. If in the course of the latter some benefit
incidentally reaches to a particular person or persons, the
former neither changes its character nor is it invalidated
for that reason. For instance, when a sudden or an
overwhelming disaster strikes, such as flood or a
destructive fire, a Legislature may legitimately authorise
expenditure of public money to provide succour to the
victims. Persons living in the area may become helpless or
destitute, irrespective of whether rich or poor, but it is a
public purpose to supply the sufferers with food, clothing
and shelter in order to relieve their immediate needs.
Expenditure of public funds in such cases have been treated
as necessary for the proper exercise of the police powers of
the State(3).
It is a common experience in the field of taxation that the
incidence of tax falls upon a class or upon individuals who
derive no direct benefit from its expenditure or who are not
responsible for the mischief to remedy which the tax is
imposed. Besides, in the present case the cess on
collection has. in the first instance, to be credited to the
State’s Consolidated Fund and then under an appropriation
duly made after deducting the cost of collection the balance
is to be transferred to the Repairs and Reconstruction
(1) Cooley on Taxation, (4th ed.). vol. 1, Ch. 4, Arts, 174
to 221 ; and American Jurisprudence vol. 51, paras 321 and
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329.
(2) Ibid, Para 330, at P. 381; and Carmichael v. Sourthern
Coal & Coke Co., 81 Law. ed., 1245.
(3) American Jurisprudence, Taxation, vol. 51, Para 353, at
396.
273
fund. The doctrine of benefits cannot apply to such a case,
firstly, because the cess goes directly to the Consolidated
Fund in augmentation of that fund and not to a specific
fund, and secondly, because the legislature has the power to
authorise expenditure out of the Consolidated Fund on any
public purpose which it thinks necessary and proper(1).
Both the purpose of the cess and its use are without doubt
for public purpose. The purpose is to prevent collapses and
the suffering they must cause including rendering several
persons homeless, a condition accentuated by the demand for
accommodation outrunning the supply. The use is for
preservation and prolonging the life of the buildings
existing at the date of the enactment of the Act by carrying
out structural repairs where owners due to diverse reasons
refuse or are reluctant to spend their capital on such
preservation, jeopardising the life of their properties and
due to the peculiar conditions in the property market find
it profitable to render buildings into vacant plots. If in
implementing the purpose, which, as aforesaid, is
demonstratably public, some benefit reaches particular
individuals, the statute, which does not directly purport so
to do, cannot be invalidated.
Ch. IV of the Act deals with the levy of the cess and the
buildings subjected to its imposition. Though s. 27 imposes
the tax on buildings and lands, the exemptions given to
buildings exclusively occupied by the owners, to buildings
exclusively used for non-residential purpose, to residential
buildings exclusively occupied on leave and licence, to open
lands not build upon and to buildings which might be erected
after the date on which the Act comes into force. have the
effect of confining the tax to residential houses occupied
by tenants existing at the date of the commencement of the
Act. Sec. 29 divides the buildings so taxed into categories
A, B and C. Buildings built prior to September 1. 1940 fall
into category Al. those build between September 1, 1940 and
December 31, 1950 fall into category B and those built
between Janury 1, 1951 and the date immediately before the
date on which the Act was brought into force fall into
category C. Under the Schedule, category A buildings are
charged at the rate of 25% of the rateable value and at 4%
if any building in that category is structurally repaired by
the Board. If a building falls in category B, it is charged
at 20% and at 30% if it is structurally repaired, and
buildings falling in category C have to bear the tax at 15%,
and at 20% if any one of them is structurally repaired by
the Board. The Act thus makes three kinds
(1) Carmichael v. Southern Coal & Coke Co., 81 Law Ed. 1245
at pp. 1261 and 1265.
274
of classification, (1) by confining the tax to the
residential tenanted buildings, it classifies buildings
which are used for residential purpose and are tenanted,
from the rest; (2) by confining the tax to such existing
buildings it classifies them from those built after the date
on which the Act is brought into force, and (3) by dividing
those which are liable to tax into three categories
according to the three periods in which they were
constructed.
To such a classification, the challenge, firstly was that
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there was no rationale in dividing the residential and the
non-residential buildings as a number of buildings falling
in both the groups had been found to be in imminent
dangerous condition, and posed the problem of danger to
human lives and of collapse. It was said, therefore, that
both the kinds ought to have been subject to the provisions
of the Act. The second challenge was to the equality of the
percentum of the rate to buildings falling in any on of the
three categories without regard to their actual physical
conditions. Counsel sought to work out several permutations
and combinations to show that such equal treatment to
buildings in each one of the three categories created
inequality by reason of disregard to their unequal
conditions. Thus, a building built in 1900 was treated
equal with one built in 1939 and both bore the tax at the
same rate. Similarly, a building totally neglected by the
owner, and therefore, needing structural repairs was treated
on equal footing with another in the same category, but on
which the owner has recently carried out full structural
repairs and was therefore in a sounder condition than the
former. There was, according to counsel, inequality writ
large in secs. 27 and 28, and the Schedule to the ’the Act.
The third attack was on the exemptions, the ground of attack
being that some of them had no foundation in principle and
were totally arbitrary. Reliance was placed in this connec-
tion on some of the decisions of this Court to show that
discrimination results where classification among equals is
based on no rational principle and which has no reasonable
nexus with the object with which the impugned legislation is
enacted. Similarly, such discrimination arises where there
is no classification even though the objects which are
subjected to tax are unequal and yet treated alike. [see K.
T. Moopil Nair v. Kerala(1), State of Madras v. R. Nand Lal
& Co. (2) and Andhra Pradesh v. Nalla Raja Reddy(3)].
Counsel for the respondents, on the other hand, urged that
those decisions had no application to the Present Act as the
classifications made and the exemptions provided thereunder
were based on principles which had intimate relation to the
objects with which the Act was passed and the evil it sought
to avert.
(1) [1961] 3 S.C.R 77. (2) [1967] 3 S.C.R. 645.
(3) [1967] 3 S.C.R. 28.
275
From what has been earlier stated, it is manifest that a
combination of factors, such as geographical limitations on
living space in the city, the consequent limited number of
buildings, the fact of a large number of them having been
constructed as early as 1905 and even before, the fact of
many of then,. having had to be built vertically and that
too on timber frames, the effect of freezing of rents
together with obligations imposed on the owners by the Rent
Act rendering the maintenance of buildings economically
unattractive, reluctance and sometimes inability of the
owners to carry out repairs and even to comply with
Municipal requisitions, the alarming spurt in the city’s
population, immigration of labour in large numbers from the
hinterland, increasing pressure on the existing residential
premises and on sanitary facilities therein, house collapses
in large numbers every year entailing human tragedy and
rendering hundreds homeless, had raised problems which were
of imminent concern to the State as well as the Municipal
authorities. In these circumstances, if the legislature
took a policy decision to give priority to the residential
tenant premises in respect of which, in its opinion, the
danger was graver and more imminent, no challenge to the
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division between residential and non-residential premises
can be sustainable particularly when dealing with a part of
the problem and confining its treatment to residential
premises only was considered feasible. From the studies
undertaken by the Government and the Corporation earlier
referred to, it appears that there were two alternatives.
the first was reconstruction of large sections of the city
and replacing new buildings in place of the old, and the
second was the preservation and prolonging the life of the
existing structures by carrying out structural repairs and
alterations therein. The first obviously would have raised
numerous problems, legal and economic. The second would
create lesser number of them. If the Legislature thought it
best in "lie circumstances to choose the second instead of
the first and confined its attention to the existing
structures no challenges on the ground of discrimination or
arbitrariness can legitimately be made. The classification
of residential premises from the rest and that between those
existing at the time when the Act was brought into force
from the new ones which might be built thereafter can be
regarded as based on intelligible differentia and related to
the objectives and their feasibility which the legislature
had in mind while undertaking the questioned legislation.
The division of such existing structures into three
categories was evidently made in the light of the survey of
buildings by the Corporation and the report of Bedekar
Committee and the classification of buildings made therein
on the basis of age and the kind of construction in vogue in
the respective periods in which
276
they were erected. That being so, it is impossible to say
that the aforesaid groupings of buildings was unprincipled,
whimsical or arbitrary.
But, as Mr. Sorabji was at pains to point out, there might
be buildings requiring structural repairs while there might
be some in the same category which might not require them
for the reason that they had been consistently looked after
by their owners, and yet the latter are made to pay the tax
and that too to the same degree. To that the answer is
twofold. Firstly, that the tax payable is on the rateable
value of each building which differs from building to
building, and secondly, it is distributed between owners and
the tenants, the former bearing 10 % of it only. To make
such distribution reasonable and just, the Legislature sus-
pended during the life of the Act some of the obligations of
the owners under the Rent Act and revived the obligations of
the tenants under s. 108(m) of the Transfer of Property Act,
though retaining the powers of the Corporation obviously en
the overriding consideration of public health. It is true
that even so, some of ’,lie owners, whose buildings do not
need structural repairs, have to pay the tax, the proceeds
of which would be spent for carrying out repairs to
buildings whose landlords have been neglectful. The
argument, in other words, is reduced to this, namely, that
there would be one class of tax-payer who would not get the
return and individual benefit while the other’ would get it
at the expense of the former. Such an argument, however,
can be urged almost against every tax and every public
expenditured and no tax can ever escape such a censure. The
grievance that individual tax-payers get more or less return
from the tax proceeds has hardly ever been entertained and
would not be a sustainable ground for a challenge against
its constitutional validity. The decision in Railroad
Retirement Board v. Alton Railroad Co., (1) leaned heavily
by counsel, disapproving a provision establishing a
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compulsory bonus system of employees on all carriers
treating them all as a single employer, on the around that
in imposed upon solvent carriers the burden of furnishing
money necessary to meet the demands of the system upon
insolvent carriers. cannot apply as the decision turned on
due process clause, a clause not available in our
Constitution.
The levy of the cess under s. 27 of the Act is not based on
the principle of qid pro quo. Its object is not to repair
all residential premises, but to preserve and prolong their
lives in order to avert the dilema caused by the acute
shortage of residential accommodation on the one hand, and
the reluctance and/or inability of the owners to carry out
repairs resulting from the
(1) 79 Law. Ed. 1468.
277
Rent Act, on the other, and to establish an agency so that
structural repairs to buildings in dangerous or ruinous
conditions can be carried out. The finances for these
objects are provided from. a fund from the impugned cess and
contributions by the State and the Corporation.
The contention that some of the buildings falling in catego-
ries B and C would not need structural repairs throughout
the life of the Act or that such repairs would be carried
out in buildings not cared for by defaulting landlords,
takes no notice of the fact that the primary object of the
Act is not to repair all buildings subject to cess but to
prevent the annually recurrent mischief of’ house collapses
and the human tragedy and deprivations they cause. The cess
being thus levied to prevent such disasters, there is no
question of unequal treatment between one class of owners
and another. The classification of buildings into three
categories is based, as already stated, on their age and the
construction current during the periods of their erection.
It is, therefore, based on an intelligible differentia and
is closely related to the objects, of the legislation.
There is, therefore, no question of unequals being treated
as equals, as each building in respect of which the cess is
payable falls within the surveillance of the Board and has
to be structurally repaired if the need were to arise. The
principle laid down in Moopil Nairs case(1) or in New Manek
Chowk Spinning and Weaving Mills Co. Ltd. v. Municipal
Corporation of the City of Ahmedabad(2) clearly does not
apply to the present case.
The objection to the exemptions under s. 28 can be met by
the fact that buildings in each of the groups therein set
out form a distinct class by themselves. Buildings in cls.
(a) to (f) are buildings to which the Rent Act does not
apply, and therefore, the considerations for which the cess
is levied do not apply to them. Buildings used for non-
residential purposes do not fall within the scope of the
Act, and therefore, had to be excluded from the levy of the
cess. Cls. (g), (h) and (j) read with the newly inserted
cl. (ja) were, however, objected to. Buildings vesting in
or leased to cooperative housing societies registered’ under
the Maharashtra Cooperative Societies Act, 1960 form a class
by themselves and cannot be equated with buildings built by
individuals. A perusal of that Act is sufficient to satisfy
that the relations between a society and its members to whom
apartments are either allotted or leased are not the same as
those between landlords and tenants.’ There is, besides,
considerable, control of the Registrar, Cooperative
Societies, over the administration of the funds of the
societies and their expenditure and an overall supervision
over their affairs. The Bedekar Committee;,
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(1) [1961] 3 S C.R 77.
(2) [1967] 2 S.C.R. 679.
278
no doubt, sounded a warning in respect of some of the
buildings put up by some of such societies. But these are
exceptions and the Legislature could not have carved out a
sub-clause in respect of them. The Committee, however, had
observed that these societies in the present state of the
property market were the only real instrumentalities through
which an increase in the residential accommodation can at
present be achieved, and therefore, should be encouraged.
Likewise, the relations between the owners and persons occu-
pying their buildings under leave and licence cannot be
equated with relations between landlords and tenants. The
circumstances which led to the imposition of the cess do not
apply to premises in the occupation of licensees because
such licensees have no rights such as the tenants have,
namely, irremoveability and. the freezing of rents, and the
consequential reluctance or inability of the landlords to
maintain their premises in tenantable repairs. There is no
such statutory control over compensation paid by them as
there is in the case of standard rent. Considerations
,applicable to them are, therefore, quite different. The
two classes of occupiers, therefore, cannot be equated. The
premises ,occupied by licensees thus form a distinct class
by themselves and could not have been lumped together with
tenanted premises without the danger of a challenge under
Art. 14.
So far as the building occupied by owners themselves and
falling under cl. (h) are concerned, counsel frankly
conceded that different considerations would apply and
therefore no objection could be taken to their being
exempted from the tax. If buildings used for non-
residential purposes or on the basis of leave and licence
are validly treated differently, buildings, if used partly
for one and partly for another such purpose or purposes can
also be similarly treated provided that no part or parts
thereof occupied or used for a purpose other than those
specified in the three clauses. Since these buildings
forming separate classes by themselves form the tenanted
residential premises, the provisions for exempting them
cannot be held as violative of the equal protection clause.
For the reasons stated above, the Act has to be held valid
and the petitions unsustainable. Accordingly, the petitions
are ,dismissed but in the circumstances of the case there
will not be any order of costs.
K.B.N.
Petitions dismissed.
279