Full Judgment Text
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PETITIONER:
DWARKADAS MARFATIA & SONS
Vs.
RESPONDENT:
BOARD OF TRUSTEES OF THE PORT OF BOMBAY
DATE OF JUDGMENT27/04/1989
BENCH:
MUKHARJI, SABYASACHI (J)
BENCH:
MUKHARJI, SABYASACHI (J)
KANIA, M.H.
RANGNATHAN, S.
CITATION:
1989 AIR 1642 1989 SCR (2) 751
1989 SCC (3) 293 JT 1989 Supl. 146
1989 SCALE (1)1157
CITATOR INFO :
R 1990 SC1031 (12)
F 1991 SC 537 (48)
F 1991 SC 855 (69)
ACT:
Constitution of India, 1950: Articles 12, 14, 32 and
226--’Bombay Port Trust’--Whether ’State’--Evicting its
tenant and granting the land in question to another
tenant--Frontiers of judicial review of such action.
HEADNOTE:
The respondent Board of Trustees of the Port of Bombay
is a statutory authority, and as such has been exempted from
the operation of the Bombay Rents, Hotel & Lodging House
Rates (Control) Act, 1947. The appellant has been the lessee
of the respondent since about 1932 in respect of part of the
original plot No. 4 (now plot 5B) which adjoins plot No. 6
tenanted by M/s Bombay Bharat & Swadeshi Rice Mills. In or
about 1933-34, M/s Bombay Bharat & Swadeshi Rice Mills took
over the appellant, and a rice mill was started on appel-
lant’s part of plot No. 4 and plot No. 6.
In December 1957, the Town Planning Scheme No. 1 in
Bombay City came into force, and the original plot No. 4 was
reconstituted into final plot No. 5. In or about 1963 the
respondent sub-divided plot No. 5 into final plot 5A and
final plot 5B, and as a result of the sub-division M/s
Dhanji Mavji became the tenant/occupant of a major portion
of plot 5B, In 1970-71 the respondent agreed to let the
entire plot 5B, including the portion which had been let to
and was in possession of the appellant since 1933, to Dhanji
Mavji. The appellant objected to the offer made to Dhanji
Mavji but the respondent asserted that as Dhanji Mavji had
been in possession of the major portion of plot No. 5B, it
agreed to let the entire plot to them. In the premise, the
respondent purported to terminate the tenancy of the appel-
lant in respect of its . portion of plot 5B, and later filed
suit for eviction. The Trial Court dismissed the suit hold-
ing that it would be legitimate to infer that the letting
was for a manufacturing purpose and hence the notice of
termination was bad. The appellate court reversed that
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decision. Aggrieved thereby, the appellant filed a writ
petition under Article 227 of the Constitution. The High
Court accepted the finding of the appellate court that the
notice of ejectment was valid notice and there was no
waiver of notice.
752
Before this Court, it was contended on behalf of the
appellant that (1) the exemption from the operation of the
Rent Act was given to the Port Trust Authority on the as-
sumption that it would act in public interest and would not
behave like ordinary landlords; (2) the action of the re-
spondent in terminating the appellant’s contractual tenancy
had a public law character attached to it and was according-
ly subject to judicial review; (3) every action of the
respondent which was ’State’ within Article 12 of the Con-
stitution, whether it be in the field of contract or any
other field, was subject to Article 14 of the Constitution
and must be reasonable and taken only upon lawful and rele-
vant grounds of public interest; (4) the respondent’s estab-
lished rational/policy was to offer/allot a final/reconsti-
tuted plot for development to the existing occupants thereof
as joint tenants; and (5) the eviction of the appellant was
not necessary in the public interest for the proper develop-
ment of the plot as required by the Town Planning Scheme.
On behalf of the respondent it was contended that (1)
the onus was entirely on the appellant to establish that the
Bombay Port Trust had terminated the tenancy or taken the
proceedings in eviction not in public interest but for a
collateral purpose or mala fide or that it had acted in a
manner contrary to the provisions of Article 14; (2) since
there was no obligation or duty cast upon the Bombay Port
Trust to provide accommodation, there could be no question
of acting in governmental character, and such a body stood
on the same footing as any other citizen and would, in
respect of such activity, not be subjected to public law
duty; (3) the respondent’s dealing with tenants was a con-
tractual dealing and it was not a matter for public law
domain and was not subject to judicial review; and (4) it
was the policy of the respondent to allot the entire re-
constituted plot to one person who was occupying the major
portion of such plot, for its proper development.
Dismissing the appeal, it was,
HELD: Per Sabyasachi Mukharji, J., (Kania, J. agreeing)
(1) Bombay Port Trust being a public body, even in
respect of its dealing with its tenants, it must act in
public interest, and an infraction of that duty is amenable
to examination either in civil suit or in writ jurisdiction.
[761G]
Rampratap Jaidayal v. Dominion of India, [1952] 54 Bom.
L.R. 927; and Baburao Shantaram More v. The Bombay Housing
Board, [1954] V SCR 572, referred to.
753
(2) Where any special right or privilege is granted to
any public or statutory body on the presumption that it must
act in a certain manner. such bodies must make good such
presumption while acting by virtue of such privilege. Judi-
cial review to oversee if such bodies are so acting is
permissible. ]762D-E]
Radhakrishna Agarwal & Ors. v. State of Bihar & Ors.,
[1977] 3 SCR 249 and Life Insurance Corporation of India v.
Escorts Ltd. & Ors., [1985] 3 Supp SCR 909, referred to.
(3) The field of letting and eviction of tenants is
normally governed by the Rent Act. The Port Trust is statu-
torily exempted from the operation of the Rent Act on the
basis of its public/Governmental character. Every
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action/activity of the Bombay Port Trust which constituted
"State" within Article 12 of the Constitution in respect of
any right conferred or privilege granted by any statute is
subject to Article 14 and must be reasonable and taken only
upon lawful and relevant grounds of public interest. [762E-
F; 763A-B]
S.P. Rekhi v. Union of India, [1981] 2 SCR 111 and
M.C. Mehta & Anr. v. Union of India & Ors., [1987] 1 SCC
395, referred to.
(4) Where there is arbitrariness in State action, Arti-
cle 14 springs and judicial review strikes such an action
down. Every action of the Executive authority must be sub-
ject to rule of law and must be informed by reason. So,
whatever be the activity of the public authority, it should
meet the test of Article 14. [763C]
All exercise of discretion or power by public authori-
ties as the respondent, in respect of dealing with tenants
in respect of which they have been treated separately and
distinctly from other landlords on the assumption that they
would not act as private landlords must be judged by that
standard. [763H; 764A]
If a governmental policy or action even in contractu-
al matters fails to satisfy the test of reasonableness, it
would be unconstitutional. [764A-B]
E.P. Royappa v. State of Tamil Nadu, [1974] 2 SCR 348;
Maneka Gandhi v. Union of India, [1978] 2 SCR 621; R.D.
Shetty v. The International Airport Authority of India &
Ors., [1979] 3 SCR 1014; Kasturi Lal Lakshmi Reddy v. State
of J & K, [1980] 3 SCR 1338 and
754
Ajay Hasia v. Khalid Mujib Sehravardi, [1981] 2 SCR 79,
referred to.
(7) Governmental Policy would be invalid as lacking in
public interest, unreasonable or contrary to the professed
standards and this is different from the fact that it was
not done bona fide. [764B-C]
(8) There is always a presumption that a governmental
action is reasonable and in public interest. It is for the
party challenging its validity to show that the action is
unreasonable, arbitrary or contrary to the professed norms
or not informed by public interest, and the burden is a
heavy one. [764C-D]
(9) Judicial review is not concerned with the decision,
but with the decision making process. Unless this restric-
tion on ’the power of the court is observed, the court under
the guise of preventing the abuse of power, would be itself
guilty of usurping power which does not belong to it.
[765E-F]
(10) The Court cannot really substitute a decision
reached by a fair procedure keeping the policy of the re-
spondent in mind by a different decision only on the ground
that the decision which appeals to the court is a better
one. [765G]
Council of Civil Service Unions v. Minister for the
Civil Service, [1984] 2 AER 935; Chief Constable of the
North Wales Police v. Evans, [1982] 1 WLR 1195; In re Pres-
ton v. I.R.C., [1985] 2 WLR 336 and Regina v. Chief Consta-
ble of the Merseyside Police, [1986] 2 WLR 144, referred to.
(11) The Bombay Port Trust, perhaps, was justified in
coming to the conclusion that the only possible way to
develop the properties of the Bombay Port Trust in compli-
ance with the Town Planning Scheme was by allotting plots to
holders of major portions thereon. Such a decision cannot be
faulted. [766E-F]
(12) Upon the facts of the instant case, there was an
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implied obligation in respect of dealings with the
tenants/occupants of the Port Trust Authority to act in
public interest/purpose. That requirement is fulfilled if it
is demonstrated that the Port Trust authorities have acted
in pursuance of a policy which is referable to public pur-
pose. Once that norm is established whether that policy is
the best policy or whether another policy was possible, is
not relevant for consideration. [767E-F]
755
(13) Under the constitutional scheme of this country,
the Port Trust Authorities were required by relevant law to
act in pursuance of public purpose. This Court is satisfied
that they have proceeded to so act. [767G]
Per S. Ranganathan, J. (Concurring)
On the facts of the instant case, the action of the Port
Trust was not improper and there are no grounds for inter-
ference. [768F]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2036 of
1987.
From the Judgment and Order dated 19.11.1986 of the
Bombay High Court in W.P. No. 710of 1984.
Aspi Chinai, R.F. Nariman, Miss Darshna Bhogilal, K.K.
Lahiri, R. Karanjawala, Ejaz Maqbool and Mrs. Manik Karanja-
wala for the Appellant.
K.K. Singhvi, Brij Bhushan and Anil Kumar Gupta for the
Respondent in C.M.P. No. 19447 of 1988.
G. Ramaswamy, Additional Solicitor General, U.J. Mukhi-
ja, B.S. Basania, Mrs. A.K. Verma, Arun Banga and D.N. Misra
for the Respondent.
The Judgment of the Court was delivered by
SABYASACHI MUKHARJI, J. This is an appeal by special
leave from the judgment and order dated 19th November, 1986
of the learned Single Judge of the Bombay High Court. In
this appeal this Court has been asked to examine the fron-
tiers of judicial review of the action of a statutory au-
thority, i.e. the Board of Trustees of the Port of Bombay,
in evicting its tenant and granting the land in question to
another tenant. However, in order to appreciate the contro-
versy it is necessary to have a conspectus of the facts
involved.
756
The respondent Board of Trustees of the Port of Bombay
is a statutory authority. Vast areas of South Bombay which
are completely tenanted, are owned by the respondent. Being
a statutory authority, the respondent has been exempted from
the operation of the relevant Rent Act. The respondent is a
statutory corporation constituted under the Major Port Trust
Act, 1963 as amended by the Major Port Trust (Amendment)
Act, 1974.
Between about 1906 and 1932, one Jhunjhunwala was the
lessee of plot No. 6 (which adjoins plot 5B which is the
suit plot) and a building was existing on plot No. 6 which
was tenanted to M/s Bombay Bharat & Swadeshi Rice Mills, and
the said Mills were desirous of operating a rice mill on
plot No. 6 but could not get the licence from the Municipal-
ity for the operation of the said rice mill unless satisfac-
tory arrangement was made for the removal and storage of
rice husk in a separate chamber/structure.
Since about 1932, the appellant had been the lessee of
the respondent in respect of part of the original plot No. 4
(now plot 5B) which adjoins plot No. 6 of the suit plot
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measuring 113.4 sq. rots. In or about 1933-34, with a view
to acquire the suit plot and using the same for the rice
mill/dust room, M/s Bombay Bharat & Swadeshi Rice Mills took
over the appellant. The dust room structure was constructed
on the suit plot. The rice mill on plot No. 6 and the dust
room on the suit plot had a common wall and were inter-
connected by ducts.
It was stated that the respondent’s inspectors had
regularly visited the premises in question but had never
objected to the user of the rice mill/dust room. In Decem-
ber’57, the Town Planning Scheme No. 1 in Bombay City came
into force. The original plot No. 4 was reconstituted into
final plot No. 5 but continued to belong to the respondent.
The Scheme also stipulated that all rights of lessee/tenants
in the original plots stood transferred to the final plots.
It may be noted that in December’57 original plot No. 4
comprised of 113.4 sq. mts. let to the appellant, 390 sq.
mts. let to M/s Dhanji Mavji, 453 sq. mts. let to two asso-
ciate firms (M/s Gordhandas Ranchoddas and M/s Chunilal
Gupta) and 195 sq. mts. let to M/s Vassanji Hirji. Hence, of
the final plot No. 5, the appellant and their associates, it
was asserted, held 569 sq. mts., Dhanji Mavji held 390,
Vassanji Hirji held 195 sq. rots. and the balance 155 sq.
mts. was with the respondent/others. Total area of final
plot 5 was 1309 sq. mts. From 1957-72, the respondent, it is
asserted, continued the tenancies of the appellant and its
associate firms. In or about 1963, however, the respondent
applied for and got final plot No. 5 sub-divided into final
plot 5A (659 sq. mts.)
757
and final plot 5B (650 sq. mts.). The suit plot and M/s
Dhanji Mavji’s plot fell entirely in final plot 5B and as a
result of the sub-division, Dhanji Mavji became the
tenant/occupant of a major portion of plot 5B. It is assert-
ed that appellant’s associate firm and Chunilal Gupta fell
in plot No. 5A and became the tenants/occupants of a major
portion of plot No. 5A. In 197 1 the Municipality renewed
the mill licence covering both the structures.
It is the case of the appellant that in 1970-71, the
respondent arbitrarily agreed to let the entire plot 5B
including the portion which had been let to and in the
possession of the appellant since 1933 to M/s. Dhanji Mavji,
and thereby agreed to give him 650.6 sq. mrs. against his
existing 390 sq. mts. Also the appellant offered to develop
final plot 5B jointly with Dhanji Mavji in 1972-76. The
appellant, however, asserted that it had offered to pay the
revised rent that might be fixed by the respondent. The
appellant objected to the offer made to Dhanji Mavji exclu-
sively and pointed out that the established practice of the
respondent was to continue the existing tenants/ occupants
on the final plots. The respondent, however, asserted that
as Dhanji Mavji had been in possession of the major portion
of plot No. 5B (390 sq. mts. vis-a-vis 113.4 sq. mts.), they
agreed to let the entire plot to Dhanji Mavji and, there-
fore, could not entertain the appellant’s request. In the
premises, by notices issued in 197 1-73, the respondent
purported to terminate the tenancy of the appellant. In
1973-74, the Municipal Corporation auctioned the right,
title and interest of Jhunjhunwala and the respondent in
plot No. 6 for nonpayment of property taxes. An associate
firm of the appellant M/s. Natwar Parekh & Sons purchased
plot No. 6 and became the owner thereof. The case of the
appellant was that the respondent got the Corporation to
wrongfully exclude the respondent’s interest from the con-
veyance. The said Natwar Parekh challenged such exclusion by
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filing writ petition No. 52/74 in the High Court. On
26.7.1976, the writ petition was allowed, and Natwar Parekh
are now the owners of plot No. 6. This, according to the
appellant, caused resentment to the respondent, and it
offered Plot No. 5A to the existing tenants, i.e. the peti-
tioner’s associates who held 453 sq. mts. and Vassanji
Hirji, who held 195 sq. mts. The petitioner’s associates who
held 70% of the plot 5A, pointed out that the said Vassanji
Hirji was not interested and that the entire plot should
accordingly be given to them. The respondents declined and
instead commenced eviction proceedings against all the three
holders. In or about October 1977, the respondent issued one
month’s notice to the appellant to terminate the tenancy.
In December, 1977 the respondent filed suits Nos. 447 &
603/77 against the appellant in the Court of Small Causes,
Bombay. The
758
appellant filed its written statement and pleaded that the
proceedings had been instituted mala fide and just to bene-
fit Dhanji Mavji and to harass the appellant’s associates,
who had acquired the respondent’s title to plot no. 6.
Secondly, it was asserted that the premises had been ac-
quired and used for rice mill for 40 years and accordingly
it could not be terminated by one month notice. The lease
was for manufacturing purposes. Thirdly, it was asserted,
that the notice of termination, in any event, had been
waived by demanding and recovering rent/ enhanced rent.
It is asserted that at the hearing the witnesses of the
respondent had admitted that the plot would be given to
Dhanji Mavji if the appellant was evicted therefrom. It also
agreed that the respondent was under no statutory obligation
to give the entire plot to Dhanji Mavji.
On or about 31st March, 1981 the Trial Court dismissed
the suit, holding that the appellant was admittedly using
the plot for a rice mill for over 50 years to the knowledge
of the respondent; and it would be legitimate to infer that
the letting was for a manufacturing purpose. Hence, the
notice of termination was bad. The Trial Court did not deal
with the question of mala fide. On or about 13th January,
1984 the appellate court reversed that decision and also
held that the issue of mala fide or arbitrariness was not
relevant on the legality of the eviction proceedings. Ag-
grieved thereby, the appellant filed a writ petition No.
710/84 under Article 227 of the Constitution. The High Court
dismissed the said writ petition by the judgment under
appeal and upheld the order of eviction. The High Court
accepted the finding of the appellate court that the notice
of ejectment was valid notice and there was no waiver of
notice. In our opinion, the High Court was right on this
aspect and in any event under Article 227 of the Constitu-
tion the High Court could not have gone into this question.
We, in an appeal under Article 136 of the Constitution
cannot re-appraise that question.
The question that survived after the finding of the
appellate court and which was urged mainly before the High
Court and also in this appeal, was whether the action of the
respondent in evicting the appellant and granting the prem-
ises in question to M/s Dhanji Mavji was proper and right.
It was contended on behalf of the appellant that the action
of the respondent in terminating the appellant’s contractual
tenancy had a public law character attached to it and was
accordingly subject to judicial review. It was asserted that
every action of the respondent which was ’State’ within
Article 12 of the Constitution, whether it be in the field
of contract, or any other field, was subject to Article 14
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of the Constitution and must be reasonable and taken only
759
upon lawful and relevant grounds of public interest. In that
light, it was urged that if the eviction of the appellant
was not necessary in the public interest and if it had been
taken pursuant to any norm or policy which does not permit
eviction of the appellant, then the action is arbitrary and
discriminatory and not in accordance with any policy which
the respondent was enjoined to follow..
In the aforesaid background it was contended that the
eviction of the appellant was not necessary in public inter-
est. It appears that the eviction of the appellant was only
in pursuance of a policy of the Port Trust to let out a
reconstituted plot to the person who occupied the major
portion and who could use it for development. It was urged
that the decision of the Port Trust to allot the entire plot
to M/s Dhanji Mavji to the exclusion of the appellant
(although the appellant was thereof for the past 40 years)
was an arbitrary and discriminatory departure from the
established policy of the Port Trust, which was to offer the
plot to the existing tenants (where two or more tenants were
in occupation of one plot) as joint-tenants. It was contend-
ed that the impugned termination was ultra vires and arbi-
trary. It was contended that the exclusive allotment of the
entire plot 5B to M/s Dhanji Mavji and the consequent termi-
nation of the appellant’s tenancy was not necessary to
enable proper development of the plot as required by the
Town Planning Scheme. There was no policy requiring the
entire final/reconstituted plot to be allotted exclusively
to the person occupying the major portion thereof or requir-
ing the other existing occupants to be evicted. Nor, it was
submitted, was the allotment of the entire plot, pursuant to
any such alleged policy. On the other hand, the appellant
contended that the respondent’s established policy was to
offer/allot a final/ reconstituted plot for development to
the existing occupants thereof as joint tenants. It was
contended that this rational policy which, according to the
appellant, would have fulfilled the public interest of
development in accordance with the regulations of the Town
Planning Scheme and at the same time would not have required
or necessitated the eviction of the existing occupants.
Contrary to the established rational policy of accommo-
dating tenants by offering/allotting a new plot jointly to
the existing occupants/tenants, the respondent arbitrarily,
it was contended, and discriminatingly did not offer the new
plot 5B to M/s Dhanji Mavji and the appellant (both of whom
were existing tenants/occupants of the plot) as joint ten-
ants, but instead wrongfully decided to give the entire plot
to M/s Dhanji Mavji to the exclusion of the appellant.
"Our attention was drawn to Section 4 of the Bombay
Rents, Hotel & Lodging House Rates (Control) Act, 1947,
which enjoins that
760
the Act would not apply to the premises belonging to the
Govt. or to the local authorities. By the provisions of the
said Section 4, the Port Authorities were exempted from the
operation of the Rent Act. This privilege was given to the
Port Trust Authorities, it was submitted, on the assumption
that it would act in public interest, and would not behave
like ordinary landlords. The special privileges, powers and
benefits were statutorily conferred on the Bombay Port Trust
by Section (4) of the aforesaid Act. It had those rights due
to its statutory or public character, as a local authority.
Our attention was also drawn to the decision in Rampra-
tap Jaidayal v. Dominion of India, [1952] 54 Bom. LR 927 at
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934 where the Chief Justice Chagla observed as follows:
"It is not too much to assume, as the Legisla-
ture did in this case assume, that the very
Government whose object was to protect the
tenants and prevent rent being increased and
prevent people being ejected, would not itself
when it was the landlord do those very things
which it sought to prohibit its people from
doing, and therefore the underlying assumption
of this exemption is that Government would not
increase rents and would not eject tenants
unless it was absolutely necessary in public
interest and unless a particular building was
required for a public purpose."
This Court in Baburao Shantaram More v. The Bombay
Housing Board & Anr., [1954] V SCR 572 had to consider
Section 4 of the Bombay Rents, Hotel & Lodging House Rates
Control Act, 1947, and so far as material for our present
purposes explained the basis of exemption under Section 4 as
that the Govt. or local authority or the Board would not be
actuated by any profit making motive so as to unduly enhance
the rents or eject the tenants from their respective proper-
ties as private landlords are or are likely to be. In other
words, this Court recognised that the basis of differentia-
tion in favour of the public authorities like the respond-
ent, was on the ground that they would not act for their own
purpose as private landlords do, but must act for public
purpose.
’Our attention was also drawn by Mr Chinai, learned
counsel for the appellant, to the observations on ’Adminis-
trative Law by Wade, 5th Edn. at page 355. It was stated
therein as follows:
"Statutory power conferred for public pur-
poses is conferred as it were upon trust, not
absolutely-that is to say, it can
validly be used only in the right and proper
way which Parliament when conferring
it is presumed to have intended."
761
It, therefore, follows that the public authorities which
enjoy this benefit without being hidebound by the require-
ments of the Rent Act must act for public benefit. Hence, to
that extent, this is liable to be gone into and can be the
subject-matter of adjudication.
Learned Addl. Solicitor General Mr Ramaswami contended
that the onus was entirely on the appellant and the burden
lay on the defendant to establish that the Bombay Port Trust
had terminated the tenancy or taken the proceedings in
eviction not in public interest but for a collateral purpose
or mala fide or that it had acted in a manner contrary to
the provisions of Art. 14 of the Constitution. He is right
so contending.
It was further urged by Mr Ramaswamy that public law
duties are owed to society at large and the nature of the
body performing the functions is not determinative of public
law or private law character of the action taken. He con-
tended that since the provisions of the Bombay-Rent Act did
not apply to the premises of the Bombay Port Trust in the
notice of termination no reason was required to be given
either in the notice itself terminating the tenancy or in
the plaint for evicting the appellant. He further contended
that originally the Bombay Port Trust was constituted as a
body corporate under the provisions of the Bombay Port Trust
Act, 1889 and is now constituted under the provisions of the
Major Port Trusts Acts, 1988. In both these Statutes the
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object for constituting the Bombay Port Trust was not to
provide accommodation to persons and, therefore, the object
was totally different from the object for which the Bombay
Rent Act and similar enactments have been enacted. It was,
therefore, urged that since there was no obligation or duty
cast upon the Bombay Port Trust to provide accommodation,
there could be no question of acting in Government charac-
ter.
It was urged that the respondent did not enjoy any
special privileges/powers of benefits vis-a-vis such activi-
ties by virtue of its being a local Body or Government
character. In the premises, it was contended that such a
body stands on the same footing as any other citizen and
will, in respect of such activity, not be subjected to
public law duty.
We are unable to accept the submissions.. Being a
public body even in respect of its dealing with its tenant,
it must act in public interest, and an infraction of that
duty is amenable to examination either in civil suit or in
writ jurisdiction.
Our attention was drawn to the observations of this
Court in Radhakrishna Agarwal & Ors. v. State of Bihar &
Ors., [1977] 3 SCR 249. Reliance was also placed on the
observations of this Court in Life
762
Insurance Corpn. of India v. Escorts Ltd. & Ors., [1985] 3
Suppl SCR 909, in support of the contention that the public
corporations’ dealing with tenants is a contractual dealing
and it is not a matter for public law domain and is not
subject to judicial review. However, it is not the correct
position. The Escorts’ decision reiterated that every action
of the State ’or an instrumentality of the State, must be
informed by reason. Indubitably, the respondent is an organ
of the State under Art. 12 of the Constitution. In appropri-
ate cases, as was observed in the last mentioned decision,
actions uninformed by reason may be questioned as arbitrary
in proceedings under Art. 226 or Art. 32 of the Constitu-
tion. But it has to be remembered that Art. 14 cannot be
construed as a charter for judicial review of State action,
to call upon the State to account for its actions in its
manifold activities by stating reasons for such actions.
The contractual privileges are made immune from the
protection of the Rent Act for the respondent because of the
public position occupied by the respondent authority. Hence,
its actions are amenable to judicial review only to the
extent that the State must act validly for a discernible
reason not whimsically for any ulterior purpose. Where any
special right or privilege is granted to any public or
statutory body on the presumption that it must act in cer-
tain manner, such bodies must make good such presumption
while acting by virtue of such privileges. Judicial review
to oversee if such bodies are so acting is permissible.
The field of letting and eviction of tenants is normally
governed by the Rent Act. The Port Trust is statutorily
exempted from the operation of Rent Act on the basis of its
public/Government character. The legislative assumption or
expectation as noted in the observations of Chagla C.J. in
Rampratap Jaidayal’s case (supra) cannot make such conduct a
matter of contract pure and simple. These corporations must
act in accordance with certain constitutional conscience and
whether they have so acted, must be discernible from the
conduct of such corporations. In this connection, reference
may be made on the observations of this Court in S.P. Rekhi
v. Union of India, [1981] 2 SCR 111, reiterated in M.C.
Mehta & Anr. v. Union of India & Ors., [1987] 1 SCC 395,
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wherein at p. 148, this Court observed:
"It is dangerous to exonerate corporations
from the need to have constitutional con-
science; and so, that interpretation, language
permitting, which makes governmental agencies,
whatever their mien amenable to constitutional
limitations must be adopted by the court as
against the alternative of permitting them to
flourish as an imperium in imperio."
763
Therefore, Mr Chinai was right in contending that every
action activity of the Bombay Port Trust which constituted
"State" within Art. 12 of the Constitution in respect of any
right conferred or privilege granted by any Statute is
subject to Art. 14 and must be reasonable and taken only
upon lawful and relevant grounds of public interest. Reli-
ance may be placed on the observations of this Court in E.P.
Royappa v. State of Tamil Nadu, [1974] 2 SCR 348; Maneka
Gandhi v. Union .of India, [1978] 2 SCR 621; R.D. Shetty v.
The International Airport Authority of India & Ors., [1979]
3 SCR 1014; Kasturi Lal Lakshmi Reddy v. State of J & K &
Anr., [1980] 3 SCR 1338 and Ajay Hasia v. Khalid Mujib
Sehravardi & Ors. etc., [1981] 2 SCR 79. Where there is
arbitrariness in State action, Art. 14 springs in and judi-
cial review strikes such an action down. Every action of the
Executive Authority must be subject to rule of law and must
be informed by reason. So,, whatever be the activity of the
public authority, it should meet the test of Art. 14. The
observations in paras 101 & 102 of the Escorts’ case (supra)
read properly do not detract from the aforesaid principles.
The High Court had relied on the observations of this
Court in Kasturi Lal Lakshrni Reddy v. State of Jammu &
Kashmir & Anr., (supra) that the State was not totally freed
of the duty to act fairly and rationally, merely because it
could do so under a contract. The High Court stated that
though it might be accepted that a public body like the
respondent should not act unreasonably or unfairly but it
did not follow that every time they decided to take action
against the contractual tenants, they had to decide the said
action in terms of fairness, equity and good faith. In
support of this proposition, reliance was placed on the
observations of this Court in L.I.C v. Escorts, (supra). In
this connection, Mr Chinai appearing for the appellant
reiterated before us as he did before the High Court, that
the basis of the legitimate assumption or expectation of
which the statutory exemption had been granted by the Legis-
lature to the Bombay Port Trust provided a guideline or
touch-stone by which the conduct of the public authority
which had been granted exemption, should be judged. And,
according to him, the necessity of eviction in the instant
case, must have been only in public interest. Reliance was
placed on several decisions referred to hereinbefore.
We are inclined to accept the submission that every
activity of a public authority especially in the background
of the assumption on which such authority enjoys immunity
from the rigours of the Rent Act, must be informed by reason
and guided by the public interest. All exercise of discre-
tion or power by public authorities as the respondent, in
respect of dealing with tenants in respect of which they
have been treated separately and distinctly from other
landlords on the assump-
764
tion that they would not act as private landlords must be
judged by that standard. If a governmental policy or action
even in contractual matters fails to satisfy the test of
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reasonableness, it would be unconstitutional. See the obser-
vations of this Court in Kasturi Lal Lakshrni Reddy, (supra)
and R.D. Shettv v. The International Airport Authoritv of
India & Ors., [1979] 3 SCR 1014 at 1034.
Learned Additional Solicitor General reiterated on
behalf of the respondent that no question of mala fide had
been alleged or proved in these proceedings. Factually, he
is right. But it has to be borne in mind that governmental
policy would be invalid as lacking in public interest,
unreasonable or contrary to the professed standards and this
is different from the fact that it was not done bona fide.
It is true as learned Addl. Solicitor General contended that
there is always a presumption that a governmental action is
reasonable and in public interest. It is for the party
challenging its validity to show that the action is unrea-
sonable, arbitrary or contrary to the professed norms or not
informed by public interest, and the burden is a heavy one.
In this background the contention of the appellant has
been that its eviction was not necessary in public interest,
and further that the eviction was only in pursuance of an
alleged policy on the part of the Port Trust to let out the
reconstituted plot to the person who occupied the major
portion, which, according to the appellant, was not in
consonance with the obligation of the Trust to take action
only in public interest. It was contended that eviction for
development with least dislocation, should have been the aim
and that would have served the public purpose better. On
behalf of the appellant it was contended that before the
Trial Court it was established that both the appellant and
M/s Dhanji Mavji had been tenants of the Port Trust on the
original plot No. 4 since 1932, and in fact the appellant
was older tenant. Our attention was drawn to para 16 of the
appellant’s written statement, Vol. 2 Paper Book, page 35.
In this context, it was submitted that the decision of the
Port Trust was not based on public purpose/interest, and as
such was ultra vires of the powers of the Port Trust. It was
contended that such a plea was justiciable in all civil
suits.
On behalf of the Port Trust authorities, however, the
submission was that there was no obligation under the Bombay
Port Trust Act to provide accommodation. So, there cannot be
any governmental character. This we have already dealt with.
Learned Add|. Solicitor General submitted that in evi-
dence it has been mentioned by Katara (P.W. 1 at page 43,
Vol.II) that the plot had been allotted to Dhanji Mavji
since it was the policy of the Bombay Port Trust to allot a
re-constituted plot to a person occupying
765
a major portion of such plot. There was no challenge to this
evidence .in cross-examination. On the other hand, he con-
tended that there was no evidence on the alleged policy of
the Port Trust of giving plots on joint tenancy to all
occupants. According to him, in the letters addressed by the
Port Trust at pp. 82, 123, 128 of Vol. 1 and in the letters
by and on behalf of the appellant and/or their alleged
associate concerns at pp. 14 1 to 147 they have specifically
admitted that there was a policy of the Port Trust to allot
plots to the occupants of the major portions thereof and in
fact a grievance has been made by them that in accordance
with the said policy of the Bombay Port Trust, Plot No. 5A
was not being allotted to the associates of the appellant.
In that view of the matter even under the scope of judicial
review, it was contended, whether it should have been given
on joint-tenancies or not, is not a matter which could be
gone into by the Court. Reliance was placed on the observa-
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tions of Lord Justice Diplock in Council of Civil Service
Unions v. Minister for the Civil Service, [1984] 2 AER 935
at 950, where the learned Lord Justice classified 8 grounds
subject to control of judicial review, namely, illegali-
ty, irrationality and procedural impropriety. Learned
Addl. Solicitor General is right, in our opinion, in that we
cannot really substitute a decision reached by a fair proce-
dure keeping the policy of the respondent in mind by a
different decision only on the ground that the decision
which appeals to the court, is a better one. Reliance was
placed on the observations of Lord Chancellor Lord Hailsham
in Chief Constable of the North Wales Police v. Evans,
[1982] 1 WLR 1155. In our opinion, it is necessary to remem-
ber that judicial review, in the words of Lord Brightman in
that case, is not concerned with the decision, but with the
decision making process. As observed by Prof. Dias in ’Juri-
sprudence’ (5th Edn. at p. 91) unless the restriction on the
power of the court is observed, the court would under the
guise of preventing the abuse of power, be itself guilty of
usurping power which does not belong to it. It is therefore
necessary to bear in mind the ways and means by which the
court can control or supervise the judicial action of any
authority which is subject to judicial control. In this
connection, it is necessary to refer to the observations of
Lord Justice Templeman in re Preston v. I.R.C., [1985] 2 WLR
836 and the observations of Lord Justice May in Regina v.
Chief Constable of the Merseyside Police, [1986] 2 WLR 144.
It is not within the purview of a court to substitute a
decision taken by a constituted authority simply because the
decision sought to be substituted is a better one. Learned
Addl. Solicitor General, in our opinion, is therefore right
in contending that the appellant should not be allowed to
contend that the decision of the Bombay Port Trust to allot
the plot to the major holder is not one of the feasible
means of achieving the objectives of development. It was not
open to the appellant to contend
766
that the Bombay Port Trust could have framed a better policy
in a way in which both the goals, development and non-evic-
tion of existing tenants, could have been achieved.
Furthermore, we have to bear in mind that joint-allot-
ment for the purpose of development pre-supposes coopera-
tion. In this connection, it is necessary to remember that
Mr Singhvi, appearing for the intervener, in C.M.P. No.
19447/88 indicated that the joint development was not possi-
ble because they were not willing to take it jointly. He
also pointed out that the appellant was aware that the
decision to allot this plot in his client’s favour had been
taken as early as 1973 and that it was within the knowledge
of the present appellant that they had also put up construc-
tions thereon at substantial cost. He urged that, though it
is true that the lease in favour of the petitioner was
terminated and the suit filed only in 1977, the fact is that
the appellant took no step earlier to have the allotment in
favour of his clients cancelled. This, he has urged, is also
a ground for non-interference at this stage. We are inclined
to agree.
Our attention was drawn to the fact that Dhanji Mavji had
held 80% of the re-constituted plot. The plot 5B had been
developed inasmuch as a building of ground plus 5 upper
storeys had been erected as was the maximum possible not-
withstanding the fact that the appellant had not yet surren-
dered their portion. As against this, on plot 5A where the
Bombay Port Trust offered a joint tenancy to the three
occupants, since there was no occupant holding a major
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portion thereof, there had been no development whatsoever
and in fact there has been litigation going on to remove all
the 3 occupants. In that view of the matter the Bombay Port
Trust, perhaps, was justified in coming to the conclusion
that the only possible way to develop the properties of the
Bombay Port Trust in compliance with the Town Planning
Scheme by allotting plots to holders of major portions
thereon. Such a decision cannot be faulted.
The Town Planning Scheme came into force in 1957. Plot 5
was divided into Plot 5A and 5B in 1963. The Town Planning
Act had been enacted to meet the requirements for planning,
development and use of land. Having regard to Sections 2(7),
2(13), 2(17), 2(18), 2(21), 2(22), 2(27), 13, 14, 22, 59,
65, 88, 89, & 159, it appears that one of the purposes was
the extinguishment of the tenancies of the Port Trust, and
as such tenants of plot 5A and 5B were liable to eviction.
The Port Trust continued them as monthly tenants for many
years before formulating a policy to develop the plots by
offering them to major holders. In pursuance to that Scheme,
regulations have been flamed under Section 169 of the Town
Planning Act. Our attention was placed on some of these
regulations. It is contended that it was viewed that
767
plot of land of less than 500 sq. yards out of the Town
Planning Scheme cannot be allotted. In that view of the
matter it is a possible view and we need not go beyond this.
In that context even though we reiterate that the Port
Trust must act reasonably and in adherence to a policy which
serves the public purpose on the assumption of which exemp-
tion was granted to it from the Rent Act, while dealing with
the tenants or occupants, it cannot be said that the Port
Trust has acted improperly. In that light the decision of
the High Court must be affirmed though on a different empha-
sis.
In the view that we have taken, it is not necessary for
us to go into the question whether under Art. 227 of the
Constitution, it was open to the High Court to go into the
question of constitutional validity for which reliance was
placed on the observations of this Court in Venkatlal G.
Pittie & Anr. v. Bright Bros (P) Ltd. [1987] 3 SCC 558 at
569 and Khalil Ahmed Bashir Ahmed v. Tufelhussein Samasbhai
Sarangpurwala, [1988] 1 SCC 155. Reliance was also placed by
Mr Chinai on the observations of the House of Lords in
England in Wandsworth London Borough Council v. Winder,
[1985] AC 461 at 505-507. In that case the local authority
was under the agreement itself, required to fix rent under
the statutory provision. It committed a breach thereof.
Hence, it was held there that that was a breach of a con-
tractual obligation enforceable under the Private Law and,
therefore, justiciable.
As we look upon the facts of this case, there was an
implied obligation in respect of dealings with the
tenants/occupants of the Port Trust authority to act in
public interest/purpose- That requirement is fulfilled if it
is demonstrated that the Port Trust Authorities have acted
in pursuance of a policy which is referable to public pur-
pose. Once that norm is established whether that policy is
the best policy or whether another policy was possible, is
not relevant for consideration. It is, therefore, not neces-
sary for our present purposes to dwell on the question
whether the obligation of the Port Trust Authorities to act
in pursuance of a public purpose was of public law purpose
or a private law purpose. Under the Constitutional scheme of
this country the Port Trust Authorities were required by
relevant law to act in pursuance of public purpose. We are
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satisfied that they have proceeded to so act.
We must record that learned Addl. Solicitor General
made a statement that irrespective of the result of this
appeal, the Port Trust Authorities of Bombay, will consider
reasonably granting of an alternative site to the appellant,
if such an application is made to them.
In the view that we have taken this appeal must, there-
fore, fail and is accordingly dismissed. The C.M.P. No.
19447/88 is disposed of
768
by directing that the applicants are permitted to intervene
and their submissions have been considered. In the facts and
the circumstances of the case, the parties will pay and bear
their own costs. All interim orders are vacated.
RANGANATHAN, J. I respectfully agree with the conclusion
of my learned brother Sabyasachi Mukharji, J. However, I
would like to add a word of reservation.
2. The principal argument which Shri Chinai addressed to
us at great length on behalf of appellant was that the
relationship between the appellant and the Port Trust was
not purely contractual and in the realm of private law. He
urged that the Port Trust, having been granted an exemption
from the provisions of the rent control acts on certain
public grounds, is not at liberty to take action to evict
the petitioner without being accountable therefore and that
its action is in the realm of public law and hence liable to
judicial review. He submitted that the decision of this
Court in the Escorts case, 1985-3 Suppl. SCR 909, is not
inconsistent with this contention.
3. The learned Additional Solicitor General contested
the above proposition on principle and refuted the sugges-
tion that the Port Trust was under any obligation to show
that its action was bona fide, and not arbitrary or unrea-
sonable but could be justified on grounds of public inter-
est. He submitted that on the facts of the present case, the
state of the pleadings at the various stages and its own
findings on the facts, the High Court was not called upon to
go into the larger issue at all and that its observations in
this regard were purely casual. He submitted, however, that,
without prejudice to these contentions, he would be willing
to satisfy us on the facts of the present case that the
action of the Port Trust was bona fide and based on policy
and reason. He addressed us on this aspect and I agree, with
respect, with the conclusion of my learned brother
Sabyasachi Mukharji, J. that, on the facts of the present
case, the action of the Port Trust was not improper and that
there are no grounds to interfere with the same.
4. In view of the above conclusion on the merits and in
view of my opinion that we have not heard full arguments on
both sides on the general propositions contended for by Shri
Chinai as to the parameters and scope of judicial review in
such matters which are issues of far-reaching importance, I
would like to refrain from expressing any final and conclud-
ed opinion on these aspects though, prima facie, I am also
inclined to think, as held by my learned brother that there
is considerable force in them.
R.S.S. Appeal dismissed.
769