Tuesday 17 September 2019

Notes on Malpe Vishwanath Acharya's Judgment

Malpe Vishwanath Acharya and ors. Vs. State of Maharashtra (AIR 1998 SC page 602)

The judgment leading to enactment of the MRC Act :-
The judgment of the Hon'ble Supreme Court11 led the
enactment of the MRC Act . “Lex injusta non est lex” (unjust laws
are not laws) was the legal maxim which was contended by the
landlords in their Appeals and the connected Writ Petitions, in
which, the validity of the relevant provisions the BRC Act, insofar
as it provides that landlords cannot charge rent in excess of the
standard rent was challenged. The Appellants were landlords or
their representative of different premises in Mumbai which had
been given on rent to various tenants. They filed Writ Petitions in

the Hon'ble High Court challenging constitutional validity of
Section 5(10)(B), Section 11(1) and Section 12(3) of the BRC Act
inter alia on the ground that the said provisions pertaining to
standard rent were ultra vires to Articles 14, 19 & 21 of the
Constitution. The main challenge to the said provisions was on the
ground that restrictions on the rights of the landlord to increase the
rent which has been frozen as on 1st September,1940 or at the time
of first letting are no longer a reasonable restriction on the right of
the landlord to increase the rates.

The Hon'ble Supreme Court observed that in the BRC Act, the
“standard rent” is the rent as on 1st September, 1940 or the first
rent of the premises which was let out thereafter. The pegging down of rent, coupled with the inability of the landlord to evict the
tenants, has given rise to unlawful tenancies. In the statement of
objects and reasons annexed to the L.A. Bill No. 79 of 1986
introduced in the Maharashtra Legislature providing for
amendment to the BRC Act with regard to Clause- 3 it was, inter
alia, stated as follows:
" The freezing of standard rent prevailing on the 1st
September, 1940 has deprived the landlords of getting
reasonable and adequate return to undertake
maintenance and repairs to the old buildings. Despite the
penal provisions in the Act for charging any premium from
a tenant, such freezing of rent results in charging 'pugree'
or deposit or similar illicit payment which are widely
prevalent. The construction of new tenements on rental

basis has considerably caused with the result that low and
middle income groups are not getting premises on
rent............... "
The Hon'ble Supreme Court further observed that the
Legislature itself has taken notice of the fact that pugree system
has become prevalent in Mumbai because of the Rent Restriction
Act. This Court was also asked to take judicial notice of the fact that
in view of the unreasonably low rents which are being received by
the landlords, recourse is being taken to other methods to seek
redress. These methods, which are adopted are outside the fore
corners of the Law and are slowly giving rise to a state of
lawlessness where, it is feared, the courts may become irrelevant in
deciding disputes between the landlords and tenants.
The Hon'ble Supreme Court further observed that in order to
provide fair wage to the salaried employees the government
provides for payment of dearness and other allowances from time to
time. Surprisingly this principle is lost sight of while providing for
increase in the standard rent-the increase made even in 1987 are
not adequate, fair or just and the provisions continue to be arbitrary
in today's context.
The Hon'ble Supreme Court concluded that taking all the
facts and circumstances into consideration we have no doubt that
the existing provisions of the BRC Act relating to the determination
and fixation of the standard rent can no longer be considered to be
reasonable. The said provisions would have been struck down as
having now become unreasonable and arbitrary but we think it is
not necessary to strike down the same in view of the fact that the

present extended period of the BRC Act comes to an end on 31st
March, 1998. The government's thinking reflected in various
documents itself shows that the existing provisions have now
become unreasonable and, therefore, require reconsideration.
The Hon'ble Supreme Court accordingly disposed of appeals
without granting any immediate relief but held that the decision of
the High Court upholding validity of the impugned provisions
relating to standard rent was not correct. The Hon'ble Supreme
Court however, refrained from striking down the said provision as
the then existing Act was to elapsed on 31.3.1998 and hoped that
new Rent Control Act will be enacted with effect from 1st April,
1998, keeping in view, the observations made in this judgment in so
far as fixation of standard rent is concerned. It was, however, made
clear that any further extension of the existing provisions without
bringing them in line with the views expressed in this judgment,
would be invalid as being arbitrary and violative of Article-14 of the
Constitution and therefore, of no consequence. Consequently, in the
light of what is observed in this judgment the Maharashtra
Legislature has enacted the MRC Act. The MRC Act is basically a
social legislation and it reflects the change in social scenario in
between the old BRC Act and the new MRC Act. There were
number of changes already made in the BRC Act from time to time
as per the social requirement. Further changes have been made in
new MRC Act.

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