Moti Ram vs Suraj Bhan and Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 524 of 1959

Decision Date: 3 February, 1960

Coram: P.B. Gajendragadkar, K.C. Das Gupta

In this matter, the Supreme Court of India delivered its judgment on 3 February 1960. The case was styled Moti Ram versus Suraj Bhan and Others. The opinion was authored by Justice P. B. Gajendragadkar, who was joined by Justices K. C. Das Gupta, Subbarao, and K. Gupta. The decision was recorded in the official law reports as 1960 AIR 655 and 1960 SCR (2) 896, and it later appeared in several citation references including RF 1963 SC 499, D 1968 SC 1336, RF 1984 SC 1164, and RF 1988 SC 1060. The dispute concerned the application of the Punjab Urban Rent Restriction Act, 1949 (East Punjab) and its amendment enacted by the East Punjab Urban Rent Restriction (Amendment) Act, 1956 (Punjab 29 of 1956). The original statute permitted a landlord to seek eviction of a tenant for reconstruction or replacement of a building under section 13(3)(a)(iii). Section 15 of the Act allowed an appeal against a Rent Controller’s order, and subsection 15(4) declared that, subject to the appellate decision, the controller’s order would become final. The amendment, which became operative on 24 September 1956, altered section 13(3)(a)(iii) to extend eviction powers to cases where the landlord required demolition for government‑directed development, improvement trusts, or where the premises were unsafe. It also inserted a new subsection 15(5) granting the High Court the authority to call for and examine records of any order made under the Act to determine its legality or propriety.

The factual backdrop began on 28 August 1956 when the respondent filed an application with the Rent Controller seeking eviction of the appellant from a shop, invoking section 13(3)(a)(iii) on the basis that the shop was needed for reconstruction. At that time the unamended provision allowed eviction only for reconstruction, replacement, or erection of another building. The Rent Controller rejected the application, and the appellant’s subsequent appeal to the statutory appellate authority also failed. Undeterred, the respondent approached the High Court by way of a revision petition. The High Court examined the case and issued a decree of eviction, holding that the shop was required for reconstruction within the meaning of the original, unamended section 13(3)(a)(iii). The appellant argued that the amendment introducing subsection 15(5) – which permitted revision before the High Court – should not apply because the eviction proceedings were initiated under the law as it stood on the date of the original application. Consequently, the appellant contended that the respondent was not entitled to the decree issued by the High Court.

The Court observed that the matter before it did not fall within the ambit of the amended provision of section 13(3)(a) of the Act, because the amendment was not made retrospective and therefore could not be applied to the facts of the present dispute. It held that the revision petition filed before the High Court was competent and that the High Court possessed the jurisdiction to intervene in the proceedings. The Court explained that a decision of an appellate authority acquires finality only after the decision is rendered and not before that point. In the instant case, when the appellate authority issued its order, the amending provision had already come into force, and consequently the appellate order could not claim finality under the earlier version of the statute. The Court relied upon the principles laid down in Indira Sohanlal v. Custodian of Evacuee Property Delhi [1955] 2 S.C.R. III7, and further referred to Delhi Cloth and General Mills Co. Ltd. v. Income‑Tax Commissioner (1924) L.L.R. 9 Lah. 284, Colonial Sugar Refining Co. Ltd. v. Irving (1905) A.C. 369, and Garikapatti Veeraya v. N. Subbiah Choudhury [1957] S.C.R. 488. The Court further held that the amended clause 13(3)(a)(iii) dealt with a substantive change affecting the landlord’s substantive rights, and that, absent an express or necessary implication of retrospectivity, such an amendment operated only prospectively. This view was endorsed by citing Ram Parshad Halwai, Ludhiana v. Mukhtiay Chand, I.L.R. 1958 Pun. 1553.

The judgment concerned Civil Appeal No. 524 of 1959, which was entertained by special leave from the Punjab High Court’s order dated 7 August 1959 in Civil Revision No. 613 of 1958, itself arising from the District Judge, Gurgaon’s order dated 19 August 1958 in Civil Appeal No. 14/14 of 1958. Counsel for the appellant and counsel for respondent No. 1 appeared before the Court, which delivered its opinion on 3 February 1960. The appeal arose out of ejectment proceedings instituted by Suraj Bhan, identified as respondent 1, against Moti Ram, the appellant, concerning a shop located in the urban area of Gurgaon. The appellant had occupied the shop as a tenant for more than twenty years at a monthly rent of Rs. 20. Respondent 1 had purchased the shop on 15 June 1956 and subsequently filed an application with the Rent Controller seeking the appellant’s eviction under section 13 of the East Punjab Urban Rent Restriction Act, 1949. The application relied on four grounds: the appellant’s alleged habitual default and rent arrears; the claim that the return of the purchase price was inadequate; respondent 1’s fear that the premises might be sold and the appellant could be dispossessed; and the assertion that respondent 1 required the shop for his personal use, including the intention to reconstruct it. The Court’s analysis focused on the applicability of the amended statutory provision and the appropriate jurisdiction of the High Court to entertain the revision, ultimately concluding that the amendment was prospective and that the High Court was correctly empowered to interfere.

In this case the respondent asserted that he intended to reconstruct the shop, for which he had obtained the necessary sanction from the Municipal Committee of Gurgaon and whose plan had been duly approved. The appellant opposed this claim, contending that all the pleas advanced by the respondent were either incorrect or invalid. The Rent Controller examined the matter and upheld the appellant’s position, rejecting every plea presented by the respondent. Concerning the specific plea regarding reconstruction, the Rent Controller concluded that the evidence produced by the respondent was fabricated as a camouflage and that the plea was a false pretext designed to secure the eviction of the appellant. Consequently, the application filed by the respondent for evicting the appellant was dismissed. The respondent then appealed this decision to the District Court. The appellate court affirmed all the findings of the Rent Controller, and the appeal was consequently dismissed. Regarding the respondent’s final plea about rebuilding the shop, the appellate court observed that the respondent had indeed obtained the plan’s approval and the municipal sanction to reconstruct the building, apparently to create a basis for evicting the appellant. Unsatisfied, the respondent instituted a revisional application before the High Court of Punjab at Chandigarh. The High Court upheld the findings of the lower courts on the first three pleas raised by the respondent, but it accepted the last plea, thereby allowing the revisional application and granting a decree for the eviction of the appellant. The appellant now challenges that decree before this Court. Before addressing the arguments presented by counsel for the appellant, it is necessary to note a material fact: the application for ejectment was filed on 28 August 1956. The appellant filed his written statement on 14 November 1956, after the relevant Act had been amended by Amending Act 29 of 1956 on 24 September 1956. The present appeal is concerned with the amendments made to sections 13 and 15 of the Act. Section 13(1) provides, inter alia, that a tenant in possession of a building shall not be evicted except in accordance with the provisions of that section or pursuant to an order made under section 13 of the Punjab Urban Rent Restriction Act, 1947, as subsequently amended. Section 13(2) outlines the procedure for a landlord to apply for a direction to evict a tenant and sets out the conditions that must be satisfied for a decree of ejectment to be granted in favour of the landlord; these conditions are not the focus of the present appeal.

In this appeal, the court considered the effect of the amendment made to Section 13(3)(a)(iii) of the Act. The provision as it existed on the date of the respondent’s application allowed a landlord to apply to the Controller for an order directing the tenant to vacate the premises when the landlord required the building for reconstruction, replacement by another building, or for the erection of other buildings. The amending Act substantially altered that language. After amendment, Section 13(3)(a)(iii) read: “In the case of any building or rented land, if he requires it to carry out any building work at the instance of the Government or Local Authority or any Improvement Trust under some improvement or development scheme or it has become unsafe or unfit for human habitation.” One issue before the court was whether this newly worded provision applied to the present proceedings.

The court also examined Section 15, sub‑section (4). Under the version of Section 15(4) that was in force when the application was filed, the decision of the appellate authority, and consequently the order of the Controller, was final and could not be challenged in any court of law, whether by suit or by any other proceeding of appeal or revision. The amendment to the Act deleted the concluding clause of sub‑section (4) and inserted the words “except as provided in sub‑section (5) of this section.” Sub‑section (5), which was added by the amendment, provided: “The High Court may, at any time, on the application of any aggrieved party or on its own motion, call for and examine the records relating to any order passed or proceedings taken under this Act for the purpose of satisfying itself as to the legality or propriety of such order or proceedings and may pass such order in relation thereto as it may deem fit.” On behalf of the appellant, counsel argued that the amended provision permitting a revisional application to the High Court was not applicable to the present proceedings.

The court then addressed the question of the competence of a revisional application. The appellant contended that, according to Section 15, sub‑section (4) as it stood at the time the present proceeding began, the appellate authority’s decision was final and could not be questioned in suit or any other proceeding by way of appeal or revision; in other words, a revisional application against the appellate decision was expressly excluded. The appellant maintained that if, at the commencement of the present proceedings, the law regarded the appellate decision as final, the later amendment that introduced a right of revision could not alter that legal position. Consequently, the appellant claimed that it was entitled, as a party to the proceedings, to rely on the finality of the appellate order for the duration of the case.

With reference to the present proceedings, the argument was presented that the provision for a revisional application introduced by the amending Act could not operate retrospectively to affect cases that were already pending when that amendment was enacted. The appellant relied on this contention and sought to show that the amendment should not apply to the suit currently before the Court. The Court, however, indicated that this position had already been settled by its own decision in Indira Sohanlal v. Custodian of Evacuee Property, Delhi (1). In that precedent, the appellant was a displaced individual from Lahore who owned a house there and had arranged an exchange of that house for certain lands situated in a village in the State of Delhi belonging to an evacuee identified as “M.” On 23 February 1948, the appellant filed an application before the Additional Custodian of Evacuee Property (Rural), Delhi, seeking confirmation of the exchange under section 5‑A of the East Punjab Evacuees’ (Administration of Property) Act, 1947, as amended in 1948, and directed the application to the State of Delhi. Section 5 of the same Act provided that any order made by the Custodian or Additional Custodian could not be appealed or revised and that such an order would become final and conclusive. Nevertheless, the pending application was not disposed of until 20 March 1952, when the Additional Custodian issued an order confirming the exchange. In the interim, the statutory scheme had been altered; Central Act XXXI of 1950 was subsequently enacted, and among its provisions section 27 conferred revisional powers on the Custodian‑General. Exercising those revisional powers, the Custodian‑General, after hearing the parties, set aside the confirmation order and directed that the matter be reconsidered by the Custodian. The appellant contended before this Court that the original confirmation order could not be subject to revision because, at the time the 1948 application was filed, the appellant had acquired a vested right under section 5‑A, accompanied by the attributes of finality and conclusiveness provided by section 5‑B. The appellant further argued that the later repeal and reenactment of the relevant provisions could not affect that right, relying on section 6 of the General Clauses Act and section 58(3) of Act XXXI of 1950. The Court rejected that contention and upheld the revisional order that the appellant had challenged. It clarified that its decision rested on two bases. The first basis concerned the interpretation of section 6 of the General Clauses Act in conjunction with section 58(3) of Act XXXI of 1950. The second, and more fundamental, basis was a principle of general importance: the Court held that the finality prescribed by section 5‑B only became operative after the order in question was actually made, not before its issuance. Consequently, any finality that might be ascribed to the earlier provision could not be claimed before the order was formally passed, and the amendment introducing revisional powers was applicable to the order when it was finally rendered.

Justice Jagannadhadas, speaking for a unanimous Court, observed that the right in question could not be described as a vested or accrued right. He explained that such a right did not come into existence until a final determination was actually made, and only at that point did the right to finality become an existing right, citing the decision in Delhi Cloth and General Mills Co. Ltd. v. Income Tax Commissioner. Consequently, the Court held that the principle laid down in Colonial Sugar Refining Co. Ltd. v. Irving could not be applied to support the present case. In light of this observation, the Court found it impossible to accept Mr. Bindra’s argument that the appellant could invoke the finality of the appellate decision before that decision had been formally recorded. The Court noted that if finality could not be claimed at an earlier stage, then when the appellate authority finally decided the matter, the amending statutory provision had already come into force, and the appellate order could not rely on the earlier provision for finality. The Court also pointed out that the principle articulated in Indira Sohanlal had been cited in Garikapatti Veeraya v. N. Subbiah Choudhury, and that the unresolved question from the earlier case had subsequently been considered and decided in that later judgment. While counsel for the respondent suggested that the passage from Indira Sohanlal had been cited with approval, the Court affirmed that it was bound by its own decision in that case, which clearly opposed the appellant’s contention that the amended provision concerning the High Court’s revisional jurisdiction was inapplicable. Turning to the appellant’s other contention, the Court examined the amended provision of section 13(3)(a)(iii). It acknowledged that if this amendment were applicable, the respondent would not be able to obtain an order of ejectment. The amendment, the Court observed, imposed strict limitations on a landlord’s right to recover possession of any building or rented land. The Court then considered whether the amendment operated retrospectively. It concluded that the amendment was not procedural but substantive, affecting the landlord’s substantive rights, and therefore could not be characterised as a procedural change. The Court recognised that the legislation intended to provide relief to tenants, although that observation did not affect the analysis of the amendment’s retrospective operation.

In this case, the Court observed that although the principle of liberal construction of statutes might ordinarily be applied, it was neither material nor relevant to the central question of whether the newly amended provision operated retrospectively. The Court reiterated the well‑settled rule that, when a legislative amendment interferes with vested rights, the amendment is to be given prospective effect unless the amendment itself expressly declares a retrospective operation or such retrospective operation is necessarily implied. The Court found that the amending Act did not contain any clause making the relevant provision retrospective, and there was no justification to accept an argument that retrospective operation could be inferred as a necessary implication. The Court added that counsel for the respondent had not contended that the original provision in section 13(1), which the Court recognized as retrospective, should be used to interpret the amended provision in section 13(3)(a)(iii); such a contention would be wholly untenable. The Court then considered the consequences that would follow if the new provision were held to be retrospective. It noted that, under that assumption, every pending action in which a landlord had sought possession of a building let to a tenant on the basis of the pre‑amendment version of section 13(3)(a)(iii) would automatically fail, because those actions would no longer satisfy the tests introduced by the amendment. The Court held that, had the Legislature intended to impose such a drastic effect, it would have done so by inserting explicit language to that effect, as is the usual practice when retrospective operation of substantive law is intended. Consequently, the Court was satisfied that the amended section 13(3)(a)(iii) could not be applied to proceedings that were already pending before either the Rent Controller or the appellate authority at the time the amendment was enacted. The Court also observed that, when the revision application was argued before the High Court, the appellant admitted that the law in force before the amendment governed the case. Although counsel for the respondent was permitted to raise the issue for consideration, the Court found no substance in the argument. The Court further noted that the Punjab High Court, in Ram Parshad Halwai Ludhiana v. Mukhtiar Chand, had reached the same conclusion regarding the effect of the amendment to section 13(3)(a)(iii). Finally, the Court addressed another point raised by counsel for the respondent, namely that the High Court had erred in its own determination of whether the requirements of section 13(3)(a)(iii) had been satisfied. The Court reiterated that both the Rent Controller and the appellate authority had found that the respondent’s claim—that the shop was needed for reconstruction—was not made in good faith, citing the decision in I.L.R. (1958) Punjab 1553.

In this case the High Court set aside the earlier finding and Mr Bindra challenged whether that reversal was correct or proper. The Court explained that the revisional power granted to the High Court by section 15(5) of the Rent Control Act is broader than the power given by section 115 of the Code of Civil Procedure, because section 15(5) permits the High Court to examine both the legality and the propriety of any order placed before it for revision. Accordingly the High Court was entitled to review the propriety and the legality of the finding made by the Rent Controller and the appellate authority concerning the landlord’s requirement under section 13(3)(a)(iii). The High Court accepted the appellant’s contention that the landlord’s requirement must be bona‑fide and observed that there was no legal evidence on the record showing that the requirement was not bona‑fide. It was clear that the tests applied by both the Rent Controller and the appellate authority were based on the assumption that the amended provision of section 13(3)(a)(iii) applied to the present proceedings. If that assumption were not true, then it would have been irrelevant for them to inquire whether the premises had become unsafe or unfit for human habitation, as they had done. All of the material evidence placed before the High Court supported the view that the landlord’s claim under section 13(3)(a)(iii) was made in good faith. Soon after acquiring the house the landlord decided to reconstruct the building, informed the municipality of his plan, and obtained the municipal sanction for the reconstruction. On the basis of these facts it is difficult to accept an argument that the landlord was acting in bad faith. The High Court therefore held that the landlord’s requirement was bona‑fide, and the Court found no merit in the submission that the High Court acted irregularly or improperly in reaching that view. Accordingly the appeal was dismissed and the appellant was ordered to pay costs.