judgement:
Civil Appeal No. 1 1 37 of 1981 .
From the Award dated 22nd December, 1978 of the 9th Industrial Tribunal, West Bengal in Industrial Case No. X 7/74 (G.O. No. 8231 IR IR IOL 3 (K)/73.
R.K. Garg, P.K. Chakravarti and A K. Ganguli for the Appellants.
G.B. Pai, section Chatterjee, Altaf Ahmed and A K Panda for the Respondents.
The Judgment of the Court was delivered by DESAI, J.
In exercise of the power conferred by Sec. 10 of the , the Government of the State of West Bengal as an appropriate Government referred the following dispute to the Ninth Industrial Tribunal, West Bengal for adjudication.
The reference reads as under: "Whether the termination of services of Shri Manas Kumar Mukherjee is justified ? To what relief, if any is he entitled ?" Hindustan Steel Ltd. ( 'Employer ' for short) dismissed Manas Kumar Mukherjee( 'Workman ' for short) without holding any inquiry 431 and without giving any opportunity to the workman to question or A correct the allegation of misconduct levelled against him and in violation of principles of natural justice.
The employer tried to sustain its action by invoking its powers under Standing Order 32 of the certified Standing Orders of the Hindustan Steel Ltd. S.O. 32 reads as under: B "32.
Special Procedure in certain cases.
Where a workman has been convicted for a criminal offence in a Court of Law or where to General Manager is satisfied, for reasons to be recorded in writing, that it is inexpedient or against the interests of security to continue to employ the workman, the workman may be removed or dismissed from service without following the procedure laid down in Standing Order 31.
" S.O. 31 prescribed detailed procedure for dealing with cases of misconduct.
Briefly stated, the procedure prescribed in S.O. 31 for imposing major penalty is that the employer has to draw up a charge sheet and give an opportunity to the delinquent workman to make his representation within seven days.
If the allegations are controverted, an enquiry has to be held by an officer to be nominated by the management and in such an enquiry reasonable opportunity of explaining and defending the alleged misconduct must be given to the workman.
The delinquent workman may also be given the assistance of a fellow employee.
The procedure also permits suspension of the delinquent workman pending enquiry.
At the end of the enquiry.
if the charges are held proved, and it is provisionally decided to impose major penalty, the delinquent workman has to be afforded a further resalable opportunity to represent why the penalty should not be imposed on him.
According to the employer it can dispense with such an enquiry in exercise of the power conferred by S.O. 32.
The scope and ambit of S.O. 32, will be presently examined.
The Tribunal held that as the employer dispensed with the disciplinary enquiry in exercise of the power conferred by S.O. 32, it cannot be said that dismissal from service was not justified.
The Tribunal observed that even if there were allegations of misconduct, the employer was quite competent to pass an order of removal from service without holding any enquiry in view of the provision con 432 tained in S.O. 32 The Tribunal concluded that the employer accused the workman of committing misconduct and proceeded to pass the order of removal from service without holding any enquiry into the allegations of misconduct, it cannot be said to be a colorable exercise of power and the workman would not be entitled to any relief.
The Tribunal accordingly rejected the reference.
Hence this appeal by special leave.
The only question that must engage our attention is what is the scope and ambit of S.O 32.
It has already been extracted.
Upon its true construction the standing Order does not provide that for reasons to be recorded in writing, an enquiry into misconduct can be dispensed with.
S.O. 32 clearly confers power upon the General Manager that on his being satisfied that it is inexpedient or against the interest of security to continue to employ the workman, then for reasons to be recorded in writing the workman may be removed or dismissed from service without following the procedure laid down in Standing Order 31.
This archaic standing order reminiscent of the days of hire and fire is relied upon by a public sector undertaking to sustain an utterly unsustainable order and to justify an action taken in violation of the principles of natural justice, an action which has the effect of denying livelihood and casting a stigma.
One can appreciate that in a given situation, and enquiry into misconduct may be counter productive.
Constitution itself contemplates such a situation when it enumerates siltations in which a punishment of dismissal, removal or reduction in rank can be imposed without holding a disciplinary enquiry.
Let it be extracted: "311.
Dismissal, removal or reduction in rank of persons employed in civil capacities under the Union or a State ( 1) . . . . . . (2) No such person as aforesaid/shall be dismissed or removed or reduced in rank except after an inquiry in which he has been informed of the charges against him and given a reasonable opportunity of being heard in respect of those charges: . . . . . . . . . 433 Provided further that this clause shall not apply A (a) where a person is dismissed or removed or reduced in rank on the ground ' of conduct which has led to his conviction on a criminal charge: or (b) where the authority empowered to dismiss or remove a person or to reduce him in rank is satisfied that for some reason, to be recorded by that authority in writing, it is not reasonably practicable to hold such inquiry; or (c) where the President or the Governor as the case may be, is satisfied that in the interest of the security of the State it is not expedient to hold such inquiry.
" A bare perusal of the situations and contingencies in which a disciplinary enquiry affording a reasonable opportunity of being heard before imposing the enumerated penalty can be dispensed with will clearly show that the power is not given to dismiss remove or reduce in rank the delinquent worker but the power conferred by the afore mentioned provision is to dispense with an enquiry before imposing major penalty.
Sub art (3) of Art 311 provides that 'if, in respect of any such person as aforesaid, a question arises whether it is reasonably practicable to hold such inquiry as is referred to in clause (2).
the decision thereon of the authority empowered to dismiss or remove such person or to reduce him in rank shall be final. ' Now the three situations contemplated by the provision arc such that holding of an enquiry would be counter productive.
Where the penalty of dismissal, removal or reduction in rank is to be imposed on the ground of a conduct which has led to his conviction on a criminal charge, obviously, the enquiry will be superfluous or a repeat performance because a judicial tribunal has held the charges proved.
But where the authority empowered to impose the penalty is satisfied for reasons to be recorded by it in writing to dispense with an enquiry, the reasons so recorded must ex facie show that it was not reasonably practicable to hold a disciplinary enquiry.
Similarly, where in the interest of the security of the State, the President or the Governor, as the case may be, is satisfied that it is not expedient to hold such enquiry, the same can be dispensed with.
In the last mentioned situation, the highest executive of the country, the President and the highest executive of State the Governor alone is entitled to dispense with the inquiry, if it is satisfied that in the interest of the security of the State, it is not 434 expedient to hold such enquiry Dispensing with the enquiry in the first and third situation does not present a difficulty because in the first situation there is a conviction by a criminal court and in the third situation, the highest executive in the Centre and the State is empowered to dispense with the enquiry.
It is in the second fact situation that one must evaluate the width of discretionary power to dispense with enquiry.
The appointing authority is invested with power to dispense with enquiry.
And in case of persons belonging to Class IV services, the appointing authority may be some one in the lower administrative hierarchy and such an officer is invested with such draconian powers.
Where such a power is conferred, on an authority entitled to impose penalty of dismissal or removal or reduction in rank, before it can dispense with the inquiry, it must be satisfied for reasons to be recorded in writing that it is not reasonably practicable to hold such an enquiry.
Power to dispense with enquiry is conferred for a purpose and to effectuate the purpose power can be exercised.
But power is hedged in with a condition of setting down reasons in writing why power is exercised.
Obviously therefore the reasons which would permit exercise of power must be such as would clearly spell out that the inquiry if held would be counter productive.
The duty to specify by reasons the satisfaction for holding that the inquiry was not reasonably practicable cannot be dispensed with.
The reasons must be germane to the issue and would be subject to a limited judicial review.
Undoubtedly Sub article
(3) of article 311 provides that the decision of the authority in this behalf is final.
This only mean that the Court cannot inquire into adequacy or sufficiency of reasons.
But if the reasons ex facie are not germane to the issue namely of dispensing with enquiry the Court in a petition for a writ of certiorari can always examine reasons ex facie and if they are not germane to the issue record a finding that the pre requisite for exercise of power having not been satisfied, the exercise of power was bad or Without jurisdiction.
If the court is satisfied that the reasons which prompted the concerned authority to record a finding that it was not reasonably practicable to hold the enquiry, obviously the satisfaction would be a veneer to dispense with the inquiry and the court may reject the same.
What is obligatory is to specify the reasons for the satisfaction of the authority that it was not reasonably practicable to hold such an inquiry.
Once the reasons are specified and are certainly subject to limited judicial review as in a writ for certiorari, the court would examine whether the reasons were germane to the issue or was merely a cloak, device or a pretence to dispense with the inquiry 435 and to impose the penalty.
Let it not be forgotten what is laid down A by a catena of decisions that where an order casts a stigma or affects livelihood before making the order, principles of natural justice namely a reasonable opportunity to present one 's case and controvert the adverse evidence must have full play Thus even where the Constitution permits dispensing with the inquiry, a safeguard is introduced that the concerned authority must specify reasons for its decision why it was not reasonably practicable to hold the inquiry.
Turning to S.O 32, it nowhere obligates the General Manager to record reasons for dispensing with the inquiry as prescribed by S.O. 31.
On the contrary, the language of S O. 32 enjoins a duty upon the General Manager to record reasons for his satisfaction why it was inexpedient or against the interest of the security of the State to continue to employ the workman.
Reasons for dispensing with the inquiry and reasons for not continuing to employ the workman stand wholly apart from each other.
A Standing Order which confers such arbitrary, uncanalised and drastic power to dismiss an employee by merely stating that it is inexpedient or against the interest of the security to continue to employ the workman are violative of the basic requirement of natural justice inasmuch as that the General Manager can impose penalty of such a drastic nature as to affect the livelihood and put a stigma on the character of the workman without recording reasons why disciplinary inquiry is dispensed with and what was the misconduct alleged against the employee.
It is time for such a public sector undertaking as Hindustan Steel Ltd to recast S.O. 32 and to bring it in tune with the philosophy of the Constitution failing which it being other authority and therefore a State under article 12 in an appropriate proceeding, the vires of S O. 32 will have to be examined.
It is not necessary to do so in the present case because even on the terms of S.O. 32, the order made by the General Manager is unsustainable.
The view we are taking gets some support from a decision of this Court.
In a slightly different situation, this Court in L. Michael & Anr.
vs M/s Johnston Pumps India Ltd ll) observed that discharge simplicitor on the ground of loss of confidence when questioned before a court of law on the ground that it was a colorable exercise of power or it is a mala fide action, the employer must disclose that he has acted in good faith and for good and objective reasons.
Mere ipse dixit of the employer in such a situation is of no significance.
Where a disciplinary enquiry is dispensed with on the specious plea that it was not reasonable practicable to hold one and a penalty (1) [1975] 3 S.C.R.489.
436 of dismissal or removal from service is imposed, if the same is challenged on the ground that it was a colorable exercise of power or mala fide action, the same situation would emerge and the employer must satisfy the Court the good and objective reasons showing both proof of misconduct and valid and objective reasons for dispensing with the enquiry.
In our opinion, when the decision of the employer to dispense with enquiry is questioned, the employer must be in a position to satisfy the Court that holding, of the enquiry will be either counter productive or may cause such ireparable and irreversible damage which in the facts and circumstances of the case need not be suffered.
This minimum requirement cannot and should not be dispensed with to control wide discretionary power and to guard against the drastic power to inflict such a heavy punishment as denial of livelihood and casting a stigma without giving the slightest opportunity to the employee to controvert the allegation and even without letting him know what is his misconduct.
Turning to the facts of the case, a bare perusal of the impugned order is both instructive and provides ample material for pointing out how the drastic power can be arbitrarily exercised without keeping in view the prerequisite to be satisfied for exercise of the power.
The order reads as under: " HINDUSTAN STEEL LIMITED DURGAPUR STEEL PLANT Ref.
No. Order/PF/MN 1215 24th August, 1970 O R D E R Having considered the matter fully, I am satisfied that it is no longer expedient to employ Shri Manas Mukharjee, Assistant, Order Department, Durgapur Steel Plant any further.
It is therefore ordered that Shri Manas Mukherjee be removed from the service of the Company with effect from 24.
8. 1970.
He is allowed/three months ' salary which he may collect from the cash section of the Finance Department by 26.8.1970.
Sd/ Maj. ,Gon.
Director Ineharge.
437 The expression 'no longer expedient ' as used in the order A clearly spells out the fact that some enquiry was started.
What prompted the General Manager to close the enquiry, one cannot gather from the order But our attention was invited to Ann.
R 2 which according to the respondents specifies the reasons recorded in writing for dispensing with the enquiry.
Briefly, in Ann.
R 2, it is stated that the authority concerned has looked into the secret .
report sent to him by Shri P S Rao Naidu, Planning & Progress Officer, Order Deptt.
and the comments of DGM thereon.
He has also stated that he has looked into the report received from Sr. AO (E) and the copy of the complaint lodged by Smt.
Gita Majumdar, wife of an employee in the plant with the police.
These recitals have been considered sufficient to dispense with tho enquiry.
If Smt.
Gita Majurndat did file a report with the police making accusation against the appellant, she would have to be examined in the criminal case.
She could have been more conveniently called before the enquiry officer, and the secret reports remain secret.
The reason for dispensing with the enquiry do not spell out what was the nature of the misconduct alleged to have been committed by the appellant and what prompted the General Manager to dispense with tho enquiry.
It is difficult to hold that the recitals of the order spell out some objective reasons and the reasons were germane to the question of dispensing with the enquiry Frankly speaking, we are not satisfied in this case that for valid, objective and relevant reasons, the enquiry was dispensed with.
An attempt was made to urge that some annexures to the counter affidavit would show certain complaints received against; the appellant.
We decline to look into them as they were not given to the appellant in the course of enquiry to meet or explain the same.
We consider them irrelevant at this stage, Once we hold that there was DO justification for dispensing with the enquiry, imposition of penalty of dismissal without disciplinary enquiry as contemplated by S O 31 would be illegal and invalid.
Two options are thereupon open to us.
One would be to permit the General Manager, if he is so minded to hold the disciplinary enquiry and come to his own decision and the second would be to remit the matter to the Labour Court to permit the respondent employer if it is entitled in law to substantiate the charges of misconduct before the Tribunal.
The order removing the appellant from service was passed way back on August 24, 1970.
More than 14 years have rolled by.
H 438 In such a situation, to start the whole thing de nevo would neither be of any help to the appellant nor would be conducive to the maintenance of discipline in the plant.
Undoubtedly, once a workman is removed from service a stigma attaches to him, and if the order is held to be not in consonance with the provisions of the relevant standing orders at any rate, the stigma has to be removed Having given the matter our anxious consideration, we dispose of the appeal as under The respondent shall recall and cancel the order dated August 24, 1970 removing the appellant from service and reinstate him and on the same day the appellant shall tender resignation of his post which shall be accepted by the respondent.
The respondent shall pay as and by way of back wages and future wages, a sum of Rs. 1,50,000 to the appellant within 2 months from today to be spread over from year to year commencing from the date of removal from service.
We give one more opportunity to the respondent to recast its Standing Order 32 within a period of two weeks to be brought at best in conformity with the second proviso to sub article
(2) of article 311 failing which its validity will be re examined by this Court.
The amount of Rs. 1, 50,000 directed to be paid to the appellant by the respondent comprises backwages, and all other allowances admissible to him from year to year from 1970 upto the end of 1984.
The amount shall be spread over from year to year.
If because of the lump sum payment as directed herein the respondent is required to deduct Income tax as enjoined by Sec. 192 of the y Income tax Act, 1961, the appellant shall be entitled to relief under Sec.
89 of the Income Tax Act, 1961.
For this purpose, the appellant shall make an application as required by Sec. 89 read with Rule 21A to the appropriate authority, who would consider granting of relief to the appellant under Sec.
89 of the Income tax Act.
The proceeding in this behalf shall be disposed of within a period of six months.
The appeal is disposed of in these terms with no order as to cost.
N.V.K. Appeal allowed.

summary:
Standing Order 31 of the 1st Respondent/Public Sector Undertaking prescribed a detailed procedure for dealing with cases of misconduct; and for imposing major penalty, the employer had to draw up a chargesheet and give an opportunity to the delinquent workman to make his representation within 7 days.
If the allegations were controverted, an enquiry had to be held by an officer to be nominated by the management and in such an enquiry reasonable opportunity of explaining and defending the alleged misconduct had to be given to the workman.
Suspension of the delinquent workman pending enquiry was also permitted.
At the end of the enquiry, if the charges were held proved, and it was provisionally decided to impose a major penalty, tho delinquent workman bad to be afforded a further reasonable opportunity to represent why the penalty should not be imposed on him.
Standing Order 32 provided for a special procedure in case of a workman was convicted for a criminal offence in a court of law or where the General Manager was satisfied for reasons to be recorded in writing that it was inexpedient or against the interests of security to continue to employ the workmen ', viz., the workman could be removed or dismissed from service without following the procedure laid down in Standing Order No. 31.
429 The appellant an Assistant in the 1st Respondent undertaking was A removed from service on the ground that it was no longer expedient to employ him.
The management dispensed with the departmental enquiry, after looking into the secret report of one of their officers that the appellant had misbehaved with the wife of an employee and that a complaint in respect thereof had been lodged with the police.
In the reference to the Industrial Tribunal, the Tribunal held that as the employer dispensed with the disciplinary enquiry in exercise of the power conferred by Standing Order 32, it could not be said that the dismissal from service was not justified, and that if there were allegations of misconduct, the employer was quite competent to pass an order of removal from service without holding any enquiry any in view of the provisions contained in Standing Order 32, and rejected the reference.
Allowing the appeal, by the employee to this Court, ^ HELD: 1.
The reasons for dispensing with the enquiry do not spell out what was the nature of the misconduct alleged to have been committed by the appellant and what prompted the General Manager to dispense with the enquiry.
[437D] 2.
As there was no justification for dispensing with the enquiry, imposition of penaly of dismissal without the disciplinary enquiry as contemplated by Standing Order 31 is illegal and invalid.
[437F] 3 The respondent shall recall and cancel the order dated August 24, 1970 removing the appellant from service and reinstate him and on the same day the appellant shall tender resignation of his post which shall be accepted by the respondent.
The respondent shall pay as and by way of back wages and future wages, a sum of Rs. l.5 lakhs to the appellant within 2 months which shall be spread over from year to year commencing from the date of removal from service.
The appellant shall be entitled to relief under Section 89 of the Income tax Act, 1961 for which he shall make the necessary application to the appropriate authority.
who would consider granting of relief.
[438C D;F] F 4.
Where an order casts a stigma or affects livelihood, before making the order, principles of natural justice in a reasonable opportunity to present one s case and controvert the adverse evidence must have full play.
Even he Constitution which permits dispensing with the inquiry under Article 311 (2) a safeguard is introduced that the concerned authority must specify reasons for its decision why it was not reasonably practicable to hold the inquiry.
[435 A B] 5.
(i) Standing Order 32, nowhere obligates the General Manager to record reasons for dispensing with the inquiry as prescribed by Standing Order 31.
On the contrary, the language of Standing Order 32 enjoins a duty upon the General Manager to record reasons for his satisfaction why it was inexpedient ar against the interest of the security of the State to continue to employ the workman.
Ressons for dispensing with the enquiry an reasons for not continuing to employ the workman stand, wholly apart from each other.
[435C D] 430 (ii) A Standing Order which confers such arbitrary.
uncanalised and drastic power to dismiss an employee by merely stating that it is inexpedient or against the interest of security to continue to employ the workman is violative of the basis c requirement of natural justice, as tho General Manger can impose penalty of such a drastic nature as to affect the livelihood and put a stigma on the character of the workman without recording reasons why disciplinary enquiry is dispensed with and, what was the misconduct 13 alleged against the employee.
[435D E] 6 When the decision of the employer to dispense with the enquiry is questioned, the employer must be in a position to satisfy the Court that holding of the enquiry will be either counter productive or may cause such irreparable and irreversible damage which in the facts and circumstances of the case need not be suffered This minimum requirement cannot and should not be dispensed with.
[436B C] L. Michael and Anr.
vs M/s. Johnston Pumps India Ltd ; , referred to.
It is time for the 1st respondent public sector undertaking to recast Standing Order 32, and to bring it in tune with the philosophy of the Constitution failing which the vires of the said standing Order would have to be examined in an appropriate proceeding.
[438D]


judgement:
NO. 893 and 967 of 1979 and W. P. No, 295 of 1980 Under Article 32 of the Constitution of India Dr. Y. section Chitale, and Vineet Kumar for the petitioners m W. P. NOS.
823 & 967 of 1979.
T. M. Sampat and P. N. Ramnalingam for the Petitioners in W. P. No. 295/80.
Anil Devan, K. section Ramamurthy, V. M. Tarkunde, M. K. D. Namboodry and section BalaKrishnan for the respondents in W. P. Nos. 893 & 967 of 1979 and W. P. No 295 of 1980.
The Judgment of the Court was delivered by TULZAPURKAR, J.
By these three writ petitions filed under article 32 of the Constitution the petitioners, who are tenants in a building belonging to respondent No. 2 Society, have challenged the validity of the exemption granted to all buildings owned by all Co operative Societies in the State of Tamil Nadu from all the provisions of the T. N. Act 18 of 1960 under sec.
29 thereof.
The facts giving rise to the aforesid challenge lie in a narrow compass.
The petitioners are tenants in different portions on the ground floor of the building bearing Door No. 188, Mount Road, Madras belonging to second respondent which is an Apex Society registered under the Tamil Nadu Co operative Societies Act, 1961.
It appears that the property was purchased in 1961 by the second respondent from its previous owners M/s. Mohammed Ibrahim and Company, and soon thereafter the second respondent applied to the State Government under sec.
29 of the Act and sought exemption for it from all the provisions of the Act But on hearing the objections raised by the petitioners and other tenants the application was rejected.
Respondent No 2 thereupon made two attempts to evict the petitioners from their respective premises.
The first was on the ground that the premises are required by it for its own occupation but at the end of a long drawn out litigation respondent No. 2 failed to obtain possession; the second was on the ground that it required the premises for demolition and new construction and it was during the tendency of this litigation that the State Government issued its Notification No. II (2) H.O. 6060/76 dated 21.11 1976 under sec.
29 419 of the Act whereby the State Government exempted the buildings A belonging to all Co operative Societies in the State of Tamil Nadu from all the provisions of the Act.
On the issuance of this Notification respondent No. 2 Withdrew its eviction petitions preferred on the ground of demolition and new construction and served notices upon the petitioners under sec.
106 of the Transfer of Property Act terminating their tenancies and filed civil suits against them in the City Civil Court, Madras for recovery of vacant possession of the premises in their respective occupation.
The petitioners have filed their written statements and suits are awaiting trial.
But since the protection available to them has been withdrawn the petitioners arc facing the imminent prospect of suffering eviction decrees against them and therefore, have approached this Court by means of these writ petitions challenging the constitutional validity of the Notification in question of the ground that the same is violative of article 14 of the Constitution and have obtained stay of further proceedings in the suits.
The impugned Notification dated 21st November, 1976 runs thus: "No. II (2) H.O. 6060176 In exercise of the powers conferred by Sec. 29 of the Tamil Nadu Buildings (Lease and Rent Control) Act 1960 (Tamil Nadu Act 18 of 1960), the Government of Tamil Nadu hereby exempts the.
buildings owned by all Government Undertakings including Government Companies registered under the Indian Central Act I of 1956) and by all the Co operative Societies from all the provisions of the said Act.
" As was done in the earlier case dealing with the total exemption granted in favour of all buildings belonging to public religious trusts and public charities, here also Counsel for the petitioners fairly stated that treating the buildings owned by all the Co operative Societies in the State of Tamil Nadu as falling into one group while exercising the power under sec.
29 of the Act will have to be regarded as a rational classification based on an intelligible differentia inasmuch as Co operative Societies while carrying on their activities in various fields do serve a great public purpose of attaining the social and economic welfare of a large section of the people belonging to the middle class and the rural class by encouraging thrift, selfhelp and mutual aid amongst them and by eliminating the middle 420 man and as such do form a distinct group different from other bodies undertaking similar activities on commercial lines and as such buildings belonging to Co operative Societies may need special or preferential treatment in some matters like registration of documents, payment of stamp duty, recovery of their dues etc.
at the hands of the State Government but according to Counsel the differentia on which this classification is based has no nexus with the object with which the powers to grant exemption has been conferred upon the State Government under sec.
29 of the Act and since the impugned Notification does not satisfy the test of nexus the exemption granted to all such buildings cannot be sustained and will have to be regarded as discriminatory and violative of article 14.
By way of elaborating the aforesaid contention Counsel for the petitioners urged that the Act was put on the statute book for the purpose of curbing the two evils of rack renting and unreasonable eviction and that the power to grant exemption could as per the guidance afforded by the scheme all the provisions of the Act be exercised by the State Government ill cases where the mischief sought to be remedied by the Act is neither prevalent nor apprehended are in cases where an inflexible application of the law is likely to result in undue hardship or in cases where the beneficial provision of the Act is likely to be or is being abused by persons for whom it is intended and according to Counsel the exemption in favour of the buildings belonging to all Co operative Societies in the State of Tamil Nadu does not conform to such guidance.
Counsel pointed out that Rule 11 of the Rules made under the T.N. Co operative Societies Act 1961 specifies as many as 13 different classes of Co operative Societies, such as farming society, credit society, housing society, marketing society etc.
and the impugned Notification indiscriminately and unconditionally exempts all buildings belonging to all types of Co operative Societies with no regard to their nature or functions Further, according to sec.
4 of the T.N. Co operative Societies Act the very object of every Co operative Society is the promotion of the economic interest of its Members and sec.
62 of that Act provides not only for payment of dividends o n shares to members but also for payment of bonus to members and paid employees of the Society.
Hence it is unrealistic to assume that Co operative Societies are not or will not indulge in rack renting or unreason eviction or will be ideal landlords whose tenants will not be in need of any statutory protection.
Tn other words Counsel urged that there was and is no warrant of any 421 presumption that Co operative Societies qua landlords will not indulge in rack renting or will not unreasonably evict tenants; in fact they would not be different from other private landlords so far as the two evils sought to be curbed by the Act are concerned and therefore Counsel urged that the exemption granted could not be said to be in conformity with the guidance afforded by the scheme and the provisions of the Act.
In support of the above contention Counsel relied upon a decision of this Court in Baburao Shantaram More vs The Bombay Housing Board and Anr.(1) where the validity of sec.
3 A of the Bombay Housing Board Act, 1951 was challenged as infringing article 14.
It was urged in that case that sec.
3 A exempted lands and buildings belonging to the Bombay Housing Board from the operation of the Bombay Rent Act, 1947 while lands and buildings belonging to numerous Co operative Housing Societies, which were similarly situated and whose object was also to solve housing problems, were not given any exemption from the operation of the Rent Act and the result was that while tenants of the Co operative Housing Societies were fully protected against unreasonable eviction and enhancement of rent, the tenants of the Housing Board were denied such protection and therefore sec.
3 A was violative of article 14.
The contention was negatived on the ground that the Housing Board and the Cooperative Housing Societies incorporated under the Cooperative Societies Act were not similarly situated and in that behalf this Court observed thus: "Further, though these Co operative Housing Societies are no doubt incorporated bodies, they nevertheless may earn profits which may be distributed amongst their members.
The Board, on the other hand, is incorporated body brought into existence for the purpose of framing housing schemes to solve the problem of acute shortage of housing in Bombay.
There are no share holders interested in the distribution of any profits.
It is under the control of the Government and acts under the orders of the Government.
In effect, it is a Government sponsored body not having any profits making motive.
No material has been placed before us which may remotely be regarded as suggesting, much less proving, that Co operative Housing (1) ; 422 Societies or their members stand similarly situated vis a vis the Board and its tenants.
" Relying upon the above observations Counsel for the petitioners submitted that this Court had recognised the position that various activities are undertaken by Cooperative Societies with the motive of earning profits and as such there was and is no warrant for treating them differently from other private landlords in the context of two evils sought to be remedied by the Act and in this sense the exemption granted does not satisfy the test or nexus and therefore the same infringes article 14.
The above contention so presented, though seemingly plausible, will, on deeper scrutiny, be found to be without substance and we shall presently indicate our reasons for saying so.
It is true that under sec.
4 of the Tamil Nadu Co operative Societies Act the very object of every Co operative Society registered thereunder is the promotion of economic interests of its members and section 62 of the Act provides for payment of dividends on shares to its members as also for payment of bonus to its members and paid employees.
But these aspects of a Co operative Society do not mean that it could be linkened to any other body undertaking similar activities on commercial lines and to do so would be to miss the very basis on which the cooperative movement was launched and propagated and has been making progress in the country during the last several decades.
Indisputably, Co operative Societies which carry on their activities in various fields do 50 for the purpose of attaining the social and economic welfare of a large section of the people belonging to the middle class and the rural class by encouraging thrift, self help and mutual aid amongst them, especially by eliminating the middle man.
But the object of promoting the economic interests of the members has to be achieved by following cooperative principles where the profit motive will be restricted to a reasonable level unlike other commercial bodies where sky` is the limit so far as their desire to earn profits is concerned.
Sections 4 and 62 of the T.N. Co operative Societies Act and Rule 46 of the Rules made under that Act bring out this aspect of the matter very eloquently.
Section 4 itself states that a society, which has as its object the promotion of economic interest of its members in accordance With cooperatives principle, may, subject to the provisions of the Act be registered thereunder In other words the promotion of economic interests of the members has to be achieved in accordance with co operative principles and the realisation thereof has been made subject to the provisions of the 423 Act.
Section 62 which deals with disposal of net profits puts A restrictions on the disbursement of such profits and it runs as follows: "62.
Disposal of net profits ( 1 ) (a) A registered society shall out of its net profits as declared by the Registrar for the purposes of this Act in respect of any co operative year contribute such amount not exceeding, (i) five percent of the net profits to the co operative development fund; and (ii) two per cent of the net profits to the co operative education fund, as may be specified in the Rules.
(b) Such contribution shall be made within such time and in such manner as may be prescribed.
2) The balance of the net profits so declared shall be appropriated firstly, for being credited to a reserve fund, the amount so credited being not less than twenty per cent, but not exceeding thirty per cent, af the net profits; secondly, towards contribution to such other funds and at such rates as may be specified in the Rules: thirdly, towards payment of dividends on shares to members at such rate as may be specified in the Rules; fourthly, towards payment of bonus to members and paid employees of the registered society at such rate and subject to such conditions as may be specified in the Rules; fifthly, towards contribution to such other funds and such rates as may be specified in the by laws; sixthly, towards contribution to the common good fund at such rate not exceeding ten per cent of the net profits as may be specified in the Rules; and 424 seventhly, the remainder, if any, of the net profits being credited to the reserve fund.
" Rule 46 prescribes the limits on payment of dividends on shares to its members as also on payment of bonus to its members and paid employees.
Sub Rule (3) of Rule 46 says that the payment of dividends on shares to members by a Society shall not exceed 6 percent per annum on the paid up value of each share; provided that the Government may by special or general order permit any Society or class of Societies to pay dividend at the rate exceeding 6 per cent.
Similarly under Sub Rules (4) and (5) restrictions have been placed on payment of bonus to members and to paid employees.
In view of these provisions it will appear clear that in the matter of distribution of profits by way of payment of dividend to members and payment of` bonus to members as well as paid employees restrictions have been placed by law and the same is maintained at a reasonable level and considerable portion of the net profits is apportioned and required to be carried to various kinds of funds, like cooperative development fund, co operative education fund, reserve fund etc.
In fact it is such statutory appropriations and restrictions on payment of dividends and bonus which differentiates Co operative Societies from other bodies undertaking similar activities on commercial lines and therefore, the buildings belonging to such Co operative Societies are substantially different from the buildings owned by private landlords.
Further, it has to be appreciated that these statutory provisions are applicable to all types of Co operative Societies specified in Rule 14 whatever be their nature or functions.
The profit element being maintained at a reasonable level by provisions of law in all types of Co operative Societies there is every justification for the assumption that no cooperative society will indulge in rack renting or unreasonable eviction.
In this view of the matter if the State Government came to the conclusion that in the case of Co operative Societies there being no apprehension that they would indulge in either of these two evils exemption from the provisions of the T.N. Act No. 18 of 1960 should be granted in favour of buildings belonging to such Co operative Societies it will have to be regarded as a legitimate exercise of the power conferred on it under section 29 of the Act the same being in conformity with the guidance afforded by the preamble and provisions of the Act in that behalf.
Besides, on the factual sides of the issue it has been specifically averred in the counter affidavit filed on behalf of the State Govern 425 ment that it duly took note of the fact that all types of Co operative Societies functioning in Madras City and at several centers throughout the State as a class were engaged in various kinds of activities promoting social welfare, rural development and economic good by providing employment to lacs of people and were doing excellent work by way of implementing one of the Directive Principles of State Policy embodied in article 43 of the Constitution, that several complaints were received from these Co operative Societies that they were facing problems arising out of a literal application of the T.N. Act 18 of 1960, particularly in the matter of securing accommodation in their own buildings for carrying on their activities and that they got involved in long drawn out litigations in that behalf and requesting for an exemption from the provisions of the Act so that they could be relieved of the hardships from which they were suffering; it has been further averred that the Government also took note of the fact that it was not the business activity of any Co operative Society including even a Co operative Housing Society to purchase buildings for the purpose of letting them out and earning income therefrom and as such there was no apprehension of indulging in rack renting on their behalf and that on a consideration of all the relevant factors the Government was satisfied that the protection given to the tenants of such buildings, if withdrawn, would not result in rack renting or unreasonable eviction and that the granting of exemption to them was necessary to relieve them of great hardship lt may be stated that all these averments have gone unchallenged and in our view the facts and circumstances put forward by the State Government clearly show that the differential on the basis of which the classification was made had a clear nexus with the object with which the power to grant exemption has been conferred upon the State and therefore the impugned Notification will have to be regarded as valid In regard to respondent No. 2 being the Apex Society herein, the additional factors taken into consideration were that out of its total share capital of 13.78 crores the State Government 's contribution was to the tune of 12.81 crores, that the Government had guaranteed the loans borrowed by it for its working capital.
that as the apex body it had membership of about 1488 primary societies (Handloom Weavers Co operative Societies and that it had 34 branches and two godowns in Madras and was required to pay for its rented premises rent at the rate of Rs. 2 50 per square foot while the tenants of their own building were paying rent at the rate of 20 paisa per square feet; respondent No. 2 society was also involved in a long 426 drawn out litigation under the provisions of the T.N. Act 18 of 1960 In other words, respondent No 2 society was a glaring instance of undue hardship being suffered by a Co operative Society as a result of the literal application of the Act.
We are sure that a large number of similar instances must have prompted the State Government to issue the impugned Notification which as we have said above will have to be regarded a legitimate exercise of power conferred on the State Government under sec 29 of the Act Counsel has of course placed strong reliance upon the observations made by this Court in Baburao Shantaram 's case (supra) which have been quoted above in support of his contention but in our view neither the ratio nor the observations are of any avail to the petitioners.
It will be clear at once that the decision in question is no authority for the proposition that exemption from the provisions of any rent control enactment cannot be granted in favour of the buildings owned by Co operative Societies.
the case was con concerned with the constitutional validity of sec 3 A of the Bombay Housing Board Act, 1951 where under exemption had been granted to lands and buildings belonging to the Bombay Housing Board from the operation of the Bombay Rent Act, 1941 and its validity was upheld by this Court.
One of the contentions urged before the Court was that buildings belonging to Co operative Housing Societies in Bombay were similarly situated as the buildings belonging to the Housing Board inasmuch as the object served by Co operative Housing Societies and the Housing Board was the same namely, solving the housing problems of the city of Bombay and even so, though the tenants of Co operative Housing Societies were fully protected against unreasonable eviction and enhancement of rent, the tenants of Housing Board were denied such protection and therefore sec.
3 A was discriminatory and this contention was negatived by the Court by observing that the Co operative Housing Societies and their members were not similarly situated vis a vis the Board and its tenants and while pointing out the difference the Court stated that while Cooperative Housing Societies may earn profits distributable among its members there was no question of the Housing Board making any profits.
The Court was not concerned with the question as to whether a similar exemption if granted to buildings belonging to Co operative Societies would be valid or rot.
The difference pointed by this Court was sufficient to refute the charge of discrimination levelled against the particular piece of legislation (sec.
3 A of the Bombay Housing Boards Act 1951) but it 11 will be fallacious to rely upon this difference for the purpose of 427 striking down the exemption granted in favour of buildings of Cooperative Societies under another enactment if such exemption is otherwise justified on the facts and circumstances obtaining in regard to such buildings.
In fact as explained earlier the Co operative principles which govern the functioning of these Co operative Societies put a curb on their profit motive and as pointed there are statutory provisions which maintain their profit element at reasonable level which warrant the assumption that Co operative Societies would not indulge in rack renting or unreasonable eviction and it was in the light of this position as also after careful study of all relevant factors obtaining in their case the, State Government was satisfied that the grant of total exemption in favour of the buildings of all Co operative Societies functioning in the entire State was necessary.
The observations relied upon cannot therefore support the Petitioners ' contention.
In the result the writ petitions are dismissed.
Interim orders, if any are vacted.
There will be no order as to costs.

dataset_name: IN-Abs

summary:
In exorcise of the powers conferred by section 29 of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 (Tamil Nadu Act 18 of 1960), the Government of Tamil Nadu by a Notification No. II (2) H. O. 6060/76 dated 21 t November, 1976 exempted the Buildings owned, inter alia by all the co operative societies from all the provisions of the said Act.
Since the protection available to the petitioners, who wore tenants in a building belonging to respondent No. 2, an Apex Society registered under the Tamil Nadu Co operative Societies Act, 1961 and covered by the said notification.
had been withdrawn and since the petitioners were facing the imminent prospect of suffering eviction decrees against them, they filed the present writ petitions challenging the constitutional validity of the impugned notification on the ground that the same was violative of article 14 of the Constitution.
The petitioners contended that treating the buildings owned by all the co operative societies in the State of Tamil Nadu as falling into one group while exercising the power under sec.
29 of the Act will have to be regarded as a rational classification based on an intelligible differentia but the differentia on which this classification was based had no excuse with the object of curbing the two evils of rack renting and unreasonable eviction for which the power to grant exemption had been conferred upon the State Government under sec.
29 of the Act and since the impugned notification did not satisfy be test of nexus the exemption granted to all such buildings could not be sustained and Will have to be regarded as discriminatory and violative of article 14.
In other words Counsel urged that there was and is up warrant OF any presumption that co operative societies qua landlords will not indulge in rack renting or will not unreasonably evict tenants; in fact they would not be different from other private landlords so far as the two evils sought to be curbed by the Act are concerned and therefore Counsel urged that the exemption granted could not be said to be in conformity with the guidance afforded by the scheme and the previsions of the Act.
417 Dismissing the petitions, ^ HELD: It is true that under sec.
4 of the Tamil Nadu Co operative Societies Act the very object of every co operative society registered thereunder is the promotion of economic interests of its members and sec.
62 of the Act provides for payment of dividends on shares to its members as also for payment of bonus to its members and paid employees.
But these aspects of a co operative society do not mean that it could be likened to any other body undertaking similar activities on commercial lines and to do so would be to miss the very basis on which the co operative movement was launched and propagated and has been making progress in the country during the last several decades.
Indisputably, co operative societies which carry on their activities in various fields do so for the purpose of attaining the social and economic welfare of a large section of the people belonging to the middle class and the rural class by encouraging thrift, self help and mutual aid amongst them, especially by eliminating the middle man.
But the object of promoting the economic interrupts of the members has to be achieved by following co operative principles where the profit motive will be restricted to a reasonable level unlike other commercial bodies where sky is the limit so far as their desire to earn profits is concerned.
Sections 4 and 62 of the Act and Rule 46 of the Rules make it clear that in the matter of distribution of profits by way of payment of dividend to members and payment of bonus to members as well as paid employees restrictions have been placed by law and the same is maintained at a reasonable level and considerable portion of the net profits is apportioned and required to be carried to various kinds of funds, like co operative development fund, co operative education fund, reserve fund etc.
In fact it is such statutory appropriations and restrictions on payment of dividends and bonus which differentiates co operative societies from other bodies undertaking similar activities on commercial lines and therefore, the buildings belonging to such co operative societies are substantially different from the buildings owned by private landlords.
Further it has to be appreciated that these statutory provisions are applicable to all types of co operative societies specified in Rule 14 whatever be their nature or functions.
The profit element being maintained at a reasonable level by provisions of law in all types of co operative societies there is every justification for the assumption that no co operative society will indulge in rack renting or unreasonable eviction.
In this view of the matter if the State Government came to the conclusion that in the case of co operative societies there being no apprehension that they would indulge in either of these two evils exemption from the provisions of the Tamil Nadu Act No. 18 of 1960 should be granted in favour of buildings belonging to such co operative societies it will have to be regarded is a legitimate exercise of the power conferred on it under sec.
29 of the Act the same being in conformity with the guidance afforded by the preamble and provisions of the Act in that behalf.
[422D 5; 424C G] Besides, on the factual side of the issue the facts and circumstances put forward by the State Government in its counter affidavit which have gone unchallenged clearly show that the differentia on the basis of which the classification was made had a clear nexus with the object with which the power to grant exemption has been conferred upon the State and therefore the impugned notification will have to be regarded as valid.
[425E F] 418


judgement:
il Appeal No. 653 of 1979.
Appeal by Special leave from the Judgment and Order dated the 14th August, 1978 of the Delhi High Court in section A. O. No. 166173.
U. R. Lalit and B. P. Maheshwari, for the Appellant.
A. K. Goel for the Respondent.
The Judgment of the Court was delivered by CHANDRACHUD, CJ.
The appellant is a tenant of the respondents in respect of one room in a house at Kamla Nagar, New Delhi.
The rent of the room is Rs. 10/ per month.
On March 19, 1967 the respondents filed an application for possession of the room on two grounds: one, that the appellant was in arrears of rent and, two, that they required the room bona fide for their own use and occupation.
An order was passed by the Rent Controller in that proceeding under section 14 (2) read with section 15 (1) of the Delhi Rent Control Act, 1958 (hereinafter called "the Act"), calling upon the appellant to pay or deposit the arrears of rent within one month.
The appellant complied with that order, whereupon, on April 1, 1968 respondents withdrew the ejectment application, with liberty to file a fresh application.
The reason stated by the respondents for withdrawing the application was that they had not given to the appellant a notice to quit under section 106 of the Transfer of Property Act and that, therefore, the application was liable to fail for a formal defect.
Immediately thereafter, on April 7, 1968 respondents gave a notice to quit to the appellant, terminating his tenancy with effect 391 from May 9, 1968.
On May 13, 1968, respondents filed a fresh application for possession against the appellant on the ground that they required the room bona fide for their personal use.
That application was dismissed on February 14, 1969.
On March 9, 1971 respondents filed the instant application against the appellant for possession of the room on the ground that the appellant was in arrears of rent from April 1968 until March 1971.
In this proceeding, the learned Additional Rent Controller, Delhi, refused to pass an order under section 15 (1) of the Act on the ground that such a benefit was given to the appellant in the first eviction petition and that, by reason of the proviso to subsection (2) of section 14 of the Act, the appellant could not claim that benefit once again.
In that view of the matter, the Rent Controller passed an order of eviction against the appellant.
The appeal filed by the appellant against the order of eviction was allowed by the Rent Control Tribunal, which took the view that the appellant was entitled to the benefit of the provision contained in section 14 (2) of the Act and that the proviso to that subsection had no application because, the benefit of the provision contained in section 14 (2) was being availed of by the appellant for the first time in the present proceedings.
According to the Tribunal, the first ejectment application filed by the respondents against the appellant was dismissed because, respondents asked for leave to withdraw that application with liberty to file a fresh application on the ground that they had not served a notice to quit on the appellant, and not on the ground that the appellant had complied with the order passed under section 15 (1) of the Act.
The judgment of the Rent Control Tribunal was set aside in Second Appeal by the High Court of Delhi.
The High Court took the view that though the first ejectment application was withdrawn by the respondents on the ground that they had not given a notice to quit to the appellant, that cannot alter the position that the appellant had availed of the benefit of the provision contained in section 14 (2) of the Act.
Therefore, according to the High Court, by reason of the proviso to section 14 (2), the appellant was not entitled to invoke the provisions of section 15 (1) of the Act.
By this appeal, the tenant challenges the correctness of the judgment of the High Court.
Section 14 of the Act contains provisions which are more or less similar to the provisions contained in various other Rent Acts.
392 Sub section (I) of that section contains the prohibitory provision that, notwithstanding anything to the contrary contained in any other law or contract, no order or decree for the recovery of possession of any premises shall be made by any court or Controller in favour of the landlord against a tenant.
The proviso to that subsection enables or entitles a landlord to obtain possession of the premises let out to a tenant on one or more of the grounds only, which are mentioned in clauses (a) to (I) of the sub section.
Clause (a) of the proviso enables 3 landlord to obtain possession if the tenant has neither paid nor tendered the arrears of rent within two months from the date on which the notice of demand for the arrears of rent has been served on him by the landlord in the manner prescribed by section 106 of the Transfer of Property Act.
Under clause (e) of the proviso, the landlord can obtain possession of the residential premises let out to the tenant, on the ground, broadly, that the premises are required by him for a personal need.
Subsection (2) of section 14 reads thus: "14 (2) No order for the recovery of possession of any premises shall be made on the ground specified in clause (a) of the proviso to sub section (1), if the tenant makes payment or deposit as required by section 15: Provided that no tenant shall be entitled to the benefit under this sub section, if, having obtained such benefit once in respect of any premises, he again makes a default in the payment of rent of those premises for three consecutive months " Section 15(1) of the Act reads thus: "15 (1) In every proceeding for the recovery of posses sion of any premises on the ground specified in clause (a) of the proviso to sub section (I) of Section 14, the Controller shall, after giving the parties an opportunity of being heard, make an order directing the tenant to pay to the landlord or deposit with the Controller within one month of the date of the order, an amount calculated at the rate of rent at which it was last paid for the period for which the arrears of the rent were legally recoverable from the tenant including the period subsequent thereto up to the end of the month previous to that in which payment or deposit is made and to continue to Pay or deposit, month by month, 393 by the fifteenth of each succeeding month, a sum equivalent A to the rent at that rate.
" Sub section (6) of section 15 provides that if a tenant makes payment or deposit as required by sub section (1), no order shall be made for the recovery of possession against him on the ground of default in the payment of rent by him.
On the other hand, if a B tenant fails to make payment or deposit as required by section 15 (1), the Controller may order the defence of the tenant to be struck off under sub section (7) and proceed with the hearing of the ejectment application.
The rent of the suit premises is small, only Rs. 101 per month.
The tenant, of course, is much too small as would appear from the fact that he committed default in the payment of rent at that rate for a long time.
But, quite often small tenants have small landlords who are entitled to expect that the tenants will pay at least the small rent regularly and not drive them to a court proceeding which is bound to cost more than the amount of arrears of rent which is at stake.
This seemingly insignificant case raises a question of some public importance, which is partly evidenced by the fact that the learned Judges of the Delhi High Court have taken conflicting views upon the question Those views were explained carefully and those judgments were read out to us by Shri A. K. Goel who appears on behalf of the respondents.
We do not propose to embark upon an analysis of these judgments since, that exercise is not likely to prove fruitful The reason is that the facts of the various cases which were before the High Court differed from case to case, which partly accounts for the divergent views expressed by different learned Judges of the High Court.
With respect, some of the judgments cited before us overlook that previous decisions turned on their own peculiar facts.
It is contended by Shri Lalit, who appears on behalf of the appellant, that the proviso to sub section (2) of section 14 can have no application to the instant case because, in the first ejectment proceeding which was filed by the respondents against the appellant, the latter had not obtained any benefit under that sub section.
On the other hand, it is contended by Shri Goel that in a tenant avails of the benefit of an order passed under section 15 (1), he must be regarded as having obtained the benefit of the provision contained in section 14 (2).
According to the learned counsel, the object of the proviso to section 14 (2) is to ensure that an order under section 394 15 (1) is not passed in favour of a tenant more than once.
Therefore, it is contended, the final result of the eviction petition in which an order was passed under section 15 (1) for the first time, or the form of the final order passed in that proceeding, has no relevance on the question whether the tenant had obtained benefit of the provision contained in section 14 (2).
We are of the opinion that the appellant 's contention is preferable to that of the respondents, having regard to the language of section 14 (2) of the Act and of the proviso to that section.
Putting it briefly, that section provides that no order for the recovery of possession of any premises can be made on the ground that the tenant has committed default in the payment of rent, if he pays or deposits the rent in accordance with the provisions of section 15.
The benefit which the tenant obtains under section 14 (2) is the avoidance of the decree for possession.
Though he had committed default in the payment of rent, no decree for possession can be passed against him This benefit accrues to the tenant by reason of the fact that he has complied with the order passed by the Controller under section 15 of the Act.
The passing of an order under section 15 is not a benefit which accrues to the tenant under section 14 (2).
It is obligatory upon the Controller to pass an order under section 15 (1) in every proceeding for the recovery of possession on the ground specified in section 14 (1) (a), that is, on the ground that the tenant has committed default in the payment of rent.
That is a facility which the law obliges the Controller to give to the tenant under section 15.
It is through the medium of that facility that the tenant obtains the benefit under section 14 (2).
And, that benefit consists in the acquisition of an immunity against the passing of an order of possession on the ground of default in the payment of rent.
It must follow that, it is only if an order for possession is not passed against the tenant by reason of the provision contained in section 14 (,), that it can be said that he has obtained a benefit under that section.
The Key words of the proviso to sub section (2) of section 14 are: "Provided that no tenant shall be entitled to the benefit under this sub section." That brings out the relevance of the nature of the order which was passed in the earlier proceeding in which the tenant had complied with the order passed by the Controller under section 15.
It the earlier proceeding was withdrawn by the landlord, it cannot be said that the tenant obtained the benefit of not having had an order of possession passed against him.
It is self evident that if a proceeding 395 ends in an order granting permission for its withdrawal, it cannot A possibly be said that "no order for the recovery of possession was passed therein for the reason that the tenant had made payment or deposit as required by section 15". 'that is the gist of section 14 (2).
The stage or occasion for passing an order to the effect that 'no order for possession can be passed because of the fact that the tenant has complied with the order passed under section 15 ' does not arise in the very nature of things, in a case wherein the landlord is permitted to withdraw the application for ejectment of the tenant.
There are two circumstances which must be borne in mind in this case though, we must add, they will not make any difference to the legal position which is stated above.
The first circumstance is that the respondents asked for leave to withdraw the earlier ejectment application.
in which the appellant that duly comlied with the order passed by the Controller under section I C, on the ground that the application was liable to fail for a formal defect since they had not given a notice to quit to the appellant under section 106 of the Transfer of Property Act.
Thus, the reason leading to the termination of the earlier ejectment application was that the respondents wanted to care the formal defect from which the application suffered and not that no order for possession could be passed against the appellant for the reason that he had complied with the order passed under section 15.
In other words, there was no nexus between the final order which was passed in the earlier ejectment application and the fact that the appellant had complied with the order passed under section 15.
The second circumstance which must be mentioned is that the earlier ejectment application was founded on two grounds, namely, that the appellant had committed default in the payment of rent and that respondents wanted the premises for their personal need.
The fact that the first of these grounds was no longer available to the respondents since the appellant had complied with the order passed under section 15, could not have resulted in the dismissal of the ejectment application because, the other ground on which eviction of the appellant was sought by the respondents had yet to be considered by the Rent Controller.
This is an additional reason why it cannot be said on the facts of this case that the appellant obtained a benefit under section 14 (2).
At the cost of repetition, we must clarify that the two circumstances which we have just mentioned will not make any difference to the fundamental legal position which we have explained above that the proviso to section 14 (2) can be attracted only if it is shown that the tenant had obtained the benefit of the provision contained in that section and not otherwise.
396 As we have stated earlier, several conflicting decisions of the High Court of Delhi were read out to us It is both needless and difficult to consider them individually.
We will only indicate, that on facts similar to those before us, the view taken by D. K. Kapur, J, in Rama Gupta v Rai Singh Kain,(1) is the correct view to take The learned Judge held in that case that since the landlord had withdrawn the earlier eviction petition, it could not be said that the tenant had derived a benefit under section 14 (2) of the Act.
In Kahan Chand Makan v section Bhambri, (a) a Division Bench of the Delhi High Court noticed the conflicting judgments rendered by the different Benches of the High Court, including the judgment of D. K. Kapur, J., in Rama Gupta vs Rai Singh Kain It is not possible to say with certainty whether the view taken by D. K. Kapur, J., was approved because, the judgment of the Division Bench refers to various derisions of the High Court without stating which of those is correct and which not.
In any case, the conclusion recorded by the Division Bench in paragraph 13 of its judgment seems too broad to apply to varying situations.
Besides, the learned Judges, with respect.
have apparently confused the availing of the facility under section 15 by the tenant with the benefit which accrues to him under section ' 4 (2) .
They say: "We, therefore, hold that where a deposit of arrears of rent has been made by the tenant in compliance with an order specifically passed under section 15 (1) of the Act in the course of proceedings initiated for his ejectment under section 14 (1) (a), the benefit cannot be availed of in a subsequent proceeding for his ejectment on the same ground.
The existence and proof of such an order in an earlier proceeding covered by section 14 (1) (a) is essential in order to deprive the tenant of the protection which section (I4 (2) gives him.
" The benefit which the proviso to sub section (2) of section 14 speaks of is: "the benefit under this sub section ' and not the benefit under section 15.
A recent decision of a learned Single Judge of the Delhi High Court is reported in Ashok Kumar vs Ram Gopal (3) That was a typical case which attracted the proviso to section 14(2).
The landlord (1) (2) AIR 1977 Delhi 247.
(3) 1982 2 Rent Control Journal 29.
397 therein had filed an application under section 14(1)(a) in 1973 for the A eviction of the tenant on the ground of non payment of rent.
The Rent Controller passed an order under section 15 (1) which was duly complied with by the tenant.
Thereupon, the landlord 's application was dismissed by the Controller.
In May 1979, the landlord filed another petition for possession against the tenant on the ground that he had committed default in the payment of rent.
It was held by n Kirpal J, and rightly, that since the tenant had obtained the benefit of section 14 (2) in the previous ejectment application, he was not entitled to the benefit of that section once again.
For these reasons, we allow the appeal, set aside the judgment of the High Court and restore that of the Rent Control Tribunal with the modification that the period of one month for depositing the arrears of rent shall be computed from the date of this judgment.
If the appellant deposits the arrears of rent due until December 31, 1984 on or before January 12, 1985 the respondent ' application for possession will stand dismissed.
On the other hand, if the appellant fails to deposit the arrears of rent as directed above, there shall be an order for possession in favour of the respondents which they will be entitled to execute.
The amount of arrears will be deposited in the Court of the Additional Rent Controller, Delhi, in which the ejectment application was filed against the appellant.
There will be no order as to costs throughout.
M. L. A. Appeal allowed.

summary:
The respondents, Landlord. filed three ejectment applications on March 9, 1967, May 13, 1968 and March 9, 1971 respectively against the appellants, a tenant for possession of one room situate at Kamla Nagar, New Delhi.
The first application was on the ground of non payment arrears of lent and bona fide requirement, the second on the ground of bona fide requirement of the landlord and the third one again on the ground of non.
payment of arrears of rent.
The first application, where the appellant complied with an order passed by the Rent Controller u/s 14(21 r/w section 15(1 ) of the Delhi Rent Control Act, 1958 calling upon the appellant to deposit arrears of rent, was withdrawn by the respondents subsequently on the ground that they had not given to the appellant a notice to quit.
The second application was dismissed on merits.
In the third application out of which the present appeal arises, the Additional Rent Controller passed an order of eviction against the appellant holding that no order section 15(1), of the Act could be passed on the ground that such a benefit was given to the appellant in the first eviction petition and that by reason of the proviso to sub section 2 of section 14 of the Act, the appellant could not claim that benefit once again.
The appeal of the appellant against the order of eviction was allowed by the Rent Control Tribunal, which took the view that the appellant was entitled to the benefit of the provision contained in section 14 (2) of the Act and that, the proviso to that sub section had no application because, the benefit of the provision contained in section 14 (2) was being availed of by the appellant for the first time in the present proceedings.
But the High Court in second appeal set aside the judgment of the Rent Control Tribunal and restored that of the Rent Controller.
The appellant contended that the proviso to sub section
(2) of section 14 can have no application to the instant case because, in the first ejectment proceedings the appellant had not obtained any benefit under that sub section.
The respondent contended that if a tenant avails of the benefit of an order passed section 15 (1), he must be regarded as having obtained the benefit of the provision contained in section 14 (2) and that the final result of the eviction petition in which an order was passed under section 15 (1) for the first time, or the form of the final order passed in that proceeding, has no relevance on the question whether the tenant had obtained benefit of the provision contained in section 14 (2).
389 Allowing the appeal, ^ HELD: (I) Section 14 (2) of the Act provides that no order for the recovery of possession of any premises can be made on the ground that the tenant has committed default in the payment of rent, if he pays or deposits the rent in accordance with the provisions of section 15.
The benefit which the tenant obtains under section 14 (2) is the avoidance of the decree for possession.
Though he had committed default in the payment of rent, no decree for possession can be passed against him.
This benefit accrues to the tenant by reason of the fact that he has complied with the order passed by the Controller under section 15 of the Act.
The passing of an order under section 15 is not a benefit which accrues to the tenant under section 14(2).
It is obligatory upon the Controller to pass an order under section 15(1) in every proceeding for the recovery of possession or: the ground specified in section 14 (1) (a), that is, on the ground that the tenant has committed default in the payment of rent.
That is a facility which the law obliges the Controller to give to the tenant under section 15.
It is through the medium of that facility that the tenant obtains the benefit under section 14(2).
And that benefit consists in the acquisition of an immunity against the passing of an order of possession on the ground of default in the payment of rent.
It must follow that, it is only if an order for possession is Dot passed against the tenant by reason of the provision contained in section 14(2), that it can be said that he has obtained a benefit under that section.
[394C G] (2) If the earlier proceeding was withdrawn by the landlord, it cannot be said that the tenant obtained the benefit of not having had an order of possession passed against him.
It is self evident that if a proceeding ends in an order granting permission for its withdrawal, it cannot possibly be said that "no order for the recovery of possession was passed therein for the E reason that the tenant had made payment or deposit as required by section 15".
That is the gist of Section 14(2).
The stage or occasion for passing an order to the effect that 'no order for possession can be passed because of the fact that the tenant has complied with the order passed under section 15 does not arise in the very nature of things, in a case wherein the landlord is permitted to withdraw the application for ejectment of the tenant.
[394H; 395A B] (3) In the instant case, the reason leading to the termination of the earlier ejectment application was that the respondents wanted to cure the formal defect from which the application suffered and not that no order for possession could be passed against the appellant for he reason that the had complied with the order passed under section 15.
In other words, there was no nexus between the final order which was passed in the earlier ejectment application and the fact that the appellant had complied with the order passed under section 15.
The earlier ejectment application was founded on two grounds, namely, that the appellant had committed default in the payment of rent and that respondents wanted the premises for their personal need.
The fact that the first of these grounds was no longer available t ) the respondents since the appellant had complied with the order passed under section 15 could not have resulted in the dismissal of the ejectment application because, the other ground on which eviction of the appellant was sought by the respondents had yet to be considered by the Rent Controller.
This is an additional reason why it cannot be said on the facts, of this case 390 that the appellant obtained a benefit under section 14(2).
But, the two circumstances, just mentioned will not make any difference to the fundamental legal position explained above that the proviso to section 14(2) can be attracted only if it is shown that the tenant had obtained the benefit of the provision contained in that section and not otherwise.
[395D H] (4) The Court allowed the appeal, set aside the judgment of the High Court and restored that of the Rent Control Tribunal with the modification that the period of one month for depositing the arrears Or rent shall be computed from the date of this judgment.
[397C] Rama Gupta vs Rai Singh Kain , Ashok Kumar vs Ram Gopal 1982 (2) Rent Control Journal 29 approved.
Kahan Chand Makan vs B.S. Bhambri, AIR 1977 Delhi 27 referred to.