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Home >> Library of Articles - Topics >> Rent Control Act >> Supreme court upholds rent act >> Sc upholds state Rent Control Act

 Supreme court upholds rent act - Sc upholds state Rent Control Act View HTML Page 
Source - The Time of India - Dhananjay Mahapatra    
SC upholds state Rent Control Act

Dhananjay Mahapatra | TNN

New Delhi: Mumbai may soon witness a large-scale eviction of MNCs, big PSUs, banks, corporate houses and petrol pumps if they are functioning from rented premises.

    The Supreme court, in a ruling on Thursday, upheld the constitutional validity of Section 3(1)(b) of the Maharashtra Rent Control Act, 1999, which withdrew protection from eviction to all tenant companies having a paid up share capital of Rs 1 crore or more.

    The Act was enacted to unify, consolidate and amend the law relating to the control of rents and repair of certain premises and of eviction. It also intended to encourage construction of new houses by landlords assuring them a fair return on their investments.

    Many companies, including ONGC, and banks had challenged the withdrawal of protection under the new rent law. Saraswat Cooperative Bank Ltd, which was taken as the lead matter among the bunch of petitions filed in the SC, had challenged an order of the Bombay high court dismissing its contention against the validity of the 1999 Act.

    Appearing for the cooperative bank, senior advocate Ranjit Kumar faulted the financial criteria laid down in the Act and said it was possible that a company with paid up capital of less that Rs 1 crore could be earning more profit than another company with a paid up capital of Rs 1 crore.

    But, according to the Act, while the former is protected as a tenant, the one earning less profit is without the statutory protections listed in the 1999 law, he said.

    Appearing for the landlords, senior advocate Raju Ramachandran stood in support of the classification of companies—as provided under the Act—and said the net worth of a company may vary from time to time, but its paid up capital is more or less stable.

    Accepting Ramachandran’s argument, a bench, comprising justices B P Singh and Altamas Kabir said: “It’s within the legislative competence of the state to enact laws for the protection of certain sections of society on the basis of economic criteria and so long as it does not result in unreasonable classification, it is for the legislature to decide whom it should include or exclude from the application of such laws.’’

    “Although, the decision to exclude private limited companies and public limited companies having a paid up share capital of Rs 1 crore from the protection of the Act has been questioned on the ground of discrimination, we are unable to accept such contention,’’ Justice Kabir said while writing the judgment.

Publication:Times of India Mumbai; Date:Aug 20, 2006; Section:Times City; Page Number:5