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
URL : http://epaper.timesofindia.com/Repository/ml.asp?Ref=VE9JTS8yMDA2LzA4LzIwI0FyMDA1MDM=&Mode=HTML&Locale=english-skin-custom