On December 10, 2019, the constitutional bench of the Supreme Court (“SC”) in the case of Rajendra Diwan v. Pradeep Kumar Ranibala and Another, has held that section 13(2) of the Chhattisgarh Rent Control Act, 2011 (“Act”) is unconstitutional. The provision stipulates that an appeal directly to the SC against the order of RentControl Tribunal, Chhattisgarh, is unconstitutional and against the legislative competence of the State of Chhattisgarh.

FACTS
The present case is an appeal to the SC against the order passed by the Rent Control Authority. An application that was filed by the landlord against the tenant under section 12 of the Act. The SC expressed serious concerns about maintainability of the petition due to lack of legislative competence of the state of Chhattisgarh for providing a statutory appeal directly to the SC against the order of Rent Control Authority. As it involved a substantial question of law regarding the interpretation of the constitution, the case was referred to the constitutional bench of the SC.

ISSUE
Whether section 13(2) of the Act was ultra vires the Indian Constitution due to lack of legislative competency of the State Legislature of Chhattisgarh to enact a provision providing for appeal directly to the SC against an order of the Tribunal.

ARGUMENTS
Counsel for Rajendra Diwan (“Appellant”) argued that section 13(2) of the Act grants SC an appellate jurisdiction which it already had under Article 136 (special leave to appeal by the SC) of the Constitution. Further, Article 138(1) of the Constitution provides that the SC shall have such further jurisdiction and powers with respect to any of the matters in the union list, as Parliament may by law confer and Article 138(2) of the Constitution provides that the SC shall have such further jurisdiction and powers with respect to any matter, as Government of India and the government of any state may, by special agreement, confer, provided that Parliament by law provides for exercise of such jurisdiction and powers by the SC. It was argued that section 13(2) of the impugned Act was in consonance with Article 138 read with Article 200 of the Constitution which attempts to curtail the jurisdiction of High Courts subject to the assent of the President. It was submitted that the President acts on the aid and advice of the council of ministers which amounts to an agreement between the state government and Government of India, therefore the said provision was in compliance with Article 138(2) and Article 200 of the Constitution.

Counsel for Pradeep Kumar Ranibala and others (“Respondent”) on the other hand, argued that the impugned provision is unconstitutional. This is evident from the bare reading of Entry 77 (jurisdiction, powers, etc. of the SC) in List I (Union List), Entry 65 (fees in respect of any of the matters, not including fees taken in any court) in List II (State List) and Entry 46 (jurisdiction and powers of all courts, except the SC) of List III (Concurrent List). Entry 77 read with Article 146(1) (officers, expenses, etc. of the SC) of the Constitution confers exclusive jurisdiction to Parliament to legislate regarding jurisdiction and powers of SC only which is prohibited for state legislature as per Entry 65 in List II and 46 in List III. It was argued that neither the Governor nor the President of India has the power to confer legislative competence on a legislative body contrary to provisions of the Constitution.

The case of H.S Yadav v. Shakuntala Devi Parakh [(Civil Appeal No(S). 5153 of 2019], (decided on October 15, 2019) was also referred to by the Respondent, which struck down section 13(2) of the Rent Control Act as unconstitutional due to lack of legislative power of the state legislature. The SC has been established under Article 124 and its jurisdiction and powers are defined in Article 131 to Article 145 of the Constitution. There is no provision providing for direct appeal to SC from a tribunal order established by law of a state legislature.

OBSERVATIONS OF THE SUPREME COURT
It was observed by the SC that when the question of vires of an act is to be considered, the whole act has to be looked upon to decide whether the legislature has a competence to enact such a law. Once it is ascertained affirmatively, the power extends to all the ancillary and incidental matters which are reasonably and logically within the ambit of such area as held in the case of United Provisions v. Atika Begum [AIR 1941 FC 16]. The impugned section which provided for a direct appeal to the SC was not ancillary or incidental to the powers of State of Chhattisgarh to enact the Act. Evidently, in this instance, the State Legislature had transgressed its legislative powers.

All the entries in the Seventh Schedule have to be interpreted in the widest terms but at the same time harmonized with the other entries. Entry 18 of the State List which enables the state legislature to make laws with respect to landlord tenant relationship, collection of rents, etc. does not allow it to circumvent Entry 64 (offences against laws) of the State List and 46 of the Concurrent List which enable the state legislature to enact laws with respect to the jurisdiction and powers of courts, except the SC. The aforesaid entries therefore prohibited the state legislature from exercising jurisdiction in respect of the SC. Neither does Entry 18 of the State List render otiose Entry 77 of the Union List which exclusively confers law making power with respect to jurisdiction of the SC to the Parliament. Section 13(2) of the Act which provides for the direct appeal to the SC is not ancillary or incidental to the powers of State of Chhattisgarh to enact the Act.

Both the state and union derive their powers to make laws under Article 245 of the Constitution and unlike Article 245(2), where union laws made by the Parliament are saved with extraterritorial operation, there is no provision in the Constitution which saves state laws made by the state legislature for the same.

Since the Tribunal under the Act is established under Article 323B (tribunals for other matters) of the Constitution, the curtailing of jurisdiction of High Court except under Article 226 and 227 of the Constitution would be saved by Article 323(3)(d) (law made under clause 1 may exclude jurisdiction of all courts except that of the SC with respect to matters falling within the jurisdiction of tribunals) of the Constitution. However, Article 323B of the Constitution does not provide state legislature power to expand appellate jurisdiction of the SC.

The SC also analysed the scope of Article 136 of the Constitution which confers a discretionary power on the SC to intervene in appropriate cases which can be exercised in spite of other provisions in the Constitution or any other law, and the statute providing for the conclusiveness of the decision of tribunal does not bar such power of the SC. Exercising such powers, the SC settles only questions of law involving public importance and does not intervene in facts and findings by lower courts. On the contrary, an appeal is the continuation of the original proceedings in which the appellate court is obliged to re-appreciate facts and evidence on record. Section 13(2) of the Act purports to confer a right of statutory appeal to the SC on issues which may not involve serious questions of law, and is clearly beyond the legislative power of the state.

Further, presidential assent makes no effect on the legislative competence to make laws. Moreover, for an agreement between state and the union government, a special agreement is required between them through negotiations and deliberations rather than the assent of the President on the aid and advice of the council of ministers. Subsequently, the Parliament is required to enact a law enabling the SC to exercise jurisdiction pursuant to such agreement. Therefore, in the present case, the provision of special agreement of Article 138(2), as discussed aforesaid, could not apply.

DECISION OF THE SUPREME COURT
The SC held that it affirms the decision of H.S. Yadav v. Shakuntla Devi Parikh and further held that section 13(2) of the Chhattisgarh Rent Control Act is ultra vires the Constitution, beyond the scope of power of the state legislature, and therefore null and void.

Vaish Associates Advocates View

Although a perusal of the judgement indicates that the SC has made a rational application of the doctrine of ultravires, and struck down a law wherein the state has overstepped its bounds, there are certain noteworthy points that have not been taken into consideration by the SC.

The point made by the Appellant that section 13(2) of the Act does not in reality deal with the powers of the SC is a logical one. The provision only enables an appeal to the SC, and does not in any way circumscribe the wide powers it already has (and given the scope of a special leave petition, it is unlikely that the powers can be increased).

The SC also did not consider the doctrine of “pith and substance” for deciding the constitutionality of the provision and the argument of the Appellant that “rent control” falls squarely within Entry 18 of State List of the Seventh Schedule, is in sync with the doctrine. At best, the infringement upon the union’s powers is incidental in nature, as even without the provision in question, the SC would have the power to entertain an appeal from the orders of the Rent Control Tribunal.

The judgement limits the direct runway granted by section 13(2) of the Act to the SC, although it will have no tangible effect on the appeals that emanate from the orders of the Rent Control tribunal, as they will end up going to the SC in the form of a special leave petition.

For more information please write to Mr. Bomi Daruwala at [email protected]

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