S. M. MAHENDRU AND COMPANY ETC. versus STATE OF TAMIL NADU AND ANR.

Citation: [1985] 2 S.C.R. 416 · Decided: 12-12-1984 · Supreme Court of India · Bench: V.D. TULZAPURKAR · Disposal: Dismissed

Judgment (excerpt)

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416 
S. M. MAHENDRU AND COMPANY ETC. 
v. 
STATE OF TAMIL NADU AND ANR. 
December 12, 1984. 
(V. D. TuLZAPURKAR, R. S. PATHAK AND 
SABYASACHI MuKHARJl JJ.] 
Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 (Tamil Nadu 
Jo-. 
' ' 
' 
Act 18 of 1960)-S. 29-Scope of-Government of Tamil Nadu issued 
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Notification No. 11 (2) H. O. 6060/76 dated 21st November, 1976 exempting 
buildings owned Inter alia by co·operative societies from all the provisions of 
the Act 18 of 1960-Validity of notification-Notification held valid and not 
violative of Art. 14 of the Constitution. 
In exercise of the powers conferred by section 29 of the Tamil Nadu 
Buildings (Lesse and Rent .Control) Act, 1960 (Tamil Nadu Act 18 of 
J960), the Government of Tamil Nadu by a Notification No. II (2) H. O. 
6060/76 dated 21st November, i976 exempted the Buildings owned, Inter 
a/la by all the co-operative societies from all the provisions of the said 
Act. 
Since the protection available to tb:: petitioners, who were 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the said notification, had been withdrawn and .since the petitioners were 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 themJ 
they filed the present writ petitions chaJieaging the constitutional validity of 
the impugned notification on the ground that the same was vio_lative of Art. 
14 of the Constitution. 
The petitioners contended that treating the 
buildings owned by aU the co-operative societies in the State of Tamil N adu 
as falling into one group while exercising the power uader sec. 29 of the 
Act will have to be regarded as a rational classification bas-:d on an intelli· 
gible differentia but the differentia on which this classific_ation was based had 
nO nexus with the object of curbing the two evils of rack-renting and unrea-
sOoable eviction for which the power to grant exemption h1d been coaferred 
upon the State Government under sec. 29 or tbe Act and since the in1pugned 
notification did not satisfy the test of nexus the exemption granted to all such 
buildings CC"uld not be sustained and will have to be regarded as discrimi-
natory and violative of Art. 14. 
In other word<; Counsel urged that there 
was and is no warrant of any presumption that co-operative societies qua 
landlords will not indulge in rack-renting or will not unreasonably evict 
te~ 
nants; 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.1 be 
in conformity with the guidance afforded by the scheme and the provisiQoS 
of the Act. 
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• 
S. M. M. & CO. V. TAMiL NADU 
417 
Dismissing the petitions, 
HELD: It is true th>t under sec. 4 of the Tamil Nadu Co-operative 
Societies Act the very object of every co-operative society registered there-
under 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 hoes 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 lhe 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 interests of the members has to be 
achieved by following co-operative principles where the profit motive will be 
restricted to a reasonable level unlikC 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 distributi.on of profits by way of payment of dividend to members 
and payment of b"anus to members as well as paid employe·es restrictions 
bave been placed by law and the saroe is main

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