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Present: Samarawickreme, J., Wiraalaratne, J. and Sharvananda, J. ‘
MRS. ALICE JAYAWARDENA Petitioner andCOMMISSIONER OF NATIONAL HOUSING and Others, Respondents
S. C. Application No. 849/77
Ceiling on Housing Property Law – Vesting order – Section 17(1) — Divesting order -Subsection (I) of section 17A – Direction of Minister. – Failure of Commissioner to exercisediscretion.
A vesting order was made under section 17(1) of the Ceiling on Housing Property Lawvesting the premises in suit in the Commissioner of National Housing. Subsequently uponthe written direction of the Minister, the Commissioner divested the ownership of the saidpremises acting under subsection (I) of section I7A of the said Law.
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Held, that the divesting order is not valid because the Commissioner failed to exercisethe discretion to make a divesting order, but has merely carried out the direction of theMinister.
Section 17A postulates that the proper authority for exercising the discretion to make adivesting order is the Commissioner of National Housing. The prior approval of the Ministeris only to give legal efficacy to the decision of the Commissioner to divest the ownership.
“The discretionary power which has to be exercised judicially can and must be exercisedonly by the authority to whom the power is committed".
Application for a writ of certiorari and/or mandamus.
K. S. Mahesan for the Petitioner.
K. M. M. B. Kulatunga, Actg. Solicitor-General, with S. Alagaratnam, StateCounsel, for the 1st and 2nd respondents.
K. Shanmugalingam for the 3rd respondent.
Cur. adv. vult.
July 25,1978. Sharvananda, J.
According to the petitioner, she was the tenant of premises No. 237,Thimbirigasyaya Road, Colombo 5, holding under the 3rd respondent,Mrs. Jayanethi, and the said house and premises constituted an excess houseof the said owner within the meaning of the provisions of the Ceiling onHousing Property Law, No. 1 of 1973, as amended by Law No. 34 of 1974and Law No. 18 of 1976 (hereinafter referred to as ‘the Law’). She had madeapplication to the Commissioner of National Housing, the 1st respondent,under section 13 of the said Law for the purchase of the said premises. The1st respondent, by letter dated 20.1.77, informed the petitioner that the saidpremises had been vested in him (the Commissioner of National Housing)with effect from 1.11.76 and he requested the petitioner to deposit one-fourthof the purchase price of the premises. In compliance with the said letter, thepetitioner paid, on or about 20.1.77, a sum of Rs. 3,833/-, being one-fourth ofthe purchase price. By another letter dated 10.2.77, the 1st respondentwanted the petitioner to pay monthly instalments of Rs. 102/- towards thebalance purchase price. In compliance with the said letter, the petitioner paidRs. 102/- on 10.2.77, Rs. 306/- on 10.3.77, Rs. 102/- on 18.4.77, andRs. 204/- on 17.6.77.
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According to the notification appearing in the Government Gazette dated4.2.77, Mr. P. B. G. Keuneman, the then Minister of Housing andConstruction, had made a vesting order in terms of section 17(1) of the Lawvesting the house bearing assessment No. 237, Thimbirigasyaya Road,Colombo 5, in the Commissioner of National Housing with effect from1.11.76. The petitioner states that she thereafter entered into a preliminarysale agreement with the Commissioner for the sale of the said premises toher and that after the said agreement was entered into and the aforesaidpayments made by her, there were certain Cabinet changes which resulted inMr. Pieter Keuneman, Minister of Housing and Construction, beingsucceeded by Mr. Chelliah Kumarasuriar. By her present application, shecomplains that the 1st respondent, viz. the Commissioner of NationalHousing, had, behind her back and on the direction and instance of the newMinister of Housing and Construction, made order dated 10.6.77 under sub-section (1) of section 17A of the Law divesting the ownership of the saidhouse bearing assessment No. 237, Thimbirigasyaya Road, Colombo 5. Thisdivesting order, purporting to be made under section 17A of the aforesaidLaw, appears in the Gazette dated 20.6.77. The relevant notificationappearing in the Gazette under the hand of the Commissioner of NationalHousing reads as follows
“Order under subsection (1) of section 17AWHEREAS the house described in the Schedule hereto has been vested inme under section 17(1) of the Ceiling on Housing Property Law,No. 1 of 1973, as amended aforesaid, I, Mahabalage Gemunu DunstanJayawardene, Commissioner of National Housing, upon being directed inwriting by the Minister of Housing and Construction, do by this orderdivest the ownership of the said house.
SCHEDULE1. House bearing assessment No. 237, Thimbirigasyaya Road,Colombo 5”.
The divesting order appears to be the sequel of an adverse report by theSecretary of the Ministry who, on a complaint made by the 3rd respondent,probed into the circumstances of the original vesting of the said house. Thisreport exhibits grounds which would have justified the Commissionermaking an order of divestment under section 17A of the Law had heconsidered the report and decided to take action under section 17A. TheSecretary, however, suggested to the Minister that “the Commissioner maybe directed to divest himself of the ownership of this house under section17A(1)”. In pursuance of the report, the Minister (Mr. C. Kumarasuriar)made the following order dated 26.5.77:-
“I agree – please divest”.
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In pursuance of this direction, the 1st respondent Commissioner, withoutreviewing the report himself and taking his own action, made the impugnedorder under section 17A in compliance with the Minister's direction. Thissection reads as follows:-
“17A(1) Notwithstanding that any house is vested in the Commissionerunder this Law, the Commissioner may, with the prior approval inwriting of the Minister, by Order published in the Gazette, divest himselfof the ownership of such house, and on publication in the Gazette of suchOrder, such house shall be deemed never to have been vested in theCommissioner”.
The section gives no guidance whatever as to the basis on which thediscretion to make a divestment order is to be exercised and imposes no limitas regards the grounds on which the discretion is to be exercised. But itdefinitely postulates that the proper authority for exercising the discretion tomake a divesting order is the Commissioner of National Housing. The priorapproval of the Minister is only necessary to give legal efficacy to thedecision of the Commissioner to divest the ownership. The Ministersuperimposes his sanction on the determination made by the Commissioner.Before reaching that decision, the Commissioner has to direct his mind to thematter and bring an independent judgment of his own to bear on the issue. Itis manifest from the tenor of the Gazette notification P9 dated 20.6.77referred to above that the Commissioner made his order of divestment .“uponbeing directed in writing by the Minister of Housing and Construction”. Thepetitioner in the application before this Court states that the direction givenby the Minister, referred to in the aforesaid Gazette, amounts to a dictationby the Minister and that in the circumstances the Commissioner did not makethe order in the exercise of his discretion, but was unduly prevailed upon bythe Minister to do so. Counsel for the petitioner contends that the 1strespondent acted in automatic obedience to the Minister’s instructions andhad, in effect, abdicated the discretion vested in him and allowed it to beexercised by the Minister.
Under section 17A of the Law, the function of the Minister would appearto be confined only to giving approval to the divesting order of theCommissioner and not giving executive instructions to him. The entries inthe relevant office file and the Gazette notification P9 tend to show that theCommissioner had surrendered his discretion to the Minister and had notexercised his own personal judgment in deciding whether a divesting ordershould, in the circumstances, be made or not and that he did not bring to bearhis mind at all upon the issue. As stated earlier, the section predicates the
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Commissioner determining the question with the approval of the Ministerand not carrying out the directions of the Minister. In this case, it appears thatthe 1st respondent-Commissioner did not address his mind to the propriety ofmaking a divesting order but was content to submit himself to the Minister.
In the proceedings before this Court, the 1st respondent has not chosen tofile any affidavit in this Court owning responsibility for the impugned order.
Counsel for the 3rd respondent in this Court submitted that theCommissioner of National Housing is an executive officer and is subject tothe general and special directions of the Minister of Housing andConstruction and referred us to section 8(2) of the National Housing Act(Chap. 401) which provides as follows: “In the exercise, discharge orperformance of the powers, functions or duties assigned or imposed on himunder this Act, the Commissioner shall be subject to the general or specialdirections of the Minister”, and that it was lawful for the said Minister toissue directions to the 1st respondent as to how the latter should exercise thepower conferred on him by section 17A of the Law. One short answer to thissubmission is that the power or discretion to make the divesting orderreferred to above is vested in the Commissioner by section 17A of the Lawand not under any provision of the National Housing Act. Hence, ex faciesection 8(2) of the latter Act does not apply to control the exercise of powerby the Commissioner under section 17A of the Law. Section 8(2) of theNational Housing Act, in any event, will not apply to the quasi-judicialdetermination of the Commissioner which is founded on his own personaljudgment. The discretionary power which has to be exercised judicially canand must be exercised only by the authority to whom the power iscommitted. Section 8(2) of the National Housing Act can appropriately applyonly to executive orders and not to judicial or quasi-judicial orders groundedon the subjective satisfaction of the repository of that power as to theexistence or non-existence of circumstances which justify the exercise of thepower. The judicial element involved in making the order militates againstany suggestion that, in the exercise of his power under section 17A of theLaw, the Commissioner can be subject to the directions of anyone. The viceof the Minister’s decision, thus vitiates the order attributed to the 1strespondent.
The petitioner further complains that she was not heard before thedivestment order P9 was made. Failure to give a hearing to her, who hadacquired an interest in the premises by virtue of the sale agreement anddeposit of part purchase price and was hence concerned in opposing the
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divestment order, is also a good ground to set aside the impugned order ofdivestment. Before any order prejudicial to a party is made, principles ofnatural justice require that he should be heard.
Though I set aside the divestment order in question, I should place onrecord the following before I part with the record.
It is to be noted that premises No. 237, Thimbirigasyaya Road,
' Colombo 5, is in extent of over 41 perches with a five-roomed upstairbungalow on it and is situated in the residential area of Thimbirigasyaya,Colombo. According to the petitioner herself, in her statement to theInquiring Officer, the 3rd respondent had purchased these premises in 1969for a sum of Rs. 100,000/-. The letters PI and P3 show that the price atwhich the petitioner is to purchase the premises is estimated to beRs. 15,332/- only. It is incredible that the National Housing Departmentcould have, with any sense of realism, computed the market value of thepremises at Rs. 15,332/- only. This valuation is ridiculously low and can inno sense represent the market value of the premises in question within themeaning of section 23 of the Law. The 3rd respondent-owner has ground forlegitimate complaint. Justice and fairness requires that a revaluation of thepremises by a competent valuer should be done to determine the pricepayable for the said house and premises vested in the Commissioner. Further,the report of the Secretary, Ministry of Housing and Construction, dated24.5.77, refers to a number of irregularities connected with the originalvesting and makes certain disclosures respecting the circumstances of thevesting which call for an investigation into the genesis and propriety of thevesting order. It is desirable that the Commissioner should inquire, into thehistory of the vesting order and also satisfy himself as to the validity of theSecretary’s criticism and decide whether circumstances justify that an ordershould be made by him under section 17A of the Law. Before he makes anyorder under the section which will affect the petitioner, the petitioner shouldbe heard on her objections, if any, to the order of divestment. Though thepresent order, purporting to be made under section 17A and referred to in theGazette notification P9, is set aside for the reasons set out above, thequashing of same will not bar the 1st respondent-Commissioner fromlooking into the whole matter afresh.
The application for a writ of certiorari quashing the divestment ordercontained in P9 is allowed. Each party will bear his own costs of thisapplication.
Samarawickreme, J. -1 agree.
WlMALARATNE, J. – I agree.
Application allowed.
