JUDGMENT Sengupta, J. 1. This appeal has been preferred from an interim order dated 16th June, 1988, made by a Learned Single Judge of this Court on a writ petition filed by Auto Distributors Ltd. (Appellant No.1) and its shareholder (Appellant No.2) challenging the constitutional validity of Section 49 & 52 of the Major Port Trust Act 1963 (hereinafter referred to as "Act") and the enhancement by the respondent Board of Trustees for the port' of Calcutta (hereinafter referred to as "the Port Trust") of the rent charge. payable by the appellants for the occupation of Port premises by a notice dated 12th October, 1987, and Notification dated 28th March, 1988, published in Calcutta Gazette Extraordinary dated 31st March, 1988 The appellants are aggrieved by that part of the order dated 16th June, 1988, whereby the Learned Judge directed the appellants to pay at the rate brought by the unilateral enhancement made by the impugned notice dated 12th October, 1987. 2. Since the appeal was from an interim order we are not inclined to interfere in the matter. The parties, however, made a joint request that we should dispose of the entire controversy on merits by deciding the writ petition itself. Accordingly, by consent of parties, we decided to hear out the writ petition on merits and appropriate directions were given in this regard. 3. After the conclusion of the hearing, the Learned Counsel appearing for the parties suggested that they would file their note of submissions in brief and this Court gave them liberty to do so and 'reserved judgment. The written notice, however, were submitted much later than the date specified and only on 6th June, 1991, a copy of the judgment of the Bombay High Court was placed before us. 4. We have considered the submissions made at the hearing as well as the written notes and proceed to express our view. 5. The facts arc short and not disputed. The appellant No.1 (Auto Distributors Ltd.) is a well known dealer of automobiles and spare parts of automobiles and imports machinery, spare parts and accessories for its business. For the purpose of storage of spare parts and other stores it occupies Plate No. D-276/2 measuring 8877.717 sq. of land as well as Plate No. D-276/2A measuring 1688.698 sq. mtrs, of land belonging to the Port Trust. For the purpose of storage of spare parts and other stores it occupies Plate No. D-276/2 measuring 8877.717 sq. of land as well as Plate No. D-276/2A measuring 1688.698 sq. mtrs, of land belonging to the Port Trust. The Plate No. D-276/2 was occupied under a lease dated 28th May, 1957, and was for a period of 30 years with effect from 27th September, 1957, whereas Plate No. D-276/2A was occupied under the lease dated 11th May, 1970 for a period of 17 years 7 months 23 days with effect from 4th February, 1970. Both these leases were to expire on 27th September, 1987. 6. After obtaining the leases Auto Distributors with the consent of Calcutta Port Trust constructed at its own expenses warehouses for the purpose of storage of spare parts etc. There was no dispute of any kind whatsoever including the payment of rent reserved by the leases during the period reserved thereby. 7. Difficulties arose when Auto Distributors applied for renewal of the leases for a further period of 30 years by its letter dated 11th February, 1987. In spite of several reminders the Port Trust did not respond to the letters until after the expiry of the leases on 27th September, 1987. The Port Trust by its letter dated 12th October, 1987, informed Auto Distributors that the Trustees were revising their rates of rent and the terms of granting long term leases in respect of their lands and structures and that request for granting fresh long term leases for a period of 30 years would be considered after finalisation of such rates of rents and terms. The letter also stated that after expiry of the leases with effect from 27th September, 1987, rent at Rs. 105.00 and Rs. 84.00 per 100 sq. mts. per month for the first plate and second plate respectively would be charged in the name of Auto Distributors treating the tenancy as continuing on month to month basis with effect from 27th September, 1987, and that his rent would be revisible from time to time as approved by the Board of Trustees for the Port of Calcutta. Auto Distributors pointed out in their letter dated 19th October, 1987, that the fact should be charged at the standard rate prevailing at the time of extension of the lease and not the exorbitantly or arbitrarily increased rates as intimated by the Port Trust. Auto Distributors pointed out in their letter dated 19th October, 1987, that the fact should be charged at the standard rate prevailing at the time of extension of the lease and not the exorbitantly or arbitrarily increased rates as intimated by the Port Trust. They pointed out that they were paying Rs.37.50 and 27.47 per 100 sq. mtrs. per month in respect of the plate No. D-276/2 and D-276/2A respectively and the corresponding enhancement of Rs. 105/- and Rs. 84/- was a denial of justice. Auto Distributor’ application for renewal of the leasee, however, remained pending as the port Trust took the stand that they were still considering the matter. 8. In the meantime a notification dated 28th March, 1988 was published by the Calcutta Port Trust In the Calcutta Gazette Extraordinary dated 31st March, 1988, whereby it was notified that under the provisions or Section 52 of the Act the rent schedule of, Inter alia, land of the Port Trust as specified in the notification had been approved by Central Government to take effect from the date of publication of the notification. According to this notification the rent charges in respect of land covered by Plate No. D-276/2 and D-276/2A was Rs. 350/- per 100 sq. mtrs. per month and Rs.270/- per 100 sq. mtrs. Per month respectively. 9. Ultimately, by a letter dated 24th May, 1988, Calcutta Port Trust informed Auto Distributors as follows :- “ ...... The Trustees have since revised the rate of rent of their land. The rate of rent of the above land as per current rent Schedule is Rs. 350/- and Rs 270/- per 100 sq. mtrs. per month for the 1st belt and 2nd belt respectively with effect from the 31st Much, 1988. On your accepting the aforesaid rates of rent and agreeing to pay twelve months' rent at current rates of rent at non-refundable renewal fees, a proposal for lease of land for 10 years will be placed before the Board of Trustees, for consideration. If your reply is not received within one month from the date of this letter it will be presumed that you are not interested to take renewal on the aforesaid condition and therefore you will have to hand over possession of the above land to this office representative who will be present at the site at 11-00 AM on 23rd June, 1988." 10. It was in this background that the writ petition was moved on 16th June, 1988, challenging the constitutional validity of Section 49 and 52 of the Act, the notification dated 28th March, 1988 as well as letters of the Calcutta Port Trust dated 12th October, 1987 and 24th May, 1988. 11. Mr. Samaraditya Pal, learned counsel appearing on behalf of the writ petitioners, made the following submission :- (1) The fixation of root charges by the impugned letter dated 12th October, 1987, is illegal imposition by the Post Trust without valid authority of law. (2) The demand for rent at the rate of Rs. 350/- and Rs.270/- per 100 sq. mtrs. Per month with effect from 31st March, 1988, as communicated by impugned letter of the Trust letter dated 24th May, 1988, and based on the notification dated 28th March, 1988, is illegal and unconstitutional for the following reasons : (a) Session 49 of the Act is violative of Article 14 of the Constitution as it confers unguided and uncanalised power on the Port Trust in fixing the rates. In this connection reliance is placed on the decision of the Supreme Court in (1) B.B. Rajwanshi Vs. State of U.P.; AIR 1988 SC 1089 and in (2) Senior Supdt. of Post Offices v. Izsar Hossain : AIR 1989 SC 2262 . (b) Even assuming that Section 49 of the Act is constitutionally valid, the exercise of power in the instant case is unreasonable, arbitrary and bad. Learned Counsel emphasised that the Port is not a profit making institution and it cannot fix rates which have no relation with nature of the land and/or building, services rendered, improvements made. repairs undertaken etc. According to learned Counsel it is not disputed that no services are rendered by the Port Trust and none of the other things mentioned has been done. It is further submitted that in any event Port Trust cannot fix rent which is higher than standard rent under the West Bengal Premises Tenancy Act, 1956. Although the Tenancy Act does not apply to the properties belonging to the 'Port Trust (Section 1(3) of the West Bengal Premises Tenancy Act, 1956), the underlying principles relating to fixation of standard rent should apply. To substantiate these submissions reliance was placed on the following authorities : (3) Ram Pratap Jaidayal Vs. Dominion of India; AIR 1953 Bom 170 . To substantiate these submissions reliance was placed on the following authorities : (3) Ram Pratap Jaidayal Vs. Dominion of India; AIR 1953 Bom 170 . (4) Babulal Shantaram More v. Bombay Housing Board; AIR 1954 SC 153 . (5) Corporation of Calcutta Vs. Life Insurance Corpn. of India; AIR 1970 SC 1417 (6) Corporation of Calcutta V. Smt. Padma Devi; AIR 1962 SC 151 . (7) Dr. Balbir Singh v. M/s. N.C.D. & Ors.; AIR 1985 SC 339 . (8) Devan Doulat Ral Kapoor v. New Delhi Municipal Committee; AIR 1980 SC 541 (9) Dwarkadas Margatia vs. Board of Trustees of the Port of Bombay; (1989) 3 SCC 293 (10) Jyantilal Dharamsi Vs. Board of Trustees for the Port of Bombay (unreported judgment of S.M. Daud, J. dated 1st & 4th October, 1990) (c) Section 49 does not override provisions of existing contracts. The rates notified under Section 49 remain fixed until altered. A lease entered into during the regime of a particular rate framed under Section 49 will be governed by that rate. Subsequent unilateral change of rate brought about by a general revision in exercise of powers under Section 49 will not automatically result in alteration of the rates in existing contracts or leasee. (d) No alteration in the rates would be due and proper without compliance with the principles of natural Justice or fairness. This is particularly important because the alterations purport to cover number of properties whose location, amenities etc. are not the same. An effective representation in a given case could have persuaded the authorities to fix a different and/or appropriate rate in that case. For this purpose learned counsel relied on (11) H.L. Trehan v. Union of India, AIR 1989 SC 568 . (e) The reason disclosed by the Port authorities in the affidavit as well a. in the minutes of the meetings are not based on relevant or germane consideration and particularly the methodology adopted for valuation is wholly inappropriate in principle at least as far as the subject properties are concerned. The details of the criticism in this regard will be considered while dealing with the merits of the submissions. The details of the criticism in this regard will be considered while dealing with the merits of the submissions. (f) The lease deeds contained express provisions for escalation of 25% every 5 years and as such there was no scope for applying any other standard in the facts of the instant case (g) The provisions for charging premium in respect of the long term lease are arbitrary and illegal. In any event it is not authorised by the Act. 12. On behalf of the Port Trust it was contended as follows: (a) Scale of rates framed under Section 49 of the Act have the force of law and as held by the Supreme Court the same cannot be challenged. Reliance was placed on the (12) Board of Trustees of The Port of Bombay v. Indian Goods Supplying Co., AIR 1977 SC 1622 and (13) Board of Trustees for the Port of Bombay Vs. Jai Hind Oil Mills Co., AIR 1987 SC 622 . (b) The rates notified in the notification dated 28th March, 1988 (published in Calcutta Gazette Extraordinary dated 31st March, 1988) on the basis of which the impugned letter dated 24th May, 1988, was written by the Port Trust was adopted by the Board of Trustees at their meeting held on 24th December, 1987 on the basis of a report and recommendation of rent revision committee which was constituted in June 1987. Pursuant to the recommendation of the Public Accounts Committee of the Lok Sabha contained in its 175th report (5th Lok Sabha). In this connection learned Counsel for the Port Trust has relied heavily on the averments contained in paragraph 19 of the affidavit-in-Opposition filed on behalf of the Port Trust and also on the extracts from the proceeding of the 14th meeting of the Board of Trustees held on 24th December, 1987 and other related records produced before this Court. (c) The controversy raised to the writ petition relates to purely matters of contract and cannot be subject matter of judicial review under Article 226 of the Constitution. In this context reliance is placed on the following decisions: (14) Radha Krishna Agarwal v. State of Bihar, AIR 1977 SC 1946. (15) Additional Forest Officer v. Biswanath Tea Co. Ltd., AIR 1981 SC 1378. (16) Hindusthan Petrolium Corporation Ltd. Vs. Shyam Sunder Ganeriwala, 91 XWN 217. In this context reliance is placed on the following decisions: (14) Radha Krishna Agarwal v. State of Bihar, AIR 1977 SC 1946. (15) Additional Forest Officer v. Biswanath Tea Co. Ltd., AIR 1981 SC 1378. (16) Hindusthan Petrolium Corporation Ltd. Vs. Shyam Sunder Ganeriwala, 91 XWN 217. (d) The challenge to the vires of Section 49 of the Act is not substantiated. 13. Before considering the merits of the rival contentions it would be necessary to refer to certain provisions or the Act as well as to the extracts of the minutes of the meeting of Board of Trustees dated 24th December, 1987, and the related records disclosed by the Port Trust before this Court. Chapter VI of the Act deals with imposition and recovery of the rates at Ports. Section 49 and 52 which occur in Chapter VI provide as follows: "49. Scale of rates and statement or conditions for use or property belonging to Board: (1) Every Board shall, from time to time, also frame a scale of rates on payment of which, and a statement of conditions under which, any property belonging to, or in the possession or occupation of the Board, or any place within the limits of the port or the port approaches may be used for the purposes specified hereunder : (a) approaching or lying at or alongside any buoy, mooring, wharf, quay, pier, dock, land, building or place as aforesaid by vessels; (b) Entering upon or plying for hire at or on any wharf, quay, pier, dock, land, building, road, bridge or place as aforesaid by animals or vehicles carrying passengers or good, ; (c) Leasing of land or sheds by owners of goods imported or Intended for export or by steamer agents ; (d) Any other use of any land, building, works, vessels or appliances belonging to or provided by the Board. (2) Different scales and conditions may be framed for different classes of good and vessels.” "52. Prior sanction of Central Government to rates and conditions – Every scale of rates and every statement of conditions framed by a Board under the foregoing provisions of this Chapter shall be submitted to the Central Government for sanction and shall have effect when so sanctioned and published by the Board in the Official Gazette." 14. Prior sanction of Central Government to rates and conditions – Every scale of rates and every statement of conditions framed by a Board under the foregoing provisions of this Chapter shall be submitted to the Central Government for sanction and shall have effect when so sanctioned and published by the Board in the Official Gazette." 14. An examination of the extract of the proceedings of the meeting of the Board of Trustees dated 24th December, 1987 and the related documents disclose that on 27th April, 1981 the Board of Trustees adopted resolution No. 138 whereby it was decided to enhance the rates of rent charges by 100% pending a general revision under Section 49 of the Act. The documents nor the affidavit throw any light on the basis on which this 100% enhancement was effected. By another resolution dated 30th June, 1981, the Board of Trustees resolved to set up a committee for going into the question of revision of rates. A Committee was set up pursuant to this resolution and it submitted its report on 26th April, 1982. Before, however, the report could be implemented the Board of Trustees had to constitute an enlarged and more representative committee in view of the representations from many of the lessees/tenants. The enlarged committee's recommendations were made available to the Board of Trustees on 15th July, 1982. The Board of Trustees by its resolution No. 272 dated 21st August, 1982, approved the recommendation of the enlarged committee and accordingly a new rent schedule was admittedly not applied to the writ petitioner No.1 in this case since it was governed by existing long term leases. In June 1987 pursuant to the recommendation of the Public Accounts Committee of the Lok Sabha contained in its 175th report (5th Lok Sabha) a committee was constituted to review the rent schedule for revision of rent rates and to furnish recommendation in this regard to the Board. From the minutes of the meeting of the Rents Revision Committee dated 14th August, 1987, the following may be extracted : - (1) “It was also explained that Calcutta Port Trust has prepared a working paper on the proposed valuation of the land and the structures on the basis of the valuation report prepared by the consultants in 1983. From the minutes of the meeting of the Rents Revision Committee dated 14th August, 1987, the following may be extracted : - (1) “It was also explained that Calcutta Port Trust has prepared a working paper on the proposed valuation of the land and the structures on the basis of the valuation report prepared by the consultants in 1983. This valuation report has been accepted by the Trustees vide ResolutionNo.101 dated 30th April, 1984.” (2) The committee was informed than in computing the value of land, the consultants assessed the market value of such land by resorting to comparative sales method wherever sale dated in respect of similar land in the vicinity were available. Where such dates were not available dates for rent as normally being charged for similar proportions were collected. The surplus generated after deducting the expressed return on investment on the land, was capitalized to obtain he market value of the land.” (3) "It was then complained by the Land Manager, C.P.T. that the rent had been calculated for both land and the structure by taking 10% return on the escalated value as assessed by consultants and 2% of the escalated value of structure has been taken extra in calculating the rent for structure towards the cost of repairs and maintenance and as such 12% return on the escalated value of the structure has been considered on the rent of the structure. The rent calculated in the aforesaid manner is inclusive of the outgoing like owner’s share of municipal tax, administrative cost etc: (4) "After detailed discussion, the committee felt that return of 10% and 12% on the value of land and structures respectively as assessed by the consultants appointed by the Trustees and after escalation @ 5% per year would be the reasonable rent for the Trustees' land and structure. The committee further recommended that in no case the increase in revised rent should be lower than 25% over the 1983 rent Schedule." 15. In the extract of the proceedings of the Board of Trustees dated 24th December, 1987 the following are of importance :- (1) "These valuation reports were earlier accepted by the Trustees vide their Resolution No. 101 dated 30th April, 1934. In the extract of the proceedings of the Board of Trustees dated 24th December, 1987 the following are of importance :- (1) "These valuation reports were earlier accepted by the Trustees vide their Resolution No. 101 dated 30th April, 1934. The committee recommended that return of 10% and 12% on the value of land and buildings respectively as assessed by the committee after allowing escalation @ 5% per annum would be the reasonable rent for the Trustees land and buildings." (2) "In case of grant of long term leases of the land and buildings otherwise than by inviting the tenders/auction upto a period of thirty years, four years' rent as mentioned against various zones in the Schedule of rent will be payable as premium in addition to the monthly rent as per schedule of rent.” (3) "The scheduled rates of rent will be applicable to all existing tenancies, licences and leases excepting that the rates of rent in existing long term leases will be governed by the relevant covenant of the lease.” (4) "The Trustees considered that in view of the critical financial condition of the Port, need for substantial revision of land rent schedule was necessary, more to because of the valuable nature of the property held by Calcutta Port Trust in various areas in land around Calcutta.” 16. At this meeting of 24th December, 1987, the Trustee resolved by Resolution No. 186 to sanction adoption of revised rate of the charges. The impugned notification dated 28th March, 1988, followed this approval. 17. The contention on behalf of the Port Trust that since the rates notified by the Notification dated 28th March, 1988, are statutory in character and therefore cannot be valid cannot be accepted. It is true that in The Board of Trustees v. Indian Goods Supplying Co. ( AIR 1977 SC 1622 ) the Supreme Court made the following observations : "The contention put, forward on behalf of the respondents is that they are in no way responsible for the delay in clearing the goods as the goods had been detailed under the Import Trade Control Regulations. It is no doubt true that before clearance is given by the Import Trade Control authorities and the Customs Department the goods cannot be cleared by the respondents. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control authorities. It is no doubt true that before clearance is given by the Import Trade Control authorities and the Customs Department the goods cannot be cleared by the respondents. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control authorities. Taking into account the hardship caused to the Importer because of the delay certain concessions in demurruge rates are permitted. The Port Trust has prescribed the reduced demurrage levy which is 1/6th of the normal rate from the date of expiry of the free days upto the 60th day, 3rd of the normal rate after the expiry of the 60th day, upto the 90th day, half the normal rate after the expiry of the 90th day upto the 120th day, 2/3rd of the normal rate after the expiry of the 120th day upto the 150th day and at the full rate after the expiry of the 150th day. As the scale of rates are framed by virtue of the statutory powers conferred on the Board under Section. 43 and as the rates have been approved by the Central Government. Under Section 43 the rate's have the force of law and cannot be questioned. Taking into account the hardship to the import certain concession has been given but the legality of the rates which are being levied according to law cannot be questioned. This view was taken by this Court in a recent decision reported in (17) Trustees of the Port of Madras Vs. M/s. Aminchand Pyarelal, (1976)1 SCR 721 : ( AIR 1975 SC 1935 ) when it had to consider the validity of the scale of rates fixed by the Madras Port Trust.” 18. We are not inclined to consider these observations of the Supreme Court as laying down any principle that a statutory scale of rates framed under a statutory power is beyond the scope of judicial review. The Supreme Court not have laid down such a proposition which is against one of the elementary and basic features of the Constitution. We read these observations in the context in which they were made viz. the reasonableness of the provision relating to demurrage in the scale of rates framed by the Bombay Port Trust could not be questioned having regard to the considerations mentioned in the Judgment. We read these observations in the context in which they were made viz. the reasonableness of the provision relating to demurrage in the scale of rates framed by the Bombay Port Trust could not be questioned having regard to the considerations mentioned in the Judgment. Another submission made on behalf of the Port Trust is that since the controversy related to purely matters of contract it was not amendable to judicial review under Article 226. It is now well settled that questions arising even in purely contractual field can be reviewed under Article 226 in an appropriate case. It will depend on the nature of the issues raised and whether judicial technique available under Article 226 is adopt to resolve such issues. Recent decisions of the Supreme Court have effectively demolished the orthodox view based on a distinction between the pre-contract threshold stage and the post contractual dispute stage. We may usefully refer to the decision of the Supreme Court in Dwarkadas Marfatia Vs. Board of Trustees of the port of Bombay (Supra), and (18) Srilekha Vidhyarti Vs. State of Uttar Pradesh, reported in AIR 1991 SC 537 . In any event the submission appears to be misconceived because what is under challenge is in substance the exercise of statutory power by the Board under Section 49 of the Act. We are unable to accept these submissions made on behalf of the Port Trust. 19. In the view that we have taken on merits of the controversy it is not necessary to express any opinion relating to the vires of Section 49 of the Act. It is settled that the Courts should not pronounce upon the validity of a statute unless it is absolutely necessary for deciding the lis between the parties. Moreover, although the Union of India is a party to this writ petition, it does not appear that the Union of India was served and as such it would be wholly improper to consider the merits of the submissions relating to vires of a Central Act or any provision thereof without hearing the Union of India. We, therefore, leaved that point open. 20. We will first deal with the challenge to the validity of the letter of the Port Trust dated 12th October, 1987, enhancing the rent to Rs.105/- and Rs.84/- respectively. We, therefore, leaved that point open. 20. We will first deal with the challenge to the validity of the letter of the Port Trust dated 12th October, 1987, enhancing the rent to Rs.105/- and Rs.84/- respectively. Under both the leases the Commissioner (now Port Trust) reserved the right to revise the rates of rent upto 25% of the scheduled rent then in force. The 12th October, 1987 letter unilaterally imposed the enhanced rent after 26th September, 1987, i.e. after expiry of the leases. The letter, however, expressly acknowledges continuity of relationship of tenant and landlord on month to month basis with effect from 27th September, 1987. It the relationship continues (even though there is a modification of the tenure) it is difficult to appreciate why the provision for revision of 25% contained in the leases should not apply. In fact in the lease dated 4th February, 1970, relating to the second plate the Commissioners (now Port Trust) reserved the right to revise the rent with effect from 27th September, 1987, upto 25%, but not exceeding the scheduled rent then in force. Significantly, the Board's decision also shows that the impugned rates of 1988 would not apply to existing long term tenancies and Note (4) of the impugned notification provided that leases shall contain provision for revision of rent every five years, revision being upto the level of the prevailing schedule of rent. Even if it is assumed that a new relationship of landlord and tenant came into existence with effect from 27th September, 1987, that cannot ipso facio confer upon the Port Trust any unilateral power of imposing the rent upon the tenant. This is against all fundamental principles of law and particularly the law of contract. It is a total arbitrary imposition. 21. The more vexed question is the validity of the direction contained in the letter of the Port Trust dated 24th May, 1988. This letter is based on the notification dated 28th March, 1988, enhancing the rent charges, The Question that first arises is whether enhancement of rent charges in exercise of powers under Section 49 of the Act automatically and without anything more replaces the contractual rents. Section 49 of the Act confers power on the Board to frame rates and once such rent is framed and approved by the Central Government under Section 51 of the Act they become the effective rates. Section 49 of the Act confers power on the Board to frame rates and once such rent is framed and approved by the Central Government under Section 51 of the Act they become the effective rates. It is contended by Mr. Pal that when entering into contract for lease during the operation of a particular rates schedule the Board has to adopt-the rates mentioned in the rate schedule in the contract or the lease. In other words the Board cannot on its ipse dixit apply different rates for different persons during the currency of a prevailing rate schedule which has become effective. But he points out, and we think rightly, that Section 49 of the Act does not say that the rates published from time to time will override contractual rates. There is substance in there submissions. Section 49 of the Act does not start with the usual non-obstante clause which is found is Statutes i.e., "notwithstanding anything to the contrary contained in any contract etc. These words are used whenever the legislature intend contractual provisions to be overridden. It is now well settled that contractual rights are valuable property rights (see (19) Dwarkadas Srinivas v. Sholopur Spinning & Weaving Co. Ltd, AIR 1954 SC 119 at 135) and interference with such rights will not be presumed unless it is absolutely necessary to do so. Having fixed the contractual rent in accordance with the provision of the rent schedule any alteration thereof has to be by mutual agreement between the parties. The provisions for revision in the leases as well as in the impugned notification also support this view. If the general revision made from time to time were to apply automatically to the existing contracts then there would have been no necessity of reserving the right to review in a special manner and upto a limited extent in the leases themselves or in the impugned notification. The apprehension that Port Trust will be stuck with the contractual rate if the tenant does not agree to a revision is not justified. The Port Trust can always have a right of revision of the rates incorporated in the lease deeds as they have done in the instant case and as the impugned notification expressly provides. The escalator thus provided in the lease deed could reasonably take, into account the projected inflationary trends. The Port Trust can always have a right of revision of the rates incorporated in the lease deeds as they have done in the instant case and as the impugned notification expressly provides. The escalator thus provided in the lease deed could reasonably take, into account the projected inflationary trends. In the absence of an express statutory provision overriding the contractual rates there is no compulsive necessity to hold that the contractual rates become non-est on the general revision of rates under Section 49 of the Act. This contention of the writ petitioners must be upheld. 22. We also next turn to the submissions relating to natural justice and fairness. In considering whether a particular situation calls for the application of the principles of natural justice, the Court should avoid a doctrinaire approach as often stated by the Supreme Court. The rules of natural justice are not embodied rule (20) (Maneka Gandhi v. Union of India, AIR 1978 SC 597 , 628) and when the principles of natural justice will apply, to what extent they will apply, and what form and procedure will satisfy its requirements would all depend on the facts and satisfy its requirement would all depend on the fact and circumstances of a given case particularly having regard to the Interests affected thereby. 23. In the Trustee of the Port of Madras v. Aminchand Pyarelal, AIR 1975 SC 1935 , the Supreme Court held that the exercise of power of the Board to frame scale of rates does not result in the framing of a bye-law. In this context the Supreme Court observed : "22. A bye-law has been said to be an ordinance affecting the public, or some portion of the public, imposed by some authority clothed with statutory powers, ordering something to be done or not to be done, and accompanied by some sanction or penalty for its non-observance. The Board's power to frame the scale of rates and statement of conditions is not a regulatory power to order that something must be done or something may not be done. The rates and conditions govern the basis on which the Board performs the services mentioned in Sections 42, 43 and 43-A. Those who desire to avail of the services of the Board are liable to pay for those services at prescribed rates and to perform the conditions framed in that behalf by the Board. The rates and conditions govern the basis on which the Board performs the services mentioned in Sections 42, 43 and 43-A. Those who desire to avail of the services of the Board are liable to pay for those services at prescribed rates and to perform the conditions framed in that behalf by the Board. Indeed, some of the services which the Board may perform are optional and if the importer desires to have the benefit of those services, he has to pay the charges prescribed therefor in the scale of rates. For example, any one wanting to use the Board's premises for any of the purposes mentioned in clauses (a) to (d) of Section 43 would have to pay the charges prescribed by the Board for the use of its premises. Similarly, anyone desiring to have the benefit of the Board's services in behalf of carnage or storage as specified in clauses (c) to (d) of Section 42 shall have to pay for these services at the prescribed rates. Whether the services are from the importer's point of view optional in the sense that he mayor may not require them or whether the importer has no option save to avail himself of the basic services of the Board as for landing and keeping the goods in the transit area the services have to be paid for at the scale of rates prescribed by the Board. In such matters, where services are offered by a public authority on payment of a prior, conditions governing the offer and acceptance of services are not in the nature of bye-laws. They reflect or represent an agreement between the parties, one offering its services at prescribed rates and the other accepting the services at those rates. As generally, in the case of bye-laws framed by a local Authority, there is such cases no penal sanction for the observance of the conditions on which the service are offered and accepted. If the services are not paid for the Board can exercise its statutory lien on the goods under Section 51 and enforce that lien under Section 56 of the Act; or else, the Board may take recourse to the alternative remedy of a suit provided for by Section 62". 24. If the services are not paid for the Board can exercise its statutory lien on the goods under Section 51 and enforce that lien under Section 56 of the Act; or else, the Board may take recourse to the alternative remedy of a suit provided for by Section 62". 24. If only needs to be pointed out that section 43 of the Madras Port Trust Act, 1905 pari materia with Section 49 of the Act, i.e. the Major Port Trusts Act. The position, therefore, appears to be that although rules framed under Section 49 of the Act have statutory force cause they are made under statutory power, they do not assume the legislative character of 3 bye-law or a rule or a regulation. In other words, they are not made pursuant to any delegated legislative power. The question that arises is, is it necessary for the Port Trust to give any opportunity to the users of its premises to make a representation before enhancing the rates? There can be no doubt that a decision for enhancement after consideration of representation of such users would be more conductive to the concept of fairness unless it can be shown by some convincing argument to the contrary. One such argument is that it would be practically impossible to invite representation from a large number of users, hear them individually and dispose of each one of them with a reasoned order. 25. In the context of this case, there is no emergency, no confidentiality, no public Interest involved so as to deny such opportunity. The argument of inconvenience does not appeal to use particularly the one relating to members. 26. The Supreme Court in H.L. Trehan (Supra) struck, down a circular issued by the Board of Directors of Caltex Oil Refinery (India) Ltd. (CORIL) on the ground that the persons affected had not and been given opportunity of making any representation. In that case, the Supreme Court was considering the validity of a circular issued pursuant to Section 11(2) of Acquisition of Shares of Caltex Oil Refinery (India) Ltd. and/or undertakings of India Caltex Oil Refinery (India) Ltd. Act 17 of 1977 which provided that every employee of the acquired undertaking would continue on the same terms and conditions until the conditions of services were duly altered. But by the circular dated 8th March, 1978, the perquisites admissible to the management staff were sought to be rationalised in a manner which was prejudicial compared to those which existed prior to the taking over. The Supreme Court held that since the concerned employees were not given any opportunity of bearing or representing their case before the impugned circular was issued by the Board of Directors the same could not be sustained as it offended the rules of natural justice. This was done although a large number of employees were involved. . 27. The difficulties pointed out by the Port Trust are not unsurmountable. In the first place, the number of users are not innumerable. Secondly, the opportunity need not be an opportunity of hearing the Board could notify the proposed enhancement and invite objections. Thirdly, even consultations with a representative body could inspire confidence. It is for the Port Trust to chose what form they would like to adopt in a given situation. It has been rightly pointed out on behalf of the writ petitioners that if such an opportunity was given the tenants could have pointed out that no services are being rendered by the Port Trust nor any repairs have been made or that the standard rent principle should be followed or that the enhancement was highly disproportionate etc. and as such the enhancement was not called for or that the enhancement should be limited to a particular point. We are not to be taken as laying down that for every enhancement, however minimal its impact, the above procedure should be followed. But what strikes us is that when the Board decides to enhance the rate by a substantial percentage and if such rates are to apply automatically to existing users replacing the existing rates, as contended by the Port Trust (which we have not accepted earlier) then fairness demands that the users be taken into confidence before burdening them with such liability. Having regard to the substantial scale of Increase made by the impugned Notification we, are of the view that, in the absence of any opportunity of representation or any consultation, the same cannot be sustained even it is assumed that the rates would become automatically applicable to existing contracts. Having regard to the substantial scale of Increase made by the impugned Notification we, are of the view that, in the absence of any opportunity of representation or any consultation, the same cannot be sustained even it is assumed that the rates would become automatically applicable to existing contracts. But on this view of the matter the impugned notification cannot be quashed because this complaint about procedural unfairness cannot be made by persons who are not having existing contracts i.e., who were not users when the impugned notification became effective but are prospective users because they have no existing right or interest to be protected or affected. According to us it would be more appropriate to hold that the impugned notification should not be made applicable to the writ petitioners. 28. We, however, do no, propose to rest our decision on the above grounds alone. We propose to examine the complaint of the writ petitioner on the merits of the enhancement brought about by the Notification dated 28th March 1988, which, according to them, is a clear instance of unreasonable and arbitrary exercise of power. 29. The writ petitioner pointed out that compared to the rates fixed by the lease deeds, the 'percentage increase by reason of the enhancement brought about by the notification is about 932% and in the context of the rates indicated by the letter dated 12th October, 1987, the increase would be over 300% prima facie, the enhancement appears to be unreasonably steep. But, the Court will have to consider the basis on which the enhancement has been made. Before doing so, however, we would refer to some of the principles which have been indicated in ………………….. judgment of S.M. Daud., of the Bombay High Court in the case of Jyantilal Dharamsi (Supra). (hereinafter referred to as “Jyantilal’s case”) which is extremely instructive in the present context In Jyantilal"s case the Bombay High Court was dealing with a batch of writ petitions challenging the enhancement of rent made by the Bombay Port Trust (BPT). One of the grounds on which the enhancement was challenged was unreasonable and arbitrary exercise of power by the BPT in enhancing the rates. The submissions made by the petitioners in that case as recorded by Daud, J. may be extracted : “.........Petitioners submit that the BPT being an instrumentality of the State cannot act arbitrarily or capriciously. One of the grounds on which the enhancement was challenged was unreasonable and arbitrary exercise of power by the BPT in enhancing the rates. The submissions made by the petitioners in that case as recorded by Daud, J. may be extracted : “.........Petitioners submit that the BPT being an instrumentality of the State cannot act arbitrarily or capriciously. It has to conform to standards of fairness and reasonableness and the said standard will be that which underlie rent control legislation. While the statutory limitations in their full rigour may not be applicable, the BPT is not free to device ill own ways to circumvent the restrictions in regard to charging of exorbitant rent Section 4(1) the Rent Act exempts the BPT from the restraints placed upon the landlords governed by the exactment. But this does not give it a freedom to do what it will irrespective of the well known concept of fairness and reasonableness. The BPT agrees that it cannot act arbitrarily. But counsel representing it plead that the limitation placed upon the landlords under Rent Act will not, whether in letter or spirit, control its power to act. This standard reasonableness and fairness expected from the instrumentality of the State has to be matched against another expectation from such instrumentality. In regard to the BPT it is a statutory body vested with diverse obligation and in under an obligation to maximise its revenue so as to be in a position to discharge its many responsibilities under the MPT Act." 30. After referring to the decision or the Supreme Court in (21) Kasturilal v. Jammu & Kashmir, AIR 1980 SC 1992 ; (22) Ram & Shyam Co. v. State of Haryana, AIR 1985 SC 1147 ; (23) Harandar Singh More v. Union of India, AIR 1986 SC 247; (24) Sachidananda Panday v. State of West Bengal, AIR 1987 SC 1109 ; (25) Ram Pratap Jaidayal v. Dominion of India, AIR 1953 Bombay 170; (26) Baburam Santaram More v. Bombay Housing Board, AIR 1954 SC 153 ; (27) Ashoke Marketing Ltd. v. Punjab National Bank & Ors., J. T. 1990(2) SC 417; (28) S. Kundswamy Chelliar v. State of Tamil Nadu, AIR 1985 SC 257 ; (29) Sri Sitaram Sugar Co. Ltd. v. Union of India, AIR 1990 SC 1277 ; (30) ONGC v. Natural Gas Consuming Industries of Gujrat, J.T. 1990(2) SC 516, Doud, J. reiterated the principle that power conferred on an authority did not permit such authority to set unreasonably and capriciously or on irrelevant materials or considerations. The learned Judge then referred to the decision of the Supreme Court in (31) Dwarkadas Marfatia & Sons v. Board of Trustees of the Port of Bombay, AIR 1989 SC 1642 , and after applying the relevant principles pointed out why the enhancements in that case were unreasonable and unfair. We respectfully share the view of Doud, J. regarding the applicable principles and as such It is convenient to extract the relevant part of the judgment : “......The decision most apposite to the subject under consideration, to which I now turn is Marfatia (Supra). That case arose out of a judgment delivered by me and the landlords were the BPT. A tenant was sought to be evicted and that tenant’s plea was that the notice terminating its tenancy was, for reasons other than those which could be said to be fair and reasonable or in public interest. In fact, the allegation was that the BPT was seeking to favour another person at its expense. This contention was negatived by me and if memory serves me right, what I said was that the BPT had absolute liberty to determine any tenant's tenancy and that its motives for so doing were totally irrelevant to the legality of the action taken. The tenant went to the Supreme Court by way of an appeal after obtaining special leave. The late Chief Justice who spoke for the Court sustained Marfatia's contention that the BPT was subject to the constraints of fairness and reasonableness. Speaking for the Court be made the following observations: "When the State, the local bodies and public authorities which are 'State' within the meaning of Article 12 are exempted from purview of rent control legislation, the basis of exemption is that such bodies would not be actuated by any profit making motive so as to unduly enhance the rents or eject the tenants from their respective properties as private landlords are or are likely to be. They would not act for their own purpose as private landlords do, but must act for a public purpose. They would not act for their own purpose as private landlords do, but must act for a public purpose. It, therefore, follows that the public authorities which enjoy this benefit without being hidebound by the requirements of the Rent Act must act for public benefit.....Being a public body even in respect of its dealing with its tenant, it must act in public interest and an in fraction of that duty is amenable to examination either in civil suit or in writ jurisdiction......Every activity of a public authority especially in the background of the assumption on which such authority enjoys Immunity from the rigours of the Rent Act must be informed by reason and guided by the public interest. All exercise of discretion or power by public authorities (like BPT) in respect of dealing with tenants in respect of which they have been treated separately and distinctly from ether landlords on the assumption that they would not act as private landlords, must be judged by that standard. If the governmental policy or action even in contractual matters fails to satisfy the best or reasonableness, it would be unconstitutional. "Thus, the court did say that where the authorities constituted had taken a decision which could be said to be reasonable, the Court could not substitute that decision by another because or its view that it was a better one. It is in the light of the foregoing that the issue arising in this petition has to be resolved." "When the BPT seeks to exact rent which will correspond to the present day market value of the land, it is violating the basic assumption underlying the rent control legislation. Mr. Chinoy for one set of petitioners, argues, and rightly so, that rent legislation has been enacted on the basis or a public policy which may be stated thus : (i) The land owner/landlord is entitled to a reasonable return of his investment cost. (ii) The landlord/owner is not entitled to profiteer take advantage of increase in land prices by seeking an increased return demanding higher rent computed on the basis of such Increase in land prices." “Thus, though the underpinnings of the Rent Act may not apply in the strict sense to the BPT or any other local body exempted under Section 4(1) of the Rent Control Act, the BPT, as Marfatia says, is not expected to behave as an ordinary landlord would. An ordinary landlord tries to exact the best possible profit which be can from his holding. That is why the legislature had to intervene and this was done in the public interest and make laws to prevent the landlords from exploiting the tenants by seeking exorbitant rent or else face eviction. It is not open to an ordinary landlord to claim the benefits of appreciation in prices where this be based on the getting scarce of a limited resource, viz. land, in the context of demand. The 'BPT may be entitled to get protection against an erosion in the rental as a result of inflationary trends, but no more. The BPT may be said to be acting reasonably and in fairness, if, and when, it demands an increase in the rent provided the said increase corresponds to the inflationary spiral. But when it seeks to demand more than that, in other words, tries to take advantage of its position as the owner of a scarce and limited resource, it is stepping Into forbidden territory, for, It is then not acting reasonable and fairly. This would be the position despite the statutory obligation, It has to fulfil.” ………… This is no doubt that the BPT like all local authorities and public enterprises, can do with increases in revenue. The benefits of such an increase can be passed on to the citizenry in the shape of improved services, if not a reduction in taxes direct or indirect. That, however, cannot be a reason/or permitting it to fix the market value of its land in terms of the law of demand and supply and based thereupon, charge a so called. reasonable return. Tested thus, the increases proposed by the BPT are anything but reasonable or fair. A mere look of the figures given above and the rent chargeable would show that the increase is astronomical. That cannot be permitted, for it is clearly arbitrary and capricious being based upon an in applicable measure. What would be the reasonable rent that the BPT can charge is something which need not be stated by me. That will be for the BPT to evolve...........” (Emphasis supplied) 31. What is the result of the application of these principles to the impugned enhancement? What would be the reasonable rent that the BPT can charge is something which need not be stated by me. That will be for the BPT to evolve...........” (Emphasis supplied) 31. What is the result of the application of these principles to the impugned enhancement? We have already noted the reasons disclosed by the Port Trust in paragraph 19 of the affidavit-in-opposition and the minutes of the meeting of the Board dated 24th December, 1987 and other related documents placed before us. Two of the complaints raised on behalf of the writ petitioners in this context are not without substance. First the valuation report of 1983 which is said to form the basis of the exercise has not been disclosed. Secondly, and which is more important, the methodology adopted for valuation as appearing from the documents disclosed is criticised as wholly inappropriate in principle at least as far as the properties in question are concerned. In particular it was pointed out that the adoption of the development method in the instant case and the methodology adopted for that purpose are not appropriate and therefore not relevant. It is the contention of the writ petitioners that the methodology has taken into consideration irrelevant factors and has failed to take into consideration certain important factors: These are : (i) The buildings have been constructed by and belong to the writ petitioners-this makes the adoption of the development method of valuation inappropriate; (ii) for the same reason cost of construction method is wholly inappropriate; (iii) return from writ petitioners' tenancy is not relevant because such returns have been fixed by writ petitioners having regard to the fact that structures belong to writ petitioners and are very old; (iv) totally ignoring the fact that the and concerned is subject to tenancy and therefore cannot be valued at Rs. 22,000/per cottah (first belt) or Rs. 17,000/- per cottah (2nd belt) which valuation refers to unencumbered land. 32. The adoption of development method would necessarily involve ascertaining the notional rental income for the property i.e. land and building. The building admittedly has been constructed by the writ petitioners in this case. As per the Appendix to "Methodology", it appears that construction cost is taken at Rs. 92.34 per sq. ft. and another Sq. 6.93 per sq. ft. for the cost of services and hence the total comes to Rs. 99.27 per sq. ft. The building admittedly has been constructed by the writ petitioners in this case. As per the Appendix to "Methodology", it appears that construction cost is taken at Rs. 92.34 per sq. ft. and another Sq. 6.93 per sq. ft. for the cost of services and hence the total comes to Rs. 99.27 per sq. ft. It is difficult to appreciate why the valuation of the shed/structure constructed by the writ petitioners should enter into valuation. According to the Port Trust the cost of building has been arrived at following CPWD Circular No. SS(NDZ)/SWV/97/1377 dated 7.7.1979. Including the structure constructed by the writ petitioners in land which only belongs to the Port Trust would obviously result in excessive valuation of such land. Again in Annexure B-1 to “Methodology” it has been stated as follow : "It is therefore considered fair to assess the present market' value of the land in this area as Rs. 22,000/- per cottah in the first belt and Rs. 17,000/- per cottah in the second belt." (Emphasis added). 33. The valuation is of 1983. The land in question was then under lease with every possibility of the lease being extended after expiry of 1987. It does not appear that a very obvious and relevant factor that any land which is under a lease reflects a depressed value has been taken into consideration by the Port Trust. 34. Nobody can dispute that the Port Trust like any other institution or authority needs finance for its operations. The records of the proceedings of the Board disclosed before us also puts forward the critical financial condition of the Port as the reason for substantial revision of land rent. But as repeadly observed by the Supreme Court, the Port Trust cannot behave like a purely commercial organisation. It is not entitled to exploit the ownership of a scarce resource like land in fixing the rate of rent. Can it totally ignore the principles relating to standard rent in the Rent Acts? It is difficult to appreciate how an authority within the meaning of Article 12 of the Constitution can be permitted to ignore the principles underlying fixation of standard rent contained in the Rent Acts. Can it totally ignore the principles relating to standard rent in the Rent Acts? It is difficult to appreciate how an authority within the meaning of Article 12 of the Constitution can be permitted to ignore the principles underlying fixation of standard rent contained in the Rent Acts. The writ petitioners pointed out that when the question of valuation of building under Municipal laws came up before the Supreme Court it has been held that in fixing the rental value, any rent higher than the standard rent under the Rent Control laws should not be taken into consideration. In Corporation of Calcutta Vs. Sm. Padma Debi, AIR 1962 SC 151 after referring to the provisions of the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950 relating to fixing or standard rent and Section 127(A) of the Calcutta Municipal Act, 1923 which contained the expression "the gross annual rent at which a building or land might reasonably be expected to let...........” Subha Rao, J. observed : A combined reading of the said provisions leaves no room for doubt that a contract for rent at a rate higher than the standard rent is not only not enforceable but, also that the landlord would be committing an offence if he, collected a rent above the rate of the standard rent. One may legitimately say under these circumstances that a landlord cannot reasonably be expected to let a building for a rent higher than the standard rent. A law of the land with its penal consequences cannot be ignored in ascertaining the reasonable expectations of a landlord in the matter of rent. In this view the law of the land must be necessarily taken as one of the circumstances obtaining in the open market placing an upper limit on the rate of rent for which a building can reasonably be expected to let. “ (Our Emphasis). 35. This view was reiterated by the Supreme Court in (32) Corporation of Calcutta v. LIC of India, AIR 1970 SC 1417 and (33) Dr. Balbir Singh v. NCD, AIR 1985 SC 339 . We also do not find any reasonable justification for the condition relating to payment of premium equivalent to four month, rent in respect of long term lease. This view was reiterated by the Supreme Court in (32) Corporation of Calcutta v. LIC of India, AIR 1970 SC 1417 and (33) Dr. Balbir Singh v. NCD, AIR 1985 SC 339 . We also do not find any reasonable justification for the condition relating to payment of premium equivalent to four month, rent in respect of long term lease. Almost all rent control legislation prohibits charging or premium by private landlord, yet the Port Trust seeks to take advantage of exemption from the Tenancy Act by imposing this charge. We view this as a breach of Trust and cutting at the root of the rationale of the exemption a explained by the Supreme Court in Marfatia's case. 36. For the reasons aforesaid, this writ application is allowed to the extent that the notification dared 28th March, 1988, published in the Calcutta Gazette extraordinary dared 31st March, 1988, is set aside and quashed. The appeal is therefore allowed. The order under appeal is set aside. 37. We take it clear that Port Trust will be al liberty to fix the rents or enhance editing rent in accordance with law having regard to, inter alia, the principles indicated in the judgment. 38. It is now necessary to consider the question of claim for refund. Although refund is a logical conclusion where money is retained illegally, it is ultimately a question of discretion of the Court. The enhancement by the letter dated 12th October, 1987, was not challenged by the petitioners until the enhancement sought to be imposed by the notification dated 28th March, 1958. It would not be unreasonable to draw the inference that the letter dated 12th October, 1987 did not create much hardship or prejudice to the writ petitioners end that they would have continued to pay the enhanced rate in terms of the letter dated 12th October, 1987, had not they faced the hard blow of the notification dated 28th March, 1988. There appears to be no explanation for not challenging the imposition made by the letter dated 12th October, 1987 in a Court of law earlier. The Port Trust could well say that they were lulled into a sense of security that recoveries made pursuant to the letter dated 12th October, 1987 would remain with them. There appears to be no explanation for not challenging the imposition made by the letter dated 12th October, 1987 in a Court of law earlier. The Port Trust could well say that they were lulled into a sense of security that recoveries made pursuant to the letter dated 12th October, 1987 would remain with them. If, however, any recovery has been made representing the difference between the rent fixed by the letter dated 12th October, 1987 and the notification dated 23th March, 1988 then the Port Trust shall refund the difference or adjust the same against the current bills. Yusuf, J.: I agree.