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N THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL     APPEAL     Nos.     3356-3357/2012   (Arising out of SLP (C) Nos.  3273-327of 2011)

Kesri Commissariat & others       ….. Appellants

Versus

Ministry of Food and Civil Supplies, Govt. of Maharashtra, Mumbai & Anr.    …  Respondents  

J     U     D     G     M     E     N     T      

Dipak      Misra,     J   

Leave granted.

2. The plaintiffs, trustees of the Parsee Girls’  School  

Association, being aggrieved by the judgment and order dated 5th  

March, 2010 in Writ Petition No. 1171 of 2009 and the order  

dated 17.9.2010 in Review Petition No. 160 of 2010 passed by the  

High Court of Judicature at Bombay whereby the Writ Court has

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overturned the judgment and order dated 29.8.2008 of the  

Appellate Court of Small Causes at Bombay in Appeal No. 123 of  

2005 wherein the Appellate Court had reversed the judgment and  

decree passed by the Court of Small Causes at Bombay in T.E. &  

R. Suit No. 241 of 2002 wherein the said court had decreed the  

suit against defendant No. 1 and dismissed the suit against  

defendant No. 2 for recovery of possession, and decreed the suit  

in toto and directed recovery of possession with a further  

direction of an enquiry as regards the future mesne profits under  

Order 20 Rule 12(1)(c) of the Code of Civil Procedure (for short  

‘the Code’); have preferred the present appeals by special leave  

under Article 136 of the Constitution.

3. Shorn of unnecessary details, the facts which are essential  

to be exposited are that the appellants/plaintiffs (hereinafter  

referred to as ‘the plaintiffs’) filed a suit against defendant Nos. 1  

and 2 for recovery of the suit properties situate at 4th and 5th  

Floor of Bengallee Girls High School, 42, Sir Vithaldas  

Thackersey Marg, New Marine Lines, Mumbai and for other  

reliefs.  The case of the plaintiffs before the court of first instance  

was that the Parsee Girls’  School Association is a public trust  

and owns the suit building where the B.S. Bengallee Girls High

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School is run.  In the year 1954, the plaintiffs had permitted  

defendant No. 1, the New India Assurance Company Ltd., to  

occupy the 4th and 5th floors of the suit building on payment of  

rent of Rs.6114/- per month.  The said company, in the year  

1959, without the knowledge and consent of the plaintiffs,  

inducted defendant No. 2, the Ministry of Food and Civil  

Supplies, Government of Maharashtra, as a subtenant.  It was  

pleaded that the plaintiffs had the privity of contract only with  

defendant No. 1 and had no relationship whatsoever with  

defendant No. 2 and, therefore, defendant No. 2 was in unlawful  

possession of the premises in question.  It was the stance of the  

plaintiffs that they, being in need of the suit property for the  

School, requested the defendants to deliver the possession but as  

sphinx like silence was maintained to the request, being  

compelled, they issued notice on 19.11.2001 terminating the  

tenancy of defendant No. 1 and instituted the suit for recovery of  

possession.  It was contended by the plaintiffs that the  

defendants were not protected under the provisions of Section  

3(1)(b) of the Maharashtra Rent Control Act, 1999 (for brevity ‘the  

1999 Act’) and were liable for eviction.  A claim for mesne profit

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was put forth and the same was assessed by the plaintiffs at  

Rs.11,45,583/- per month as per the market value.

4. Defendant No. 1, the New India Assurance Company, filed  

its written statement setting forth the stance that the suit was  

misconceived and not maintainable as the proper remedy on the  

part of the plaintiffs was to take recourse to Section 16 of the  

1999 Act.  It was also asserted that there was no cause of action  

for eviction.  The further stand of defendant No. 1 was that the  

plaintiffs had not obtained permission from the Charity  

Commissioner under the Bombay Public Trust Act, 1950.  It was  

asseverated that defendant No. 1 being a Government Company  

was not exempted under the provisions of the 1999 Act.  It was  

the further stand that with the knowledge and consent of the  

trustees, the predecessors of the plaintiffs, had given the suit  

premises to defendant No. 2 in the year 1959 and the present  

trustees were aware about these facts.  The allegation that  

defendant No. 2 was in unlawful occupation was strongly refuted.  

The bona fide requirement of the plaintiffs was vehemently  

controverted.  The claim of mesne profits was seriously resisted  

by the said defendant.

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5. Defendant No. 2 filed a separate written statement stating,  

inter alia, that the suit was not maintainable; that it was barred  

by limitation; that no notice under Section 80 of the Code was  

served on it; that the Insurance Company had already shifted its  

premises to its own building and sublet the suit premises to  

defendant No. 2 and they are in peaceful occupation of the same  

with the knowledge of the plaintiffs; and that it being a protected  

tenant under the 1999 Act, the relief of eviction was untenable.

6. The learned trial Judge framed number of issues and came  

to hold that the tenancy of defendant No. 1 had been validly and  

legally terminated; that the suit is not flawed for want of  

permission of the Charity Commissioner or want of notice under  

Section 80 of the Code; that the plaintiffs are the validly  

appointed trustees; that the plaintiffs are entitled to a decree for  

possession in respect of the suit premises as far as defendant No.  

1 is concerned; and that defendant No. 2 had proved that being a  

lawful subtenant, it is protected under the provisions of the 1999  

Act and, therefore, decree for possession in respect of the said  

defendant could not be granted.  The learned trial Judge, to

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arrive at the conclusion that the provisions of the 1999 Act would  

not apply to the Insurance Company, relied on the evidence on  

record, namely, the manner in which it has come into existence  

and the paid-up capital is more than rupees one crore and that it  

is not a Government Company.  As far as defendant No. 2 is  

concerned, an opinion was expressed that the 1999 Act is  

applicable as the premises in question has been given on licence  

to a Government Department.  After so holding, as is perceptible,  

the learned trial Judge proceeded to state that defendant No. 2 is  

in exclusive possession of the suit property since 1959 and,  

therefore, it had acquired the status of a deemed tenant by virtue  

of Section 15(a) of the Bombay Rents, Hotel and Lodging House  

Rates Control Act, 1947 as amended in 1987 (for short ‘the 1947  

Act’).  He also recorded a finding that after coming into force of  

the 1999 Act, the status of deemed tenant of defendant No. 2 is  

not affected and, therefore, it would get protection as provided  

under the 1999 Act.  Being of this view, he decreed the suit in  

part as has been indicated hereinabove.

7. On an appeal being preferred, the Appellate Court, after  

concurring with the findings recorded by the learned trial Judge  

and analysing the ambit, purpose and scope of Section 3 (1) (b) of

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the 1999 Act, came to hold that Section 3(1)(b) of the 1999 Act is  

applicable to both the defendants in respect of the suit premises  

and, therefore, defendant No. 2 could not become a lawful tenant  

of the landlord and claim protection under the provisions of the  

1999 Act.  On the basis of the aforesaid reasoning, the Appellate  

Court decreed the suit for recovery of possession against both the  

defendants and directed for mesne profits.

8. The reversal of the decree led defendant No. 2, the Ministry  

of Food and Civil Supplies, Government of Maharashtra, to prefer  

a writ petition under Article 227 of the Constitution of India in  

the High Court at Bombay.  It was contended before the learned  

Single Judge that the second defendant was inducted as a  

subtenant in the year 1959 and by virtue of the provisions of the  

1947 Act, it had acquired the status of deemed tenant with effect  

from 1st February, 1973 in view of the language employed in sub-

section (2) of Section 15 of the said Act and, therefore, it was  

entitled to protection.  The said submission was combatted by  

the respondents therein contending that the suit was governed  

under the provisions of Transfer of Property Act and the  

conclusion arrived at by the Appellate Court was absolutely  

impeccable.  The Writ Court, analysing the evidence and findings

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recorded by the courts below, came to hold that the writ  

petitioner was inducted by the Insurance Company in the year  

1959 as a subtenant and if the amendment brought in Section  

15 of the 1947 Act by Maharashtra Act No. VIII of 1987 is  

conjointly read with sub-section (11) of Section 5 of the 1947 Act,  

it would be clear that a subtenant who is inducted by the tenant  

before 1st February, 1973 becomes the tenant within the meaning  

of Section 5(11) of the 1947 Act and hence, the irresistible  

conclusion would be that the second defendant became a tenant.  

The Writ Court further opined that the 1999 Act came into force  

on 1st April, 2000 and by that time, by virtue of sub-section (1) of  

Section 4 of the 1947 Act, defendant No. 2, being a Government  

Department, had become a tenant and, as a logical corollary,  

Clause (a) of Section 3(1) of the 1999 Act would apply to the  

premises in question and, therefore, defendant No. 2 enjoyed the  

protection of the 1999 Act.  Being of this view, the Writ Court  

unsettled the judgment and decree for eviction.

9. We have heard Mr. T.R. Andhiyarujina, learned senior  

counsel for the appellants, Mr. Chinmoy A. Khaladkar, learned  

counsel for respondent No. 1, and Mr. A.K. Raina, learned  

counsel for respondent No. 2.

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10. The singular seminal issue that has emanated for  

consideration is whether defendant No. 2, which is respondent  

No. 2 herein, would be a protected tenant under the provisions of  

the 1999 Act.  The learned Single Judge has treated defendant  

No. 2 as a deemed tenant and thereby opined that he is entitled  

to protection under the 1999 Act.  He has placed reliance on the  

amended definition of ‘tenant’  and the language employed in  

Section 15 of the 1947 Act to come to the conclusion that  

defendant No. 2 is a protected tenant under the 1999 Act.  To  

understand the scheme of the 1947 Act, it is apposite to refer to  

Section 4 of the said enactment.  It deals with exemptions.  

Section 4(1), being relevant, is reproduced below: -

“4. Exemptions. – (1) This Act shall not apply to  any premises belonging to the Government or a  local authority or apply as against the  Government to any tenancy, licence or other like  relationship created by a grant from or a licence  given by the Government in respect of premises  requisitioned or taken on lease or on licence by  the Government, including any premises taken  on behalf of the Government on the basis of  tenancy or of licence or other like relationship by,  or in the name of any officer subordinate to the  Government authorised in this behalf; but it shall  apply in respect of premises let, or given on  licence, to the Government or a local authority or  taken on behalf of the Government on such basis  by, or in the name of such officer.”

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11. At this juncture, it is apt to state that Section 4(1) of the  

1947 Act in its original frame had come up for consideration  

before this Court in Bhatia Co-operative Housing Society Ltd.  

v. D.C. Patel1.  This Court was considering the applicability of  

the 1947 Act to a local authority, regard being had to the  

provisions contained in Section 4 of the Act.  The crucial point  

that arose before the Court was to determine the question of  

jurisdiction of the city civil court to entertain the suit keeping in  

view the language in which Section 4 of the 1947 Act was  

couched.  The applicability of the provision was the core issue.  It  

was observed, if it applied, the city civil court had no jurisdiction  

but if it did not, then it had such jurisdiction.  After so observing,  

the four-Judge Bench proceeded to deal with the fact whether the  

Act applied to the demised premises and, accordingly, proceeded  

as to what would be the true construction of Section 4(1) of the  

1947 Act.  This Court scanned the anatomy of the provisions of  

Section 4 (1) into three parts, namely, (i) the Act shall not apply  

to premises belonging to the Government or a local authority, (ii)  

the Act shall not apply as against the Government to any tenancy  

1

(1953) 4 SCR 185

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or other like relationship created by grant from the Government  

in respect of premises taken on lease or requisitioned by the  

Government, and (iii) the Act shall apply in respect of premises  

let out to the Government or a local authority.  After reproducing  

the contentions, the Court proceeded to state as follows: -

“Section 4(1) provides for an exemption from or  exception to that general object. The purpose of  the first two parts of section 4(1) is to exempt two  cases of relationship of landlord and tenant from  the operation of the Act, namely, (1) where the  Government or a local authority lets out premises  belonging to it, and (2) where the Government  lets out premises taken on lease or requisitioned  by it. It will be observed that the second part of  section 4(1) quite clearly exempts "any tenancy or  other like relationship" created by the  Government but the first part makes no reference  to any tenancy or other like relationship at all  but exempts the premises belonging to the  Government or a local authority. If the intention  of the first part were as formulated in item (1),  then the first part of section 4(1), like the second  part, would have run thus :-  

This Act shall not apply to any tenancy or  other like relationship created by  Government or local authority in respect of  premises belonging to it.  

The Legislature was familiar with this form  of expression, for it adopted it in the second part  and yet it did not use that form in the first. The  conclusion     is,     therefore,     irresistible     that     the    Legislature     did     not     by     the     first     part     intend     to    exempt     the     relationship     of     landlord     and     tenant    but     intended     to     confer     on     the     premises     belonging    to      Government      an      immunity     from     the     operation    of     the     Act.  ”  

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[Emphasis added]

Thereafter, the Bench proceeded to state as follows: -  

“It is said that if the first part of the section  is so construed as to exempt the premises from  the operation of the Act, not only as between the  Government or a local authority on the one hand  and its lessee on the other, but also as between  that lessee and his sub-tenant, then the whole  purpose of the Act will be frustrated, for it is well  known that most of the lands in Greater Bombay  belong to the Government or one or other local  authority, e.g., Bombay Port Trust and Bombay  Municipality and the greater number of tenants  will not be able to avail themselves of the benefit  and protection of the Act. In the first place, the  preamble to the Act clearly shows that the object  of the Act was to consolidate the law relating to  the control of rents and repairs of certain  premises and not of all premises. The Legislature  may well have thought that an immunity given to  premises belonging to the Government or a local  authority will facilitate the speedy development of  its lands by inducing lessees to take up building  leases on terms advantageous to the Government  or a local authority. Further, as pointed out by  Romer L.J. in Clark v. Downes [1931] 145 L.T.  20, which case was approved by Lord Goddard  C.J. in Rudler v. Franks [1947] 1 K.B. 530 such  immunity will increase the value of the right of  reversion belonging to the Government or a local  authority. The fact that the Government or a local  authority may be trusted to act fairly and  reasonably may have induced the Legislature all  the more readily to give such immunity to  premises belonging to the Government or a local  authority but it cannot be overlooked that the  primary object of giving this immunity was to  protect the interests of the Government or a local

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authority. This protection requires that the  immunity should be held to attach to the  premises itself and the benefit of it should be  available not only to the Government or a local  authority but also to the lessee deriving title from  it. If the benefit of the immunity was given only to  the Government or a local authority and not to its  lessee as suggested by learned counsel for the  respondent and the Act applied to the premises  as against the lessee, then it must follow that  under section 15 of the Act it will not be lawful  for the lessee to sublet the premises or any part  of it. If such were the consequences, nobody will  take a building lease from the Government or a  local authority and the immunity given to the  Government or a local authority will, for all  practical purposes and in so far at any rate as  the building leases are concerned, be wholly  illusory and worthless and the underlying  purpose for bestowing such immunity will be  rendered wholly ineffective. In     our     opinion,    therefore,     the     consideration     of     the     protection     of    the     interests     of     the     subtenants     in     premises    belonging     to     the     Government     or     a     local     authority    cannot     override     the     plain     meaning     of     the    preamble     or     the     first     part     of     section     4(1)     and    frustrate     the     real     purpose     of     protecting     and    furthering     the     interests     of     the     Government     or     a    local     authority     by     conferring     on     its     property     an    immunity     from     the     operation     of     the     Act.  ”   

[Underlining is ours]

Eventually, this Court opined that the demised premises,  

including the building, belonged to the local authority and are  

outside the operation of the Act.  The Act being out of the way the  

appellants were well within their rights to file the suit in

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ejectment in the City Civil Court and that Court had jurisdiction  

to entertain the suit and to pass the decree.

12. We have referred to the aforesaid dictum in extenso to  

highlight that the provision exempted the premises let out and a  

subtenant cannot claim protection in the premises belonging to  

the Government or a local authority as that would frustrate the  

real purpose of affording an immunity from the operation of the  

Act.   

13. In a similar situation, the Court of Appeal in England in the  

case of Rudler v. Franks2, speaking through Lord Goddard, C.J.,  

has opined thus: -

“The reason why the Acts do not apply when  the tenants of the Crown creates a sub- tenancy is first because, as I have just said,  the Acts operate in rem and not in personam  and so are never attached to the house at  all.”    

2

(1947) 1 K.B. 530

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14. In Percy G. Moore, Ltd. v. Stretch3, it has been held that  

the Rent Act applies to property and not to a person or to a  

tenant or a subtenant.  It is worth noting, in the said cases, the  

deliberation pertained to rent restriction.   

15. Similarly, in Cow v. Casey4, it has been laid down that a  

tenant of premises which are not protected by the Acts cannot  

create a sub-tenancy, of part of those premises which would be  

protected against the landlord.   

16. In this regard, we may refer with profit to the decision in  

Nagji Vallabhji and Company v. Meghji Vijpar and Company  

and Another5 wherein the question arose as regards the  

interpretation of Section 4(1) of the 1947 Act.  Be it noted that  

sub-section (4)(a) to Section 4 was introduced by the Bombay  

Rent Act by the Act 4 of 1953.  It was urged that they were lawful  

3

(1951) 1  All ER 228

4

(1949) 1 K.B. 474

5

(1988) 3 SCC 68

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subtenants of the firm and were, therefore, entitled to protection  

under Section 4(1) of the 1947 Act.  The Bombay City Civil Court  

decreed the suit for eviction.  In appeal, the learned Single Judge  

of the High Court of Bombay remanded the matter on two issues.  

On remand, the City Civil Court recorded a finding that the  

tenancy of the appellant was not validly terminated.  In appeal,  

the learned Single Judge came to hold that there was a valid  

notice and the provisions of the Rent Act did not apply to the  

premises in question.  On a further appeal being preferred, the  

Division Bench dismissed the same.  The Bench referred to the  

legislative history of the 1947 Act and the decision in Bhatia Co-

operative Housing Society Ltd. (supra) and referred to Section  

4(1) and sub-section (4)(a) to Section 4 and eventually came to  

hold as follows: -   

“It is significant that the exemption granted  under the earlier part of sub-section (1) of  Section 4 is in respect of the premises and  not in respect of the relationship.  In order  to confer the protection of the provisions of  the Bombay Rent Act to the sub-lessees  occupying the premises in any building  erected on Government land or on land  belonging to a local authority irrespective of  the question who has put up the building as  against the lessees of the land but without  affecting the immunity conferred to the  Government or local authorities as

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contemplated by sub-section (1) of Section 4  of the Bombay Rent Act, we would have  practically rewritten the provisions of  Section 4 and it is not open to us to do  that.”

Thereafter, the Bench proceeded to state as follows: -

“We can only observe that if the intention of  the Legislature is that the protection should  be given to the sub-lessee against the lessee  in a building taken on lease by the lessee  from the Government or a local authority, it  is for the Legislature concerned to make  appropriate amendments in the Bombay  Rent Act and it is not open for us to re-write  the provisions of Sub-section (4)(a) of  Section 4 of the Bombay Rent Act.”

17. In this regard, we may fruitfully refer to the decision in  

Parwati Bai v. Radhika6.  In the said case, the appellant had  

filed a suit for eviction in the Civil Court.  A plea was advanced  

by the defendants that the suit premises are governed by the  

provisions of the Madhya Pradesh Accommodation Control Act,  

1961.  The courts below accepted the stand of the defendant and  

dismissed the suit.  The second appeal preferred by the  

6

AIR 2003 SC 3995

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plaintiff/landlord was dismissed.  This Court referred to Section  

3(1) of the 1961 Act and held as follows: -

“It is well settled by a decision of this Court in  Bhatia Co-operative Housing Society Ltd. v.  D.C. Patel [(1953) 4 SCR 185), wherein pari  materia provisions contained in the Bombay  Rents, Hotel and Lodging House Rates Control  Act, 1947 came up for consideration of this  Court.  It was held that the exemption is not  conferred on the relationship of landlord and  tenant but on the premises itself making it  immune from the operation of the Act.  In  identical facts, as the present case is, the  decision of this Court was followed by the High  Court of Madhya Pradesh in Radheylal  Somsingh v. Ratansingh Kishansingh [1977  MPLJ 335] and it was held that the immunity  from operation of the Madhya Pradesh  Accommodation Control Act, 1961 is in respect  of the premises and not with respect to the  parties.  If a tenant in municipal premises lets  out the premises to another, a suit by the  tenant for ejectment of his tenant and arrears  of rent would not be governed by the Act as the  premises are exempt under Section 3(1)(b) of  Act though the suit is not between the  municipality as landlord and against its  tenant.  We find ourselves in agreement with  the view taken by the High Court of Madhya  Pradesh in Radheylal’s case.  It is unfortunate  that this decision binding in the State of  Madhya Pradesh was not taken note of by the  courts below as also by the High Court.”

From the aforesaid pronouncements, it is luminescent that the  

provision applies to premises and not to parties or persons.  The  

learned Single Judge has referred to the definition of ‘tenant’

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which means ‘any person or by whom or in whose account rent is  

payable and includes a tenant or subtenant as derived under a  

tenant before the first day of February, 1973’ and has held that  

the Government becomes a protected tenant.   

18. The thrust of the matter is whether the original tenant is a  

protected tenant or not and if not, what benefit would enure to a  

subtenant.

19. At this stage we think it appropriate to refer to Section 3 of  

the 1999 Act.  The said provision also deals with exemption.  For  

our purpose Clauses (a) and (b) of sub-Section (1) of Section 3,  

being relevant, are reproduced below: -

“3. Exemption. – (1) This Act shall not apply –

(a) to any premises belonging to the  Government or a local authority or apply as  against the Government to any tenancy,  licence or other like relationship created by  a grant from or a licence given by the  Government in respect of premises  requisitioned or taken on lease or on licence  by the Government, including any premises  taken on behalf of the Government on the  basis of tenancy or of licence or other like  relationship by, or in the name of any officer  subordinate to the Government authorised  in this behalf; but it shall apply in respect of  premises let, or given on licence, to the

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Government or a local authority or taken on  behalf of the Government on such basis by,  or in the name of, such officer;

(b) to any premises let or sub-let to banks, or  any Public Sector Undertakings or any  Corporation established by or under any  Central or State Act, or foreign missions,  international agencies, multinational  companies, and private limited companies  and public limited companies having a paid  up share capital of rupees one crore or  more.”

From the aforesaid provisions, it is quite plain that the Act does  

not apply to Government or a local authority or to any premises  

let or sub-let to a bank or any public sector undertaking or any  

corporation established by or under any Central or State Act,  

public limited companies and some other categories.  The  

exception that has been carved out is that it shall apply in  

respect of premises let or given in licence to the Government or a  

local authority or taken on behalf of the Government on such  

basis by or in the name of such officer.  In the case on hand, the  

trust has let out the premises to the Insurance Company.

20. In Leelabai Gajanan Pansare and Others v. Oriental  

Insurance Company Limited and Others7, question arose  

7

(2008) 9 SCC 720

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whether a Government Company falls within the compendious  

expression `any public sector undertaking’  or `corporation’  

established by or under any Central or State Act enshrined  

under Section 7 (1) of the 1999 Act.  The respondent in the said  

case who was noticed was Oriental Insurance Company Limited.  

It was contended before the two-Judge Bench that the concept of  

a Government Company is not a part of Section 3 (1) (a) and in  

the absence of the word 'Government’ and the presence of other  

expressions in Section 3(1)(b), it is to be construed that the  

Government Companies are not entitled to receive the protection  

of the Rent Act.  It was contended on behalf of the respondent  

company that a Government Company is sui generis in structure  

and in statutory treatment thereof and, therefore, it does not fall  

within the compendious expression and the exclusion clause  

which applies to public sector undertakings established by or  

under any Central or State Act does not apply to a Government  

Company like Oriental Insurance Company.

21. After dealing with various contentions, the two-Judge  

Bench referred to the various provisions of the 1999 Act, the  

Companies Act and dealt with Section 4(1) of the 1947 Act and,

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placing reliance on Malpe Vishwanath Acharya & ors. v.  

State of Maharashtra & Anr8, came to hold as follows: -

“The above discussion is relevant because we  must understand the reason why Section  3(1)(b) came to be enacted.  As stated above,  in our view, with the offer of an economic  package to the landlords, the legislature has  tried to maintain a balance.  The provisions  of the earlier Rent Act, as stated above, have  become vulnerable, unreasonable and  arbitrary with the passage of time as held by  this Court in the above judgment.  The  legislature was aware of the said judgment.  It is reflected in the report of the Joint  Committee.  In our view, the changes made  in the present Rent Act by which landlords  are permitted to charge premium, the  provisions by which cash-rich entities are  excluded from the protection of the Rent Act  and the provision providing for annual  increase at a nominal rate of 5% are  structural changes brought about by the  present Rent Act, 1999 vis-ả-vis the 1947  Act.  The Rent Act of 1999 is the sequel to  the judgment of this Court in Malpe  Vishwanath Acharya.

The entire discussion hereinabove is,  therefore, not only to go behind Section 3(1) (b) and ascertain the reasons for enactment  of the said clause but also to enable this  Court to give purposive interpretation to the  said clause.”

8

(1998) 2 SCC 1

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After so stating, the two-Judge Bench speaking, through S.H.  

Kapadia, J. (as His Lordship then was), observed as follows: -

“73. Moreover, if we are to hold that PSUs do  not include government companies, as held  by the High Court, we would be disturbing  the package offered by the legislature of  allowing increase of rent annually at 5%,  allowing the landlords to accept premium  and exclusion of certain entities from the  protection of the Rent Act under Section 3 (1)  (b).  On the other hand, acceptance of the  arguments advanced on behalf of the  respondents on the interpretation of Section  3(1)(b) would make the Act vulnerable to  challenge as violative of Article 14 of the  Constitution.  Therefore, we are of the view  that on a plain meaning of the word “PSUs”  as understood by the legislature, it is clear  that India’s PSUs are in the form of statutory  corporations, public sector companies,  government companies and companies in  which the public are substantially interested  (see the Income Tax Act, 1961).  When the  word PSU is mentioned in Section 3 (1) (b),  the State Legislature is presumed to know  the recommendations of the various  Parliamentary Committees on PSUs.  These  entities are basically cash-rich entities.  They  have positive net asset value. They have  positive net worths.  They can afford to pay  rents at the market rate.

74.   Thirdly, we are of the view that, in this  case, the principle of noscitur a sociis is  clearly applicable.  According to this  principle, when two or more words which are  susceptible to analogous meanings are  coupled together, the words can take their

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colour from each other.  Applying this test,  we hold that Section 3(1)(b) clearly applies to  different categories of tenants, all of whom  are capable of paying rent at market rates.  Multinational companies, international  agencies, statutory corporations, government  companies, public sector companies can  certainly afford to pay rent at the market  rates.  This thought is further highlighted by  the last category in Section 3(1)(b).  Private  limited companies and public limited  companies having a paid-up share capital of  more than Rs.1,00,00,000 are excluded from  the protection of the Rent Act.  This further  supports the view which we have taken that  each and every entity mentioned in Section  3(1)(b) can afford to pay rent at the market  rates.

xxx xxx xxx

76. As stated above, Section 3(1)(b) strikes  a balance between the interest of the  landlords and the tenants; it is neither pro- landlords nor anti-tenants.  It is pro-public  interest.  In this connection, one must keep  in mind the fact that the said Rent Act, 1999  involves a structural change vis-ả-vis the  Bombay Rent Act, 1947.  As stated above,  with the passage of time, the 1947 Act  became vulnerable to challenge as violative  of Article 14.  As stated above, the legislature  has to strive to balance the twin objectives of  Rent Act protection and rent restriction for  those who cannot afford to pay rents at the  market rates.

77. To accept the interpretation advanced  on behalf of the respondents for excluding  government companies from the meaning of  the word “PSUs”  in Section 3(1)(b) would

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amount to disturbing the neat balance  struck by the legislature.”

22. From the aforesaid it is graphically clear that an Insurance  

Company is not protected under the 1999 Act.  Once it is held  

that defendant No. 1, the New India Assurance Company, the  

original tenant, is not protected, the question would be whether a  

subtenant can be protected under the Act.  In the case of Bhatia  

Co-operative Housing Society Ltd. (supra), it has been clearly  

laid down that Section 4(1) of the 1947 Act applies to premises  

and not to parties or their relationship.  Section 3 uses the term  

‘premises’.  The provision commences with the non-obstante  

clause that the Act does not apply to any premises belonging to  

the Government or a local authority.  Sub-section 3(1)(b) makes  

it clear that the Act does not apply to any bank, public sector  

undertaking or certain other categories of tenants.  The  

Insurance Company is covered under Section 3(1)(b).  Thus, as a  

logical corollary, the Act does not apply to the premises held by  

the Insurance Company who is a tenant.   

23. The learned Single Judge has allowed protection to the  

Government Department on the foundation that it has become a  

tenant.  We are disposed to think that the analysis is

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fundamentally erroneous.  When the Act does not cover the  

tenant, namely, the Insurance Company as basically the  

exemption applies only to premises and not to any relationship,  

the subtenant who becomes a deemed tenant cannot enjoy a  

better protection or privilege by ostracizing the concept of  

premises which is the spine of the provision.  

22. In the ultimate analysis, we are obliged to allow the appeals,  

set aside the order passed by the High Court and restore that of  

the Appellate Court and, accordingly, it is so directed.  The  

parties shall bear their respective costs.

......................................J.                      [Dalveer Bhandari]

......................................J.           [Dipak Misra]

New Delhi; April 03, 2012.