Thursday, 10 October 2019

Whether insurance company is exempted under provisions of maharashtra rent control Act?

 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

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.
N THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL Nos . 3356-3357/2012

Kesri Commissariat  Vs  Ministry of Food and Civil Supplies,

Dipak Misra , J

Dated:April 03, 2012.

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

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

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.
Page 5
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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 subsection
(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.”
Page 10
10
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
Page 11
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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 o f landlord and tenant
but intended to confer on the premises belonging
to Government an immunity from the operation
o f 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 o f the protection o f
the interests o f the subtenants in premises
belonging to the Government or a loca l authority
cannot override the plain meaning o f the
preamble or the first part o f section 4(1 ) and
frustrate the rea l purpose o f protecting and
furthering the interests o f the Government or a
loca l authority by conferring on its property an
immunity from the operation o f 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 subtenancy
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
Page 15
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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
Page 16
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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 Cooperative
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
Page 18
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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
Page 21
21
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
Page 23
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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

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 prolandlords
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

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

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.
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