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Co-operative Society Implementing Government Schemes is Under Rent Act:
In a significant ruling that expands the understanding of what constitutes a "" under rent control legislation, the has held that the (NCCF)—a co-operative society—qualifies as a and is therefore stripped of under the .
Justice Arun R. Pedneker, sitting singly, allowed a filed by , setting aside an appellate court order that had blocked the eviction of NCCF from commercial premises spanning 4,511 square feet in Mumbai's Shree Sitaram Mills Compound. The ruling restores the 's and directs NCCF to of the premises.
A Landlord's Decade-Long Battle for Eviction
The dispute traces back to , when Saidpur Jute Company executed a with NCCF for the ground-floor premises at a monthly rent of Rs. 75,000. The agreement expired by on . Despite served in and , NCCF refused to vacate, prompting the landlord to file an under .
The ruled in the landlord's favour in , directing NCCF to hand over . However, the overturned that decision in , holding that NCCF—as a co-operative society and not a corporation established by or under a Central or Act—was entitled to the protection of the Maharashtra Rent Control Act.
That appellate reversal became the subject of the present before the High Court.
The Core Legal Question: Who is a ''?
carves out an important exception: the Act's protective provisions do not apply to premises let or sub-let to banks, Public Sector Undertakings, corporations established by or under any Central or Act, foreign missions, international agencies, multinational companies, and private or public limited companies with a exceeding one crore rupees.
The question before Justice Pedneker was whether NCCF—a co-operative society registered under the , and listed in its Second Schedule—fell within the ambit of "" under this provision.
The Landlord's Case: Pervasive Government Control
, appearing for Saidpur Jute Company, mounted a comprehensive factual and legal argument demonstrating that NCCF operates as an . He pointed to several critical indicators:
The directly holds approximately 63-65% of NCCF's of Rs. 15.02 crore. Senior officials from the —including the Joint Secretary, Economic Advisor, and Advisor (Cost)—serve on NCCF's Board of Directors. The Managing Director is appointed by the Central Government.
NCCF's own website acknowledges that it functions under the "" of the . Its operational mandate includes implementing flagship central schemes such as the Price Support Scheme (PSS) and the Price Stabilization Fund (PSF), through which it procures pulses, oilseeds, and other essential commodities to stabilize market prices.
Financially, NCCF reported a staggering sales turnover of Rs. 8,270.86 crore in FY -25, with a profit after tax of Rs. 216.53 crore. The PSF corpus alone had a budget allocation of Rs. 34,489.15 crore between and -25, all channeled through NCCF's procurement operations.
Mr. Cama relied heavily on the 's decision in Leelabai Gajanan Pansare v. Oriental Insurance Company Limited (), which held that the expression "" in Section 3(1)(b) must be interpreted broadly, not confined to . The test, the said, is one of ""—entities that can afford to pay market rent are excluded from rent control protection.
NCCF's Defence: An Autonomous Co-operative Body
, representing NCCF, vigorously contested the characterization of the federation as a . He argued that NCCF is an autonomous co-operative society governed by its own , not a creature of statute. Its ultimate authority vests in the , where each member institution—including the —has only one vote, embodying the co-operative principle of "."
Mr. Menon submitted that NCCF was registered as far back as , long before the came into force. It was merely continued and administratively designated as a "" under the new Act—not established by it. He distinguished NCCF from like , emphasizing that its functions are commercial in nature, conducted on its own account and at its own commercial risk.
On the question of government shareholding, Mr. Menon argued that shares in a co-operative society do not carry the attributes of equity ownership in a company. The government's shares are retirable and do not confer proportional voting rights—a critical distinction from the corporate model. He placed reliance on the 's judgment in J.S. Arneja v. NCCF (), which had held that NCCF is not "" within the meaning of .
Relying on Union of India v. Deoki Nandan Aggarwal () and Saregama (India) Ltd. v. Next Radio Ltd. (), Mr. Menon contended that courts ought not to enlarge the scope of legislation when the statutory language is plain and unambiguous. Section 3(1)(b), he argued, does not expressly include co-operative societies.
The Court's Analysis: Function Over Form
Justice Pedneker rejected NCCF's interpretation, holding that the appellate court had erroneously confined Section 3(1)(b) to entities incorporated under Central or Acts. Drawing extensively from the 's reasoning in Leelabai Gajanan Pansare , the judgment emphasized that the legislature's intent was to exclude "" entities capable of bearing market rents—a purpose that would be defeated by a narrow, .
The Court quoted the
's observation that
"the legislature has opted for an economic criteria, namely, entities which are in a position to pay rent at market rates are to stand excluded from
. This is the
."
Significantly, Justice Pedneker noted that the had expressly rejected the argument that only PSUs "established by or under" a Central or Act are excluded. To accept such a reading, the had warned, would render Section 3(1)(b) vulnerable to challenge under , as it would create an between (like ) and government companies incorporated under the .
The judgment also distinguished the 's own decision in Shetkari Sahakari Sangh Ltd. v. Dilip Shankarrao Patil (), where a co-operative society of agriculturists was held not to be a . Justice Pedneker observed that the present case was materially different: NCCF is not a small, local co-operative but a national federation with 85% government shareholding (direct and indirect), implementing centrally-funded schemes with a turnover exceeding Rs. 8,000 crore.
Key Observations from the Bench
The judgment contains several telling observations that illuminate the Court's reasoning:
"For the purposes of Section 3(1)(b), the Respondent, NCCF, though a co-operative society, would be a as the undertakes its public functions through the Respondent."
"Considering the Financial control, Managerial control and functionality i.e. the Respondent is an agency of the Central Government to implement its policy, this Court holds that the Respondent is a for the purpose of Section 3(1)(b) of the MRC Act."
"A could also be a non-company and also a co-operative society if it fulfils the criteria for the purpose of the Rent Act."
The Court also took note of the 's ruling in v. P.G. Jain (), which had found that the Central Government's cumulative shareholding in NCCF—direct and indirect—amounted to approximately 85%, making NCCF a body "aided" by the Central Government for the purposes of the .
The Decision and Its Implications
Allowing the , the Court set aside the appellate bench's order dated , and restored the 's dated March 30, 2023. The Court held:
"The Respondent, NCCF, is covered within the definition of a ' ' under Section 3(1)(b) of the MRC Act and, as such, is excluded from the applicability of the MRC Act to the premises leased to the Respondent."
As an interim measure, the Court directed that the landlord would not initiate execution proceedings for twelve weeks, and NCCF would continue to pay rent at the rate previously deposited before the during the pendency of proceedings—without prejudice to the landlord's right to recover any amounts that may become due.
The ruling carries significant implications for commercial tenancies across Maharashtra. It signals that the form of an entity—whether a company, statutory corporation, or co-operative society—is not determinative of its status under Section 3(1)(b). What matters is the substance: the extent of government control, the public character of the functions performed, the entity's financial capacity, and whether it serves as an .
For landlords with tenants that are government-controlled co-operative societies or similar bodies, the judgment opens a clear path to seek eviction and outside the restrictive framework of the Rent Control Act. For such entities themselves, the decision serves as a reminder that co-operative registration does not, by itself, guarantee tenancy protection when the indicia of a are demonstrably present.
