Important Point
OIC, UIC and BPCL and such other Government companies as defined under Section 617 of the Companies Act are not entitled to protection of the Maharashtra Rent Control Act, 1999 in view of the provisions of Section 3(1)(b).

Headnote:(a)Words and Phrases – PSU – A public corporation as a form covers statutory corporation, Government company and public sector company – PSU and Government company are to be equated in the sense that these two entities are the same when it comes to autonomy and flexibility as compared to departmental undertakings – Government companies stood covered under the concept of PSUs – High Court taking an erroneous view Government companies are separate and distinct entities from PSUs – India’s PSUs are in the form of statutory corporations, public sector companies, Government companies and companies in which the public are substantially interested. (Paras 42 and 47)
       (1981)1 SCC 449 – Relied upon.
       (b)Maharashtra Rent Control Act, 1999 – Section 3(1)(a) – 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 Rent Act protection – The test is Financial Capability – To say a statutory corporation stands excluded from the provisions of the Rent Act whereas Government companies incorporated under the Companies Act, 1956 would continue to get protection would lead to arbitrary discrimination under Article 14 to the Constitution – Such interpretation is not permissible. (Para 46)
       (1967) 3 SCR 466 – Relied upon.
       (1998) 2 SCC 1 – Referred.
       (c)Constitution of India,1950 – Article 14 – To meet the challenge of discrimination under Article 14 it is not sufficient to state that there is an intelligible differentia – It is further essential requirement to show that the differentia has a rational nexus to the object sought to be achieved by the Statute in question. (Para 47)
       (1964) 6 SCR 903 – Relied upon.
       (d)Maharashtra Rent Control Act, 1999 – 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. (Par 47)
       Facts of the case :
       1.Appellants-landlords had let out the suit-premises to Oriental Insurance Company Ltd.
       2.Vide notice dated 15.4.2002 under Section 106 of the Transfer of Property Act, appellant terminated the tenancy of the said Company. On failure of OIC to vacate the premises, they instituted a suit for eviction.
       2.OIC took the plea that it is not covered under Section 3(1)(b) of the Rent Act as it was “a protected tenant” under the said Rent Act, 1999 and, therefore, could not be evicted. In the said suit, the landlord pleaded that OIC is a Public Sector Undertaking and/or Corporation having a total paid up share capital of more than Rs.1,00,00,000.
       3.According to OIC, it was a Government company carrying on its own insurance business and that the premises let to it stood fully protected by the provisions of the Rent Act as they did not fall in any of the categories mentioned in Section 3(1)(b) of the said Rent Act.
       4.The trial court held that OIC is a Government company under Section 617 of the 1956 Act over which the GOI has overall control qua insurance business. According to the trial court since GOI exercises deep and pervasive control over the respondent company herein, the said premises occupied by it were entitled to protection under the second part of Section 3(1)(a). The said suit stood dismissed by the trial court.
       5.Aggrieved by the dismissal of the suit by the trial court, appellants herein preferred an appeal being FA No. 1245/04. The High Court held that exempted premises under Section 3(1)(b) of the Rent Act, 1999 are PSUs but not Government Companies incorporated under the Companies Act, 1956. The FA was dismissed.
       Finding of the Court :
       OIC, UIC and BPCL and such other Government companies as defined under Section 617 of the Companies Act are not entitled to protection of the Maharashtra Rent Control Act, 1999 in view of the provisions of Section 3(1)(b).
       Result : Civil appeals arising out of SLP(C) No. 5855/07 and 16237/08 filed by Smt. Leelabai Gajanan Pansare & Ors. and Hongkong & Shanghai Banking Corporation Ltd. respectively are allowed.
       Civil Appeals arising out of SLP(C) Nos. 24789-24790/07: Bharat Petroleum Corporation Ltd. v. Sunil Niranjan Jhaveri dismissed.

Judgment

S.H. Kapadia, J. —

Civil Appeals arising out of S.L.P.(C) Nos. 5855/07 and S.L.P. (C) No. 16237/08:

Leave granted.

2.Applications for interventions are allowed.

3.An important question of law regarding interpretation of Section 3(1)(b) of the Maharashtra Rent Control Act, 1999 is involved in the present appeal, namely :-

“Whether a Government Company falls within the compendious expression “any public sector undertakings or corporation established by or under any Central or State Act” in Section 3(1)(b) of the Maharashtra Rent Control Act, 1999 (“Rent Act” in short).”

4.For the sake of convenience we may state the facts of the case in SLP (C) No. 5855/07 in the case of Leelabai Gajanan Pansare & Ors. v. Oriental Insurance Company Ltd. & Ors.

Facts :

5.Appellants-landlords had let out the suit-premises admeasuring 3214 sq. ft. (approx.) in Thane to Oriental Insurance Company Ltd. (“OIC” for short). The rent was Rs. 10,000/- per month. Vide notice dated 15.4.2002 under Section 106 of the Transfer of Property Act, appellant terminated the tenancy of the said Company. On failure of OIC to vacate the premises, they instituted a suit for eviction. OIC took the plea that it is not covered under Section 3(1)(b) of the Rent Act as it was “a protected tenant” under the said Rent Act, 1999 and, therefore, could not be evicted. In the said suit, the landlord pleaded that OIC is a Public Sector Undertaking and/or Corporation having a total paid up share capital of more than Rs. 1,00,00,000.

6.OIC resisted the suit by filing its written statement inter alia contending that it is neither a PSU nor a Corporation; that it was not exempted under Section 3(1)(b) of the Rent Act; that it was neither a bank nor a PSU, nor a foreign mission, nor MNC and nor a public limited company having paid up share capital of more than Rs. 1,00,00,000. According to OIC, it was a Government company carrying on its own insurance business and that the premises let to it stood fully protected by the provisions of the Rent Act as they did not fall in any of the categories mentioned in Section 3(1)(b) of the said Rent Act.

7.By Judgment and Order dated 9.7.2004 in Special Civil Suit No. 202/03 the trial court held that OIC is a Government company under Section 617 of the 1956 Act over which the GOI has overall control qua insurance business. The trial court further held that OIC stood established as a subsidiary of GIC that came into existence in 1972 pursuant to nationalization of General Insurance. According to the trial court since OIC is a Government company under Section 617 of the 1956 Act and since GOI has overall control over its functioning, it is entitled to protection from eviction by the landlords under Section 3(1)(a) which gives protection to premises let to the Government or local authority or to premises taken on behalf of the Government. In other words, according to the trial court, since GOI exercises deep and pervasive control over the respondent company herein, the said premises occupied by it were entitled to protection under the second part of Section 3(1)(a). According to the said Judgment and Order dated 9.7.2004 the said suit stood dismissed by the trial court.

8.Aggrieved by the dismissal of the suit by the trial court, appellants herein preferred an appeal being FA No. 1245/04. By the impugned Judgment dated 20.12.2006, the Bombay High Court held that exempted premises under Section 3(1)(b) of the Rent Act, 1999 are PSUs but not Government Companies incorporated under the Companies Act, 1956. It was further held that a Government Company stands in a different category and by the very absence of the words “Government Company” in Section 3 (1)(b) it is clear that the Legislature did not intend their exemption from the protection under the said Rent Act, 1999 consequently, the High Court dismissed FA No. 1245/04 filed by the appellants. Hence, this civil appeal.

Contentions :

9.The basic ground of challenge in this civil appeal that the High Cour

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2008 Supreme(SC) 1243

Important PointOIC, UIC and BPCL and such other Government companies as defined under Section 617 of the Companies Act are not entitled to protection of the Maharashtra Rent Control Act, 1999 in view of the provisions of Section 3(1)(b).

Cases Referred (4)

Important Point
OIC, UIC and BPCL and such other Government companies as defined under Section 617 of the Companies Act are not entitled to protection of the Maharashtra Rent Control Act, 1999 in view of the provisions of Section 3(1)(b).