2008 (8) TMI 887 - SC - Indian Laws

Government companies not protected under Rent Control Act if defined under Companies Act

Leelabai Gajanan Pansare & Ors Versus Oriental Insurance Co. Ltd. & Ors

The Supreme Court held that Government companies, as defined under Section 617 of the Companies Act, 1956, are not entitled to protection under Section ... 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)? Issues Involved:1. Interpretation of Section 3(1)(b) of the Maharashtra Rent Control Act, 1999.2. Whether a Government Company falls within the 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.Detailed Analysis:1. Interpretation of Section 3(1)(b) of the Maharashtra Rent Control Act, 1999:The Supreme Court examined the legislative intent behind Section 3(1)(b) of the Maharashtra Rent Control Act, 1999. The section excludes certain entities from the protection of the Rent Act, including banks, public sector undertakings (PSUs), statutory corporations, foreign missions, international agencies, multinational companies, and private and public limited companies with a paid-up share capital of Rs. 1 crore or more. The court emphasized the economic rationale behind this provision, which aimed to balance the interests of landlords and tenants by excluding cash-rich entities capable of paying market rent from Rent Act protection.2. Whether a Government Company falls within the expression 'any public sector undertakings or corporation established by or under any Central or State Act' in Section 3(1)(b):The court analyzed whether Government companies, defined under Section 617 of the Companies Act, 1956, fall within the 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.Arguments and Contentions:- Appellants' Contention: The appellants argued that the High Court erred by excluding Government companies from the ambit of PSUs under Section 3(1)(b). They contended that this exclusion amounted to judicial legislation and contradicted the legislative intent, which aimed to exclude all cash-rich entities from Rent Act protection.- Respondents' Contention: The respondents argued that Government companies are distinct from PSUs and statutory corporations established by or under any Central or State Act. They contended that Government companies should continue to enjoy Rent Act protection as they were not expressly excluded under Section 3(1)(b).Supreme Court's Findings:- Legislative Intent and Economic Criteria: The court noted that the legislative intent behind Section 3(1)(b) was to exclude entities capable of paying market rent from Rent Act protection. The legislature aimed to balance tenancy protection and rent restriction by excluding cash-rich entities.- Definition and Understanding of PSUs: The term 'PSU' is not defined in the Rent Act or the Companies Act. However, various Parliamentary Committees and reports have indicated that Government companies are considered part of PSUs. The court emphasized that Government companies, statutory corporations, and public sector companies are different forms of corporate entities under the broader category of PSUs.- Constitutional Validity and Article 14: The court held that excluding Government companies from the ambit of PSUs under Section 3(1)(b) would lead to arbitrary discrimination and violate Article 14 of the Constitution. Such an interpretation would disturb the balance struck by the legislature and make the provision vulnerable to constitutional challenge.- Purposive Interpretation: The court emphasized the need for a purposive interpretation of Section 3(1)(b) in light of the economic criteria and legislative intent. It held that Government companies should be included within the expression 'any public sector undertakings or corporation established by or under any Central or State Act' in Section 3(1)(b).Conclusion:The Supreme Court concluded that Government companies, as defined under Section 617 of the Companies Act, 1956, are not entitled to the protection of the Maharashtra Rent Control Act, 1999, under Section 3(1)(b). The court allowed the civil appeals and set aside the impugned judgment of the Bombay High Court, holding that Government companies fall within the ambit of PSUs excluded from Rent Act protection. The court emphasized that its interpretation was confined to the specific provisions of the Maharashtra Rent Control Act, 1999.