# SMT. LEELABAI GAJANAN PANSARE & ORS. ~~ v. THE ORIENTAL INSURANCE CO. LTD. & ORS

- **Citation:** [2008] 12 S.C.R. 248
- **Court:** Supreme Court of India
- **Decided:** 2008-08-20
- **Case number:** Civil Appeal No. 5136 of 2008
- **Bench:** 5.H. Kapadia, 8. Sudershan Reddy
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/smt-leelabai-gajanan-pansare-ors-v-the-oriental-insurance-co-ltd-ors-23513
- **Pages:** 57

## Headnote

~--
Maharashtra Rent Control Act, 1999 - s. 3 (1) (b) - Exemption from protection under the Act - To Government Comc pany as defined u/s. 617 of Companies Act - Held: government Company falls within the meaning of 'Public Sector Undertakings ('PSUs') - Hence not entitled to protection under
·the Act in view of the exemption provision - Exclusion of Government Company from the meaning of 'PSUs' and inclusion
D of the Corporations established- under Central/State Statute
alone, would make the provision violative of Article 14 of the
Constitution - By application of the principle of noscittur a -
sociis, the provision applies to different categories of tenants
i
having financial capability to pay the rent - Such differentia
E has a rational nexus to the object sought to be achieved by
the Statute - Constitution of India, 1950 - Article 14 - Companies Act, 1956 - s. 617.
Interpretation of Statutes - Definition of an expression in
one Act must not be imported to .another Act, unless the same
F is incorporated or referred to in the latter.
Doctrines/Principles - Principle of noscittur a sociis -
·tApplicability of
Words and Phrases - 'Public Sector Undertakings' -
G Meaning of in the context of s. 3 (10) (b) of Maharashtra Rent
;. •
control Act, 1999.
t-
,,_
The question for consideration in the present appea1s is whether a Government Company, as defined under s. 617 of Companies Act, falls within the compendiH
248
-(
(
SMT. LEELABAI GAJANAN PANSARE & ORS. v.
249
THE ORIENTAL INSU. CO. LTD. & ORS.
'-f
ous expression "any public sector undertakings or CorA
poration established by or under any Central or State Act"
in s. 3 (1) (b) of Maharashtra Rent Control Act, 1999.
Disposing of the appeals, the Court
HELD: 1. Government companies as defined under B
•, f.
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). The view of the High
Court that Government companies stand excluded from
PSU under Section 3(1)(b) of Maharashtra Rent Control c
Act, 1999, as Government companies are separate and
distinct entities from PSUs and since Government Company is not in the enumerated items in Section 3(1 )(b) one
cannot include the said entity within the meaning of the
word PSU is erroneous. The word PSU is not defined D
under any Act. It is indicated in various Parliamentary
y
Committees on Administrative Reforms so that in financial, employment and in policy matters, the Central/ State
Government could evolve norms/standards. It is the publie character of the functions of the undertaking which E
makes it a PSU. However, there is no conclusive test for
determining the status of an undertaking as a PSU. In judging the character of an entity, the court has to keep in mind
the context in which the word PSU is used in a given enactment. There are a number of tests which could be applied in judging the character of an entity, namely, the test F
~r
of origin, the test of agency or instrumentality of the State,
the functional test, the monopolistic status of an entity,
test concerning areas of operations, the test of economies of scale, the test of control, the role of the entity in
the priority sector etc. Therefore, there is no one concluG
...,
..J.
sive test applicable to decide the character of an entity .
Government companies under Section 617 of Companies
Act, 1956 are understood by the Legislature to be a part
of PSUs. [Paras 42 and 49] [303,E; 296,A-F, 296,G]
H
250
SUPREME COURT REPORTS
[2008] 12 S.C.R.
*-'
A
Som Prakash Rekhi v. Union of India and Anr. 1981 (1)
SCC449 - relied on.
"Growth of Trade, Commerce and PSUs" by Shri Suresh
Prasad Padhy; "Public Enterprise in Theory and Practice" by
B
Bishwa Nath Singh- referred to.
2. On a plain meaning of the words 'PSUs' as underv
stood by the Legislature, it is clear that, India's PSUs are
in the form of statutory corporations, public sector com-
~---
panies, Government companies and companies in which
c

## Text

_Characters 0–39,987 of 119,570. This is a partial read: ask again with offset=39987 for what follows._

(2008] 12 S.C.R. 248
""'
~
A
SMT. LEELABAI GAJANAN PANSARE & ORS.
~~
v.
THE ORIENTAL INSURANCE CO. LTD. & ORS.
(Civil Appeal No. 5136 of 2008 etc.)
B
AUGUST 20, 2008
[5.H. KAPADIA AND 8. SUDERSHAN REDDY, JJ.]
~--
Maharashtra Rent Control Act, 1999 - s. 3 (1) (b) - Exemption from protection under the Act - To Government Comc pany as defined u/s. 617 of Companies Act - Held: government Company falls within the meaning of 'Public Sector Undertakings ('PSUs') - Hence not entitled to protection under
·the Act in view of the exemption provision - Exclusion of Government Company from the meaning of 'PSUs' and inclusion
D of the Corporations established- under Central/State Statute
alone, would make the provision violative of Article 14 of the
Constitution - By application of the principle of noscittur a -
sociis, the provision applies to different categories of tenants
i
having financial capability to pay the rent - Such differentia
E has a rational nexus to the object sought to be achieved by
the Statute - Constitution of India, 1950 - Article 14 - Companies Act, 1956 - s. 617.
Interpretation of Statutes - Definition of an expression in
one Act must not be imported to .another Act, unless the same
F is incorporated or referred to in the latter.
Doctrines/Principles - Principle of noscittur a sociis -
·tApplicability of
Words and Phrases - 'Public Sector Undertakings' -
G Meaning of in the context of s. 3 (10) (b) of Maharashtra Rent
;. •
control Act, 1999.
t-
,,_
The question for consideration in the present appea1s is whether a Government Company, as defined under s. 617 of Companies Act, falls within the compendiH
248
-(
(
SMT. LEELABAI GAJANAN PANSARE & ORS. v.
249
THE ORIENTAL INSU. CO. LTD. & ORS.
'-f
ous expression "any public sector undertakings or CorA
poration established by or under any Central or State Act"
in s. 3 (1) (b) of Maharashtra Rent Control Act, 1999.
Disposing of the appeals, the Court
HELD: 1. Government companies as defined under B
•, f.
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). The view of the High
Court that Government companies stand excluded from
PSU under Section 3(1)(b) of Maharashtra Rent Control c
Act, 1999, as Government companies are separate and
distinct entities from PSUs and since Government Company is not in the enumerated items in Section 3(1 )(b) one
cannot include the said entity within the meaning of the
word PSU is erroneous. The word PSU is not defined D
under any Act. It is indicated in various Parliamentary
y
Committees on Administrative Reforms so that in financial, employment and in policy matters, the Central/ State
Government could evolve norms/standards. It is the publie character of the functions of the undertaking which E
makes it a PSU. However, there is no conclusive test for
determining the status of an undertaking as a PSU. In judging the character of an entity, the court has to keep in mind
the context in which the word PSU is used in a given enactment. There are a number of tests which could be applied in judging the character of an entity, namely, the test F
~r
of origin, the test of agency or instrumentality of the State,
the functional test, the monopolistic status of an entity,
test concerning areas of operations, the test of economies of scale, the test of control, the role of the entity in
the priority sector etc. Therefore, there is no one concluG
...,
..J.
sive test applicable to decide the character of an entity .
Government companies under Section 617 of Companies
Act, 1956 are understood by the Legislature to be a part
of PSUs. [Paras 42 and 49] [303,E; 296,A-F, 296,G]
H
250
SUPREME COURT REPORTS
[2008] 12 S.C.R.
*-'
A
Som Prakash Rekhi v. Union of India and Anr. 1981 (1)
SCC449 - relied on.
"Growth of Trade, Commerce and PSUs" by Shri Suresh
Prasad Padhy; "Public Enterprise in Theory and Practice" by
B
Bishwa Nath Singh- referred to.
2. On a plain meaning of the words 'PSUs' as underv
stood by the Legislature, it is clear that, India's PSUs are
in the form of statutory corporations, public sector com-
~---
panies, Government companies and companies in which
c the public are substantially interested. When the word PSU
is mentioned in Section 3(1 )(b), the State Legislature is
rpresumed to know the recommendations of the various
I
Parliamentary Committees on PSUs. [Para 47] [301,B-C]
3. It is wrong to say that only those PSUs which are
D established by or under any Central or State Act alone
->
stand excluded from the protection of the Rent Act and
.-
the PSUs which are Government companies incorporated
+
lun_der Section 617 of Companies Act are entitled to the
'
protection as they are not expressly excluded under Sec-
)..-
E tion 3(1 )(b) of the Rent Control Act. Several entities have
\=
been enumerated in Section 3(1}{b}, namely, banks, PSUs
or statutory corporations, foreign missions, international
r
agencies, multinational companies and private limited and
public limited companies having a paid up share capital
I r
F of Rs. 1,00,00,000 or more. The Act has brought about
structural changes in the legislation. In this case, it was
Jc'-
open to the legislature to opt for any of the tests, namely,
r
test of origin, test of public character of the functions performed by each of these entities, test of public character
of each of the undertakings, test of agency or instrumen-
•,
G tality; test of monopolistic status, test of mobilization of
f- -4
resources etc. In the present case, the legislature has
I
opted for an economic criteria, namely, entities which are
in a position to pay rent at market rates are to stand ex-
•
H eluded from Rent Act protection. This is the test of Finan-
,.___
SMT. LEELABAI GAJANAN PANSARE & ORS. v.
251
THE ORIENTAL INSU. CO. LTD. & ORS.
'-f.
cial Capability. This is the golden thread which runs
A
through Section 3(1 )(a). This criteria has been selected
by the legislature knowing fully well that each of these
entities including PSUs can afford to pay rent at the market rates. In the present case, the principle of noscittur a
sociis is clearly applicable. According to this principle,
B
.. _..,
when two or more words which are susceptible to analogous meaning are coupled together, the words can take.
their colour from each other. Applying this test, it is held
that Section 3(1 )(b) clearly applies to different categories
of tenants all of whom are capable of paying rent at the c
market rates. [Paras 46 and 47] [299,C-G; 300,A-B, 301,D,E]
4. If Government companies are to be excluded from
Section 3(1 )(b) then the test of intelligible differentia having rational nexus to the objects sought to be achieved
by the Rent Act would stand defeated. It would make SecD
)
tion 3(1 )(b) vulnerable to challenge as violative of Article
+
14 of the Constitution. To meet the challenge of discrimination under Article 14 it is not sufficient to state that there
is an intelligible differentia but it is further essential requirement to show that the differentia has a rational nexus to E
the objecf sought to be achieved by the Statute in question. [Paras 46 and 47] [302,E; 300,C; 301,H; 302,A]
Shah and Co. v. State of Maharashtra 1967 (3) SCR 466
- relied on.
-YF
State of Rajasthan v. Mukanchand and ors. 1964 (6) SCR
903 - referred to.
5. 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 conG
.
-I
nection, one must keep in mind the fact that the said Rent
Act, 1999 involves a structural change vis-a-vis the Bombay
Rent Act, 1947. To accept the interpretation advanced on
behalf of the respondents for excluding Government companies from the meaning of the words "PSUs" in Section
H
252
SUPREME COURT REPORTS
[2008] 12 S.C.R.
A 3(1 )(b) would amount to disturbing the neat balance struck
by the Legislature. [Para 47] [302,A-B; 302,C-D]
6. Th~ High Court judgment is erroneous when it
adds words to Sectio_n 3(1)(b), namely, "which is not a
Government company". High Court has relied upon the
B definition of Government Company under Section 617 of
the Companies Act. The definition of an expression in one
Act must not be imported into another. It would be a new
terror in the construction of Acts if the Court is required
to limit a word to an unnatural sense because in some
C Act which is not incorporated or referred to such an interpretation is given to it for the purposes of that Act alone.
The interpretation placed by the High Court on the word
"PS Us" in Section 3(1 )(b) amounts to judicial legislation
and further it defeats the very object of Section 3(1 )(b).
D [Para 47] [302,G-H; 303,A-C]
Union of India and Ors. v. R:C. Jain and Ors. 1981 (2)
sec 308 - relied on.
7. If it is hel~ that PS Us do not include Government
E companies, it 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). [Para 47] [300,H; 301,A]
F
8. PSUs including Government Companies are independent companies/corporations. They cannot be
equated. to the "Government" in Section 3(1 )(a). Section
3(1)(b) has to be read, in its entirety. The said Section has
to be read, keeping in mind the reasons for its enactment.
G [Para 47] [302,F-G]
Case Law Reference
·1981(1) SCC449
Relied on.
42
1967 (3) SCR 466
Relied on.
46
H
II
....
I I
' ' I
!
.y I
I
~
'
SMT. LEELABAI GAJANAN PANSARE & ORS. v.
253
THE ORIENTAL INSU. CO. LTD. & ORS. [S. H. KAPADIA, J.]
1964 (6) SCR 903
Referred to. 4 7
A
1981 (2) SCC 308
Relied on.
4 7
CIVILAPPELLATE JURISDICTION : Civil Appeal No. 5136
of 2008
From the Final Judgment and Order dated 20.12.2006 of B
,,_ f
the High Court of Judicature at Bombay in First Appeal No. 1245
of 2004
~·
WITH
C.A. Nos. 5137-39 of 2008
Parag Tripathi, ASG., Shyam Divan R.F. Nariman, Dr.
c
Rajeev Dhavan, Sudhir Chandra and Soli J. Sorabjee, Gaurav
Agrawal, Percy Gandy, Kaiwan Kalyaniwala, Debmalya
Banerjee, Sonia Nigam, Nandini Gore, Manik Karanjawala, 0
Parijit Sinha, Reshmi Rea Singh, S.C. Ghosh, Snehashish
Mukherjee, Mrinakl~nti Mandal, Vishnu Mehra, Kuna!, Sakshi
Mittal, Promod Dayal, Nikunj Dayal, Anantbhushan Kanade,
Yadunath Chaudhary, Gargi Shinde, D.B. Vohra, P.K. Seth,
Pankaj Seth, Manjit Chawla, Nooruddin Dhilla, E.C. Agrawala,
Mahesh Agarwal, Rishi Agrawala, Gaurav Goel, Amit Kumar E
Sharma and Gaurav Agrawal for the Appearing Parties.
The Judgment of the Court was delivered by
S. H. KAPADIA, J.
-'f
Civil Appeals arising out of S.L.P.(C) Nos. 5855107 and
S.LP. (C) No. 16237108:
1. 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:-
F
G
"'JYhether a Government Company falls within the
H
254
SUPREME COURT REPORTS
[2008] 12 S.C.R.
,.\-
A
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)."
B
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
·'t-""'
Pansare & Ors. v. Oriental Insurance Company Ltd. & Ors.
~
Facts:
5. Appellants-landlords had let out the suit-premises adc measuring 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,
D they instituted a suit for eviction. OIC took the plea that it is not
<1
covered under Section 3( 1 )(b) of the Rent Act as it was "a pro-
+
tected tenant" under the said Rent Act, 1999 and, therefore,
could not be evicted. In the said suit, the landlord pleaded that
Ii.--
OIC is a Public Sector Undertaking and/or Corporation having
E a total paid up share capital of more than Rs. 1,00,00,000.
f.
~
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
-YF
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 menG tioned 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 wh.ich the
H GOI has overall control qua insurance business. The trial court
SMT. LEELABAI GAJANAN PANSARE & ORS. v.
255
THE ORIENTAL INSU. CO. LTD. & ORS. [S. H. KAPADIA, J.]
further held that OIC stood established as a subsidiary of GIC
A
.... ~
that came into existence in 1972 pursuant to nationalization of
General Insurance. According to the trial court si~ce OIC is a
·.,
Government company under Sectio·n 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)
B
which gives protection to premises let to the Government or
local authority or to premises taken on behalf of the Governt +
ment. 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 c
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. D
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
E
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.
F
Contentions:
-)'-
9. The basic ground of challenge in this civil appeal that
the High Court having held that OIC is the PSU had erred in
holding that a Government Company stood under a separate G
category which is absent in Section 3(1 )(b) ·and thus continues
to enjoy protection of the said Rent Act. According to the appel-
~
lants, this amounts to judicial legislation by the High Court as
the High Court has read into Section 3(1 )(b) the words, namely,
"except Government companies". According to the appellants,
H
256
SUPREME COURT REPORTS
[2008] 12 S.C.R.
A
by such exclusion of Government companies from the PSUs,
the High Court has excluded a large number of PS Us from the
purview of Section 3(1 )(b), whic::h is not the intention of the Legislature. This, according to the appellants, is contrary to the legislative policy and such interpretation defeats the very purpose
s of Section 3(1)(b) of the Rent Act. According to the appellants,
in the· alternative, in any event, OIC is a public limited company
having a paid up share capital of rupees more than one crore
and, therefore, in any event, the said company would_ fall in the
second part of Section 3(1)(b) which denies to such public lime ited companies the protection of the said Rent Act, 1999.
10. Shri Shyam Divan, learned senior counsel appearing
on behalf of the appellants submitted .that the concept of a "Government Company" is alien to the scheme of Section 3(1 )(b).
The legislature, according to the learned counsel, has not used
D the expression "Government Company" anywhere in Section
3(1)(b). There was no justification, according to the learned
counsel, for the High Court to introduce the concept of Government Gompany when the legislature has not adverted to the
said expression. According to the learned counsel, by importE ing the concept of "Government Company" in Section 3(1)(b),
the High Court has resorted to judicial legislation, which is not
permissible. According to the learned counsel, it is the function
of the legislature to decide upon the entities to which Rent Act
protection should be extended to and conversely the entities
F that may be excluded from such protection. According to the
learned counsel, in enacting Section 3(1)(b), the legislature has
clearly indicated that premises let to PSUs and Public Limited
Companies having a paid up capital of Rs. 1,00,00,000 or more
would not be entitled to protection of the Rent Act, 1999. HowG ever, the legislature did not include in Section 3( 1 )(b) "holding
company", "subsidiary company", "sick industrial company" etc.,
all of which are concepts like "Government Company" that are
specifically defined in the 1956 Act. Instead, the legislature
employed the concept of Private Limited Companies and Public Limited Companies having a paid up share capital of Rs.
H
SMT. LEELABAI GAJANAN PANSARE & ORS. v.
257
THE ORIENTAL INSU. CO. LTD. & ORS. [S. H. KAPADIA, J.]
')-
1,00,00,000 or more. It was submitted that although holding
A
company or subsidiary company or sick industrial company are
not expressly mentioned in Section 3(1 )(b), it is not open to
such entities to claim that since none of these specific expressions abovementioned are used in Section 3(1)(b), they are
entitled to Rent Act protection. According to the learned coun8
sel, a Holding company or Subsidiary company or Sick indust +
trial company is an addition to a public limited or private limited
company having a paid up share capital of more than Rs.
1,00,00,000. According to the learned counsel, the concept of
holding company, subsidiary company or a sick industrial com- c
pany are additional characteristics.
11. Learned counsel next contended that Oriental Insurance Company (OIC), United India Insurance Company(UIC)
as well as Bharat Petroleum Corporation Ltd. (BPCL) answers
the description of a "PSU", which is understood in several statD
utes to include a Government Company under Section 617 of
the 1956 Act. Therefore, according to the learned counsel, there
+
is no reason why the expression PSUs as used in Section
3(1)(b) should be read to exclude OIC which is a Government
Company where 100% of the shares are held by the Central
E
Government.
12. On literal interpretation of Section 3(1 )(b), learned
counsel submitted that the expression "or any PSUs" as used
,/
in Section 3(1 )(b) is a separate stand-alone category like, banks,
foreign missions, international agencies etc .. The said expresF
-)'
sion is separated from the rest of the provision by the word 'or"
which is disjunctive and giving a natural meaning to the said
word separates PS Us from the next expression relating to statutory Corporations. Therefore, according to the learned counsel, there is no reason why the expression 'any PSUs" should G
be restricted to statutory corporations, particularly when the disjunctive word "or" separates the two phrases in Section 3(1 )(b).
In this connection, learned counsel submitted that the word PSU
is not specifically defined in the Rent Act. It is not defined in the
1956 Act. Learned counsel submitted that under Rules of ProH
258
SUPREME COURT REPORTS
[2008] 12 S.C.R.
A
cedure and Conduct of Business in Lok Sabha under Chapter
XXVI there is reference to Constitution of Parliamentary Committees. Rule 312A refers to functions of "Committee on PS Us"
specified in the Fourth Schedule. Item 5 of Part I of the Fourth
Schedule (List of Public Undertakings) refers to the Life lns·urB ance Corporation of India (LIC) whereas Part II of the same
· Schedule refers to Public Undertakings which are Government
Companies under the 1956 Act. That, every Government Company whose annual report is placed before Parliament under
Section 619Aofthe 1956Actfalls in part II of the Fourth SchedC ule which refers to List of Public Undertakings. Accordin'g to the
learned counsel, OIC, UIC and BPCL are Government Companies, therefore, they fall in Part II of the Fourth Schedule to the
Rules of Proced.ure and Conduct of Business in the Lok Sabha.
Learned counsel further pointed out that even, according to the
0
annual reports/financial statements of OIC, the said undertaking is a PSU.- Learned counsel submitted that the above Business Rules indicate Legislative Understanding of the word PSU
to include Government Companies.
13. On the question of purposive interpretation, learned
E counsel submitted that in Malpe Vishwanath Acharya and ors.
v. State of Maharashtra and anr. (1998) 2 SCC 1 the Supreme
Court held that the provisions of the Bombay Rents, Hotel and
lodging House Rates Control Act, 1947 ("1947 Act") relating to
the determination and fixation of standard rent on account of
F
inflation and price rise could no longer be considered to be
reasonable and, therefore, provisions in the Bombay Rent Act,
namely, Section 5(10), 18 and 19 dealing with the definitions of
"standard rent" and prohibition and receipt of premium were
liable to be struck down as unreasonable and arbitrary. Learned
G counsel submitted that following the said judgment of this Court
a Joint Committee was constituted by the Maharashtra Legislature to evolve a package which was done and which consisted
of nominal increase in the standard rent, legalization of receipt
of premium by the landlords which was earlier prohibited under
the 1947 Act and the expansion of Section 3(1)(b) by which
H
+
SMT. LEELABAI GAJANAN PANSARE & ORS. v.
259
THE ORIENTAL INSU. CO. LTD. & ORS. [S. H. KAPADIA, J.]
'- j
entities enumerated therein were to loose protection of the said
A
Rent Act. According to the learned counsel, but for the said package the above provisions of the 194 7 Act were liable to be struck
down. In the circumstance, learned counsel submitted that the
legislative scheme adopted by the legislature to protect the Rent
Act from the vice that was recognized in the case of Malpe
B
Vishwanath Acharya (supra) hinges upon Section 3(1)(b) bef· -t
ing interpreted in a fair manper. According to the learned counsel, should the scope of Section 3(1 )(b) be restricted by exeluding Government companies as done by the impugned judg-
~
ment of the High Court then the larger objective of the legisla- c
..
tu re would stand defeated and the standard rent provisions under the Rent Act (1999 Act) would be rendered vulnerable. According to the learned counsel, the golden thread which runs
through Section 3(1 )(b) of the Rent Act is the economic criteria.
In this connection, learned counsel submitted that each of the D
entities mentioned in Section 3(1 )(b) are cash-rich entities.
These entities are tenants paying rent to the landlords. These
)
entities, according to the learned counsel, are excluded from
....
the Rent Act protection, particularly when with the passage of
time, the landlords were not able to maintain their property and,
E
consequently, these properties became dilapidated for want of
maintenance on account of poor return on their investments and
on account of increase in taxes and price rise. According to the
learned counsel, the Report of the Joint Committee indicates
that it had taken into account all the above factors, including the
judgment of this Court in Malpe Vishwanath Acharya (supra) F
-l
and, accordingly, gave a package of the above three items enumerated above including Section 3(1)(b) so that maximum number of poor tenants would continue to get protection with· the
exclusion of those tenants who have the paying capacity. Therefore, according to the learned counsel, when PSUs, as underG
stood by Parliament, the Reporting Ministry and the Comptrol-
-1
ler and Auditor-General have understood PSUs to include Government Companies and Statutory Corporations then this Court
must give a plain, simple and clear meaning to the words PS Us
in Section 3(1 )(b) in order to avoid any challenge to the said
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sub-section on the ground of invidious classification having no
rational nexus with the objects sought to be achieved. According to the learned counsel, if the said expression "PS Us" in the
said sub-section is confined to statutory corporations and if
PSUs and statutory corporations are classified under one dis8
tinct category, as contended on behalf of the respondents, then
the consequence would be that in the Insurance Industry, OIC
and UIC (Government companies) would get protection of the
Rent Act, 1999 whereas UC, which is a statutory corporation,
would stand excluded from such protection. It is this type of arc bitrary discrimination which needs to be avoided in interpreting
Section 3(1 )(a). According to the learned counsel, therefore,
one needs to give the meaning to the words PSUs as understood by the Committee on Public Undertakings, the Reporting
Ministry and by the Comptroller and Auditor-General and if so
0
read, all the three entities herein, namely, IOC/UIC/BPCL would
come within the meaning of expression PS Us in Section 3(1 )(b)
of the Rent Act. Therefore, according to the learned counsel,
the impugned judgment needs to be set aside.
14. Shri R.F. Nariman, learned senior counsel appearing
E on behalf of the The Hongkong & Shanghai Banking Corporation Ltd. submitted that Section 3(1) of the said Rent Act must
be read as a whole in order to understand the meaning and
purport of the said section. According to the learned counsel,
the rationale behind under Section 3(1 )(a) in providing that the
F
tenants of Government or a local authority will not have the protection of the Rent Act, whilst providing that the Government or
local authority in its capacity as a tenant will have the protection
of the Rent Act is that Government or a local authority performs
sovereign and governmental functions. In other words, learned
G counsel urged that Government or a local authority is covered
by the ambit of Section 3(1 )(a) as long as it does not enter the
arena of commercial activity. Learned counsel next submitted
that the concept of a "Government Company" is not a part of
Section 3(1 )(a). According to the learned counsel, the said subsection 3(1 )(a) is bodily lifted from Section 4(1) of Bombay Rent
H
<
SMT. LEELABAI GAJANAN PANSARE & ORS. v.
261
THE ORIENTAL INSU. CO. LTD. & ORS. [S. H. KAPADIA, J.]
'-f
Act, 194 7. That Act was a temporary enactment. According to
A
the learned counsel, the absence of the words "Government
Company" in sub-section 3(1 )(a) and the presence of the expression "any PS Us" in Section 3(1 )(b) leads to the inevitable
conclusion that Government Companies were not entitled to
receive the protection of the said Rent Act. According to the
B
learned counsel, banks, PSUs, statutory corporations and prit
vate and public limited companies mentioned in Section 3(1)(b)
+
are in the commercial sector and, therefore, they will not have
..
the protection of the Rent Act when they are the tenants. According to the learned counsel, the object of the said Rent Act c
is to extend protection of the said Rent Act to tenants who are
Government, local authorities and those who are not affluent
and who do not have the capacity to pay market rent. On the
point of literal interpretation, learned counsel submitted _that on
a plain reading of Section 3(1 )(b) it would be clear that PS Us D
and statutory corporations fall in two separate and distinct categories/classes of tenants who are not entitled to the protec-
>
tion of the said Rent Act. In this connection, learned counsel
,.._
placed heavy reliance on the word "or" occurring in Section
3(1 )(b) after the word Banks and before the words "any corpoE
ration established by or under any Central or State Act". Learned
counsel submitted that the word "or'' indicated the PSUs are
disjunctive and form a separate category by themselves. In this
connection, learned counsel further submitted that to interpret
"PS Us" to mean statutory corporations alone would lead to tautology as it would make the said words superfluous and, thereF
~ fore, it was submitted that the expression "PSUs" must be read
to mean all PS Us, namely, statutory corporations, public sector
companies, Government companies etc .. Learned counsel submitted that the legislature has used the words PSUs in plural
deliberately as it desired statutory corporations, public sector G
companies and Government companies etc. to fall as part of
the genus, namely, PSU. Therefore, according to the learned
counsel, PSU is the genus whereas Government companies,
statutory corporations and public sector companies etc. are species.
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15. Learned counsel next submitted that Section 3(1 )(b)
applies to any corporation established by or 1.mder any Central
_\_,.
or State Act; that, a "corporation" would include a company; that
such corporation does not have to be established by a Central
or State Act. It can also be estabiished under a Central or State
B Act, for example, GIG is established under General Insurance
Business Nationalisation Act, 1972 as a Government Company.
Therefore, according to the learned counsel, if Section 3(1 )(b)
is read in the manner suggested by the respondent the words
+--,..
PS Us in Section 3(1 )(b) would be wholly redundant as there,
(
c would be no undertakings left apart from the statutory corporations established by or under any Central or State Act because
the expression "or under" subsumes all forms of corporations
so established. Learned counsel further submitted that Section
16 of General Insurance Business (Nationalisation) Act, 1972,
D in particular sub-section (2), shows that four companies, including OIC and UIC, render combined services of general insurance business all over India. According to the learned counsel,
all the said four- companies are the Government Companies
<
which even on the narrow interpretation placed by the respon_..
E
dent, are corporations established under the Nationalisation Act.
Therefore, learned counsel submitted that "PSUs" should be
read in the widest possible term so as to include within it every
kind of establishments through which the Government would do
business. Therefore, according to the learned counsel, PSUs
would encompass Government companies, statutory corporaF tions, public sector companies etc. through which the Government is doing business. Reliance was placed on various statutes which have defined PSUs to include Government compa-
·~
nies. One such statute is "Building and Other Construction
Workers (Regulation of Employment and Conditions of Service)
G Act, 1996" which defines PS Us under Section 2(1 )(a)(ii) as any
corporation established by or under any Central or State Act or
a.Government Company as defined in Section 617 of the said
~-
1956 Act, which is owned, controlled or managed by the Central Government. Learned counsel pointed out further that LIC
H is a statutory corporation established under the LIC Act 1956;
SMT. LEELABAI GAJANAN PANSARE & ORS. v.
263
'-.,
THE ORIENTAL INSU. CO. LTD. & ORS. [S. H. KAPADIA, J.]
that Sections 21, 27, 28, 28(A) and 38 of the said LIC Act show A
that LIC is under the control of the Central Government and not
Parliament. It is further pointed out that under Section 6(2)(g)
and (h), LIC is entitled to run business other than the business
of life insurance in certain circumstances. Therefore, according to the learned counsel, LIC could in given circumstances B
.
_.
run the business of general insurance. What is pointed out by
the learned counsel is that various anomalies would arise if this
Court was to accept the interpretation placed on Section 3(1 )(b)
of the said Rent Act. According to the learned counsel, in terms
of Section 3(1)(b) LIC is not different from GIC, which is a Gov- c
ernment company established under a Central Act, or from other
four nationalized insurance companies including OIC and UIC.
All the said companies are doing the business of insurance,
namely, LIC is in the business of life insurance whilst the others
are in the business of general insurance. All the said insurance D
companies, according to the learned counsel, are mammoth
undertakings having a paid up share capital ·in excess of Rs .
. 1,00,00,000. Therefore, learned counsel submitted that if the
interpretation of Section 3(1)(b) given by the respondent(s)
herein is accepted it would mean extension of protection of the
E
said Rent Act to the four insurance companies including, OIC
and UIC, while not extending such protection to LIC and GIC,
which interpretation would run foul of Article 14 of the Constitulion. Learned counsel submitted that any interpretation of Section 3(1 )(b) must be such as would uphold its constitutional va-
~-t
lidity and, therefore, the four insurance companies, namely, OIC,
F
UIC, New India Assurance Company and National Insurance
Company must also not be entitled to the protection of the said
Rent Act.
16. Learned counsel submitted that while interpreting SecG
tion 3(1 )(b) the principle of noscittur a sociis must be adopted
which would mean that Section 3(1)(b) applies to different categories of tenants all of whom can afford to pay at the market
rate. According to the learned counsel, all the different kinds of
tenants enumerated in Section 3(1 )(b) are financially giants,
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t;
A
namely, PSUs, statutory corporations, banks, multinational companies, international agencies, private or public limited companies with a paid up share capital of Rs. 1,00,00,000 or more
etc. These tenants, according to the learned counsel, do not
require the protection of the Rent Act. Learned counsel next
B submitted that in any event OIC and UIC are public limited companies having a paid up share capital of more than Rs.
~ '
1,00,00,000 and, therefore, stand excluded from the protection
of the Rent Act. In this connection, learned counsel urged that
Government Companies and Insurance Companies are merely
c sub-species of public limited companies under the 1956 Act;
the genus "company" is divided into three species - "existing
company", "private company" and "public company"; that various sub-species including holding and subsidiary companies,
insurance companies, Government companies etc. are all public
D limited companies under 1956 Act.
17. Lastly, learned counsel urged that when the legislature
provided under Section 3(1 )(b) that private limited companies
and public limited companies having a paid up share capital of
Rs. 1,00,00,000 or more were to be excluded from the protecE tion of the Rent Act, it was providing for all bodies carrying on
business in the corporate form under the 1956 Act, which have
a paid up share capital of Rs. 1,00,00,000 or more. Therefore,
according to the learned counsel, the legislature had no intention of carving out an exception in the case of Government comF panies defined under Section 617 of the 1956 Act as erroneously held by the High Court.
18. Shri Soli J. Sorajbee, learned senior counsel appearing for the applicants-intervenors submitted that the legislative
policy under the Rent Act legislation in India is to confine proG tection to the weaker sections of the society and not to extend
such protection to the entities which can withstand the forces of
~
demand and supply. In this connection, learned counsel submitted that Section 3(1)(b) strikes a balance between the interest of the landlord and the tenant; it is neither pro-landlord nor
H anti-tenant. It is pro - public interest. According to the learned
SMT. LEELABAI GAJANAN PANSARE & ORS. v.
265
THE ORIENTAL INSU. CO. LTD. & ORS. [S. H. KAPADIA, J.]
':J
counsel, the impugned judgment frustrates the object of SecA
,.
tion 3(1 )(b) as indicated hereinabove. Further, according to the
.,
·learned counsel, it was not open to the High Court to exclude
Government Companies from PSUs referred to in Section
3(1)(b). According to the learned counsel, such an exercise
~
undertaken by the High Court amounts to judicial legislation as it
B
' .....
was not open to the High Court to read into Section 3(1)(b) the
words, namely, "except Governmeril companies". According to
the learned counsel, such judicial legislation is liable to be set
aside by this Court. Learned counsel further submitted that the
basic rationale underlying the exemption granted by Section c
3(1 )(b} is that the entities and bodies mentioned therein, in the
legislative judgments are not in need of Rent Act protection. In
this connection, the learned counsel submitted that it is this rationale which becomes explicit when Section 3(1)(b) excludes a
private or public limited company having paid up share capital of D
Rs. 1,00,00,000 or more from Rent Act protection. Learned counsel submitted in this connection that if a company becomes a
Government company, it is not equally in need of RentAct protection so long as its paid up capital is Rs. 1,00,00,000 or more.
Learned counsel submitted that for the purpo,ses of Rent Act proE
tection, there is no fundamental or qualitative distinction between
a public limited company with Rs. 1,00,00,000 paid up share
capital and .a Government company with Rs. 1,00,00,000 paid
I .
up share capital. According to the learned counsel, a company
on becoming a Government company does not undergo metamorphosis so as to result in the emergence of a separate entity
F
---t
under the 1956 Act, which needs Rent Act protection to which it
was formerly not entitled. The consequence, according to the
learned counsel, of a company becoming a Government Company is that the Government Company is placed under a special
system of control and merely because the entire share holding is G
-\
owned by the Central Government will not make the incorporated
company a Central Government. In this connection, learned counsel relied upon the judgment of this Court in A. K. Bindal and anr
v. Union of India and ors. 2003(5)SCC 163 at 175. According to
the learned counsel, the need for Rent Act protection does not H
266
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[2008] 12 S.C.R.
A
arise merely because a company is placed under strict control
and regulations. The need for Rent Act protection or its absence
has no nexus whatsoever with the strict regime of control imposed
on a Government company by Section 619 of the 1956 Act. In
this connection, learned counsel submitted that if a public limited
B company with paid up share capital of Rs. 1,00,00,000 is not
entitled to Rent Act protection under Section 3(1 )(b), that company on becoming a Government company cannot claim protection of the Rent Act to which it was not entitled as a public limited
company so long as its paid up share capital is Rs. 1,00,00,000
C or more. According to the learned counsel, for the purpose of
Section 3(1 )(b) what is relevant and decisive is the criterion of
Rs. 1,00,00,000 paid up share capital and not the degree or extent of control exercised over the company as held by the trial
court and so long as the said criterion is satisfied and continues
0
to be satisfied, the company remains outside the puNiew of the
Rent Act. Any other interpretation, according to the learned counsel, would lead to invidious discrimination between a public limited company with one crore paid up share capital and a Government company with the same paid up share capital.