No Fresh Notification Required To Apply Rent Control Act In Panchayat Area Converted To Municipality: Kerala High Court Full Bench

A Full Bench comprising Justice Sushrut Arvind Dharmadhikari and Justice Gopinath P and Justice G Girish was answering a reference which arose from conflicting Division Bench decisions on whether the conversion of a Panchayat into a Municipality interrupts the applicability of the Rent Act unless the State Government issues a fresh notification amending Schedule I.

Ancillary issues included whether Schedule I to the Act is static until amended by the Government, or whether it undergoes automatic variation with changes in the status or territorial limits of local authorities

The present petition was filed by the tenants of a building seeking to stay the execution proceedings in EP No.402/2023 before the Munsiff Court, Kuthuparamba, including the delivery of possession of the building. They also prayed for a direction to the respondents not to take any coercive step based on the eviction order passed in the suit, and thereafter, confirmed in appeal and revision.

The area upon which the building was situated was located in Koothuparamba Panchayat, which became a Municipality with effect from 01.04.1990. Therefore, the petitioners contended that even though the Rent Control Act was applicable to the Panchayat, the same would not automatically apply to the area, after its conversion to Municipality. According to them, a fresh notification under Section 1(3) is required to make the Act applicable to the Municipality.

A prior Division Bench decision in Koorantakath Kamaludeen v. Kannyath Divakaran (OP(RC) 154/ 2024) had accepted this reasoning, prompting the reference.

The Full bench observed that the object of the Rent Control Act is to regulate the leasing of buildings and controlling rents in respect of such leased buildings. It further observed that one of the principal aims and objectives of the Act was the prevention of unreasonable eviction of tenants from rented premises within the State of Kerala.

The Schedule I to the Rent Control Act enumerated various villages, Panchayats, and Municipalities as the areas to which the provisions of the Rent Act apply. At the time of the enactment of the Rent Act in 1959, the State of Kerala comprised of only nine districts, whereas now it has increased to fourteen districts

It was submitted that the Schedule I to the Rent Act continues to remain unamended and unaltered in its form and content.

The Court examined the provisions of the Kerala Panchayat Raj Act, 1994 and the Provisions of the Kerala Municipality Act, 1992, which provides for the constitution of Panchayat and Municipality respectively to analyse the submissions made by both parties regarding the impact of alteration, conversion, or change in the status of Panchayat to a Municipality, or from one Municipality to another.

The Court noted that even though the Rent Control Act was enacted in 1959, it could be enforced only in 1965, after the Presidential assent was obtained under Article 254 of the Constitution of India. At this point, both the Panchayat Act and Municipalities Act were in force, consequently, the concept of “Panchayat area” and “Municipality area” was incorporated into Schedule I of the Rent Control Act.

The Court then went on to analyse section 1 of the Rent Control Act, particularly, Section 1(2) which mentioned that the Act applies to areas mentioned in the schedule and section 1(3) which enabled the government to extend, modify, or withdraw the Act's application to other areas by notification. The proviso to Section 1(3) states that no notification shall be issued unless it is supported by a resolution passed by the local authority or authorities, of the areas affected by the notification.

The Court noted that even if Section 1(3) had not been enacted, and only Section 1(2) existed on the statute book, it would not have adversely affected or stultified the operation of the Rent Control Act.

“Section 1(3) serves merely as a procedural provision relating to the applicability of the Rent Act. Under this section, if any area is to be added, modified, or withdrawn, it can occur only by way of notification and not otherwise. The proviso to Section 1(3) has a limited scope and cannot affect the operation of Section 1(2).” court noted.

The Court observed that Section 1(2) is the charging provision of the Rent control Act which applies to all areas mentioned in the Schedule. The Court ruled that the proviso requiring a resolution of the local authority is confined to notifications issued under Section 1(3) and cannot be read into Section 1(2).

By relying on the decision in Delhi Metro Rail Corporation Limited v Tarun Pal Singh [(2018) 14 SCC 161], and other precedents, the Court noted that a provision to any section cannot have an ambit, scope, or operation larger than the provision to which it is appended.

“A proviso is ordinarily subordinate to the main section to which it is appended and must always be interpreted in a manner that ensures harmony with the principal section as well as other provisions of the statute.” Court noted

The Court compared the relationship between a section and its proviso to a wall and plaster and observed that the plaster cannot exist independently or be applied in mid-air to stand in a vacuum.

“The proviso, as noted above, is appended to Section 1(3) and not to Section 1(2). The Court is unpersuaded by the submissions of the petitioners that the proviso must govern the operation of Section 1(2) as well. When the proviso is attached solely to Section 1(3), it cannot be extended or read into Section 1(2).” Court noted.

The Court then went on to examine the transitional effect of the conversion of a panchayat into a municipality on an entry as existing under Schedule I of the Rent Control Act.

The Court observed that significant changes have occurred in the geography and administrative boundaries of Kerala over the last 50 plus years, where a number of Panchayats mentioned in Schedule I have transitioned into municipalities, and several municipalities have shifted from one district to another.

It noted that if such transitional effect necessitates a fresh notification under Section 1(2) or 1(3) of the Rent Control Act, it would give rise to cascading issues which would result in petitions contending requirement of fresh notification even for transfer or transportation of a municipality.

“If this approach were adopted, every alteration in the nature, boundaries, or territorial extent of a panchayat or municipality under the Panchayat Act or the Municipalities Act would potentially require fresh notifications and amendments to Schedule I of the Rent Act, making its operation impractical and unworkable.” Court noted

The Court further noted that permitting such an interpretation would open a Pandora's box and would render the implementation of the Rent Control Act impossible.

The Court further held that Schedule I represents an instance of legislation by incorporation. The geographical areas of Panchayats and Municipalities, as they existed when the Rent Act came into force in 1965, were bodily lifted into the statute. Once incorporated, those entries became static and self-contained, unaffected by later changes under the Panchayat or Municipality laws.

Relying on Ram Sarup v Munshi (AIR 1963 SC 553), the Court reiterated that amendments, repeal, or restructuring of the parent enactments from which terms are borrowed do not automatically alter the incorporating statute. Consequently, a change in nomenclature or status, from Panchayat to Municipality, does not alter the 'area' to which the Rent Act applies.

The Court further observed that since the Rent Act has received Presidential assent under Article 254 of the Constitution of India and therefore prevails even over the Parliamentary legislation, namely the Transfer of Property Act, within the State.

Relying on the Supreme Court's decision in Atma Ram Properties Pvt. Ltd. Oriental Insurance Co. Ltd. [(2018) 2 SCC 27], the Court has also held that when it comes to landlord-tenant relations, the Rent Act becomes the special legislation on the subject, prevailing over the superseding provisions of the Panchayat and Municipality legislations.

The Court has also observed that legislature may under the Section 1(3) of the Rent Act modify, amend, extend, or even withdraw the areas already notified as part of the schedule under Section 1 (2) but the Court cannot draw any interference in favor of any aggrieved party claiming an automatic modification or alteration.

“If the State Government chooses to keep Schedule I intact, without effecting any changes or modifications, the Court cannot draw any inference in favor of any aggrieved party claiming an automatic modification or alteration of the 'areas' as already delineated, determined, and notified under Schedule I of the Rent Act.” Court noted.

The Full Bench thus expressly overruled Koorantakath Kamaludeen, holding that it had conflated Sections 1(2) and 1(3) and misunderstood the limited reach of the proviso.

It further held that the Rent Control Act continues to apply to areas listed in Schedule I notwithstanding the conversion of a Panchayat into a Municipality and no fresh notification under Section 1(3) is required unless the Government intends to add, exclude, or withdraw an area from the Act's operation.

Case Title: Vadavathi Rajeevan and Anr. v K Vanaja and Anr

Case No: ICR(OP(RC) 12/ 2025

Citation: 2026 LiveLaw (Ker) 31

Counsel for Petitioner: K V Pavithran, Jayanandan Madayi Puthiyaveettil, Jithin S Sundaran, Adarsh Kurian