Government Grants Act Prevails Over Rent Control Law : Supreme Court Sets Aside Eviction Proceedings Against Union Govt

The Supreme Court has held that premises occupied under a Government grant, in terms of the Government Grants Act 1895, are governed exclusively by the terms of the grant, and not by rent control legislation, setting aside eviction proceedings initiated against the Union of India under the Delhi Rent Control Act.

A bench of Justice Sanjay Karol and Justice Prashant Kumar Mishra set aside the Delhi High Court's order, which had affirmed the eviction of the Union Government from the occupation of residential premises at Sujan Singh Park, New Delhi, under the Delhi Rent Control Act, on account of non-payment of the rent.

The Court said that proceeding initiated by Sir Sobha Singh & Sons Pvt Ltd under the Delhi Rent Control Act, are not maintainable, since the lease deed executed in the government's favour attracted the statutory protection under the Government Grants Act, 1895, which overrides inconsistent laws, including rent control statutes, and that eviction cannot be sought unless expressly provided in the grant itself.

In essence, the Court said that the Respondent (Sir Sobha Singh & Sons Pvt) is entitled to only recover the rent, without seeking eviction.

“…in the absence of any express stipulation in the lease deed providing for eviction on account of non-payment of rent, no such right can be inferred. The grant must operate according to its tenor, and its silence cannot be converted into a ground of forfeiture. The respondent's right, therefore, is confined to recovery of rent in accordance with law.”, the court held.

Background

The dispute arose from a perpetual lease deed dated April 26, 1945, executed by the then colonial government in favour of Sir Sobha Singh & Sons Pvt. Ltd. for the development of land at Sujan Singh Park, New Delhi.

Under the terms of the deed, the lessee was obligated to construct residential blocks in accordance with the terms of the lease. Upon Independence, the Union of India stepped into the shoes of the original lessor(British Government), while the lessee continued as successor-in-interest.

Under the lease arrangement, the lessee constructed residential flats, servant quarters, and garages, and the Government retained the right to occupy up to 50% of the flats for its officials at a “fair rent.”

Pursuant to this arrangement, the Union of India occupied 5 single-bedroom flats, 9 double-bedroom flats, 39 servant quarters, and 25 garages having rent @ ₹2,400 per flat per month.

The dispute began when the respondent alleged non-payment of rent for the period April 1989 to March 1991, amounting to ₹63,360, and issued a demand notice in January 1991. Subsequently, an eviction petition was filed under Section 14(1)(a) of the Delhi Rent Control Act before the Additional Rent Controller.

Aggrieved by the Rent Control Authority's decision to evict the premises, with subsequent approval by the Delhi High Court, the Union appealed to the Supreme Court.

Supreme Court's Findings

The Court held that the lower forums had proceeded on an erroneous assumption that the relationship between the parties was that of landlord and tenant, without properly appreciating that the occupation arose from a Government grant.

It emphasized that once a lease emanates from a Government grant, the rights and obligations of the parties must be determined strictly in accordance with the terms of the grant. The Court noted that Section 3 of the Government Grants Act gives overriding effect to the terms of such grants, notwithstanding any rule of law or statute to the contrar

Allowing the Union's appeal, the judgment authored by Justice Mishra observed that once the lease was granted on a statutory grant, the Government Grants Act overrides every other law inconsistent with it. Thus, the eviction proceedings under the rent control laws cannot proceed, the court held.

“Section 3 of the GG Act embodies a clear legislative mandate that every Government grant shall take effect according to its tenor, notwithstanding any rule of law, statute or enactment to the contrary. The expression “any rule of law, statute or enactment” in the provision is of the widest amplitude and admits of no restrictive construction…it constitutes an overriding declaration that the grant shall prevail in accordance with its tenor, even if such tenor is inconsistent with general statutory law.”, the court observed.

Since the lease deed did not provide for eviction on non-payment of rent, the respondent could not seek eviction, the Court said, adding that the remedy lies in recovery of arrears, not eviction.

Rejecting the High Court's view that the protection under the Government Grants Act was limited to inconsistencies with the Transfer of Property Act, the Bench held that Section 3 has a wider scope and accords primacy to the terms of the grant even over other statutory regimes, including rent control laws

In terms of the aforesaid, the appeal was allowed

Headnote

Delhi Rent Control Act, 1958 — Section 3 & Section 14(1)(a) — Government Grants Act, 1895 — Sections 2 & 3 — Non-applicability of Rent Control Law to Government Grants - The Delhi Rent Control Act, 1958 (DRC Act), being a legislation intended to regulate conventional tenancies arising under the general law, does not extend to nor govern a holding originating in and regulated by a Government grant - A grant made under the Government Grants Act, 1895 (GG Act) constitutes a legal relationship whose incidents and enforceability are governed exclusively by the tenor of the grant and the statutory protection inhering therein - Its legal character does not derive its content from ordinary landlord-tenant relationships under general law, but instead flows from the sovereign grant and the conditions embodied therein - eviction proceedings instituted against the Union of India under Section 14(1)(a) of the DRC Act for premises occupied under a perpetual lease deed originating from a Government grant are vitiated at their inception for want of jurisdiction. [Paras 45-55]

Government Grants Act, 1895 — Section 3 — Scope of Overriding Mandate — Wider Interpretation vs. Narrow Interpretation - Section 3 of the GG Act embodies a clear legislative mandate that every Government grant shall take effect according to its tenor, notwithstanding any rule of law, statute, or enactment to the contrary - The expression "any rule of law, statute or enactment" is of the widest amplitude and admits of no restrictive construction - The approach which seeks to confine Section 3 merely to the exclusion of the Transfer of Property Act, 1882 (TP Act), by reading it in a narrow or truncated manner, is incorrect - While Section 2 of the GG Act expressly excludes the application of the TP Act, Section 3 travels further and grants primacy to the conditions, limitations, and stipulations contained in the Government grant itself, elevating them to a position of supremacy over any general or statutory law. [Paras 51, 52, 53]

Landlord and Tenant — Right of Eviction — Absence of Express Covenant - In the absence of any express stipulation or clause in the lease deed providing for re entry or eviction on account of non-payment of rent, no such right can be inferred - The Government grant must operate according to its tenor, and its silence cannot be converted into a ground for forfeiture. In such cases, the lessor's/respondent's remedy is strictly confined to the recovery of rent/arrears in accordance with law. [Paras 55]

Precedent — Ratio Decidendi vs. Obiter Dicta - A judgment is an authority only for what it actually decides - The binding element of a judgment lies in its ratio decidendi, i.e., the principle of law which was necessary for the determination of the issue that directly arose for consideration and was consciously adjudicated upon - Observations which stray beyond the contours of the issue in question do not partake of the character of a binding precedent. [Relied on Pradeep Oil Corporation v. Municipal Corporation of Delhi and Another, (2011) 5 SCC 270; The State of U.P. v. Zahoor Ahmad, AIR 1973 SC 2520 / (1973) 2 SCC 547; Tata Steel Limited v. State of Jharkhand and Others, (2015) 15 SCC 55; Union of India and Another v. Dinshaw Shapoorji Anklesari and Others, (2014) 14 SCC 204; Para 41 55]

Cause Title: UNION OF INDIA VERSUS SIR SOBHA SINGH AND SONS PVT. LTD.

Citation : 2026 LiveLaw (SC) 413

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Appearance:

For Petitioner(s) :Mr. Tushar Mehta,Solicitor General Mr. K.M.Nataraj, A.S.G. Mr. Kanu Agrawal, Adv. Mr. Mayank Pandey, Adv. Mr. Navanjay Mahapatra, Adv. Mr. Udit Dedhiya, Adv. Mr. Sudarshan Lamba, AOR

For Respondent(s) :Mr. P.S Patwalia, Sr. Adv. Mr. P.S. Bindra, Sr. Adv. Mr. Anand Singh, Adv. Mr. S. Santanam Swaminadhan, Adv. Ms. Abhilasha Shrawat, Adv. Mr. Kartik Malhotra, Adv. Ms. Shreya Mansi James, Adv. Ms. Vaisnavi Jay, Adv. Mr. Shikhar Bhardwaj, Adv. Ms. Monica Phartyal, Adv. Mrs. Aarthi Rajan, AOR