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

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