Union of India v. Sir Sobha Singh and Sons Pvt. Ltd.

B. SUBMISSIONS OF PARTIES

14. Mr. K.M. Nataraj, learned ASG appearing for the appellant submitted that the impugned judgment fails to give full effect to the overriding mandate of the GG Act.

15. It was urged that Sections 2 and 3 of the GG Act expressly exclude the application of the Transfer of Property Act, 18828 and mandate that Government grants operate according to their tenor, notwithstanding any rule of law or statutory enactment to the contrary. It was contended that the nonobstante clause in Section 3 gives primacy to the terms of the grant over all other enactments, including the DRC Act.

16. Learned ASG submitted that Section 3 of the DRC Act itself excludes premises belonging to the Government and tenancies arising out of Government grants. It was pointed out that a conjoint reading of the two enactments, therefore, clearly exclude the applicability of the DRC Act to the present case.

17. Reliance was placed on Municipal Corporation of Delhi vs. Pradip Oil Corporation and Another[9], wherein a full bench of Delhi High Court had affirmed that the rights and obligations under a Government grant are regulated solely by its terms and stand insulated from inconsistent statutory 8 ‘TP Act’ provisions. Further reliance was placed on Union of India and Another vs. Dinshaw Shapoorji Anklesari and Others10, reiterating that Section 3 confers overriding effect and that the Government’s conditions in a grant prevail over contrary statutes. Reference was also made to Azim Ahmad Kazmi and Others vs. State of Uttar Pradesh and Another11 to submit that enforcement or resumption must strictly conform to the tenor of the grant and no external statutory regime can be superimposed.

18. It was further contended by learned ASG that the perpetual lease deed unequivocally recognise the President of India as “lessor” and the respondent as “lessee”. In the absence of any express clause providing for re-entry or eviction upon non-payment of rent, no such right can be inferred; at best, the remedy is recovery of arrears.

19. As regards reliance placed by the High Court on Collector of Bombay (supra), learned senior counsel submitted that the said decision did not consider the interplay between the GG Act and the DRC Act or the scope of Section 3 of the GG Act. It is, therefore, distinguishable and inapplicable to the present controversy.

20. On this premise, the learned ASG had submitted that the High Court erred in confining the overriding effect of the GG Act only vis-à-vis the TP Act and in invoking the DRC Act to sustain eviction. Therefore, it was prayed that the impugned judgment deserves to be set aside.

21. Per Contra, Mr. P.S. Patwalia, learned senior counsel for the respondent submitted that Sections 2 and 3 of the GG Act were confined to insulating Government grants from the operation of the TP Act and cannot be read as excluding the applicability of the DRC Act. It was contended that the GG Act was never intended to operate as a complete code overriding all tenancy laws.

22. Reliance was placed principally on the four-Judges Bench decision of this Court in Collector of Bombay (supra), to submit that Sections 2 and 3 of the GG Act must receive a narrow construction. Learned senior counsel for the respondent argues that the general words of Section 3 cannot be read in apparent generality but must be confined to the object declared in the preamble namely, removing doubts as to the operation of the TP Act. Properly construed, Section 3 merely saves such provisions, restrictions, conditions or limitations in a Government grant as might otherwise be invalid under the TP Act and does not override independent statutory regimes such as the DRC Act.

23. It was further argued that the DRC Act, being a subsequent special welfare legislation, contains no exemption for Government grants. Proviso to Section 3(b) of the DRC Act expressly contemplates applicability to premises lawfully let by Government, and Section 54 of the DRC Act does not save the GG Act.

24. Learned senior counsel for respondent submits that a lawful tenancy is borne out from the allotment letter, agreement, and perpetual lease, including Clause (6) referring to “fair rent”. Learned senior counsel highlighted that the long-standing correspondence and payment of rent establish between the parties the landlord–tenant relationship.

25. It was contended that the plea regarding the GG Act was raised belatedly before the High Court and was confined to a pure question of law. Even otherwise, no clause in the grant bars eviction proceedings. As per the learned senior counsel, the appellant, having availed the protection under the DRC Act for decades, is estopped from denying its applicability.

26. In these circumstances, learned senior counsel for the respondent submits that the initiation of eviction proceedings under the DRC Act is legally competent and maintainable. Therefore, it was prayed that the present appeal deserved to be dismissed.

C. ANALYSIS

27. We have heard the learned senior counsels for the parties and have perused the materials on record.

28. While issuing notice on 06.04.2022, this Court stayed the operation of the ejectment order and had directed the parties to maintain status quo with respect to the flats in question.

29. At the outset, it bears emphasis that the present controversy turns upon the true character of a Government grant executed by the Governor General in Council in respect of 7.58 acres of land at North and South Sujan Park, New Delhi, for the construction of residential flats in favour of Sardar Bahadur Sir Sobha Singh & Sons Private Ltd. The appellant-Union of India now represents the original grantor, and the respondent traces its claim to the grantee. The legal incidents and operative tenor of this grant lie at the very heart of the dispute before us.

30. Pursuant to the aforesaid grant, a perpetual lease deed dated 26.04.1945 came to be executed between the Governor General in Council and Sardar Bahadur Sir Sobha Singh & Sons Private Limited. The lease contemplated the construction of approximately 100 residential flats on the demised premises. The letter of allotment to which the perpetual lease deed dated 26.04.1945 is annexed incorporates provisions reserving to the Government certain rights of occupation and requisition. The relevant Clauses of the allotment letter, which are material for the present controversy, read thus: “I am to convey formal sanction of the Government of India to the allotment to you of two sites in New Delhi, One on the North and the other on the south of the junction of the Cornwallis and Humayun Roads (sic) measuring about 7.58 acres each for the purpose of the constructing about 100 residential flats on the following terms.

1. to 4. ….

5. So long as the war continues and for one year thereafter, the Labour Department of the Government of India, to have the right to use the whole of the building or any part thereof paying a rental assessed by that Department on the basis of the capital cost. The present war (sic) shall be treated as having continued to, and as having ended on, such date as the Central Government may declare.

6. Even after the conclusion of the period mentioned at (5) above, the Central Government to be entitled to require that a certain number of the flats, not exceeding 50% of the total, shall be leased to officials named by them, at a fair rent as assessed by or under the orders of the Central Government.” (emphasis supplied)

31. Since the perpetual lease deed emanates from and is founded upon a Government grant, its construction is governed by the provisions of the GG Act. Sections 2 and 3 of the GG Act thereof expressly exclude the applicability of the TP Act to the Government grants and mandate that such grants shall take effect according to their tenor, notwithstanding any rule of law to the contrary. The said provisions are reproduced hereunder:

32. The legislative object underlying the enactment of the GG Act was to remove doubts regarding the extent to which the TP Act might operate upon grants made by the Government. The TP Act invalidates certain conditions restraining alienation or providing for forfeiture upon alienation or insolvency. The GG Act was enacted to clarify that such statutory limitations would not control Government grants and that the provisions, restrictions and conditions contained therein would be operative strictly in accordance with their tenor.

33. The core controversy of the present lis arose from the eviction petition filed by the respondent, being aggrieved by the non-payment of rental dues by the appellant as per the perpetual lease deed. An order dated 08.07.2004 was passed by the learned ARC directing the appellant to deposit the rental arrears. However, upon the non-compliance, an eviction order was passed on 14.02.2005. Though, this matter has traversed through multiple forums, the central premise throughout has been the alleged failure of the appellant to deposit the rental dues.

34. A careful scrutiny of the orders passed by the learned ARC and RCT, however, reveals a significant omission. Neither the learned ARC nor the RCT have considered the perpetual lease deed in its proper legal character, namely as the instrument emanating from a Government Grant. The nature of the deed and the juridical relationship flowing therefrom have not been addressed. The reasoning adopted proceeds on the assumption that the parties stand in the conventional relationship of landlord and tenant. In doing so, the learned ARC and RCT have treated the existence of a rental covenant as determinative, without adverting to the sovereign character of the grant or the foundational character of the perpetual lease deed, which expressly creates a relationship of lessor and lessee between the parties

35. The perpetual lease deed, on its plain terms, embodies a transfer of the right to enjoy the demised premises in perpetuity in consideration of premium and annual rent, and expressly delineates the parties as lessor and lessee. The rights created and the obligations imposed by the instrument, as reflected in its covenants, reservations and conditions, bear all the essential attributes of a lease within the meaning of the TP Act.

36. However, the enquiry cannot rest there. The subject lease is not a conventional demise but one emanating from a Government grant. Once the character is established, the statutory consequences mandated under the GG Act follow. The applicability of the TP Act stands excluded, and the rights and the obligations of the parties fall to be determined strictly in accordance with the tenor of the grant, notwithstanding any rule of law to the contrary.

37. The learned ARC and RCT, in proceeding on the footing of a conventional landlord-tenant relationship without construing the lease in the light of its origin in a Government grant, thereby misdirected themselves in law.

38. In the impugned judgment, the High Court had placed reliance on the four-Judge Bench decision of this Court in Collector of Bombay (supra) while deciding the scope of Section 3 of the GG Act. The relevant paragraphs of the aforesaid judgment relied upon by the High Court are reproduced hereinbelow:

39. A meticulous examination of the impugned judgment would indicate that the High Court while construing the scope of Section 3 of the GG Act proceeded on the premise that the said provision operated within a confined field referring to inconsistencies arising under the TP Act. On that premise, the High Court concluded that there existed no legal impediment to the institution and adjudication of eviction proceedings under the DRC Act.

40. At first blush, such reliance may appear to be apposite. However, a closer examination of the decision in Collector of Bombay (supra) would demonstrate that the controversy therein arose in an entirely distinct factual and legal setting, namely, the continued levy of assessment tax upon land in the context of the nature and character of the interest created under the grant. The observations made therein must, therefore, be understood in the context of the specific issue which fell for determination, and cannot be extended beyond the contours of that controversy.

41. It is a trite law that 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, however illuminating they may appear, do not partake of the character of binding precedent.

42. Viewed in this light, the reliance placed by the High Court upon Collector of Bombay (supra) does not advance the matter, as the present controversy concerns the legal consequences flowing from a Government grant and the extent to which the statutory regime governing landlord-tenant relationships may be invoked in relation thereto.

43. At this juncture, the learned senior counsel for the respondent contended that, notwithstanding the origin of the lease in a Government grant, the relationship between the parties is in substance, that of a landlord and tenant and is therefore governed by the provisions of the DRC Act. It was urged that by virtue of the proviso to Section 3(b) of the said Act, the premises in question do not stand excluded from its operation and that the respondent was consequently entitled to invoke the remedies available thereunder. The relevant provision reads as under: “3. Act not to apply to certain premises.—Nothing in this Act shall apply— (a) to any premises belonging to the Government; (b) to any tenancy or other like relationship created by a grant from the Government in respect of the premises taken on lease, or requisitioned, by the Government: Provided that where any premises belonging to Government have been or are lawfully let by any person by virtue of an agreement with the Government or otherwise, then, notwithstanding any judgment, decree or order of any court or other authority, the provisions of this Act shall apply to such tenancy.

(c) to any premises, whether residential or not, whose monthly rent exceeds three thousand and five hundred rupees; or

(d) to any premises constructed on or after the commencement of the Delhi Rent Control (Amendment) Act, 1988, for a period of ten years from the date of completion of such construction;”

44. The interplay between the GG Act and the DRC Act has been considered by a Full Bench of the Delhi High Court in Pradip Oil Corporation (supra), wherein it was observed as follows:

57. Scope and object of the provisions of the Government Grants Act has been stated by the Apex Court in The State of U.P. v. Zahoor Ahmad, AIR 1973 SC 2520, in the following terms: “15. In the present case the High Court correctly found on the facts that the respondent after the determination of the lease held over. Even if the Government Grants Act applied Section 116 of the Transfer of Property Act was not rendered inapplicable. The effect of Section 2 of the Government Grants Act is that in the construction of an instrument governed by the Government Grants Act the Court shall construe such grants irrespective of the provisions of the Transfer of Property Act. It does not mean that all the provisions of the Transfer of Property Act are inapplicable. To illustrate, in the case of grant under the Government Grants Act Section 14 of the Transfer of Property Act will not apply because Section 14 which provides what is known as the rule against perpetuity will not apply by reason of the provisions in the Government Grants Act. The grant shall be construed to take effect as if the Transfer of Property Act does not apply.

16. Section 3 of the Government Grants Act declares the unfettered discretion of the Government to impose such conditions and limitations as it thinks fit, no matter what the general law of the land be. The meaning of Sections 2 and 3 of the Government Grants Act is that the scope of that Act is not limited to affecting the provisions of the Transfer of Property Act only. The Government has unfettered discretion to impose any conditions, limitations, or restrictions in its grants, and the right, privileges and obligations of the grantee would be regulated according to the terms of the grant, notwithstanding any provisions of any statutory or common law.””

45. The aforesaid judgment of the Full Bench of the High Court was upheld by this Court in Pradeep Oil Corporation vs. Municipal Corporation of Delhi and Another12. In view of the aforesaid exposition of law, it becomes evident that a grant made under the 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. The legal character of such a grant does not derive its content from the ordinary incidents of a landlord-tenant relationship under the general law, but instead flows from the sovereign grant and the conditions embodied therein. The statutory framework ensures that the terms of the grant stand insulated from the operation of inconsistent provisions contained in other enactments, and the rights and obligations of the grantee fall to be determined strictly with reference to the grant itself and not dehors it. The 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. Consequently, the reliance placed by the learned senior counsel for the respondent upon the Section 3 of the DRC Act to contend that the said enactment governs the present holding, is of no avail.

46. Now that it is decided by us that the DRC Act is not applicable to the facts of the present case, the only question that remains is the scope and applicability of Section 3 of the GG Act with respect to the land in question; whether by narrowing and restricting the use of Section 3 of the GG Act on the mere subject of TP Act or taking a wider approach giving unfettered discretion to the tone and tenor of the grant. The impugned judgment of the High Court places reliance on the decision of Collector of Bombay (supra) and approaches Section 3 of the GG Act through a narrow perspective. In the earlier paragraphs, we have held that the issue which arises in the present case stands on a materially different footing, and the principles enunciated in Collector of Bombay (supra) cannot be read as determinative of the present question.

47. Once the decision in Collector of Bombay (supra) is understood in its proper perspective, it becomes necessary to consider the subsequent line of decisions of this Court which have directly examined the scope and effect of the Government Grants Act, and have elucidated the extent to which the rights and obligations arising under a Government grant fall to be governed by the tenor of the grant itself.

48. In Azim Ahmad Kazmi (supra), a Division Bench of this Court was dealing with issue of whether the State Government can dispossess the lessees in accordance with the GG Act without resorting to other procedure established by any other law. The matter also dealt with the lease deed executed between the parties. The relevant observations in this regard are reproduced hereinbelow:

49. In Dinshaw Shapoorji Anklesari (supra), a three-Judge Bench of this Court had observed as follows:

51. Upon an anxious consideration of the statutory scheme of the GG Act and the authoritative pronouncements of this Court, the legal position that emerges is no longer res integra. 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.

52. The approach which seeks to confine Section 3 merely to the exclusion of the TP Act, by reading it in a narrow or truncated manner, does not accord with either the plain language of the provision or the consistent expositions of this Court. 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, even if they run contrary to any general law.

53. Section 3 of the GG Act confers upon Government grants a special statutory immunity and elevates the stipulations contained therein to a position of supremacy. The provision is not to be read as a mere ancillary clause to Section 2, nor as a limited exclusion confined to the TP Act. Rather, 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.

54. We are, therefore, of the considered view that the correct interpretative approach to Section 3 of the GG Act, is a wider one. The section does not admit a narrow construction that dilutes the supremacy accorded to the terms of the grant. At the same time, its application must be conditioned upon a faithful adherence to the actual stipulations contained in the grant; the Government cannot travel beyond the four corners of the instrument. Within those bounds, however, the tenor of the grant prevails, unfettered by inconsistent statutory or common law principles.

55. In view of our categorical finding that the DRC Act has no manner of application to the present lis, the very foundation upon which the learned ARC assumed jurisdiction to entertain the eviction suit by the respondent stands eroded. The eviction proceedings, having been instituted, entertained and decided under a statutory regime alien to the legal character of the relationship between the parties, are thus vitiated at their inception. The High Court, in affirming the said course on the premise that the respondent would otherwise be left without a remedy, with respect, misdirected itself. The existence or absence of a remedy cannot determine jurisdiction. Equally, 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.

D. CONCLUSION

56. In view of the above, we reach to the following conclusion: a) The Appeal is allowed. b) The impugned judgment dated 08.01.2020 passed by the High Court in CM(M) No. 293 of 2008 is set aside.

57. We make it clear that this judgment shall not preclude the respondent from pursuing appropriate civil remedies in accordance with law. ………………………………………J. (SANJAY KAROL) ………………………………………J. (PRASHANT KUMAR MISHRA) NEW DELHI; APRIL 22, 2026.