Supreme Court: While considering this appeal, the Court had to determine whether the nature of Union of India’s (appellant) occupation of residential premises at Sujan Singh Park, New Delhi is governed by the provisions of Section 3, Government Grants Act, 1895 (GG Act) or whether the appellant became amenable to eviction proceedings under Section 14(1)(a), Delhi Rent Control Act, 1958 (DRC Act) for non-payment of rent.
The Division Bench of Sanjay Karol and Prashant Kumar Mishra*, JJ., pointed out that the legal character of such a grant made under GG Act 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. Whereas 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.
Therefore, the Court held that the DRC Act will not apply over the present matter, hence the eviction orders issued against the appellant were set aside.
Background
The origin of the dispute lies in a perpetual lease deed dated 26 April 1945 executed by the Governor General in Council in favour of the respondent in respect of 7.58 acres of land situated at North and South 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. Post independence, the appellant stepped into the shoes of the original lessor, while the lessee continued as successor-in-interest.
Residential flats, servant quarters and garages were constructed pursuant to the lease and over time several of these premises came to be occupied by the appellant for housing government officials.
The respondent’s side contended that the appellant occupied the premises as a tenant and paid rent at the rate of Rs 2400 per month per flat, thereby attracting the provisions of the DRC Act. However, the appellant contended that its occupation flowed directly from the perpetual lease deed arising out a grant and that no statutory tenancy governed by rent control law existed.
Alleging default in payment of rent for the period of 1 April 1989 to 31 March 1991 amounting to Rs 63,360, the respondent issued a demand notice. Upon failure to clear the arrears, an eviction petition was filed before the Additional Rent Controller (ARC) under Section 14(1)(a), DRC Act. Subsequently, the ARC directed appellant to deposit arrears under Section 15(1), DRC Act. However, due to non-compliance, an eviction order dated 14 February 2005 was passed by the ARC holding that the appellant was disentitled to the protection under Section 14(2), DRC Act.
The appellant eventually invoked the supervisory jurisdiction of the High Court under Article 227 of the Constitution and approached Delhi High Court. Their primary contention was that Section 3, GG Act excluded the operation of the DRC Act, since the occupation of the premises was referable solely to the terms of the perpetual lease.
Vide the impugned judgment, Delhi High Court held that the lease deed did not create any immunity from the application of rent control legislation. It was concluded that occupation under Clause (6) of the lease deed, accompanied by payment of rent, attracted the DRC Act. Accordingly, the petition was dismissed, with limited protection in execution subject to compliance with conditions.
Aggrieved with the above decision, the appellant approached the Supreme Court.
Court’s Assessment
In April 2022, the Supreme Court had stayed the operation of the eviction order and had directed the parties to maintain status quo with respect to the flats in question.
Perusing the matter, the Court stated that dispute 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. The appellant now represents the original grantor, and the respondent traces its claim to the grantee.
The Court examined that the letter of allotment to which the perpetual lease deed was annexed and noted that it incorporated provisions reserving to the government certain rights of occupation and requisition. The Court further stated that since 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, GG Act thereof expressly exclude the applicability of the Transfer of Property Act, 1882 (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.
Examining the orders passed by the ARC and Rent Control Tribunal (RCT), the Court noted a significant omission as they had not 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 were not addressed and their reasoning proceeded on the assumption that the parties stood in the conventional relationship of landlord and tenant.
The Court then discussed the meaning of a perpetual lease and pointed out that it 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. “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 Court pointed out that the 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.
Examining the rationale used by the High Court, it was noted that while construing the scope of Section 3, GG Act, the High Court 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.
The Court explained that 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, therefore reliance placed by the High Court on Collector of Bombay v. Nusserwanji Rattanji Mistri, (1955) 1 SCC 184, does not advance the matter.
The Court further pointed out that interplay of the GG Act and the DRC Act has been considered by Delhi High Court in MCD v. Pradip Oil Corpn., 2001 SCC OnLine Del 1026, which was upheld by the Supreme Court in Pradeep Oil Corpn. v. MCD, (2011) 5 SCC 270. Therein the exposition of law stated 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.
Therefore, the DRC Act which is a law regulating conventional tenancies arising under general law, does not govern a holding originating in and regulated by a government grant.
On the aspect of the scope and applicability of Section 3, GG Act with respect to the land in question the Court had to consider whether narrowing and restricting the use of Section 3, 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. Upon analysing the statutory scheme of the GG Act and relevant precedents, it was noted that the issue is no longer res integra.
Section 3, 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. Section 3, GG Act confers upon government grants a special statutory immunity and elevates the stipulations contained therein to a position of supremacy. The provision is neither to be read as a mere ancillary clause to Section 2, GG Act, 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.
Therefore, it was opined that the correct interpretative approach to Section 3, 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.
Decision
With the assessment that DRC Act is not applicable over the present dispute, the Court stated that the legal premise upon which the ARC assumed jurisdiction in the matter, stood eroded. The Court held that eviction proceedings, having been instituted, entertained and decided under a statutory regime alien to the legal character of the relationship between the parties, were thus vitiated at their inception.
The Court stated that 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.
Therefore, it was decided that the respondent’s right is confined to recovery of rent in accordance with law.
[Union of India v. Sir Sobha Singh & Sons (P) Ltd., 2026 SCC OnLine SC 658, decided on 22-4-2026]
*Judgment by Justice Prashant Kumar Mishra
Advocates who appeared in this case:
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 Mr. Sharath Nambiar, Adv. Mr. Vinayak Sharma, Adv. Mr. Vinayak Joshi, Adv. Mr. Anuj Sriniwas Udupa, Adv. Mr. Chitransh Sharma, Adv. Mr. Yogya Raj Purohit, Adv. Ms. Indira Bhakar, Adv. Ms. Satvika Thakur, Adv. Ms. Nikita Capoor, Adv. Ms. Ritika Ranjan, Adv. Mr. S. Subramanium, Adv.
For Respondent(s): Mr. P.S Patwalia, Sr. Adv. Mr. P.S. Bindra, Sr. Adv. Mr. Anand Singh, Adv. Mrs. Aarthi Rajan, AOR Mr. S. Santanam Swaminadhan, Adv. Ms. Abhilasha Shrawat, Adv. Mr. Kartik Malhotra, Adv. Ms. Shreya Mansi James, Adv. Ms. Monica Phartyal, Adv. Mr. Amar Kumar, Adv. Mr. Aman Rawat, Adv.