Case: Leelabai Gajanan Pansare  Vs. Oriental Insurance Co.Ltd

the principle of constitutional adjudication which makes it decisive in the choice of fair alternatives that one construction may raise serious constitutional questions avoided by another. ...". (emphasis supplied) 47. Moreover, if we are to hold that PSUs do not include Government companies, as held by the High Court, we would be disturbing the package offered by the Legislature of allowing increase of rent annually at 5%, allowing the landlords to accept premium and exclusion of certain entities from the protection of the Rent Act under Section 3(1)(b). On the other hand, acceptance of the arguments advanced on behalf of the respondents on the interpretation of Section 3(1)(b) would make the Act vulnerable to challenge as violative of Article 14 of the Constitution. Therefore, we are of the view that on a plain meaning of the words `PSUs as understood by the Legislature, it is clear that, Indias PSUs are in the form of statutory corporations, public sector companies, Government companies and companies in which the public are substantially interested (see: Income tax Act, 1961). When the word PSU is mentioned in Section 3(1)(b), the State Legislature is presumed to know the recommendations of the various Parliamentary Committees on PSUs. These entities are basically cash-rich entities. They have positive net asset value. They have positive net worths. They can afford to pay rents at the market rate. Thirdly, we are of the view that, in this case, the principle of noscittur a sociisis clearly applicable. According to this principle, when two or more words which are susceptible to analogous meaning are coupled together, the words can take their colour from each other. Applying this test, we hold that Section 3(1)(b) clearly applies to different categories of tenants all of whom are capable of paying rent at the market rates. Multinational companies, international agencies, statutory corporations, Government companies, public sector companies can certainly afford to pay rent at the market rates. This thought is further highlighted by the last category in Section 3(1)(b). Private limited companies and public limited companies having paid up share capital of more than Rs. 1,00,00,000 are excluded from the protection of the Rent Act. This further supports the view which we have taken that each and every entities mentioned in Section 3(1)(b) can afford to pay rent at the market rates. We may note that to meet the challenge of discrimination under Article 14 it is not sufficient to state that there is an intelligible differentia but it is further essential requirement to show that the differentia has a rational nexus to the object sought to be achieved by the Statute in question. (see: State of Rajasthan v. Mukanchand and ors. (1964) 6 SCR 903.) As stated above, Section 3(1)(b) strikes a balance between the interest of the landlords and the tenants; it is neither pro-landlords nor anti-tenants. It is pro-public interest. In this connection, one must keep in mind the fact that the said Rent Act, 1999 involves a structural change vis-à-vis the Bombay Rent Act, 1947. As stated above, with the passage of time, the 1947 Act became vulnerable to challenge as violative of Article 14. As stated above, the legislature has strike to balance the twin objectives of Rent Act protection and rent restriction for those who cannot afford to pay rents at the market rates. To accept the interpretation advanced on behalf of the respondents for excluding Government companies from the meaning of the words "PSUs" in Section 3(1)(b) would amount to disturbing the neat balance struck by the Legislature. OIC and UIC are Government companies. They have paid up capital of more than Rs. 100 crores. They can easily afford to pay rents at the market rates. The legislature in its wisdom has kept PSUs, including Government companies, outside the Rent Act. We have to proceed on the basis that the State Legislature was aware of the meaning of the words PSUs as understood by the various Parliamentary Committees. If Government companies are to be excluded from Section 3(1)(b) then the test of intelligible differentia having rational nexus to the objects sought to be achieved by the said Rent Act would stand defeated. We cannot exclude such PSUs from Section 3(1)(b) as is sought to be contended on behalf of the respondents. PSUs including Government Companies are independent companies/corporations. They cannot be equated to the "Government" in Section 3(1)(a). We have to read Section 3(1)(b) in its entirety. We have to read the said section keeping in mind the reasons for its enactment. Lastly, we are of the view that the High Court judgment is erroneous when it adds words to Section 3(1)(b), namely, "which is not a Government company". In other words, the High Court states that OIC/UIC and BPCL are public undertakings, however, they are Government companies incorporated under Section 617 of the 1956 Act and, therefore, stand excluded from Section 3 (1)(b). In this connection it may be stated that High Court has relied upon the definition of Government Company under Section 617 of the Companies Act. In the case of Union of India and others v. R.C. Jain and others - 1981 (2) SCC 308 this Court has enunciated the principle that "the definition of an expression in one Act must not be imported into another. It would be a new terror in the construction of Acts if we were required to limit a word to an unnatural sense because in some Act which is not incorporated or referred to such an interpretation is given to it for the purposes of that Act alone." Lastly, the interpretation placed by the High Court on the word "PSUs" in Section 3(1)(b) amounts to judicial legislation and further it defeats the very object of Section 3(1)(b). 48. Before concluding, we may note that we have interpreted the words ‘PSUs in Section 3(1)(b) purely in the context of the provisions of the Maharashtra Rent Control Act, 1999. Our judgment is, therefore, confined strictly to the said provisions of the Rent Act.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]34. Our object of the above discussion regarding provisions of the Bombay Rent Act, 1947 is two-fold. Firstly, to point out that there has been a structural change made by the Legislature in the present Rent Act vis-à-vis the 1947 Act. Secondly, we have analysed the relevant provisions of the 1947 Act to indicate the change in the economic conditions between 1947 and 31.3.2000 when the present Rent Act came into force.The important point to be noted is that in the above judgment it has been held that with the passage of time the 1947 Act which was justified when enacted had become arbitrary and unreasonable with the change in economic circumstances. It has been further observed in the said judgment that the 1947 Act relating to determination and fixation of standard rent can no longer be considered to be reasonable. However, this Court felt that though the provisions mentioned above were liable to struck down as unreasonable and arbitrary keeping in mind the consequences that the tenants may lose protection of the Rent Act, this Court gave an opportunity to the Government to consider enactment of a Model Law. This judgment was delivered by the apex Court on 19.12.1997.38. Therefore, the legislature was required to keep in mind the vulnerability of fixing standard rent as on 1.9.1940. At the same time, the legislature had to keep in mind two aspects, namely, tenancy protection and rent restriction. The problem arose on account of economic factors. However, the legislature found the solution by evolving an economic criterion. The legislature evolved a package under which the prohibition on receiving premium under Section 18 of the 1947 Act stood deleted. In other words, landlords were given the liberty to charge premium. The second package was to exclude cash-rich body corporates and statutory corporations from the protection of the Rent Act. This part of the economic package helps the landlords to enhance the rent and charge rent to the entities mentioned in Section 3(1)(b) who can afford to pay rent at the market rate. This was the second item in the economic package offered to the landlords under the present Rent Act. The third item of the Rent Act was to give the benefit of annual increase of rent @ 5% under the present Rent Act. All three items constituted one composite package for the landlords. The underlying object behind the said economic package is to balance and maintain the two-fold objects of the Rent Act, namely, tenancy protection and rent protection. The idea behind excluding cash-rich entities from the protection of the Rent Act is also to continue to give protection to tenants who cannot afford to pay rent at market rate.39. The above discussion is relevant because we must understand the reason why Section 3(1)(b) came to be enacted. As stated above, in our view, with the offer of an economic package to the landlords, the legislature has tried to maintain a balance. The provisions of the earlier Rent Act, as stated above, have become vulnerable, unreasonable and arbitrary with the passage of time as held by this Court in the above judgment. The legislature was aware of the said judgment. It is reflected in the report of the Joint Committee. In our view, the changes made in the present Rent Act by which landlords are permitted to charge premium, the provisions by which cash-rich entities are excluded from the protection of the Rent Act and the provision providing for annual increase at a nominal rate of 5% are structural changes brought about by the present Rent Act, 1999 vis-à-vis the 1947 Act. The Rent Act of 1999 is the sequel to the judgment of this Court in the case of Malpe Vishwanath Acharya (supra).40. The entire discussion hereinabove is, therefore, not only to go behind Section 3(1)(b) and ascertain the reasons for enactment of the said sub-section but also to enable this Court to give purposive interpretation to the saiddo not find merit in this submission. Firstly, it may be noted that several entities have been enumerated in Section 3(1)(b), namely, banks, PSUs or statutory corporations, foreign missions, international agencies, multinational companies and private limited and public limited companies having a paid up share capital of Rs. 1,00,00,000 or more. As stated above, the said Rent Act, 1999 has brought about structural changes in the legislation. In this case, it was open to the legislature to opt for any of the tests, namely, test of origin, test of public character of the functions performed by each of these entities, test of public character of each of the undertakings, test of agency or instrumentality, test of monopolistic status, test of mobilization of resources etc. In the present case, we find that the legislature has opted for an economic criteria, namely, entities which are in a position to pay rent at market rates are to stand excluded from Rent Act protection. This is the test of Financial Capability. This is the golden thread which runs through Section 3(1)(a). Be it banks, PSUs. Statutory corporations, multinational companies, foreign missions, international agencies and public and private limited companies having a paid up share capital of Rs. 1,00,00,000 or more stand excluded from the Rent Act protection. This criteria has been selected by the legislature knowing fully well that each of these entities including PSUs can afford to pay rent at the market rates. Secondly, we have given in-depth consideration to the contention advanced on behalf of the respondents on the interpretation of Section 3(1)(b). We are of the view that to accept the contention of the respondents, namely, that only PSUs which are established by or under the Central or State Acts will not get protection whereas PSUs which are Government companies incorporated under the 1956 Act would continue to get protection would make the Section 3(1)(b) vulnerable to challenge as violative of Article 14 of the Constitution. In this regard, it may be noted that in the insurance industry, we have LIC, banks, private sector companies and Government companies. To say that LIC being a statutory corporation stands excluded from the provisions of the Rent Act whereas Government companies incorporated under the Companies Act, 1956 would continue to get protection would lead to arbitrary discrimination under Article 14 to the Constitution.Today, vide civil appeal arising out of SLP(C) No. 5855/07 we have set aside the Division Bench judgment of the Bombay High Court dated 20.12.2006 in the case of Smt. Leela Gajanan Pansare v. Oriental Insurance Co. Ltd..