Case: Kesri Commissariat and Ors Vs. Ministry of Food and Civil Supplies, Govt. of Maharashtra, Mumbai and Anr

v. State of Maharashtra & Anr (1998) 2 SCC 1 ), came to hold as follows: - ?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 Malpe Vishwanath Acharya. The entire discussion hereinabove is, therefore, not only to go behind Section 3(1)(b) and ascertain the reasons for enactment of the said clause but also to enable this Court to give purposive interpretation to the said clause.? After so stating, the two-Judge Bench speaking, through S.H. Kapadia, J. (as His Lordship then was), observed as follows: - ?73. 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 word ‘PSUs? as understood by the legislature, it is clear that India?s PSUs are in the form of statutory corporations, public sector companies, government companies and companies in which the public are substantially interested (see the 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. 74. Thirdly, we are of the view that, in this case, the principle of noscitur a sociis is clearly applicable. According to this principle, when two or more words which are susceptible to analogous meanings 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 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 a 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 entity mentioned in Section 3(1)(b) can afford to pay rent at the market rates. xxx xxx xxx 76. 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 to strive to balance the twin objectives of Rent Act protection and rent restriction for those who cannot afford to pay rents at the market rates. 77. To accept the interpretation advanced on behalf of the respondents for excluding government companies from the meaning of the word ‘PSUs? in Section 3(1)(b) would amount to disturbing the neat balance struck by the legislature.? 22. From the aforesaid it is graphically clear that an Insurance Company is not protected under the 1999 Act. Once it is held that defendant No. 1, the New India Assurance Company, the original tenant, is not protected, the question would be whether a subtenant can be protected under the Act. In the case of Bhatia Co-operative Housing Society Ltd. (supra), it has been clearly laid down that Section 4(1) of the 1947 Act applies to premises and not to parties or their relationship. Section 3 uses the term ‘premises?. The provision commences with the non-obstante clause that the Act does not apply to any premises belonging to the Government or a local authority. Sub-section 3(1)(b) makes it clear that the Act does not apply to any bank, public sector undertaking or certain other categories of tenants. The Insurance Company is covered under Section 3(1)(b). Thus, as a logical corollary, the Act does not apply to the premises held by the Insurance Company who is a tenant.23. The learned Single Judge has allowed protection to the Government Department on the foundation that it has become a tenant. We are disposed to think that the analysis is fundamentally erroneous. When the Act does not cover the tenant, namely, the Insurance Company as basically the exemption applies only to premises and not to any relationship, the subtenant who becomes a deemed tenant cannot enjoy a better protection or privilege by ostracizing the concept of premises which is the spine of the provision.

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

Explanation:
1[ds]22. From the aforesaid it is graphically clear that an Insurance Company is not protected under the 1999 Act. Once it is held that defendant No. 1, the New India Assurance Company, the original tenant, is not protected, the question would be whether a subtenant can be protected under the Act. In the case of Bhatia Co-operative Housing Society Ltd. (supra), it has been clearly laid down that Section 4(1) of the 1947 Act applies to premises and not to parties or their relationship. Section 3 uses the term ‘premises?. The provision commences with the non-obstante clause that the Act does not apply to any premises belonging to the Government or a local authority. Sub-section 3(1)(b) makes it clear that the Act does not apply to any bank, public sector undertaking or certain other categories of tenants. The Insurance Company is covered under Section 3(1)(b). Thus, as a logical corollary, the Act does not apply to the premises held by the Insurance Company who is a tenant.23. The learned Single Judge has allowed protection to the Government Department on the foundation that it has become a tenant. We are disposed to think that the analysis is fundamentally erroneous. When the Act does not cover the tenant, namely, the Insurance Company as basically the exemption applies only to premises and not to any relationship, the subtenant who becomes a deemed tenant cannot enjoy a better protection or privilege by ostracizing the concept of premises which is the spine of the provision.