Supreme Court Clarifies Applicability of Central Law over State Law in Property Disputes: Naeem Bano vs. Mohammad Rahees (2024)

Introduction

Date of the Judgment: 22 November 2024

Citation: 2024 INSC 1000

Judges: Justice B.V. Nagarathna and Justice Nongmeikapam Kotiswar Singh

When a state law conflicts with a central law, which one prevails? The Supreme Court of India recently addressed this crucial question in a property dispute case. The core issue revolved around whether a state amendment to the Transfer of Property Act, 1882, specifically concerning the notice period for lease terminations, remains valid after the Parliament has amended the same provision. This case clarifies the supremacy of Parliamentary law in matters listed under the Concurrent List of the Constitution.

The bench comprised of Justice B.V. Nagarathna and Justice Nongmeikapam Kotiswar Singh. The judgment was authored by Justice B.V. Nagarathna.

Case Background

The case involves a property dispute between a landlord, Naeem Bano (the appellant), and a tenant, Mohammad Rahees (the respondent). The dispute arose from a notice of eviction issued by the landlord to the tenant on 24th July 2015 under Section 106 of the Transfer of Property Act, 1882. The tenant challenged this notice, leading to a series of legal proceedings. The primary contention was the validity of the notice period, which is governed by Section 106 of the Transfer of Property Act, 1882.

Timeline

Course of Proceedings

The High Court of Judicature at Allahabad, in its order dated 18.11.2022, noted that a similar matter regarding the interpretation of Section 106 of the Transfer of Property Act, 1882, was pending before a larger bench. The High Court decided to continue the interim order until the larger bench gave its opinion. This decision was challenged by the landlord in the Supreme Court. The landlord argued that the High Court should have decided the case on its merits instead of waiting for the larger bench’s opinion.

Legal Framework

The case primarily revolves around Section 106 of the Transfer of Property Act, 1882, which deals with the duration of leases in the absence of a written contract.

Prior to 31.12.2002, Section 106 of the Transfer of Property Act, 1882, stated:

“106. Duration of certain leases in absence of written contract or local usage. — In the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months’ notice expiring with the end of year of the tenancy; and a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days’ notice expiring with the end of a month of the tenancy.
Every notice under this section must be in writing, signed by or on behalf of the person giving it, and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such party, or to one of his family or servants at his residence, or (if such tender or delivery is not practicable) affixed to a conspicuous part of the property.”

The Uttar Pradesh State Legislature amended Section 106 of the Transfer of Property Act, 1882, on 30.11.1954, by:

• Omiting the words “expiring with the end of a year of the tenancy” and “expiring with the end of a month of the tenancy”;
• Substituting “fifteen days’ notice” with “thirty days’ notice”.

However, the Parliament, by Act 3 of 2003, substituted Section 106 of the Transfer of Property Act, 1882, with effect from 31.12.2002. The substituted Section 106 reads:

“106. Duration of certain leases in absence of written contract or local usage. — (1) In the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months’ notice; and a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days’ notice.
(2) Notwithstanding anything contained in any other law for the time being in force, the period mentioned in sub -section (1) shall commence from the date of receipt of notice.
(3) A notice under sub -section (1) shall not be deemed to be invalid merely because the period mentioned therein falls short of the period specified under that sub -section, where a suit or proceeding is filed after the expiry of the period mentioned in that sub -section.
(4) Every notice under sub -section (1) must be in writing, signed by or on behalf of the person giving it, and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such party, or to one of his family or servants at his residence, or (if such tender or delivery is not practicable) affixed to a conspicuous part of the property.”

The Transfer of Property Act, 1882, falls under Entry 6 of List III (Concurrent List) of the Seventh Schedule of the Constitution of India, which states:

“Transfer of property other than agricultural land; registration of deeds and documents.”

Article 254 of the Constitution of India, which deals with inconsistencies between laws made by the Parliament and laws made by the State Legislatures, is also relevant. It states:

“254. Inconsistency between laws made by Parliament and laws made by the Legislatures of States. – (1) If any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is competent to enact, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of clause (2), the law made by Parliament, whether passed before or after the law made by the Legislature of such State, or, as the case may be, the existing law, shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void.
(2) Where a law made by the Legislature of a State with respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in that State:
Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter including a law adding to, amending, varying or repealing the law so made by the Legislature of the State.”

Arguments

Appellant (Landlord) Arguments:

• The appellant argued that the Parliamentary amendment to Section 106 of the Transfer of Property Act, 1882, which came into effect on 31.12.2002, should apply to the case.
• The notice for ejectment was issued on 24.07.2015 under Section 106 of the Transfer of Property Act, 1882, in accordance with the Parliamentary amendment.
• The earlier amendment made by the Uttar Pradesh State Legislature on 30.11.1954, should be considered void due to the principle of implied repeal, as it conflicts with the subsequent Parliamentary amendment.
• Alternatively, the proviso to Article 254 of the Constitution should be applied to sustain the validity of the notice issued under Section 106 of the Transfer of Property Act, 1882, as per the central amendment.

Respondent (Tenant) Arguments:

• The respondent contended that the High Court was correct in passing the impugned order, as a reference was pending before a larger bench.
• The case should be heard after the larger bench answers the reference order.
• There is no merit in the appeal.

The innovativeness of the argument by the appellant was that even though the State amendment was made earlier, and if it had received presidential assent, the subsequent parliamentary amendment would still prevail.

Submissions

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame specific issues. However, the core issue before the court was:

• Whether the High Court was correct in deferring the decision until the larger bench decided on the reference regarding the validity of the notice under Section 106 of the Transfer of Property Act, 1882, in light of the Parliamentary amendment.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

✓ The Court relied on T.Barai vs. Henry Ah Hoe, [1983] 1 SCR 905 to establish the general rule that a Union law prevails over a State law in case of repugnancy.

✓ The Court referred to Hoechst Pharmaceuticals Ltd. vs. State of Bihar, [1983] 3 SCR 130 to explain the exception under Article 254(2), where a State law can prevail if it receives Presidential assent, but only to the extent of the inconsistency.

✓ The Court cited Zaverbhai Amaidas vs. State of Bombay, [1955] SCR 799 to note that Article 254(2) is based on section 107(2) of the Government of India Act, 1935, and that the proviso in Article 254(2) was added to enlarge the powers of Parliament.

✓ The Court considered Gauri Shankar Gaur vs. State of UP, [1993] Supp.1 SCR 667 to reiterate that while a State law with Presidential assent can prevail, Parliament can override it by amending the Union law.

✓ The Court used Innoventive Industries Ltd. vs. ICICI Bank, [2017] 8 SCR 33 to summarize the legal position on Article 254, emphasizing that repugnancy can be direct or arise from the same subject matter, and State law is void to the extent of the repugnancy, unless Article 254(2) applies with Presidential assent, which is again subject to a subsequent Parliamentary law.

✓ The Court analyzed Section 106 of the Transfer of Property Act, 1882 to determine the validity of the notice period for lease terminations, specifically in light of the amendments made by the State of Uttar Pradesh and the Parliament.

✓ The Court interpreted Article 254 of the Constitution of India to resolve the conflict between the State and Parliamentary laws, ultimately concluding that the Parliamentary amendment prevails due to the proviso to Article 254(2).

The Supreme Court held that the Parliamentary amendment to Section 106 of the Transfer of Property Act, 1882, which came into effect on 31.12.2002, would apply. The Court reasoned that since the subject of “transfer of property other than agricultural land” falls under the Concurrent List, both the Parliament and the State Legislature have the power to make laws on the subject. However, in case of a conflict, the Parliamentary law would prevail due to the proviso to Article 254(2) of the Constitution.

The Court noted that the Uttar Pradesh State Legislature had amended Section 106 in 1954, but the subsequent Parliamentary amendment would prevail. The Court stated, “Consequently, the U.P. amendment to Section 106 would pale into insignificance owing to implied repugnancy and inconsistency between the U.P. State amendment and the Parliamentary amendment to Section 106 of the T.P. Act in the year 2003 even if the earlier U.P. amendment had been reserved for consideration of the President and had received the Presidential assent.”

The Court further clarified, “Thus, on the Parliament amending a provision subsequent to a State legislature’s amendment of a provision of law found in the Concurrent List, the Parliamentary amendment would apply. Article 254 is an instance of Parliamentary supremacy.”

The Court concluded that the High Court should have considered the case on its merits rather than awaiting the opinion of the larger bench. The Court stated, “Therefore, the High Court ought to have considered the case i.e. the tenant’s revision petition, on its own merits and disposed of the same rather than awaiting the opinion of the larger Bench on a reference made.”

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle of Parliamentary supremacy in matters under the Concurrent List, as enshrined in Article 254 of the Constitution. The Court emphasized that when a State law conflicts with a subsequent Parliamentary law on the same subject, the Parliamentary law prevails, even if the State law had received Presidential assent. This principle of implied repeal was central to the Court’s reasoning.

Fact:Law Ratio

The Court’s decision was heavily influenced by the legal principles and constitutional provisions, with a smaller emphasis on the specific facts of the case.

Logical Reasoning

Key Takeaways

✓ Parliamentary law prevails over State law in matters listed under the Concurrent List, even if the State law had received Presidential assent, if a subsequent law is made by the Parliament.

✓ The proviso to Article 254(2) of the Constitution ensures that the Parliament has the final say in matters under the Concurrent List.

✓ Landlords and tenants should be aware of the latest Parliamentary amendments to the Transfer of Property Act, 1882, as they will prevail over State amendments.

Directions

The Supreme Court set aside the impugned order and directed the High Court to dispose of the tenant’s revision petition on its own merits, considering the observations made by the Supreme Court. The High Court was asked to expedite the process.

Development of Law

The ratio decidendi of this case is that in matters under the Concurrent List, a subsequent Parliamentary amendment to a law will prevail over a State amendment, even if the State amendment had received Presidential assent. This reaffirms the principle of Parliamentary supremacy under Article 254 of the Constitution. The judgment clarifies that the proviso to Article 254(2) empowers the Parliament to override State laws in the Concurrent List. This position reinforces the supremacy of Parliamentary law over State law in such matters.

Conclusion

In the case of Naeem Bano vs. Mohammad Rahees, the Supreme Court clarified the supremacy of Parliamentary law over State law in matters under the Concurrent List, specifically concerning amendments to Section 106 of the Transfer of Property Act, 1882. The Court held that the Parliamentary amendment of 2003 would prevail over the Uttar Pradesh State amendment of 1954. The High Court was directed to decide the case on its merits, without awaiting the opinion of a larger bench. This judgment reinforces the principle of Parliamentary supremacy and provides clarity on the application of Article 254 of the Constitution.

Category

• Constitution of India
  • Article 254, Constitution of India
• Transfer of Property Act, 1882
  • Section 106, Transfer of Property Act, 1882
• Property Law
  • Lease Agreements
  • Eviction Notices
  • Landlord-Tenant Disputes
• Concurrent List
  • Parliamentary Supremacy

FAQ

Q: What does this judgment mean for landlords and tenants in Uttar Pradesh?

A: This judgment means that the notice period for lease terminations in Uttar Pradesh will be governed by the Parliamentary amendment to Section 106 of the Transfer of Property Act, 1882, which provides for a 15-day notice for month-to-month leases, and not the 30-day notice period as per the State amendment.

Q: Does this judgment apply to other states?

A: Yes, the principle of Parliamentary supremacy established in this judgment applies to all states in India for matters under the Concurrent List. Any State amendment that conflicts with a subsequent Parliamentary amendment on the same subject will be invalid.

Q: What is the significance of Article 254 of the Constitution in this case?

A: Article 254 deals with inconsistencies between laws made by the Parliament and laws made by the State Legislatures. The Supreme Court used Article 254 to conclude that the Parliamentary amendment to Section 106 of the Transfer of Property Act, 1882, would prevail over the State amendment.

Q: What is the proviso to Article 254(2) of the Constitution?

A: The proviso to Article 254(2) allows the Parliament to make laws at any time with respect to the same matter, including a law adding to, amending, varying, or repealing the law made by the Legislature of the State. This ensures that the Parliament has the final say in matters under the Concurrent List.

Q: What is the Concurrent List?

A: The Concurrent List is one of the three lists (along with the Union List and State List) in the Seventh Schedule to the Constitution of India. It includes subjects on which both the Parliament and the State Legislatures can make laws. However, in case of a conflict, the Parliamentary law will prevail.