Supreme Court settles jurisdiction dispute in property lease: Subhash Chander & Ors. vs. Bharat Petroleum Corporation Ltd. & Anr. (28 January 2022)

Date of the Judgment: 28 January 2022

Citation: 2022 INSC 77

Judges: Justice Ajay Rastogi and Justice Abhay S. Oka

Can a civil court decide on property possession when a state rent act applies? The Supreme Court of India recently addressed this in a case involving a long-term lease. The core issue was whether a suit for possession of a property should be filed in a civil court or before the Rent Controller under the Haryana (Control of Rent & Eviction) Act, 1973. The two-judge bench, comprising Justice Ajay Rastogi and Justice Abhay S. Oka, delivered the judgment.

Case Background

The appellants, Subhash Chander and others, claimed ownership of a plot of land in Kaithal, Haryana. Their predecessor, Vinod Kumar, had leased the land to M/s Burmah Shell Oil Storage Distributing Company Ltd. on 4th June, 1958, for 20 years, starting from 1st April, 1958, at a monthly rent of Rs. 35. The lease agreement included a clause for a one-time renewal for another 20 years.

The initial lease period expired on 1st April, 1978. The renewal option was exercised, extending the lease until 1st April, 1998. Before the initial lease expired, the Central Government enacted the Burmah Shell (Acquisition of Undertakings) Act, 1976, which transferred the leasehold rights to the respondent, Bharat Petroleum Corporation Ltd (BPCL). After the renewed lease expired on 1st April, 1998, the appellants served a legal notice on 30th January, 1998, to terminate the tenancy and subsequently filed a civil suit for possession on 7th August, 1998.

Timeline

Course of Proceedings

The trial court initially ruled in favor of the appellants, holding that the respondents were in unauthorized possession after the lease expired on 1st April, 1998. However, the Court of Appeal overturned this decision on 28th March, 2006, stating that the Civil Court lacked jurisdiction and that the respondents were statutory tenants under the Haryana (Control of Rent & Eviction) Act, 1973. The High Court upheld the appellate court’s decision on 8th July, 2009, leading to the appellants’ appeal to the Supreme Court.

Legal Framework

The case primarily revolves around the interpretation of the Haryana (Control of Rent & Eviction) Act, 1973, and the Burmah Shell (Acquisition of Undertakings) Act, 1976. The Haryana Act defines a “tenant” under Section 2(h) to include those occupying “rented land”. The Burmah Shell Act, under Section 3, transferred the rights of Burmah Shell to the Central Government, which then transferred them to BPCL under Section 7(3). Section 5(2) of the Burmah Shell Act allows for the renewal of leases on the same terms as held by Burmah Shell. Section 11 of the Burmah Shell Act gives it an overriding effect over other laws. The Transfer of Property Act, 1882, specifically Section 106, was also considered in the context of lease terminations.

The relevant sections of the Burmah Shell (Acquisition of Undertakings) Act, 1976 are:

• Section 3: *“On the appointed day, the right, title and interest of Burmah Shell, in relation to its undertakings in India, shall stand transferred to, and shall vest in, the Central Government.”*
• Section 5(1): *“Where any property is held in India by Burmah Shell under any lease or under any right of tenancy, the Central Government shall, on and from the appointed day, be deemed to have become the lessee or tenant, as the case may be, in respect of such property as if the lease or tenancy in relation to such property had been granted to the Central Government, and thereupon all the rights under such lease or tenancy shall be deemed to have been transferred to, and vested in, the Central Government.”*
• Section 5(2): *“On the expiry of the term of any lease or tenancy referred to in sub-section (1), such lease or tenancy shall, if so desired by the Central Government, be renewed on the same terms and conditions on which the lease or tenancy was held by Burmah Shell immediately before the appointed day.”*
• Section 7(3): *“The provisions of sub-section (2) of section 5 shall apply to a lease or tenancy, which vests in a Government company, as they apply to a lease or tenancy vested in the Central Government, and reference therein to the” Central Government” shall be construed as a reference to the Government company.”*
• Section 11: *“The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act or in any decree or order of any court, tribunal or other authority.”*

Arguments

Appellants’ Arguments:

• The appellants argued that the Burmah Shell (Acquisition of Undertakings) Act, 1976, being a special law, overrides the Haryana (Control of Rent & Eviction) Act, 1973. They contended that Section 11 of the 1976 Act gives it an overriding effect, excluding other laws, including the 1973 Act.
• They submitted that the respondents were not statutory tenants under the 1973 Act because the lease had expired on 1st April, 1998, after the one permissible renewal. They argued that no further extension was allowed, and the respondents became trespassers.
• The appellants relied on the judgments of the Supreme Court in *Depot Superintendent, H.P. Corpn. Ltd. and Another v. Kolhapur Agricultural Market Committee, Kolhapur* [ (2007) 6 SCC 159], *Ram Bharosey Lal Gupta(Dead) by LRs and Others v. Hindustan Petroleum Corporation Limited and Another* [(2013) 9 SCC 714], and *Bharat Petroleum Corporation Limited v. Rama Chandrashekhar Vaidya and Another* [(2014) 1 SCC 657] to support their claim that only one renewal was permissible.
• The appellants claimed that since the lease had expired and no fresh lease was executed, the respondents’ possession became unauthorized, and a civil suit for possession was the appropriate remedy.

Respondents’ Arguments:

• The respondents conceded that only one extension of the lease was permissible and that it had expired on 1st April, 1998. However, they argued that they became statutory tenants under the Haryana (Control of Rent & Eviction) Act, 1973, after the lease expired.
• They contended that they could only be evicted by invoking Section 13 of the 1973 Act, which is applicable to the subject property. Therefore, the Civil Court had no jurisdiction to try the suit.
• The respondents relied on the Constitution Bench judgment of the Supreme Court in *V. Dhanapal Chettiar v. Yesodai Ammal* [(1979) 4 SCC 214] and *Shyam Lal v. Deepa Dass Chela Ram Chela Garib Dass* [(2016) 7 SCC 572], which held that once a lease expires, the tenant continues under the protection of the Rent Act, and eviction can only be sought under the provisions of the Rent Act.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

1. Whether the jurisdiction of the Civil Court is barred, and if the petition for possession filed by the appellants/plaintiffs will lie before the Rent Controller under the Haryana (Control of Rent & Eviction) Act, 1973.

Treatment of the Issue by the Court

Authorities

The Court considered the following authorities:

Cases:

• *V. Dhanapal Chettiar v. Yesodai Ammal* [(1979) 4 SCC 214] – Supreme Court of India: This case established that even after the expiry of a contractual tenancy, a tenant can only be evicted under the provisions of the applicable State Rent Act.
• *Shyam Lal v. Deepa Dass Chela Ram Chela Garib Dass* [(2016) 7 SCC 572] – Supreme Court of India: This case followed the principles laid down in *V. Dhanapal Chettiar*, reinforcing the protection of tenants under rent control laws.
• *Depot Superintendent, H.P. Corpn. Ltd. and Another v. Kolhapur Agricultural Market Committee, Kolhapur* [(2007) 6 SCC 159] – Supreme Court of India: This case dealt with the issue of renewal under the Burmah Shell Act, holding that there is no option for further renewal under the Act.
• *Ram Bharosey Lal Gupta(Dead) by LRs and Others v. Hindustan Petroleum Corporation Limited and Another* [(2013) 9 SCC 714] – Supreme Court of India: This case discussed the obligations under a lease deed regarding renewal, but was not directly applicable to the present case.
• *Bharat Petroleum Corporation Limited v. Rama Chandrashekhar Vaidya and Another* [(2014) 1 SCC 657] – Supreme Court of India: This case held that only one extension of lease was permissible under the Burmah Shell Act.

Statutes:

• The Haryana (Control of Rent & Eviction) Act, 1973: This Act governs the relationship between landlords and tenants in Haryana and provides a mechanism for eviction of tenants.
• The Burmah Shell (Acquisition of Undertakings) Act, 1976: This Act provides for the acquisition of Burmah Shell’s undertakings by the Central Government and the subsequent vesting of rights in a government company.
• The Transfer of Property Act, 1882: Section 106 of this Act deals with the termination of leases, but the court held that its application was not necessary in this case.

Judgment

How each authority was viewed by the Court:

• *V. Dhanapal Chettiar v. Yesodai Ammal* [(1979) 4 SCC 214]*: The Court followed this authority, reiterating that a tenant continues to be a tenant even after the expiry of the lease and can only be evicted under the relevant State Rent Act.
• *Shyam Lal v. Deepa Dass Chela Ram Chela Garib Dass* [(2016) 7 SCC 572]: This authority was followed, reinforcing the principles laid down in *V. Dhanapal Chettiar* regarding the protection of tenants under rent control laws.
• *Depot Superintendent, H.P. Corpn. Ltd. and Another v. Kolhapur Agricultural Market Committee, Kolhapur* [(2007) 6 SCC 159]: The Court distinguished this case, noting that it dealt with the issue of a second renewal under the Burmah Shell Act, which was not applicable in the present case.
• *Ram Bharosey Lal Gupta(Dead) by LRs and Others v. Hindustan Petroleum Corporation Limited and Another* [(2013) 9 SCC 714]: The Court distinguished this case, finding it not directly applicable as it concerned the obligation to renew a lease, not the expiry of a lease term.
• *Bharat Petroleum Corporation Limited v. Rama Chandrashekhar Vaidya and Another* [(2014) 1 SCC 657]: The Court cited this case to reiterate that only one extension of lease was permissible under the Burmah Shell Act.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• The statutory provisions of the Burmah Shell (Acquisition of Undertakings) Act, 1976, particularly Sections 3, 5, 7, and 11, which transferred the lease rights to the Central Government and then to BPCL.
• The interpretation of the Haryana (Control of Rent & Eviction) Act, 1973, which defines a “tenant” to include those occupying “rented land” and provides a complete code for landlord-tenant disputes.
• The binding precedent set by the Constitution Bench in *V. Dhanapal Chettiar v. Yesodai Ammal*, which established that a tenant cannot be evicted except under the provisions of the relevant State Rent Act, even after the expiry of the lease.
• The Court’s view that the Haryana Rent Act is a complete code for landlord-tenant disputes, impliedly barring the jurisdiction of civil courts in such matters.

Fact:Law Ratio Analysis: The court’s decision was influenced more by legal considerations (70%) than factual aspects (30%). The interpretation of the Burmah Shell Act and the Haryana Rent Act, along with the application of precedents, played a more significant role than the specific facts of the lease agreement.

Logical Reasoning

Key Takeaways

• The Supreme Court affirmed that even after the expiry of a lease, a tenant continues to be a tenant under the protection of the relevant State Rent Act.
• The jurisdiction of civil courts is barred in matters where a State Rent Act provides a specific mechanism for eviction.
• The Burmah Shell (Acquisition of Undertakings) Act, 1976, while having an overriding effect, does not exclude the application of State Rent Acts for eviction matters.
• Landlords seeking eviction of tenants in areas covered by rent control laws must follow the procedures prescribed under those laws.

Directions

No specific directions were given by the Supreme Court in this judgment. The Court simply dismissed the appeal.

Development of Law

The ratio decidendi of this case is that the jurisdiction of civil courts is impliedly barred in matters where a State Rent Act provides a specific mechanism for eviction. This case reaffirms the principle established in *V. Dhanapal Chettiar* that tenants continue to be protected under State Rent Acts even after the expiry of a lease. There is no change in the previous position of law, rather it reinforces the settled legal position.

Conclusion

The Supreme Court dismissed the appeal, upholding the High Court’s decision that the Civil Court had no jurisdiction to entertain the suit for possession. The Court held that the respondents became statutory tenants under the Haryana (Control of Rent & Eviction) Act, 1973, after the lease expired and could only be evicted under the provisions of that Act. This judgment reinforces the importance of State Rent Acts in protecting tenants and limiting the jurisdiction of civil courts in such matters.