Supreme Court Upholds Special Eviction Rights for NRIs under Rent Act: Ram Krishan Grover vs. Union of India (2019)

Date of the Judgment: 14 November 2019

Citation: (2019) INSC 988

Judges: Ranjan Gogoi, CJI, L. Nageswara Rao, J., Sanjiv Khanna, J.

Can Non-Resident Indians (NRIs) be given special rights to evict tenants from their properties? The Supreme Court of India addressed this question in a significant judgment concerning the East Punjab Urban Rent Restriction Act, 1949. This case examines the constitutional validity of Section 13-B of the Act, which allows NRIs to seek immediate possession of their properties under certain conditions. The judgment was delivered by a three-judge bench comprising Chief Justice Ranjan Gogoi and Justices L. Nageswara Rao and Sanjiv Khanna, with the majority opinion authored by Justice Sanjiv Khanna.

Case Background

This case involves multiple appeals by tenants of residential and non-residential buildings in Chandigarh and urban areas of Punjab. These tenants challenged the constitutional validity of Section 13-B of the East Punjab Urban Rent Restriction Act, 1949 (the ‘Rent Act’). This section provides a special right to Non-Resident Indians (NRIs) to recover immediate possession of their properties. The Central Government had extended this provision to the Union Territory of Chandigarh via a notification dated 09.10.2009, using powers under Section 87 of the Punjab Reorganisation Act, 1966.

The core issue revolves around whether NRIs should have a special right to evict tenants, and whether the extension of Section 13-B to Chandigarh is lawful. The tenants argued that this provision is discriminatory and violates the Constitution.

Timeline

Course of Proceedings

The judgment does not specify the course of proceedings in the lower courts. However, it is clear that the tenants challenged the extension of Section 13-B to Chandigarh, leading to the appeals before the Supreme Court.

Legal Framework

The core of this case revolves around several key legal provisions:

• Section 13-B of the East Punjab Urban Rent Restriction Act, 1949: This section grants Non-Resident Indians (NRIs) the right to recover immediate possession of their residential, scheduled, or non-residential buildings if they require it for their own use or for the use of someone dependent on them. The section states:

  “13-B. Right to recover immediate possession of residential building or scheduled building and/or non-residential building to accrue to Non-resident Indian.— (1) Where an owner is a Non-Resident Indian and returns to India and the residential building or scheduled building and/or non-residential building, as the case may be, let out by him or her, is required for his or her use, or for the use of any one ordinarily living with and dependent on him or her, he or she, may apply to the Controller for immediate possession of such building or buildings, as the case may be: Provided that a right to apply in respect of such a building under this Section, shall be available only after a period of five years from the date of becoming the owner of such a building and shall be available only once during the life time of such an owner. (2) Where the owner referred to in sub-section (1), has let out more than one residential building or scheduled building and/or non-residential building, it shall be open to him or her to make an application under that sub-section in respect of only one residential building or one scheduled building and/or one non-residential building, each chosen by him or her. (3) Where an owner recovers possession of a building under this Section, he or she shall not transfer it through sale or any other means or let it out before the expiry of a period of five years from the date of taking possession of the said building, failing which, the evicted tenant may apply to the Controller for an order directing that he shall be restored the possession of the said building and the Controller shall make an order accordingly.”

• Definition of “Non-Resident Indian” (Section 2(dd) of the Rent Act): This defines an NRI as a person of Indian origin who is settled outside India for employment, business, or any other purpose indicating an intention to stay outside India for an uncertain period.

  “(dd) “Non-resident Indian” means a person of Indian origin, who is either permanently or temporarily settled outside India in either case – (a) for or on taking up employment outside India; or (b) for carrying on a business or vocation outside India; or (c) for any other purpose, in such circumstances, as would indicate his intention to stay outside India for an uncertain period;”

• Section 87 of the Punjab Reorganisation Act, 1966: This section empowers the Central Government to extend any state enactment to the Union Territory of Chandigarh.

  “87. Power to extend enactments to Chandigarh – The Central Government may, by notification in the Official Gazette, extend with such restrictions or modifications as it thinks fit, to the Union territory of Chandigarh any enactment which is in force in a State at the date of the notification.”

• Section 88 of the Punjab Reorganisation Act, 1966: This section clarifies the territorial extent of laws.

  “88. Territorial extent of laws.—The provisions of Part II shall not be deemed to have effected any change in the territories to which any law in force immediately before the appointed day extends or applies, and territorial references in any such law to the State of Punjab shall, until otherwise provided by a competent legislature or other competent authority, be construed as meaning the territories within the State immediately before the appointed day.”

• Section 89 of the Punjab Reorganisation Act, 1966: This section provides power to adapt laws.

  “89. Power to adapt laws.—For the purpose of facilitating the application in relation to the State of Punjab or Haryana or to the Union Territory of Himachal Pradesh or Chandigarh of any law made before the appointed day, the appropriate Government may, before the expiration of two years from that day, by order, make such adaptations and modifications of the law, whether by way of repeal or amendment, as may be necessary or expedient, and thereupon every such law shall have effect subject to the adaptations and modifications so made until altered, repealed or amended by a competent legislature or other competent authority.”

These provisions are central to understanding the legal issues in the case, particularly the power of the Central Government to extend state laws to Chandigarh and the special rights granted to NRIs under the Rent Act.

Arguments

The appellants (tenants) raised several arguments against the validity of Section 13-B and its extension to Chandigarh:

• Excessive Delegation: The tenants argued that the notification dated 09.10.2009, extending the Amendment Act to Chandigarh, was an excessive delegation of legislative power. They contended that it amended the rent legislation in force in Chandigarh, which was enacted by Parliament under Article 246(4) of the Constitution.
• Incompetence of State Legislature: The tenants argued that the Punjab State Legislature was not competent to enact the Amendment Act. They claimed that the rights of Non-Resident Indians fall under the Union List, specifically Entry 17 (Citizenship), Entry 18 (Extradition), and Entry 19 (Admission into, and emigration and expulsion from India) of List I of the Seventh Schedule of the Constitution. They also argued that the subject matter of the legislation is in conflict with Central enactments like the Citizenship Act, 1955, and the Foreign Exchange Management Act, 1999.
• Arbitrariness and Discrimination: The tenants argued that Section 13-B is arbitrary, unreasonable, and discriminatory. They contended that it creates an artificial classification favoring NRIs over Indian residents, violating Article 14 of the Constitution.

The respondents (Union of India) defended the validity of Section 13-B and its extension to Chandigarh, arguing that:

• Valid Extension Under Section 87: The respondents argued that the extension of the Amendment Act to Chandigarh was a valid exercise of power under Section 87 of the Reorganisation Act. They relied on the Supreme Court’s decision in Ramesh Birch v. Union of India to support their argument.
• Competence of State Legislature: The respondents contended that the Amendment Act falls within the State’s legislative competence, as it deals with the relationship between landlords and tenants, which is covered under Entry 18 of List II (Land) or Entries 6 and 7 of List III (Transfer of Property and Contracts) of the Seventh Schedule.
• Reasonable Classification: The respondents argued that the classification of NRIs as a separate category is reasonable and has a rational nexus with the object of the legislation. They stated that the special provisions were enacted to address the unique difficulties faced by NRIs returning to India.

The arguments of both sides were supported by various legal precedents and interpretations of constitutional provisions.

Submissions by Parties

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Whether the Notification dated 09.10.2009, extending Section 13-B of the Rent Act to Chandigarh by executive action, is invalid due to excessive delegation of legislative power.
2. Whether the amendments made by the Amendment Act with regard to the rights of Non-Resident Indians by the State Legislature of Punjab were beyond its competence.
3. Whether Section 13-B of the Rent Act is arbitrary and unreasonable, as it does not afford any legal remedy to the tenants.
4. Whether classifying Non-Resident Indian landlords as a separate category renders Section 13-B invalid and ultra vires Article 14 of the Constitution.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities:

Judgment

The Supreme Court upheld the constitutional validity of Section 13-B of the Rent Act and its extension to Chandigarh. The court addressed each submission made by the parties as follows:

The Court also examined how each authority was viewed:

• Re Delhi Laws Act 1912, Ajmer Merwara (Extension of Laws) Act, 1947 and Part C States (Laws) Act, 1950* was examined and elucidated to determine the validity of Section 87 of the Reorganisation Act.
• R. v. Burah (1878) 5 Ind App 178 (PC)* was used as a touchstone to uphold the constitutional validity of Section 87 of the Reorganisation Act.
• Ramesh Birch v. Union of India, 1989 Supp (1) SCC 430* was relied upon to uphold the validity of extending future amendments to existing laws.
• Vasu Dev Singh v. Union of India, (2006) 12 SCC 753* was cited to explain the difference between conditional and delegated legislation, supporting the validity of the extension.
• Hamdard Dawakhana v. Union of India, AIR 1960 SC 554* was cited to further clarify the distinction between conditional and delegated legislation.
• Vijay Kumar Sharma and Others v. State of Karnataka and Others, (1990) 2 SCC 562* was cited to explain that incidental encroachment on a rival field is disregarded if the legislation’s dominant purpose is within its permitted jurisdiction.
• Indu Bhushan Bose v. Rama Sundari Debi and Another, (1969) 2 SCC 289* was examined to determine the legislative competence on landlord-tenant relations, holding it falls under the Concurrent List.
• Jaisingh Jairam Tyagi and Others v. Mamanchand Ratilal Agarwal and Others, (1980) 3 SCC 162* was followed to support the view that housing and accommodation fall under the Concurrent List.
• V. Dhanapal Chettiar v. Yesodai Ammal, (1979) 4 SCC 214* was followed to support the view that housing and accommodation fall under the Concurrent List.
• Accountant and Secretarial Services Pvt. Ltd. and Another v. Union of India and Others, (1988) 4 SCC 324* was examined to discuss the interplay between Central and State laws, holding that Central laws prevail in case of conflict.
• Baldev Singh Bajwa v. Monish Saini, (2005) 12 SCC 778* was discussed to interpret the provisions of Section 18-A of the Rent Act and the need for a genuine requirement for eviction.
• Ravi Dutt Sharma v. Ratan Lal Bhargava, (1984) 2 SCC 75* was discussed to explain the object of rent control legislation and the need for a speedy remedy for landlords.
• Kewal Singh v. Smt. Lajwanti, (1980) 1 SCC 290* was followed to uphold the validity of summary procedures for eviction, stating that theHigh Court’s revisional power is sufficient safeguard.
• Ram Dass v. Ishwar Chander* was cited to explain that the bona fide need should be genuine and honest, conceived in good faith.
• Bega Begum v. Abdul Ahad Khan* was cited to explain that the words “reasonable requirement” postulate that there must be an element of need as opposed to a mere desire or wish.
• Surjit Singh Kalra v. Union of India* was cited to explain that every claim for eviction against a tenant must be a bona fide one.
• Shiv Sarup Gupta v. Dr. Mahesh Chand Gupta* was cited to explain that the sense of felt need which is an outcome of a sincere, honest desire, in contradistinction with a mere pretence or pretext to evict a tenant, refers to a state of mind prevailing with the landlord.
• Inderjeet Kaur v. Nirpal Singh, (2001) 1 SCC 706* was cited to explain that leave to defend should be granted when the pleas raise triable issues.
• Swami Nath v. Nirmal Singh, (2010) 9 SCC 452* was examined to interpret the expression ‘one building’ in sub-clause (2) to Section 13-B, holding that it means one building and not one tenancy in a building.
• Ram Krishna Dalmia v. Justice S.R. Tendolkar, 1959 SCR 279: AIR 1958 SC 538* was followed to postulate the conditions for a valid classification under Article 14, requiring an intelligible differentia and a rational nexus with the object of the statute.
• State of A.P. and Others v. Nallamilli Rami Reddi and Others, (2001) 7 SCC 708* was further elucidated that a classification need not be scientifically perfect and is justified unless palpably arbitrary.
• Pioneer Urban Land & Infrastructure Limited and Another v. Union of India and Others* was discussed to explain the concept of under-inclusiveness in classification, stating that courts exercise tolerance unless there is no fair reason for the law.
• Malpe Vishwanath Acharya and Others v. State of Maharashtra and Another, (1998) 2 SCC 1* was emphasized the need for balancing the rights of landlords and tenants in rent control legislation.
• Joginder Pal v. Naval Kishore Behal, (2002) 5 SCC 397* was emphasized the need for balancing the rights of landlords and tenants in rent control legislation.
• Satyawati Sharma (Dead) By LRs v. Union of India and Another, (2008) 5 SCC 287* was emphasized the need for balancing the rights of landlords and tenants in rent control legislation.
• Vinod Kumar v. Ashok Kumar Gandhi* was emphasized the need for balancing the rights of landlords and tenants in rent control legislation.

In summary, the Supreme Court found no constitutional infirmity in Section 13-B of the Rent Act or its extension to Chandigarh. The court held that the special rights granted to NRIs are a reasonable classification aimed at addressing their unique circumstances when returning to India. This judgment provides clarity on the rights of NRI landlords under the Rent Act and sets a precedent for similar cases.

Dissenting Opinion

There was no dissenting opinion in this case. The judgment was unanimous, delivered by a three-judge bench, with the majority opinion authored by Justice Sanjiv Khanna.

Conclusion

The Supreme Court’s judgment in Ram Krishan Grover vs. Union of India (2019) has significant implications for the legal landscape concerning rent control and property rights of Non-Resident Indians (NRIs). The key findings of the judgment are:

• Constitutional Validity Upheld: The court upheld the constitutional validity of Section 13-B of the East Punjab Urban Rent Restriction Act, 1949, which grants special eviction rights to NRIs.
• Valid Extension to Chandigarh: The extension of Section 13-B to the Union Territory of Chandigarh was deemed a valid exercise of power under Section 87 of the Punjab Reorganisation Act, 1966.
• Reasonable Classification: The court found that classifying NRI landlords as a separate category is reasonable and has a rational nexus with the object of the legislation, addressing the unique needs of NRIs returning to India.
• No Excessive Delegation: The court rejected the argument that the extension of Section 13-B was an excessive delegation of legislative power.
• No Discrimination: The court determined that Section 13-B does not violate Article 14 of the Constitution, which guarantees equality before the law.

Impact of the Judgment:

• Clarity for NRI Landlords: The judgment provides clarity on the rights of NRI landlords to seek immediate possession of their properties under specific conditions, streamlining the eviction process.
• Safeguards for Tenants: While granting special rights to NRIs, the court emphasized that tenants have the right to defend eviction proceedings, ensuring that the process is not arbitrary or unfair.
• Precedent for Similar Cases: This judgment sets a precedent for similar cases involving rent control and property rights of NRIs, providing a legal framework for future disputes.
• Balancing Rights: The court emphasized the need to balance the rights of landlords and tenants, ensuring that the law is not misused and that the rights of both parties are protected.

Implications for Landlords and Tenants:

• NRI Landlords: NRI landlords now have a clear legal pathway to recover their properties for personal use or for the use of their dependents, provided they meet the conditions set out in Section 13-B.
• Tenants: Tenants facing eviction under Section 13-B have the right to defend their case, and the court has emphasized the need for a genuine and bona fide need for eviction.

In conclusion, the Supreme Court’s judgment in this case strikes a balance between the rights of NRI landlords and the rights of tenants, providing a legal framework that is both fair and effective. It underscores the importance of addressing the unique circumstances of NRIs while ensuring that the rights of tenants are not unduly compromised. This judgment will continue to shape the legal landscape in property disputes involving NRIs and rent control legislation.

Eviction Process Flowchart