1995 JTR(SC) 943
1996 AIR(SC) 264 ; 1995 AIR(SCW) 4038 ; 1996 1 APLJ 62 ; 1995 4 CurCC(SC) 217 ; 1995 2 RCJ 411 ; 1996 1 RCR(Rent) 66 ; 1995 5 Scale 612 ; 1995 6 SCC 605 ; 1995 Supp3 SCR 634 ; 1995 KHC 1002
SUPREME COURT OF INDIA
B.L.Hansaria : B.P.Jeevan Reddy : K.Ramaswamy
G.Sridharamurti
Versus
Hindustan Petroleum Corporation Limited
Case No. : .
Date of Decision : 9/13/95
Advocates Appeared: Hegde Santosh : Kapur Rajiv : Kulkami S.K. : Michael M.K. : Qadri Wasim A. : Sharma Surya Kant : Suri Sushma
Act
Referred
:CONSTITUTION OF INDIA : Art.254
ESSO ACQUISITION OF UNDERTAKINGS IN INDIA ACT : S.5, S.7
(A) The Esso Acquisition of Undertakings in India Act, 1974, read with the Constitution of India, Article 254, governs the transfer of immovable property held by Esso Company to the central government and subsequently to a government company. Sections 5 and 7 of the Esso Act operate a statutory transfer of tenancy rights, deeming the central government as the tenant and then vesting those rights in the respondent corporation, overriding general provisions of the Karnataka Rent Control Act, particularly Section 21(1)(f). The non obstante clause in Section 7 of the Esso Act excludes the applicability of Section 23 of the Karnataka Rent Control Act, rendering the transfer involuntary and not amounting to sub-letting or assignment within the meaning of the Rent Control Act.
(B) Key legal principles include statutory precedence of central legislation over state legislation under Article 254, deemed transfer of tenancy rights under acquisition statutes, non-voluntary transfer negating sub-letting claims, and the operation of non obstante clauses in overriding general legal provisions.
Facts of the case:
An open space measuring 66.6 x 40 feet under Survey No. 432/25 in Ward No. XVII at Bangalore-Bellary Trunk Road in Bellary was possessed by Esso Company through a lease dated 17/7/1969. After the appellant-Esso Company was merged into the respondent corporation on 14/3/1974, the appellant filed an eviction petition under Section 21(1)(f) of the Karnataka Rent Control Act for ejectment on grounds of sub-letting, impleading both Esso Company and the respondent corporation. The Esso Acquisition of Undertakings in India Act, 1974, came into force on 13/3/1974. Lower courts dismissed the petition, holding that the respondent corporation became a tenant by operation of law under the Esso Act, and this conclusion was affirmed by the High Court.
Findings of Court:
The court found that Sections 5 and 7 of the Esso Act caused a statutory transfer of the tenancy rights from Esso Company to the central government and then to the government company, respectively. This transfer was not a voluntary assignment or sub-letting within the meaning of Section 21(1)(f) of the Karnataka Rent Control Act. The court also determined that the ratio decidendi from Parasram Harnand Rao v. Shanti Parsad Narinder Kumar Jain was inapplicable due to the distinct statutory framework of the Esso Act.
Issues:
Whether the respondent corporation became a tenant of the premises by voluntary assignment or sub-letting in violation of Section 21(1)(f) of the Karnataka Rent Control Act, or whether the transfer was mandated by the Esso Acquisition of Undertakings in India Act, 1974.
Ratio Decidendi:
The statutory transfer of tenancy rights under Sections 5 and 7 of the Esso Act, operating automatically upon the merger of Esso Company into the respondent corporation, cannot be characterized as sub-letting or assignment within the Karnataka Rent Control Act, especially given the non obstante clause in Section 7 of the Esso Act which excludes the applicability of other enactments in conflict.
Result:
The appeal is dismissed with no costs awarded.
(A) The Esso Acquisition of Undertakings in India Act, 1974, read with the Constitution of India, Article 254, governs the transfer of immovable property held by Esso Company to the central government and subsequently to a government company. Sections 5 and 7 of the Esso Act operate a statutory transfer of tenancy rights, deeming the central government as the tenant and then vesting those rights in the respondent corporation, overriding general provisions of the Karnataka Rent Control Act, particularly Section 21(1)(f). The non obstante clause in Section 7 of the Esso Act excludes the applicability of Section 23 of the Karnataka Rent Control Act, rendering the transfer involuntary and not amounting to sub-letting or assignment within the meaning of the Rent Control Act.
(B) Key legal principles include statutory precedence of central legislation over state legislation under Article 254, deemed transfer of tenancy rights under acquisition statutes, non-voluntary transfer negating sub-letting claims, and the operation of non obstante clauses in overriding general legal provisions.
Facts of the case:
An open space measuring 66.6 x 40 feet under Survey No. 432/25 in Ward No. XVII at Bangalore-Bellary Trunk Road in Bellary was possessed by Esso Company through a lease dated 17/7/1969. After the appellant-Esso Company was merged into the respondent corporation on 14/3/1974, the appellant filed an eviction petition under Section 21(1)(f) of the Karnataka Rent Control Act for ejectment on grounds of sub-letting, impleading both Esso Company and the respondent corporation. The Esso Acquisition of Undertakings in India Act, 1974, came into force on 13/3/1974. Lower courts dismissed the petition, holding that the respondent corporation became a tenant by operation of law under the Esso Act, and this conclusion was affirmed by the High Court.
Findings of Court:
The court found that Sections 5 and 7 of the Esso Act caused a statutory transfer of the tenancy rights from Esso Company to the central government and then to the government company, respectively. This transfer was not a voluntary assignment or sub-letting within the meaning of Section 21(1)(f) of the Karnataka Rent Control Act. The court also determined that the ratio decidendi from Parasram Harnand Rao v. Shanti Parsad Narinder Kumar Jain was inapplicable due to the distinct statutory framework of the Esso Act.
Issues:
Whether the respondent corporation became a tenant of the premises by voluntary assignment or sub-letting in violation of Section 21(1)(f) of the Karnataka Rent Control Act, or whether the transfer was mandated by the Esso Acquisition of Undertakings in India Act, 1974.
Ratio Decidendi:
The statutory transfer of tenancy rights under Sections 5 and 7 of the Esso Act, operating automatically upon the merger of Esso Company into the respondent corporation, cannot be characterized as sub-letting or assignment within the Karnataka Rent Control Act, especially given the non obstante clause in Section 7 of the Esso Act which excludes the applicability of other enactments in conflict.
Result:
The appeal is dismissed with no costs awarded.
M.K.MICHEL, RAJIV KAPOOR, S.K.KULAKARNI, SANTOSH HEGDE, SURYA KANT SHARMA, SUSHMA SURI, VASIM A.QADRI
(1) LEAVE granted. We have heard learned counsel for the parties.
(2) AN open space measuring 66.6 x 40 feet comprised in Survey No. 432/25 in Ward No. XVII situated at Bangalore-Bellary Trunk Road in the city of Bellary, was in the possessIOn of Esso Company pursuant to a lease dated 17/7/1969 granted by the appellant- Esso Company was merged into respondent-corporatIOn on 14/3/1974. The appellant filed evictIOn petitIOn under SectIOn 21(1(f) of the Karnataka Rent Control Act (for short, the Act) for ejectment on the ground of sub-letting, impleading Esso Company and thereafter, the respondent-corporatIOn. The Esso (AcquisitIOn of Undertakings in India) Act, 1974 (for short, the Esso Act) came into force w.e.f. 13/3/1974. The courts below dismissed the applicatIOn on the ground that the Esso Company had not sub-let the demised premises but by virtue of a statutory operatIOn under the Esso Act, the respondent-corporatIOn stood transposed as a tenant which is an involuntary- act pursuant to SectIOn 7 of the Act; and notwithstanding the specific embargo created under SectIOn 2l(1(f) of the Act, it cannot be construed to be a sub-letting. The High court also reached the same conclusIOn on 25/6/1990/26/6/1990 in CRP No. 3628 of 1982. Thus this appeal by special leave.
(3) SHRI Kulkami, the learned counsel appearing for the appellant contended that SectIOn 2l(1(f) of the Act clearly prohibits assignment or transfer "in any manner" of the interest of the tenant deeming it to be a sub- letting. Therefore, in view of the non obstante clause contained in sub- sectIOn (1 of SectIOn 23 of the Act, the continuance of the respondent- corporatIOn in the premises must be deemed to be due to sub-letting within the meaning of SectIOn 2l(1(f) of the Act. In support of his contentIOn, he placed strong reliance on a ratIO laid down by this court in Parasram Harnand Rao v. Shanti Parsad Narinder Kumar Jain .
(4) TO appreciate the contentIOns, it is necessary to look at the provisIOn of the Esso Act.
(5) SECTION 5 of that Act envisages:
"5. (1 Where any property is held in India by ESSO 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."
(6) SS. (1 and (2 of SectIOn 7 of the Esso Act state:
"7. (1 Notwithstanding anything contained in S. 3. 4 and 5. the Central government may, if it is satisfied that a government company is willing to comply, or has complied, with such terms and conditIOns as that government may think fit to impose, direct, by notificatIOn, that the right, title and interest and the liabilities of Esso in relatIOn to any undertaking in India shall, instead of continuing to vest in the central government, vest in the government company either on the date of the notificatIOn or on such earlier or later date (not being a date earlier than the appointed day) as may be specified in the notificatIOn.
(2 Where the right, title and interest and the liabilities of Esso relatIOn to its undertakings in India vest in a government company under Ss. (1, the government company shall, on and from the date such vesting, be deemed to have become the owner, tenant or lessee, as the case may be, in relatIOn to such undertakings, and all the rights and liabilities of the central government in relatIOn to such undertakings shall, on and from the date of such vesting, be deemed to have become the rights and liabilities, respectively, of the government company."
(7) IT would be clear from above provisIOns that by statutory operatIOn, the pre-existing tenancy rights held by Esso Company with the appellant initially stood transferred and vested in the central government, and thereafter, by operatIOn of SectIOn 7 of the Esso Act, the said rights in turn stood transposed and vested in the government company as if the government company statutorily became the tenant of the appellant-landlord. It is true that Ss. (1 of SectIOn 23 of the Act employing non obstante clause excluded operatIOn of any other enactment. But it must be remembered that there is no specific provisIOn in List II of the Seventh Schedule to the ConstitutIOn covering the Act. On the other hand, by virtue of what has been stated in Entry 6 in List III of the Seventh Schedule, the legislature of the State and also Parliament can enact law in relatIOn to immovable property. Since the Esso Act is a central enactment, and later too, the non obstante clause in SectIOn 7 of Esso Act excludes the operatIOn of SectIOn 23 of the Act. Both the Act and the Esso Act occupy same field and both cannot exist harmonIOusly. So to the extent of inconsistency, the Act becomes void by operatIOn of Article 254 of the ConstitutIOn. On the Esso Act coming into force, by operatIOn of S. 5 and 7 of that Act, the respondent-corporatIOn became statutory tenant and thereby it cannot be construed to be an assignment of tenancy rights, which the appellant landlord had entered into with the Esso Company, by the central government in favour of the government company.
(8) THE ratIO of Parasram Hamand Rao case is inapplicable to the facts in this case. Therein, one Laxmi Bank which was a tenant with the appellant was in liquidatIOn. The Official Liquidator had sold the tenancy rights in favour of the respondents. Thereby, the respondent became tenant of the demised premises. The landlord initiated proceedings under SectIOn l4(1(b) of the Delhi Rent (Control) Act contending that it amounted to sub-letting. This court accepting the contentIOn held that in view of the wide language employed in SectIOn 14(l)(6, though the same was made in favour of the respondent through court, it amounted to transfer of an interest inter se. The ratIO therein does not get attracted to the facts in this case in view of the statutory operatIOn of S. 5 and 7 of Esso Act which is not voluntary act of assignment of interests intra vivos.
(9) THE appeal is accordingly dismissed. No costs.