Sovereign Grants Under Government Grants Act 1895 Take Effect By Their Tenor & Prevail Over Delhi Rent Control Act: Supreme Court
Since the DRC Act is intended to regulate conventional tenancies, it cannot extend to a holding that originates in and is regulated by a sovereign grant.
Justice Sanjay Karol, Justice Prashant Kumar Mishra, Supreme Court
The Supreme Court has held that a perpetual lease deed emanating from a government grant is governed exclusively by the tenor of the grant itself, thereby excluding the jurisdiction of general tenancy laws like the Delhi Rent Control (DRC) Act, 1958.
The Court noted that Section 3 of the Government Grants (GG) Act, 1895, carries a wide amplitude, ensuring that the terms and conditions of such grants prevail over any inconsistent rule of law, statute, or legislative enactment. The Bench determined that because the DRC Act is intended to regulate conventional tenancies, it cannot extend to a holding that originates in and is regulated by a sovereign grant. Consequently, where a grant does not expressly provide for eviction due to non-payment of rent, such a right of forfeiture cannot be inferred or sought through rent control authorities.
Justice Sanjay Karol and Justice Prashant Kumar Mishra holding that Section 3 of the GG Act is not merely a limited exclusion of the Transfer of Property Act, 1882, but an overriding declaration of the supremacy of the grant's conditions, it observed, “Section 3 of the GG Act confers upon Government grants a special statutory immunity and elevates the stipulations contained therein to a position of supremacy. The provision is not to be read as a mere ancillary clause to Section 2, nor as a limited exclusion confined to the TP Act. Rather, it constitutes an overriding declaration that the grant shall prevail in accordance with its tenor, even if such tenor is inconsistent with general statutory law”.
Tushar Mehta, Solicitor General, K.M. Nataraj, A.S.G. appeared for the appellant and Senior Advocates P.S Patwalia, P.S. Bindra appeared for the respondent.
The dispute involved a perpetual lease deed executed in 1945 by the Governor General in Council in favor of the respondent and Sons Pvt. Ltd. for 7.58 acres of land at Sujan Singh Park, New Delhi.
Under the grant, the Government retained the right to occupy a percentage of the constructed flats for housing officials at a "fair rent". Following Independence, the Union of India occupied several flats but allegedly defaulted on rent between 1989 and 1991. The respondent subsequently filed an eviction petition under Section 14(1)(a) of the DRC Act.
The Additional Rent Controller (ARC) initially ordered the deposit of arrears and later passed an eviction order in 2005 for non-compliance. This was affirmed by the Rent Control Tribunal. The High Court of Delhi, in 2020, dismissed the Union's challenge, relying on Collector of Bombay v. Nusserwanji Rattanji Mistri and Others (1955) 1 SCC 184 to hold that the GG Act only insulated grants from the Transfer of Property Act and did not bar the DRC Act's application.
The Court observed that the lower courts misdirected themselves by treating the arrangement as a conventional landlord-tenant relationship. "Section 3 of the GG Act embodies a clear legislative mandate that every Government grant shall take effect according to its tenor, notwithstanding any rule of law, statute or enactment to the contrary. The expression ‘any rule of law, statute or enactment’ in the provision is of the widest amplitude and admits of no restrictive construction”, the Bench noted.
“The approach which seeks to confine Section 3 merely to the exclusion of the TP Act, by reading it in a narrow or truncated manner, does not accord with either the plain language of the provision or the consistent expositions of this Court...”, it further noted.
The Bench distinguished Collector of Bombay as being specific to tax assessment and instead followed the line of precedent in Municipal Corporation of Delhi v. Pradip Oil Corporation and Another 2001 SCC OnLine Del 1026 and Azim Ahmad Kazmi and Others v. State of Uttar Pradesh (2012) 7 SCC 278, which affirmed that such grants are insulated from the "tentacles of any statutory law".
Allowing the appeal, the Court set aside the High Court’s judgment and the subsequent eviction orders, holding that the ARC lacked jurisdiction as the DRC Act was inapplicable to the lis. The Bench clarified that while eviction under the DRC Act was incompetent, the respondent remained free to pursue appropriate civil remedies for the recovery of rent in accordance with the law.
Cause Title: Union of India v. Sir Sobha Singh and Sons Pvt. Ltd. (Neutral Citation: 2026 INSC 406)
Appearances:
Appellant: Tushar Mehta, Solicitor General, K.M. Nataraj, A.S.G., Kanu Agrawal, Mayank Pandey, Navanjay Mahapatra, Udit Dedhiya, Sudarshan Lamba, AOR, Sharath Nambiar, Vinayak Sharma, Vinayak Joshi, Anuj Sriniwas Udupa, Chitransh Sharma, Yogya Raj Purohit, Indira Bhakar, Satvika Thakur, Nikita Capoor, Ritika Ranjan, S. Subramanium, Advocates.
Respondent: P.S Patwalia, Sr. Adv., P.S. Bindra, Sr. Adv., Anand Singh, Aarthi Rajan, AOR, S. Santanam Swaminadhan, Abhilasha Shrawat, Kartik Malhotra, Shreya Mansi James, Monica Phartyal, Amar Kumar, Aman Rawat, Advocates.