Central law on eviction of unauthorised occupants prevails over state rent laws: SC

New Delhi, Dec 11 (PTI) In a significant verdict that may help public sector undertakings (PSUs) reclaim their properties, the Supreme Court held on Thursday that the 1971 Public Premises (Eviction of Unauthorised Occupants) Act prevails over state rent control laws.

A three-judge bench of Justices Vikram Nath, Sandeep Mehta and N V Anjaria ruled that the provisions of the PP Act apply retrospectively, meaning tenants who have occupied premises belonging to government corporations like the Life Insurance Corporation (LIC), other insurance companies and nationalised banks even prior to 1958 or 1971 can be evicted under the central law.

The bench was dealing with two conflicting judgments on the aspect of overriding applicability of the PP Act as against state rent control laws.

A two-judge apex court bench had, on March 17, 2015, referred the matters for adjudication by a three-judge bench.

"In these petitions, in fact, the ratio decided by the two-judge bench of this court in the case of Suhas H Pophale vs Oriental Insurance Company Limited and its Estate Officer is contrary to the decision of the Constitution bench rendered in the case of Ashoka Marketing Limited and Another vs Punjab National Bank and Others. Therefore, these matters need to be heard by a three-judge bench," the referral order had said.

The key issue was whether the provisions of the PP Act would prevail over the state rent control laws in relation to premises let out prior to the commencement of the Act.

The three-judge bench on Thursday described the 2014 Suhas Pophale judgment as "palpably incorrect", "unjustified" and "bad in law".

Authoring the judgment, Justice Anjaria stated that the 2014 bench had failed to follow the binding precedent laid down by a five-judge Constitution bench in 1990 in the Ashoka Marketing Limited vs Punjab National Bank case.

The court used strong words regarding the violation of judicial discipline by the smaller bench in 2014.

It observed that the doctrine of stare decisis (to stand by things decided) requires a bench of lesser strength to follow the law declared by a larger bench.

"The underlying purpose for respecting and following the decisions of the bench consisting of a greater number of judges and even of the bench of co-equal strength is part of judicial discipline. It ensures certainty, predictability and dependability in the operation and application of law," it said.

"The doctrine of stare decisis embodies the foundational principle that precedents must be observed with institutional fidelity, not merely by the high courts or subordinate courts, but by this court as well.

"It enjoins that a bench of lesser or co-equal strength must follow the law declared by a larger bench, in recognition of the binding authority of such pronouncements. This adherence to precedent is not a matter of mere formality, but of judicial discipline and constitutional propriety," it added.

The apex court held that in light of the law laid down by the Constitution bench in the Ashoka Marketing case and the three-judge bench decision in the Jain Ink case, the view taken by the two-judge bench that state rent laws will prevail over central laws "cannot and does not hold the field".

"The ratio decidendi by the bench of larger strength is binding on the bench of the smaller strength, irrespective of the fact whether the judgment by the bench of the larger strength is a priori or posterior, in point of time," it observed.

A bench of smaller strength cannot mark a departure from the decision of a bench of larger strength, so as to vary the ratio in the guise of explaining the decision of the larger bench, it said.

This ruling clears the path for statutory corporations such as the LIC, general insurance companies and nationalised banks to evict long-standing tenants by invoking the summary procedure of the PP Act, bypassing the lengthy litigation processes of rent control courts.

The lead appeal was filed by the LIC.

The dispute involved premises in Mumbai where tenancy was created in 1957.

The Bombay High Court, relying on the 2014 Suhas Pophale judgment, had quashed eviction orders against the tenants, holding that they were protected by the Rent Control Act.

The Supreme Court has now set aside that view, answering a reference made in 2015 to resolve the conflict between the judgments. PTI SJK RC