Central eviction law overrides state rent acts: Supreme Court

In a ruling with far-reaching consequences for public sector undertakings (PSUs), the Supreme Court on Thursday held that the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 supersedes all state rent control laws — a clarification that could allow government corporations to finally reclaim properties locked in decades-long tenancies.

A bench of Justices Vikram Nath, Sandeep Mehta and N.V. Anjaria concluded that the PP Act applies retrospectively, meaning even occupants who took tenancy of premises owned by entities such as the Life Insurance Corporation (LIC), public insurance companies or nationalised banks before 1958 or 1971 are subject to eviction under the Central legislation. In effect, the judgement affirms that once a property becomes “public premises”, tenants cannot seek refuge under state rent laws.

The ruling settles a long-standing judicial conflict. In 2015, a two-judge bench had referred the matter to a larger bench after noting that its own earlier decision in Suhas H. Pophale vs Oriental Insurance Company Ltd (2014) appeared to contradict the landmark 1990 Constitution Bench ruling in Ashoka Marketing Ltd vs Punjab National Bank. The referral order stated plainly that the Pophale ruling was at odds with binding precedent and required authoritative reconsideration.

On Thursday, the three-judge bench left no ambiguity about the status of the 2014 decision, describing it as “palpably incorrect”, “unjustified” and “bad in law”. Justice Anjaria, writing for the bench, said the earlier judges had failed to follow the Constitution Bench’s clear pronouncement that the PP Act overrides state rent statutes where the two conflict.

The Court went further, issuing a pointed reminder on the constitutional necessity of adhering to precedent. It emphasised that the doctrine of stare decisis obliges a bench of smaller strength to follow the rulings of a larger bench: “The underlying purpose for respecting and following the decisions of the bench consisting of a greater number of judges… is part of judicial discipline. It ensures certainty, predictability and dependability in the operation and application of law.”

The judgment continued: “The doctrine of stare decisis embodies the foundational principle that precedents must be observed with institutional fidelity… This adherence to precedent is not a matter of mere formality, but of judicial discipline and constitutional propriety.”

The bench stressed that a smaller bench cannot reinterpret or dilute the ratio of a larger bench under the guise of “explaining” it. The timing of the decisions, it noted, is irrelevant — the ruling of the larger bench always prevails.

The decision clears the way for statutory corporations such as the LIC, general insurance companies and nationalised banks to initiate swift eviction proceedings under the PP Act, rather than navigating the slow and often tenant-friendly mechanisms of state rent control courts.

The lead appeal in the batch arose from a dispute over a Mumbai property leased in 1957. The Bombay High Court, relying on the now-discredited 2014 Pophale ruling, had held that the tenants were protected by state rent law and quashed eviction orders. The Supreme Court has now overturned that view, resolving a legal conflict pending since the matter was referred in 2015.

With PTI inputs