Case Note & Summary
The dispute arose from an eviction petition filed by the appellant landlord, G. Sridharamurti, against the respondent, Hindustan Petroleum Corporation Ltd., concerning an open space measuring 66.6 x 40 feet in Survey No.432/25, Ward No.XVII, Bellary. The premises had been leased to Esso Company under a lease dated July 17, 1969. Esso Company later merged into the respondent Corporation after the Esso (Acquisition of Undertakings in India) Act, 1974 came into force on March 13, 1974. The landlord filed an eviction petition under Section 21(1)(f) of the Karnataka Rent Control Act, alleging sub-letting because the tenancy rights automatically vested in the Central Government and then in the Government company. The Rent Controller and the lower appellate court dismissed the petition, holding that the statutory vesting did not amount to sub-letting. The High Court in CRP No.3628/82 on 25/26 June 1990 also confirmed the dismissal. The landlord then appealed to the Supreme Court by special leave. The core legal issue was whether the statutory transfer of tenancy rights under Sections 5 and 7 of the Esso Act constituted sub-letting under Section 21(1)(f) of the Karnataka Rent Control Act, especially given the non-obstante clause in Section 23(1) of the State Act. The appellant argued that Section 21(1)(f) prohibits assignment or transfer in any manner and that the non-obstante clause made the respondent's continuance a deemed sub-letting. He relied on M/s. Parasram Harnand Rao v. Shanti Prasad Narinder Kumar Jain & Anr., (1980) 3 SCC 565. The respondent's position, accepted by the courts below, was that the vesting occurred by statutory operation and was not a voluntary act of assignment. The Supreme Court examined Sections 5 and 7 of the Esso Act and noted that the tenancy rights first vested in the Central Government and then in the Government company by operation of law, making the Government company a statutory tenant. The Court held that this statutory transposition was an involuntary act and could not be construed as sub-letting. On the interplay of the non-obstante clauses, the Court observed that both Parliament and the State Legislature were competent to legislate on immovable property under Entry 6, List III of the Seventh Schedule. The Esso Act, being a later Central enactment with its own non-obstante clause, prevailed over the State Act, and the State Act became void to the extent of inconsistency by operation of Article 254 of the Constitution. The Court distinguished the Parasram Harnand Rao case because there the tenancy rights were sold by the Official Liquidator through court, a voluntary inter vivos transfer, whereas the present case involved automatic statutory vesting. Accordingly, the Supreme Court dismissed the appeal with no order as to costs, affirming the decisions of the courts below.
Headnote
A) Rent Control Law - Sub-letting and Assignment - Statutory Vesting of Tenancy Not Voluntary Sub-letting - Karnataka Rent Control Act, Section 21(1)(f); Esso (Acquisition of Undertakings in India) Act, 1974, Sections 5 and 7 - The landlord sought eviction on ground of sub-letting because tenancy rights of Esso Company vested first in Central Government and then in the respondent Government company by statutory operation. Court held that such vesting was an involuntary act by operation of law and could not be construed as assignment or sub-letting within meaning of Section 21(1)(f). Held that statutory transposition does not amount to sub-letting (Paras 1-3). B) Constitutional Law - Repugnancy Between Central and State Laws - Non-obstante Clause in Central Act Prevails - Constitution of India, Article 254; Karnataka Rent Control Act, Section 23(1); Esso (Acquisition of Undertakings in India) Act, 1974, Section 7 - State Act contained non-obstante clause excluding other enactments, but Parliament and State Legislature both competent under Entry 6 List III Seventh Schedule. Since Esso Act was later Central enactment with its own non-obstante clause, the State Act to the extent of inconsistency became void under Article 254. Held that Central Act prevails and State Act cannot defeat statutory tenant status (Paras 1-3). C) Precedent - Applicability of Ratio - Distinguishing Voluntary Transfer from Statutory Operation - Delhi Rent Control Act, Section 14(1)(b) - Reliance on M/s. Parasram Harnand Rao v. Shanti Prasad Narinder Kumar Jain & Anr. was misplaced because in that case tenancy rights were sold by Official Liquidator through court, a voluntary inter vivos transfer, whereas present case involved automatic statutory vesting. Held that ratio in Parasram Harnand Rao is inapplicable (Paras 1-3).
Issue of Consideration
Whether the statutory transfer/vesting of tenancy rights from Esso Company to the Central Government and then to Hindustan Petroleum Corporation under Sections 5 and 7 of the Esso (Acquisition of Undertakings in India) Act, 1974 amounts to sub-letting under Section 21(1)(f) of the Karnataka Rent Control Act, particularly in light of Section 23(1) of that Act and Article 254 of the Constitution.
Final Decision
Appeal dismissed; no costs. The Supreme Court held that by operation of Sections 5 and 7 of the Esso Act, the respondent Corporation became statutory tenant, not an assignee or sub-tenant; Section 23 of Karnataka Rent Control Act was void to the extent of inconsistency with Esso Act under Article 254.
Law Points
- Statutory vesting of tenancy rights under Central Act does not amount to sub-letting or assignment under Karnataka Rent Control Act
- Central Act with non-obstante clause prevails over State Act on same subject due to Article 254
- involuntary statutory transfer is distinct from voluntary inter vivos assignment
- non-obstante clause in State Act cannot override subsequent Central Act on concurrent list
