Central law on eviction of unauthorised occupants prevails over state rent laws: SC
New Delhi: In a landmark decision expected to strengthen the ability of public sector undertakings to recover long-held properties, the Supreme Court ruled on Thursday that the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 supersedes state rent control laws. The judgment confirms that the central legislation applies retrospectively, allowing statutory corporations such as the Life Insurance Corporation of India, nationalised banks and public insurance companies to initiate eviction proceedings even against tenants who occupied their premises before 1958 or 1971.
The three-judge bench comprising Justices Vikram Nath, Sandeep Mehta and N V Anjaria settled a long-standing conflict arising from two earlier Supreme Court rulings. The matter had been referred for authoritative resolution after a two-judge bench on March 17, 2015 noted contradictions between the 2014 judgment in Suhas H Pophale vs Oriental Insurance Company Limited and the 1990 Constitution bench decision in Ashoka Marketing Limited and Another vs Punjab National Bank and Others. The referral order had pointed out that the 2014 ruling appeared “contrary” to the binding precedent established by the five-judge bench.
The core issue before the court was whether the PP Act takes precedence over state rent control laws with respect to premises let out prior to the Act’s commencement. Delivering the judgment, Justice Anjaria held that the 2014 Suhas Pophale ruling had proceeded in disregard of established precedent, describing that decision as “palpably incorrect”, “unjustified” and “bad in law”.
The court recorded strong observations on judicial discipline, stating that the doctrine of stare decisis requires strict adherence to rulings delivered by benches of higher numerical strength. “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,” the court said.
Underscoring the duty of consistency, the bench added that the doctrine “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.”
Reaffirming the authority of the Constitution bench decision in Ashoka Marketing and the three-judge ruling in the Jain Ink case, the court concluded that the view taken by the smaller 2014 bench, which had favoured the primacy of state rent laws, “cannot and does not hold the field”. The bench further observed that the binding nature of a larger bench’s ruling applies irrespective of whether it predates or postdates the smaller bench’s decision.
The judgment held that a bench of lesser strength is not permitted to deviate from a larger bench’s ruling by attempting to reinterpret its ratio. As a result, the court confirmed that central PSUs may rely on the PP Act’s summary eviction mechanism instead of pursuing protracted litigation under state rent control frameworks.
The lead case concerned LIC’s bid to evict tenants from a Mumbai property where tenancy had begun in 1957. The Bombay High Court had earlier set aside eviction orders by relying on the 2014 Suhas Pophale ruling, reasoning that the tenants were protected under the state’s Rent Control Act. The Supreme Court has now overturned that decision, thereby resolving the conflict flagged in 2015 and restoring the applicability of the PP Act to such disputes.
