Bombay High Court
Saidpur Jute Company Limited vs National Co-Operative Consumers … on 17 July, 2026
CRA-300-2026.DOC
ARP
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
CIVIL REVISION APPLICATION NO. 300 OF 2026
Saidpur Jute Company Limited
A Company incorporated under the
Companies Act 1956 having its registered
office at 15-A, Bharat Insurance Building,
3rd Floor, Horniman Circle, Fort,
Mumbai 400 023. ...Applicant
Versus
National Co-operative Consumer's
Federation of India Limited
A Multi State Co-operative Society
constituted under the Multi State
Cooperative Society Act 2002 having its
head office at 'Deepali', 5th Floor, 92, Nehru
Place, New Delhi 110 019 and branch office
at 65, 67, 68, Shree Sitaram Mills
Compound, N. M. Joshi Marg,
Mumbai - 400 011. ...Respondent
Mr. Rohaan Cama a/w Mr. Aseem Naphade, Mr. Aman
Sadiwala & Mr. Kush Shah i/b Mr. Vikrant D. Shetty, for
the Applicant.
Mr. Mahesh Menon a/w Ms. Aakansha Anand & Ms. Vaishali
Chhabra i/b Mahesh Menon & Co., for the Respondent.
Digitally
signed by
AJIT
AJIT RAMESH
RAMESH PATHRIKAR CORAM ARUN R. PEDNEKER, J.
PATHRIKAR Date:
2026.07.17 RESERVED ON : 10th JULY 2026
20:20:10
+0530 PRONOUNCED ON: 17th JULY 2026
Page 1 of 46
17th July 2026
CRA-300-2026.DOC
JUDGMENT :
–
1. By the present Civil Revision Application, the Applicant
challenges the Judgment and Order dated 13 th March 2026
passed in R. Appeal No.125 of 2023 by the Court of Small
Causes at Mumbai (Appellate Bench), whereby the Appellate
Bench was pleased to set aside the Judgment and Decree
dated 30th March 2023 passed in T. E. Suit No.41/45 of 2012
by the Court of Small Causes at Mumbai and dismissed the
Suit filed by the Applicant for eviction of the Respondent from
the suit premises under the provisions of Section 41 of the
Presidency Small Causes Courts Act, 1882.
2. The legal question that arises for consideration in the
present Civil Revision Application is whether the protection
under Section 3(1)(b) of the Maharashtra Rent Control Act,
1999 (“MRC Act”) is available to the premises leased to the
Respondent i.e. National Co-operative Consumer’s
Federation of India Limited, a Multi-State Co-operative
Society registered under the Multi-State Co-operative
Page 2 of 46
17th July 2026
CRA-300-2026.DOC
Societies Act, 2002 (“MSCS Act”) and listed in schedule II of
the MSCS Act.
3. The facts leading to the filing of the application are that
a Leave and Licence agreement dated 30th May 2005 was
executed between the Applicant and the Respondent, whereby
the Respondent was permitted and allowed to use, occupy and
possess the suit premises as a monthly tenant of the suit
premises. The suit premises are admeasuring 4,511 sq. ft.
situated at 65-67-68, Ground Floor, Shree Sitaram Mills
Compound, N. M. Joshi Marg, Mumbai 400011 (“Suit
Premises”). The Respondent was required to a pay monthly
rent of Rs.75,000/- inclusive of the Municipal Taxes for the
period from 1st January 2005 to 31st December 2007 in respect
of the suit premises.
4. The agreement expired by afflux of time on 31 st
December 2007. Accordingly, by notice dated 8 th April 2008
addressed to the Respondent, the Applicant terminated the
tenancy in respect of the suit premises. The Applicant again
addressed a notice dated 7th December 2011 to the
Page 3 of 46
17th July 2026
CRA-300-2026.DOC
Respondent and terminated the monthly tenancy of the
Respondent in respect of the suit premises.
5. Since the Respondent failed to comply with the
requisitions contained in the Termination Notice and
handover quiet, vacant and peaceful possession of the suit
premises, the Applicant filed an Eviction Suit being T.E. Suit
No.41/45 of 2012 under Section 41 of the Presidency Small
Causes Court Act before the Court of Small Causes at Mumbai.
6. The Respondent resisted the suit by filing its written
statement. The Applicant filed its Affidavit of Evidence along
with compilation of documents. Thereafter, the Trial Court by
Judgment and Decree dated 30th March 2023, was pleased to
decree the T.E. Suit No.41/45 of 2012 and was pleased to
direct the Respondent to handover quiet, vacant and peaceful
possession of the suit premises.
7. Being aggrieved by Judgment and Decree dated 30 th
March 2023, the Respondent preferred an Appeal being R.
Appeal No.125 of 2023 before the Court of Small Causes at
Mumbai (Appellate Bench). By Impugned Order dated 13 th
Page 4 of 46
17th July 2026
CRA-300-2026.DOC
March 2026, the Appellate Court was pleased to allow the R.
Appeal No.125 of 2023 and was pleased to set aside the
Judgment and Decree dated 30th March 2023 passed by the
Trial Court.
8. During the pendency of Appeal before the Small Causes
Court at Mumbai (Appellate Bench), as a condition for stay of
the Trial Court’s Judgment and Decree, the Respondent
deposited interim compensation of Rs.8,00,000/- per month.
The Appellate Court by the impugned order directed the
present Appellant to re-deposit the compensation amount.
9. Heard Mr. Rohaan Cama with Mr. Aseem Naphade, Mr.
Aman Sadiwala and Mr. Kush Shah, the learned counsel for
the Applicant and Mr. Mahesh Menon with Ms. Aakansha
Anand and Ms. Vaishali Chhabra the learned counsel for the
Respondent and with consent, heard finally.
10. Challenging the Judgment and Decree of the Appellate
Court, Mr. Cama, the learned counsel for the Applicant,
submits that the Respondent, a Multi-State Co-operative
Society, is a public sector undertaking. As such, no protection
Page 5 of 46
17th July 2026
CRA-300-2026.DOC
is available under the MRC Act to the premises licenced to the
Respondent. In order to ascertain the factual status of the
Respondent, Mr. Cama submits that the Respondent is
operating under the administrative control of the Department
of Consumer Affairs (Ministry of Consumer Affairs, Food and
Public Distribution) and plays a pivotal role by serving as
strategic link between farmers and consumers. It was
established to function as the apex body of consumer
cooperatives in the country. The Respondent operates through
a network of 28 Branch Officers located in different parts of
the country with its headquarters in New Delhi.
11. The Respondent discharges public functions such as
price stabilization, essential commodities procurement,
consumer welfare etc. under the administrative control of the
Ministry of Consumer Affairs. Therefore, its inclusion in the
second schedule of MSCS Act reflect a legislative judgment
that it performs national public functions.
12. As per the Respondent’s website, the Respondent has
152 members including the Government of India and three
Page 6 of 46
17th July 2026
CRA-300-2026.DOC
national-level cooperative organizations: National Cooperative
Union of India (NCUI), National Cooperative Development
Corporation (NCDC), and National Agriculture Cooperative
Marketing Federation of India (NAFED). The Respondent’s
total paid-up share capital stood at Rs.15.02 Crore, of which
the Government of India contributed Rs.9.49 Crore (63.18%).
In the FY 2023-24, the Respondent achieved a sales turnover
of Rs.5,968.96 Crore, a significant increase from Rs.2,811.39
Crore in FY 2022-23. The Audit Report for the FY 24-25
reported that Respondent has achieved Sales Turnover of
8270.86 Crores and the Profit after Tax as Rs.216.53 Crores.
The bulk of these sales came from the supply of grocery and
general merchandise, as well as textiles, agri-inputs, and civil
construction. Respondent also undertakes projects related to
Government of India such as the Price Support Scheme and
the Price Stabilization Schemes.
13. Under the bye laws of the Respondent, the objects of the
Respondent include:
Page 7 of 46
17th July 2026
CRA-300-2026.DOCa. To establish trade connections with consumers which
will include Governments, Government Undertakings, Local
Bodies and others, as well as, manufacturers, distributors and
suppliers/ dealers including Government agencies,
cooperative or corporate agencies [Bye Law No.3(iv)];
b. Act as agents of Central, State Governments or
undertakings, corporations or cooperative institutions or other
business enterprises [Bye Law No.3(xiii)];
c. Arrange supplies of various items required by the
Central/State Government. Public Sector Undertakings, Co-
operative Organizations and others [Bye Law No.3(ix)]; and
d. Securing from the Government such requisite facilities,
assistance and financial aids for itself and its members
institutions [Bye Law No.3(vii)]
14. The bye-laws further provide control of Government in
the following manner:
a. The Board of Directors of the Respondent includes
nominees of the Government of India [Bye Law No.25(b)]
Page 8 of 46
17th July 2026
CRA-300-2026.DOCb. The membership of the Respondent is open to
Government of India and government agencies [Bye Law
No.5(d) and (h)]
15. Several statutory provisions of the MSCS Act
conclusively prove that the Central Government or State
Government have deep pervasive control over the
Respondent, namely:
a. Section 48 provides that the Central or State
Governments have a right to nominate members of the Board
of Directors of the Respondent, which Director cannot be
removed by other directors of the Respondent.
b. Under Section 122, the Central Government has the
power to give directions to the Respondent in public interest
or for the purposes of securing proper implementation of co-
operative production and other development programmes
approved or undertaken by Central Government or to secure
proper management of the business of Respondent or for
preventing the affairs of the Respondent being conducted in
Page 9 of 46
17th July 2026
CRA-300-2026.DOCmanner detrimental to the interest of members, depositors or
creditors.
16. There is substantial government control in the affairs of
the Respondent as Senior Officers of the Department of
Consumer Affairs, including the Joint Secretary, Economic
Advisor and Advisor (Cost), serve on its Board of Directors.
The Government therefore participates directly in the
Respondent’s administration, policy formulation and decision-
making processes.
17. Likewise, as set out hereinabove, Respondent also
acknowledges that it functions under the administrative
control of the Department of Consumer Affairs, Ministry of
Consumer Affairs, Food and Public Distribution. This
conclusively proves that Respondent operates within a
governmental framework and serves as an institutional
mechanism through which governmental policies relating to
consumer welfare and market regulation are implemented.
18. The records of the Respondent demonstrate that it
functions as an implementing agency of the Central
Page 10 of 46
17th July 2026
CRA-300-2026.DOC
Government. It is utilised for procurement under the Price
Support Scheme and Price Stabilization Fund, market
intervention operations, export canalisation functions,
maintenance of buffer stocks and various consumer welfare
programmes. In performing these functions, Respondent acts
pursuant to governmental directions and policy objectives. Its
activities are therefore functionally integrated with those of
the State and constitute a mechanism through which
governmental objectives concerning food security, consumer
welfare and price regulation are carried into effect.
19. The aforesaid provisions and functions of the
Respondent conclusively determines that it falls within the
criteria of Public Sector Undertaking. The expression Public
Sector Undertaking is not defined in the Rent Control Act and
must, therefore, be given its ordinary, purposive and
contextual meaning. A Public Sector Undertaking’ in its
ordinary and well-understood sense means any undertaking in
which the public sector i.e. the Government has dominant and
controlling interest. As set out hereinabove, the Government
Page 11 of 46
17th July 2026
CRA-300-2026.DOC
of India holds 65.42% of the paid-up share capital, making it
the single dominant shareholder.
20. In the above factual submissions, Mr. Cama submits that
in the case of Leelabai Gajanan Pansare & Ors. Vs. Oriental
Insurance Company Limited & Ors.,1 the Supreme Court
observed that the word ‘PSU’ is not defined in the Rent Act or
in the Companies Act. However, as long as it performs a public
function, it’s a PSU and a PSU is not only a Government
Company. It can also be an autonomous body. He further
submits that considering the object of Section 3(1)(b) of the
MRC Act, whereby the State instrumentalities or corporations
establish under the State Act or the public sector undertakings
are kept out within the protection of the MRC Act so that the
landlord gets the market price of the tenanted premises. He
further submits that the Appellate Court has erred in holding
that the Respondent is not a public sector undertaking and has
protection under the MRC Act and does not fall within the
categories mentioned under Section 3(1)(b) of the MRC Act.
1 MANU/SC/3535/2008
Page 12 of 46
17th July 2026
CRA-300-2026.DOC
Accordingly, he submits that the Judgment of the Appellate
Court, on these aspects, is perverse and the Judgment of the
Trial Court be restored.
21. In support of his submissions, Mr. Cama relies upon the
following judgments:
(ii) Central Bureau of Investigation, State of Madhya
Pradesh Vs. P.G. Jain3
(iii) Pradeep Kumar Biswas Vs. Indian Institute of Chemical
Biology4
(iv) Ramana Dayaram Shetty Vs. International Airport
Authority of India5
(vii) Ajay Hasia & Ors. Vs. Khalid Mujib Sehravaradi & Ors.8
22. Mr. Menon, the learned counsel for the Respondent,
submits that the Respondent is a Multi-State Co-operative
2 2017 SCC OnLine Ori 1025
3 (2016) 12 SCC 360
4 (2002) 5 SCC 111
5 (1979) 3 SCC 489
6 LPA No. 926 of 2008, decided on 7th July 2011
7 Writ Petition (civil) No. 512 of 2017, Order dated 7th January 2022
8 (1981) 1 SCC 722
Page 13 of 46
17th July 2026
CRA-300-2026.DOC
Society and autonomous body registered under the MSCS Act.
It is governed by its own Bye-Laws for the purpose of
governance, management, etc. It is neither a body created
through a Statute by the Government of India, not is carries
out any Statutory functions or obligations. The management
of the Respondent vests in the Board of Directors, while the
ultimate authority of Respondent vests in the hands of the
General Body. Furthermore, the Board of Directors of
Respondent exercise all the powers of the Respondent, save
and except those which are specifically reserved for the
General Body.
23. Mr. Menon places reliance upon the Judgment in the
case of Union of India & Anr. Vs. Deoki Nandan Aggarwal 9 to
contend that it is not the duty of the court either to enlarge
the scope of the legislation or the intention of the legislature
when the language of the provision is plain and unambiguous.
He submits that the Respondent is not a public sector
undertaking and that the term public sector undertaking
9 1992 Supp (1) SCC 323
Page 14 of 46
17th July 2026
CRA-300-2026.DOC
would not be expanded include a co-operative society. For the
same purpose, he also relies upon the Judgment in case of The
Hon’ble Supreme Court in Saregama (India) Ltd. Vs. Next
Radio Ltd. & Ors.10
24. It is further submitted that the Respondent is not a
“corporation established by or under a Central or State Act”
within the meaning of Section 3(1)(b) of the MRC Act, or
“State” within the meaning of Article 12 of the Constitution of
India. National Co-operative consumers’ Federation of India
Limited (“NCCF”) is registered way far back in 1965, which
continues to be governed by, but was not established by or
under, the MSCS Act. NCCF, begin a pre-existing multi-state
cooperative society, was continued, in due course, to be
administratively designated a “National Co-operative Society”
for the purpose of Section 3(r) read with Section 116 of the
MSCS Act, a category of recognition available generally to
qualifying pre-existing federal cooperative societies. This
statutory continuation and administrative designation of a
10 (2022) 1 SCC 701
Page 15 of 46
17th July 2026
CRA-300-2026.DOC
pre-existing entity cannot be equated with the “establishment”
of NCCF by or under the MSCS Act.
25. It is further submitted that the nature, functions and
objects of the NCCF, set out in Bye-Law 3, are to assist, aid
and counsel its member institutions in accordance with
cooperative principles, and to facilitate their working by
providing supply support to consumer cooperatives and allied
agencies for distribution of consumer goods at reasonable and
affordable rates. Towards this end it renders technical
guidance in grading, packaging, standardisation, bulk buying,
storing, pricing and account keeping; creates and trains cadres
of personnel for the cooperative sector, in collaboration with
NCUI; holds seminars, conferences and training programmes;
establishes trade connections with Governments, cooperative
organisations and corporate bodies.
26. Bye-law 4 also functions in the same mould. In practice,
NCCF is principally a trading body/implementing
agency/nodal agency. It deals chiefly in groceries and essential
commodities, including under the Price Stabilisation Fund and
Page 16 of 46
17th July 2026
CRA-300-2026.DOC
Price Support Scheme, and also in general merchandise,
textiles, import and export, construction and agri-inputs, all
conducted on its own account and at its own commercial risk.
Even where NCCF procures or distributes commodities at the
instance of Government, as under price stabilisation
operations from time to time, it does so under its own Bye-
laws (Bye-law 3(ix) and (xiii)), as a commercial agency
executing business for a client, and not in discharge of any
governmental or sovereign function delegated to it. “Public
sector undertaking” has no fixed statutory meaning; it is
defined neither in the Rent Act nor in the Companies Act.
27. It is submitted that Governmental shareholding in the
NCCF, without more, is not determinative. Under Bye-law
20(a) of NCCF’s Bye-laws, the ultimate authority of NCCF
vests in its General Body, and under Bye-law 20(c), every
delegate present at a General Body meeting has one vote,
exercised in person, with no proxy permitted. The
Government of India, notwithstanding that it presently holds
a substantial share of NCCF’s paid-up capital, possesses only
Page 17 of 46
17th July 2026
CRA-300-2026.DOC
one vote in the General Body, out of delegates of over 150
member institutions drawn from State-level consumer
cooperative federations and other cooperative societies across
the country (Bye-law 5(a) to (g)). This is the cooperative
principle of “one member, one vote”, standing in direct
contrast to the one share, one vote” principle that governs
control in a company, where voting power is coextensive with
shareholding. The Government’s shareholding is not
permanent proprietary concern. Shares held by members,
including the Government of India, are subject to withdrawal
or transfer only after a minimum holding period and Board
approval (Bye-law 18(v) and (vi)), are retirable by NCCF as
per terms of sanction in the case of Government’s holding
(Bye-law 18(vii)), and, being cooperative share capital, do not
carry the attributes of equity ownership in a company.
Management likewise remains with elected representatives.
Under Bye-law 25, the Board of Directors comprises not
exceeding 17 members (of which only the Government’s
nominee(s) under Section 48 of the MSCS Act (Bye-law
Page 18 of 46
17th July 2026
CRA-300-2026.DOC
25(b)), being, one nominee each of NCUI, NCDC and NAFED
(Bye-law 25(c)) sit outside the elective process; the remaining
Directors, five from State-level Apex Federations (Bye-law
25(a)) and five from other member cooperatives (Bye-law
25(d)), are elected by the General Body. The Chairman and
Vice-Chairman are elected by the Board from amongst
themselves (Bye-law 25(f)), and even the Managing Director,
though the Chief Executive, functions under the overall
control of the Board (Bye-law 36).
28. It is submitted that NCCF is financially self-sustaining. It
draws its income from the commercial operations described in
Part C, not from budgetary support, and reported a turnover
of about Rs.5,969 crore in FY 2023-24 and about Rs.8,271
crore in FY 2024-25, with profit after tax of about Rs.182
crore and about Rs.250 crore respectively, against a total paid-
up share capital, across all members, of roughly Rs.15 crore.
The value of Government’s shareholding is thus negligible
against NCCF’s self-generated turnover, and NCCF cannot be
said to be “substantially financed” by Government in any
Page 19 of 46
17th July 2026
CRA-300-2026.DOC
relevant sense. Reliance is placed on D.A.V. College Trust &
Management Society v. Director of Public Instructions11, where
Government shareholding or assistance, without more, was
held insufficient to constitute substantial financing of an
institution otherwise capable of carrying on its activities
independently.
29. It is further submitted that the NCCF is not “State”
within the meaning of Article 12. For that purpose, he relies
upon the Judgment of the Delhi High Court in the case of J. S.
Arneja Vs. NCCF12. NCCF fails every indicium of State control
laid down in Ramana Dayaram Shetty (supra), and applied in
Ajay Hasia v. Khalid Mujib Sehravardi13, and Pradeep Kumar
Biswas v. Indian Institute of Chemical Biology14, its entire
share capital is not Government owned; it receives no
financial assistance beyond ordinary share subscription; it
enjoys no State-conferred monopoly; there is no deep and
pervasive administrative control over its day to day
11 (2019) 9 SCC 185
12 1994 (28) DRJ 546
13 (1981) 1 SCC 722
14 (2002) 5 SCC 111
Page 20 of 46
17th July 2026
CRA-300-2026.DOC
functioning, which rests with its elected Board and General
Body; its objects and functions are those of an ordinary
consumer cooperative federation, not a governmental function
transferred to it. Zee Telefilms Ltd. v. Union of India15,
declined to treat even a body performing functions of
undoubted public importance as “State” in the absence of
pervasive control. NCCF similarly is not a “State” within the
meaning of Article 12 of the Constitution of India.
30. It is further submitted that NCCF is not a corporation
established by or under any Central or State Act and this does
not fall within the categories mentioned in Section 3(1)(b).
For that purpose, he relise upon the Judgment in the case of
Shetkari Sahakari Sangh Ltd. Vs. Dilip Shankarrao Patil16,
Deoki Nandan Aggarwal (supra) and Saregama (India) Ltd.
(supra). The Respondent-Society is not created under the
MSCS Act Act as it is merely governed by and in accordance
with the provisions of Multi-State Co-operative Society. NCCF
15 (2005) 4 SCC 649
16 2024 SCC OnLine Bom 3649
Page 21 of 46
17th July 2026
CRA-300-2026.DOC
stands on the same footing as the ordinary registered society
considered in Shetkari Sahakari Sangh Ltd. (supra).
31. Having considered the rival submissions, the question
that arises for consideration is whether the Respondent is a
public sector undertaking as contemplated under Section 3(1)
(b) of the MRC Act and whether the Public Sector
Undertaking has to be incorporated under the Central or State
Act for being excluded from protection of the provisions of the
MRC Act? For ready reference, Section 3(1)(b) of the MRC
Act is noted below:
“3(1)(b) to any premises let or sub-let to banks, or any Public
Sector Undertakings or any Corporation established by or under
any Central or State Act, or foreign missions, international
agencies, multinational companies, and private limited companies
and public limited companies having a paid up share capital of
more than rupee one crore or more.”
32. Section 3(1)(b) of the MRC Act uses the expression
“Public Sector Undertaking or corporation established by or
under any Central or State Act.” The above portion of Section
3(1)(b) is separated by commas from the other part of Section
3(1)(b). The contention is that the PSU has to be established
Page 22 of 46
17th July 2026
CRA-300-2026.DOC
by or under the Central or State Act to be excluded from the
protection of MRC Act. However, the Supreme Court in the
case of Leelabai Gajanan Pansare & Ors. (supra) has
extensively dealt with this aspect and has held in paragraph
46 thus:
“46. According to the respondents, the words `PSUs’ in Section
3(1)(b) has to be read with the words any corporation established
by or under Central or State Act. In other words, according to the
respondents, only those PSUs which are established by or under
any Central or State Act alone stand excluded from the protection
of the Rent Act. According to the respondents, PSUs which are
Government companies incorporated under Section 617 of the
1956 Act are entitled to the protection as they are not expressly
excluded under Section 3(1)(b). We do not find merit in this
submission. Firstly, it may be noted that several entities have been
enumerated in Section 3(1)(b), namely, banks, PSUs or statutory
corporations, foreign missions, international agencies,
multinational companies and private limited and public limited
companies having a paid up share capital of Rs. 1,00,00,000 or
more. As stated above, the said Rent Act, 1999 has brought about
structural changes in the legislation. In this case, it was open to the
legislature to opt for any of the tests, namely, test of origin, test of
public character of the functions performed by each of these
entities, test of public character of each of the undertakings, test of
agency or instrumentality, test of monopolistic status, test of
mobilization of resources etc. In the present case, we find that the
legislature has opted for an economic criteria, namely, entities
which are in a position to pay rent at market rates are to stand
excluded from Rent Act protection. This is the test of FinancialPage 23 of 46
17th July 2026
CRA-300-2026.DOCCapability. This is the golden thread which runs through Section
3(1)(a). Be it banks, PSUs. Statutory corporations, multinational
companies, foreign missions, international agencies and public and
private limited companies having a paid up share capital of Rs.
1,00,00,000 or more stand excluded from the Rent Act protection.
This criteria has been selected by the legislature knowing fully well
that each of these entities including PSUs can afford to pay rent at
the market rates. Secondly, we have given in- depth consideration
to the contention advanced on behalf of the respondents on the
interpretation of Section 3(1)(b). We are of the view that to accept
the contention of the respondents, namely, that only PSUs which
are established by or under the Central or State Acts will not get
protection whereas PSUs which are Government companies
incorporated under the 1956 Act would continue to get protection
would make the Section 3(1)(b) vulnerable to challenge as
violative of Article 14 of the Constitution.
…Applying this test, we hold that Section 3(1)(b) clearly applies to
different categories of tenants all of whom are capable of paying
rent at the market rates. Multinational companies, international
agencies, statutory corporations, Government companies, public
sector companies can certainly afford to pay rent at the market
rates. This thought is further highlighted by the last category in
Section 3(1)(b). Private limited companies and public limited
companies having paid up share capital of more than Rs.
1,00,00,000 are excluded from the protection of the Rent Act. This
further supports the view which we have taken that each and every
entities mentioned in Section 3(1)(b) can afford to pay rent at the
market rates…”
33. The submission before the Supreme Court in Leelabai
Gajanan Pansare & Ors. (supra) was the words `PSUs’ in
Page 24 of 46
17th July 2026
CRA-300-2026.DOC
Section 3(1)(b) has to be read with the words any corporation
established by or under Central or State Act. In other words,
the submission was only PSUs which are established by or
under any Central or State Act alone stand excluded from the
protection of the Rent Act. As such, the Government
companies incorporated under Section 617 of the 1956 Act
are entitled to the protection of the Rent Control Act as they
are not expressly excluded under Section 3(1)(b). The Court
repelled the contention by observing that several entities have
been enumerated in Section 3(1)(b), namely, banks, PSUs or
statutory corporations, foreign missions, international
agencies, multinational companies and private limited and
public limited companies having a paid up share capital of Rs.
1,00,00,000 or more. The Rent Act, 1999 has brought about
structural changes in the legislation and it was open to the
legislature to opt for any of the tests, namely, test of origin,
test of public character of the functions performed by each of
these entities, test of public character of each of the
undertakings, test of agency or instrumentality, test of
Page 25 of 46
17th July 2026
CRA-300-2026.DOC
monopolistic status, test of mobilization of resources etc. The
Supreme Court held that the legislature has opted for an
economic criteria, namely, entities which are in a position to
pay rent at market rates are to stand excluded from Rent Act
protection. This is the test of Financial Capability. This is the
golden thread which runs through Section 3(1)(a). Be it
banks, PSUs, Statutory corporations, multinational companies,
foreign missions, international agencies and public and
private limited companies having a paid up share capital of
Rs. 1,00,00,000 or more stand excluded from the Rent Act
protection. This criteria has been selected by the legislature
knowing fully well that each of these entities including PSUs
can afford to pay rent at the market rates. The Court further
observed that to accept the contention of the respondents,
namely, that only PSUs which are established by or under the
Central or State Acts will not get protection whereas PSUs
which are Government companies incorporated under the
1956 Act would continue to get protection under MRC Act
would make the Section 3(1)(b) vulnerable to challenge as
Page 26 of 46
17th July 2026
CRA-300-2026.DOC
violative of Article 14 of the Constitution. To illustrate, the
Supreme Court observed that LIC being a statutory
corporation stands excluded from the provisions of the Rent
Act whereas Government companies incorporated under the
Companies Act, 1956 would continue to get protection would
lead to arbitrary discrimination under Article 14 to the
Constitution. The Supreme Court observed that one of the
possible view could be that the words `PSUs’ as understood by
the Legislature, it is clear that, India’s PSUs are in the form of
statutory corporations, public sector companies, Government
companies and companies in which the public are
substantially interested. These entities are basically cash-rich
entities. They have positive net asset value. They have positive
net worths. They can afford to pay rents at the market rate.
Thus, the Supreme Court has rejected the idea that the PSUs
which could also be Government Company if not established
by or under the State Act would be excluded from the ambit
of Section 3(1)(b). Any PSUs whether established under the
Public Sector Act or otherwise would be covered under the
Page 27 of 46
17th July 2026
CRA-300-2026.DOC
ambit of Section 3(1)(b). Thus, the Supreme Court
interpreted Section 3(1)(b) in a manner so as to avoid the
Section being struck down as violative of Article 14 of the
Constitution of India.
34. The next issue before this Court is whether the
Respondent is a PSU, in the context of Section 3(1)(b) of the
MRC Act? The Supreme Court in the case of Leelabai Gajanan
Pansare & Ors. (supra) also interpreted the word PSU in
Section 3(1)(b), purely in the context of provisions of MRC
Act as noted at paragraph 48 as under:
“48. We may note that we have interpreted the words ‘PSUs’ in
Section 3(1)(b) purely in the context of the provisions of the
Maharashtra Rent Control Act, 1999. Our judgment is, therefore,
confined strictly to the said provisions of the Rent Act.”
35. The definition of PSU has to be broadly interpreted for
the purposes of Rent Control Act, as the Rent Control Act,
1999 has a historical background. In the case of Malpe
Vishwanath Acharya and ors. v. State of Maharashtra and
anr.,17 the Supreme Court considered the constitutional
17 (1998) 2 SCC 1
Page 28 of 46
17th July 2026
CRA-300-2026.DOC
validity of the Maharashtra Rent Act, 1947 and has observed
that the existing provisions of the Bombay Rent Act relating
to the determination and fixation of the standard rent can no
longer be considered to be reasonable. The said provisions
would have been struck down as having become unreasonable
and arbitrary but the Court thought it was not necessary to
strike down the same in view of the fact that the extended
period of the Bombay Rent Act was to comes to an end on 31-
3-1998. It was noticed that new bill was under consideration
and the Court left it to the legislature to frame a just and fair
law keeping in view the interests of all concerned. It was
observed by the Supreme Court that by the passage of time,
the MRC Act of 1947 which was justified, however, due to
change in economic circumstances, the determination and
fixation of the standard rent can no longer be considered to be
reasonable. However, the 1947 Act was not struck down in
view of the new Act which was in offing. Considering the
difficulty faced to the MRC Act, the Legislature gave package
to the Landlord in the new MRC Act of 2000 by excluding
Page 29 of 46
17th July 2026
CRA-300-2026.DOC
cash-rich body corporates and statutory corporations from the
protection of the Rent Act. This part of the economic package
helps the landlords to enhance the rent and charge rent to the
entities mentioned in Section 3(1)(b) who can afford to pay
rent at the market rate. The new Rent Act of 2000 also give
the benefit of annual increase of rent @ 5% and the
provisions of bar, on receiving premium, was also deleted. All
the three items noted above constituted one composite
package for the landlords. The underlying object behind the
said economic package is to balance and maintain the two-
fold objects of the Rent Act, namely, tenancy protection and
rent protection. The idea behind excluding cash-rich entities
from the protection of the Rent Act is also to continue to give
protection to tenants who cannot afford to pay rent at market
rate. In this background, Section 3(1)(b) came to be enacted.
By offering an economic package to the landlords, the
legislature has tried to maintain a balance. The provisions of
the earlier Rent Act, as stated above, had become vulnerable,
unreasonable and arbitrary with the passage of time. In the
Page 30 of 46
17th July 2026
CRA-300-2026.DOC
light of the observations made by the Supreme Court in the
cases of Malpe Vishwanath Acharya and ors. (supra) and
Leelabai Gajanan Pansare & Ors. (supra), the term “Public
Sector Undertaking” in Section 3(1)(b) needs to be
interpreted.
36. The Single Bench of this Court in the case of United
India Insurance Co. Ltd. Vs. Hongkong And Shanghai
Banking18, while dealing with the question of interpretation of
Section 3(1)(b), has observed that the expression “public
sector undertakings” is not defined in the Act or any other
law. In view of the fact that the expression “public sector
undertakings” has not been defined in the Maharashtra Rent
Act or any other relevant law, the expression must be given
the meaning as is commonly understood. The test applied in
excise law that the words of common parlance must be given
the meaning ascribed to them by a common man would
equally apply for interpreting the meaning of the expression
“public sector undertakings”. Common man considers the
18 2007 (5) MHLJ 313
Page 31 of 46
17th July 2026
CRA-300-2026.DOC
corporations owned or controlled by the Central or the State
Government as public sector undertakings. A corporation or a
company whose entire or majority of the share capital is held
and owned by the Government or any organ or
instrumentality of the Government is regarded as a public
sector undertaking by the common man. That is a common
meaning of the phrase “public sector undertakings”.
37. The Supreme Court in Leelabai Gajanan Pansare & Ors.
(supra) has observed that the word `PSU’ is not a term of art.
It is not defined in the said Rent Act. It is not defined in the
Companies Act. It is observed that the Government has
adopted the method of running companies by directly holding
shares in them. This is apart from statutory corporations
which are set up or established under Central/State Acts. The
public character of the functions performed by the
Undertaking determine the character of that undertaking. It is
the public character of the functions of the undertaking which
makes it a PSU. However, there is no conclusive test for
determining the status of an undertaking as a PSU. In judging
Page 32 of 46
17th July 2026
CRA-300-2026.DOC
the character of an entity, the court has to keep in mind the
context in which the word PSU is used in a given enactment.
There are a number of tests which could be applied in judging
the character of an entity, namely, the test of origin, the test of
agency or instrumentality of the State, the functional test, the
monopolistic status of an entity, test concerning areas of
operations, the test of economies of scale, the test of control,
the role of the entity in the priority sector etc. Therefore, there
is no one conclusive test applicable to decide the character of
an entity. The PSUs may be in the form of departmental units,
corporations, Government companies, autonomous bodies or
authorities. It is further observed that a majority of PSUs in
India are in the company form and the idea behind bringing
more PSUs in this form has been mainly that of autonomy.
Thus, it is observed that statutory corporations, public sector
companies and Government companies are merely corporate
forms. India’s PSUs may be in the corporate forms or in the
form of statutory corporations or in the form of public sector
companies. From the above observation of the Supreme Court
Page 33 of 46
17th July 2026
CRA-300-2026.DOC
in Leelabai Gajanan Pansare & Ors. (supra), this Court finds
that a PSU could also be a non-company and also a co-
opearative society if it fulfils the criteria for the purpose of the
38. The Supreme Court in the case of Ramana Dayaram
Shetty (supra) has observed that the corporation can include
entity created under the Societies Registration Act and if
Government owns majority shareholding then it is an
instrumentality of the Government i.e. it would be a PSU even
if it functions autonomous.
39. In Shetkari Sahakari Sangh Ltd. (supra), the Appellant,
Shetkari Sahakari Sangh Ltd. was a Co-operative Society
registered under the provisions of the Maharashtra Co-
operative Societies Act, 1960 (MCS Act), and the issues
involved therein are as under:
(i) Whether the Defendant fits into the definition of the
term ‘any corporation established by or under any Central or
State Act’ used under section 3(1)(b) of the Maharashtra Rent
Control Act, 1999 ?
Page 34 of 46
17th July 2026
CRA-300-2026.DOC
(ii) Even if the Defendant does not strictly fit into the words
‘any corporation established by or under any Central or State
Act’ whether the Defendant would be covered by the entities
who are exempted from application of provisions of
Maharashtra Rent Control Acy, 1999 on the principle of
‘affordability to pay rent’ by applying judgment of Apex Court
in Leelabai Gajanan Pansare and others vs. Oriental Insurance
Company and others, (2008) 9 SCC 720 ?
40. The Single Judge of this Court held that merely because
the Supreme Court proceeded to include a company within
the words ‘PSUs’ appearing in Section 3(1)(b) of the Rent Act,
it does not mean that every entity which is capable of paying
rent at market rate would stand exempted from applicability
of provisions of the Rent Act under Section 3(1)(b). The
Supreme Court was mainly concerned with the issue as to
whether ‘Government Companies’ form a separate class than
that of PSUs for the purpose of application of Section 3(1)(b)
of the Rent Act. Thus, this Court held that the Judgment of
Leelabai Gajanan Pansare & Ors. (supra) cannot be read to
Page 35 of 46
17th July 2026
CRA-300-2026.DOC
mean that every entity which is capable of affording market
rent, would stand excluded under the provisions of the Rent
Act. There may be smaller Co-operative Societies formed by a
particular group of persons such as fishermen, agriculturists,
etc. where such societies may not have very bright financial
operations. Whether such Co-operative Societies are required
to be treated as ‘Corporations’ for the purpose of application
of Section 3(1)(b) of the Rent Act ? The Court negatived this
contention. The Court ultimately answered the questions
raised in paragraph 43 as under:
“43. The substantial questions of law are accordingly answered as
under:
(i) Defendant does not fit into definition of the term “any
corporation established by or under Central or State Act” used in
Section 3(1)(b) of the Maharashtra Rent Control Act, 1999.
(ii) By applying the ratio of the judgment of the Supreme Court in
Leelabai Gajanan Pansare case the defendant cannot be treated as
an entity which is exempted from application of provisions of the
Rent Act by applying the principle of “affordability to pay market
rent”.
41. In Shetkari Sahakari Sangh Ltd. (supra), the Single
Bench of this Court has observed that a co-operative society is
Page 36 of 46
17th July 2026
CRA-300-2026.DOC
an association of private individuals and, that it cannot fall
within the term “corporation established by or under the State
Act” merely because it is registered under the provisions of the
Co-operatives Societies Act.
In the instant case, this Court is concerned only with whether
the Respondent, in which the Government holds 65% share
capital directly and total of 85% indirectly, could be termed as
a public sector undertaking and not if it is established under
the Central or State Acts.
42. The Patna High Court in the case of
Chairman/President, National Co-opeative Consumers’
Federation of India Ltd. Vs. Bibhuti Bhushan Sinha 19 has
observed that NCCF to be State for the purpose of Article 12
of the Constitution of India. Therefore, Writ Petitions were
held to be maintainable.
43. In P. K. Ramchandra Iyer & Ors. Vs. Union of India &
Ors.,20 the Apex Court has relying upon Ajay Hasia (supra) has
19 2011 SCC OnLine Pat 797
20 (1984) 2 SCC 141
Page 37 of 46
17th July 2026
CRA-300-2026.DOC
held Indian Council of Agricultural Research (ICAR), a
Registered Society, to be an instrumentality of State and thus
Writ Petition is held to be maintainable.
44. Relevant is also the Judgment of the High Court of
Orissa in the case of Digambar Behera (supra), wherein the
Court has observed that a body is performing ‘public function’
when it seeks to achieve some collective benefit for the public
or a section of public and is accepted by the public or that
section of the public as having authority to do so. Bodies
therefore, exercise public functions when they intervene or
participate in social or economic affairs in the public interest.
It is further observed that the public character of the functions
performed by the undertaking determine the character of that
undertaking. It is the public character of the functions of the
undertaking which makes it a PSU. PSUs may be in the form
of departmental units, corporations, government companies,
autonomous bodies or authorities. All the important forms of
organization for PSUs have certain advantages and certain
limitations. A majority of PSUs in this form has been mainly
Page 38 of 46
17th July 2026
CRA-300-2026.DOC
that of autonomy. Similar is the case of statutory corporations
which are also created to mitigate the drawbacks of
departmental administration.
45. The Supreme Court in the case of Central Bureau of
Investigation, State of Madhya Pradesh (supra) has held as
follows:
“10. …In a situation where the cumulative value of the
redeemable and non-redeemable shares subscribed by the Central
Government in the NCCF would constitute almost 85% of its share-
capital, we do not see how the participation of the Central
Government, by means of subscription to the non-redeemable
shares, would fall outside the meaning and scope of the expression
“aided” as appearing in Section 2(c)(iii) of the P.C. Act, 1988. Even
otherwise, we find no basis to hold that the equity participation
insofar as the non-redeemable shares is concerned would amount
to a loan to the NCCF by the Central Government. We, therefore,
hold that the Central Government holds majority of the shares in
the NCCF i.e. 85% thereof and, therefore, the NCCF is a body
“aided” by the Central Government as required Under Section 2(c)
(iii) of the P.C. Act, 1988.”
46. Few facets of the Respondent becomes apparent from
the submissions given by the Respondent along with its
Annual Report placed on record. The report indicates that the
Respondent is under the administrative control of the Ministry
Page 39 of 46
17th July 2026
CRA-300-2026.DOC
of Cooperation and the Department of Consumer Affairs. It
implements the Price Support Scheme (PSS) and Price
Stabilization Fund (PSF), NCCF procures pulses, oilseeds and
other green grams. It has a business turnover of Rs.5,000
Crores fully supported by credit facilities made available by
the Central Government. The NCCF operates under the
administrative control of the Ministry concerned, and its
founding objective is to provide supply support to consumer
co-operatives and other distributing agencies for making
consumer goods at reasonable and affordable costs. Its Board
of Directors consists of 15 members, elected representatives of
members co-operative societies and also three Directors
nominated by the Central Government. The Managing
Director is also appointed by the Central Government. Its
Head Office is situated at Delhi and it has 28 branches all over
the India. The website reflects it as the National Cooperative
Consumers’ Federation of India Ltd. Ministry of consumer
Affairs, Food and Public Distribution, Govt. of India.
Page 40 of 46
17th July 2026
CRA-300-2026.DOC
47. The Annual Report of NCCF of the year 2024-25
submitted by the Respondent shows that the budgetary
provisions are quoted as below:
“Budget allocation of ₹34,489.15 crore has been made under the
PSF corpus from 2014-15 to 2024-25. This fund has been largely
utilized for building the dynamic buffer of pulses and onions.
As per the Government’s decision, the PSF was transferred to the
Department of Consumer Affairs (DOCA) with effect from 1 April
2016. Price stabilization operations are determined at the Centre by
the Central Price Stabilization Fund Management Committee
(PSFMC), which was reconstituted on transfer of the Scheme and is
now headed by the Secretary, Department of Consumer Affairs. The
Corpus Fund is managed by the Small Farmers Agribusiness
Consortium (SFAC). There is also a sub-committee for. investing
surplus from the PSF corpus, chaired by Financial Adviser, Ministry
of Consumer Affairs, Food and Public DistributionDuring the year 2015, the Government approved creation of pulses
buffer stock of 1.5 lakh MT. Subsequently, after due deliberation, it
was recommended to Increase the limit to around 20 lakh MT of
pulses for effective market intervention. The Government created a
buffer of 20.50 lakh MT of pulses through both domestic
procurement and imports by RMS 2017-18, from which regular
disposal was undertaken.”
48. The authority of the Respondent is controlled by the
Central Government. The Board of Directors of NCCF consists
of Joint Secretary, Department of Consumer Affairs, Two
DOCA-Director (Govt. Nominee), NCUI Nominated Director,
Page 41 of 46
17th July 2026
CRA-300-2026.DOC
one person from NCDC, Nominated Director by NAFED and
one Government Officer as Managing Director.
The financing of two schemes i.e. PSS and PSF is by the
Central Government. The Central Government holds
approximately 65% of the share capital directly and total of
85% indirectly, as observed in Central Bureau of Investigation,
State of Madhya Pradesh (supra). After amendment to the
Multi-State Co-operative Act, Section 35 provides that the
share capital of the authorities cannot be reduced without the
consent of the authorities.
49. Section 35 of MSCS Act is quoted below:
“35. Redemption of shares.–(1) The shares of the authorities
referred to in clauses (c) and (d) of sub-section (1) of section 25,
held in multi-State co-operative societies,–
(a) shall not be redeemed without the prior approval of such
authorities; and
(b) may be redeemed in such manner as may be agreed upon
between the multi-State co-operative society and such authorities.
(2) The shares held in a multi-State co-operative society by any of
the authorities referred to in clauses (e) to (g) of sub-section (1) of
section 25, shall be redeemed in accordance with the bye-laws of
such multi-State co-operative society and in case, where the bye-
laws do not contain any provision, in such manner as may be
Page 42 of 46
17th July 2026
CRA-300-2026.DOC
agreed upon between the multi-State co-operative society and such
authorities.
(3) The redemption of shares referred to in sub-sections (1)
and (2), shall be on the face value of shares.”
50. The Respondent is a national federal co-operative
society, which has no individual members but has other co-
operative societies as its members. Although the structure of
the Respondent is of a co-operative society and its authority
vests in the General Body, the Respondent act on the direction
of the State to implement its policies. The business of the
Respondent is the ensure price stablisation of the food articles
by procurement and sale. The activity is financed/budgeted by
the State. The management of the Respondent is also
substantially controlled by the appointments made by the
State. The Respondent, in view of the amendment in the
MSCS Act, cannot unilaterally dilute the share capital of the
State. In some Judgments of the High Courts as noted herein-
above, the Respondent is held to be a “State”. However, the
Delhi High Court has held that the Respondent not to be a
“State” within the meaning of Article 12 of the Constitution of
Page 43 of 46
17th July 2026
CRA-300-2026.DOC
India. The PSS and PSF scheme and the other schemes of the
Central Government are implemented through the
Respondent. The Annual Report placed on record by the
Respondent on 2024-25 show that Rs.34,489.15 crore has
been made under the PSF corpus from 2014-15 to 2024-25.
The Respondent is a cash-rich body.
51. For the purposes of Section 3(1)(b), the Respondent,
NCCF, though a co-operative society, would be a Public Sector
Undertaking as the State undertakes its public functions
through the Respondent. The entire business of the
Respondent revolves around the implementation of Central
schemes. As per Bye Law No.3(vii), NCCF secures requisite
facilities, assistance and financial aids for itself and its
members institutions from the Government. NCCF is in
financially sound condition. The entire financing for
implementation of schemes is from the Central Government.
For the reasons noted above, the Respondent NCCF, for the
purpose of Section 3(1)(b) of the MRC Act is a PSU.
Considering the Financial control, Managerial control and
Page 44 of 46
17th July 2026
CRA-300-2026.DOC
functionality i.e. the Respondent is an agency of the Central
Government to implement its policy, this Court holds that the
Respondent is a PSU for the purpose of Section 3(1)(b) of the
MRC Act.
52. The Appellate Court, held that the Respondent is not
incorporated under the Central or State Acts and, as such, is
not covered within the definition of 3(1)(b), has erroneously
interpreted Section 3(1)(b). The Respondent, NCCF, is
covered within the definition of a “Public Sector Undertaking”
under Section 3(1)(b) of the MRC Act and, as such, is
excluded from the applicability of the MRC Act to the
premises leased to the Respondent. This Court thus set asides
the impugned Judgment and Order of the Appellate Court
dated 13th March 2026 and restores the Judgment and Decree
of the Trial Court dated 30th March 2023.
53. In view of the above, the Civil Revision Application is
allowed and disposed of accordingly.
(ARUN R. PEDNEKER, J.)
Page 45 of 46
17th July 2026
CRA-300-2026.DOC
54. At this stage, learned counsel appearing for the
Respondent submits that the order passed today be stayed.
Considering the prayers made, it is directed that the original
Plaintiff – Applicant herein will not initiate execution
proceedings for a period of twelve weeks.
55. As an interim measure the Respondents would also
continue to pay the rent at the same rate which was deposited
before the Trial Court, during the pendency of proceedings
before the Trial Court, for a period of twelve weeks. This is
without prejudice to the rights of Applicant to recover
amounts that may become due and payable.
(ARUN R. PEDNEKER, J.)
Page 46 of 46
17th July 2026
