The Allahabad High Court at Lucknow has allowed a writ petition filed by the District Cooperative Bank Ltd., Lucknow, holding that the rent enhancement order passed against it under Section 21(8) of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972, was without jurisdiction. The Court ruled that a cooperative bank does not fall within the statutory definition of a “public sector corporation” under Section 3(p) of the Act.
Case Background
The dispute arose after the landlord, claiming ownership of the premises through a lease deed and family settlement, filed an application under Section 21(8) of the Act seeking enhancement of monthly rent from ₹101.87 to ₹18,333 for a portion of a building occupied by the District Cooperative Bank. The District Magistrate allowed the application by an order dated 16 January 2004, directing enhanced rent with retrospective effect from 1 September 1995. The bank’s appeal under Section 22 of the Act was dismissed on 11 August 2006, leading to Writ Petition No. 1000119 of 2006.
During the pendency of the writ petition, the High Court directed the bank to pay enhanced rent. However, the bank failed to make the payments, resulting in contempt proceedings and a legal notice issued by the landlord demanding arrears amounting to ₹33,78,000. The landlord subsequently filed an eviction suit under Section 20 of the Act, which was decreed by the Small Causes Court on 16 October 2021. The bank challenged this judgment in SCC Revision No. 1 of 2022.
Arguments of the Parties
The petitioner-bank was represented by Advocates Rakesh Kumar Chaudhary, Ayush Chaudhary, Vivek Raj Singh, A.R. Khan, and Shreya Chaudhary. They argued that Section 21(8) was inapplicable since it applied only to buildings let out to the State Government, local authorities, public sector corporations, or recognized educational institutions. Being a primary cooperative society, the petitioner claimed it did not fall under any of these categories as defined under Sections 3(l), 3(m), 3(p), or 3(q) of the Act.
It was further contended that the valuation report, which formed the basis for rent enhancement, considered 4,000 sq. ft., while the actual tenanted area was only 1,500 sq. ft. The bank also disputed the landlord’s title over the portion under its occupation, asserting that the rented property was distinct from the area acquired by the landlord.
On the other hand, the respondent-landlord was represented by Senior Advocate S.C. Misra, assisted by Sunil Kumar Chaudhary, and also by Ankit Srivastava, Gaurav Chand Kaushik, C.S.C., Anil Kumar, Kapil Misra, Parcham Mubarak, Shafiq Mirza, and Umesh Kr. Shukla. They argued that the bank, being engaged in banking activities and governed by the Banking Regulation Act, qualified as a “public sector corporation” under Section 3(p). Reliance was placed on the Supreme Court’s decision in Daman Singh v. State of Punjab, AIR 1985 SC 973, and on definitions under the Banking Regulation Act.
Court’s Analysis
Justice Pankaj Bhatia rejected the landlord’s arguments, holding:
“On the plain reading of Section 21(8) and Section 3(p), the petitioner does not fall within the definition of ‘public sector corporation’… the help of external aid of the Banking Regulation Act for interpreting Section 21(8) of U.P. Act No. XIII of 1972… merits rejection.”
The Court held that although the bank may be governed by the Banking Regulation Act, it could not, by that reason alone, be equated with a public sector corporation under the Rent Act. The Court also cited The Apex Co-operative Bank of Urban v. Maharashtra State Co-operative Bank Ltd., (2003) 11 SCC 66, to reinforce the principle that terms defined within a statute must be interpreted strictly according to that statute and not using external definitions.
The Court concluded:
“The District Magistrate had no jurisdiction to enhance the rent on the application filed by the respondent as a landlord, as the petitioner bank does not fall within the definition of ‘public sector corporation’… the order dated 6.10.2006… is wholly without jurisdiction and is accordingly quashed.”
Decision
The High Court allowed the writ petition, quashed the rent enhancement order dated 6 October 2006, and directed that all amounts deposited by the bank pursuant to interim orders be refunded.
In SCC Revision No. 1 of 2022, the Court quashed the Small Causes Court’s decree awarding arrears of ₹6,98,400 and damages of ₹600 per month, as they were based on the now-invalidated enhanced rent. However, the decree of ejectment was upheld on the ground that the bank had failed to pay even the unenhanced rent.
“The only logical conclusion was a decree of ejectment under Section 20 of the UP Act No XIII of 1972 and thus no fault can be found with the decree of ejectment passed on 16.10.2021.”
