Union Of India vs. Sir Sobha Singh And Sons Pvt. Ltd.

REPORTABLE
2026 INSC 406
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

UNION OF INDIA … APPELLANT(S)
VERSUS
SIR SOBHA SINGH AND SONS
PVT. LTD. ... RESPONDENT(S)
J U D G M E N T

PRASHANT KUMAR MISHRA, J.

1. Leave granted.
2. This Appeal presents a question concerning the nature of the appellant-
Union of India’s occupation of residential premises at Sujan Singh Park, New
Delhi; whether such occupation is governed exclusively by the terms of a
perpetual lease deed attracting the overriding protection of Section 3 of the
1
Government Grants Act, 1895 , or whether the arrangement between the
parties bears the incidents of a landlord–tenant relationship, thereby
rendering the appellant amenable to eviction proceedings under Section
2
14(1)(a) of the Delhi Rent Control Act, 1958 for non-payment of rent. Vide
3
impugned judgment dated 08.01.2020, the High Court of Delhi , affirming the
concurrent findings of the courts below, answered this question against the
Signature Not Verified
Digitally signed by
MINI
Date: 2026.04.22
16:33:42 IST
Reason:

1
‘GG Act’
2
‘DRC Act’
3
‘High Court’
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appellant. The correctness of that view falls for determination in the present
Appeal.
A. FACTUAL MATRIX
3. The dispute traces back to a perpetual lease deed dated 26.04.1945
executed by the Governor General in Council in favour of respondent-Sardar
Bahadur Sir Sobha Singh & Sons Private Limited, who is the respondent
herein, in respect of 7.58 acres of land situated at North and South Sujan
Singh Park, New Delhi. Under the terms of the deed, the lessee was obligated
to construct residential blocks in accordance with the terms of the lease. Upon
Independence, the appellant stepped into the shoes of the original lessor,
while the lessee continued as successor-in-interest.
4. Residential flats, servant quarters and garages were constructed
pursuant to the lease. Over time, several of these premises including five
single-bedroom flats, nine double-bedroom flats, thirty-nine servant quarters
and twenty-five garages at Sujan Singh Park (North and South), New Delhi,
came to be occupied by the appellant for housing government officials.
5. The respondent asserted that the appellant occupied the premises as a
tenant and paid rent at the rate of Rs. 2,400/- per month per flat, thereby
attracting the provisions of the DRC Act. The appellant, on the other hand,
maintained that its occupation flowed directly from the perpetual lease deed
arising out a grant and that no statutory tenancy governed by rent control
law existed.
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6. Alleging default in payment of rent for the period of 01.04.1989 to
31.03.1991 amounting to Rs. 63,360/-, the respondent issued a demand
notice dated 14.01.1991. Upon failure to clear the arrears, an eviction petition
being Suit No. E-68/98/91 was filed before the learned Additional Rent
4
Controller under Section 14(1)(a) of the DRC Act.
7. The appellant resisted the proceedings, contending :
inter alia
(i) absence of landlord–tenant relationship; (ii) bar under Section 3 of the GG
Act; (iii) applicability of the Public Premises (Eviction of Unauthorised
Occupants) Act, 1971 owing to alleged re-entry by the Government in 1960;
and (iv) want of notice under Section 80 of the Code of Civil Procedure, 1908.
8. By order dated 08.07.2004, the learned ARC directed deposit of arrears
under Section 15(1) of DRC Act. As a corollary of the non-compliance, led to
an eviction order dated 14.02.2005 passed by the learned ARC holding that
the appellant was disentitled to the protection under Section 14(2) of the DRC
Act.
5
9. The appeal before the Rent Control Tribunal was initially dismissed on
the ground of delay. Upon intervention by this Court on 16.10.2006 and
remand, the RCT, by order dated 01.09.2007, dismissed the appeal on merits,
affirming the eviction and holding that a landlord–tenant relationship stood
established between the parties. However, execution of the said order dated
01.09.2007 was suspended for six months subject to payment of arrears with
interest and costs.

4
‘ARC’
5
‘RCT’
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10. Aggrieved, the appellant invoked the supervisory jurisdiction of the
High Court under Article 227 of the Constitution of India by filing CM(M) No.
293 of 2008. The principal plank of challenge was that Section 3 of the GG
Act excluded the operation of the DRC Act, since the occupation of the
premises was referable solely to the terms of the perpetual lease.
11. The High Court, by impugned judgment dated 08.01.2020, rejected the
contention. Upon construing Clause (6) of the lease deed, it was held that the
provision did not create an immunity from the application of rent control
legislation. Further, the High Court examined the scope of Section 3 of the
GG Act in the light of the principles laid down by a four-Judge Bench of this
6
Court in Collector of Bombay vs. Nusserwanji Rattanji Mistri and Others
which had distinguished cases where occupation flows directly and
exclusively from a Government grant from those arising out of arrangements
bearing the incidents of tenancy.
12. The High Court further distinguished decisions such as Express
7
Newspapers Pvt. Ltd. and Others vs. Union of India and Others ,
observing that these cases pertained to direct Government grants expressly
overriding general tenancy law. In the present case, it was concluded that the
occupation under Clause (6), accompanied by payment of rent, attracted the
DRC Act. Accordingly, the petition was dismissed, with limited protection in
execution subject to compliance with conditions.

6
(1955) 1 SCC 184
7
(1986) 1 SCC 133
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13. Taking an exception to the concurrent findings of the Courts below and
the refusal of the High Court to interfere, the appellant has preferred the
present Appeal.
B. SUBMISSIONS OF PARTIES
14. Mr. K.M. Nataraj, learned ASG appearing for the appellant submitted
that the impugned judgment fails to give full effect to the overriding mandate
of the GG Act.
15. It was urged that Sections 2 and 3 of the GG Act expressly exclude the
8
application of the Transfer of Property Act, 1882 and mandate that
Government grants operate according to their tenor, notwithstanding any rule
of law or statutory enactment to the contrary. It was contended that the non-
obstante clause in Section 3 gives primacy to the terms of the grant over all
other enactments, including the DRC Act.
16. Learned ASG submitted that Section 3 of the DRC Act itself excludes
premises belonging to the Government and tenancies arising out of
Government grants. It was pointed out that a conjoint reading of the two
enactments, therefore, clearly exclude the applicability of the DRC Act to the
present case.
17. Reliance was placed on Municipal Corporation of Delhi vs. Pradip
9
Oil Corporation and Another , wherein a full bench of Delhi High Court had
affirmed that the rights and obligations under a Government grant are
regulated solely by its terms and stand insulated from inconsistent statutory

8
‘TP Act’
9
2001 SCC OnLine Del 1026
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provisions. Further reliance was placed on Union of India and Another vs.
10
Dinshaw Shapoorji Anklesari and Others , reiterating that Section 3
confers overriding effect and that the Government’s conditions in a grant
prevail over contrary statutes. Reference was also made to Azim Ahmad
11
Kazmi and Others vs. State of Uttar Pradesh and Another to submit
that enforcement or resumption must strictly conform to the tenor of the grant
and no external statutory regime can be superimposed.
18. It was further contended by learned ASG that the perpetual lease deed
unequivocally recognise the President of India as “lessor” and the respondent
as “lessee”. In the absence of any express clause providing for re-entry or
eviction upon non-payment of rent, no such right can be inferred; at best, the
remedy is recovery of arrears.
19. As regards reliance placed by the High Court on Collector of Bombay
(supra) , learned senior counsel submitted that the said decision did not
consider the interplay between the GG Act and the DRC Act or the scope of
Section 3 of the GG Act. It is, therefore, distinguishable and inapplicable to
the present controversy.

20. On this premise, the learned ASG had submitted that the High Court
erred in confining the overriding effect of the GG Act only vis-à-vis the TP Act
and in invoking the DRC Act to sustain eviction. Therefore, it was prayed that
the impugned judgment deserves to be set aside.

10
(2014) 14 SCC 204
11
(2012) 7 SCC 278
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21. Per Contra, Mr. P.S. Patwalia, learned senior counsel for the respondent
submitted that Sections 2 and 3 of the GG Act were confined to insulating
Government grants from the operation of the TP Act and cannot be read as
excluding the applicability of the DRC Act. It was contended that the GG Act
was never intended to operate as a complete code overriding all tenancy laws.
22. Reliance was placed principally on the four-Judges Bench decision of
this Court in Collector of Bombay (supra) , to submit that Sections 2 and 3
of the GG Act must receive a narrow construction. Learned senior counsel for
the respondent argues that the general words of Section 3 cannot be read in
apparent generality but must be confined to the object declared in the
preamble namely, removing doubts as to the operation of the TP Act. Properly
construed, Section 3 merely saves such provisions, restrictions, conditions or
limitations in a Government grant as might otherwise be invalid under the TP
Act and does not override independent statutory regimes such as the DRC
Act.
23. It was further argued that the DRC Act, being a subsequent special
welfare legislation, contains no exemption for Government grants. Proviso to
Section 3(b) of the DRC Act expressly contemplates applicability to premises
lawfully let by Government, and Section 54 of the DRC Act does not save the
GG Act.
24. Learned senior counsel for respondent submits that a lawful tenancy is
borne out from the allotment letter, agreement, and perpetual lease, including
Clause (6) referring to “fair rent”. Learned senior counsel highlighted that the
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long-standing correspondence and payment of rent establish between the
parties the landlord–tenant relationship.
25. It was contended that the plea regarding the GG Act was raised
belatedly before the High Court and was confined to a pure question of law.
Even otherwise, no clause in the grant bars eviction proceedings. As per the
learned senior counsel, the appellant, having availed the protection under the
DRC Act for decades, is estopped from denying its applicability.
26. In these circumstances, learned senior counsel for the respondent
submits that the initiation of eviction proceedings under the DRC Act is legally
competent and maintainable. Therefore, it was prayed that the present appeal
deserved to be dismissed.
C. ANALYSIS
27. We have heard the learned senior counsels for the parties and have
perused the materials on record.
28. While issuing notice on 06.04.2022, this Court stayed the operation of
the ejectment order and had directed the parties to maintain status quo with
respect to the flats in question.

29. At the outset, it bears emphasis that the present controversy turns
upon the true character of a Government grant executed by the Governor
General in Council in respect of 7.58 acres of land at North and South Sujan
Park, New Delhi, for the construction of residential flats in favour of Sardar
Bahadur Sir Sobha Singh & Sons Private Ltd. The appellant-Union of India
now represents the original grantor, and the respondent traces its claim to
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the grantee. The legal incidents and operative tenor of this grant lie at the very
heart of the dispute before us.
30. Pursuant to the aforesaid grant, a perpetual lease deed dated
26.04.1945 came to be executed between the Governor General in Council
and Sardar Bahadur Sir Sobha Singh & Sons Private Limited. The lease
contemplated the construction of approximately 100 residential flats on the
demised premises. The letter of allotment to which the perpetual lease deed
dated 26.04.1945 is annexed incorporates provisions reserving to the
Government certain rights of occupation and requisition. The relevant
Clauses of the allotment letter, which are material for the present controversy,
read thus:
“I am to convey formal sanction of the Government of India to
the allotment to you of two sites in New Delhi, One on the North
and the other on the south of the junction of the Cornwallis and
Humayun Roads (sic) measuring about 7.58 acres each for the
purpose of the constructing about 100 residential flats on the
following terms.
1. to 4. ….
5. So long as the war continues and for one year thereafter,
the Labour Department of the Government of India, to have
the right to use the whole of the building or any part thereof
paying a rental assessed by that Department on the basis of
the capital cost. The present war (sic) shall be treated as
having continued to, and as having ended on, such date as
the Central Government may declare.
6. Even after the conclusion of the period mentioned at (5)
above, the Central Government to be entitled to require that
a certain number of the flats, not exceeding 50% of the total,
shall be leased to officials named by them, at a fair rent as
assessed by or under the orders of the Central Government
.”
(emphasis supplied)
31. Since the perpetual lease deed emanates from and is founded upon a
Government grant, its construction is governed by the provisions of the GG
Act. Sections 2 and 3 of the GG Act thereof expressly exclude the applicability
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of the TP Act to the Government grants and mandate that such grants shall
take effect according to their tenor, notwithstanding any rule of law to the
contrary. The said provisions are reproduced hereunder:
“ 2. Transfer of Property Act, 1882, not to apply to
Government grants.— Nothing in the Transfer of Property Act,
1882, contained shall apply or be deemed ever to have applied
to any grants or other transfer of land or of any interest therein
heretofore made or hereafter to be made by or on behalf of the
Government to, or in favour of, any person whomsoever; but
every such grant and transfer shall be construed and take effect
as if the said Act had not been passed.
3. Government grants to take effect according to their
tenor.— All provisions, restrictions, conditions and limitations
over contained in any such grant or transfer as aforesaid shall
be valid and the effect according to their tenor, any rule of law,
statute or enactment of the Legislature to the contrary
notwithstanding.”

32. The legislative object underlying the enactment of the GG Act was to
remove doubts regarding the extent to which the TP Act might operate upon
grants made by the Government. The TP Act invalidates certain conditions
restraining alienation or providing for forfeiture upon alienation or insolvency.
The GG Act was enacted to clarify that such statutory limitations would not
control Government grants and that the provisions, restrictions and
conditions contained therein would be operative strictly in accordance with
their tenor.
33. The core controversy of the present lis arose from the eviction petition
filed by the respondent, being aggrieved by the non-payment of rental dues
by the appellant as per the perpetual lease deed. An order dated 08.07.2004
was passed by the learned ARC directing the appellant to deposit the rental
arrears. However, upon the non-compliance, an eviction order was passed on
14.02.2005. Though, this matter has traversed through multiple forums, the
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central premise throughout has been the alleged failure of the appellant to
deposit the rental dues.
34. A careful scrutiny of the orders passed by the learned ARC and RCT,
however, reveals a significant omission. Neither the learned ARC nor the RCT
have considered the perpetual lease deed in its proper legal character, namely
as the instrument emanating from a Government Grant. The nature of the
deed and the juridical relationship flowing therefrom have not been
addressed. The reasoning adopted proceeds on the assumption that the
parties stand in the conventional relationship of landlord and tenant. In doing
so, the learned ARC and RCT have treated the existence of a rental covenant
as determinative, without adverting to the sovereign character of the grant or
the foundational character of the perpetual lease deed, which expressly
creates a relationship of lessor and lessee between the parties
35. The perpetual lease deed, on its plain terms, embodies a transfer of the
right to enjoy the demised premises in perpetuity in consideration of premium
and annual rent, and expressly delineates the parties as lessor and lessee.
The rights created and the obligations imposed by the instrument, as reflected
in its covenants, reservations and conditions, bear all the essential attributes
of a lease within the meaning of the TP Act.
36. However, the enquiry cannot rest there. The subject lease is not a
conventional demise but one emanating from a Government grant. Once the
character is established, the statutory consequences mandated under the GG
Act follow. The applicability of the TP Act stands excluded, and the rights and
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the obligations of the parties fall to be determined strictly in accordance with
the tenor of the grant, notwithstanding any rule of law to the contrary.
37. The learned ARC and RCT, in proceeding on the footing of a
conventional landlord-tenant relationship without construing the lease in the
light of its origin in a Government grant, thereby misdirected themselves in
law.

38. In the impugned judgment, the High Court had placed reliance on the
four-Judge Bench decision of this Court in Collector of Bombay (supra) while
deciding the scope of Section 3 of the GG Act. The relevant paragraphs of the
aforesaid judgment relied upon by the High Court are reproduced
hereinbelow:
“ 19. The contention is that as the grant is of a freehold
estate without any reservation it must, to take effect
according to its tenor, be construed as granting exemption
from assessment to revenue. But that will be extending the
bounds of Section 3 beyond its contents. The object of the
Act as declared in the Preamble is to remove certain doubts
“as to the extent and operation of the Transfer of Property
Act, 1882, and as to the power of the Crown to impose
limitations and restrictions upon grants and other
transfers of land made by it or under its authority”. Section
2 enacts that the provisions of the Transfer of Property Act
do not apply to Crown grants. Then follows Section 3 with
a positive declaration that “all provisions, restrictions,
conditions and limitations over” shall take effect according
to their tenor. Reading the enactment as a whole, the
scope of Section 3 is that it saves “provisions,
restrictions, conditions and limitations over” which
would be bad under the provisions of the Transfer of
Property Act, such as conditions in restraint of
alienations or enjoyment repugnant to the nature of the
estate, limitations offending the rule against perpetuities
and the like. But no question arises here as to the
validity of any provision, restriction, condition, or
limitation over, contained in Ext. A on the ground that
it is in contravention of any of the provisions of the
Transfer of Property Act, and there is accordingly
nothing on which Section 3 could take effect.
20. It is argued by the learned Attorney General that this
limitation on the scope of the Act applies in terms only to
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Section 2, and that Section 3 goes much further, and in
general and unqualified in its operation. The scope of
Section 3 came up for consideration before the Privy
Council in Jagannath Baksh Singh v. United Provinces
[Jagannath Baksh Singh v. United Provinces, 1946 SCC
OnLine PC 14 : 1946 FLJ 88 : (1945-46) 73 IA 123]. After
setting out that section, Lord Wright observed : (SCC
OnLine PC)
“… These general words cannot be read in their
apparent generality. The whole Act was intended to
settle doubts which had arisen as to the effect of the
Transfer of Property Act, 1882, and must be read with
reference to the general context.…”
In this view, Section 3 must also be construed in the
light of the Preamble, and so construed, it cannot, for
the reasons already given, have any bearing on the
rights of the parties. Moreover, that section only enacts
that “all provisions, restrictions, conditions and
limitations over” shall take effect according to their tenor,
and what is relied on is not any provision, restriction,
condition or limitation over, in Ext. A which according to
its tenor entitles the respondents to hold the lands rent-
free, but the absolute character of the interest conveyed
under Ext. A. Therefore, Section 3 does not in terms
apply .”
(emphasis supplied)

39. A meticulous examination of the impugned judgment would indicate
that the High Court while construing the scope of Section 3 of the GG Act
proceeded on the premise that the said provision operated within a confined
field referring to inconsistencies arising under the TP Act. On that premise,
the High Court concluded that there existed no legal impediment to the
institution and adjudication of eviction proceedings under the DRC Act.
40. At first blush, such reliance may appear to be apposite. However, a
closer examination of the decision in Collector of Bombay (supra) would
demonstrate that the controversy therein arose in an entirely distinct factual
and legal setting, namely, the continued levy of assessment tax upon land in
the context of the nature and character of the interest created under the grant.
The observations made therein must, therefore, be understood in the context
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of the specific issue which fell for determination, and cannot be extended
beyond the contours of that controversy.
41. It is a trite law that a judgment is an authority only for what it actually
decides. The binding element of a judgment lies in its ratio decidendi i.e., the
principle of law which was necessary for the determination of the issue that
directly arose for consideration and was consciously adjudicated upon.
Observations which stray beyond the contours of the issue in question,
however illuminating they may appear, do not partake of the character of
binding precedent.
42. Viewed in this light, the reliance placed by the High Court upon
Collector of Bombay (supra) does not advance the matter, as the present
controversy concerns the legal consequences flowing from a Government
grant and the extent to which the statutory regime governing landlord-tenant
relationships may be invoked in relation thereto.
43. At this juncture, the learned senior counsel for the respondent
contended that, notwithstanding the origin of the lease in a Government
grant, the relationship between the parties is in substance, that of a landlord
and tenant and is therefore governed by the provisions of the DRC Act. It was
urged that by virtue of the proviso to Section 3(b) of the said Act, the premises
in question do not stand excluded from its operation and that the respondent
was consequently entitled to invoke the remedies available thereunder. The
relevant provision reads as under:
“ 3. Act not to apply to certain premises. —Nothing in this Act
shall apply—
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(a) to any premises belonging to the Government;
(b) to any tenancy or other like relationship created by a grant
from the Government in respect of the premises taken on lease,
or requisitioned, by the Government:
Provided that where any premises belonging to
Government have been or are lawfully let by any person by
virtue of an agreement with the Government or otherwise,
then, notwithstanding any judgment, decree or order of any
court or other authority, the provisions of this Act shall
apply to such tenancy.
(c) to any premises, whether residential or not, whose monthly
rent exceeds three thousand and five hundred rupees; or
(d) to any premises constructed on or after the commencement
of the Delhi Rent Control (Amendment) Act, 1988, for a period of
ten years from the date of completion of such construction;”
(emphasis supplied)
44. The interplay between the GG Act and the DRC Act has been considered
by a Full Bench of the Delhi High Court in Pradip Oil Corporation (supra),
wherein it was observed as follows:
“56. The question which must be posed and answered is to what
was the necessity of inserting such a clause in the agreement.
Admittedly, the grant (sic) has been made in terms of the
provisions of Government Grants Act. The provisions of the
Transfer of Property Act do not have any application in
relation to Government Grant Act. Yet again the provisions
of Delhi Rent Control Act would not apply to the
Government land. If by reason of such grant the terms and
conditions of the agreement had to be determined in the
light of the provisions of the Government Grants Act such a
clause was wholly redundant was thereby the grantee could
not have claimed any right as a tenant and even otherwise,
he would not have been benefited under the provisions of
any statute. There cannot be any doubt that a grant under the
Government Grants Act would include licence as has been held
in Hajee S.V.M. Mohamed Jamaludeen Bros. and Co. v.
Government of T.N., (1997) 3 SCC 466. The very fact that by
reason of (sic) the grant a statutory construction comes into
being which will have an overriding effect over any other
statute and as thereby the terms thereof would stand
tentacles of any statutory law such a clause , in our opinion,
was wholly redundant as is stated therein:
“10. The combined effect of the above two
sections of the Grants Act is that terms of any
grant or terms of any transfer of land made by
a Government would stand insulated, from the
tentacles of any statutory law. Section 3
places the terms of such grant beyond the
reach of any restrictive provision contained in
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any enacted law or even the equitable
principles of justice, equity and good
conscience abumbrated by common law is
such principles are inconsistent with such
terms. The two provisions are so framed as to
confer unfettered discretion on the Government to
enforce any condition or limitation or restriction
in all types of grants made by the Government to
any person. In other words, the rights,
privileges and obligations of any grantee of the
Government would be completely regulated by
the terms of the grant, even if such terms are
inconsistent with the provisions of any other
law.”
57. Scope and object of the provisions of the Government Grants
Act has been stated by the Apex Court in The State of U.P. v.
Zahoor Ahmad, AIR 1973 SC 2520, in the following terms:
“15. In the present case the High Court correctly
found on the facts that the respondent after the
determination of the lease held over. Even if the
Government Grants Act applied Section 116 of the
Transfer of Property Act was not rendered
inapplicable. The effect of Section 2 of the
Government Grants Act is that in the
construction of an instrument governed by the
Government Grants Act the Court shall
construe such grants irrespective of the
provisions of the Transfer of Property Act. It
does not mean that all the provisions of the
Transfer of Property Act are inapplicable. To
illustrate, in the case of grant under the
Government Grants Act Section 14 of the Transfer
of Property Act will not apply because Section 14
which provides what is known as the rule against
perpetuity will not apply by reason of the
provisions in the Government Grants Act. The
grant shall be construed to take effect as if the
Transfer of Property Act does not apply.
16. Section 3 of the Government Grants Act
declares the unfettered discretion of the
Government to impose such conditions and
limitations as it thinks fit, no matter what the
general law of the land be. The meaning of
Sections 2 and 3 of the Government Grants
Act is that the scope of that Act is not limited
to affecting the provisions of the Transfer of
Property Act only. The Government has
unfettered discretion to impose any
conditions, limitations, or restrictions in its
grants, and the right, privileges and
obligations of the grantee would be regulated
according to the terms of the grant,
notwithstanding any provisions of any
statutory or common law. ””
(emphasis supplied)
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45. The aforesaid judgment of the Full Bench of the High Court was upheld
by this Court in Pradeep Oil Corporation vs. Municipal Corporation of
12
Delhi and Another . In view of the aforesaid exposition of law, it becomes
evident that a grant made under the GG Act constitutes a legal relationship
whose incidents and enforceability are governed exclusively by the tenor of
the grant and the statutory protection inhering therein. The legal character of
such a grant does not derive its content from the ordinary incidents of a
landlord-tenant relationship under the general law, but instead flows from the
sovereign grant and the conditions embodied therein. The statutory
framework ensures that the terms of the grant stand insulated from the
operation of inconsistent provisions contained in other enactments, and the
rights and obligations of the grantee fall to be determined strictly with
reference to the grant itself and not dehors it. The DRC Act being a legislation
intended to regulate conventional tenancies arising under the general law,
does not extend to nor govern a holding originating in and regulated by a
Government grant. Consequently, the reliance placed by the learned senior
counsel for the respondent upon the Section 3 of the DRC Act to contend that
the said enactment governs the present holding, is of no avail.
46. Now that it is decided by us that the DRC Act is not applicable to the
facts of the present case, the only question that remains is the scope and
applicability of Section 3 of the GG Act with respect to the land in question;
whether by narrowing and restricting the use of Section 3 of the GG Act on
the mere subject of TP Act or taking a wider approach giving unfettered

12
(2011) 5 SCC 270
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discretion to the tone and tenor of the grant. The impugned judgment of the
High Court places reliance on the decision of Collector of Bombay (supra)
and approaches Section 3 of the GG Act through a narrow perspective. In the
earlier paragraphs, we have held that the issue which arises in the present
case stands on a materially different footing, and the principles enunciated in
Collector of Bombay cannot be read as determinative of the present
(supra)
question.
47. Once the decision in Collector of Bombay (supra) is understood in its
proper perspective, it becomes necessary to consider the subsequent line of
decisions of this Court which have directly examined the scope and effect of
the Government Grants Act, and have elucidated the extent to which the
rights and obligations arising under a Government grant fall to be governed
by the tenor of the grant itself.
48. In Azim Ahmad Kazmi (supra) , a Division Bench of this Court was
dealing with issue of whether the State Government can dispossess the
lessees in accordance with the GG Act without resorting to other procedure
established by any other law. The matter also dealt with the lease deed
executed between the parties. The relevant observations in this regard are
reproduced hereinbelow:
“ 17. The questions which require consideration are: (i) whether
the Order passed by the State Government on 15-12-2000 for
cancellation of lease and resumption of possession is legally
valid; and (ii) whether the State Government can dispossess
the lessees in accordance with the Government Grants Act,
1895 without resorting to other procedure established by
any other law.
*
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27. For taking possession, the State Government is required to
follow the law, if any, prescribed. In the absence of any specific
law, the State Government may take possession by filing a suit.
28. Under the provisions of the Land Acquisition Act, 1894, if
the State Government decides to acquire the property in
accordance with the provisions of the said Act, no separate
proceedings have to be taken for getting possession of the land.
It may even invoke the urgency provisions contained in Section
17 of the said Act and the Collector may take possession of the
land immediately after the publication of the notice under
Section 9. In such a case, the person in possession of the land
acquired would be dispossessed forthwith.
29. However, if the Government proceeds under the terms
of the Government Grants Act, 1895 then what procedure is
to be followed. Section 3 of the Government Grants Act,
1895, stipulates that the lease made by or on behalf of the
Government is to take effect according to their tenor—All
provisions, restrictions, conditions and limitations
contained in any such creation, conferment or grant
referred to in Section 2, shall be valid and take effect
according to their tenor; any decree or direction of a court
of law or any rule of law, statute or enactments of the
legislature, to the contrary.
30. In State of U.P. v. Zahoor Ahmad [(1973) 2 SCC 547 : AIR
1973 SC 2520] this Court held that Section 3 of the Act
declares the unfettered discretion of the Government to
impose such conditions and limitations as it thinks fit, no
matter what the general law of the land be. From Clause 3(C)
of the deed, it is clear that the State of U.P. while granting
lease made it clear that if the demised premises are at any
time required by the lessor for his or for any public purpose,
he shall have the right to give one month's clear notice to
the lessee to remove any building standing at the time on
the demised property and within two months of the receipt
of the notice to take possession thereof on the expiry of that
period subject to the condition that if the lessor is willing to
purchase the property on the demised premises, the lessees
shall be paid for such building such amount as may be
determined by the Secretary to the Government of U.P. in
the Nagar Awas Department.
31. In the case in hand, the District Magistrate, Allahabad High
Court issued a notice on 11-1-2001 to the appellants intimating
that the State Government had passed an Order on 15-12-2000
cancelling the lease deed and resuming possession of the
disputed property as the same was required for public purpose.
The appellants sent an application but instead of filing
objections before the State Government represented before the
Chief Minister of U.P. on 31-1-2001 praying for revocation of
Order dated 15-12-2000. Objection was filed before the District
Magistrate, Allahabad who after consideration of the objection
rejected the same by order dated 24-8-2001 enclosing therein a
cheque for rupees ten lakhs towards compensation for the
building standing over the plot. The appellants refused to accept
the cheques. The respondents thereafter dispossessed the
appellants from the part of the land on 1-9-2001.
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32. Under Clause 3(C) of the lease deed, the respondent State
was permitted resumption of the land which was required
for its own use or for public purpose and after giving one
month's clear notice in writing is entitled to remove any
building standing at the time on the demised premises and
within two months of the receipt of the notice to take
possession thereof subject to the condition that if the lessor
is willing to purchase the building on the demised premises
it is required to pay the lessees the amount for such building
as may be determined by the Secretary to the Government
of U.P. in the Nagar Awas Department. In the case in hand
such procedure was followed. Therefore, we are of the view
that there is no other procedure or law required to be
followed, as a special procedure for resumption of land has
been laid down under the lease deed.”
(emphasis supplied)
49. In Dinshaw Shapoorji Anklesari (supra) , a three-Judge Bench of this
Court had observed as follows:
“ 36. The Government Grants Act, 1895 as would be evident from
the Preamble and Section 2 therein, seeks to clarify the doubts
with regard to the extended operation of the Transfer of Property
Act. Section 2 of the Act reads as follows:
“2. Transfer of Property Act, 1882, not to apply to
Government grants.—Nothing in the Transfer of
Property Act, 1882, contained shall apply or be
deemed ever to have applied to any grant or other
transfer of land or of any interest therein heretofore
made or hereafter to be made by or on behalf of the
Government to, or in favour of any person
whomsoever; but every such grant and transfer shall
be construed and take effect as if the said Act had
not been passed.”
37. Not only the Transfer of Property Act is made
inapplicable to the government grants but Section 3 of the
Government Grants Act, 1895 further makes it clear that
the Government grants is to take effect according to their
tenor, notwithstanding any rule of law, statute or enactment
of the legislature to the contrary. Section 3 lays down as
follows:
“3. Government grants to take effect according to
their tenor.—All provisions, restrictions, conditions
and limitations over contained in any such grant or
transfer as aforesaid shall be valid and take effect
according to their tenor, any rule of law, statute or
enactment of the legislature to the contrary
notwithstanding.”
38. This Court in Azim Ahmad Kazmi v. State of U.P. [(2012)
7 SCC 278 : (2012) 4 SCC (Civ) 214] , has held that the
government grant of lease of land is governed entirely by the
terms of the grant. The Court took note of Section 3 of the
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Government Grants Act, 1895 which is to take effect
according to its tenor notwithstanding any other law to the
contrary.
39. In Chief Executive Officer v. Surendra Kumar Vakil [(1999)
3 SCC 555] , this Court has held that the grantee under the old
grant terms is a mere occupier/licensee having no title over the
land so as to entitle him to transfer the land to another person
without prior consent of the authorities concerned. The Court
further held that the regulations as well as the General Land
Register which are old documents maintained in the regular
course and coming from proper custody clearly indicate that the
land was held on old grant basis and this was sufficient for the
Government to resume the land in accordance with law.
40. In Union of India v. Kamla Verma [(2010) 13 SCC 511 :
(2010) 4 SCC (Civ) 802] , this Court has held that it is always
open to the Union of India to resume the land held on old
grant terms and that the Union of India cannot be prevented
from resuming the said land.
41. Therefore, it is clear that the Government has unfettered
discretion and under Section 3 impose any condition,
limitation or restriction in its grants and the rights,
privileges and obligations of the grantee would be regulated
only according to the terms of the grant itself though they
may be inconsistent with the provisions of any statute or
common law.
42. The grants of lands situated in cantonment area under
Old Grants form a self-contained provision prescribing the
procedure as to the grant and resumption of the land and
hence recourse to the civil procedure code or the Specific
Relief Act will not be applicable.
*
51. The land of the suit premises belongs to the Union of India,
the appellants herein. Therefore, they cannot be held to be the
tenants of the suit premises comprising of an area of 0.90 acres
together with structure consisting of main bungalow, servant
quarters and garage. The respondent-plaintiffs have only the
right with regard to the structure built on the suit premises. The
appellant Union of India have a right for resumption of the suit
premises, as is evident from the evidence on record as discussed
above. This issue was not properly appreciated by the trial court,
the appellate court and the High Court which also failed to notice
the appellants' right under Sections 2 and 3 of the Government
Grants Act, 1895.
(emphasis supplied)

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13
50. In Tata Steel Limited vs. State of Jharkhand and Others , a
Division Bench of this Court had emphasised on the proposition of no bar on
the Government when it comes to usage of any land vested in it or any interest
accruing. The material observations can be read as follows:
“ 16. It is almost becoming a forgotten proposition of law that
the Government is not bound by the Transfer of Property
Act, 1882, when it seeks to transfer any land vested in it or
any interest therein. It may not be possible to trace out the
entire history of the vesting of lands in the Government and
the legal rights and obligations flowing from such vesting as
it is a huge topic by itself. It is sufficient to state that Articles
294 to 296 of the Constitution of India provide for vesting of
property (which includes land) and assets in the Union of India
and various States. Article 294 deals with the development of the
property and assets which vested (prior to the coming into force
of the Constitution) in His Majesty for the purposes of the
Government of the Dominion of India and for the purposes of the
Government of each Governor's Province. Article 295 provides
for the succession to the property and assets which vested prior
to the commencement of the Constitution in any Indian State.
Article 296 deals with accrual of properties by escheat or lapse
or as bona vacantia. The Imperial Legislature recognised the
need of a law to regulate the method and manner by which
the Governments could transfer or create any interest in the
land vested in the Government. Section 2 of the
Government Grants Act declares that “nothing contained in
the Transfer of Property Act, 1882 applies to any grant or
other transfer of land or any interest therein” made by or on
behalf of the Government either prior to or after the
commencement of the said Act. In other words, when the
Government transfers land or any interest therein to any
person, such a transfer is not governed by the Transfer of
Property Act, 1882. The rights and obligations flowing from
the transfer of either a piece of land or an interest therein
by the Government cannot be determined on the basis of the
rights and obligations specified under the Transfer of
Property Act, 1882. They are to be ascertained only from the
tenor of the document made by the Government evidencing
such a transfer. This position is clearly recognised by this Court
in Hajee S.V.M. Mohd. Jamaludeen Bros. & Co. v. State of T.N.
[Hajee S.V.M. Mohd. Jamaludeen Bros. & Co. v. State of T.N.,
(1997) 3 SCC 466] as follows: (SCC p. 470, para 10)
“10. The combined effect of the above two
sections of the Grants Act is that terms of any
grant or terms of any transfer of land made by a
Government would stand insulated from the
tentacles of any statutory law. Section 3 places
the terms of such grant beyond the reach of any
restrictive provision contained in any enacted
law or even the equitable principles of justice,

13
(2015) 15 SCC 55
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equity and good conscience adumbrated by
common law if such principles are inconsistent
with such terms. The two provisions are so
framed as to confer unfettered discretion on the
Government to enforce any condition or
limitation or restriction in all types of grants
made by the Government to any person. In other
words, the rights, privileges and obligations of
any grantee of the Government would be
completely regulated by the terms of the grant,
even if such terms are inconsistent with the
provisions of any other law. ””
(emphasis supplied)

51. Upon an anxious consideration of the statutory scheme of the GG Act
and the authoritative pronouncements of this Court, the legal position that
emerges is no longer res integra . Section 3 of the GG Act embodies a clear
legislative mandate that every Government grant shall take effect according
to its tenor, notwithstanding any rule of law, statute or enactment to the
contrary. The expression “any rule of law, statute or enactment” in the
provision is of the widest amplitude and admits of no restrictive construction.
52. The approach which seeks to confine Section 3 merely to the exclusion
of the TP Act, by reading it in a narrow or truncated manner, does not accord
with either the plain language of the provision or the consistent expositions
of this Court. While Section 2 of the GG Act expressly excludes the application
of the TP Act, Section 3 travels further and grants primacy to the conditions,
limitations and stipulations contained in the Government grant itself, even if
they run contrary to any general law.
53. Section 3 of the GG Act confers upon Government grants a special
statutory immunity and elevates the stipulations contained therein to a
position of supremacy. The provision is not to be read as a mere ancillary
clause to Section 2, nor as a limited exclusion confined to the TP Act. Rather,
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it constitutes an overriding declaration that the grant shall prevail in
accordance with its tenor, even if such tenor is inconsistent with general
statutory law.
54. We are, therefore, of the considered view that the correct interpretative
approach to Section 3 of the GG Act, is a wider one. The section does not
admit a narrow construction that dilutes the supremacy accorded to the terms
of the grant. At the same time, its application must be conditioned upon a
faithful adherence to the actual stipulations contained in the grant; the
Government cannot travel beyond the four corners of the instrument. Within
those bounds, however, the tenor of the grant prevails, unfettered by
inconsistent statutory or common law principles.
55. In view of our categorical finding that the DRC Act has no manner of
application to the present lis , the very foundation upon which the learned
ARC assumed jurisdiction to entertain the eviction suit by the respondent
stands eroded. The eviction proceedings, having been instituted, entertained
and decided under a statutory regime alien to the legal character of the
relationship between the parties, are thus vitiated at their inception. The High
Court, in affirming the said course on the premise that the respondent would
otherwise be left without a remedy, with respect, misdirected itself. The
existence or absence of a remedy cannot determine jurisdiction. Equally, in
the absence of any express stipulation in the lease deed providing for eviction
on account of non-payment of rent, no such right can be inferred. The grant
must operate according to its tenor, and its silence cannot be converted into
Civil Appeal @ S.L.P. (Civil) No. 5629 of 2022 Page 24 of 25

a ground of forfeiture. The respondent’s right, therefore, is confined to
recovery of rent in accordance with law.
D. CONCLUSION
56. In view of the above, we reach to the following conclusion:
a) The Appeal is allowed.
b) The impugned judgment dated 08.01.2020 passed by the High Court
in CM(M) No. 293 of 2008 is set aside .
57. We make it clear that this judgment shall not preclude the respondent
from pursuing appropriate civil remedies in accordance with law.

………………………………………J.
(SANJAY KAROL)


………………………………………J.
(PRASHANT KUMAR MISHRA)

NEW DELHI;
APRIL 22, 2026.



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