Multi-state Cooperative Societies under government control qualify as Public Sector Undertakings excluded from Rent Act protection.

The Applicant (landlord) entered into a Leave and License agreement in 2005 with the Respondent (NCCF), a Multi-State Co-operative Society, for premises in Mumbai at a monthly rent of Rs. 75,000.

After the agreement expired in 2007, the Applicant issued termination notices and filed an eviction suit under Section 41 of the Presidency Small Causes Courts Act.

The Trial Court decreed the suit in favor of the Applicant on March 30, 2023.

However, the Appellate Bench of the Court of Small Causes set aside the decree on March 13, 2026, holding that the Respondent was protected under the Maharashtra Rent Control Act, 1999 ("MRC Act").

The Applicant challenged this reversal via the present Civil Revision Application.

1. Whether the protection under Section 3(1)(b) of the Maharashtra Rent Control Act, 1999 is available to the premises leased to the Respondent (NCCF), or if the Respondent qualifies as a "Public Sector Undertaking" (PSU) excluded from such protection.

2. Whether a Public Sector Undertaking must be established specifically by or under a Central or State Act to be excluded from the MRC Act's protection.

The Court primarily applied Section 3(1)(b) of the MRC Act, which excludes "Public Sector Undertakings" (PSUs) and certain corporations from rent protection.

It relied heavily on the precedent of Leelabai Gajanan Pansare v. Oriental Insurance Company Limited, which established that the exclusion is based on "Financial Capability"—entities capable of paying market rent should not enjoy protection.

The Court also referenced Ramana Dayaram Shetty v. International Airport Authority of India and Ajay Hasia v. Khalid Mujib Sehravaradi regarding the "instrumentality of State" test under Article 12.

Section 35 of the Multi-State Co-operative Societies Act, 2002 was applied to demonstrate government control over share capital.

The Court reasoned that "Public Sector Undertaking" is not a term of art and must be interpreted based on the entity's public character and financial capability rather than its specific legal form.

Applying the "economic package" logic from Malpe Vishwanath Acharya, the Court found that Section 3(1)(b) intends to allow landlords to charge market rates to cash-rich entities.

Factually, the Court observed that the Central Government holds approximately 85% of NCCF's share capital (directly and indirectly), exercises deep pervasive control through the appointment of the Managing Director and Board nominees, and provides massive budgetary support (over Rs. 34,000 crore for price stabilization schemes).

The Court rejected the Respondent's argument that its cooperative structure precluded it from being a PSU, noting that NCCF functions as an implementing agency for Central Government policies and is a "cash-rich body".

Thus, it falls under the "Financial Capability" test for exclusion.

The Court set aside the Appellate Court’s judgment dated March 13, 2026, and restored the Trial Court's eviction decree dated March 30, 2023. The Civil Revision Application was allowed; however, the Court granted a 12-week stay on execution proceedings.