The Supreme Court in this case ruled that respondents including, Deputy Commissioner, Ambala (Haryana) and the State of Haryana, were using the leased land for Public Water Supply, which is a business, contrary to the judgment of the Punjab and Haryana High Court.

Panchkula (ABC Live India): Public Water Supply : The Supreme Court of India decided a case titled Rajinder Kumar Bansal & Ors Vs Municipal Committee & Ors  on August 17, 2021, wherein the apex court of India decided this appeal, wherein it has ruled on whether club activities is a business activity in accordance with Section 2(f) of the Haryana Urban (Control of Rent and Eviction) Act, 1973.

Brief facts leading to the present appeal are one Telu Ram was the original owner of the property. Bhagwan Dass held occupancy rights in terms of the Punjab Tenancy Act, 1887. Bhagwan Dass earlier executed a gift deed in favour of Louis club on 16.01.1909 for the purpose of running a club only after construction of a building thereon in respect of land bearing Khasra No. 770 comprising 15 bighas and 12 biswas and Khasra No. 771 comprising of 0 bighas 8 and biswas i.e. total admeasuring 16 bighas. Bhagwan Dass had doubt about the gift since he had only occupancy rights and therefore, a lease deed was executed, after cancelling the gift deed, in favour of the Respondent No.2 herein on 03.03.1909. The rent was Rs. 10/- per year besides land revenue. The tenant was given authority to use land for the purpose of club. It further provided that if there is any construction, the landlord will pay market price of it. The lease deed in question reads as thus:
“I, Bhagwan Dass S/o Lala Bihari Lal Mahajan is resident of City Ambala. That land in Khewat no. 10/12, Khasra No. 542, 543 measuring 15 Bigha 16 Biswa situated in Patti Acharjan, City Ambala, executant has occupancy rights U/s 6 as per tenancy law Punjab. That the executant with his own free will without any pressure gave possession for Entertainment vide Gift dated 16-01-1909 in favour of Louis Club, Ambala City and possession was also given to the Club. The gift deed was also got registered. As gift deed as per condition on line no. 12, 13 of gift deed is not legally valid, so said Gift deed was cancelled by the present deed. Occupancy rights are given to Louis Club on perpetual leases. All the rights are given to the club for its use. Club is in possession. Club is authorized to use the land for the purpose of Club.   For   the   occupancy   rights of executant   the   rent   has   been fixed at Rs.10/- per year which will be paid yearly. Land revenue and amount to be paid to the owner of the land will be paid by Club.   Club   is   authorized   to   get   the   said   amount   remitted   from Govt.  Or   owner   or they may   pay them.  The condition is that   if Club cease to exist and land is not used then the land will come back to the executant. If there is any construction the executant will   pay   the   market   price.   If   executant   does   not   pay   the   said price the Club is authorized to remove his material or to sell the same   to   somebody else.  The   executant   will   have   no   objection. The owners have given consent separately for the above. That perpetual lease deed has been scribed on 03-03-1909.”

It is an admitted fact that a pavilion was constructed, which was used for the purpose of club only. The Respondent No. 2 herein created a sub-lease in favour of Ladies Tandon Club. Later, one portion of the property was transferred to the Municipal Committee. The Municipal Committee changed the use of the property by sinking a tubewell for the use of residents of the town. Therefore, the appellants filed a petition for ejectment inter alia on the ground of non-payment of rent;(2) subletting of the premises without the consent of the landlord; and (3) that the property had been abandoned by the first respondent which had ceased to exist and the premises were now being used for the offices of different departments that is the property has been put to unauthorized use.

The joint written statement was filed on behalf of the Respondent Nos.1,   2   and   3   i.e.,   Louis   Club,   Deputy   Commissioner,   State   of   Haryana inter alia pleading that the premises had never been used for business and commercial purposes. Therefore, it is not covered by the rent control laws. The State claimed ownership of the property. It was
further pleaded that Ladies Tandon Club has been occupying a portion of the property as a licensee since 1936 which is an unregistered society. Reference was made to the gift deed in which mutation was sanctioned and possession delivered to Louis Club.

An order of ejectment was passed by the Rent Controller on 18.2.1988. An   appeal   against   the   said   judgment   was   preferred   by   Louis   Club through the Deputy Commissioner, State of Haryana. Such appeal was dismissed on 19.03.1994. Aggrieved against the order passed by the Appellate   Authority,   a   Revision   Petition   was   filed   by   the   Municipal Committee under Section 115 of the Code of Civil Procedure, though it should   have   been   under   Section   15   (6)   of   the   Act.   The   High   Court allowed the revision petition.

The Supreme Court in this case ruled that respondents including, Deputy Commissioner, Ambala (Haryana) and the State of Haryana, were using the leased land for business purposes contrary to the judgment of the Punjab and Haryana High Court.

The judgment in para 14 with aim to nullified the impugned judgment of the Punjab and Haryana High Court passed by Justice K. Kannan says that, “The High Court has also relied upon Supreme Court judgments reported as Narain Swadeshi Mills v. Commissioner of Excess Profits Tax, Senairam Doongarmall v. Commissioner of Income Tax, Manipur Administration v. Nila Chandra Singh10, as well as the judgment of Punjab   &   Haryana   High   Court   reported   as  Hazara   Singh.   The judgment   reported   in Senairam   Doongarmall arises   out   of   the Income-Tax Act, 1922 to determine the business income. The judgment reported as Narain Swadeshi Mills is to determine the existence of business under the Excess Profits Tax Act, 1940. The judgment reported as Manipur Administration pertains to a control order issued under the Essential Commodities Act, 1955. Each of the statute is enacted for a particular objective in mind. The definition in one statute cannot be used for interpreting the same word in another statute. The judgment of   the High Court   in Hazara Singh is renting   of   an agricultural   land though within the municipal area. All these judgments are clearly not applicable to the present case where the rented land was let out to a club   with   an   implied   permission   to   construct.   The   Tenant   has constructed   a   pavilion   in   the   year   1911   and   the   said   pavilion   was mortgaged to the District Board. The District Boards were constituted as part of local self-Government under the Punjab District Boards Act, 1883. The said Act was repealed when the Punjab Municipal Act, 1911 was enacted. The only question requires to be examined was whether such sports activity can be said to be either business or trade. The Full Bench of the High Court was erroneous in holding that the land let out to the club used for pavilion is not for the purpose of business.

The Supreme Court Referred Following Case law in this Case;

Haji Ismail Valid Mohmad Vs. Sports Club in the name of Union Sports Club

Hazara Singh and others Vs. Dalip Singh and others

The   Model   Town   Welfare   Council,   Ludhiana Vs Bhupinder Pal Singh

P.K. Kesayan Nair Vs C.K. Babu Naidu

P.Vairamani Ammal Vs K.N.K. Rm. Kannappa

Arjan Singh Chopra Vs Sewa Sadan Social Welfare Centre

Narain Swadeshi Mills v. Commissioner of Excess Profits Tax

Senairam Doongarmall v. Commissioner of Income Tax

Manipur Administration v. Nila Chandra Singh

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