Introduction:

The case of Sreekumar M.R and Ors. v Travancore Devaswom Board and Ors. (2026 LiveLaw (Ker) 212) came before the Kerala High Court, raising a nuanced and significant question concerning the interplay between land acquisition laws and landlord-tenant relationships. The dispute revolved around whether tenants could avoid paying rent after the issuance of a notification under Section 3-D of the National Highways Act, 1956, which declares acquisition of land for national highway purposes.

The petitioners, tenants occupying a shopping complex owned by the Travancore Devaswom Board, approached the Court seeking a declaration that they were not liable to pay rent or arrears once the property stood acquired by the Central Government through a Section 3-D notification issued in June 2020.

The matter was adjudicated by a Division Bench comprising Justice Raja Vijayaraghavan V and Justice K.V. Jayakumar. The Court was required to examine the statutory scheme governing acquisition under the National Highways Act and reconcile it with established principles of tenancy under the Transfer of Property Act, 1882.

The case highlighted a critical legal distinction between vesting of title and actual possession, and its implications on contractual obligations such as payment of rent.

Arguments by the Petitioners (Tenants):

The petitioners argued that the issuance of the Section 3-D notification resulted in the absolute vesting of the acquired land in the Central Government. They relied on Section 3-D(2) of the National Highways Act, which explicitly provides that upon publication of the notification, the land shall vest absolutely in the Central Government free from all encumbrances.

Based on this statutory provision, the petitioners contended that the Travancore Devaswom Board ceased to be the owner of the property from the date of notification. Consequently, it lost the legal authority to demand or collect rent from the tenants.

The petitioners further argued that their obligation to pay rent was intrinsically linked to the ownership of the property. Once ownership was transferred to the Central Government, the landlord-tenant relationship between them and the Devaswom Board stood extinguished.

They also emphasized that the acquisition process fundamentally altered the legal status of the property. According to them, continuing to demand rent despite the transfer of ownership amounted to unjust enrichment on the part of the landlord.

Additionally, the petitioners sought to distinguish between their continued occupation of the premises and their liability to pay rent. They argued that their possession after the notification was not under the original tenancy arrangement but was rather incidental to the acquisition process.

The petitioners also contended that the delay in taking possession by the authorities should not prejudice them. They argued that they could not be held responsible for administrative delays in completing the acquisition process, including the determination and disbursement of compensation.

In essence, the petitioners urged the Court to recognize the legal effect of the Section 3-D notification and to hold that their liability to pay rent ceased from the date of vesting of the property in the Central Government.

Arguments by the Respondents (Travancore Devaswom Board and Others):

The respondents, including the Travancore Devaswom Board, strongly opposed the petition and maintained that the tenants were liable to pay rent for the entire period during which they continued to occupy the premises.

The respondents argued that while the Section 3-D notification results in vesting of title in the Central Government, it does not automatically result in transfer of possession. They relied on the statutory framework of the National Highways Act, particularly Section 3-E, which deals with the taking of possession after issuance of notice and completion of compensation proceedings.

According to the respondents, there exists a clear distinction between vesting of ownership and actual delivery of possession. Until possession is formally taken over by the acquiring authority, the existing rights and obligations under the tenancy continue to operate.

The respondents pointed out that the petitioners remained in possession of the premises until November 2023, long after the issuance of the Section 3-D notification in June 2020. During this period, they continued to use and enjoy the property for their commercial purposes.

It was argued that allowing the tenants to occupy the premises without paying rent would result in unjust enrichment at the expense of the landlord. The respondents emphasized that the tenants cannot be permitted to take advantage of the acquisition process to avoid their contractual obligations.

The respondents also relied on general principles of lease under the Transfer of Property Act, 1882, which impose an obligation on the tenant to pay rent so long as they remain in possession of the leased property.

They further contended that the acquisition process under the National Highways Act contemplates multiple stages, including notification, determination of compensation, and taking of possession. Until these stages are completed, the existing legal relationships are not entirely extinguished.

In conclusion, the respondents urged the Court to dismiss the petition and uphold the tenants’ liability to pay rent for the period of their continued occupation.

Court’s Judgment:

The Kerala High Court undertook a detailed examination of the statutory provisions under Sections 3-A to 3-F of the National Highways Act, 1956, along with the principles governing leases under the Transfer of Property Act, 1882.

At the outset, the Court acknowledged that Section 3-D(2) provides for the absolute vesting of the acquired land in the Central Government upon issuance of the notification. This means that, in terms of title, the ownership of the property stands transferred from the original owner to the Government.

However, the Court emphasized that vesting of title is not synonymous with taking possession. It noted that Section 3-E of the Act specifically contemplates a subsequent stage where possession is taken after issuance of notice and determination of compensation.

The Court observed that the statutory scheme clearly envisages a gap between the vesting of ownership and the actual surrender or delivery of possession. During this interim period, the property may continue to be occupied by existing tenants or occupants.

In light of this distinction, the Court held that the liability of the tenant to pay rent does not cease merely upon issuance of the Section 3-D notification. Instead, the obligation continues so long as the tenant remains in possession of the premises.

The Court reasoned that the essence of a lease lies in the right to enjoy the property in exchange for payment of rent. As long as the tenant continues to enjoy the property, the corresponding obligation to pay rent subsists.

Rejecting the petitioners’ argument, the Court held that the transfer of ownership to the Central Government does not absolve the tenant of their contractual obligations towards the landlord for the period of occupation.

In a significant observation, the Court stated that a tenant cannot “wriggle out” of the liability to pay rent by relying on the technical transfer of ownership, while continuing to occupy and benefit from the property.

The Court also invoked the principle against unjust enrichment, holding that allowing the tenants to avoid rent payments would result in them benefiting at the expense of the landlord without any legal justification.

Accordingly, the Court concluded that tenants who continue to occupy the premises after the issuance of a Section 3-D notification are bound to pay rent or arrears of rent until they surrender possession pursuant to notice under Section 3-E.

The writ petition was therefore dismissed.