Exploitation of Licensees by Tenants under Owner Landlord in Mumbai

1. The two decisions of the Supreme Court of India, viz; Atma Ram Pvt. Properties Vs Federal Motors [P] Ltd[1] and The State of Maharashtra &Anr. ….Versus M/s. Super Max International Pvt. Ltd. &Ors,[2] are being misinterpreted and exploited by the Tenants under the Owner-Landlord against Licensee-sub tenants under The Bombay Rents, Hotel And Lodging House Rates Control Act, 1947.[referred to hereinafter as  Bombay Rent Act,1947,] followed by the Maharashtra Rent Control Act,1999.

2.  The Bombay Rent Act, 1947, amended with effect from 1.2.1973 conferred the status of tenant on the licensee of the Tenant under the Owner-Landlord.[Section 15-A read with Section 5[11][b][b] of the Bombay Rent Act,1947 and Section 7[15] of the Maharashtra Rent Control Act,1999].The idea was to protect the licensees who were being exploited by the unscrupulous Tenants under Owner-Landlord. The said amendment also conferred the fictional status of “Landlord” on the tenants who had created the licenses before 1.2.1973.Such tenants initiated litigation under the Rent Act for eviction of tenants-erstwhile licensees, taking the stand that they are Landlord. While so, the Bombay Rent Act,1947,was repealed and the Maharashtra Rent Control Act,1999, was passed and it came into effect from 31.3.2000.In the said Act also, the fictional status of  the Tenant who created license before 1.2.1973 as “Landlord” continued.[ Please refer to Section 5[3] of the Bombay Rent Act,1947, and Section 7[3] of the Maharashtra Rent Control Act,1999];

3.  The fictional Landlords [who are tenants-lessees under owner/landlord of the property] under the said two Acts are ingenuously exploiting the two well-meaning decisions of the Supreme Court of India mentioned above-Atma Ram Properties case and Super Max case, demanding compensation from licensees-tenants during the pendency of Appeals against eviction decree obtained by them from   the trial court under the Rent Act.

4. In Atmaram Properties, the Supreme Court of India directed that Compensation amount proportional to market rent should be deposited in Court during pendency of Appeal after decree of eviction in favour of Landlord-Owner of the tenanted property.

5. The following questions were considered in Atmaram Properties, VIZ;

“(i) In respect of premises enjoying the protection of rent control legislation, when does the tenancy terminate; and

(ii) Upto what point of time the tenant is liable to pay rent at the contractual rate and when does he become liable to the landlord the compensation for use and occupation of the tenancy premises unbound by contractual rate of rent?”

6.  It was categorically held that the Owner-Landlord is entitled to get Compensation at market rent for occupation of tenanted property after first decree of eviction. The amount of Compensation that may be fixed by the Court was to be deposited in Court or Nationalized Bank during the pendency of the Appeal,

7. The State of Maharashtra &Anr. ….Versus M/s. Super Max International Pvt. Ltd. &Ors,[3]where the decision in Atma Ram Properties was approved, was again a Rent Control litigation instituted by the Owner-Landlord against the Tenant holding over after decree of eviction during pendency of Revision in the High Court of Bombay,

8. It is now well settled that the Owner-Landlord is entitled to get Compensation at the rate of market rent to be fixed by the Court during the pendency of Appeal/Revision/Civil Appeal against the order of eviction.

9.  These decisions of the Supreme Court of India and the principles enunciated therein are intended to compensate the Owner-Landlord whose recovery of possession of his property is postponed till final decision of the Appellate/ Revisional decision by the Superior Court where the decree of eviction is challenged.

10.  The Supreme Court of India certainly did not intend to benefit the Tenants under the owner-landlord who creates illegal licenses-sub tenancies behind the back of the owner-landlords. However, in the Small Causes Court of Mumbai, such Tenants who happen to create licenses before 1.2.1973 and who are conferred with fictional status of Landlord by the Bombay Rent Act, 1947, and Maharashtra Rent Control Act,1999,are allowed to get Compensation amount on the basis of Atma Ram Properties case and Super Max. This has resulted in a situation whereby the licensees-tenants who were sought to be protected from exploitation by the Maharashtra Legislature through Act XVII of 1973, are now being judicially exploited. Even the High Court of Bombay is not correcting this mistake.

11.  It is pertinent to notice that the Bombay Rent Act,1947, and its provisions relating to standard rent was found to be unfair, unjust and arbitrary and, therefore, unconstitutional by the Supreme Court of India in Malpe Viswanath[4]

12.  Supreme Court of India have observed in paragraph 16 of Super Max decision, that it will be necessary to consider the Constitutional Validity of the provisions of the Maharashtra Rent Control Act,1999, at the appropriate time.

13.  Supreme Court of India in, M.M.Quasim Vs Manohar Lal Sharma &ors[5]- paragraph 14-held as follows, viz;

“----------A lessor, therefore, included in the expansive definition of landlord, cannot seek to evict the tenant, on the ground that he wants possession of the premises for his own occupation. He cannot claim such a right against the real owner and as a natural corollary he cannot seek to evict the tenant on the ground that he wants the possession of the premises for his own occupation-----“

14.  It is, therefore, necessary to have a re-look at the two decisions of the Supreme Court of India, Atma Ram Pvt Properties Vs  Federal Motors[P] Ltd[6] and The State of Maharashtra &Anr. ….Versus M/s. Super Max International Pvt. Ltd. &Ors[7], and to clarify and make it abundantly clear that the principles enunciated therein are only with respect to the Owner-Landlord of the property that is tenanted out by them. This alone will stop undue exploitation of the poor licensees by the unscrupulous tenants under Owner/landlord through litigative process under the Maharashtra State Rent Act.

Philip. P. J, Advocate, High Court of Kerala,

Ernakulam, Chamber No 524, Golden

Jubilee Complex, Advocate’s

Association, Kerala - 682031