Tenant’s rights in redevelopment cannot eclipse landlord’s rights of ownership: Bombay High Court

bombay high court

Bombay High Court: In a matter involving issue of law relating to Section 499 of the Mumbai Municipal Corporation Act, 1888 (‘MMC Act’), the Division Bench of G.S. Patel and Kamal Khata, JJ. refused to allow the tenants to redevelop the property in question while the landlord was willing to do the same and came up with a detailed proposal.

The prayers in the instant matter were directed to a Structural Assessment Report of the Technical Advisory Committee (‘TAC’) dated 12-04-2022 stating that the building was so categorized to be required to be repaired without being evacuated. The decision of Executive Engineer, order of the Designated Officer of MCGM granting NOC to carry out structural repairs by tenants and decision approving repairs by tenants were all called into question.

Factual Background based on order dated 31-08-2023

The petitioner in the instant matter was a landlord of immovable property, while the respondents were tenants of that building. The Court perused the photographs to express that the building was severely damaged, dilapidated, built sometime in the 1960s. The tenants alleged that the building could be repaired and assured of having necessary funds for the same without seeking reimbursement from the landlord, who was in occupation of at least 6 of the tenements in the said building. Since the landlord so far had no proposal for redevelopment, the tenants sought permission to repair the building at their cost.

Through order dated 27-07-2023, the Court had allowed some of the tenants to obtain permission from MCGM for structural repairs directing the landlord to cooperate. The building at that time was shown to be reparable and the challenge was confined to categorization of the building, and there was no proposal for taking it down and redeveloping the building. The instant writ petition was noted, and the order was expressly made subject to its outcome.

The landlord later proposed to redevelop the building, after which, the tenants will not only be reaccommodated but will be given premises on ownership basis free of cost, since he proposed to use the incentive FSI for the said aspect. Vide order dated 31-08-2023, the Court made it clear that the landlord would not be allowed to deviate from such commitment, accepted as an undertaking to the Court, and clarified that the area of the said premises will be as governed by law. It further required a clearly stated detailed proposal and made it clear that in case of being dissatisfied with the landlord’s proposal, the Court will permit the tenants to proceed with redevelopment.

Court’s Scrutiny of Tenancy and Redevelopment

The Court noted the landlord’s commitment to reaccommodate the tenants on an ownership basis, accompanied with proposed development agreement and developer having sufficient net worth, various floor plans of proposed redevelopment. The Court cautiously clarified that they were not commanding or directing redevelopment in any particular form. The Court considered the question of “whether merely on the basis of a structural assessment, a tenant of a building can wholly eclipse the valuable rights of development associated with ownership of a property by a property owner.”

Tenant’s rights in redevelopment

The Court highlighted the settled position that ownership of a movable property carries several rights with it including the right to fully enjoy fruits of development of that property, and that if such rights were to be curtailed, that could only be done as per law and without any expropriation. “If, however, the landlord of a tenanted building does absolutely nothing at all and allows it to simply to go to ruin or even to collapse, the tenants are not without a remedy.”

With reference to Chandralok People Welfare Assn. v. State of Maharashtra, 2023 SCC OnLine Bom 2300, the Court clarified that it was concerned with the Municipal Law. It stated that the Municipal Corporation was not only a planning authority under Maharashtra Regional Town Planning Act, 1966 (‘MRTP Act’) but also a local authority governed by a dictated statute — MMC Act.

Coming back to prayer framed under Section 499 of MMC Act, the Court clarified that it falls under Chapter XIX of MMC Act which deals with procedure and specifically sub-section related to recovery of expenses by Commissioner and General Manager. The Court perused Section 499 of MMC Act which has to be read with Sections 489 and 354.

The Court commented that the instant case was exactly the reverse of Chandralok (supra), because there, the owner was unwilling to develop the property in question, was unable to show any proposal. On the contrary, the instant case involved an owner who gave specifics and set out terms for redevelopment committing to convert tenancies into ownership. The Court explained that the contention that the rights of owner developer being subordinate to repair and reconstruction rights of tenants, must be rejected for being contrary to Rent Act and MMC Act, since otherwise would lead to elevating tenant rights over property owner willing to develop to reaccommodate all tenants.

On tenants’ alternative submission that the owner cannot be permitted to redevelop the entire structure but limited to effecting repairs — the Court interpreted the same as to rights of property owner to enjoy fruits of property and benefits of full spectrum re-development be curtailed. The Court stated that there was nothing in law to support such an extreme proposition. It’s just that the statutes provide a remedy for tenants wherein an owner stands idly and the tenants have limited remedy to get the building repaired or rebuilt to its original condition, and such right cannot be expanded to eclipse the full rights of property owner willing to undertake redevelopment.

Conclusion

The Court allowed the writ to the extent of directions and cancelled any commencement certificate issued by MCGM to the tenants. The Court clarified that if the landlord failed to submit a proposal for development to MCGM, tenants will be entitled to submit a proposal for reconstruction. The Court also rejected the tenants’ application for stay on the instant order. The Court rejected the same stating that “What the tenants really seek is not just a right to dictate the terms of that tenancy beyond anything the law contemplates, but to impermissibly expand tenancy rights to the prejudice of the property owner — without taking the slightest steps to acquire those ownership rights.”

[Anandrao G. Pawar v. The Municipal Corporation of Greater Mumbai, 2023 SCC OnLine Bom 2534, Order dated 27-10-2023]


Advocates who appeared in this case :

For Petitioner: Advocate Mayur Khandeparkar, Advocate Abhijit Patil

For Respondents: Advocate Pooja Yadav, Senior Advocate Girish S. Godbole, Advocate Joel Carlos, Advocate Leena Shah; Shah & Furia Associates

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