UNDER MAHARASHTRA RENT CONTROL ACT,1999
(The Procedure to recover possession and difficulties)
by MAHABALESHWAR MORJE
tenant but not to penalise the landlords".
|C O N T E N T S|
|Introduction Object and purpose of amendment.|
exempted under Section 3.
|Function of Reserve Bank of India|
|Indian Banks Abroad|
|Question faced by landlords and licensors.|
|Some of affected persons.|
|Some of the important judgments of Supreme Court and High Court.|
|Whether the new or fresh agreement between licensor and occupier should be in writing and registered ?|
|Multinational Companies And Foreign Agencies|
will happen in case of pending suits and appeal whether landlords
of New Law ? Yes.
|Offences by Companies.|
|The prices prevailing in different parts of Mumbai|
|Registration Of Agreement|
|Leave Under Companies Act|
|Form of the Model Agreement of Tenancy.|
Taking into advantage of shortage of premises residential or commercial some of the landlords executed agreements in writing or orally under the pretext of leave and license and charged exorbitant compensation and went on renewing the agreements after the break of short period. Such agreements were entered into with an object to circumvent the provisions of law and protection given under the Rent Act, The Government of Maharashtra therefore issued an ordinance giving protection to the Licensees who were exploited by the landlords/licensors. The object was to protect the small licensees from exploitations where they were required to pay excessive rent and where they were required to vacate the premises frequently however, the object was not to protect multinational companies and foreign companies or banks who are exploiting the landlords/licensors.
Unfortunately on account of protection under the previous Bombay Rent Act, 1947 several honest landlords or flat owners are deprived of the possession of their premises. The object of the amendment of 1973 was to give protection to old licensees, who were in occupation for a long time under leave and license agreement. However taking advantage of the shortage of the premises, the landlords prepared the agreement under Leave & License and charged exorbitant license fee and force them to vacate after the period of expiry of leave and license.
The Joint Select Committee under rent Act, discussed the problems arising out of hardship caused the landlords and licensors whose premises were occupied by the Banks, Multinational Companies etc. in order to remove the hardship they have amended the Act by adding sub-clause (b) which states as under :-
This clause provides for exemption. Sub-clause (1)(b) of this clause provides that this Act shall not apply to any premises let to foreign missions, international agencies, multi-national companies and public limited companies having a paid up share capital of more than rupees one crore. The Committee felt that this Act should not apply to premises let or sub-let to foreign missions, international agencies etc. The Committee further felt that this Act should not apply to private limited companies having a paid up share capital of more than rupees one crore. The Committee also decided that the Act should not apply to Banks and other Public Sector Undertakings including Government and semi-Government Undertakings or Corporations established by or under any State or Central enactments. The sub-clause has been amended accordingly.
Realising the hardship that is caused due to providing protection under the old Act, the Government of Maharashtra has removed the protection which was wrongfully claimed by introducing section 3 (b) of the Maharashtra Rent Control Act, 1999 which is as under :
(b) The Act not to apply to any premises let or sub-let to banks, or any Public Sector Undertakings or any corporation established by or under any Central or State Act, or foreign missions, international agencies, multinational companies and private limited companies and public limited companies having a paid up share capital of rupees one crore or more.
Under Indian Companies Act, 1956 the company, existing company, private company and public company are defined in section 3.
COMPANIES: Part XI of Companies Act refers to Companies incorporated
outside India. It relates provisions as to establishment of places of business
Section 591 refers to application of section 592 to 602 to foreign companies.
premises exempted under section 3 (b) are :-
A. THE BANKS. (a) FOREIGN BANKS (b) INDIAN BANKS
B. PUBLIC SECTOR UNDERTAKING
C. THE CORPORATION ESTABLISHED BY OR UNDER ANY CENTRAL ACT
D. THE CORPORATION ESTABLISHED BY OR UNDER ANY STATE ACT
E. FOREIGN MISSIONS
F. INTERNATIONAL AGENCIES
G. MULTINATIONAL COMPANIES
H. PRIVATE LIMITED COMPANIES having paid up capital shares of rupees one crore
I. PUBLIC LIMITED COMPANIES having paid up capital shares of rupees one crore or
J. FOREIGN COMPANIES
(b). INDIAN BANKS which includes, the Reserve Bank of India,
Bank of India, Central Bank of India, Bank of Baroda, United Commercial
Bank, Punjab National Bank, Oriental Bank of Commerce,United Western
Bank,Mumbai District Central Co-op.Bank and others. Some of these banks
have taken the premises on the basis of leave and License and/or on lease
however, they avoided vacating the premises or paying additional compensation.
There are several Indian Banks in United Kingdom, Japan, Fuji, Mauritius, United Arab Emirates and other places. Our Banks cannot claim the protection of protected licensee or protected tenant they are required to vacate the premises immediately after the period of expiry of license or lease.
PUBLIC SECTOR UNDERTAKINGS are constituted by Central Government
by enacting special law, which includes :
The Fertilizer Corporation of India, the Food Corporation of India, the Rastriya Chemicals and Fertilizers, the Water and Power Consultancy Services (India) Ltd.,
the Rastriya Pariyojana Nirman Nigam Ltd., the National Water Board, the National Airport Authority and others.
THE COPRORATION ESTABLISHED BY OR UNDER ANY CENTRAL ACT :
The Hindustan Petroleum Corporation, the Bharat Petroleum Corporation, the Indian Airlines, the Central Ganga Authority, the National Backward class and Development Corporation, the National Commission for Women, the National Council for Science and Technology, the National Building Corporation., the National Film Development Corporation, the All India Radio, the Door Darshan Kendra etc.
THE CORPORATION ESTABLISHED BY OR UNDER ANY STATE ACT :
The Maharashtra State Finance Corporation, the Maharashtra State Transport Corporation, the Bombay Electricity and Suburban Transport Ltd., the Maharashtra Tourism Development Corporation, the Maharashtra State Industrial Development Corporation etc.
INTERNATIONAL AGENCIES :
The World Health Organisation, International Monetary Fund, International Labour Organisation etc.
FOREIGN MISSIONS :
Offices of Counsel Generals for U.K., U.S.A, Canada, Japan, France, Italy, Germany and other countries.
MULTINATIONAL COMPANIES :
The Hindustan Liver, Proctor and Gramble, Mac Donald, Larsen & Toubro Ltd., Johnson & Johnson Ltd., Glaxo, Fizer. etc.
H. PRIVATE LIMITED COMPANIES having paid up capital shares of Rupees one crore or more :
PUBLIC LIMITED COMPANIEShaving paid up capital shares of Rupees
one crore or more :
The Associated Cement Corporation, Tata Locomotives, Industrial Development Bank of India, Volats Ltd, Indian National Hotels, Hindustan Machine Tools, Ashok Leyland, Bata India, Dabor India, Bombay Dying, Century Industries, Great Eastern Company, Gujarat Ambuja Cement, Hindalgo, Bajaj Auto, Premier Automobiles, Maruti Suzuki etc.
Star T.V. C.N.N, B.B.C, Co-Cola, Pepsi etc.
RESERVE BANK OF INDIA : The Reserve Bank of India (RBI) was established under the Reserve Bank of India Act, 1934 on 1 April 1935 and nationalised on 1 January 1949. The Bank acts as banker to the Central Government, State Governments, commercial banks, state co-operative banks and some of the financial institutions. The Reserve Bank also performs a variety of developmental and promotional functions. These apart, the Reserve Bank also handles the borrowing programme of the Government of India.
Amongst the public Sector banks, as on March 1999, the State Bank of India (SBI) group (SBI and its seven associates) is the biggest unit with 13,290 offices and deposits exceeding 1,39,000 crore aggregating Rs.1,71,782.48 crore and advances of Rs.1,14,430.37 crore. In the associate banks, SBI owns either the entire or the majority of share capital. The SBI and its associate banks as a group account for around 31.9 percent of aggregate banking business (aggregate of deposits and advances) conducted by the public sector banks and around 26.2 percent of the aggregate business of the entire banking system. The remaining 19 banks in the public sector are more nationalised in 1969 and 1980 respectively.
While studying this subject, it must be noted that the Indian Banks having their branches in country like U.K, Canada, Japan, Fiji, Hongkong etc. are required to pay compensation on the basis of market rent or compensation whereas some of the foreign banks from developed countries like U.S.A, U.K. Japan are paying standard rent by claiming protection as statutory tenants and protected licensees as a result of which the Government of India has lost big amount of foreign exchange and now it is expected that the Central Government would get good amount which can used for the several welfare scheme.
The Central Government is developing the policy of Swadeshi this will help to achieve the objects of Swadeshi. The among the foreign mission the bodies would include the various embassy and offices of Consulate General which could include the Office of Consulate General of U.S.A, U.K, France, Russia, Japan and many other countries.
Where a tenant takes a certain person as a partner and gives him exclusive possession of a part of the premises, or where a sub-tenant prior to the coming into force of the Act goes out and in his place a new sub-tenant is brought in or where a tenant creates a mortgage by way of a sub-demise, or where a tenant gives exclusive possession of the premises to a third party under an agreement of conducting the business which is started by the third party and the tenant has nothing to do with the profit and loss of the business in such cases the tenant could be said to have contravened the provisions of sub-section (1).
A sale of tenancy rights by a liquidator of a company under compulsory
winding up being against the will of the company and being a transfer by
the court will not come under this clause. Where an Official Receiver appointed
by the court sells a property during the subsistence of the contractual
tenancy, the sale would transfer the rights of the contractual tenant and
it would be a sale on behalf of the tenant and may come under this clause.
In some of the cases where a tenant of business premises had been adjudicated insolvent the courts have held that the Official Assignee or the Liquidator as the case may be may sell the running business together with stock in trade, goodwill and tenancy rights. These cases were sought to be brought under the relevant notification.
In another case before the Supreme Court the premises were business premises of the tenant, a limited company. The business of the company had come to a grinding halt and liquidation proceedings were started and an official liquidator to give the business for conduction or on a lease to a caretaker. This order was challenged. The Supreme Court recognized the vesting of the tenancy rights in the liquidator.
The Supreme Court observed that if the business of the company had been going on, the liquidator could have carried on the business of the company to the extent it was necessary for beneficial winding up but he could not re-start the business on the ground that it would be beneficial to the creditors. But the business of the company having come to a standstill, the liquidator had nothing to give for conducting, or on a lease, to a caretaker. The Supreme Court set aside the order of the High Court and directed the liquidator to surrender the tenanted premises to the landlord and thereby reduce further liability to pay the rent. The Supreme Court observed and held that the Rent Act is intended to protect the tenancy rights and it should be interpreted to advance the protection, but the court could not lend its aid to flout the provisions of the Rent Act so as to enable the tenant to earn money by restarting the business which was already closed.
In the latest case the company had a tenancy right in respect of a residential flat and the company was ordered to be wound up in liquidation. The Supreme Court held that the tenancy right of the company in liquidation in respect of the residential flat my not be an asset for the purpose of liquidation and that merely because the company goes into liquidation and an official liquidator is appointed, the tenancy of the company in respect of the residential flat vis-à-vis its landlord or its tenant does not undergo any change (probably by reason of the provisions of section 5(11)(c)(ii) and 15(I). The Supreme Court, therefore, set aside the order of the High Court and directed the question of legality of the sub-tenancy of the said flat to be decided in the pending suit.
Questions Faced By the Licensors/Landlords/Flat owners are :
While interpreting the provisions of amendment which came into force on 1st Feb. 1973 it ought to have been noted that the protection which sought to have been given to the person who were exploited and not to the companies or establishment which are capable of exploiting the landlord or licensors and the protection which are sought to be claimed by some of the multinational companies or foreign companies are not available in own country however they choose to make false claim for protection depriving the Indian citizens of their properties. It must be noted that Foreign Nationals and Companies have greater responsibilities and duties not to deny the rights of properties to Indian citizens.
Some of such cases filed in High Court of Mumbai are :
The High Court of Bombay in Judgment delivered by Justice Ashok Agarwal has held that the High Court has jurisdiction to try and entertain the Suit. (1990 Mah.L.J.1145). Vishwanath Sawant Vs. Gandabhai 1990.
A gratuitous licensee would be a licensee within the meaning of Section 52 of easements Act and therefore even after revocation of such licence, the suit would be between the licensor and the licensee. Therefore, because of the termination of licence, the licensee may become a trespasser, but nonetheless the suit is not against trespasser. It is only against a licensee whose licence is revoked, licence whether with consideration or without consideration. (AIR 1998 BOMBAY 337). Kirit Kumar Vallabhdas V/s. Gajanan. Justice P.S.Patankar has relied upon judgment in Mansukal D.Jain and held that Judgment in 1990 Mah.LJ 1145 and AIR 1995 Bom.210 is not good in view of Supreme Court Judgements.
Section 41 (1) does not imply words "suits and proceedings for recovery of possession of immovable property". There is a good deal of difference between the words "relating to the recovery of possession" on the one hand and the terminology "for recovery of possession of any immovable property". The words "relating to" are of wide import and can take in their sweep any suit in which the grievance is made that the defendant licensor is threatening to illegally recover possession from the Plaintiff-licensee. Suits for protecting such possession of immovable property against the alleged illegal attempts on the part of the defendant to forcibly recover such possession from the plaintiff, can clearly get covered by the wide sweep of the words "relating to recovery of possession" as employed by Section 41(1). Therefore such suit could lie within the exclusive jurisdiction of Small Causes Court and the City Civil Court would have no jurisdiction to entertain such suits. (AIR 1995 SC 1102) Mansukhalal Dhirajlal Jain and other Vs. Ekanath
The Plaintiffs has filed this suit for a declaration in High Court that the defendant is a trespasser in respect of the suit flat and has no right, title or interest therein or to continue to use the same. The Plaintiff further prayed that the Defendant be ordered to forthwith quit and vacate the suit flat, remove his belonging lying therein and to hand over the same to the Plaintiff. A claim for recovery of Rs.7 lakhs as mesne profits is also made. It is further prayed that the defendant be directed to pay a sum of Rs.20,000/- per month from February 1995 on wards as mesne profits till the date of vacant possession is handed over to the Plaintiff. Appointment of Receiver of the suit flat is prayed for as an interim measure. A prayer for injunction is also made. (AIR 1998 BOMBAY 107) Justice S.S. Nijjar states that High Court has jurisdiction to try such suit.
Some of the landlords are advised to file application before the competent authority. Since such establishment under the Rent Act which is a summary remedy.
Since the Maharashtra Rent Control Act, 1999 is not applicable to the Banks, Multinational Companies, Public Sector Undertakings etc., the landlords/licensors can take the proceedings under section 105 of the Transfer of property Act, 1882 such proceedings can be taken in the High Court of Mumbai. The landlords or licensors also can claim the mesne profit on the basis of market value or such similar amount from the foreign companies or Banks or big establishments.
It must be noted that though the Banks and other companies are specifically excluded from the protection of the Rent Act it would take more time to recover the possession therefore the special provision should be made and preference and expeditious hearing should be given to such licensor as they are wrongfully deprived of the possession from the year 1973 or thereabout. Such landlords/licensor should be given certain concession in payment of court fees if necessary and be directed to pay after recovery of the amount.
Section 55 : Tenancy agreement to be compulsorily registered :-
If necessary the provision relating to Payment of Court fee for recovery of compensation for last 28 years should be relaxed and the period of limitation also should be relaxed if it can be done in the interest of justice equity and good conscience.
In order to avoid further delay and to accrue the object of the Act, the affected persons have written a letter to Shri Yeshwant Sinha, Union Minister for Finance, Mr.Jalan, the Governor, Reserve Bank of India to hold a meeting of foreign and national banks who are occupying the office or residential premises and direct the Inspector of Complaints to hold an enquiry and investigation and direct the Banks to vacate the premises or issue fresh or modified agreements and or to pay additional compensation as protection of the Rent Act is withdrawn, if any.
54 referring to the offences of Company.
Where a person committing offence under Maharashtra Rent Control Act is a company or other corporate body or association of persons (Whether incorporated or not), or a firm every director manager, secretary, agent or other officer or person concerned with the management thereof, and every partner of the firm shall, unless he proves that the offence was committed without his knowledge or consent be deemed to be guilty of such offence therefore if the directors of the company or partners of firm have deliberately withheld the possession or avoided to pay the compensation or have acted contrary to the Company Law. It is respectfully submit that the Directors of the Companies or Partners of Firm should have detached views and advice their companies to vacate the premises or pay the compensation as per the market value or such other rates. The Directors or the Partners of the firm are well informed and responsible persons in the business world and they should not expect or force the landlords to go to the Court when the provisions of law is very clear.
While appreciating the decision of the Government to introduce Sec.3 which refers to exemption from protection under the Maharashtra Rent Control Act, 1999. It must be noted that the further amendment should be made or guidelines should be given stating that where market value of the property is more than 1 crore or where the share capital is more than 1 crore, the licensor should be permitted to file the suit for recovery of possession of the premises in the High Court or District Court in order to avoid further delay or cost involved in it.
Article 36 provides stamp duty for deed of lease. Agreement of Leave & Licence does not create any right in the immovable property. The deed of lease creates right in the property as lessee. The Leave and License Agreement is mere license or permission granted by the owner to guarantee. Section 52 of easement Act is clear on the point. Thus agreement of leave and license cannot be equated with deed of lease.
It must be noted that object of Section 55 under the Maharashtra Rent Control Act 1999, which is welfare legislation is to ascertain to the property right and avoid uncertain deed and conclusion by entering into an agreement of Leave and Licence and not only to collect the revenue but to have Agreement admissible under Indian Registration Act and Indian Evidence Act and save the time of the Court to establish the intention of the parties
The Views of the experts are therefore, is that agreement is required to be exempted from stamp duty and is to be executed on Stamp Paper of Rs.20/- but no stamp duty will be payable and that when the agreement is registered only registration charges will be payable and no registration fee is required to be paid where tenant or licensee avoids to sign the agreement before the registering authority. It must be noted that it can be registered unilaterally copy of the model agreement of Leave and Licence is enclosed herewith for ready reference.
In view of certain decisions of Supreme Court it appears that Competent Authority shall also be deemed to be a court for the purposes of Contempt of Courts Acts. Such official would be performing judicial or quasi-judicial functions and therefore will be subject to the superintendence of the High Court as Part IIA itself provides. This officer however is different from the controller under Part III of the Act. The Act has thus created three different forums namely the Court, the Competent Authority, and the Controller, the first dealing with matters of rents and eviction of tenants generally, the second only with the eviction of tenants of certain landlords and the third with rates of Hotels and Lodging Houses. This is apart from the appellate courts and the revisional courts including the Government and the Supreme Court.
Section 446 of the Companies Act, 1956 and Section 45C of the Banking Companies Act, 1949 correspond to section 171 of the Indian Companies Act, 1913 and Section 45C gives wider jurisdiction to the winding up court. The winding up court has it has been held concurrent jurisdiction with any other court of competent jurisdiction. Leave to sue was granted to file a suit under this Act.
Once Leave to sue has been obtained under Section 446 of the Companies Act, 1956 and the suit has been instituted, for amending the plaint subsequently, no fresh leave is necessary.
It must be further noted that some of the Banks and big companies are threatening to make an application to intervene in the public interest litigation pending in Supreme Court to challenge the provision under section 3. No doubt every aggrieved person has right to approach the Court however taking into account that the Banks or international agencies or big companies have wrongfully enjoyed the benefits which they were not entitled to have in any other part of the World or in other states. They should avoid further confrontation and return the possession back or have reasonable increase in compensation by entering into a fresh agreement.
It must be noted that some of the Foreign Banks and multinational Companies are threatening of going out of State of Maharashtra in order to avoid payment compensation based on the basis of market value or such other amount. It is also stated that some of the Banks are trying to show the share capital of the amount of less than 1 crore. All this points are required to consider in the interest of both the parties and interest of the business of whole.
In case the Foreign Companies and Banks fail to do so the landlords & licensors should make representation to Hon'ble Shri Vilasrao Deshmukh, the Chief Minister and Hon'ble Shri Rohidas Patil, the Minister for Housing to make such amendments to achieve the object of Section 3 of the new Maharashtra Rent Control Act,1999 and in case any need and assistance they should contact the Secretary, Flat Owners Association, 3rd flr, 23, Ambalal Doshi Marg above Jai Hind Co-op. Bank, Fort, Mumbai-400 023. Telephone No.2650284 & 2657291.
In case, one need further guidance please contact the Secretary, Flat Owners Association, at the address given below:
© Copyright 2000, The Flat Owner's Association, Mumbai.