Bombay High Court
Hiren Bharat Shah vs Gada Enterprises And 5 Ors on 29 September, 2021
Author: B. P. Colabawalla
Bench: B. P. Colabawalla
16.carbpl.20852.21..doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ANJALI Digitally signed by
ANJALI TUSHAR
TUSHAR
IN ITS COMMERCIAL DIVISION
ASWALE
Date: 2021.10.06
ASWALE 17:44:42 +0530
COMMERCIAL ARBITRATION PETITION (L) NO. 20852 OF 2021
Hiren Bharat Shah ..Petitioner
Vs.
Gada Enterprises & Ors ..Respondents
Mr.Samit Shukla i/b DSK Legal, for the Petitioner.
Mr.Piyush M. Shah a/w Mr. Karan Gandhi, Mr. Chirag Unadkat,
Dishang Shah, Helta Sagar, for Respondent No.2.
Mr. Mehul A. Rathod, for Respondent No.3.
CORAM:- B. P. COLABAWALLA,J.
DATE :- SEPTEMBER 29, 2021.
P. C.:
The above Petition is filed under Section 9 of the Arbitration and Conciliation Act, 1996 seeking the following reliefs:-
A) "That this Hon'ble Court be pleased to pass an order and direction directing Respondent Nos. 1 to 3 to make payment of INR 3,30,4 76,65 as per particulars of Claims annexed hereto as Exhibit "D" to the Petitioner and continue paying the transit rent compensation to the Petitioner in accordance with clause 8 of the Agreement dated May 3, 2011 (Exhibit "A" hereto) until handing over possession of the New Premises to the Petitioner.
B) This Hon'ble Court be pleased to pass an order and direction directing Respondent Nos.1 to 3 to submit on oath a status report of the redevelopment undertaken as contemplated under Aswale 1/11
16.carbpl.20852.21..doc Agreement dated May 3, 2011 (Exhibit "A" hereto).
C) This Hon'ble Court be pleased to pass an order and direction directing Respondent Nos.1 to 3 to furnish adequate security to the satisfaction of this Hon'ble Court which will ensure due completion of the construction contemplated under Agreement dated May 3, 2011 (Exhibit "A" hereto)".
2 The Petitioner confirms that the Petitioner and Respondent Nos. 4 to 6 are the only legal heirs and representatives of the original tenant, Mr Jayantilal Jamnadas Shah. The Petitioner stated before this Court that Respondent Nos. 4 to 6 have been served on 18 th September, 2021 and the learned counsel appearing on behalf of the Petitioner undertakes to file an affidavit of service to that effect within a period of one week from today. The said statement is accepted. 3 Despite service, none have appeared on behalf of Respondent Nos. 4 to 6 and/or objected to the compensation/rent for temporary alternate accommodation being paid to the Petitioner. 4 Initially, Respondent Nos. 1 to 3 took a preliminary objection that the present Petition is not maintainable because admittedly, the original occupant Mr Jayantilal Jamnadas Shah, who is the grandfather of the Petitioner, husband of Respondent No. 4, father of Respondent No. 5 and grandfather of Respondent No.6, was the tenant of Respondent Nos. 1 to 3. Respondent Nos. 1 to 3 are not only Aswale 2/11
16.carbpl.20852.21..doc the developers but also the landlords and this being a relationship between a landlord and tenant, the subject matter could not be referred to arbitration. In this regard the learned advocate appearing on behalf of Respondent Nos. 1 to 3 relied upon the decision of a learned Single Judge of this Court in the case of Amritlal Malde and Anr. v/s National (India) Contractors and Engineers and Ors. (2020 SCC Online Bom. 10624).
5 The learned advocate appearing on behalf of the Petitioner brought to my attention that the aforesaid order of the learned Single Judge has been set aside in Appeal in Mahendra Devilal Jain v/s. National (India) Contractors and Engineers and Ors (2021 SCC online Bom 617). The learned counsel brought to my attention Paragraph Nos. 125 to 137 of this decision to contend that the argument canvassed on behalf of Respondent Nos. 1 to 3 is incorrect in law. The relevant Paragraph Nos. 125 to 137 read thus:-
"125. A perusal of Section 33 of the Maharashtra Rent Control Act, 1999 clearly indicates that the said provision does not refer to "charges" whereas Section 41 of the Presidency Small Causes Court Act, 1882 refers to "charges". The forum for recovery of charges under Section 33 of Maharashtra Rent Control Act, 1999 and under Section 41 of Presidency Small Causes Court Act, 1882 however are the same.
126. Under Section 16 of the Maharashtra Rent Control Act, 1999 and, more particularly, under Section 16 (i) and (k), it is provided as to when the landlord may recover possession. The said provision clearly indicates that the landlord may recover possession if the premises are reasonably and bona fide required by the landlord for the immediate purpose of demolishing them and such demolition is to be made for the purpose of erecting new building on the premises sought to be Aswale 3/11
16.carbpl.20852.21..doc demolished. The possession may be also recovered by the landlord if the premises are required for the immediate purpose of demolition ordered by any municipal authority or other competent authority. The said provision under Section 16 is subject to Section 25 of the Maharashtra Rent Control Act, 1999. It is not the case of respondents that the Municipal Corporation or other competent authority had issued any notice for demolition of the said building and pursuant to such notice, the old building and the tenements occupied by the appellant and other tenants were demolished.
127. Admittedly, in this case, respondents had applied for redevelopment permission under Regulation 33(7) of the Development Control Regulations, 1991 to rehabilitate the existing tenants in the new building on ownership basis by providing permanent alternate accommodation free of cost. Respondents were also entitled to carry out construction of additional tenements. If respondents would have agreed to provide accommodation in the new building by continuing the existing tenancy rights in the new structure constructed in the new building and if the landlord would not have handed over possession of the tenements to the tenants in the new building, the tenants in that event could have filed a suit under Section 17 of the said provisions of the said Maharashtra Rent Control Act, 1999 for recovery of possession against the landlord read with Section 18 of the said Act.
128. In this case, the appellant sought recovery of possession on ownership basis along with displacement rent and compensation under the said agreement entered into between the parties and not for recovery of possession as a tenant of the new tenement constructed in the new building by respondent No. 1. The provisions of Section 16 read with Sections 18 and 19 of the Maharashtra Rent Control Act also thus would not apply in the facts of this case.
129. The Hon'ble Supreme Court in case of Karnani Properties Ltd. (supra) has considered the provisions of West Bengal Premises Rent Control (Temporary Provisions) Act, 1950 and has held that the term "rent" has not been defined in the Act. Hence, it must be taken to have been used in its ordinary dictionary meaning. If, as already indicated, the term "rent" is comprehensive enough to include all payments agreed by the tenant to be paid to his landlord for the use and occupation not only of the building and its appurtenances but also of furnishing, electric installations and other amenities agreed between the parties to be provided by and at the cost of the landlord. There is an irresistible conclusion that all that is included in the term "rent" is within the purview of the Act and the other authorities had the power to control the same.
130. This Court enquired with the learned Counsel for respondents whether it was the case of his client that any landlord can pay rent to the tenant for occupying his premises under the provisions of the Bombay Rent Act, learned Counsel for respondent No. 1 had no answer. The word "rent" under the provisions of the Bombay Rent Act has to be paid by the tenant to the landlord and not by the landlord to Aswale 4/11
16.carbpl.20852.21..doc the tenant. The rent provided under the provisions of the Maharashtra Rent Control Act and the displacement rent provided under the agreement entered into between the parties in lieu of the appellant handing over vacant possession to the landlord for the purpose of constructing the new building and to allot the tenements in the new building as and by way of permanent alternate accommodation on ownership basis without payment of any costs are two different sets of compensation and cannot be mixed up. The displacement rent along with other compensation is payable by the owner to the allottee of the premises in the new building on ownership basis whereas the rent for the purpose of use and occupation of the tenanted premises is required to be paid by the tenant to the landlord for occupying the premises of the landlord.
131. Under Section 7(3) of the Maharashtra Rent Control Act, 1999 defines 'landlord'. A perusal of the said definition clearly indicates that the landlord is the person who is entitled to receive the rent in respect of any premises, if the premises were let to a tenant and includes any person not being a tenant who from time to time derives title under a landlord and further includes in respect of his sub-tenant, a tenant who has sub-let his premises. The term 'licensee' is defined under Section 7(5). The licensee is the person who is in the occupation of the premises or part thereof under a subsisting agreement for licence given for a licence fee or charge.
132. The term 'tenant' is defined under Section 7(15). A perusal of the said definition indicates that the person by whom or on whose account rent is payable for any premises and includes such person who is a tenant or who is a deemed tenant or who is a sub-tenant as permitted under a contract or by the permission or consent of the landlord etc. In our view, if owner has agreed to pay the displacement rent in lieu of temporary accommodation till such alternate permanent accommodation is handed over by the landlord to the allottee, cannot be considered as a landlord within the meaning of Section 7(3) of the Maharashtra Rent Control Act, 1999. Similarly, the tenant who is receiving such allowance from the landlord in lieu of temporary accommodation till such time the permanent alternate accommodation is made available to him by the landlord on ownership cannot be considered as a tenant within the meaning of Section 7(15) of the Maharashtra Rent Control Act, 1999. Learned counsel for the respondent no. 1 could not demonstrate as to how his client was a landlord within the meaning of Section 7(3) though was paying displacement compensation or rent to the tenant in lieu of the temporary accommodation till the possession of the permanent alternate accommodation is handed over to the tenant on ownership basis in the new building.
133. This Court in case of Shashikant G. Mehta v. Soonoo Minoo Khajotia (supra) has adverted to judgment of this Court in case of Hatimbhai Khurshid Hussein Bohari v. Chandanmal R. Sakhale, 2003 B.C.I. 770 in which it was held that the rent is a recompense paid by the tenant to the landlord for the transfer of a right to enjoy premises. Aswale 5/11
16.carbpl.20852.21..doc The Hon'ble Supreme Court in case of Abdul Kader (supra) has held that the term 'rent' has not been defined under Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 and therefore Court shall have to go by the ordinary dictionary meaning of the term 'rent'. The Hon'ble Supreme Court adverted to its earlier judgment in case of Karnani Properties Ltd. v. Augustine (Miss), AIR 1957 SC 309 in which it was held that the term 'rent' is comprehensive enough to include, all payments agreed by the tenant to be paid to his landlord for the use and occupation not only of the building and its appurtenances but also furnishing, electric installations and other amenities agreed between the parties to be provided by and at the cost of the landlord. The principles laid down by the Supreme Court in case of Abdul Kader (supra) and by this Court in case of Shashikant G. Mehta (supra) applies to the facts of this case.
134. On perusal of the definition of the landlord and the tenant referred to aforesaid and considering the facts of this case, this Court cannot accept the submission of the Dr. Chandrachud, learned Counsel for the respondents that under the said agreement entered into between the parties, there was a relationship of landlord and tenant though by the said agreement, the appellant became entitled to an allotment of shop as permanent alternate accommodation on ownership basis without payment of any cost. In our view, the arguments advanced by the learned Counsel for the respondent no. 1 are ex-facie contrary to well settled principles of law laid down by various Courts in various judgments referred aforesaid and also the provisions of Maharashtra Rent Control Act, 1999.
135. There is no dispute that the Rent Act is a social welfare legislation. It is surprising that the developer who has exploited the appellants in all respect has courage to urge before this Court that the provisions of Rent Act being a social welfare legislation, and is enacted to protect the interest of tenants, the existing dispute between the parties shall be referred to Small Causes Court, though in the facts of this case, Small Causes Court has no jurisdiction to entertain such dispute.
136. The learned Single Judge of this Court in the impugned order has held that the dispute between the parties cannot be referred to arbitration mainly on the ground that under Clause (ix) of the Agreement entered into between the parties, the tenancy would be converted into ownership rights only when the tenant was offered the newly constructed premises by way of permanent alternate accommodation on ownership basis free of cost, by a notice intimating that the tenant must take possession before the expiry of 30 days on the date of receipt of such notice accompanied by a occupation certificate in respect of the newly constructed premises. In our view, the learned Single Judge ought to have considered the entire agreement and not a particular clause in isolation.
137. In our view, the view taken by the learned Single Judge is contrary to the provisions of the Maharashtra Rent Control Act, 1999 Aswale 6/11
16.carbpl.20852.21..doc and contrary to the principles laid down by the Supreme Court and this Court in catena of judgments referred to aforesaid. The judgments referred to and relied upon by the learned Single Judge in the impugned order are clearly distinguishable in the facts of this case. The learned Single Judge has not decided the arbitration petition filed by the appellant under Section 9 of the Arbitration Act on merits but has refused to grant any relief only on the ground that the relationship between the respondent no. 1 and the appellant continued to be that of landlord and tenant."
6 Considering the aforesaid Division Bench judgment, I have no hesitation in rejecting the preliminary objection raised by Respondent Nos. 1 to 3.
7 The disputes between the parties, namely, the Petitioner and Respondent Nos. 1 to 3 arise due to the unpaid amounts of compensation towards temporary alternate accommodation in accordance with the Agreement dated 3rd May, 2011 ("the said Agreement") entered into between Mr Jayantilal Jamnadas Shah and Respondent No.1 firm of which Respondent Nos.2 and 3 are partners. By the said Agreement, Mr Jayantilal Shah agreed to surrender his tenanted premises in the building known as "Shanti Nagar" located at Borivali (West), Mumbai 400 092 ("the said building") for the purpose of redevelopment. In return, Mr Shah was promised a new premises on an ownership basis. Till the handover of the new premises, Respondent No.1 was obligated to make a payment of compensation / rent towards temporary alternate accommodation to Mr. Jayantilal Jamnadas Shah Aswale 7/11
16.carbpl.20852.21..doc as stipulated in the said Agreement dated 3rd May, 2011. 8 It is the case of the Petitioner that by a registered Gift Deed dated 15th October 2016, Mr Jayantilal Jamnadas Shah inter-alia transferred all the benefits arising out of and/or under the said Agreement dated 3rd May, 2011 to the Petitioner, including the right to receive the compensation towards temporary alternate accommodation till the handover of the newly constructed premises. The registered Gift Deed is annexed at Exhibit- B to the Petition. Be that as it may, on September 9, 2020, Mr Jayantilal Jamnadas Shah passed away. 9 The grievance in the present Petition is that the Respondent No.1 firm has admittedly failed to make payment of compensation towards temporary alternate accommodation to Mr Jayantilal Jamnadas Shah/the Petitioner from January 2021 onwards and it is for this reason that the Petitioner has filed the present Petition against the Respondents inter-alia seeking payment of unpaid compensation towards temporary alternate accommodation in accordance with the terms of the said Agreement dated 3rd May, 2011 read with the Gift Deed dated 15th October, 2016.
10 The learned advocate appearing on behalf of Respondent Aswale 8/11
16.carbpl.20852.21..doc Nos. 2 and 3, who are the partners of the 1 st Respondent firm, have stated before the Court that the compensation towards temporary alternate accommodation payable under the aforesaid Agreement for the period January 2021 to November 2021 is a sum of Rs. 1,97,652/-. They shall make this payment to the Petitioner by cheque. Further, Respondent Nos. 2 and 3 and who are the only partners of Respondent No. 1, have undertaken to the Court that Respondent No.1 shall continue to make payment of compensation/rent towards temporary alternate accommodation to the Petitioner until they handover the new premises in the redeveloped building to the Petitioner. The said undertakings are accepted. It is made clear that by Respondent Nos.1 to 3 handing over possession of the new premises to the Petitioner, shall not be construed to mean that the Petitioner has become the owner thereof. This is only to ensure that Respondent Nos.1 to 3 discharge their obligations under the Agreement dated 3 rd May, 2011. If any claim is made in relation to the aforesaid premises and/or the compensation paid by Respondent Nos. 1 to 3 to the Petitioner, only the Petitioner shall be liable for the same and Respondent Nos. 1 to 3 shall not be liable in any manner whatsoever. It is clarified that any payments made by Respondent No.1 to the Petitioner under this order shall constitute satisfaction and discharge of Respondent No.1's liability under the said Agreement. Similarly, the handing over of the new premises in the Aswale 9/11
16.carbpl.20852.21..doc redeveloped building to the Petitioner, shall constitute satisfaction and discharge of Respondent No.1's liability under the said Agreement to provide permanent alternate accommodation. Any claims made by any of the heirs of Mr Jayantilal Jamnadas Shah shall be against the Petitioner alone and no heir shall be allowed to make any claim against Respondent Nos. 1 to 3.
11 If any litigation is filed in respect of the new premises to be allotted in the redeveloped building, or in relation to any other benefits under the said Agreement (including the transit rent being paid to the Petitioner), Respondent Nos.1 to 3 shall abide by any orders passed in that litigation.
12 Parties have agreed that in view of this order, no dispute now survives between the Petitioner and Respondent Nos.1 to 3 and they have agreed that there is no need to go for Arbitration. It is accordingly so ordered.
13 The above Section 9 Petition is disposed of in the aforesaid terms.
14 In view of this order, the learned counsel appearing for the Aswale 10/11
16.carbpl.20852.21..doc Petitioner does not press prayer clauses (B) and (C) at this stage and prays that it be kept open to be agitated in the future, if the need so arises. It is accordingly so ordered.
15 This order will be digitally signed by the Private Secretary/Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.
( B. P. COLABAWALLA, J. ) Aswale 11/11