Bombay High Court Diary
Introduction
A division bench of Justice G.S. Kulkarni and R.N. Laddha of the Hon’ble Bombay High Court was hearing the petition concerning the nature and/or course pertaining to redevelopment adopted by the owners of the property.
Issue involved in the case
The main question which arose for consideration in the present case was whether tenants (in the present case, one tenant) can dictate the nature of the redevelopment to be undertaken by the landlord, by insisting that the redevelopment of the building necessarily should be, as the building originally stood, prior to its demolition. Illustratively residential premises should be redeveloped only as residential and not as commercial or vice-versa.
Facts of the case
The petitioner is a Limited Liability Partnership firm (for short, ‘LLP’) and owner of some plot of land in Khar (West). The building which stood on the said plot of land initially comprised of partly commercial and partly residential tenements. The said building was demolished in the year 2021 after the respondent – Municipal Corporation of Greater Mumbai (for short ‘Municipal Corporation’) issued a notice to the owners/occupants under Section 354 of the Mumbai Municipal Corporation Act, 1888 (for short ‘MMC Act’).
The petitioner proposed to undertake redevelopment so as to construct a commercial building, which according to the petitioner was permissible as per rules. The petitioner intended to undertake such redevelopment under the provisions of Regulation 33(19) of the Development Control and Promotion Regulation for Greater Mumbai, 2034 (for short ‘DCPR 2034’).
The petitioner had accordingly submitted a proposal to the Municipal Corporation and accepting such proposal an Intimation of Disapproval (for short, ‘IOD’) was issued in favour of the petitioner. Only 1 tenant out of 21 tenants in all, had objection for the redevelopment being undertaken by the petitioner.
The next step for the petitioner was to obtain a Commencement Certificate (for short, ‘CC’). But however, as one of the tenants was opposing and declining to enter into a Permanent Alternate Accommodation Agreement (for short ‘PAAA’), and/or not issuing an NOC to the petitioner, the Municipal Corporation considering condition nos. 7 and 8 of the IOD denied to grant a commencement certificate to the petitioner. Conditions nos. 7 and 8 of the IOD read as follows:
“7. That the Registered Agreement with the existing tenant along with the list will not be submitted before C.C.
8. That the consent letter from the existing tenants for the proposed additions/alterations in their tenement will not be submitted before C.C.”
The petitioner knocked the doors of the court of law strongly placing reliance upon the fact that, only 1 tenant out of the majority of the 21 tenants, cannot hinder, hamper and/or stall the redevelopment in such condition as inserted in the IOD by the Municipal Corporation, which according to the petitioner was arbitrary.
Contentions raised by the petitioner
It was submitted on behalf of the petitioner that the petitioner was at all times prepared and eager to offer alternate premises, as also permanent alternate premises on ownership basis to the opposing tenant, similarly as offered to the other tenants. However, he on totally unjustifiable reasons was negating to accept such offer as made to him, although it was accepted by the other tenants.
He was insisting and maintaining before the court that the petitioner ought not to undertake redevelopment as per Regulation 33(19) of the DCPR 2034 and ought to undertake redevelopment specifically as per the Rules 33(7)(A), namely, a residential redevelopment.
It was submitted on behalf of the petitioner that such approach and/or attitude on the part of the opposing tenant was untenable. It was also further asserted that the said tenant neither had any legal right, nor locus so as to command and/or dictate the course of redevelopment to be undertaken by the petitioner. It was also further contented before the court that proposal for redevelopment, as permissible in law, as put by the petitioner before the Municipal Corporation, was accepted by the Municipal Corporation by issuance of an IOD for permitting the petitioner to undertake commercial development as per the provisions of Regulations 33(19) of the DCPR 2034.
It was also further put forth that the demand and/or insistence of the said tenant that the redevelopment needs to take place as per Rule 33(7)(A) of the DCPR 2034 was an unjustified assertion and in fact a hurdle being created detrimental not only to the interest of the petitioner, but also causing a serious prejudice to the remaining tenants, who have been out of their respective houses and who have accepted the redevelopment being undertaken by the petitioner. It was also submitted that it is a settled principle of law, that a minority tenant/occupant of the building, cannot oppose and/or withhold the entire redevelopment.
Reliance was also placed by the petitioner upon the decision of this court in Raj Ahuja v/s Municipal Corporation of Greater Mumbai, in which it was declared that clause 1.15 of the 2018 Guidelines “Guidelines issued by the MCGM for declaring private and municipal buildings as ‘C-1 category’ (Dangerous, unsafe)” do not mandate consent/agreement to be obtained from all (100%) tenants/occupants, as consent of 51% to 70% of the occupants/tenants of the building, as applicable to the proposals made under the relevant regulations DCPR-2034, shall amount to sufficient compliance for processing development/redevelopment proposal, for a commencement certificate to be issued, including in respect of buildings covered under Section 354 of the MMC, Act.
Observations of the Hon’ble Bombay High Court
After taking into cognizance the events unfolded and hearing the learned counsels for the parties, the bench observed that the counsel for the respondent was not in a position and/or state to showcase/prove any legal right which could allow a single tenant to demand and/or dictate the course of redevelopment to be undertaken by the landlord.
The bench also noted that the counsel for the respondent was unable to draw the Court’s notice and/or attention to any embargo on the owner of the land, to undertake redevelopment, different from the nature of the existing building which stood demolished nor the said counsel was in a position to make good that the proposal of the petitioner as submitted to the Municipal Corporation under Regulation 33(19) of the DCPR 2034 was in any manner illegal and/or unlawful.
The bench took into consideration its decision given in Raj Ahuja v/s Municipal Corporation of Greater Mumbai. It also further stated that the approach adopted by the said tenant was unreasonable and adamant which was hindering, hampering and further putting the entire redevelopment to a standstill, which he cannot do, considering the settled position in law as laid down in several decisions of the court.
The bench observed that, “The said respondent No.3 in his capacity as a tenant has limited rights. He, within the ambit of such rights cannot dictate the petitioner-owner, as to the nature of redevelopment. If such contention, as urged on behalf of him, is accepted, it would amount to recognizing rights which are certainly not conferred by law on the tenants.
Recognizing such rights would infact take away and/or obliterate the legal rights of the owners of property to undertake redevelopment in a manner as may be permissible in law, including under the DCPR 2034. Thus, tenants cannot take a position to foist, dominate and/or dictate to the owner the nature and the course of redevelopment the owner desires to have.
The rights of the owners of the property to undertake redevelopment of the manner and type they intend, cannot be taken away by the tenants, minority or majority. Tenancy rights cannot be stretched to such an extent that the course of redevelopment can be taken over by the tenants, so as to take away the basic corporeal rights of the owner of the property, to undertake redevelopment of the owners choice. The only rights the tenants have, would be to be provided an alternate accommodation of an equivalent area occupied by them before the building was demolished.”
The bench also further stated that “The inherent rights of the owners to have a redevelopment of their choice cannot be questioned by the occupants/ tenants, when the owner is ready and willing to protect the rights of the tenants, by providing alternate accommodation in the redeveloped premises. We have not been pointed out any legal rights and rights so overwhelming of the tenants, which would override the legal rights of the owners, to undertake redevelopment as per the choice of the owners of the land, as in the present case.”
Order of the Hon’ble Bombay High Court
The bench in its order on 29th March, 2023 directed the Municipal Corporation to issue Commencement Certificate to the petitioner without insisting for compliance of condition Nos. 7 and 8 of the IOD for want of the petitioner executing an agreement for an alternate accommodation with the said tenant, as per the decision of the court in Raj Ahuja v/s Municipal Corporation of Greater Mumbai.
Analysis of the ruling of the Hon’ble Bombay High Court
The ruling of the Hon’ble Bombay High Court in the above matter evidently conveys that the insistence of the said opposing tenant to undertake proposed redevelopment as per Rules 33(7)(A), namely, a residential redevelopment and not according to Regulation 33(19) of the DCPR 2034 is unjust, unreasonable and arbitrary as it would open up a Pandora for similar requests/appeals from the other tenants leading to the project becoming unviable resulting in derailment of the entire redevelopment process.
It is vital to understand the fact that, the landlords decide to undertake a certain kind of redevelopment taking into consideration various factors including feasibility, potentiality of land, planning constraints, site conditions etc. The said ruling establishes a clear perspective of the hon’ble court that it is completely a landlords discretion when it comes to undertaking and/or choosing a particular type of redevelopment and he cannot be questioned on the nature and/or course of the redevelopment proposed to be undertaken by him, as the said aspect is bound to vary and/or differ from situation to situation.
The rights of the tenants should only remain confined to being provided an alternate accommodation of an area equivalent to the area occupied by them prior to the demolition of the building. Tenancy rights cannot be extended to such a magnitude that would enable the tenants to capture/take over the course of redevelopment, which actually is a subject that falls within the ambit of the landowner, as the same would take away the legal right of the landowner to undertake redevelopment of his choice.
It lays down that the power should be given to the landowners to decide upon the kind of redevelopment he wishes to undertake for the plot of land owned by him, for he is the owner. But however, at the same time it is crucial on his part to ensure that the said redevelopment is undertaken by him in a bonafide manner, without causing any grave prejudice to the interest of the tenants of the building who have actually consented for the proposed redevelopment.
Implication of the ruling of the Hon’ble Bombay High Court
The ruling of the Hon’ble Bombay High Court in the above matter will help the landowners to expedite the process of redevelopment of buildings which are old and in a deteriorating condition in the manner they deem fit and proper, as the court has firmly stated that both minority and majority of the tenants do not have the right to dictate upon the landowner the nature and course of redevelopment the landowner wishes to undertake.
The article is authored by Mrs. Nirali Yash Desai’. She is real estate lawyer working with Damji Shamji Shah Group, Mumbai.