CIVIL APPEAL 1115 of 2005 on 28 July 1908

1. This order will dispose of the Plaintiff’s Notice of MotionNo. 1115 of 2005 and the 2nd Defendant’s Notice of Motion No.1320 of 2013. The 2nd Defendant is an association of occupants(“the Association”) of what was once called the Empire Buildingand later renamed Mahendra Chambers. The Plaintiff is apartnership firm. The 1st Defendant is the Municipal Corporationof Greater Mumbai (“MCGM”). The 3rd Defendant is theChairman of the 2nd Defendant. Defendants Nos. 4 to 10 are, or atthe relevant time were, the Trustees of the Parsee Punchayet Fundsand Properties Trust, a public charitable trust (“Parsee Punchayet”).

2. Given the age of these Notices of Motion, I have declined anapplication for adjournment by the Defendants.

3. The dispute pertains to a plot of land and a building known asMahendra Chambers at 134/136, DN Road, Fort, Mumbai 400 001.

4. A brief history is necessary. On 28th July 1908, at a timewhen these areas were yet being developed across the Island City,the Trustees of what was then called the Improvement Trust for theCity of Bombay leased 2,724 sq yards of land at DN Road to oneLallubhai Dharamchand. The lease was for 99 years with effect from1901. This was one of about 146 such plots leased by theGovernment of Bombay to the Improvement Trust. Some decadeslater there followed an Act of 1933 by which Section 91-B was addedto the MCGM Act 1881 and these plots were thus transferred to the MCGM. The plots were to re-vest in the State Government on theexpiry of the 99-year lease.

5. Lallubhai Dharamchand assigned his lease to one VicajiTaraporewalla. Sometime around 1908, Vicaji constructed thebuilding in question on the plot. He died on 4th March 1949, and hisexecutors surrendered the lease to the MCGM and secured twoseparate leases for what was then called Plot A1 (1298 sq yards) andPlot B1 (to another entity called Narayana Trust) for the remainderof the lease period some 37 years and six months until 13thDecember 2000. Vicaji left a Will, and his executors apparentlyobtained probate to it. On 20th January 1966, these executorsassigned the leasehold Plot A1 and the building on it (then called theEmpire Building) to the Parsee Punchayet. On 23rd August 1974,the Parsee Punchayet and the Plaintif– rm entered into anagreement for assignment of the leasehold rights of Plot A1 and theEmpire Building, (by now included in Schedule W to the MCGMAct), together with another adjacent Plot A2. This lease was validuntil 2008 for Plot A2 and the MCGM had permitted an open-airgarden restaurant to be operated on it. The total consideration wasRs. 10 lakhs. Rs. 1 lakh was paid on execution. The remaining Rs. 9lakhs was paid by 29th January 1976.

6. Evidently, the Parsee Punchayet required prior permission ofthe Charity Commissioner, and it obtained this on 24th June 1975 tocomplete the sale of the building and to assign the lease. This was tobe completed within six months.

7. On 14th November 1975, the Parsee Punchayet applied to theMCGM for its consent to the assignment of these leases in Plots A1and A2. We are not concerned with Plot B1, assigned to theNarayana Trust. There is no dispute regarding the renewal of thelease for Plot A2, but it assumes some significance because of thecontrasting action taken in regard to Plot A1. On 1st February 1976,having received the full consideration, the Parsee Punchayet put thePlaintif– rm in possession of Plots A1 and A2 and the EmpireBuilding on Plot A1. There were several tenants in the building, andthe Parsee Punchayet issued Letters of Attornment on 29th January1976. The Plaintiff began collecting rent from the tenants of theEmpire Building and then re-named it Mahendra Chambers. ThePlaintiff continued to pay all assessments and taxes.

8. Two years later, on 15th November 1978, the MCGMrequired the Parsee Punchayet Trustees to pay Rs. 2,000/- astransfer fees and 5% of the agreement consideration: an amount ofRs. 50,000/-. This was done, and the MCGM issued receipts.

9. Eleven years went past without a formal response by theMCGM to the application for its consent to the assignment. It wasnot until 4th June 1986 that the MCGM forwarded its permission orno objection or licence dated 24th February 1986 for the assignmentof these two plots by the Parsee Punchayet to the Plaintiff. This wasmade subject to the Parsee Punchayet submitting a registered deedof assignment “within a period of 4 months from the date of executionalong with a certified copy of the registration slip and the Index II for registration and bringing the names of thepurchasers on this office record.”

10. By this time, the composition of Parsee Punchayet Board ofTrustees had changed. This required a fresh application to theCharity Commissioner and an extension of time to complete thetransaction. There are certain intervening events regarding someillegal constructions and the MCGM action against those, but I willpass over these quickly because they do not seem to me to affect theissue that falls for consideration. On 16th February 1994, the ParseePunchayet explained to the MCGM the reason for the delay, interalia pointing out that the Charity Commissioner’s permission wasrequired afresh, and that the MCGM’s delayed permission hadcompelled these extensions of time. Four years later, on 25thSeptember 1998, the MCGM called on the Plaintiff to submitcertified true copies of the assignment deed duly executed alongwith Index II. Thus, up to this point, there was no problem with theassignment of Plot A1 and the Empire Building/Mahendra Chambers to the Plaintiff.

11. On 13th December 2000, the 99-year lease period for all theproperties in Schedule W to the MCGM Act expired. Therefollowed an Ordinance of 20th October 2001 amending Section 91-Band permitting the Government to grant fresh leases of theseSchedule W plots for up to 30 years. On 2nd November 2001, theMCGM told the Plaintiff that it would consider a renewal of PlotA1’s lease after it received an order from the Government ‘re-vesting’ the properties in the MCGM. In the meantime, theMCGM continued to accept lease rent from the Plaintiff.

12. Pausing briefly, I must note that this concept of ‘re-vesting’seems to have been wholly misunderstood by both the StateGovernment and the MCGM. They seem to have proceeded on thefooting that a ‘re-vesting’ is lawful reason for a lessor to re-enterdemised property without following the due process of law, that is tosay, a re-vesting supposedly permits a unilateral resumption ofactual physical possession without either a surrender or an order ofthe Court. As we shall see, this is wholly incorrect in law. It is alsoentirely misdirected on facts. The reason suggests itself. These plotsare all ones of which the erstwhile Government of the State ofBombay, now the Maharashtra State Government, is the owner andhead lessor. The MCGM statute permits the State Government to‘vest’ these properties in the MCGM so that the MCGM can leasethem out (or renew existing leases) in accordance with government-mandated policy. Therefore, this vesting on the expiry of the leasesin the government, and the re-vesting in the MCGM for renewals orfresh leases, is a matter between the head lessor and its delegate orsubordinate lessor. The State Government does not lease the plotsto the MCGM. It ‘vests’ the plots in the MCGM, so that MCGMcan be the lessor. This relationship between the State Governmentand the MCGM is one entirely distinct from the relationship, in lawand on facts, between the MCGM as the lessor and individuallessees. Neither the expiry of a lease, nor its ‘vesting’ on such expiryin the State Government, nor a later ‘re-vesting’ in the MCGM inaccordance with policy operate to dispense with the requirementthat the lessor/MCGM must proceed only in accordance with law,and by following the due process of law, to recover possession froma lessee.

13. In 2002, the MCGM asked the Plaintiff to get its assignmentdeed registered. Later that year, the Association was formed. On 7thAugust 2002, the MCGM granted the 2nd Defendant some repairpermissions but did so without reference to the Plaintiff. ThePlaintif led a Writ Petition in this Court, which said that thePlaintiff had to establish its title. The Plaintiff withdrew that petitionwith liberty to adopt appropriate proceedings.

14. I come now to the events of 21st September 2002, when ameeting was apparently held between the MCGM, the Association,its Chairman and the Chief Minister. A copy of these minutes is atExhibit “R” to the plaint. Pages 125–126 have the typed text inMarathi and pages 127–128 have an office translation in English. Iam reproducing the translation (about which there is no dispute; andI am myself satisfied that it is a reliably accurate translation of theoriginal Marathi, which I have read myself).

Issues raised during the meeting

Mahendra Chambers estate is Scheduled estate and waslet out on lease to Parsi Panchayat Funds Properties. Butthey transferred it in the name of M/s. Mahendra Builders.However, as appropriate documents were not compliedwith BMC did not approve this arrangement. Meanwhilethe lease period of this property expired and since now it isvested with the Government, the commissioner hasclarified that now it can be leased out for a period of 30years.

Presently the said buildings are in unrepaired state andapplicants occupants Welfare Association havecommenced repair work with the permission of the BMC.

The applicants have proved that in the interest of theresidents, the lease of the said building may betransferred in the name of Association. The Associationis willing to pay the arrears of lease rent amount, propertytax, etc. Pursuant to the said application, if theGovernment vests the said property with theCommissioner, then the said property can be given onlease to the Association, stated the Commissioner,Mumbai Municipal Corporation.

Decisions in the meeting

Suggestion of Commissioner is approved. But this caseshould not be related to any other matter in Schedule ‘D’Cadre or should not be treated as precedent and firstly thesaid property should be vested with the Commissioner andthereafter the same be leased out to applicant WelfareAssociation, Commissioner should verify the legal aspectof this matter and submit appropriate proposal.

(Emphasis added)

15. As the emphasised portion shows, the representation was inequal parts factually wrong and legally unsound. It was incorrect tosay that the MCGM had not approved the transfer; it had, thoughvery late, forcing a fresh application for sanction to the CharityCommissioner. The representation assumed that since the lease hadexpired, the MCGM could resume possession by just walking in;and that a ‘re-vesting’ (as between the State Government and theMCGM) was valid justification for a forcible re-entry, bypassing thedue process of law; thus setting the MCGM at liberty to introduce anew lessee. This proceeds on the footing that since the term of thelease had expired, therefore, the Plaintiff more or less in law lost possession and all juridical rights over the property in question andthat the matter stood at large. At the very least, the representation atthe meeting was, in my view, though prima facie at this stage, over-simplistic.

16. On 13th January 2003, the Charity Commissioner extendedthe time for the assignment of the plot. The MCGM invitedobjections from the Plaintiff regarding re-assessment of Plots A1 andA2. There followed on 20th January 2003 a formal notification bythe State Government vesting Plot A1 in the MCGM for another 30years. On 4th March 2003, the Parsee Punchayet executed what waseffectively a fresh deed of assignment in favour of the Plaintiff. Thiswas duly registered, and an Index II was issued. On 10th April 2003,the MCGM issued a Letter of Intent in favour of the 2ndDefendant–Association to execute a fresh lease in its favour.

17. On 27th April 2003, a registered post notice was allegedlyissued by the MCGM to the Parsee Punchayet claiming that sincethe lease had expired, Plot A1 and the Empire Building/MahendraChambers ‘vested’ in the MCGM and that it was entitled to re-enterthe plot. This is the entirely erroneous basis of the MCGM’s action.There is simply no warrant for it in law. The notice purported tostate that the MCGM would attend the site on 2nd May 2003 “totake back the possession of the plot with building”. This notice waspasted on the property in question. The Parsee Punchayet maintainsthat it never received any such notice. On 2nd May 2003, theMCGM caused a panchanama to be drawn stating that it had re-entered the property by pasting the notice on 2nd May 2003 as nonewas present from the lessees.

18. On 11th June 2003, the Plaintiff sent to the MCGM theregistered assignment deed and a copy of the Index II. On 21st July2003, the MCGM wrote to the Plaintiff alleging that it had takenpossession and, therefore, the lease no longer subsisted. Itcontended that the assignment was, therefore, invalid. Somecorrespondence ensued, and ultimately the Plaintiff filed WritPetition No. 2421 of 2003 for a mandamus seeking renewal of thelease. Holding that the Plaintiff’s title was in serious dispute, theCourt said the petition was not maintainable.

19. The Plaintiff then issued a statutory notice under Section 527of the MCGM Act. The Plaintiff has continued to pay rent for PlotA2 (although the receipts are for some unfathomable reason stillissued in the name of Parsee Punchayet). On 24th June 2004, theMCGM threatened to terminate the Letter of Intent in favour of the2nd Defendant–Association, which then filed Writ Petition No.1829 of 2004 for a mandamus to execute the lease in its favour. Anorder of status quo in that petition was made on 20th September2004. A few days later, on 30th September 2004, the Plaintif ledthe present suit.

20. In April 2005 the Plaintiff filed Notice of Motion No. 1115 of2005. SC Dharmadhikari J made an ad-interim order on 24th June2005 restraining the MCGM from renewing or executing a freshlease of Plot A1 and Mahendra Chambers. This was confirmed on4th October 2005 by DK Deshmukh J (obviously in a time yetwithin living memory era when Notices of Motion came up for finalhearing reasonably soon after ad-interim orders). The 2ndDefendant–Association went in appeal. On 7th March 2007, the Appeal Court by consent set aside the final order on the Notice ofMotion and remanded it for a fresh hearing but without expressingany opinion on the points raised. It clarified that the previous ad-interim status quo order would continue.

21. A few further points of note.

(a) On 15th December 2009, the lease for Plot A2 stoodtransferred by the MCGM to the Plaintiff. transferred by the MCGM to the Plaintiff.

(b) The 2nd Defendant filed its Notice of Motion No. 1320of 2013 seeking to modify the ad-interim order on thePlaintiff’s Notice of Motion. of 2013 seeking to modify the ad-interim order on thePlaintiff’s Notice of Motion.

(c) There is a more recent Government Policy of 15thMarch 2017 allowing renewal of leases for a furtherperiod of 30 years. The Plaintiff has applied for arenewal of the lease.March 2017 allowing renewal of leases for a furtherperiod of 30 years. The Plaintiff has applied for arenewal of the lease.

22. The very short point involved here is whether the MCGMcould have, first, claimed a re-vesting of the property to thedetriment of the Plaintiff or the Parsee Punchayet (as distinct fromany question of vesting or re-vesting as between the MCGM and theState Government); and, second, whether the law permits anylessor, even an instrumentality of the State, to simply re-enterleasehold property in this fashion by giving a notice or pasting it onthe site. If this cannot be done in law, then at least in this Notice ofMotion, Mr Chinoy for the Plaintiff must necessarily succeed and,consequently, the 2nd Defendant–Association’s application forvariation of the ad-interim order must fail.

23. I believe it is settled law that in any tenancy or lease,possession can be regained or resumed by the lessor or landlord onlyin a way known to the law, i.e. either by an appropriate order ofeviction and delivery of possession, or by a surrender of the tenancyor lease. Merely marching in is not a known mode of resumption ofpossession. The reason for this is plain. A lessee is not on the samefooting as, say, a trespasser. A lessee’s possession position is fromthe inception juridical, i.e. such as the law recognises. A tenant or alessee may be ‘holding over’. The concept of a tenant or lesseeholding over is also well-known to law.

24. Mr Chinoy is, therefore, completely justified in his relianceon State of Uttar Pradesh v Maharaja Dharmander Prasad Singh &1Ors. The facts there were somewhat peculiar but the statement oflaw on which Mr Chinoy relies, set out in paragraphs 30 and 31, iswholly unambiguous:

“30. A lessor, with the best of title, has no right to-resume possession extrajudicially by use of force, froma lessee, even after the expiry or earlier termination ofthe lease by forfeiture or otherwise. The use of theexpression ”re-entry” in the lease deed does notauthorise extra-judicial methods to resume possession.Under law, the possession of a lessee, even after theexpiry or its earlier termination is juridical possessionand forcible dispossession is prohibited; a lesseecannot be dispossessed otherwise than in due courseof law. In the present case, the fact that the lessor is theState does not place it in any higher or better position.On the contrary, it is under an additional inhibitionstemming from the requirement that all actions of 1(1989) 2 SCC 505.

Government and governmental authorities should have””a legal pedigree.In Bishan Das v. State of Punjab, [AIR1961 SC 1570 : (1962) 2 SCR 69] this Court said: (SCR pp.79-80)

“We must, therefore, repel the argumentbased on the contention that the petitionerswere trespassers and could be removed byan executive order. The argument is not onlyspecious but highly dangerous by reason ofits implications and impact on law and order…

Before we part with this case, we feel it ourduty to say that the executive action taken inthis case by the State and its officers isdestructive of the basic principle of the rule oflaw.”

31. Therefore, there is no question in the present caseof the Government thinking of appropriating to itself anextrajudicial right of re-entry. Possession can be resumedby Government only in a manner known to orrecognised by law. It cannot resume possessionotherwise than in accordance with law. Government is,accordingly, prohibited from taking possessionotherwise than in due course of law.”

(Emphasis added)

25. The emphasised portion shows, prima facie that the MCGMhad no authority in law whatsoever to merely give notice of re-entry,paste some notice on the building, and to then claim that it hadtaken back possession. The observations in paragraph 31 of theSupreme Court decision of a government appropriating to itself an

extra-judicial right of re-entry seem to me to apply entirely to a caselike this. The words of the Supreme Court are clear, and this willapply whether the authority is the MCGM or the StateGovernment. Possession can be resumed only in accordance withlaw, i.e. in due course of law. It cannot be by forcible entry or bypasting notices. I believe this is of importance to this day,throughout the city, wherever properties or plots are held on leasewhether from the MCGM or the Collector representing the StateGovernment. Merely putting up large boards that the property isleasehold does not mean the government is entitled to resumepossession otherwise than in accordance with law. That phrase, ‘inaccordance with law’ with all its many variants (‘due process of law’,‘procedure according to law’) means that, like any other lessor —indeed, more than any other lessor, for its actions are constrained byconstitutional safeguards — the government in any avatar can onlyresume possession as a lessor of leasehold property only under avalid order and decree of a court of competent jurisdiction, or if thelessee surrenders possession. Acquisition and requisitionproceedings stand on a different footing, but we are not concernedwith those capacities where the government exercises the policepower of the state over property. Merely because the government isthe lessor it enjoys no extra-judicial rights over the property to regain possession.

26. The response of the MCGM, therefore, on 21st July 2003(Exhibit “AA” to the Plaint at page 165) that the leasehold rights inPlot A1 did not subsist since it had taken possession on 2nd May2003 cannot be sustained.

27. This leaves the question of the minutes of 21st September2002. The issue before the authority was not at all of possession ofthe property being with the MCGM or even with the StateGovernment. The entire discussion of vesting and re-vesting wasutterly misdirected because that was a matter between the StateGovernment as the superior title holder and the MCGM, and theState Government’s policy of allowing the MCGM to renew leases.

This required the formality of the State Government to vest leasehold properties in the MCGM so that those leases could berenewed, but those could not be equated or read to mean that theMCGM had resumed, or could resume, possession of any propertyor that it could give a fresh lease to whomever it liked. To do so, ithad to follow the due process of law. It had to obtain an eviction decree and execute it.

28. The Plaintiff’s Notice of Motion No. 1115 of 2005 seeks atemporary injunction against the Defendants from interfering withthe Plaintiff’s possession of the property. The second relief soughtis to restrain the MCGM, the Association and its Chairman fromreceiving any rent from the tenants. Prayer (c) seeks an injunctionagainst renewal of the lease, and this is the subject matter of thepresently operative ad-interim order.

29. In my view, Notice of Motion No. 1115 of 2005 must succeed.It is made absolute in terms of prayer clause (a), (b) and (c) with aclarification that it is open to the MCGM to adopt such proceedingsas it may be advised in accordance with law regarding thetermination of the lease or the resumption of possession.

30. The direct consequence of this, inevitably, is that the 2ndDefendant’s Notice of Motion — for modification of the ad-interimorder of 24th June 2005, for the appointment of a Receiver and for adirection that lease rent be accepted by the MCGM from the 2ndDefendant — must necessarily fail. Notice of Motion No. 1320 of2013 is accordingly dismissed.

31. In the facts and circumstances of the case, there will be noorder as to costs.

(G. S. PATEL, J)