Bombay High Court
Mr. Vijay Sopan Machindar vs Mr. Puneet Jitendra Sejpal And Ors on 4 September, 2017
Bench: M.S. Sonak
Dinesh Sherla 507-as-wp-9729-17
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 9729 OF 2017
Mr. Vijay S. Machindar .. Petitioner
vs.
Mr. Puneet Jitendra Sejpal and ors. .. Respondents
Mr. P.S. Dani, Sr. Advocate a/w. V.S. Kapse i/b H.S. Rajshirke for the
Petitioner.
Mr. Vineet Naik, Sr. Advocate a/w. Mr. Bhushan Deshmukh i/b
Apeksha Murray i/b Kanga & Co. for Respondent No.1.
CORAM : M. S. SONAK, J.
DATE : 4 SEPTEMBER 2017.
ORAL JUDGMENT :-
1] Not on board. In view of urgency, taken on production board.
2] Heard Mr. Dani, learned Senior Advocate for the petitioner
and Mr. Naik, learned Senior Advocate for respondent No.1.
3] Rule. Rule is made returnable forthwith, with the consent of
and at the request of learned counsel for the petitioner and
respondent No.1 who is really the contesting respondent. Mr. Dani
states that respondent Nos.2 and 3 have been duly served.
Respondent Nos.2 and 3 have been impleaded in this matter because
the orders made by them are under challenge.
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4] The impugned orders dated 7th June 2016 and 9th August 2017
decline leave to the petitioner to contest the application made by
respondent No.1 under Section 24 of the Maharashtra Rent Control
Act, 1999 (MRC Act) seeking eviction of the petitioner from the suit
premises on the basis that respondent No.1 is the licensor and the
petitioner is licensee in respect of the suit premises and further, the
period of license, has already come to an end.
5] Mr. Dani submits that the competent authority, at the stage of
deciding whether leave to contest should be granted under Section
43 of the MRC Act, is not entitled to adjudicate upon the merits of
the defence raised by the defendant. He submits that the defence
raised in this case was that the two leave and license agreements
were never intended to be acted upon or were ever acted upon as
leave and license agreements, but rather, these agreements were
executed as a security for loan transactions under which the
petitioners had borrowed a sum of Rs.2.25 crores from the
respondent No. 1, which sum, has been duly repaid by the petitioner
through banking transactions. Mr. Dani submits that upon
repayment of the loan, there was no question of acting on the basis
of the alleged leave and license agreements. Mr. Dani submits that
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the alleged term of the license, even according to the respondent No.
1 expired on 22nd June 2011 but the application seeking eviction has
been instituted after three years. Mr. Dani submits that this is
evidence of the circumstance that the leave and license agreements
were never intended to be acted upon and in any case the
application seeking recovery of possession is barred by law of
limitation. Mr. Dani submits that these were the substantial defences
raised by the petitioner and the competent authority and the
appellate authority have exceeded jurisdiction in declining leave to
the petitioner to contest the proceedings under Section 24 of the
MRC Act.
6] Mr. Naik, learned Senior Advocate for respondent No.1,
submits that the proceedings under Section 24 of the said Act are
required to be disposed of in a summary manner. The only issues
relevant in such proceedings are the existence of a written leave and
license agreement and whether, the licensee continues in possession
of the suit premises, notwithstanding expiry of the period of license
set out in the leave and license agreement. Mr. Naik submits that all
other issues, that is issues relating to title, nexus with any alleged
underlying transactions etc. are totally alien to the scope of
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proceedings under Section 24 of the said Act read with Special
Provisions contained in Chapter - VIII of the said Act, which are to
be disposed off in a summary manner. Mr. Naik relies upon the
decision of this Court in Ami Merchandising Pvt. Ltd. vs. State of
Maharashtra and ors. - 2014 (3) Mh.L.J. 257, in support of these
propositions.
7] Mr. Naik submits that in the present case, the relationship
between the parties is governed by registered agreements dated 23 rd
June 2009 and 20th July 2010, which clearly make out a case of
licensor - licensee relationship. Mr. Naik submits that there is also no
dispute that the period prescribed in the agreements, has since
expired. Mr. Naik submits that since there is no serious dispute on
these two aspects, which are the only relevant aspects in proceedings
of this nature, leave to defend was rightly denied by the two Courts.
Since, the issues raised by the petitioner, apart from being false and
frivolous, transgress, limited scope of jurisdiction of the competent
authority under the special provisions of the said Act, the impugned
orders declining leave to defend were rightly made and warrant no
interference.
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8] Chapter V of MRC Act is concerned with special provisions for
recovery of possession of premises in certain cases. Section 24,
which is a part of Chapter V provides for summary disposal of
proceedings initiated by a licensor against the licensee for recovery
of the licensed premises on the expiry of the license. Section 24
provides that notwithstanding anything contained in the MRC Act,
licensee in possession or occupation of the premises given to him
license for residence shall deliver possession of suit premises to the
landlord on expiry of the period of license; and on the failure of the
licensee to so deliver the possession of the licensed premises, a
landlord shall be entitled to recover possession of such premises
from a licensee, on the expiry of the period of license, by making an
application to the competent authority, and, the competent authority,
on being satisfied that the period of license has expired, shall pass an
order for eviction of a licensee. Sub Section (2) of Section 24
makes a provision for payment of damages by a licensee who does
not deliver the possession of the licensed premises to the landlord on
the expiry of the period of license. Sub Section (3) of Section 24
provides that the competent authority shall not entertain any claim
of whatever nature from any other person who is not a licensee
according to the agreement of license. The explanation in this
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Section defines the expression 'landlord' and further provides that
an agreement of license in writing shall be conclusive evidence of
the facts stated therein.
9] Chapter VIII of the MRC Act provides for summary disposal of
certain applications, including, application under Section 24 of the
MRC Act. Section 43, which is a part of Chapter VIII, to the MRC
Act, inter alia contemplates leave to be applied for by a respondent
to contest the proceedings under Section 24, seeking his eviction
from the premises. Section 43(4)(a) provides that the licensee on
whom summons is duly served in the manner whether or a
registered post in the manner laid down in sub Section (3), shall not
contest the prayer for eviction from the premises, unless within 30
days of the service of summons on him, he files an affidavit stating
grounds on which he seeks to contest an application for eviction and
obtains leave from the competent authority to that effect. Section
43(4)(b) provides that the competent authority shall give to the
licensee leave to contest the application after the affidavit filed by
the licensee discloses such facts as would disentitle the landlord
from obtaining an order for recovery of possession of the premises
on the grounds specified in Section 24 of the MRC Act. Where leave
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is granted to the licensee to contest the application, the competent
authority shall commence the hearing of the application as early as
practicable and shall, as far as possible, proceed with the hearing
from day to day, and decide the same, as far as may be, within six
months of the order granting of such leave to contest the
application.
10] In this case, the petitioners, in their affidavit seeking leave to
contest the proceedings under section 24 of the MRC Act had
submitted that the two leave and licenses agreements dated 23 rd
June 2009 and 28th July 2009 were basically executed as security for
loan transactions under which the petitioners had borrowed an
amount of Rs.2.25 crores from the respondent No. 1. It was further
submitted that the loan amount has since been repaid through
banking transactions and post such repayment, there was no
question of either parties relying upon the leave and license
agreements and seeking eviction on the basis that the term stated in
the two agreements, has since expired. A further defence was raised
that the application under Section 24 of the MRC Act is barred by
limitation, since, according to the petitioners, the cause of action, if
any, arose, even according to the respondent No. 1 on 20 th June
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2011 and the application under Section 24 of the MRC Act was
instituted after the expiry of period of three years from the date of
alleged accrual of cause of action. The petitioners, in the appeal
court, also attempted to place reliance upon a MOU to contend that
the same explains the true relationship between the parties.
11] The competent authority, in its order dated 7 th June 2016, at
the stage of deciding whether leave to contest was granted to the
petitioners or not, proceeded to frame issues and decide the question
as to whether the respondent no. 1 was entitled to the relief in terms
of Section 24 of the MRC Act. The appeal court has endorsed the
conclusion recorded by the competent authority. However, the
appeal court has noted that from the bank statement placed by the
petitioner on record, it is possible to hold that the petitioner has
repaid the loan of Rs.2.25 crores to the respondent No. 1. The
appeal court has further observed that there is no material on record
to establish any nexus between the leave and license agreements and
the loan transaction. The appeal court also refused to take
cognizance of the MOU on the ground that such MOU was neither
referred to nor relied upon by the petitioner in the affidavit seeking
leave to contest the application under Section 24 of the MRC Act.
Dinesh Sherla 507-as-wp-9729-17
12] At the stage of deciding whether leave to contest in terms of
Section 43(4)(b) of the MRC Act is required to be granted or not,
the competent authority, is required to consider whether the affidavit
filed by the respondents discloses such facts has not disentitled the
landlord from obtaining any order for recovery of possession of the
premises on the grounds specified in Section 22 or 23 or 24. This
means that, at this stage, the competent authority is required to
apply its mind to determine whether the respondents have raised
arguable issues in the affidavit filed by the respondents seeking leave
to contest the application under Section 24 of the MRC Act. At this
stage, the competent authority is neither required nor expected to
adjudicate upon the merits of the claim of the applicant or the merits
of the defence raised by the respondents. At this stage, the
competent authority is required to examine whether the defence
raised by the respondents is an arguable and plausible defence, or
whether the defence is totally frivolous and in the nature of a
moonshine. At this stage, the competent authority is required to also
examine whether the defence raised, is at all a defence which can be
gone intro by the competent authority in the summary proceedings
under Section 24 of the MRC Act or whether, the defence raised is
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quite alien to the scope of the said provision. As long as affidavit
filed by the respondents discloses such facts as would disentitle the
landlord from obtaining an order for recovery of possession of the
premises on the grounds specified in Section 24 of the MRC Act,
leave to contest is required to be granted. However, one thing is
clear that the competent authority, at the stage of deciding whether
leave to contest should be granted or not, is not entitled to delve
into or adjudicate upon the merits or demerits of the defence or to
proceed to decide upon the merits and demerits of the respective
cases put-forth by the rival parties. In this case, this is what
competent authority appears to have done and to that extent, the
order of the competent authority does appear to be in excess of
jurisdiction vested in it.
13] The petitioner, as noted earlier, has raised various defences,
which, if accepted, may possibly disentitle the respondent No. 1
from recovering the possession of the suit premises on grounds
specified in Section 24 of the MRC Act. In support of the defences
raised, some material in the form of bank statement has also been
produced by the petitioners. In fact, the appeal court, has itself
observed that the bank statements produced on record by the
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respondents indicate the repayment of the amount of Rs.2.25 crores
by the petitioners to the respondent No. 1. At this stage, it is not for
this Court to go into the issue as to whether this amount represents
the loan transaction between the parties and further whether the
leave and license agreements relied upon by the respondent No. 1
were intended only as a security in respect of such loan transactions.
All that is necessary to observe is that this is not a case where it can
be said that the affidavit filed by the petitioner did not even disclose
such facts as would disentitle the landlord from obtaining recovery
of possession of the suit premises on the grounds specified in Section
24 of the MRC Act or that the defences raised were entirely frivolous
or in the nature of a moonshine. These are only prima facie
observations for the purpose of deciding whether leave to contest
was required to be granted in the facts and circumstances of the
present case and therefore, these observations, need not influence
the competent authority in deciding the matter on its merits and in
accordance with law.
14] In Ami Merchandising Pvt. Ltd. (supra), this Court, has not
held that the competent authority is required to evaluate the claim
and the licensor or the defence of the licensee on merits at the stage
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of considering an application by the respondent (licensee) for leave
to contest the proceedings. Therefore, the decision in Ami
Merchandising Pvt. Ltd. (supra) is of no assistance to the respondent
No. 1 in the fact situation in the present case.
15] This is however a case where the petitioner is required to be
put to terms. The agreements contemplated payment of
compensation by the petitioner at the rate of Rs.40,000/- per month.
Notwithstanding the defence, there is no dispute that the petitioner
has paid such compensation upto June 2011. The petitioner
continues in possession of the suit premises but from July 2011 till
August 2017, has paid no compensation. The arrears have therefore
run upto Rs.31,20,000/-.
16] Mr. Dani, learned Senior Advocate for the petitioner, on the
basis of instructions from the Advocate on record, makes a
statement that the petitioner will, without prejudice, to the
petitioner's rights and contentions, pay to respondent No.1 the
amount of Rs.31,20,000/- within a period of six weeks from today.
Further, the petitioner will continue to pay a sum of Rs.40,000/- per
month to respondent No.1 on or before 10 th day of each succeeding
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month until disposal of the application under Section 24 of the said
Act. These statements are accepted. The petitioner is directed to
comply with such statements.
17] In case of default in payment of sum of Rs.31,20,000/- within
six weeks from today, the petitioner shall not have the benefit of this
order and this petition shall be deemed to have dismissed without
any further reference to the Court.
18] The impugned orders are set aside. Leave to contest the
proceedings is hereby granted. The competent authority is directed
to dispose of the proceedings initiated by respondent No.1 on their
own merits and in accordance with law, without being influenced by
the observations in the impugned orders or for that matter the
observations in the present order as well. All contentions of all
parties are, accordingly kept open.
19] The competent authority to endeavour to dispose of the
proceedings within a period prescribed under Section 43(4)(c) of
the said Act. The parties to cooperate in the matter of disposal of the
proceedings within the period as prescribed for.
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20] Rule is made absolute to the aforesaid extent. There shall
however, be no order as to costs.
(M. S. SONAK, J.)
