Bombay High Court
Deepak S. Kavadiya vs Addl. Divisional Commissioner Konkan ... on 12 November, 2024
2024:BHC-AS:43296
Megha 908_wp_14856_2024_fc.docx
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.14856 OF 2024
Deepak S. Kavadiya ....Petitioner
V/s.
Additional Divisional
Commissioner, Konkan Division
and Ors. ... Respondents
____________________
Mr. Surel Shah, Senior Advocate with Mr. Ashwin Shete, Mr. Abhay
Dhadiwal and Ms. Vidhi Karia i/b. M/s. Jaykar & Partners for
Petitioner.
Mr. Anil Singh, Senior Advocate with Mr. D.D. Singh, Mr.
Rushikesh S. Kekane, Mr. Shivam J. Singh, Mr. Adarsh Vyas, Mr.
Rama Gupta and Ms. Ruchita Verma for Respondents.
___________________
CORAM : SANDEEP V. MARNE, J.
Judgment reserved on : 24 October 2024.
Judgment pronounced on : 12 November 2024.
Judgment:
1) The issue involved in the present Petition is about
jurisdiction of the Competent Authority under the provisions of
Section 24 of the Maharashtra Rent Control Act, 1999 (MRC Act) to
try and entertain application for eviction filed by Petitioner-Licensor
for eviction of Respondent No.3-licensee in the light of dispute
amongst them about the exact purpose for which the license is
granted. Under Section 24 of the MRC Act, the Competent Authority
has jurisdiction to order eviction of licensee where the license is
Digitally
signed by
MEGHA
MEGHA
SHREEDHAR
granted only for residential purpose. If the license is granted for
SHREEDHAR PARAB
PARAB Date:
2024.11.12
17:07:16
+0530 purpose other than residential, the Competent Authority loses
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jurisdiction under Section 24 of the Act and the Licensor would then
need to institute a Suit before Small Causes Court for eviction of
licensee. While it is the contention of Petitioner-Licensor that the
license was granted purely for residential purpose, it is the
contention of Respondent No.3-licensee that the license was for
commercial purpose, thereby ousting the jurisdiction of the
Competent Authority under Section 24 of the MRC Act. The short
issue that therefore arises for consideration is whether license has
been granted by Petitioner-Licensor in favour of Respondent No.3-
licensee for residential or commercial purposes.
2) The issue arises in the light of challenge set up by the
Petitioner to order dated 19 September 2024 passed by the
Additional Divisional Commissioner, Konkan Division allowing
Revision Application by Respondent No.3-licensee and setting aside
the eviction order passed by the Competent Authority on 6 August
2024 in Eviction Application No.178 of 2023. The Competent
Authority had rejected the application filed by Respondent No.3-
licensee for grant of leave to defend under the provisions of Section
43 of the MRC Act on the ground that the premises are let out for
residential purposes. Simultaneous with the rejection of leave to
defend vide order dated 6 August 2024, the Competent Authority
proceeded to allow Eviction Application by separate order passed on
the same day directing Respondent No.3 -licensee to handover
possession of the licensed premises to the Petitioner -Licensor with
further direction to pay damages @ Rs.2,00,000/- per month from 2
April 2022 till the date of handing over of possession of the premises.
The eviction order dated 6 August 2024 passed by the Competent
Authority has been set aside by the Revisional Authority by allowing
the Revision preferred by Respondent No.3-licensee vide order dated
19 September 2024 by holding that the license was granted for
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commercial purposes. Order dated 19 September 2024 passed by the
Revisional Authority is the subject matter of challenge in the
present Petition.
3) Facts of the case as pleaded in the Petition are that the
Petitioner is the owner in respect of Flat No. A/1102, Juhu Griha
Swapna CHSL, JVPD, Juhu, Vile Parle West, Mumbai-400056
(licensed premises). According to Petitioner, Respondent No.3
needed residential premises in Juhu and approached the Petitioner
through a real estate broker. A leave and license agreement dated 27
April 2017 was executed between Petitioner and Respondent No. 3
granting license in respect of the premises for the period from 1 May
2017 to 30 April 2019 on payment of monthly license fee of Rs.
40,000/- per month in addition to security deposit of Rs.2,00,000/-.
As per the agreement dated 27 April 2017, the licensee was to use
the premises for residential purpose. After expiry of the first license
agreement, Petitioner and Respondent No.3 entered into three
subsequent license agreements for the years 2019, 2020 and 2021.
The last license agreement was executed on 5 May 2021 for the
period from 1 May 2021 to 1 April 2022. According to Petitioner,
even the last License Agreement dated 5 May 2021 granted license
for use of the premises for residential purpose only. According to
Petitioner, Respondent No.3 did not comply with the terms of the
license agreement dated 5 May 2021 and did not pay license fees
from the month of April 2021. Petitioner therefore served notice on
Respondent No.3 on 25 July 2022 for payment of arrears of license
fees of Rs. 14,00,000/- and for recovery of possession of the premises.
On 1 September 2022, Respondent No.3 replied the notice raising a
plea that an amount of Rs. 3,39,49,711/- was due to Respondent No.3
from the Petitioner towards business transaction. Petitioner
addressed letter dated 4 October 2022 to the co-operative Society
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informing it about expiry of the license and addressed complaint to
the police on 8 October 2022. In the above background Respondent
No.3 addressed demand notice dated 9 November 2022 demanding
an amount of Rs. 3,40,00,000/- or return diamonds taken by the
Petitioner from her or execution of sale deed of the licensed premises
after accepting amount of Rs.80,00,000/- towards balance
consideration. The husband of Respondent No.3 filed FIR against the
Petitioner before Juhu Police Station. However, after conducting
investigations police filed 'C' summary report in the said FIR.
4) In the above background, Petitioner filed Eviction
Application No. 178 of 2023 against Respondent No. 3 before the
Competent Authority under provisions of Section 24 of the MRC Act
seeking recovery of possession of the licensed premises and damages
for unlawful occupation thereof. After receipt of summons,
Respondent No.3 appeared in the application and filed application
seeking leave to defend under the provisions of Section 43 of the
MRC Act, to which Petitioner filed reply. After hearing both the
parties, Competent Authority proceeded to pass order dated 6
August 2024 rejecting the application for leave to defend holding
that the premises were let out for residential use and that the
alleged transaction of diamond was unrelated to the transaction of
license. On 6 August 2024, the Competent Authority passed a
separate order allowing the Eviction Application No.178 of 2023 and
directed Respondent No.3 to handover possession of the licensed
premises to the Petitioner with further direction to pay damages at
double the amount of license fee i.e. Rs. 2,00,000/- per month from 2
April 2022 till handing over possession of the licensed premises.
5) Aggrieved by the orders dated 6 August 2024 rejecting leave
to defend and allowing the eviction application, Respondent No.3
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preferred Revision Application under the provisions of Section 44 of
the MRC Act before the Additional Divisional Commissioner,
Konkan Division. The Revisional Authority has allowed the Revision
Application of Respondent No.3 holding that the license in respect of
the licensed premises is granted for commercial purpose and that
therefore the Competent Authority did not have jurisdiction to
decide Eviction Application of the Petitioner under Section 24 of the
MRC Act. Petitioner has filed this Petition challenging the order of
the Revisional Authority dated 19 September 2024.
6) Mr. Surel Shah, the learned Senior Advocate appearing for
Petitioner would submit that the Revisional Authority has erred in
holding that the license in respect of the premises is granted for
commercial use ignoring the specific covenant of the first as well as
the last agreement specifically providing for use of the premises for
residential purposes. That the suit premises comprise of residential
flat situated in co-operative housing society. That it is unlawful
under the provisions of Section 30 of the MRC Act to let out
residential premises for commercial use. Respondent No.3 himself
has admitted in various correspondence that he has been residing in
the premises. That in addition to specific covenants of the licensed
agreement, there are several other documents on record containing
clear admissions on the part of Respondent No.3 -licensee that she
always resided in the suit premises. That stray references to
commercial use in the last agreement cannot be construed to mean
that there was any intention on the part of the parties to create
license for commercial use. That those clauses suggesting
commercial use can, at best, be interpreted to mean that business
could be carried in the premises after acquiring necessary licenses.
That not even a single license is procured by Respondent No.3 or her
husband for commencing any business in the premises. That several
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bills sought to be relied upon by Respondent No.3 clearly reflect the
address of her establishment at Dhavalgiri building and not at the
licensed premises.
7) Mr. Shah would further submit that the Revisional
Authority has erred in misreading the provisions of Section 55 of the
MRC Act. That if the license agreement is unregistered, landlord is
also entitled to disprove the terms and conditions of license
suggested by tenant. That therefore the Revisional Authority ought
to have considered various other documents in conjunction with the
covenant of last license agreement for arriving at a conclusion that
license was granted for residential use.
8) Mr. Shah would rely upon judgment of the Apex Court in
TEXCO Marketing Private Limited V/s. Tata AIG General
Insurance Company Limited and others1 in support of his
contention that offending clauses in a contract can be struck off by
invoking the doctrine of blue pencil. That few stray references of
commercial use in the last agreement being repugnant to the main
clause of granting license for residential use, the same are required
to be ignored. He would also rely upon judgment of the Apex Court
in Shin Satellite Public Co. Ltd. V/s. Jain Studios Ltd. 2 in
support of his contention that it is the duty of the Court to severe
and separate trivial and technical parts of the contract by retaining
the main or substantial part by giving effect to the latter if it is
legal, lawful and otherwise enforceable. Mr. Shah would accordingly
pray for setting aside order passed by the Revisional Authority.
9) Petition is opposed by Mr. Anil Singh, the learned Senior
Advocate appearing for Respondent No.3- licensee. He would submit
1
. (2023) 1 SCC 428
2
. (2006) 2 SCC 628
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that all the license agreements are unregistered and therefore, the
terms and conditions suggested by licensee would prevail as per the
provisions of Section 55 of the MRC Act. He would take me through
various clauses of the last License Agreement dated 5 May 2021 to
demonstrate that the license was granted for the purpose of conduct
of business in the premises. He would submit that as against
reference of residential use at only one place in Clause 1 of the
License Agreement, there are multiple covenants permitting use of
the licensed premises for business /commercial purpose. That even
Clause 1 of the License Agreement states that the premises would be
used for residential 'and lawful activities'. That thus, even in Clause
1 there is no prohibition on use of the premises for commercial
purposes, which is lawful activity. Mr. Singh would submit that all
the previous license agreements have been superseded by the last
agreement dated 5 May 2021 and that therefore the covenants of the
earlier License Agreements are irrelevant for deciding the purpose of
licenses under the last agreement. He would submit that the license
agreement has to be read as a whole and upon holistic reading
thereof, the inescapable conclusion that emerges is that the license
is for commercial use. That the case does not involve any intentional
mistake in a stray clause of the license agreement permitting
commercial use, but parties have consciously agreed to grant
licenses for commercial use in favour of Respondent No.3. Mr. Singh
also relied upon provisions of Section 24(3)(b) of the MRC Act in
support of his contention that the last license agreement becomes a
conclusive proof of the arrangement between the parties. Mr. Singh
would rely upon judgment of this Court in Amarjit Singh Vs. R.N.
Gupta3 in support of his contention that Court cannot go beyond the
document to find out the intention of the parties. He would also rely
upon judgment of this Court in Rekha Promodrao Deshmukh V/s.
3
. 1995 SCC Online Bom 191
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Gajanan Maharaj Sanstan, Shegaon and Ors.4 holding that
only such landlord, who has given license for residence can file
proceedings for recovery of possession under Section 24(1) of the
MRC Act. Mr. Singh would pray for dismissal of the Petition.
10) Rival contentions of the parties now fall for my
consideration.
11) As observed above, the hotbed of controversy between the
parties is about the exact use for which license in respect of the
premises is granted. The purpose of grant of license assumes
significance in the light of legislature making available speedy
remedy of eviction of licensee by filing an application before the
Competent Authority under Section 24(1) of the MRC Act. Section
24 of the MRC Act provides thus:
24. Landlord entitled to recover possession of premises given
on licence on expiry
(1) Notwithstanding anything contained in this Act, a licensee in
possession or occupation of premises given to him on license for
residence shall deliver possession of such 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 the 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.
(2) Any licensee who does not deliver possession of the premises to the
landlord on expiry of the period of licence and continues to be in
possession of the licensed premises till he is dispossessed by the
Competent Authority shall be liable to pay damages at double the rate
of the licence fee or charge of the premises fixed under the agreement
of licence.
(3) 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 licence.
4
. 2016(2) Mh.L.J. 813
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Explanation.- For the purposes of this section,-
(a) the expression "landlord" includes a successor-in-interest who
becomes the landlord of the premises as a result of death of such
landlord; but does not include a tenant or a sub-tenant who has given
premises on licence;
(b) an agreement of licence in writing shall be conclusive evidence of
the fact stated therein.
12) Thus, an application under sub-section (1) of Section 24 of
the MRC Act can be made to the Competent Authority only if the
license is granted for residence. Section 42 of the MRC Act lays down
special provisions for making application to the Competent
Authority for eviction of a licensee and provides thus:
42. Special provisions for making application to
Competent Authority by landlord to evict tenant or
licensee.
Notwithstanding anything contained in this Act or any other law
for the time being in force or any contract to the contrary or any
judgment or decree or order of any court, but subject to the
provisions of section, 22 or 23 or 24 as the case may, be; a
landlord may submit an application to the Competent Authority,
signed and verified in a manner provided in rules 14 and 15 of
Order VI of the First Schedule to the Code of Civil Procedure,
1908, as if it were a plaint, to the Competent Authority having
jurisdiction in the area in which the premises are situated, for
the purpose of recovery of possession of the premises from the
tenant or licensee, as the case may be.
13) Section 43 deals with the procedure for disposal of
application filed before the Competent Authority and provides thus:
43. Special procedure for disposal of applications.
(1) Every application by a landlord under this Chapter for the
recovery of possession shall be accompanied by such fees as may
be prescribed. The Competent Authority shall deal with the
application in accordance with the procedure laid down in this
section.
(2) The Competent Authority shall issue summons in relation to
every application referred to in sub-section (2) in the form
specified in Schedule Ill.
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(3) (a) The Competent Authority shall, in addition to, and
simultaneously with; the issue of summons for service on the
tenant or licensee, as the case may be, also direct the summons to
be served by registered post, acknowledgment due, addressed to
the tenant or the licensee or agent empowered by such tenant or
licensee to accept the service at the place where the tenant or
licensee or such agent actually and voluntarily resides or carries
on business or personally works for gain;
(b) When an acknowledgment purporting to be signed by the
tenant or licensee or their agent received by the Competent
Authority or the registered article containing the summons is
received back with an endorsement purporting to have been made
by a postal employee to the effect that the tenant or licensee or
their agent had refused to take delivery of the registered article,
the Competent Authority may proceed to hear and decide the
application as if there has been a valid service of summons.
(4) (a) The tenant or licensee on whom the summons is duly
served in the ordinary way or by registered post in the manner
laid down in sub-section (3) shall not contest the prayer for
eviction from the premises, unless within thirty days of the
service of summons on him as aforesaid, he files an affidavit
stating grounds on which he seeks to contest the application for
eviction and obtains leave from the Competent Authority as
hereinafter provided, and in default of his appearance in
pursuance of the summons or his obtaining such leave, the
Statement made by the landlord in the application for eviction
shall be deemed to be admitted by the tenant or the licensee, as
the case may be, and the applicant shall be entitled to an order for
eviction on the ground aforesaid,
(b) The Competent Authority shall give to the tenant or licensee
leave to contest the application if the affidavit filed by the tenant
or licensee discloses such facts as would disentitle the landlord
from obtaining an order for the recovery of possession of the
premises on the ground specified in section 22 or 23 or 24;
(c) Where leave is granted to the tenant or 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.
(5) The Competent Authority shall, while holding an inquiry in a
proceeding to which this Chapter applies, follow the practice and
procedure of a court of small causes, including the recording of
evidence.
14) Thus, the summary procedure is contemplated before the
Competent Authority under Section 43 of the MRC Act, under which
the licensee is not entitled to defend the eviction application in
absence of leave granted by the Competent Authority. Section 43(4)
(c) postulates hearing of eviction application on day-to-day basis and
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decision thereof within six months from the date of grant of leave.
Though recording of evidence is also contemplated under Section
43(5) of the MRC Act, the procedure for eviction of licensee is of
summary nature requiring the licensee to secure leave from the
Competent Authority to defend the eviction application. The order
of the Competent Authority passed under Section 24(1) of the MRC
Act by following procedure specified under Section 43 is not
appealable. However, special remedy of revision is made available
before the State Government or an officer not below the rank of
Additional Commissioner of Revenue Division. Section 44 of the
MRC Act provides thus:
44. Order of Competent Authority to be non-appealable and
revision by State Government.
(1) No appeal shall lie against an order for the recovery of
possession of any premises made by the Competent Authority in
accordance with the procedure specified in section 43.
(2) The State Government or such officer, not below the rank of an
Additional Commissioner of a Revenue Division, as the State
Government may, by general or special order, authorise in this
behalf, may, at any time suo motto or on the application, of any
person aggrieved, for the purposes of satisfying itself that an order
made in any case by the Competent Authority under section 43 is
according to law, call for the record of that case and pass such order
in respect thereto as it or he thinks fit:
Provided that, no such order shall be made except after giving the
person affected, a reasonable opportunity of being heard in the
matter:
Provided further that, no powers of revision at the instance of
person aggrieved shall be exercised, unless an application is
presented within ninety days of the date of the order sought to be
revised.
15) Under Section 45 of the MRC Act, the Competent Authority
is invested with power to execute the eviction order upon failure to
comply with the same within a period of 30 days. Section 45 reads
thus:
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45. Effect of refusal or failure to comply with order of
eviction.
If any person refuses or fails to comply with the order of eviction
made under section 43 within thirty days of the date on which it
has become final, the Competent Authority or any other officer duly
authorized by the Competent Authority in his behalf, may evict
that person from, and take possession of, the premises and deliver
the same to the landlord and for that purpose, use such force as
may be necessary.
16) Thus, the MRC Act provides for a special package for
eviction of licensee by filing application under Section 24(1) by the
Licensor. The object of the legislature is to encourage homeowners
to make available housing stock for home users through the
arrangement of license. To encourage the activity of release of
adequate housing stock in the market, especially in the urban areas,
it becomes necessary for the legislature to instill confidence among
home owners that they can recover possession from the home user by
adopting speedy remedy after expiry of tenure of the license.
However, this speedy remedy is made available by the Legislature
only in respect of the license granted for residence. The speedy
mechanism for recovery of possession of licensed premises is not
made available where the license is granted for commercial use. It is
not necessary to delve deeper into the exact legislative intent behind
excluding licenses granted for commercial use from the sphere of
speedy remedy under Section 24 of the MRC Act. Possible reason
could be the ability of commercial property owners to undertake
lengthy and complex litigation before Small Causes Courts/ Rent
Courts for recovery of possession of premises let out for commercial
use. Therefore, the legislative intent behind making available speedy
remedy of eviction before the Competent Authority under Section 24
of the MRC Act must be borne in mind while deciding the
controversy at hand. The fact that License granted for commercial
use is not covered by provisions of Section 24 of the MRC Act, the
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necessary corollary is that the Licensor in respect of the premises let
out for commercial use is required to file a Suit for eviction of
licensee in Small Causes Courts, wherever they are established, or
before a Rent Court.
17) Having examined broadly the statutory scheme of the MRC
Act to recover possession of the licensed premises from a licensee
under Section 24 of the MRC Act, it is time to go back to the moot
issue of the exact purpose for which licensed premises are let out in
the present case for examining whether jurisdiction of the
Competent Authority under Section 24 of the MRC Act is retained or
ousted.
18) Petitioner and Respondent No.3 executed first Leave and
License Agreement dated 27 April 2017 for the period from 1 May
2017 to 30 May 2019. Clause 6 of the said license agreement dated
27 April 2017 provides thus:
6. Use: That the Licensed premises shall only be used
by the Licensee for Residential purpose. The Licensee
shall maintain the said premises in its existing condition and
damage, if any, caused to the said premises, the same shall be
repaired by the Licensee at its own cost subject to normal
wear and tear. The Licensee shall not do anything in the said
premises which is or is likely to cause a nuisance to the other
occupants of the said building or to the prejudice in any
manner to the rights of Licensor in respect of said premises or
shall not do any unlawful activities prohibited by State or
Central Government.
(emphasis added)
19) There is no dispute to the position that apart from specific
covenant in Clause 6 of the Agreement dated 27 April 2017 that the
licensed premises shall be used by the licensee for residential
purpose, there is no other covenant in the agreement suggesting use
of the premises for business/commercial purposes. Petitioner has not
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placed on record second and third License Agreements covering the
period from 1 April 2019 till 30 April 2021. However, there is no
dispute amongst the parties that two separate License Agreements
were executed during that period as well. The last License
Agreement was executed between the parties on 5 May 2021, and it
is this agreement, which is at the heart of the controversy, especially
about interpretation of its covenants about the purpose of license. It
would therefore be necessary to reproduce the relevant covenants of
License Agreement dated 5 May 2021, relied upon by both the sides.
The relevant clauses are as under:
C. The Licensor represents and confirms to the Licensee that:
(i). ...
(ii) On the Licensee paying the Licensor, the License Fees and on
observing and performing all the terms, conditions and covenants
hereof, the Licensee shall be entitled to peacefully conduct
business from the Licensed Premises during the License
Period. The Licensee has not paid the rent due to covid lockdown
from two years and is liable to pay the same within two three
months. If not paid, legal action can be taken against them by the
Licensor.
xxx
1. LICENSEE:
The Licensor hereby grant to the Licensee a bare non-assignable
and non-transferrable License to use and occupy the said Licensed
Premises for a period of 11 months commencing from 01.05.2021
and ending on 01.04.2022. The Licensee has agreed that the
said Licensed Premises will be used for residential and
lawful activities etc., at the sole risk, cost and expense of the
Licensee and on the terms and subject to the conditions contained
in this Agreement. The Licensee agrees that he will use and
occupy the Licensed Premises on Leave and License basis (without
in any manner creating tenancy/lease/sub tenancy
right/title/interest and/or any other relation, except what is
mentioned herein) subject to the terms and conditions of this
Agreement.
xxx
8. COVENANTS OF THE LICENSEE:
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a. ...
xxx
n. The Licensee shall at its own costs, risks and expenses
obtained all necessary approvals, clearances, permissions,
licenses, permits, exemptions, NOCs sanctioned etc. (by
whatever name called) as may be required by law (presently
and from time to time) for carrying on his said Business
(and/or in connection therewith or in relation thereto) in the
Licensed premises in the manner contemplated by this
Agreement; and as and when required by the Licensor
produce such approvals, clearances, permissions, licenses,
permits, NOCs, exemptions, sanctions etc. for inspection by
the Licensor and give notarized copies thereof to the Licensor
prior to commencing the said Business (i.e. commencing
trading) in /from the Licensed premises. The Licensee further
covenants that the Licensee shall at all times comply with all
the terms and conditions, if any, of such approvals,
clearances, permissions, licenses, permits, NOCs, exemptions,
sanctions, and all laws, rules, regulations etc. without any
delay, demur or default.
xxx
p. To allow and permit the Licensor, at all reasonable times, to
enter the Licensed Premises during office/business hours
to the Licensee and to view and/or make physical verification
of the state and condition thereof and to direct the Licensee
to set right any wrongful use, damage, repairs, etc.
q. Not to claim any protection or any other right under the
provisions of The Maharashtra Rent Control Act, 1999,
(and/or any other statutory enactment there to and or any
other acts, ruling, judgments and/or etc.), as it is the
intention of both the Parties to this Agreement that this
License is only a bare non-assignable and non-transferrable
permissible personal license given by the Licensor to the
Licensee for the use and occupation of the Licensed
Premises for commercial purposes during the
subsistence of this Agreement.
r. To use the Licensed Premises with due care and diligently
and to duly and regularly maintain the Licensed Premises in
just and proper manner. The Licensee shall be responsible for
all acts, deeds, actions, omissions, damages, losses, repairs,
replacement etc. caused to the Licensed Premises whether by
the Licensee, his Authorized Associates, staff, employees,
guests during the continuance of this Agreement.
xxx
u. The Licensee hereby undertakes that he will not make
changes to the Licensed Premises in the nature of permanent
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alteration, permanent addition, modification, alteration,
amendment of the structure including alteration/modification
of columns, chiseling of the beams, excessive loading of the
slabs by placement of water tanks, AC equipment etc., which
in any manner howsoever threatens the integrity of the
structure which houses the Licensed Premises. However,
the Licensee shall have the right to carry out
additional furnishings and/or fitments in the Licensed
premises, as required, so as to suit their business
needs, including any other non-structural alterations as are
required by the Licensee with the prior written permission of
the Licensor, which shall be granted within 5 days.
v. The Licensee hereby indemnifies and keeps indemnified and
defend and save harmless the Licensor and/or its agent (s)
and/or its officers and/or its employees and/or its
representatives against all actions, injury, claims, loss,
damage, penalties, prosecutions, prejudice etc. that the
Licensor and/or its agent(s) and/or its employees and/or its
representatives and/or its property and/or the customers
/visitors to the said Licensed premises may sustain and/or
suffer as also for all amounts whether by way of costs,
charges, expenses damages or otherwise, that the Licensor
may incur and or for which the Licensor may be put to notice
of or may become and or be held liable and/or responsible,
including for such claims, loss, damage, prejudice etc. which
arise in connection with and /or in relation to:
(i) defect(s) and/or deficiency/deficiencies in and/or harmful
effects of the goods and /or services of the Licensee
and /or
(ii) act(s), deed(s), matter(s), things etc. omitted and/or
committed by the Licensee and/or his employees and
or his servants and/or his representatives and/or.
(iii) negligence, misrepresentation, default, breach,
violation, contravention etc. on the part of the
Licensee and/or its employees and/or his servants
and/or his servants and/or his representatives, etc.
11. FORCE MAJEURE:
a) Upon the occurrence of any of the force majeure events
like fire, accident, riots, flood, earthquake, storm,
terrorist activities, war, Act of God, which results in
closure of business of the Licensee in the Licensed
Premises, it shall be declared an event of force majeure.
It is clarified that a force majeure event will be declared
as such only if such an event affects the physical
condition of the Licensed Premises resulting in the
Licensee being not being able to use or have access to the
Licensed Premises but such event shall not include any
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other event such as but not limited to business
recession, economic breakdown or strikes.
(emphasis and underlining added)
20) Thus, Clause 1 of the License Agreement provided that the
licensed premises would be used for residential and lawful activities.
Relying on Clause 1 of the Agreement Mr. Shah contends that even
the last agreement is for residential purposes alone. As against this,
Mr. Singh relies upon recital 'C (ii)' providing that licensee was
entitled to peacefully conduct business from the licensed premises
during the license period. Mr. Singh has also relied upon Clauses
8(n),(p),(q), (r),(u), (v) and 11(a) to submit that permission was
granted for use of the premises for business and commercial
purposes.
21) Thus, there are conflicting clauses in the last License
Agreement dated 5 May 2021. While Clause 1 contemplates use of
License Premises for residential and lawful activities, other clauses
seem to suggest that premises could also be used for commercial
purposes. For the purpose of the present Petition, the issue of 'use' is
relevant only for the purpose of determining jurisdiction of
Competent Authority under Section 24 of the MRC Act. The
controversy relating to 'use' is not relevant for deciding the allegation
of change of user for termination of license. Therefore, what needs to
be found out is whether the license is granted for residence for
invoking jurisdiction of Competent Authority under Section 24 of the
MRC Act.
22) Mr. Singh would submit that under provisions of Clause (b)
of Sub Section 3 of Section 24 of the MRC Act, only covenants of
Agreement of License are required to be considered and the
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extraneous material sought to be relied upon by Petitioner is
irrelevant. Additionally, he has also relied upon 'Entire Agreement'
clause in the agreement which reads thus:
17. ENTIRE AGREEMENT:
The Parties hereto acknowledge, declare and confirm that this Agreement
embodies the entire agreement and understanding between the Parties
hereto with regard to the subject matter and supersedes and cancels all
the prior discussions negotiations and understandings between the
Parties, whether written or oral.
23) The Revisional Authority has accepted the contention of
Respondent No.3 by refusing to take into consideration any other
document other than covenants of License Agreement. The relevant
findings recorded by the Revisional Authority in paragraphs 5 to 11
are as under:
5. The applicant raised various contention with documentary
evidence of photographs and vouchers. As per the documents
places on record it shows that commercial transaction is also
involved between applicant's company and respondent. There are
no demand notice places on record by the respondent regarding
non payment of license fee by the applicant since 2017 to till date.
6. The Respondent even not places on record any ledger statements or
any documents which showing that the applicant paying the
license fee of from first leave and license agreement.
7. Perusal of subject leave license agreement number two clearly
disclose that subject premises was license for commercial and not
for residential, and this fact has been clearly agitated by the
appellant before the competent authority in leave to defend
application and several clauses of the subject leave license
agreement were also incorporated under the said leave to defend
application, but impugned order absolutely does not whisper any
discussion therein nor there is any finding as well.
8. However, if the clauses are perused, it is crystal clear that the
subject premises was licensed for the purpose of commercial.
Section 24, subsection 3(b) of Maharashtra rent control act
Provides that the agreement itself is the conclusive evidence of
facts stated in the agreement and hence any other document other
than the leave and license agreement cannot be looked into and to
be taken into consideration.
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9. Merely because certain documents referred by the respondent
indicating that the premises is residential and is in residential
building that itself does not mean that said leave and license
agreement, was not license for commercial. section 24 of
Maharashtra rent control act does not provide that merely because
the premises which is licensed under leave and license agreement
is residential that itself does not qualify the test of the purpose of
giving the premises on leave and license.
10. The test qualifying the provisions of section 24 of the
Maharashtra rent control act specifically provides that the
premises shall be given for residential, which clearly means if the
premises is not given for residential in that event section 24 cannot
be invoked. Hence, in such circumstances, it is more than apparent
on the face of record that, the subject premises under the subject
leave and license agreement is not licensed for residential, but
licensed for commercial purpose It is clearly proved beyond doubt
that since the premises was not licensed for the purpose of
residential and hence ejectment, application itself was not
maintainable and on the ground of maintainability itself, the
ejectment application is liable to be dismissed. The same is
accordingly dismissed.
11. The learned authority overlooked the subject leave license
agreement number two. and though the same is not registered, but
still Id. Authority below wrongly held that the subject leave &
license agreement is registered which has also materially affected
the result of the said eviction application. As per section 55 of
Maharashtra control act, the said license agreement is not
registered and hence also the contention of the appellant, about
licensing the subject premises for commercial prevails over the
contention of the respondent that the premises was licensed for
residential.
As a result of the aforesaid discussion, I am inclined to exercise
the discretion in favour of the Applicant and allow the Revision.
Taking into consideration all these facts and circumstances I
proceed to pass the following order:
ORDER
1. Revision Application is allowed.
2. The order of Competent Authority Konkan Division in
case No.178 of 2023 dated 06.08.2024 is set aside.
3. The Parties be informed accordingly.
24) Thus, the Revisional Authority has relied upon Section 55
of the MRC Act for accepting the contention of the licensee that in
absence of registration of the licence agreement, her version of
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licence being granted for commercial use would prevail. Section 55 of
the Act provides for providing for compulsory registration of tenancy
agreement and consequences of non-registration. Section 55 provides
as under:
55. Tenancy agreement to be compulsorily registered
(1) Notwithstanding anything contained in this Act or any other law
for the time being in force, any agreement for leave and licence or
letting of any premises, entered into between the landlord and
the tenant or the licensee, as the case may be, after the
commencement of this Act, shall be in writing and shall be
registered under the Registration Act, 1908.
(2) The responsibility of getting such agreement registered shall be
on the landlord and in the absence of the written registered
agreement, the contention of the tenant about the terms and
conditions subject to which a premises have been given to him by
the landlord on leave and licence or have been let to him, shall
prevail, unless proved otherwise.
(3) Any landlord who contravenes the provisions of this section shall,
on conviction, be punished with imprisonment which may extend
to three months or with fine not exceeding rupees five thousand
or with both.
25. Thus, under Sub Section (2) of Section 55, where there is no
written registered agreement, the contention of the tenant about the
terms and conditions, subject to which a premises have been given to
him by the landlord on leave and license or have been let to him,
shall prevail, unless proved otherwise. According to Mr. Singh since
the agreements are unregistered contention of Respondent No.3-
Licensee that license is granted for commercial purpose would
prevail. On the other hand, Mr. Shah contends that use of the word
'unless proved otherwise' under Section 55(2) entitles landlord to
prove that the contention of licensee in respect of unregistered
licensed agreement is incorrect. I find considerable force in the
submission of Mr. Shah. The intention of legislature behind
incorporating Sub Section (2) of Section 55 is mainly to encourage
registration of Licensed Agreement and to provide for consequences
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of non-registration by creating a right in favour of the
tenant/licensee to set forth exact terms and conditions of
tenancy/license. However, such entitlement of the tenant/licensee is
curtailed by creating right in favour of landlord to prove the
suggestion of tenant to be factually incorrect. Thus, the Legislature
has not provided for acceptance of version of tenant/licensee to be
gospel truth. On the contrary, it has recognised the right of the
landlord/licensor to prove the version of tenant/licensee to be
incorrect. Therefore, in a given case, where tenant contends that
licensed premises are given for commercial purposes on account of
non-registration of license agreement, landlord can prove that the
same are granted for residential purposes. For proving such use,
landlord can lead evidence by relying upon external documents.
Thus, the broad scheme of Section 55 read with Section 24(3)(b) of
the MRC Act is such that when there is a registered Leave and
License Agreement, parties are bound by the terms and conditions
of such registered agreement. In case the Leave and License
Agreement is either reduced to writing or is not registered, tenant's
interpretation of terms and conditions would prevail subject to the
right of the landlord to prove such interpretation to be incorrect.
This is not to suggest that unregistered agreement creates a higher
right in favour of landlord as compared to a registered agreement.
However, at the same time, it cannot be contended that in respect of
an unregistered agreement, everything that tenant says must be
accepted as gospel truth. The Legislature has consciously protected
landlord's right to prove tenant's contention wrong. The Revisional
Authority, while relying on provisions of Section 55, has completely
ignored this right of the licensor and has blindly accepted the
version of the licensee that the license is granted for commercial use.
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26. In the present case, there are voluminous documents to
suggest specific admissions on the part of Respondent No.3 that
license has been granted for residential use. When Petitioner
addressed notice dated 25 July 2022 to Respondent No.3 seeking
recovery of arrears of license fees and calling upon Respondent No.3
to vacate the premises, Respondent No.3 gave a reply through her
Advocate on 1 September 2022 stating in the opening part of the
reply that she was presently residing at a licensed premises.
Additionally, she has specifically admitted in clause 6.4 of the reply
that 'our client states that he has been residing in the said flat for the
past 5 years and there has never been any complaint against our
client.'
27. Respondent No. 3 thereafter addressed notice dated 9
November 2022 to the Petitioner for demanding either return of
diamonds or Rs. 3,40,00,000/- or execution of sale deed in respect of
licensed premises. Referring to the alleged transaction of delivery of
diamonds to the Petitioner in paragraphs 1 to 3 and 5 of the said
demand notice, it was repeatedly admitted that husband of
Respondent No.3 was looking for residential accommodation, that
Petitioner provided residential accommodation and that they started
residing in the licensed premises. Para 2 to 3 and 5 of the Notice
dated 9 November 2022 read thus:
1) My client states that in the year 2017 my client was in the
need of residential accommodation in JVPD, Vile Parle
West area.
2) My client states that through some broker he got
information that you noticee have got good residential
premises within JVPD area as well as in other part of
Mumbai. Hence, my client approached you for residential
accommodation in JVPD area on Leave and License basis.
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3) My client states that you have consented to provide your
residential premises at A/1102, Juhu Griha Swapna CHS Ltd.,
Gulmohar Road, Road No.4, JVPD, Vile Parle West, Mumbai- 400
056, to my client for the period of 24 (Twenty Four) months, It is
part of terms and condition of the Leave and License agreement
that my client will pay a Security Deposit of Rs.2,00,000/- (Rs.
Two Lakhs only) and monthly compensation of Rs.40,000/- (Rs.
Forty Thousand only) per month. That you have presented while
communication with my client that you noticee are dealing in
diamonds in United States of America.
xxx
5. My client states that when my client started residing at
A/1102, Juhu Griha Swapna CHS Ltd, Gulmohar Road,
Road No.4, JVPD, Vile Parle West, Mumbai-400 056, the good
cordial family as well as business relation was established
amongst the family of my client and your family, as my client is
having Jewellery Shop at Lokhandwala, under the style of
Om Shilpi Jewels and Gems Private Limited, and deals in
Gold, Gold Jewellery Diamond Jewelry, Diamonds, Colour Stones
ETC.
(emphasis and underlining added)
28. Simultaneously, the husband of Respondent No.3 lodged police
complaint dated 13 October 2022 and in paragraph 6 thereof he
stated that 'I have been residing in the said flat for the last Five years
as per the Mutual Understanding and Business Arrangement
between the Opponent and me. ...'. Husband of Respondent No.3 also
filed criminal complaint before the Court of Metropolitan Magistrate,
Andheri, in which he disclosed his residential address as that of
licensed premises. Contrary to his claim of licenced premised being
let out for commercial purposes, he declared that 'I say that I am
doing the business under the name and style as Omshilpi Jewels And
Gems Pvt. Ltd., having office at Dhaval Giri Building, Shop no.6 & 7
Opp. Mc Donald's, Lokhandwala, Andheri West, Mumbai-53.'
Husband of Respondent No.3 made solemn statement on oath before
the Metropolitan Magistrate that he was residing at licensed
premises and carried out business at altogether different premises at
Lokhandwala Complex. Also, in support of his contention of business
deal relating to sale of diamonds, husband of Respondent No.3 relied
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upon several delivery challans of Omshilpi, in which the Firm's
address is shown as Dhavalgiri building, Lokhandwala Complex,
Andheri (west) and not of licensed premises.
29. The above documents would clearly indicate repeated
admissions on the part of Respondent No.3-licensee that she
alongwith her husband have been residing in the licensed premises.
Thus, there are following three sets of material in favour of
Petitioner to indicate that the license was granted to Respondent
No.3-licensee for residential use of the premises:
(i) First License Agreement dated 27 April 2017 containing
specific covenant for use of the premises for residential purpose
only. There is nothing on record to indicate any special reason
for converting such residential use to commercial one at the
time of execution of the last License Agreement.
(ii) Covenant in Clause 1 of the last License Agreement dated 5
May 2021 specifying use of the licensed premises for residential
and lawful activities.
(iii) Several admissions given by Respondent No.3 and her
husband about they searching for residential accommodation,
Petitioner granting license for residence and they actually
residing in the licensed premises.
30. If the above material is pitted against few inconsistent clauses
in the last Licensed Agreement dated 5 May 2021, it is difficult to
hold that the intention of the parties was to grant license for
commercial use of the premises. In view of inconsistent clauses in
the last License Agreement, the Revisional Authority ought not to
have ignored the admissions given by Respondent No. 3 and her
husband about procuring license for residential purpose and they
actually residing therein while carrying out business in different
premises in Lokhandwala Complex.
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31. Mr. Shah has contended that Petitioner could not have
otherwise granted license in respect of the premises for commercial
use since the premises are sanctioned for use as residence. He has
accordingly relied upon provisions of Section 30 of the MRC Act,
which puts a prohibition on the landlord to put residential premises
to commercial use. Section 30 of the MRC Act provides thus:
30. Conversion of residential into commercial premises prohibited
1) A landlord shall not use or permit, to be used for a commercial
purpose any premises which, on the date of the commencement of
this Act, were used for a residential purpose.
(2) Any landlord who contravenes the provisions of sub-section (1) shall,
on conviction, be punishable with imprisonment for a term which
may extend to six months or with fine which may extend to ten
thousand rupees or with both.
32. There is no dispute to the position that the licensed premises
are sanctioned by the planning authority for use as residence. They
are not authorised to be used for commercial purposes. Licensed
premises comprise of a flat in a co-operative housing society.
However, the language employed in Section 24(1) of the MRC Act
contemplates 'license for residence' and not 'license of residential
premises'. Therefore, the use for which the premises are sanctioned
by the planning authority becomes irrelevant for deciding the issue
of jurisdiction of the Competent Authority. What is material is the
purpose for which the license is granted. In normal circumstances,
residential premises cannot be used for commercial purposes.
However, for deciding the issue of jurisdiction of the Competent
Authority, one cannot go by the purpose for which the premises are
sanctioned, but the purpose for which they are licensed becomes the
determinative factor. In that sense, reliance by Mr. Shah on
provisions of Section 30 of the MRC Act does not cut much ice.
However, provisions of Section 30 can be taken into consideration in
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the facts of the present case only as an additional, and not the sole,
determinative factor. Therefore, in addition to the above discussed
three factors, the Court cannot turn complete blind eye to the
position that the licensed premises are ultimately a residential flat
and there is specific prohibition on Petitioner in letting them out for
commercial purposes under Section 30 of the MRC Act.
33. It is the case of Respondent No. 3-licensee, which has been
accepted by the Revisional Authority, that the covenants of the last
License Agreement alone can be taken into consideration while
deciding the issue of jurisdiction. But as discussed above, there
appears to be some conflict in the clauses of the last License
Agreement about the exact purpose for which the license was
granted. There is no dispute to the position that initial 3 agreements
were for residential purposes alone. There is no material on record
to indicate that parties made a conscious departure from earlier
purpose and decided to change the purpose from residential to
commercial. Faced with the position that there are few clauses in the
last License Agreement providing for commercial use of the
premises, Mr. Shah has relied on judgment of the Apex Court in
TEXCO Marketing Private Limited (supra). The Apex Court has
considered the effect of exclusion clause in a contract of insurance
when it is found to be offending the main contract. The Apex Court
held in paragraphs 13, 23 and 24 as under:
13. An exclusion clause has to be understood on the touch-stone of
the doctrine of reading down in the light of the underlining object
and intendment of the contract. It can never be understood to
mean to be in conflict with the main purpose for which the
contract is entered. A party, who relies upon it, shall not be the
one who committed an act of fraud, coercion or misrepresentation,
particularly when the contract along with the exclusion clause is
introduced by it. Such a clause has to be understood on the prism
of the main contract. The main contract once signed would eclipse
the offending exclusion clause when it would otherwise be
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impossible to execute it. A clause or a term is a limb, which has
got no existence outside, as such, it exists and vanishes along with
the contract, having no independent life of its own. It has got no
ability to destroy its own creator, i.e. the main contract. When it is
destructive to the main contract, right at its inception, it has to be
severed, being a conscious exclusion, though brought either
inadvertently or consciously by the party who introduced it. The
doctrine of waiver, acquiescence, approbate and reprobate, and
estoppel would certainly come into operation as considered by this
court in N. Murugesan v. Union of India (2022) 2 SCC 25.
xxx
Doctrine of blue pencil
23. In such a situation, the doctrine of "blue pencil" which strikes
off the offending clause being void ab initio, has to be pressed into
service. The said clause being repugnant to the main contract,
and thus destroying it without even a need for adjudication,
certainly has to be eschewed by the Court. The very existence of
such a clause having found to be totally illegal and detrimental to
the execution of the main contract along with its objective,
requires an effacement in the form of declaration of its non-
existence, warranting a decision by the Court accordingly.
24. The aforesaid principle evolved by the English and American
Courts has been duly taken note of by this Court in Beed District
Central Coop. Bank Ltd. v. State of Maharashtra,
"10. The "doctrine of blue pencil" was evolved by the English
and American courts. In Halsbury's Laws of England, (4th
Edn., Vol. 9), p. 297, para 430, it is stated:
"430. Severance of illegal and void provisions.--A
contract will rarely be totally illegal or void and
certain parts of it may be entirely lawful in
themselves. The question therefore arises whether
the illegal or void parts may be separated or
'severed' from the contract and the rest of the
contract enforced without them. Nearly all the cases
arise in the context of restraint of trade, but the
following principles are applicable to contracts in
general."
11. In P. Ramanatha Aiyar's Advanced Law Lexicon, 3rd
Edn. 2005, Vol. 1, pp. 553-54, it is stated:
"Blue pencil doctrine (test).--A judicial standard for
deciding whether to invalidate the whole contract or only
the offending words. Under this standard, only the
offending words are invalidated if it would be possible to
delete them simply by running a blue pencil through them,
as opposed to changing, adding, or rearranging words.
(Black, 7th Edn., 1999) This doctrine holds that if courts
can render an unreasonable restraint reasonable by
scratching out the offensive portions of the covenant, they
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should do so and then enforce the remainder.
Traditionally, the doctrine is applicable only if the
covenant in question is applicable, so that the
unreasonable portions may be separated. E.P.I. of
Cleveland, Inc. v. Basler [12 Ohio App 2d 16 ].
Blue pencil rule/test.--Legal theory that permits a
judge to limit unreasonable aspects of a covenant
not to compete.
Severance of contract; 'severance can be effected
when the part severed can be removed by running a
blue pencil through it without affording the
remaining part'. Attwood v. Lamont [(1920) 3 KB
571 :
1920 All ER Rep 55 (CA)] . (Banking) A rule in
contracts a court may strike parts of a covenant not
to compete in order to make the covenant
reasonable. (Merriam Webster) Phrase referring to
severance (q.v.) of contract. 'Severance can be
effected when the part severed can be removed by
running a blue pencil through it' without affording
the remaining part. Attwood v. Lamont [(1920) 3
KB 571 : (1920) 3 KB 571 (CA)] . (Banking)"
12. The matter has recently been considered by a learned Judge of this
Court while exercising his jurisdiction under sub-section (6) of Section 11 of
the Arbitration and Conciliation Act, 1996 in Shin Satellite Public Co. Ltd.
v. Jain Studios Ltd. [(2006) 2 SCC 628]"
34. Thus, the Apex Court invoked the doctrine of 'blue pencil' for
striking off the offending clause when the same is found repugnant
to the main contract and sought to destroy it. The Apex Court has
held that such offending clause is required to be eschewed by the
Court by invoking the doctrine of blue pencil.
35. In Shin Satellite Public Co. Ltd. (supra) the Apex Court has
held in paragraphs 19, 26 and 28 as under:
19. In Attwood v. Lamont, (1920) 2 KB 146, the plaintiff was
carrying on business as a draper, tailor and general outfitter at
Kidderminster. By a contract for employment, the defendant
agreed with the plaintiff that he would not, at any time
thereafter "either on his own account or on that of any wife of
his or in partnership with or as assistant, servant or agent to
any other person, persons or company carry on or be in any way
directly or indirectly concerned in any of the following grades or
businesses, that is to say, the trade or business of a tailor,
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dressmaker, general draper, milliner, hatter, haberdasher,
gentlemen's, ladies' or children's outfitter at any place within a
radius of ten miles of" Kidderminster. The defendant, however,
subsequently set up business as a tailor at Worcester, outside
the ten miles limit, but obtained and executed tailoring orders
in Kidderminster. When the plaintiff brought an action, it was
contended by the defendant that the agreement was illegal and
could not be enforced. The Court, however, held that various
parts of the contract were severable and valid part thereof could
be enforced. Upholding the argument of the plaintiff and
granting relief in his favour, the Court observed that the Courts
would sever in a proper case, where the severance can be made
by using a 'blue pencil'. But it could be done only in those cases
where the part so enforceable is clearly severable and not where
it could not be severed. By such process, main purport and
substance of the clause cannot be ignored or overlooked. Thus, a
covenant "not to carry on business in Birmingham or within 100
miles" may be severed so as to reduce the area to Birmingham,
but a covenant "not to carry on business within 100 miles of
Birmingham" will not be severed so as to read "will not carry on
business in Birmingham". The distinction may appear to be
artificial, but is well-settled.
Xxx
26. In the present case, clause 23 relates to arbitration. It is in
various parts. The first part mandates that, if there is a dispute
between the parties, it shall be referred to and finally resolved
by arbitration. It clarifies that the rules of UNCITRAL would
apply to such arbitration. It then directs that the arbitration
shall be held in Delhi and will be in English language. It
stipulates that the costs of arbitration shall be shared by the
parties equally. The offending and objectionable part, no doubt,
expressly makes the arbitrator's determination "final and
binding between the parties" and declares that the parties have
waived the rights of appeal or objection "in any jurisdiction".
The said objectionable part, in my opinion, however, is clearly
severable as it is independent of the dispute being referred to
and resolved by an arbitrator. Hence, even in the absence of any
other clause, the part as to referring the dispute to an arbitrator
can be given effect to and enforced. By implementing that part,
it cannot be said that the Court is doing something which is not
contemplated by the parties or by 'interpretative process', the
Court is re-writing the contract which is in the nature of
'novatio'. The intention of the parties is explicitly clear and they
have agreed that the dispute, if any, would be referred to an
arbitrator. To that extent, therefore, the agreement is legal,
lawful and the offending part as to the finality and restraint in
approaching a Court of law can be separated and severed by
using a 'blue pencil'.
xxx
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28. The agreement in the instant case can be enforced on an
additional ground as well. As already noted, clause 20
(Severability) expressly states that if any provision of the
agreement is held invalid, illegal or unenforceable, it would not
prejudice the remainder. In my view, clause 20 makes the
matter free from doubt. The intention of the parties is
abundantly clear and even if a part of the agreement is held
unlawful, the lawful parts must be enforced. Reference of a
dispute to an arbitrator, by no means can be declared illegal or
unlawful. To that extent, therefore, no objection can be raised by
the respondent against the agreement.
36. It is urged by Mr. Shah that by applying the law expounded by
the Apex Court in TEXCO Marketing Private Limited and Shin
Satellite Public Co. Ltd. (supra) and by invoking the doctrine of
blue pencil, the clauses of the last License Agreement dated 5 May
2021 seeking to suggest commercial/business use of licensed
premises, which are repugnant to main clause of use for residential
purpose, are required to be eschewed. In my view, it is not really
necessary to consider application of doctrine of blue pencil in the
facts of the present case. As observed above, the object behind
undertaking an enquiry into the exact use for which premises are let
out is not to consider the allegation of change of user. The enquiry is
directed for a limited purpose of examining the jurisdiction of
Competent Authority under Section 24 of the MRC Act. Upon
consideration of cumulative effect of the three factors discussed
above coupled with prohibition under Section 30 of the MRC Act for
letting out residential premises for commercial purpose, the
inescapable conclusion that emerges is that the license is granted for
residential use and that Respondent No. 3 and her husband actually
reside in the same.
37. If the broad legislative objective behind making available
speedy and summary remedy to a house owner to evict house user is
borne in mind, I do not see any difficulty in ruling in favour of
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retention of the jurisdiction of the Competent Authority under
Section 24 of the MRC Act in the present case, when the licensed
premises are not only a residential flat but are being actually used
by Respondent No.2 and her husband for their residence. They do
not actually conduct any business in the premises and the business
of her husband is carried out in different premises at Lokhandwala
Complex.
38. The Court cannot turn a blind eye to the real objective of
Respondent No.3 in setting up the defence of commercial use of the
licensed premises. By setting up the said defence, all that is sought
to be achieved by the third Respondent is to merely delay her
eviction by getting eviction proceedings before the Competent
Authority set aside on technical ground of jurisdiction and then
drive Petitioner-Licensor to a lengthy litigation before the Small
Causes Court by filing eviction suit, thereby enabling her to retain
possession of the suit premises for much longer time. As observed
from various documents on record, the husband of Respondent No.3
apparently has serious dispute with Petitioner-Licensor in resepct of
the alleged business of delivery of diamonds. The husband of
Respondent No. 3 claims to have delivered diamonds worth
Rs.3,40,00,000/- to Petitioner and claims that Petitioner has failed to
pay the value of the said diamonds. The husband of Respondent No.3
may have a valid cause against Petitioner in respect of the alleged
delivery of diamonds. However, the alleged claim towards diamonds
cannot be a reason to hold Petitioner for ransom for squatting on the
licensed premises. Respondent No.3 must hand back possession of
the licensed premises to the Petitioner and adopt necessary legal
remedy for return of the diamonds or for recovery of value thereof.
Respondent No.3 /her husband also claim right to purchase the
licensed premises by paying the balance consideration of Rs.
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80,00,000/- after adjusting price of diamonds of Rs. 3,40,00,000/-. In
her application for leave to defend, Respondent No.3 has referred to
filing of Suit (L) No. 294 of 2023 by the husband of Respondent No.3
against Petitioner for non-compliance of notice dated 9 November
2022. Respondent No.3 and her husband are free to prosecute the
said litigation. In case there is any agreement for sale of the flat and
if Respondent No. 3 can prove existence of such agreement, it is for
her to secure appropriate reliefs in respect of the flat in the Suit.
However, she cannot retain possession of the licensed premises till
her alleged claims get settled through Civil Court. In that view of
the matter, the technical plea of jurisdiction raised by Respondent
No. 3 to delay her eviction needs to be repelled in the light of specific
admissions given by her and her husband that they reside in the
licensed premises and the business is conducted in altogether
different premises at Lokhandwala Complex.
39. The conspectus of the above discussion is that the order passed
by the Revisional Authority dated 19 September 2024 is palpably
erroneous and deserves to be set aside. Writ Petition accordingly
succeeds and I proceed to pass the following order:
(i) Order dated 19 September 2024 passed by the
Additional Divisional Commissioner, Konkan Division
in Revision Application filed by Respondent No.3 is set
aside.
(ii) Eviction Order passed by the Competent Authority on
6 August 2024 in Eviction Application No.178 of 2023
is confirmed.
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(iii) Nothing observed in the Judgment shall affect the
rights of the parties in respect of any litigations
already instituted or to be instituted with regard to
their respective claims against each other.
40. With the above directions Writ Petition is allowed. Rule is
made absolute. There shall be no orders as to costs.
[SANDEEP V. MARNE, J.]
41. After the judgment is pronounced, the learned counsel
appearing for the Respondents seeks stay of the order for a period of
eight weeks. The request is opposed by the learned counsel
appearing for the Petitioner. Considering the facts and
circumstances of the present case, the order shall stand stayed for a
period of four weeks.
[SANDEEP V. MARNE, J.]
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