Writ Petition No. 426 of 2013

27th August, 2013

Petitioner Counsel: Mr. Aspi Chinoy,Ms. Sonal,Zohair & Co.
Respondent Counsel: Mr. A.V. Anturkar,Mr. K.N. Kandekar

Cases Cited:
Esha Ekta Apartments Cooperative Housing Society Limited and others Vs. Municipal Corporation of Mumbai and others, 2013(2) ALL MR 901 (S.C.) =(2013) 5 SCC 357 [Para 5,15]
M/s. Dwarkadas Marfatia and Sons Vs. Board of Trustees of the Port of Bombay, 1989 (3) SCC 293 [Para 14]

JUDGMENT

M. S. SONAK, J. :- Rule. Rule is made returnable with the consent of all the parties forthwith.

2. The petitioner takes exception to the communication dated 8th December, 2012 (impugned communication) of the Regional Manager (Estates) of Life Insurance Corporation of India (respondent No.1), rejecting the regularisation application made by the petitioner in respect of the premises being a flat No.2A (said premises) in Mumbai, under tenancy code No.5928 and the "Notes and Decision" dated 7th December, 2012 containing the reasons/basis for issuance of the impugned communication dated 8th December, 2012.

3. The facts and circumstances in which the impugned communication came to be made, are set out briefly hereinafter:

A] In the year 1939 or thereabouts one S.B. Madan was tenant of the said premises and lived therein alongwith his wife Mrs. Dina Madan. They did not have any children. Dina's sister Rati Mody, her husband Kershasp Mody and their son Navroz (petitioner) began to live with them in the said premises from 1967 or thereabouts.

B] In the year 1950 or thereabouts, Jupiter General Insurance Company became the owner and landlord of the said building and the tenancy of the said premises was continued in favour of S.B. Madan, who died in the said premises on 25th May, 1968.

C] In pursuance of Notification dated 26th December, 1968, Life Insurance Corporation of India (L.I.C.) became the owner and landlord of the said building with effect from 31st December, 1968 and this was intimated to Dina Madan, who was required to and continued to pay rent in respect of said premises to the L.I.C., which was alloted tenancy code No. 5928 by respondent No.1.

D] There was some correspondence between Dina Madan and the L.I.C. regards transfer of her name in tenancy records and the issue of litigation with one Khurshid driver, who was in unauthorised occupation of a portion of the said premises. The L.I.C. stated the issue of transfer of her name in the records would be decided upon the conclusion of litigation with said Khurshid driver.

E] On 5th January 1977, Dina Madan died in the said premises. The petitioner and his parents, who were residing in the said premises at the time of her death, continued to do so. The petitioner's mother Rati Mody continued correspondence with the L.I.C. regards transmission of tenancy in her name on the basis that she was residing in the said premises as a member of the family alongwith the recorded tenant during their lifetime and at the time of their respective deaths and that under her Will dated 2nd May, 1979, late Mrs. Dina Madan had bequeathed the tenancy rights in respect of said premises upon said Rati Mody, which has since been probated.

F] The L.I.C., by their letter dated 22nd May, 1979 acknowledged the receipt of letter dated 7th May, 1979 and stated that before request for transfer of tenancy could be considered they would like to know the latest position with regard to the litigation against Khurshid driver. By yet another letter dated 4th October 1979, the L.I.C. required said Rati Mody to furnish copies of the Will, probate and furnish information as soon as litigation with Khurshid driver is disposed of.

G] In the meantime, the petitioner and his family continued to reside the said premises and pay rents to L.I.C. in the name of S.B. Madan. The Electricity Meter came to be transferred in the name of Rati Madan. Rati Madan became member of Mackawee Mansion Tenants' Association and the correspondence with regard to transmission of tenancy rights continued.

H] On 11th June, 1993, the petitioner's father Kershasp Mody died in the said premises. On 19th February, 1996, the petitioner's mother informed the L.I.C. that Khurshid driver had died on 13th February 1988 and the litigation with him had since abated and the small portion of the said premises unauthorisedly used by said driver for storing his belonging was now in her occupation. On this basis, she requested that the tenancy be recored in her name. Further correspondence ensued in which, the L.I.C. required Rati Mody to furnish various documents, which were accordingly furnished.

I] In the year 1997, the L.I.C. returned the rent cheque for the month of July, 1997 to Rati Mody and addressed a communication dated 27th October, 1997 regards increase in rent. The correspondence ensued in this regard for number of years. On or around 30th December 2002, Rati Mody also died in the said premises.

J] The petitioner continued to reside and pay rents to L.I.C. though the receipts were issued in the name of late S.B. Madan. Further correspondence also ensued between the parties on the aspect of transfer/transmission of tenancy in respect of said premises until 23rd December, 2004. On this date, the L.I.C. issued termination notice stating therein that S.B. Madan during his life time had unlawfully and in breach of terms of tenancy, sublet the said premises and unlawfully parted with the possession of the said flat in favour of Rati Mody. Further correspondence ensued in this regard.

K] However, by an application dated 11th August, 2007, respondent No.1 filed case No.1 and 1A of 2008 under sections 4 and 7 of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 (hereinafter referred to as "said Act, 1971") against the petitioner and his family members for eviction and recovery of arrears of rent/damages from 1st July, 2005 till vacant possession is delivered to the L.I.C.. The Estate Officer by an order dated 20th March, 2012 directed the petitioner to vacate the said premises, and pay arrears of rent and mesne profits. The petitioner's appeal under section 9 of the Act, was dismissed by a judgment and order dated 10th July, 2012 by the Principal Judge of the City Civil Court.

L] The petitioner thereupon preferred Writ Petition No.7879 of 2012 before the learned Single Judge of this Court, which was dismissed by the judgment and order dated 31st August, 2012.

The learned Single Judge, however, after noting the chequered history directed that one opportunity be given to the petitioner to pursue a request for regularization of tenancy rights and possession in respect of said premises. The observations in this regard shall be referred to in the course of the judgment.

M] The petitioner by the application dated 10th October, 2012 applied for regularization in pursuance of the opportunity granted by the learned Single Judge in the judgment and order dated 31st August, 2012 passed in Writ Petition No.7879 of 2012.

N] The petitioner also preferred LPA No.285 of 2012 before the Division Bench of this Court questioning the judgment and order dated 31st August, 2012, as modified by the order dated 13th September 2012. The appeal was dismissed by the judgment and order dated 19th December 2012, and in the context of the application for regularization made by the petitioner, certain directions were issued regarding furnishing a bank guarantee.

O] The application for regularization dated 10th October 2012 was rejected by the respondents vide impugned communication dated 8th December, 2012 read with 'Notes and Decision' dated 7th December 2012.

This petition is directed against the impugned communication dated 8th December 2012 read with 'Notes and Decision' dated 7th December 2012.

4. Mr. Chinoy, the learned senior advocate appearing for the petitioner submitted that the impugned communication is unreasoned or in any case unreasonable. The relevant considerations have been ignored and irrelevant considerations have been taken into account. He also submitted that there is no fair and reasonable consideration of the petitioner's plea for regularization by the L.I.C., which is a public authority. He submitted that public authorities have no unfettered discretion and they are required to adhere to the principles of fairness even in contractual matters. He submitted that this is one of the basis for excluding public authorities like the L.I.C. from the purview of rent control legislation. He invited our attention to the reasons reflected in the "Notes and Decision" dated 7th December, 2012 and submitted that such reasons are either not genuine or in any case the same are not germane and relevant in deciding the plea of regularization made by the petitioner.

5. Mr. Anturkar, the learned advocate appearing on behalf of the L.I.C., on the other hand, submitted that the regularization cannot be claimed as a matter of right by the petitioner. He submitted that the circumstance that the Estate Officer, Single Judge, Division Bench and finally the Supreme Court having come to the conclusion that the petitioner has failed to establish tenancy, is an extremely relevant consideration in dealing with the plea for regularization. He submitted that the petitioner had failed to establish that he was the "first class heir qua the recorded tenant". He submitted that the said premises are situated in Fort area near the LIC Regional Office and there was a dire need of such premises for housing of LIC's top ranking Officers, who otherwise had to be accommodated at distant places and at a considerable cost to the LIC. He placed reliance upon the decision of the Supreme Court in the case of Esha Ekta Apartments Cooperative Housing Society Limited and others Vs. Municipal Corporation of Mumbai and others - (2013) 5 Supreme Court Cases 357 : [2013(2) ALL MR 901 (S.C.)], urging that illegalities cannot be regularized on the touch stone of either equity or sympathy. He also submitted that the petitioner has not complied with the directions contained in judgment and order dated 19th December, 2012 in L.P.A. No.285 of 2012, which required him to furnish a bank guarantee in an amount of Rs.28 Lacs and in these circumstances the Writ Petition should not be entertained. In any case, he submitted that even if any indulgence is to be extended to the petitioner, the same ought not to enable the petitioner to continue to remain in possession of the said premises at monthly rent of Rs.212/-, when in fact the market rate in the area is many times higher.

6. There can be no dispute that the petitioner cannot claim for regularization as a matter of right. The learned Single Judge, despite coming to the conclusion that the petitioner had failed to establish that he was the tenant in respect of the said premises, directed the L.I.C. to consider the petitioner's plea for regularization taking into consideration the peculiar facts and circumstances of the case. These peculiar facts and circumstances, obviously relate to the fact that the petitioner and his family members have been residing in the said premises for over past four decades with full knowledge of the L.I.C.. At some stage, even the L.I.C. was considering the plea of the regularization/transmission of tenancy, but the same was deferred on account of pendency of litigation with one Khurshid driver, who had stored the belongings in one portion of the said premises. The relevant observations from the judgment of the learned Single Judge are as under :

"However, one cannot be unmindful of the fact that in this case some correspondence was placed on record right from 1991 and which went on during the lifetime of the recorded tenant. Equally, Rati who claims to have occupied the premises applied for transfer of tenancy based on her occupation. The request was based on the fact that prior to the LIC acquiring the right, title and interest in the premises, same were in occupation of the recorded tenant and thereafter, when the LIC became the owner, the Petitioner No.1's mother and the recorded tenant's wife have resided throughout, to the knowledge of the LIC which can be attributed from the statements made in the letters of the LIC itself. In these circumstances, in this case one opportunity deserves to be granted to the Petitioner No.1 to pursue the request for regularization of their tenancy rights and possession of the subject premises based on the facts peculiar to this case. It is for the LIC to take a decision on their request, but to enable the Petitioners to pursue their case as set out in the application made by their mother, it is directed that for a period of three months the Petitioners shall not be evicted from the subject premises. Within this period the LIC should consider their case and communicate its decision. Needless to clarify that it would be open for the LIC to take such decision as is permissible in law and the Policies and if they permit or regularize the occupation of the Petitioners, the order passed today or by the authorities under the Public Premises (Eviction of Unauthorized Occupants) Act, 1971 will not come in their way of regularizing the occupation and possession of the Petitioners in the subject premises on such terms and conditions as are permissible in law.

5. However, this concession is given on the Petitioners filing an undertaking in this Court within a period of ten days that they shall not create any third party rights, that they shall not induct anybody in possession and that they would continue to pay compensation which has been charged by the LIC or any arrears thereof and that in the event they are unable to pursue the LIC in regularizing their occupation and possession, they will handover vacant and peaceful possession of the premises to the LIC. On such undertaking being filed the order of eviction shall not be implemented or executed for the period directed above."

7. In the aforesaid circumstance, the short question which arises is whether the petitioner's plea for regularization has been fairly and reasonably considered and the L.I.C. has exercised its discretion in a fair and reasonable manner.

8. The impugned communication read with "Notes and Decision" dated 7th December, 2012, make reference to three considerations taken into account by the L.I.C.:

(a) That the correspondence between the petitioner's mother and the L.I.C. regards transfer of tenancy in respect of said premises was made "without prejudice";

(b) That the petitioner was not "first class legal heir";

(c) That the said premises being in Fort area were bonafide required by the L.I.C. for use by their top ranking officials".

The first consideration, even if true is quite irrelevant, as it was never the case of the petitioner that the correspondence spells out some settlement or agreement between the parties. It is indeed now not open to the petitioner to contend that his occupation is authorised. Reference was made to the correspondence spread over more than two and half decades only for the purposes of emphasizing that the L.I.C. had full knowledge that the said premises were occupied by the petitioner and his family members; that the proposal for regularization/transmission of tenancy was being considered by the L.I.C. and that such proposal was deferred on account of pendency of the litigation with Khurshid driver. Although these circumstances could not have been adverted to by the petitioner in support of his plea of authorized occupation, nevertheless these circumstances were not irrelevant for purposes of consideration of plea of the regularization. In any case, such relevant considerations could not have been shut out from consideration on the basis that the correspondence was made "without prejudice".

9. The second circumstance that the petitioner was not a 'first class legal heir' is clearly an irrelevant consideration. In the event, the petitioner were to establish that he was a "first class legal heir of the recorded tenant", then possibly the issue of his suffering eviction order and seeking for regularization would have never arisen. The learned Single Judge has directed the LIC to consider the plea of regularization without eviction order passed under the Public Premises (Eviction of Unauthorized Occupants) Act, 1971, coming in the way. Therefore, the respondents should address the issue from the perspective of regularization and not once again take into consideration the circumstance that the petitioner was unable to establish lawful occupation of said premises. If it does so, then the LIC is permitting itself to be influenced by the eviction order when clearly the directions of the learned Single Judge were otherwise.

10. The chequered history, may be an irrelevant consideration for establishing that the petitioner was indeed a tenant in respect of said premises, but the very same chequered history is a relevant consideration for considering the plea of regularization. The issue as to whether or not the petitioner was a tenant in respect of said premises had to be decided upon objective basis, whereas considerable subjectivity is involved in considering the plea of regularization. In formation of a subjective opinion on the question of regularisation, the chequred history which establishes that the petitioner has been in occupation of the said premises for more than four decades with full knowledge of the L.I.C., is not an irrelevant consideration.

11. The impugned communication cannot be sustained relying only upon the circumstance that the L.I.C. bonafide requires the said premises for use by their top ranking officers. In the first place, such a reason never surfaced in the prolonged correspondence spread over two and half decades. Secondly, the petitioner was never offered an opportunity to place on record any material with regard to such consideration. Thirdly, even if such consideration is regarded as germane or relevant, the impugned order, at the highest, can be said to have been based upon mixed considerations, some relevant and others irrelevant. In a situation where exercise of subjective and discretionary powers is at issue, it is not possible to assess the influence of irrelevant considerations upon the decision making process. It is also not possible to assess the impact of failure to take into account relevant considerations. In this jurisdiction, we are concerned with the decision making process rather than ultimate decision.

12. The petitioner, upon being furnished "Notes and Decision" dated 7th December, 2012 amended the present petition and placed material on record to refute the claim of the L.I.C. regards bonafide requirement. It was submitted that in the said building itself there are two flats 5-C and 5-D, which are not in use and lying unoccupied for number of years and no proceedings have been initiated by the L.I.C. on ground of any bonafide requirement. It was also submitted that the L.I.C. had issued advertisement dated 16th October, 2012 on its website for letting out the vacant premises in Mumbai and this includes seven vacant premises in Fort area itself.

Mr. Anturkar, on behalf of the L.I.C. did counter the submission made on behalf of the petitioner and reiterated that there was bonafide requirement.

13. In the light of order that we propose to make, it may not be appropriate for us to adjudicate upon rival contentions in this regard. Suffice to state that the material now produced on record by the petitioner by way of amendment to the petition, was not the material available before the L.I.C. at the stage when the impugned communication came to be issued. In these circumstances, we are of the opinion that such material needs to be considered by the L.I.C. in the context of petitioner's plea for regularization.

14. There can be no dispute that the LIC is a public authority. Reasonableness and non-arbitrariness are the hall-marks of an action by a public authority, even where the public authorities act as landlords or in contractual matters. The Supreme Court in the case of M/s. Dwarkadas Marfatia and Sons Vs. Board of Trustees of the Port of Bombay, (1989 (3) SCC 293), made the following observations :

"Every activity of a public authority especially in the background of the assumption on which such authority enjoys immunity from the rigour of the Rent Act, must be informed by reason and guided by the public interest. All exercise of discretion or power by public authorities as the respondent, in respect of dealing with tenants in respect of which they have been treated separately and distinctly from other landlords on the assumption that they would not act as private landlords, must be judged by that standard." These observations were made in the context of the provisions of the Bombay Rents, Hotel and Lodging House Rates ' Control Act, 1947 whereby exemption from the provisions of the Act has been granted to premises belonging to the Bombay Port Trust."

Again in Tenth Edition of Administrative Law, by H.W.R. Wade & C.F. Forsyth under the caption "No unfettered discretion in Public Law", it is observed as under:

"The powers of public authorities are therefore essentially different from those of private persons. A man making his will may, subject to any rights of his dependents, dispose of his property just as he may wish. He may act out of malice or a spirit of revenge, but in law this does not affect his exercise of his power. In the same way a private person has an absolute power to allow whom he likes to use his land, to release a debtor, or, where th law permits, to evict a tenant, regardless of his motives. This is unfettered discretion. But a public authority may do none of these things unless it acts reasonably and in good faith and upon lawful and relevant grounds of public interest. So a city council acted unlawfully when it refused unreasonably to let a local rugby football club use the city's sports ground, though a private owner could of course have refused with impunity. Nor may a local authority arbitrarily release debtors, and if evicts tenants, even though in accordance with a contract, it must act reasonably and 'within the limits of fair dealing'. The whole conception of unfettered discretion is inappropriate to a public authority, which possesses powers solely in order that it may use them for the public good."

15. The decision in the case of Esha Ekta Apartment Cooperative Housing Society Limited & Others, [2013(2) ALL MR 901 (S.C.)] (supra), is not apposite. That was the case where the Supreme Court was dealing with the subject of "illegal construction" and in that context the observations were made that "sympathy or equitable considerations can have no role to play as the same will encourage violators and others to commit further such illegalities". The position in this case, is by no means comparable.

16. The impugned communication is, therefore, liable to be set aside.

17. In judgment and order dated 19th December, 2012 passed in L.P.A. No.285 of 2012, the Division Bench of this Court whilst dismissing the petitioners appeal issued the following directions at paragraph 12;

"12. Counsel for the respondent - Corporation requested the Court to consider imposing condition on the appellants to furnish bank guarantee to the extent of around of Rs.28 lacs as the appellants have deposited only around Rs.2 lacs as against the demand of over Rs.30 lacs in the order passed by the Appropriate Authority. We find this request as reasonable, considering the fact that the appellants are now wanting to pursue the matter against the order passed by the Appropriate Authority of the Respondent - Corporation of rejecting the regularisation proposal submitted by the appellants. Moreover, having dismissed the present Appeal, the appellants will have to make provision to secure the payment of amount liable to be paid in terms of the impugned decision, which was the subject matter of challenge in this Appeal. Besides giving usual undertaking, the appellants shall furnish bank guarantee within eight weeks from today for a sum of Rs.28 lacs of a nationalised bank, which can be invoked by the Corporation if and when required and subject to order of the Court where the regularisation order will be challenged by the appellants, failing which the Corporation would be free to proceed in the matter in accordance with law."

18. By an order dated 1st March, 2013, we observed that the ends of justice would be met by extending the time to furnish the bank guarantee upto 21st March, 2013 and it was clarified that the question as to whether a bank guarantee ought to be issued or not will be considered at the stage of admission. The petitioner has not furnished the bank guarantee even during the extended period.

19. In the circumstances, Mr. Anturkar is right in contending that the conditions imposed upon the petitioner regards furnishing a bank guarantee cannot be waived and also that the petitioner ought to be put to terms. Mr. Chinoy states that the petitioner does not have the financial resources to pay the said amount or to furnish the bank guarantee.

We are afraid it is not open to us to consider this submission in view of the previous order of this Court dated 19th December 2012 and the dismissal of the Special Leave Petition against the said order.

20. Accordingly, we pass the following order:

(a) The impugned communication dated 8th December, 2012 is quashed and set aside and the LIC is directed to reconsider the petitioner's application for regularisation of the tenancy afresh and in accordance with law.

(b) In the event of the petitioner furnishing a bank guarantee as directed by the order dated 19th December, 2012 in L.P.A. No.285 of 2012, the LIC shall not execute the eviction order or invoke the guarantee until the plea of regularization is considered afresh and for a period of four weeks after the order is served upon the petitioner. The time for furnishing a bank guarantee is extended upto 31st October, 2013. The guarantee shall be valid for a period of six weeks after the respondents decision on the petitioner's application for regularisation.

The petitioner shall maintain status quo in respect of said premises/flat in all respects.

(c) In the event, the petitioner fails to furnish a bank guarantee within the aforesaid period, the LIC shall be entitled to execute the eviction order and take possession of the said premises/flat. However, in that event pending decision upon the petitioner's plea for regularization and if the decision is adverse to the petitioner, for a period of four weeks after the order is served upon the petitioner the LIC shall not dispose of, alienate, encumber or part with the possession of the said premises/flat. The LIC shall, however, be entitled to make use of the said premises/flat for its own purpose, but subject to the decision on the petitioner's plea for regularization and the challenge thereto, if any.

(d) Rule is made absolute to the aforesaid extent.

(e) The Writ Petition is, accordingly, disposed of. There shall be no order as to costs.

Ordered accordingly.