Tenancy Rights Cannot Be Bequeathed in Breach of Contract: Bombay High Court Ruling


Introduction

In a landmark judgment impacting the transfer and inheritance of tenancy rights, the Bombay High Court held that tenancy rights cannot be bequeathed through a will if such transfer breaches the contractual terms between a tenant and landlord. Justice Gauri Godse delivered this ruling, emphasizing that permitting such bequests would effectively allow tenancy rights to be transferred to strangers, contrary to the intent and terms of tenancy agreements.

Background of the Case

The case involved a 2,000-square-foot flat and garage located in the Queen’s Court Building, near Oval Maidan, Churchgate, Mumbai. The property was owned by the Life Insurance Corporation of India (LIC) and leased to Dr. Darasahah Bharucha on May 19, 1986. After the death of Dr. Bharucha’s wife, Tehmina, the tenancy was transferred to him.

Following Dr. Bharucha’s death on September 11, 1994, his niece Nilofer Marshall, the daughter of his cousin, continued to occupy the flat. Marshall claimed she had been residing with Dr. Bharucha since 1980 and that under his will (probated on September 3, 1984), he had bequeathed the flat to her.

Proceedings Before Lower Courts

After Dr. Bharucha’s death, the LIC issued termination notices dated January 25, 1997, to his legal heirs, including Marshall, under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971.

The Estate Officer, a statutory authority under the 1971 Act, found that Marshall was not recognized as a lawful tenant and directed her to vacate the premises.

However, in 2009, the City Civil Court set aside the Estate Officer’s decision, allowing Marshall to continue residing in the flat. LIC subsequently appealed this decision before the Bombay High Court.

LIC’s Arguments

Represented by counsel V. Y. Sanglikar, along with lawyers Roopadaksha Basu and Heenal Wadhwa, the LIC argued that Dr. Bharucha had expressly agreed in his 1986 lease agreement that:

  1. No person other than him was residing in the flat.

  2. He would not sublet or transfer possession of the premises without prior written consent from LIC.

Therefore, LIC contended that bequeathing tenancy rights through a will, without the landlord’s consent, violated the contractual terms and was legally impermissible.

Respondent’s Arguments

On the other hand, senior advocate Haresh Jagtiani, representing Nilofer Marshall, argued that:

  • Marshall was a contractual tenant, claiming tenancy rights as transmitted through testamentary bequest (the will).

  • The lease agreement did not explicitly prohibit the transmission of tenancy through a will.

  • Even though she was not a Class-I heir, Marshall, as a legatee under Dr. Bharucha’s will, had a legitimate claim to tenancy rights.

High Court’s Observations and Ruling

Justice Gauri Godse rejected the respondent’s arguments and set aside the City Civil Court’s 2009 order.

The High Court held that:

  • The right to occupy the flat was granted solely to Dr. Bharucha, and it terminated upon his death.

  • The bequest of tenancy rights through a will was in direct breach of the tenancy agreement.

  • Permitting such transfers would allow tenancy rights to pass to non-family members or complete strangers, undermining the contractual intent between landlord and tenant.

Justice Godse further observed that tenancy rights are contractual privileges, not inheritable property rights, and cannot be unilaterally assigned or transferred through testamentary instruments without the landlord’s explicit consent.

The Court granted an eight-week stay on its order to enable the respondent to file an appeal before the Supreme Court of India.

Statutory Framework

  1. Public Premises (Eviction of Unauthorised Occupants) Act, 1971

    • Governs the eviction of unauthorized occupants from premises owned by government or public authorities like LIC.

    • Sections 4 and 5 empower the Estate Officer to initiate eviction proceedings against persons occupying public premises without lawful authority.

  2. Transfer of Property Act, 1882

    • Section 108(j) prohibits tenants from subletting, assigning, or parting with possession without the landlord’s consent, unless otherwise agreed in the lease.

  3. Indian Contract Act, 1872

    • Section 37 and 39 recognize that contractual obligations are personal in nature and must be performed by the parties themselves, except where the contract permits delegation or assignment.

  4. Indian Succession Act, 1925

    • While a will can transmit property rights, tenancy rights are not considered heritable property if restricted by a contract.

Judicial Precedents

The Bombay High Court’s ruling aligns with previous judicial pronouncements affirming that tenancy rights are not freely transferable when governed by specific contractual terms:

  • Gian Devi Anand v. Jeevan Kumar (1985) 2 SCC 683 – The Supreme Court held that tenancy rights may be heritable but subject to the nature of tenancy and statutory restrictions.

  • Murlidhar v. State of Uttar Pradesh, AIR 1974 SC 1657 – It was emphasized that contractual tenancies terminate upon the death of a tenant unless the contract or statute provides otherwise.

  • LIC of India v. State of Maharashtra (2003) 10 SCC 280 – The Court recognized LIC’s status as a public authority under the Public Premises Act, giving it statutory protection in eviction matters.

Constitutional Context

The case does not directly invoke constitutional provisions but indirectly touches upon Article 300A of the Constitution of India, which protects property rights. However, the Court clarified that tenancy rights under contract do not constitute a “property right” under Article 300A when the agreement prohibits transfer or bequest.

Conclusion

The Bombay High Court’s ruling underscores that tenancy is a contractual relationship, and its terms cannot be overridden by testamentary instruments like wills. The decision preserves the sanctity of lease agreements and prevents misuse of tenancy arrangements to transfer occupation to unauthorized individuals.

By reinforcing the principle of contractual sanctity, the judgment sets a precedent that strengthens landlord-tenant law and ensures that public premises, such as those owned by LIC, are not unlawfully retained or inherited through private wills in breach of contract.


Location: Pune, Maharashtra, India

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