Snehal Shailesh Borana v. Additional Divisional Commissioner, Konkan Division, Mumbai & Ors.

1) Rule. Rule is made returnable forthwith. With the consent of the learned counsel appearing for the parties, the Petition is taken up for final disposal.

2) Petitioner has challenged orders dated 2 November 2023 passed by the Competent Authority, Rent Control Act Court, Konkan Division, Mumbai, directing him to handover possession of the Flat to Respondent Nos. 3 and 4 with further direction to pay damages at the rate of double the license fees from ___Page No.1 of 15___ 18 October 2021 till delivery of the possession. The Competent Authority’s order dated 2 November 2023 has been confirmed in Revision by Additional Divisional Commissioner, Konkan Division by dismissing Revision Application No.664 of 2023 vide order dated 26 March 2024, which is also subject matter of challenge in the present Petition.

3) Briefly stated, facts of the case, as pleaded by Respondent Nos. 3 and 4 in the eviction application, are that they are the owners of Flat No.1304, Building No.68, Kurla Sahayog Co-operative Housing Society, Nehru Nagar, Kurla (East), Mumbai- 400 024 (the Flat). Leave and License Agreement dated 1 December 2019 was executed between Respondent Nos. 3 & 4 and Petitioner granting license in respect of the flat for a period of 22 months commencing from 18 December 2019 to 17 October 2021 for license fees of Rs.33,500/- for first 11 months and Rs.34,500/- for next 11 months. Rs.1,00,000/- was paid by Petitioner to Respondent Nos. 3 and 4 towards security deposit. The leave and license agreement came to be registered on 3 December 2019 in the office of Sub Registrar Mumbai-3. It was averred in the application that Petitioner’s husband Mr. Shailesh Borana used to pay the license fees to Respondent Nos. 3 and 4 as mutual understanding between Petitioner and her husband. That Petitioner paid license fees as agreed under the Agreement during the first 11 months tenure. However, in respect of second 11 months’ tenure she was irregular in payment of license fees. That Petitioner’s husband sent WhatsApp messages falsely claiming payment in the Bank account of Respondent Nos. 3 and 4, which messages turned out to be false after checking the Bank account by Respondent Nos. 3 and 4. According to them, this is how Petitioner committed breach of the terms and conditions of the license. That Petitioner failed to pay the electricity charges, on account of which the electricity supply company issued notices. That the conduct of the Petitioner was source of complaints by the Managing Committee of the Society. Respondent Nos. 3 and ___Page No.2 of 15___ 4 therefore issued notice dated 7 June 2021 seeking to terminate the License Agreement. That after receipt of termination notice Petitioner paid Rs.69,000/in cash in Licensor’s Bank account, which did not tally with the amount payable under the License Agreement.

4) It is further averred in the application that instead of vacating the Flat at the end of the license period, Petitioner represented to Respondent Nos. 3 and 4 that she would purchase the premises and would pay double the amount of license fees towards retention of possession of Flat till payment of full and final consideration for the transaction. Accordingly, Agreement for Sale was executed on 28 October 2021 and registered on 1 November 2021. That as per the said Agreement, the entire amount of consideration was to be paid within 60 days from date of registration of the Agreement. That full and final consideration as per the Agreement for Sale was not paid by Petitioner. The Respondent Nos. 3 and 4 pleaded the entire details about the various events and payments made under the Agreement for Sale from time to time. According to them, out of agreed amount of consideration of Rs.[1] crore, only Rs.85 lakhs have been received by them, that too after considerable delay and the balance amount of consideration of Rs.15,00,000/- is not paid till date.

5) Respondent Nos. 3 and 4 accordingly filed Application No.224 of 2022 before the Competent Authority by invoking the jurisdiction under Section 24 of the Maharashtra Rent Control Act, 1999 (MRC Act) seeking recovery of possession of the Flat and also for recovery of double the amount of license fees of Rs.69,000/- per month from June 2021 as well as for recovery of balance license fees of Rs.36,500/-. Petitioner appeared before the Competent Authority and filed application seeking leave to defend under Section 43 of the MRC Act. The application came to be rejected by the Competent Authority vide order dated 2 November 2023 holding that the issues sought to be raised ___Page No.3 of 15___ by the Petitioner were not triable issues before the Authority. On the same day i.e. 2 November 2023 the Competent Authority proceeded to pass order allowing the application filed by Respondent Nos. 3 and 4 and directed the Petitioner to handover vacant and peaceful possession of the Flat to the Respondent Nos. 3 and 4 within 30 days. Petitioner is further directed to pay damages to the Respondent @ Rs.69,000/- per month from 18 October 2021 till handover of vacant possession of the Flat.

6) Petitioner filed Revision Application No.664 of 2023 before the Additional Divisional Commissioner, Konkan Division, challenging the Competent Authority’s order dated 2 November 2023. The Revisional Authority initially granted stay to the eviction order on 26 December 2023. However, the Revisional Authority thereafter proceeded to reject the Revision Application by order dated 26 March 2024.

7) Petitioner has accordingly filed the present Petition challenging the eviction order dated 2 November 2023 passed by the Competent Authority and order dated 26 December 2023 passed by the Revisional Authority.

8) Mr. Soman, the learned counsel appearing for Petitioner would submit that the Competent Authority has erred in exercising jurisdiction under Section 24 of the MRC Act in the present case without appreciating the fact that possession of the Flat by Petitioner is no longer in pursuance of the Leave and License Agreement. He would submit that execution of the registered Agreement for Sale between the parties has invested title in respect of the Flat in her favour. That the reading of covenants of registered Agreement for Sale indicates that it actually is a sale deed. That the only possible grievance of Respondent Nos. 3 and 4 is about alleged non-receipt of balance consideration of Rs.15,00,000/-, which does not automatically invalidate vesting of title in the ___Page No.4 of 15___ Flat in Petitioner. That even the allegation of non-payment of full amount of consideration by Petitioner is false as Respondent Nos. 3 and 4 have accepted not just the balance amount of consideration but amounts over and above the same in cash, which is witnessed by a witness. That the remedy available to Respondent Nos. 3 and 4 qua the compliant of non-receipt of full amount of consideration is to sue Petitioner for recovery of balance amount of consideration and the transaction of sale does not get affected only by reasons of non-payment of full amount of consideration.

9) Mr. Soman would further submit that since Petitioner’s possession of Flat stems through the Agreement for Sale, she is entitled to protect her possession under Section 53A of the Transfer of Property Act, 1882 (TP Act). He would submit that the Respondent Nos. 3 and 4 have already filed S.C. Suit No.484 of 2023 before the City Civil Court seeking various declaratory and injunctive reliefs qua the transaction between the parties. That the prayer in the Suit also includes recovery of possession of the Flat. That once jurisdiction of Civil Court is invoked by filing suit qua transactions between parties, it is impermissible for the Competent Authority to exercise jurisdiction under Section 24 of the MRC Act. Lastly, Mr. Soman would submit that in addition to the transaction between Petitioner and Respondent Nos. 3 and 4, there is a separate transaction of mortgage in favour of the State Bank of India, which has advanced credit facility in purchase of the Flat. That the mortgage deed has been executed between the Petitioner and the Bank, thereby evidencing divesting of title of Respondent Nos. 3 and 4 in respect of the Flat, and creation of interest of the Bank therein. In such circumstances according to Mr. Soman, the Competent Authority could not have exercised summary jurisdiction for ordering Petitioner’s eviction by rejecting leave to defend. Without prejudice to the rights and contentions of Petitioner, Mr. Soman would submit that though the entire amount of consideration is already paid, she is willing either to pay to ___Page No.5 of 15___ Respondent Nos. 3 and 4 or deposit before the City Civil Court balance consideration of Rs.15,00,000/- to show her bonafides. He would accordingly pray for setting aside the impugned orders passed by the Competent Authority and Revisional Authority.

10) Petition is opposed by Mr. Adsul, the learned counsel appearing for Respondent Nos. 3 and 4. He would submit that possession of the Flat by Petitioner is through Leave and License Agreement and that the same has no relation with the Agreement for Sale. That what is executed between the parties is mere Agreement, which has not fructified into transaction of Sale and Respondent Nos. 3 and 4 still continue to be owners of the Flat. That therefore no right is created in Petitioner’s favour in respect of the Flat. That Agreement for Sale is executed after expiration of Leave and License Agreement under a specific promise to pay double the amount of license fees. Inviting my attention to clause -H of the Agreement for Sale, Mr. Adsul would submit that failure to pay balance amount of consideration within 60 days empowered Respondent Nos. 3 and 4 to terminate the Agreement after deducting amount of Rs.1,00,000/- towards compensation. That Petitioner has cheated the owners, by falsely representing them that Rs.75,00,000/- would be paid to them through bank loan by showing sanction letter of loan of Rs.75,00,000/-. That when they approached the Bank, they were informed that Petitioner had already pocketed amount of Rs.15,00,000/- to herself and only Rs.60,00,000/was paid by the Bank. That the Agreement for Sale was terminated by Notice dated 22 November 2021, but the Bank still proceeded to create a mortgage thereafter with full knowledge of cancellation of transaction between the parties. That proceedings under Section 24 of the MRC Act cannot be confused with the Suit filed by Respondent Nos. 3 and 4. That Section 24 proceedings are filed only for recovery of possession whereas the Suit is filed for seeking cancellation of transaction of Agreement for Sale and for protection of title of ___Page No.6 of 15___ Respondent Nos. 3 and 4 in respect of the Flat so as to prevent Petitioner from claiming any rights in respect thereof. That therefore mere filing of the suit does not come in the way of competent authority exercising jurisdiction under Section 24 of the MRC Act. He would pray for dismissal of the Petition.

11) Rival contentions of the parties now fall for my consideration.

12) There is no dispute to the position that Leave and License Agreement came to be executed between the Petitioner and Respondent Nos.[3] and 4 on 1 December 2019, which was registered on 3 December 2019. The License was for the period of 22 months from 18 December 2019 to 17 October 2021. The license fees agreed was Rs.33,500/- for the first term of 11 months and Rs.34,500/- for the next term of 11 months. For the purpose of deciding correctness of the impugned orders, it is not necessary to consider the allegations relating to delay in payment of license fees, non-payment of electricity charges or complaints by Society. Undisputedly, the license ended on 17 October 2021 and Petitioner did not vacate the Flat upon expiry of the License on 17 October 2021.

13) Parties agreed to effect sale of the Flat in favour of Petitioner and for that purpose registered Agreement for Sale on 28 October 2021 was executed between Petitioner and Respondent Nos. 3 and 4. The transaction of sale was agreed within 11 days of expiry of licence. Under the Agreement, the Flat was agreed to be sold for total consideration of Rs. 1 crore. It appears that on the date of execution of Agreement for Sale dated 28 October 2021, Petitioner paid an amount of Rs.19,00,000/- to Licensors towards part consideration and paid an amount of Rs.1,00,000/- towards TDS. The balance amount payable under the Agreement was Rs.80,00,000/-. There is no dispute to the position that further amount of Rs.5,00,000/- was paid by Petitioner to Respondent Nos. 3 ___Page No.7 of 15___ and 4 on 30 August 2022 thereby leaving balance consideration payable of Rs.75,00,000/-. It is admitted by Licensors in their application that amount of Rs.60,00,000/- was received by them through SBI towards credit facility availed by Petitioner. This is how total consideration admittedly received by Respondent Nos. 3 and 4 from Petitioner is Rs.85,00,000/-. It is the complaint of Respondent Nos. 3 and 4 that balance amount of Rs.15,00,000/- is not paid to them by Petitioner in pursuance of the Agreement for Sale dated 28 October 2021 and that therefore the sale transaction is incomplete and they continue to be owners in respect of the Flat. On the contrary, it is Petitioner’s contention that she has become owner in respect of the Flat on account of execution of registered Agreement for Sale dated 28 October 2021.

14) The short issue that arises for consideration in the light of above factual background is whether the Competent Authority could have exercised summary jurisdiction under Section 24 of the MRC Act and passed an order of eviction against Petitioner. Perusal of the impugned order dated 2 November 2023 refusing leave to defend would indicate that specific findings are recorded by the Competent Authority that Petitioner is holding possession of the Flat only on the basis of Leave and License Agreement and not on the basis of Agreement for Sale. The relevant findings by the Competent Authority in paragraph 3 of the order read thus:

3. I have gone through the case and heard both sides. The leave and license agreement is admitted by the respondent. Admittedly, the agreement is expired by the efflux of time. There is no agreement on record showing the extension of leave and license agreement. The execution of agreement for sale does not confer any right in property. It can not be a reason for withholding the possession of application premises. In agreement for sale there is no recital regarding the handing over possession. On the contrary it is written that the permanent possession will be given on execution of sale deed. Thus the Respondent is holding possession of application premises only on the basis of leave and license agreement and not on the basis of agreement for sale. Hence on expiry of ___Page No.8 of 15___ leave and license agreement the respondent is bound to vacate application premises. The execution of agreement for sale can not be a reason for withholding application premises. The respondent can file suit for specific performance if the agreement is not registered. Hence it cannot be a triable issue before this authority. Hence, the respondent have no ground to contest this case. Hence, she is not entitled for leave to contest this case. Hence, following order is passed: ORDER The application Exh.11 is hereby rejected. (emphasis added)