Unregistered Partnership Firms Can Claim Statutory Tenancy Rights Under Bombay Rent Act: High Court
The Bombay High Court has held that an unregistered partnership firm in occupation of premises as a licensee on February 1, 1973, can claim the benefit of Section 15-A of the Bombay Rent Control Act, 1947. The Court observed that the right conferred by Section 15-A is statutory in nature and the bar under Section 69(2) of the Indian Partnership Act, 1932 applies to enforcement of contractual rights and not statutory rights.
Justice Arun R. Pedneker was hearing a Civil Revision Application filed by All India Travel Services against the dismissal of its suit seeking declaration of tenancy and injunction in respect of the suit premises. The firm was unregistered when the leave and licence agreement dated May 30, 1966, was executed, and it continued to be in occupation and was registered as a partnership firm only on October 3, 1973.
The Trial Court and the Appellate Court had held that although the plaintiff was in possession of the premises from 1966 under the leave and licence agreement, it was not entitled to a declaration of tenancy as the firm was unregistered on the notified date.
The Court noted that Section 69(2) of the Partnership Act prohibits a suit by an unregistered firm to enforce a right arising from a contract against a third party. Section 15-A of the Bombay Rent Control Act, however, grants statutory protection to a person who was in occupation of the premises as a licensee on February 1, 1973 and deems such person to have become the tenant of the landlord.
The Court held that there was no bar under the Partnership Act or the Bombay Rent Control Act preventing an unregistered partnership firm from becoming the beneficiary of the statutory right available under Section 15-A. It observed:
“The statutory right conferred under Section 15-A is not a mere contractual right which the partnership firm seeks to enforce. There is no bar under the Partnership Act or under the Bombay Rent Control Act, 1947, which prohibits the unregistered partnership firm from becoming the beneficiary of a statutory right as is made available under Section 15-A of the Bombay Rent Control Act, 1947.”
Hence, the Court held that the reasoning of the Trial Court and the Appellate Court, that the appellant firm cannot claim the benefit of Section 15-A of the Bombay Rent Control Act, 1947, in view of the bar contained in Section 69(2) of the Partnership Act, was erroneous.
“… the rights enforced by the Partnership Firm are statutory in nature under Section 15-A of the Bombay Rent Act. The bar contained under Section 69(2) of the Partnership Act has no relevance for enforcement of a statutory right and the partnership firm through unregistered as on 01.02.1973 is entitled to the protection of Section 15-A of the Bombay Rent Control Act, 1947,” the Court remarked.
The Court accordingly set aside the judgments and orders passed by the Trial Court and the Appellate Court. The respondent's request for stay of the order was also refused as the applicant/tenant was in possession of the property.
Case Title: All India Travel Services v. Ashok K. Upadhayay [Civil Revision Application No. 578 of 2024]