Statutory Protection Under Maharashtra Rent Control Act Can't Be Circumvented By Invoking Arbitration Petition To Seek 'Speedy Eviction': High Court

The Bombay High Court bench of Justice Somasekhar Sundaresan has held that the jurisdiction under Section 9 of the Arbitration and Conciliation Act, 1996 (“the Act”) cannot be invoked to circumvent the statutory protection afforded to tenants under the Maharashtra Rent Control Act, 1999 (“Rent Act”). Interim measures under Section 9 must aid arbitral proceedings and cannot override or conflict with special statutory mechanisms under the Rent Act for eviction and redevelopment. The Court observed that issues involving protected tenants must be adjudicated by the Small Causes Court under Section 33 of the Rent Act, which is a non-obstante provision. Section 9 of the Act cannot be used to seek relief of 'speedy eviction' where tenancy rights are upheld by a binding decree. Brief Facts SJK Buildcon LLP (“Developer”/”Petitioner”) filed the petition under Section 9 of the Arbitration and Conciliation Act, 1996 (“the Act”) seeking the appointment of a Court Receiver to take possession of premises from “occupants” in connection with redevelopment of a building known as 'Keni House'. Some occupants were statutorily protected tenants under the Maharashtra Rent Control Act, 1999. On 12.02.2024, the Developer signed a Development Agreement with the Landlords (Respondents No. 1 and 2) to redevelop the building. The Landlords also gave the Developer a General Power of Attorney. The arbitration clause was part of this agreement. On the death of a tenant (Respondent No. 3), his legal heirs (the “Protected Tenants”) were made parties. Mrs. Supriya Sengupta (“Respondent No. 4”) was one of the legal heirs. The petition labelled the Protected Tenants and Sengupta “non-cooperating tenants/occupants” or “illegal occupants”, and sought their 'speedy eviction'.Notably, the Protected Tenants were beneficiaries of a final decree from the Small Causes Court, which upheld their tenancy rights in Ganesh Flour Mill. Observations The court observed that the jurisdiction of Section 9 of the Act is one that is in aid of arbitral proceedings. The measures that the Court may issue are meant to be aimed at protecting the subject-matter of the dispute, which is meant to be resolved by arbitration. The Court observed that interim measures may impact third parties, and hence, such parties must be heard where their interests are affected. It noted: “Even parties who are not signatories to the arbitration agreement are required to be made parties to proceedings under Section 9 so that any measures that may be necessary to protect the subject-matter of the dispute covered by the arbitration agreement are considered taking into account what such third parties have to say in the matter.” The court held that in the absence of a 'dispute' between the parties that would lead to arbitration, the Section 9 jurisdiction would not be available against the world at large to solve every conflict that any party to the arbitration agreement may have against any third party. The court observed that the objective of securing eviction through the Section 9 proceedings lies in the jurisdiction of Section 16 of the Rent Act, which governs the subject of taking of possession of premises for purposes of demolition and redevelopment. It held that although the Protected Tenants were being offered alternative premises, the statutory protection afforded to the Protected Tenants under Section 16 of the Rent Act cannot be eroded. The Court found that invoking Section 9 of the Act to seek relief that properly belongs within the framework of Section 16(1)(i) of the Rent Act creates a direct conflict between the two statutes. It observed that the appropriate forum for adjudicating the relief sought in the section 9 petition was the Small Causes Court under Section 33 of the Rent Act (which is a non-obstante provision). It held that the jurisdiction of the Small Causes Court cannot be circumvented by invoking Section 9 of the Act and ignoring the decreed status of protected tenants. The Court drew a parallel to the conflict between the Rent Act and the SARFAESI Act. It noted that in Bajarang Shyamsunder v. Rajesh Bajranglal Dabriwala, the Supreme Court resolved the conflict between the non-obstante clauses in the Rent Act and the SARFAESI Act, holding, among other things, that secured creditors could not take possession of premises where tenancy pre-existed the creation of a mortgage. The Supreme Court held that the rights of a lawful tenant cannot be compromised through proceedings under the SARFAESI Act. By analogy, the statutory protection afforded to tenants under the Rent Act cannot be overridden merely by invoking Section 9 of the Arbitration and Conciliation Act. The court noted that Section 9 of the Act does not have a non-obstante clause and is only intended to provide interim relief in aid of arbitration. The court held that directing the Protected Tenants to hand...

Statutory Protection Under Maharashtra Rent Control Act Can't Be Circumvented By Invoking Arbitration Petition To Seek 'Speedy Eviction': High Court

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Tazeen Ahmed

Statutory Protection Under Maharashtra Rent Control Act Can't Be Circumvented By Invoking Arbitration Petition To Seek 'Speedy Eviction': High Court

Tazeen Ahmed

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Tazeen Ahmed

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