Although the state government is exempt from the Rent Control Legislations, where it is the landlord, it cannot do as it pleases and “act like a private landlord and indulge in rack renting, profiteering and/or indulging in whimsical and unreasonable evictions or bargains”, the Bombay High Court (HC) has observed.
The court has upheld the government’s decision to charge rent, at the time of lease renewal, based on ready reckoner (RR) rate, saying that the same is not “extortionate, exorbitant and/ or manifestly arbitrary”, as the properties were located in Bandra, a very sought after and high-end real estate area in Mumbai. However, it said that the rent cannot be revised every five years and has to remain the same for the entire tenure of the lease.
The court disposed of a batch of petitions, filed mostly by housing societies in Bandra, challenging government resolutions (GR) of 2006, 2012 and 2018, revising terms of rent on long-term leases granted to housing societies.
The 2006 GR contemplated charging lease rent based on the value of the land as pre the RR. The 2012 and 2018 GRs set out the methodology for calculating the lease rent. These GRs also provided for conversion of leasehold plots to freehold (ownership). Senior counsels Rafiq Dada and Navroz Seervai, for several petitioners, contended that linking the rent and the value of the lands, is prohibited by earlier HC rulings.
The counsels argued that the GRs are clearly illegal as they seek to increase the lease rent in an exorbitant (between 400 to 1900 times), extortionate, and an unreasonable fashion, and which is contrary to public policy. Further, they contended that they were not given a hearing despite repeated requests to the government. Advocate General Birendra Saraf and government pleader Jyoti Chavan submitted that the petitioners are bound by the terms of the lease and cannot assert a right contrary thereto including the right of renewal. Also, the RR rates are less than the market rates.
The court said although the state is exempt from the provisions of the Rent Control Legislations, it is required to act in a “reasonable manner” having regard to the principles of justice, equity and fair play. “Merely because a contract is entered into with the state, the personality of the state is not cast off and the state is regulated in its conduct in all spheres by the requirements of Article 14 [Equality before law],” a bench of Justices BP Colabawalla and Somasekhar Sunderesan said on Wednesday.
Tabulating the proposed revised rent for housing societies in Bandra, the bench said each member’s liability would be between Rs2,000 to Rs6,000 per month. “When one takes these figures into consideration and especially the fact that the properties are located at Bandra Bandstand (a very sought after, and high-end real estate area in Mumbai), one can hardly call this increase exorbitant, extortionate and/or manifestly arbitrary,” the judges underlined.
