Occupant Cannot Create Or Assign Third-Party Rights In Premises Without Permission: Bombay High Court

The Bombay High Court has held that an occupant who is not a recognised tenant has no right, title, or interest to assign or create third-party rights in the premises without proper legal authority.

The Court took serious note of the conduct of Auto Credit Corporation and Rekha Prakash Jain, who had attempted to interfere with sealed premises and delay testamentary proceedings, and imposed exemplary costs of ₹25 lakh for abuse of the judicial process.

Justice Kamal Khata was hearing a Chamber Summons filed by Auto Credit Corporation and Rekha Prakash Jain, seeking leave to intervene in the proceedings and for the removal of seals affixed on the suit premises. The Court noted that earlier orders dated 11 September 2018 and 15 January 2020 had clearly recorded that the applicants had no caveatable interest and had failed to take steps for tagging related proceedings despite ample opportunity.

The applicants claimed tenancy rights dating back to 1991 and alleged that the Administrator had wrongfully sealed the premises. However, the Administrator submitted that rent had not been deposited after April 2008, and that the premises were found locked on his appointment. Subsequently, it was discovered that the sealed premises had been tampered with and that new materials had been placed inside without permission.

The Court noted that there was no question of tenants being impleaded as parties in a Testamentary Suit. It held that any claim of tenancy must be established before the Small Causes Court, which has exclusive jurisdiction in that regard.

The Court held that Auto Credit Corporation was an occupant and not a lawful tenant. It ruled that an occupant, per se, has no legal right to assign, sublet, or create third-party rights in the premises in the absence of authorisation. It observed:

“An occupant, per se, has no right, title, or interest to assign or create third-party rights to use, occupy, or carry on business from the premises without proper authority. In the absence of such authority, no person other than the original partners of Auto Credit Corporation itself can claim to utilise the premises”

The Court further remarked that the conduct of the applicants has not only delayed the progress of the Suit but has also subjected the Court Administrator to unnecessary hardship and difficulty in administering the deceased's estate.

The Court held that the Applicant sought to tender rent to the Administrator without having been declared as a tenant, and despite the premises being sealed, they were tampered with without obtaining permission from the competent Court. Such misuse of judicial process, the Court noted, called for a strong deterrent, which could only be ensured through the imposition of exemplary costs.

Accordingly, the Chamber Summons was dismissed with exemplary costs of ₹25,00,000 to be deposited in the Armed Forces Battle Casualties Welfare Fund. The Court also directed the issuance of a show-cause notice to Rekha Prakash Jain for contempt for tampering with the sealed premises.

Case Title: Auto Credit Corporation & Anr. v. Mukesh Bansilal Shah & Ors. [Chamber Summons No. 159 of 2018 in Testamentary Suit No. 94 of 2011]

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