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Banks, companies may have to pay rent at market rates

Banks, corporations and companies with a share capital of over Rs 10 million may have to pay rent at prevailing market rates as the Bombay high court has rejected a bunch of petitions which had challenged the newly-introduced Maharashtra Rent Act for not offering protection to the "affluent" class of tenants.

Justices A P Shah and Sharad Bobde rejected the petitions yesterday as they felt that admitting them would have adverse effect on other suits and litigation that may come up on the same issue.

The petitions were filed among others by Indian Airlines, Saraswat Cooperative Bank, Bombay Mercantile Bank, Crompton Greaves, Johnson and Johnson and Maharashtra State Co-operative Bank.

According to petitioners, the earlier legislation, Bombay Rent Act, gave protection to all the tenants and the owners of the premises could not evict the tenants arbitrarily. The Act also imposed a limit on rent charges.

However, in 1999, came another legislation, Maharashtra Rent Control Act. Under Section 3(1)(b) thereof, similar protection was given but "affluent" class of tenants were left out. This became a subject matter for challenge and these petitions came to be filed.

The "affluent" class of tenants have been classified as scheduled banks, public and private companies with share capital of more than Rs 10 million, public corporations, state bank and its subsidiaries.

The petitioners argued that the impugned provisions of the new act vis-a-vis the banks were discriminatory because only scheduled banks were excluded from protection afforded by the new legislation.

Indian Airlines also questioned the wisdom of the legislature in excluding public corporations from the protection given by the Act.

The petitioners argued that the intention of the Act was to protect the tenants from exploitation by landlords but by excluding a certain class of tenants the legislation was in breach of Article 14 (right to equality).

It was submitted that tenants also included individuals and partnership concerns. Why were only companies excluded from the protection given by the act, they asked.

Advocate general Goolam Vahanvati and Nitin Deshpande, however, argued that the tenants did not possess fundamental right to get protection under this Act or any other Act. They cited several Supreme Court judgements to harp on this point.

They said the apex court had observed that this Act was more inclined to benefit the tenants and therefore it was necessary to strike a balance between rights and privileges of tenants. This aspect should be handled by the legislature, they submitted.

The legislature could take into account the benefit of the people and classify them into groups for the purpose of the Act, they argued.

Besides, it was submitted that big groups had the paying capacity and hence they were excluded from the protection offered by the Act to tenants.

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