IMPORTANT POINT
The Maharashtra Rent Control Act's exemption under Section 3(1)(b) applies to the premises themselves, meaning that if the head tenant is excluded from protection due to financial criteria, the sub-tenant is also excluded from such protections.

JUDGMENT

CONTENTS

A. OVERVIEW

B. FACTUAL BACKGROUND

C. THE TRIAL COURT JUDGMENT

D. THE APPELLATE COURT JUDGMENT

E. RELEVANT STATUTORY PROVISIONS

F. RIVAL SUBMISSIONS & ANALYSIS

G. CONCLUSIONS & ORDER

A. OVERVIEW

G.S. Patel, J. - The matter raises an interesting question of law: if a tenant is excluded from the protection and application of the Maharashtra Rent Control Act, 1999 ('the Rent Act'), is the sub-tenant also automatically so excluded? More specifically: if a corporate tenant is excluded from the Rent Act's application under Section 3(1)(b) because the corporate tenant has a paid up capital of more than Rs 1 crore, is a corporate sub-tenant automatically excluded from the application of the Rent Act, even if the corporate sub-tenant's paid up capital is less than Rs 1 crore?

B. FACTUAL BACKGROUND

2. On Dr E Moses Road at Mahalaxmi, Mumbai stands a building called Tiecicon House. The third floor of Tiecicon House, abut 15,000 sq ft, is owned by the 1st Respondent, Ion Exchange Enviro Farms Ltd ('Ion Exchange'). It came to acquire these premises in the circumstances set out below. The 2nd Respondent is Bakelite Hylan Ltd, formerly Bakelite (India) Pvt Ltd ('Bakelite'). We are not concerned in this matter with the 3rd Respondent, Procter & Gamble Hygiene & Health Care Ltd ('P&G').

3. It seems the whole property had come to the hands of one SN Desai. He constructed the building. Ultimately, through a series of transactions that are immaterial for our purposes, the property (the land and building) came into the hands of the Mewar royal family through a family trust. It seems that prior to 1966, Bakelite occupied some portion of the third floor as tenants of the original owners. The present Applicant ('Frick') claims to have been in possession since 1966. On 2nd February 1966, Bakelite gave 1,750 sq ft to Frick on leave and license[The Leave & License Agreement mentions that Bakelite was the tenant.]. On 23rd May 1971, the Mewar family trust leased 9500 sq ft on the third floor of Tiecicon House to Bakelite with effect from 1st April 1971 for a 10-year term[Ion Exchange says SN Desai was the lessor, but that appears not to be correct.]. On 19th July 1996, Ion Exchange took from this Mewar family trust 20% of the reversionary rights of Tiecicon House, including the third floor. On 28th July 2000, Ion Exchange terminated Bakelite's lease inter alia claiming that it had unauthorisedly - but prior to February 1973, a date of some significance - granted a sub-lease to Frick, which had, in turn, allegedly created a sub-sub-lease to one Gupta. It was alleged that Gupta had then surrendered the premises in his possession to Bakelite (not to Frick). Ion Exchange said in its termination letter that Bakelite was now only a statutory tenant. It also alleged another sub-lease by Bakelite to P&G. Ion Exchange said Bakelite was not entitled to protection under the Rent Act. Ion Exchange claimed it needed the premises for itself. Ion Exchange therefore demanded possession from Bakelite.

4. Frick's license of 1966 was not terminated.

5. In 4th December 1984, Frick brought suit in the Small Causes Court against Bakelite for a declaration of tenancy of 1,750 sq ft and sought an injunction. The suit remained pending.

6. On 7th March 2001, Ion Exchange filed an eviction suit in the Small Causes Court under the Rent act against Bakelite, Frick and P&G. Bakelite, Frick and P&G filed their written statements. Issues were struck on 17th May 2001. An additional issue was framed later.

7. Ion Exchange and Bakelite entered into Consent Terms dated 29th June 2005. These said that Bakelite was a tenant of the entire third floor (10,000 sq ft) under thee 23rd May 1971 lease from the Mewar family trust. Bakelite agreed that it had given a leave and license to Frick of 1,750 sq ft on 2nd February 1966. It said that Frick in turn had sublet 686 sq ft to one MR&DP Consultants, which had returned this area to Bakelite[Apparently a reference to 'Gupta', mentioned earlier.]. Th