TRANSMISSION OF TENANCY

INTRODUCTION

One of the biggest
questions that invariably crops up when preparing a Will is, ‘Can I bequeath my
tenanted property?’ This is especially true in a city like Mumbai where
tenanted properties are very valuable. Tenanted property could be in the form
of residential flats or commercial properties. A person can make a Will for any
and every asset that he owns. Hence, the issue which arises is, can a person
bequeath a property of which he is only a tenant? In the State of Maharashtra,
the provisions of the Maharashtra Rent Control Act, 1999 (the Act) are also
relevant. Let us analyse this important issue in more detail.

RENT ACT
PROVISIONS

Section 7(15) of the Act defines the
term ‘tenant’ as any person by whom rent is payable for any premises. Further,
when the tenant dies, the term includes:

(a) in the case of residential tenanted
premises, any member of his family who is residing with the tenant at the time
of his death; or

(b) in the case of a tenanted premises
which is used for educational, business, trade or storage purposes, any member
of his family who, at the time of the tenant’s death, is using the premises for
such purpose.

Moreover, in the absence of any family
member of the tenant, any heir of the tenant as may be decided by the Court in
the absence of any agreement will be the tenant. These provisions are
applicable to transmission of tenancy by the original tenant as well as by any
subsequent tenants.

The term family has not been defined
under the Act and, hence, the general definition of the term would have to be
taken. It is a term which is open to very wide interpretation and is quite
elastic. The Bombay High Court in Ramubai vs. Jiyaram Sharma, AIR 1964
Bom 96, has held that the term family would mean all those who are
connected by blood relationship or marriage, married / unmarried / widowed
daughters, widows of predeceased heirs, etc. The Black’s Law Dictionary
defines the term as those who live in the same household subject to general
management and control of the head. Another definition is a group of blood
relatives and all the relations who descend from a common ancestor, or who
spring from a common root, i.e., a group of kindred persons. Hence, it is a
very generic term.

From the above definition of the term
tenant under the Act, it is very clear that only those family members of the
tenant who are residing with him would be entitled to his tenancy after his
demise. It is also relevant to note that the family members need not
necessarily be legal heirs of the tenant and the legal heirs would get the
tenancy only in the absence of any family members and that, too, on
determination by a competent Court. Residing with the tenant means that the
family members must stay, eat and sleep in the same house as the tenant. This
is a question of fact as to whether or not a family member can be said to be
residing with the deceased tenant.

However, in the case of non-residential
premises, the family members must be using the property along with the tenant.
Thus, in case of such premises it is not necessary that they reside with the
tenant but they must use the premises for the purposes for which the tenant was
using the same. In the case of Pushpa Rani and Ors. vs. Bhagwanti Devi,
AIR 1994 SC 774, the Supreme Court held that when a tenant dies, it is
the person who continued in occupation of and carried on business in the
business premises alone with whom the landlord should deal and other heirs must
be held to have surrendered their right of tenancy.

The Supreme Court in the case of Vasant
Pratap Pandit vs. Dr. Anant Trimbak Sabnis, 1994 SCC (3) 481 has held
that the legislative prescription of this provision of the Act is first to give
protection to the members of the family of the tenant residing with him at the
time of his death. The basis for this is that when a tenant is in occupation of
premises, the tenancy is taken by him not only for his own benefit but also for
the benefit of the members of the family residing with him. Therefore, when the
tenant dies, protection should be extended to the members of the family who
were participants in the benefit of the tenancy and for whose needs as well the
tenancy was originally taken by the tenant. It is for this object that the
legislature has, irrespective of the fact whether such members are ‘heirs’ in
the strict sense of the term or not, given them the first priority to be
treated as tenants. All the heirs are liable to be excluded if any other member
of the family was staying with the tenant at the time of his death.

The Bombay High Court was faced with an
interesting question in the case of Vasant Sadashiv Joshi vs. Yeshwant
Shankar Barve, WP 2371/1997. Here, the tenant resided in a premises
along with his brother. The tenant and his brother were part of an HUF. After
the tenant’s death, the brother’s son contended that since the family members
were recognised as tenants, the joint family itself should also be recognised
as a tenant. The High Court negated this plea and held that the term only
included a single person as a tenant and it was not possible that every member
of the HUF would become a tenant. It held that when a landlord grants a tenancy
it is a contract of tenancy as entered into with a specific person (tenant).
The landlord expects fulfilment of legal obligations from the tenant. The law,
therefore, does not envisage that the landlord would be required to deal with
all members of the joint family.

Similarly, in Vimalabai Keshav
Gokhale vs. Avinash Krishnaji Binjewale, 2004 (1) Bom CR 839, the High
Court rejected the contention that the Bombay Rent Act would enable each and
every member of the tenant’s family to claim an independent right in respect of
the tenancy and held that any member would mean ‘any one member.’

The Bombay High Court in Urmi
Deepak Kadia vs. State of Maharashtra, 2015(6) Bom CR 354 considered
whether the Maharashtra Rent Control Act was contrary to the Hindu Succession
Act, 1956 since it provided protection only to those heirs of the deceased who
at the time of his demise were staying with him and not to others. It held that
the field covered by two laws was not the same but entirely different. The Rent
Act sought to prevent exploitation of tenants and ensured a reasonable return
for investment in properties by landlords. In some contingencies u/s 7(15) of
the Rent Act, certain heirs were unable to succeed to a statutory tenancy. To
this extent, a departure was made from the general law. In such circumstances,
the observations of the Apex Court in Vasant Pratap’s case (Supra)
were decisive. Hence, it concluded that the Rent Act did not interfere with the
Hindu Succession Act.

HEIRS OF
TENANT SUCCEED IN ABSENCE OF FAMILY MEMBERS

The Act further provides that in the
absence of family members, it is the heirs of the tenant who would succeed to
the tenanted premises. The term heirs has not been defined under the Act and
hence one needs to have recourse to the usually understood meaning. The Supreme
Court in the case of Vasant Pratap (Supra) has dealt with the
definition of the term heirs. It means the persons who are appointed by law to
succeed to the estate in case of intestacy. It means a person who succeeds,
under law, to an estate in lands, tenements, or hereditaments, upon the death
of his ancestor, by descent and right of relationship. The term is used to
designate a successor to property either by Will or by law. The Court further
held that a deceased person’s ‘heirs at law’ are those who succeed to his
estate by inheritance under law, in the absence of a Will.

The Supreme Court in the case of Ganesh
Trivedi vs. Sundar Devi (2002) 2 SCC 329 had held that the brother of a
male tenant would be his heir. However, an interesting question arose in Durga
Prasad vs. Narayan Ram Chandaani (D) Thr. Lr. CA 1305/2017 (SC) as to
whether the brother of a married female tenant could be treated as her legal
heir and thus become the tenant after her demise? In this case before the
Supreme Court, a person had taken a residential property on rent. After his
demise his son became the tenant and after his son’s demise, his
daughter-in-law became the tenant. The question arose as to who would become
the tenant on her demise as she did not have any children. Her brother claimed
that he was a part of the deceased tenant’s family and hence he should inherit
the property. This was a property located in UP, so the Apex Court considered
the provisions of the U.P. Rent Act. Under that Act, the heirs of a tenant residing
with him succeed to the premises on the tenant’s death.

The Supreme Court held that the
question falling for consideration was whether the brother of the tenant was an
heir under the U.P. Rent Act. Since the term heir was not defined under the
Act, it held that heir was a person who inherited by law. Section 3(1)(f) of
the Hindu Succession Act, 1956 defined an heir to mean any person, male or
female, who was entitled to succeed to the property of an intestate under the
Act. The word heir had to be given the same meaning as would be applicable to
the general law of succession. The deceased tenant being a Hindu female, the
devolution of tenancy would be determined u/s 15 of the Hindu Succession Act.
Sub-section (2) of section 15 carved out an exception to the general scheme and
order of succession of a Hindu female dying intestate without leaving any
children. If such a woman has inherited property from her husband /
father-in-law, then the property devolved upon her husband’s heirs. The Apex Court
held that since she did not have any children and the tenancy in question had
come from the tenant’s father-in-law to her husband and from her husband to the
tenant, the exception contained in section 15(2) of the Hindu Succession Act
would apply. Accordingly, since her brother was not an heir of her husband, he
was not entitled to succeed to the tenancy in question.

CAN THE TENANT
MAKE A WILL?

This brings us to the important
question of whether a tenant can will away his tenanted premises? In the case
of Gian Devi Anand vs. Jeevan Kumar, (1985) 2 SCC 683, a
Constitution Bench of the Supreme Court held that the rule of heritability
(capable of being inherited) extends to statutory tenancy of commercial as well
as residential premises in States where there is no explicit provision to the
contrary under the Rent Act and tenancy rights are to devolve according to the
ordinary law of succession, unless otherwise provided in the statute. In Bhavarlal
Labhchand Shah vs. Kanaiyalal Nathalal Intawala, referring to the
Bombay Rent Control Act, 1974, it was held that a tenant of a non-residential
premises cannot bequeath under a Will his right to such tenancy in favour of a
person who is a stranger, not being a member of the family, carrying on
business. In State of West Bengal vs. Kailash Chandra Kapur, (1997) 2 SCC
387, it was held that in the absence of any contrary covenants in the
lease deed or the law, a Will in respect of leasehold rights in a land can be
executed by a lessee in favour of a stranger.

Hence, if the Rent Control laws of a
State so provide, then a tenant cannot make a Will for his tenanted premises.
In that event, the tenancy would pass on only in accordance with the Rent
Control Act. This proposition is also supported by the Supreme Court’s decision
in the case of Vasant Pratap (Supra). In that case, the tenant
made a Will of her property in favour of her nephew. This was opposed by her
sister’s grandson who was staying with the tenant at the time of her death. The
Apex Court held that normally speaking, tenancy right would be heritable but if
the right to inherit had been restricted by legislation, then the same would
apply. It held that if the word ‘heir’ in the Rent Act was to be interpreted to
include a ‘legatee under a Will’, then even a stranger may have to be inducted
as a tenant for there is no embargo upon a stranger being a legatee under a
Will. This obviously was not the intention of the legislature. Accordingly, it
was held that a bequest could not be made in respect of a tenanted property.

The Supreme Court’s decision in the
case of Gaiv Dinshaw Irani vs. Tehmtan Irani, (2014) 8 SCC 294
succinctly sums up the position after considering all previous decisions on
this issue:

‘…in general
tenancies are to be regulated by the governing legislation, which favour that
tenancy be transferred only to family members of the deceased original tenant.
However, in light of the majority decision of the Constitution Bench in Gian
Devi vs. Jeevan Kumar (Supra), the position which emerges
is that in absence of any specific provisions, general laws of succession to
apply, this position is further cemented by the decision of this Court in State
of West Bengal vs. Kailash Chandra Kapur (Supra) which has allowed
the disposal of tenancy rights of Government owned land in favour of a stranger
by means of a Will in the absence of any specific clause or provisions.’

CONCLUSION

The law as it stands in the State of
Maharashtra is very clear. A tenancy cannot be bequeathed by way of a Will. It
would pass only in accordance with the Rent Act. However, the position in other
States needs to be seen under the respective Rent Acts, if any.