Conversion of Ownership - Cessed and Non-cessed building

An existing cessed building which has got tenants already can be converted into an ownership building by forming a society of tenants, under the provisions of the Maharashtra Housing and Area Development Act, 1976 (MHADA).

A written majority of about 70% of the occupiers/ tenants is required to be submitted to the Mumbai Housing and Area Development Board, requesting to move the State Government to acquire land together with the existing building in the interest of its better preservation or for new construction of a building. [S. 103B of MHADA, 1976]

Since there is acquisition of land involved, the owner of the land will be paid an amount for transferring his rights in the land, as determined by the Land Acquisition Officer. [S. 46 and S. 96, MHADA].

The MCGM will not be required to be paid any premium, since it is the State Government that is acquiring the land. There is no question of extension of lease here by the BMC, since it is a proper acquisition of land under S. 103B of the MHADA.

Even if the owner of the building does not own the land but holds it as a lessee or licenses, even then the 70% of the occupiers can request the Board to move the State Government to acquire the land.

They need to also intimate their willingness to pay the charges as mentioned under Chapter VIII of the MHAD Act, for the purpose of such acquisition and bear the costs of reconstruction of the new building.

The Board will then consider the application and after the necessary verification and scrutiny of the proposal, approve it. It will then direct the proposed CHS to deposit within a specified time limit with the Board, 30% of the approximate amount that would be required to be paid to the owner, in case if the land is acquired. It will also intimate the owner about the same.

If the State Government approves the proposal, the Board will forward the proposal of land acquisition to Land Acquisition Officer for initiating the process as per S. 93 (3), (4), (5) and S. 96 of the MHAD Act. [S. 103B (5) of the MHAD Act, 1976] Since the land will be acquired from the owner/ lessee of the land, there is no question of lease involving the BMC.

A non-cessed building will attract the provisions of Maharashtra State Co-operative Housing Societies Act, 1960, and its bye-laws for the same process.

Since there is no legal provision for non-cessed buildings as of now, the provisions of the Maharashtra State Co-operative Housing Societies Act, 1962, and its bye-laws will be applicable.

International legal perspective on the effects of the tenants’ rights on destruction of the property

In the case of (1948) 1 All ER 306, renowned legal champion, Lord Denning, conceded that the rights created in a tenant could not come to an end by frustration, when the property is accidentally destroyed. He stressed that the contract of tenancy continued between the parties despite the destruction of the house, be it natural collapse or destruction by fire or tempest.


However, in Woodfall on Landlord and Tenant, para-2066 made a rather interesting treatment of the concept of contractual tenancy and reduced the concept of property to that of a subject matter:


"2066. Total destruction of subject-matter. A demise must have a subject matter, either corporeal or incorporeal. If the subject-matter is destroyed entirely, it is submitted that the lease comes automatically to an end, for there is no longer any demise. The mere destruction of a building on land is not total destruction of the subject-matter of a lease of the land and building, so the demise continues. But if by some convulsion of the nature the very site ceases to exist, by being swallowed up altogether or buried in the depths of the sea, it seems clear that any lease of the property must come to an end. 


This view is consistent with the lessee's entitlement to an apportionment of rent in the event of the total loss of part of the demised land. Likewise since a demise of part of a building above the ground necessitates the definition of a physical subject-matter by walls, floors and ceilings, there being no such thing in law as a demise of a volume of space above the surface of the earth unbounded by physical walls, floors or ceilings, it is submitted that the demise of part of a building, without any of the soil upon which the building stands can survive such a destruction of the building as leaves physically defined subject-matter of the demise."


In Article 592, of American Jurisprudence relied on in the following statement is made -


"592. Complete destruction.
The common-law rule that a lessee is not relieved of his obligation to pay rent through the accidental destruction of the buildings demised to him presupposes that some part of the premises remains in existence for occupation by the tenant, irrespective of the destruction. If the destruction of the premises is complete -- nothing remaining, the subject matter or thing leased no longer existing then the liability of the tenant for rent cases. This is because rent is a profit issuing out of the lands or tenements as compensation for the use of occupation. Hence, if the principal is gone, the interest or incident cannot continue to exist. Thus, it has been held that the destruction of the property extinguishes the liability for rent, as under a lease of a river front and landing consisting of a narrow footing at the base of a bluff without any wharf, dock, or pier, where the unprecedented ravages of the river effectually took away the use of the landing by washing away all but a shallow fragment of the lot. Likewise, the liability of a tenant for rent subsequently to accrue under a lease of a building, which does not include the freehold, is terminated upon the destination of the building.


Various Indian judges have held that the statement of law made in Article 592 of American Jurisprudence and para 2066 of Woodfall on Landlord and Tenant cannot be applicable in our country.

Important duty of the landlord under the Mumbai Municipal Corporation Act, 1888 and the DCR

It is important to note that when a building is in a dilapidated condition or is classified “dangerous” by the structural auditors, it becomes the duty of the landlord to fix it and make it fit for human habitation.

When a building is in a dilapidated condition, or is classified “dangerous” by the structural auditors or the Commissioner’s office u/s 354A of the Mumbai Municipal Corporation Act, 1888, the Commissioner is empowered to issue a notice requiring the owner or the occupier of such structure, which is in a ruinous condition, or which is likely to fall, or collapse, to secure or repair such structure and prevent all cause of danger.

Thus, it can be safely inferred that even if it is a building which is nearing dilapidation, having outlived its natural age, the authority will identify the structure/ building as “dangerous” and sufficient steps will be carried to ensure its redevelopment or repairs, depending on the damage.

Section 3 (4) of the Developmental Control Regulations, 1991, states:

Reconstruction: The reconstruction in whole or part of a building which has ceased to exist due to an accidental fire, natural collapse or demolition, having been declared unsafe, or which is likely to be demolished by or under an order of the Corporation or the Bombay Housing and Area Development Board and for which the necessary certificate has been given by either the said Corporation or the Board shall be allowed subject to the regulations in Appendix II.

Appendix II of the DCR states:

3. The new building may be permitted to be reconstructed in pursuance of an agreement to be executed on stamp paper by at least 70 per cent of the landlord/ occupants (if any) in the original building, within the meaning of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, and such agreement shall make a provision for accommodation for the said landlord/ all occupants in the new building on agreed terms and a copy of such agreement shall be deposited with the Corporation before commencement or undertaking reconstruction of the new building.

7. The landlord/ occupants of the original buildings shall furnish a duly stamped undertaking that he/ they shall allot to all the occupants in the original building accommodation in the new building in accordance with Regulation 3 in this Appendix.

The law of the land is that whenever a landlord puts up a new construction in the place of the old construction- on his own accord or on the notice issued by the Commissioner u/s 354A of the Mumbai Municipal Corporation Act, 1888- and if the tenancy of the tenant has not been ended, the tenant has a right to claim the tenancy in the newly constructed building in respect of the portion which is at about the same site as the tenement in the destroyed house.

That means that right of the lessee in the leased property subsists even if the leased properly has been destroyed by fire, tempest or flood or violence of an army or of a mob or other irresistible force unless the lessee exercises his option that on happening of such events the lease has been rendered void.

It is important to note that the law has empowered the lessee to terminate the contract of tenancy, if the building is completely destroyed or is rendered unfit for habitation. However, the law also says that if the collapse of the building was brought about by the wrongful act of the lessee himself, then he won’t be allowed to claim his right of tenancy. Please refer this article as well, for further reading and clarification.

The effect of landlords’ and tenants’ right in case of accidental destruction of property

If the building suffers a natural collapse, or is destroyed by tempest or fire, the rights of the tenant and the landlord remain the same, subject to certain conditions as stated under the Indian law. The relevant sections of the law are stated later in the article.


The Transfer of Property Act, 1882 gives the right of terminating the tenancy rights to the tenant, in case if the property is destroyed. If the tenant thinks that the current property can be repaired and he can stay or use the premises, he can choose not to revoke the contractual tenancy. Again, this relief to the tenant, is subject to a major condition- if the tenant himself had caused – directly or indirectly – the accident which resulted in the damage to the property, then he cannot use this provision to his advantage. Most of the litigation happens in order to prove the negligence of the tenant.


At this point, it is important to note the meaning of the term contractual tenancy. It means that before the collapse of the building, the tenants were paying rent to the landlord and the landlord had not issued them a notice of eviction, or asked them to leave.


This legal proposition has come up for consideration in Krishna Laxman Yadav And Ors. Vs Narsinghrao VithalRao Sonawane [AIR 1973 Bom 358, [1973 75 BOM.L.R. 29]. It was contended that the tenanted house having collapsed and destroyed by the Panshet floods in Pune in 1962, the tenancy was extinguished. It was held that the mere fact that the house collapsed and destroyed was insufficient to make a finding that the petitioners had stopped to be contractual tenants.


In Hind Rubber Industries Pvt. Ltd. vs Tayebhai Mohammedbhai Bagasarwalla And Others [AIR 1996 Bom 389, 1996 (4) BomCR 414, (1996) 98 BOMLR 87], it was held that the destruction of the tenanted structure does not extinguish the tenancy and the right of occupation of the tenant as the contract of tenancy continues to exist between the parties. In this case, justice Lodha held that merely because the tenanted structure has been destroyed or demolished, the right transferred under the lease cannot be said to have come to an end, and the relationship of lessor and lessee continues to exist.


Governing provisions under the Indian Law:


The provisions of Section 108 (e) of the Transfer of Property Act, 1882 which outlines the rights and duties of both the lessor and lessee, state:


S. 108 (e) provides the following:


(e) if by fire, tempest or flood, or violence of an army or of a mob, or other irresistible force, any material part of the property be wholly destroyed or rendered substantially and permanently unfit for the purposes for which it was let, the lease shall, at the option of the lessee, be void;


Provided that, if the injury be occasioned by the wrongful act or default of the lessee, he shall not be entitled to avail himself of the benefit of this provision.


For more clarity, read this.