HC rejects builder’s plea to evict tenants via arbitration in Sion redevelopment case

Justice Somasekhar Sundaresan ruled that the matter must be addressed under the Maharashtra Rent Control Act and not through “shortcuts” like arbitration, which cannot be used to bypass statutory protections

MUMBAI: The Bombay high court (HC) has dismissed a plea by a developer seeking to forcibly evict tenants from a building in Sion under the guise of arbitration, stating that protected tenancy rights cannot be overridden through interim relief.

HC rejects builder’s plea to evict tenants via arbitration in Sion redevelopment case

Justice Somasekhar Sundaresan ruled that the matter must be addressed under the Maharashtra Rent Control Act and not through “shortcuts” like arbitration, which cannot be used to bypass statutory protections.

The case involved SJK Buildcon LLP, which had signed a redevelopment agreement on February 12, 2024, with landlords Kusum Pandurang Keni and Ninad Ajay Keni to redevelop Keni House, a building constructed in 1962 and located in Sion West. Of the 22 tenements in the building, 18 are occupied by tenants and four by the landlords.

Although the agreement between the developer and landlords included an arbitration clause, there was no dispute between them. Instead, the developer filed a petition under the Arbitration and Conciliation Act, 1996, seeking court intervention to forcibly take possession of tenanted premises — including a flour mill — by appointing a court receiver. The tenants were accused of being “illegal occupants”.

However, these tenants had already been recognised as “protected tenants” by a 2015 ruling of the Small Causes Court, which upheld their tenancy rights. That decision came after a long-standing legal battle dating back to a 2004 suit filed by the developer, and it provided them with statutory protection against eviction.

The high court noted that since the tenants were not parties to the arbitration agreement, they could not be evicted through it. “Interim relief in arbitration is meant to preserve the subject matter of disputes between parties to the arbitration — not to interfere with rights already recognised by law,” the court observed.

Justice Sundaresan criticised the attempt to use arbitration as a “backdoor” for eviction, pointing out that tenancy rights are individual and sovereign, and cannot be transferred to a collective society or waived away by a development agreement. “The developer and landlords seek speedy eviction in the name of redevelopment. But doing so would undermine the tenants’ statutory protections,” the court said, directing the petitioner to seek relief from the appropriate forum — the Small Causes Court.

The petition was accordingly dismissed.