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Tangerine Electronics Systems Private Limited Mumbai Decree Holder Versus Indian Chemicals

2004 (3) TMI 790 - BOMBAY HIGH COURT

Chamber Summons 593 of 2003 - Dated:- 4-3-2004 - R.M.LODHA, S.J.VAZIFDAR, ANOOP V.MOHTA JJ. JUDGEMENT- ( 1. ) The learned single judge of this Court doubted the correctness of the view of another learned single Judge in the case of Veetrag Investments and Finance Co. v. M/s. Premier Brass and Metal works Pvt. Ltd. , Mumbai, 2002 (3) Mah LJ 455 (Veetrag Investments I) and passed the following order : "the principal question raised in this chamber Summons is that the disputed property (non-re .....

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s no right to sublet or transfer the premises held by him whether they are for residential or non-residential purposes (see para 10) ; and on that basis, found that the leasehold rights cannot be put to sale. In my opinion, prima facie, by virtue of section 56 of the Act, which is a non obstante provision, the limitation or restriction imposed in Section 26 of the Act is lifted and would enable the decree-holder to enforce the decree qua such premises, for it recognises that the tenant or any pe .....

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or consideration in this case. Accordingly, the papers be placed before the learned Chief Justice for assigning it to a larger Bench. " ( 2. ) This is now the present Full Bench has been constituted by Honble the Chief justice. ( 3. ) In the order of reference, the learned single Judge has not narrated the necessary facts. The learned counsel for the parties were not ad idem on facts before us. Bereft of facts, in the circumstances, the neat question of law for our consideration is whether .....

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ot;property" has nowhere been defined under the Transfer of Property Act. The Civil Procedure Code also does not define the term "property". The term property possesses a variety of different applications having different degrees and includes, in its widest sense, all a persons legal rights, of whatever description. In its ordinary and general meaning, the property is not only the thing which is subject matter of ownership but also includes dominion or the right of ownership or pa .....

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ansfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions, to the transferor by the transferee, who accepts the transfer on such terms. ( 8. ) From this definition of word "lease", it is clear that lease creates an interest in the property and unless there is a transfer of s .....

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rship housing society under the Maharashtra Co-operative societies Act, 1960 liable to attachment and sale in execution of a decree against a member in whose favour or for whose benefit the same has been allotted by the society. The Supreme Court considered the said question in the light of the provisions of section 60 of the Civil Procedure Code (CPC), the provisions of the Maharashtra Co-operative Societies Act, 1960 and also the byelaws of the society and held in para 19 of the report thus &q .....

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on 47 (1 ) (b) in that connection. There is nothing in the language of Section 31 to indicate that the right to occupation which is the right to be sold in auction is not attachable in execution of the decree. There is, nothing in Section 31 to even remotely include a prohibition against attachment or sale of the aforesaid right to occupation of the flat. Once Section 31 is out of the way, we are left with Section 29 wherein we do not find even a provision of prior consent for transfer of share .....

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consent in writing of the Managing Committee, but there is nothing to show that contravention of this bye-law makes the assignment void under the Act unlike in the case of a transfer being void under Section 47 (3 ). There is no impediment to ratification of the assignment by the Committee particularly in view of the legal position arising out of the conjoint effect of Section 29. Rule 24, and Bye-law 9. Section 29 read with Rule 24 shows that there is no prohibition as such against transfer of .....

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. Further, it is significant that under Section 146 (a) of the Act, contravention of sub-section (2) of Section 47 is punishable under section 47 of the Act. Contravention of any bye-law is, however, no offence. We, therefore, unhesitatingly come to the conclusion that this species of property, namely the right to occupy a flat of this type, assumes significant importance and acquires under the law a stamp of transferability in furtherance of the interest of commerce. We have seen no fetter unde .....

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cing clause (kc) in proviso to sub-section (1) of Section 60, CPC. ( 11. ) Section 6 of the TP Act provides that property of any kind may be transferred, except as otherwise provided therein or by any other law for the time being in force. Clause (d) of Section 6 reads thus : 11. What may be transferred. Property of any kind may be transferred, except as otherwise provided by this Act or by any other law for the time being in force. (d) An interest in property restricted in its enjoyment to the .....

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red, is, how far Section 26 of the Maharashtra Rent Control Act, 1999 (For short, Act of 1999) restricts the tenants right of the transfer of whole or any part of interest in the property. ( 13. ) Before we advert to Section 26, it may be proper to refer to Section 7 (15} and section 25 of the Act of 1999 to ascertain who the tenant is. Section 7 (15) "tenant" means any person by whom or on whose account rent is payable for any premises and includes, (a) such person, (i) who is a tenan .....

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n 26 : (d) in relation to any premises, when the tenant dies, whether the death occurred before or after the commencement of this act, any member of the tenants family, who, (i) where they are let for residence, is residing, or (ii) where they are let for education, business, trade or storage, is using the premises for any such purpose. with the tenant at the time of his death, or, in the absence of such member, any heir of the deceased tenant, as may be decided, in the absence of agreement, by .....

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reof have been lawfully sub let and such sub-tenancy is subsisting on the date of commencement of this Act or where subtenancy is permitted by a contract between the landlord and the tenant, such sub-tenant shall, subject to the provisions of this act, be deemed to become the tenant of his landlord on the same terms and conditions as he would have held from the tenant if the tenancy had continued. " ( 14. ) In the background of Section 7 (15)and Section 25 of the Act of 1999, we turn to Sec .....

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, permit in any area the transfer of interest in premises held under such leases or class of leases any premises or class of premises other than those let for business, trade or storage to such extent as may be specified in the notification. " ( 15. ) The said Section 26 does not absolutely prohibit or totally forbid the tenant the tenant as meant by Section 7 (15) to sublet or give on licence or assign or transfer in any other manner whole or any part of the premises let to him since it is .....

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in the premises let out to him. The landlord can always ratify the action of the tenant in subletting or giving on licence or assigning or transferring in any other manner his interest in the premises let to him. Thus, section 26 of the Act of 1999 cannot be held to contain the absolute bar against the tenant of the non-residential premises nor the transfer in contravention of Section 26 is absolutely void that is void against the whole world but may be void against the landlord furnishing him .....

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under sub-section (1) thereof shall be transferred in any manner without previous permission of the society and any transfer made in contravention of sub-section (2) shall be void, The supreme Court held that right to occupy the flat in a tenant co-partnership housing society by its member was a species of the property and was liable to attachment and sell in execution of a decree against the member in whose favour or for whose benefit it has been allotted by the society. The supreme Court also .....

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dra Ghelani, the learned counsel appearing for the applicants in support of the chamber summons sought to distinguish missed by the City Civil Court but the learned single Judge of this Court allowed the appeal and set aside the attachment and sale of the flat. The Division Bench of this court maintained the order of the learned single Judge and the matter was carried to the Supreme Court and as noticed by us above, the Supreme Court held that right of interest to occupy the flat by the judgment .....

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to the con-trary. ( 17. ) The Division Bench of this Court in union of India v. M/s. Mittersain Rupchand, 1995 (2) Mali LJ 481 : (AIR 1995 Bom 371)was concerned with the question as to whether the tenancy rights and the good-will of the running concern can be attached in execution under Order 20, Rule 54 of c. P. C. That was the case where in the ex-ecution application filed by the decree-holder seeking execution of the money decree, the executing Court levied attachment of good-will and tenanc .....

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the transfer of tenancy rights was prohib-ited by law, the same could not be attached. Reversing the view of the learned trial Judge of this Court, the Division Bench held that there was no bar whatsoever under sub-sec-tion (1) of Section 15 to attach and sell the leasehold interest of a lessee in the premises leased out for non residential purpose. The division Bench referred to the judgment of the Supreme Court in the case of Ramesh himmatlal Shah and also the Division Bench of this Court in Z .....

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to the contrary as provided by the section. It is always open for the lessor and the lessee to contract that the lessee can sub-let the premises or as-sign or transfer in any other manner his interest therein. In other words the prohibi-tion contained in sub-section (1) is not ab-solute. The section nowhere provides that the transfer shall be void. The proviso of the sub-section confers power on the State Gov-ernment to issue notification permitting the transfer of interest and such notification .....

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e not liable for attachment. It was also overlooked that the grievance on account of breach of sub-section (1) of Section 15 of the Bombay Rent Act can only be at the behest of the lessor and the lessee whose interest in the leasehold rights is attached cannot complain about the same. Indeed, in the present case, the respondents have admitted on affidavit that out of about 2,000 sq. ft. of the leased area, 1850 sq. ft. have already been parted with either under the cover of sub-leases or license .....

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the Act of 1999 was as follows: "16 (1 ). Notwithstanding anything contained in any law but subject to any contract to the contrary, it shall not be lawful after the coming into operation of this Act for any tenant to sub-let the whole or any part of the premises let to him or to assign or transfer in any other manner his interest therein and after the date of commencement of the Bombay Rents. Hotel and Lodging house Rates Control (Amendment) Act, 1973, for any tenant to give on licence th .....

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little difference in the proviso appended to both sections which empower the State Government to permit the transfer of interest in premises by publication of notification in the Official gazette. Proviso appended to Section 15 (1)of the Bombay Rent Act provided that the state Government may by notification in the official Gazette permit in any area the transfer of interest in premises held under such leases or class of leases or the giving on licence any premises or class of premises and to su .....

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sain rupchand inapplicable under Section 26 of the Act of 1999. Even if we assume that under the proviso to Section 26 of the Act of 1999, the State Government cannot permit the transfer of interest in the premises let out for business, trade or storage, the prohibition contained in Section 26 being subject to the contract to the contrary does not alter the legal position that the restriction under Section 26 is neither absolute nor total. We find ourselves unable to agree with the submission of .....

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26 of the Act of 1999 contain an exact bar against the judgment-debtor assigning or transferring its interest in the tenanted premises. S. J. Vazifdar, J. considered the Division Bench judgment in the case of Mittersain Rupchand and the judgment of the learned single Judge in veetrag Investments I and after taking into consideration the relevant provisions of the act of 1999 and Section 60 of the C. P. C. held that Section 26 does not contain absolute bar against the judgment-debtor assigning o .....

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17 of the Presidency Towns Insolvency Act, 1909. The Division Bench observed thus: The Act of 1947 made a departure from those provisions. Section 5 (11) of the Bombay Rent Control Act, 1947, defines the word "tenant" in such a way as not only to include a tenant for the time being under an agreement with the landlord, but. also subtenants and other persons as have derived title under a tenant before the commencement of the Act of 1947 and thereafter before the commencement of the amen .....

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art of the premises let to him or to assign or transfer in any other manner his interest therein, with a proviso that the State may by notification in the official Gazette permit in any area the transfer of interest in premises held under such leases and to such extent as may be specified in the notification. This section was amended in 1959 and was made subject to any contract to the contrary. The clear effect of this section is that until the Act was amended no tenant was entitled in any manne .....

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o hold thus "in the present case, the flat is a residential flat and the agreement gives no power to the defendant to transfer her interest in the property. On the contrary, it specifically prohibits her from transferring the same to, anyone under clause 11 thereof. It is obvious, therefore, that under S. 15 of the Bombay Rent Act the transfer is unlawful. In the circumstances, assuming that it is property the question is, is it such property that it can be divisible amongst the creditors e .....

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Sir John beaumount C. J. dealing with the question in a slightly different context says (p. 646): suit relating to the property of the insolvent, in my opinion, means a suit which, if successful, will increase the assets distributable amongst the creditors, or the defence of which may prevent the assets being diminished. " It was on this ground that the learned chief Justice held under S. 68 (l) (d) of the said Act that (p. 646): ". . . . . . a right to institute an appeal, which merel .....

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icial Assignee, In particular, he relied upon para 501 at page 471, which reads as follows: "property includes any property over which, or over the profits of which, any person has a disposing power which he may exercise for his own benefit. In view of that definition, all property in the hands of the insolvent, though inalienable, would vest in the Officer Receiver, unless exempted by the code of Civil Procedure, 1908, or by any other enactment for the time being in force from liability to .....

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l (AIR 1943 Mad 72) Masjir service lands, were held not to vest in the receiver in insolvency. In the first case under the Agra Tenancy Act the ex-proprietary tenancy could not be transferred in execution or alienated except inaccordance with law. In the second case, the lands involved were governed by the punjab Tenancy Act which could not be attached or sold in execution of a decree or transferred by private contract without the consent of the landlord. In the fourth case, which is more apposi .....

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( 23. ) Zarina Umer Chamdewala was considered by the Division Bench in Mittersain rupchand and was distinguished thus at pages 375-376; of AIR: "7, Mr, Bansal relied heavily on the decision of the Division Bench of this Court in zarina. Chamdewalas case (supra), In the case before the Division Bench the property in dispute was a residential flat and agreement of lease did not confer power on the lessee to transfer the leasehold interest. The division Bench of this Court found that under Se .....

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been adjudicated insolvent is not attachable under section 15 of the Bombay Rent Act and therefore it cannot be regarded as property of the insolvent and which must vest in the official Assignee. The decision of the Division Bench clearly deals with the residential premises and the interests in such premises are not attachable under Section 60 (kc) of Code of Civil Procedure. The proviso to subsection (1) of Section 15 of the bombay Rent Act confers power on the State government to issue notific .....

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e to issue notification. In our Judgment, the decision of the Division bench has no application to premises let out for non-residential purposes. Mr. Bansal then submitted that the decision of the Division Bench in respect of residential flat was followed with approval by another Division bench in the Judgment in the case of M/s. D. Vasantrai and Co. (AIR 1985 Bom 1) (supra) where the premises leased out were for the purpose of carrying on business, The submission is not accurate because the dec .....

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idential premises are not liable to attachment and sale. Reliance on the decision of the single judge of Delhi High Court in the case of belrux India Ltd. (AIR 1983 Delhi 430) (supra) is also not accurate. Section 14 of delhi Rent Control Act, inter alia provided that no order or decree for recovery of possession of any premises shall be made by any Court in favour of landlord against the tenant unless the tenant has on and after june 9, 1952 sub-let, assigned or otherwise parted with possession .....

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to the facts of the case or the provisions of Section 15 of the Bombay Rent act. In our judgment, there is no bar whatsoever under sub-section (1) of Section 15 to attach and sale (sic) the leasehold interest of a lessee in a premises leased out for non-residential purpose. " ( 24. ) Be it noted that in Zarina Umer chandewala, the Division Bench also held that the word "property" was of wide import and may include every right which a person has over property and in this sense, a m .....

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ded to the case like this where the question is whether the interest of the tenancy of non-residential premises to which the Act of 1999 applies is attachable and saleable in execution of the decree against the tenant, and particularly after the judgment of the Supreme Court in ramesh Himmatlal Shah. ( 25. ) Section 26 forbids the voluntary transfer of interest in the premises by the tenant but does not prevent the transfer by the Court. Where the transfer is by, an operation of law and not by a .....

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ision in the Act of 1999 restricts a sale in execution of the decree. ( 26. ) In the case of Golak Nath Roy chowdhary v. Mathura Nath Roy chowdhary, decided on September 1, 1891 and reported in (1893) ILR20 Calcutta 273, the Division Bench of Calcutta High Court held, we take it to be clear law in India, as in England, that a general restriction on assignment does not apply to an assignment by operation of law taking effect in invitum, as a sale under an execution. The Bombay cases cited are aut .....

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rtue of the provisions in the lease nothing passed to the purchaser under the sale nor was there any saleable interest within the provisions of Section 266 (now Section 60)of the C. P. C. in the lessee. The defence of the auction purchaser, inter alia, was that the lease did not prevent a sale in execution. The Division Bench of Calcutta High court referred to the judgment of this Court in Tamaya v. Timapa Ganoaya, ILR 7 Bom 262 and held that a restriction on assignment does not apply to an assi .....

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tion, however, in the lease that if he made any transfer of the lands, the landlord would re-enter. The decree-holder Ajhar Ali having attached the land and the huts, the lessee Keshab chandra objected that the land was not saleable under Section 60, C. P. C. since under section 60, C. P. C. such lands only can be sold as are saleable and belong to the judgment-debtor and judgment-debtor could not sell the lands, the Court cannot sale the same. Recalling the objection of the judgmentdebtor, the .....

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( 28. ) The legal position reiterated in Golak nath Roy Chowdhary and Keshab Chandra pramanik with regard to a general restriction imposed in the lease deed on assignment of tenancy interest by the lessee that such general restriction on assignment does not apply to an assignment by operation of law taking effect in invitum, as a sale under an execution, is applicable equally to a general restriction in law on assignment of tenancy interest by the tenant and we hold so. We clarify however that .....

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n of a decree against the tenant/subtenant, the Court cannot force an unwilling landlord/head tenant to enter into such a agreement. We however keep this question open to be decided by the executing Court at the appropriate stage. ( 29. ) Even otherwise, if the tenant acts in contravention of the prohibition contained in Section 26 by voluntary transferring or assigning the interest of tenancy, the tenant exposes himself to eviction as unlawfully sub-letting or transfer or assignment by the tena .....

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ll other saleable property, movable or immovable, belonging to the judgment-debtor, or over which, or the profits of which, he has a disposing power which he may exercise for his own benefit, whether the same be held in the name of the judgment-debtor or by another person in trust for him or on his behalf: provided that the following particulars shall not be liable to such attachment or sale, namely: (kc) the interest of a lessee of a residential building to which the provisions of law for the t .....

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he may have a disposing power over it exercisable for his own benefit. In such cases, the property is liable to attachment and sale subject to proviso to sub-section (1 ). From what we have discussed above, it is clear that the tenancy right of the nonresidential premises is a property and is saleable within the meaning of Section 60, c. P. C. ( 32. ) Section 56 of the Act of 1999 legitimatizes the acceptance of consideration for relinquishment, transfer or assignment of tenancy of any premises. .....

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relinquishment, transfer or assignment of his tenancy of any premises: (ii) the landlord or any person acting or purporting to act on behalf of the landlord to receive any fine, premium or other, like sum or deposit or any consideration in respect of the grant, or renewal of a lease of any premises, or for giving his consent to the transfer of a lease to any other person. " ( 33. ) The aforesaid provision leaves no manner of doubt that it enables the tenant to claim or receive any sum or a .....

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e lessee of a residential building to which the Rent Control Act applies but the said prohibition is not applicable to the interest of a tenant of a nonresidential premises to which the Maharashtra Rent Control Act applies and therefore, it can safely be held that the Interest of the tenant in the nonresidential premises to which the Act of 1999 applies Is attachable and saleable in execution of the decree against the tenant. ( 34. ) Section 26 as well as Section 56 of the Act of 1999 start with .....

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and may be understood to have been incorporated by way of abundant caution and not by way of limiting the ambit and scope of the operative part of the enactment. The expression notwithstanding anything contained in any law may not be construed to take away the effect of any provision of the Act in which that section appears. Though the learned single judge in the order of reference observed that by virtue of Section 56 of the Act that starts with non obstante clause, the limitation or restrictio .....

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ne thing is clear that Section 56 indicates in no manner of doubt that the interest of the tenant in the non-residential premises to which the act of 1999 applies is saleable and the tenant has the disposing power of the said property for his benefit. ( 35. ) There may be a case where the tenant does not transfer or assign his tenancy rights but only surrenders his tenancy to the landlord. Section 26 does not come in the picture in that case. For the surrender, of his tenancy, the tenant may rec .....

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o get back his property without undertaking exercise of eviction. The cases may be many. Can it be said that interest of the tenant in the non-residential premises is not saleable or that the tenant has no disposing power in respect of such interest for his beneflt. The answer obviously has to be in the negative. ( 36. ) The submission of Mr. Mahendra ghelani that the saleable right has to be in praesenti and merely because the lessor may give his consent later on or he may ratify the act of tra .....

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landlord of the entire building of which the demised premises are a part and that the defendant is only tenant in the demised premises. The question which arises is whether tenanted premises are liable to be attached and sold in execution of a decree passed against the tenant himself. In this respect Shri Mehta drew my attention to Section 60 of the Civil Procedure Code which contains a list of the properties which are liable to attachment and sale in execution of a decree. The list contains la .....

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ion of Shri Mehta is that the same is liable to be attached and sold in execution of a decree. In this respect Shri mehta relied upon the decision of a Division bench of this Court in Union Bank of India v. Mittersain Rupchand, 1995 (2) Man LJ 481 : AIR 1995 Bom 371, wherein it was held that the exclusion of properties mentioned in Section 60 of the Civil Procedure code specifically refers to residential premises and not to premises used for nonresidential purposes. It was further held that good .....

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ords, if there is a contract between the landlord and tenant whereby the form of permits, letter then such a transfer of the premises would be valid. 9. Shri Samdani, however, pointed out that the Rent Act, 1947 has been repealed by the Maharashtra Rent Control Act, 1999 (hereinafter referred to as "the Rent Act, 1999", for short ). Section 58 of the said Act provides for repeal of the Rent Act, 1947. It may be noted that the Rent Act, 1999 came into force with effect from 31-3-2000. T .....

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ce of contract tenant not to sub-let or transfer or give on licence. 10. The proviso enables the State Government to permit in any area the transfer of interest in the premises held on lease other than those let for business. It is not brought to my notice that the State Government has issued any notification under the proviso of Section 26 of the Rent Act, 1999. Even in that case, the notification cannot be in respect of the premises let for business. It is therefore, clear that in the absence .....

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