Occupant Cannot Create or Assign Third-Party Rights Without Permission | Bombay High Court Imposes ₹25 Lakh Penalty for Interference in Sealed Premises
Sanchayita Lahkar
The High Court of Bombay, Single Bench of Justice Kamal Khata ruled that an occupant lacking recognised tenancy has no right, title, or authority to assign or create third-party interests in the disputed premises. Taking strong exception to the actions of Auto Credit Corporation and its partner Rekha Prakash Jain—who were found to have interfered with sealed premises and delayed the testamentary proceedings—the Court dismissed their plea to lift the seal on the property and imposed exemplary costs of ₹25 lakh for abuse of the judicial process. The Bench also issued a show-cause notice to Rekha Prakash Jain over alleged tampering with the sealed premises.
The dispute arose over possession and use of a garage-cum-shop located on the ground floor of the Roshni Building at Charni Road, Mumbai. Auto Credit Corporation and its partner Rekha Prakash Jain claimed to be lawful tenants, asserting that they had been in continuous possession of the premises since 1991 under the tenancy of the former landlady, Madhavi Dhirajlal Sagar, and later Mahesh Mithalal Trivedi. They stated that rent had been regularly paid until the disposal of suits before the Small Causes Court, and that they had attempted to tender further rent to the Court-appointed Administrator by banker’s cheque in July 2017, which was returned.
The applicants challenged the Administrator’s action of sealing the premises in July 2018, alleging that he had exceeded his authority, which was limited by earlier court orders to collection of rent. They sought permission to intervene in the testamentary proceedings concerning the estate of the deceased landlady and to have the seal removed so they could resume business operations.
The Administrator, Ketan Trivedi, opposed the application. He stated that the applicants had failed to produce evidence of a valid tenancy or of acceptance of Rekha Prakash Jain as a tenant by the landlady. He reported that the premises had been locked when he assumed charge and later found signs of tampering with the seal. He contended that the applicants were merely occupants and had no legal right to occupy or transfer interests in the property.
A Court-appointed Commissioner’s inspection in January 2019 found furniture and other materials in the premises and evidence of tampering with the rear door. The Court observed that tenancy claims could be determined only by the Small Causes Court and noted that the applicants’ actions delayed the testamentary suit. The Court concluded that the applicants’ conduct constituted misuse of judicial process and imposed exemplary costs, also issuing a show-cause notice for contempt proceedings
Justice Kamal Khata stated that “this Chamber Summons is wholly misconceived.” The Court noted that “there is absolutely no question of tenants being impleaded as parties in a Testamentary Suit,” clarifying that any tenancy disputes must be adjudicated before the Small Causes Court, which has exclusive jurisdiction over such matters.
Referring to the Administrator’s findings, the Court recorded that “attempts have been made to create third-party rights in the absence of the landlady, and there has been an effort to utilize the premises without authority. Such conduct cannot be countenanced.” It further stated that Auto Credit Corporation could “at best be construed merely as an occupant of the building and not as a tenant,” stating that an occupant lacks legal authority to create or assign third-party rights.
Justice Khata observed that “from the Administrator’s report as well as the Commissioner’s report, it is evident that the sealed premises were tampered with.” Consequently, the Court directed the Registry to issue a “Show Cause Notice to Rekha Prakash Jain, calling upon her to explain why contempt proceedings should not be initiated for tampering with sealed premises.” The notice was made returnable on 12 November 2025.
Addressing the applicants’ procedural conduct, the Court found that the applicants had “delayed the progress of the suit and subjected the Court Administrator to unnecessary hardship and difficulty in administering the deceased’s estate.” The Court relied on the Supreme Court precedent in Dnyandeo Sabaji Naik v. Pradnya Prakash Khadekar (2017) 5 SCC 496, noting that courts are duty-bound to prevent litigants from exploiting legal procedures to delay justice. The Court quoted, “The imposition of exemplary costs is a vital tool to deter and weed out frivolous litigation, as well as to prevent its recurrence.”
Justice Khata recorded that “these actions and inactions have unnecessarily consumed the Court’s valuable time on collateral issues, thereby delaying adjudication of the core dispute.”
The Court dismissed the Chamber Summons and imposed exemplary costs of Rs. 25,00,000, directing payment to the Armed Forces Battle Casualties Welfare Fund within four weeks from the date of uploading of the judgment on the Bombay High Court’s website. The judgment specified the fund’s account details with Canara Bank, Defence Headquarters Branch, New Delhi.
Justice Khata ordered that “upon failure to pay costs within the stipulated period, the Collector, Mumbai, is directed to attach the properties of the applicants for recovery of the costs amount which shall be paid to the Armed Forces Battle Casualties Welfare Fund as compensation within a period of three months.” The Court listed the matter for compliance on 12 November 2025.
Advocates Representing the Parties
For the Applicants: Ms. Shaista Pathan, instructed by YNA Legal.
For the Plaintiffs: Ms. Vaishali Kasbe, instructed by Mr. Suresh Dubey, Mr. Preet Chheda.
Case Title: Auto Credit Corporation & Anr. v. Mukesh Bansilal Shah & Ors.
Neutral Citation: 2025: BHC-OS:16896
Case Number: Chamber Summons No. 159 of 2018 in Testamentary Suit No. 94 of 2011
Bench: Justice Kamal Khata
