Bombay HC Quashes Mumbai Port Authority's Retrospective Rent Hikes for Tenants
The Bombay High Court has quashed retrospective rent revisions imposed by the Mumbai Port Authority on its tenants, ruling that the authority cannot indulge in "profiteering and rack renting" and must ensure all future rent calculations remain fair and reasonable.
A division bench comprising Justice Bharati Dangre and Justice Manjusha Deshpande delivered the ruling while deciding a cluster of 145 petitions filed by long-standing tenants. The petitioners had approached the court to challenge revised lease rentals, accumulated arrears, and demand notices issued by the port administration.
The conflict originated when the Mumbai Port Authority revised lease rents under the 2015 Policy Guidelines for Land Management (PGLM). Under these guidelines, the authority introduced a formula that linked lease rent calculations directly to the highest market value of the land. The tenants contested this methodology, arguing that the resulting rates were substantially higher than the compromise formula previously approved by the Supreme Court in the landmark Jamshed Hormusji Wadia case.
Upon hearing the petitions, the High Court held that the compromise rates approved in the Jamshed Hormusji Wadia case will continue to apply to the petitioners until March 31, 2024, subject to any modifications by the Supreme Court.
The bench formally quashed the official notifications that had revised rents retrospectively for two consecutive periods: October 2012 to September 2017, and October 2017 to September 2022. It also set aside all consequential demand notices issued to the tenants for the recovery of arrears under those revisions.
Criticising the methodology adopted under the PGLM, the bench observed that the mechanism amounted to profiteering and rack renting. The court clarified, however, that the Mumbai Port Authority retains the statutory power to revise lease rents prospectively under the provisions of the Major Port Authorities Act, 2021, provided that any future rates are determined on a fair and reasonable basis.
