A decades-long dispute among partners of Khanna Construction House over a prime property in Dadar has reached a significant turning point, with the Bombay High Court upholding the Brihanmumbai Municipal Corporation’s (BMC) decision to terminate the lease of the land and proceed with redevelopment.
The ruling comes after nearly five decades of litigation that began in 1973 when one of the partners sought the dissolution of the firm. What started as an internal disagreement over ownership and control of a valuable property eventually evolved into a prolonged legal battle involving multiple stakeholders, including tenants, civic authorities and private developers.
In 2018, the City Civil Court ordered the dissolution of the partnership firm and directed that its affairs be wound up under the supervision of a Court Receiver. The court also restrained partners from creating third-party interests in the property.
Meanwhile, the building situated on the leased plot continued to deteriorate. Owing to its unsafe condition, the BMC classified it as a dangerous C-1 structure and, following court directions, demolished it in 2022.
The prolonged dispute had a severe impact on tenants, many of whom have remained displaced for almost eight years while redevelopment plans remained stalled.
The High Court had earlier given all partners and legal heirs an opportunity to jointly submit a redevelopment proposal. However, instead of presenting a unified plan, competing proposals were submitted by different factions associated with various developers. The BMC subsequently rejected these proposals, citing the absence of unanimous consent and insufficient support from tenants.
The court also took note of significant financial irregularities, including unpaid lease rent dating back to 1998 and property tax arrears exceeding ₹11 crore since 2008. Although the dues were eventually paid, the court observed that delayed payments could not negate years of default.
During the proceedings, the High Court agreed with arguments advanced by the BMC and tenants that a dissolved partnership firm lacks the authority to initiate fresh redevelopment projects. Referring to provisions of the Indian Partnership Act and relevant Supreme Court rulings, the court held that partners of a dissolved firm can only conclude pending affairs and cannot create new rights or obligations.
Observing that the petitioners appeared more focused on securing interests in the valuable property than on rehabilitation and redevelopment, the court emphasised that tenants’ rights were “of paramount importance.” It concluded that the BMC’s decision to terminate the lease was neither arbitrary nor unlawful and declined to grant any interim protection against further civic action.
Source: Mumbai Mirror
