BBMP Cannot Insist On NOC From Landlord For Renewing Trade License Of Leased Property: Karnataka High Court

A single judge bench of Justice S Sunil Dutt Yadav made the observation while allowing a petition filed by M/s Pancharathna Enterprises which runs a Hotel under the name and style of 'Velvette Hotel' challenging the order by which BBMP ordered for sealing of the premises. The said order was also on the premise that the partners viz., Kishan Hegde and others who were the previous license holders had issued a letter objecting for renewal of license.

It said, “The imposition of conditions such as obtaining of NOC from the landlord could at best be construed to be a procedural requirement that cannot be mandatorily insisted upon in the absence of any statutory backing either under the Act or in the rules which are in the nature of delegated legislation.”

As per the plea M/s.Pancharathna Enterprises initially had the trade licence on 31.07.2019 upon collecting necessary licence charges and the hotel business was being run. The Partnership Firm was reconstituted and Balajhi Pothraj was inducted as a Partner and appointed as Managing Director. When he had sought for renewal of licence on 06.01.2023 and for the first time on 18.01.2023 BBMP had called upon the petitioner to obtain No Objection Certificate (NOC) from the Landlord.

On 30.05.2023, the BBMP had passed an order for sealing of the premises which came to be challenged and the writ petition was allowed directing BBMP to consider the representation of the petitioner in accordance with law.

On 05.07.2023 once again BBMP issued a communication to the petitioner directing him to obtain NOC from the Landlord. On 13.07.2023, petitioner once again sought for renewal while asserting that NOC from the Landlord was not required as proceedings were pending before the court and before the Arbitrator.

It was contended that the lease deed has been entered into between the petitioner and respondent Nos. 3 to 7 for a period of twenty-five years. The said lease deed dated 05.04.2017 secures occupation rights as a Lessee for twenty-five years. It is also to be noticed that on the basis of such lease deed, trade licence was issued to M/s. Pancharathna Enterprises dated 31.07.2019.

The bench noted that the dispute between the landlords and petitioner firm is pending consideration in arbitration. In such proceedings the firm is represented by Balajhi Pothraju. The lease deed referred to in the order appointing arbitrator is the lease deed of 05.04.2017. The landlords themselves sought for arbitration on the basis of Clause 15 of Lease Deed dated 05.04.2017. Till such adjudication is completed regarding the dispute, the petitioner continues to be in possession of the property demised in the lease deed.

Then it said “During such time and in light of the dispute raised, if petitioner is called upon to produce an NOC by the respondent BBMP, the said condition cannot be complied within the context of the litigation between the Landlord and the tenants.”

Observing that under the 2020 Act (BBMP Act) though licence is granted under the Section 305 Clause (d), the procedural requirement that was contemplated to be provided for under the rules or bylaws are absent, Court held, “In the absence of such backing in law, restriction on the fundamental right conferred under Article 19(1)(g) of Constitution of India cannot be permitted except on the grounds envisaged under article 19(6) viz., in the interest of the general public. Prima facie the insistence on NOC from the landlord would not fall into the category of permissible restriction envisaged under article 19(6). Accordingly, the insisting on obtaining of NOC cannot be construed to be a mandatory requirement.”

Accordingly it set aside the sealing order and directed that the request for renewal or a fresh licence may be considered without reference to the NOC from the landlord.

Appearance: Senior Advocate V. Srinivas Raghavan for Advocate Vishwanath Setty V for Petitioners.

Advocate Jagadeeswara N R for R1 & R2.

Advocate Bipin Hegde for R9 & R10.

Senior Advocate K.N. Phaneendra for Advocate Vaishali Hegde FOR R3 TO R7.

Citation No: 2024 LiveLaw (Kar) 173

Case Title: M/s Pancharathna Enterprises AND The Commissioner & Others

Case No: WRIT PETITION No.22657 OF 2023