The recent controversy around the Bombay Parsi Punchayet (BPP) trustees planning to convert leave and license agreements to tenancy is not new. This issue tends to spring up before almost every BPP election and like a pre-monsoon shower it mostly generates heat and steam rather than bringing any real change or relief.

To be fair, converting leave and license agreements to tenancy may have its merits. Our concern is the timing. It would seem that whenever elections draw near, those wanting to remain in power devise strategies to delay the elections. The usual modus operandi is to go to the High Court to amend the Scheme of elections. There is a strong possibility of this happening once again. However, in case this delay-tactic does not succeed or back-fires, the beta plan is to set in motion a marketing strategy code-named: ‘Tenancy to Turn-on Voters.’ It is no doubt an attractive and great tasting candy, never mind the bitter aftertaste.

Flashback

The collective memory of the community is short. Offer them a few free-feasts and all will be quickly forgiven and forgotten. The community’s attention needs to be drawn to a Resolution passed by the erstwhile Board of Trustee at their meeting held on 21^st February, 2022 just before the BPP-2022 elections.  The following resolution was passed by trustees Mrs. Armaity Tirandaz, Mr. Viraf Mehta and Mr. Xerxes Dastur:

“RESOLVED THAT every Licensee of the  BPP of residential premises who is lawfully in occupation and in respect of whom no legal proceedings have been initiated (including any legal notice or contentious correspondence), subject to the BPP receiving legal and tax opinions and confirmation, be given an option to apply to convert his leave and license arrangement into being a monthly contractual tenant of such premises, by following the legal process to be prescribed including payment of stamp duty, registration and their statutory charges as also the consent to convert the interest free refundable security deposit into a deemed donation to the Trust, and upon the valid exercise of such option, such licensee will become a monthly contractual tenant of the Trust, subject to completion of legal, tax and audit formalities.”

Since the 2022 elections trustees Mrs. Armaity Tirandaz, Mrs. Mahrukh Noble, Mr. Viraf Mehta and Mr. Xerxes Dastur have been in majority. The question arises as to why the February 2022 Resolution was not immediately pushed forward by the majority on the new Board?

Why has the election promise made four years ago suddenly come back into public domain? Is it because the next elections are barely a year away?

Well known author and journalist Christopher Hitchens once said: “The only people truly bound by campaign promises are the voters who believe them.” This is indeed a profound truth. Universally and not just within our community, smooth and sweet-talking politicians make tall promises leaving voters feeling short changed post the elections.

Who is more vulnerable?

The community (read voters living in BPP licensed apartments) are told that tenancy will protect them from the vulnerability of a license agreement. Once again, to be fair, tenancy may offer better protection than a license agreement. However, while tenancy may make the occupants less vulnerable, it may potentially make the BPP trust more vulnerable by compromising the Parsi only covenant. Ironically, those pushing to compromise the BPP’s trust property are the same people who swear by the religion, orthodoxy and protecting Parsi Properties and Covenants.

BPP trustees may recollect the case of one Mani Behram Daruwala which is on record of the BPP trust. The RAE suit was filed in the year 1978 when a non-Parsi (Hindu Maharashtrian) Daughter-in-law was inducted by the Parsi family in one of the Trust Flats. The RAE Suit (No. 3344 of 1978) as also the Appeal (No. 284 of 1994) was dismissed by the courts stating that inducting a non-Parsi spouse is not a ground for eviction and being a family member, she has tenancy rights irrespective of her religion. This matter is pending before the High Court (Writ Petition No. 4998 of 1999).

What we gather from the court ruling so far is, a non-Parsi spouse or the children of such marriages cannot be disqualified from claiming transmission of tenancy rights in respect of a tenanted premises merely because he or she is not a Parsi as long as he or she fulfills the criteria prescribed under section 7(15)(d) of the Maharashtra Rent Control Act, 1999, namely: residing with the deceased tenant as a member of the family in the tenanted premises at the time of the tenant’s death.

The courts so far have ruled that the Rent Act does not discriminate in the matter of transmission of tenancy rights of the deceased tenant by operation of law on the basis of the religion of the claimant. Tenancy Agreement or any contract would not invalidate or prevail over the law relating to transmission of tenancy rights of the deceased tenant under the Rent Act.

Hence, to aver that in a ‘contractual tenancy’ one can enforce the Parsi only covenant is debatable.

In their order the Courts have also referred to Section 1 of “The Caste Disabilities Removal Act, 1850” which states: “Law or usage which inflicts forfeiture of, or affects, rights on change of religion or loss of caste to cease to be enforced. So much of any law or usage now in force within India as inflicts on any person forfeiture of rights or property, or may be held in any way to impair or affect any right of inheritance, by reason of his or her renouncing, or having been excluded from the communion of, any religion, or being deprived of caste, shall cease to be enforced as law in any Court.”

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The key questions are:

1. Is a trustee’s primary duty towards protecting the trust of which he or she is trustee or simply please voters in order to garner votes?
2. Whether there is a single, we repeat even a single case, of a Parsi licensee who has been evicted unjustly or unlawfully?
3. Will this scheme benefit the poor and needy or only the rich who can afford to pay the stamp duty?
4. Is BPP ready to give first priority to the poor and deserving and bear the cost of stamp duty for those who cannot afford it?
5. Have tax implications been considered?
6. Will tenancy protect the Parsi only covenant?
7. Whether it is legally and from the Income tax point of view safe to convert license agreements to tenancy subject to the licensee agreeing to convert his Refundable Security Deposit to a ‘Deemed Donation?’
8. Would this be a donation or a consideration or a premium? 
9. Would income tax view this as ‘charitable purpose’ or ‘business activity?’
10. Is there potential threat of BPP losing its tax exemption if this is viewed as business activity and business income?
11. If tax exemption is merely suspended there will be tax on income. However, if exemption itself is revoked there will be tax on accreted income of the trust.

And…

1. Have, the BPP trustees who have a fiduciary duty to perform given thought to these questions?
2. Are the BPP trustees’ statesmen with an eye on the next generation of the community and the future of the trust or mere politicians with an eye on the next elections?