Section 3E Of Slum Act Prohibits All Indirect Transfers Of Rehabilitation Tenements Not Just Registered Sales: Bombay High Court

"If the allottee is allowed to hand over the rehabilitation tenement soon after getting possession, then with passage of time the object of the rehabilitation scheme may become meaningless." Bombay High Court, in a significant ruling, held that the statutory restriction against transferring slum rehabilitation tenements under Section 3E of the Maharashtra Slum Areas Act is not limited to registered conveyances and covers all indirect methods of parting with possession.

A bench of Justice Amit Borkar observed that the expression "or otherwise" used in the statute must receive a broad and purposive interpretation to prevent welfare housing from being converted into commercial properties.

The dispute arose from challenges directed against an appellate order upholding the eviction of occupants from a rehabilitation flat allotted under a Slum Rehabilitation Scheme in Khar West, Mumbai. The petitioner approached the high court under Articles 226 and 227 of the Constitution after lower authorities found that a third party was residing in the premises as a tenant, allegedly in violation of statutory lock-in conditions.

The primary question before the court was whether the absence of a registered sale deed, lease deed, or gift deed precluded the competent authority from invoking Section 3E of the Act. The court was also called upon to determine whether parting with possession through a power of attorney and subsequent tenancy arrangements attracts the statutory bar against transfers.

Statutory Bar Is Not Confined To Registered Conveyances

Court Explains Scope Of Section 3E

The court examined the legislative scheme of the Maharashtra Slum Areas (Improvement, Clearance, and Redevelopment) Act, 1971, noting that welfare tenements are meant exclusively for eligible slum dwellers who lose their houses to redevelopment. The bench emphasized that allowing allottees to hand over possession shortly after allotment would defeat the core objective of rehabilitation schemes. "These tenements are not like flats available in the open market where a person can purchase or sell them according to his wish," the court noted while analyzing the mandatory five-year lock-in period.

"Or Otherwise" Covers All Methods Of Parting With Possession

Addressing the core statutory interpretation, the bench held that the inclusion of the words "or otherwise" alongside sale, gift, exchange, and lease demonstrates legislative intent to prohibit every indirect method of transferring enjoyment rights. Citing the Supreme Court's landmark ruling in Lila Vati Bai v. State of Bombay and coordinate bench decisions in Vinayakrao v. State of Maharashtra and Naginbhai Lallubhai Patel v. Union Territory of Dadra and Nagar Haveli, the court reiterated that these words operate as extensions rather than limitations to plug all avenues of statutory evasion. "The Court is required to see the real nature and effect of the transaction and whether, in substance, the allottee has parted with possession of the premises in such manner that the object of the statute gets defeated."

Inspection Reports And Tenant Admissions Justify Eviction

The bench scrutinized the factual matrix, which revealed that the allottee had executed a power of attorney in favor of a third party who subsequently inducted a tenant into the premises. During an official inspection, the tenant admitted to residing in the flat on rent, and no material was produced to rebut this statement or establish continuous occupation by the original allottee. The court rejected the evidentiary value of a society no-objection certificate that merely showed long-term occupation by the power of attorney holder without proving compliance with the statute.

High Court Upholds Eviction And Dismisses Petition

Concluding that the authorities had sufficient material to form an opinion regarding the prohibited transfer of the tenement, the bench found no perversity or jurisdictional error in the impugned orders. The Bombay High Court accordingly dismissed the writ petition, upheld the eviction orders passed under Section 3E of the Act, discharged the rule, and disposed of pending interim applications without any order as to costs.

Date of Decision: 31 July 2026