Mumbai, March 27: In a significant ruling on the use of residential premises, a Mumbai co-operative court has held that renting out flats on a short-term basis through platforms like Airbnb amounts to commercial activity and cannot be permitted in co-operative housing societies without approval.
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Court upholds society’s restrictions on short-term rentals
The court was hearing a dispute filed by 65-year-old Churchgate resident Mahesh Khetshibhai Mehta against The Bharatiya Friend’s Co-operative Housing Society Ltd., challenging multiple resolutions that restricted members from using their flats for short-term paying guest and homestay purposes.
Dismissing the plea, the court upheld the society’s rules, observing that such activities disrupt the residential character and raise safety concerns.
Emphasis on co-operative housing principles
In its order, the court emphasised the core objective of co-operative housing. “The object behind establishment of a co-operative housing society lies in co-operation while living together… rules are framed to ensure smooth functioning and safety of all members,” the court noted, adding that members are duty-bound to follow collectively agreed regulations.
Petitioner cites income needs and loneliness
Mehta had argued that he began hosting paying guests after his children settled abroad, citing loneliness and the need for additional income. He claimed that despite falling under a category permitted by a 2008 society resolution—senior citizens above 65 years without children residing with them—the society imposed penalties of Rs 1,000 per day from 2013, later increased to Rs 3,000 per day, allegedly without legal basis.
He also challenged resolutions passed between 2008 and 2015 that prohibited short-term paying guests, commercial use of flats and even initiated expulsion proceedings against him.
Additionally, he alleged violation of his fundamental rights and sought a No Objection Certificate for operating a homestay under a central tourism scheme, along with a refund of over Rs 1.5 lakh collected as transfer charges.
Society argues commercial misuse and security risks
The society, however, contended that Mehta was effectively running a commercial guesthouse by listing his flat online and accommodating short-term occupants, including foreign nationals.
It argued that such activity violated lease conditions, society bye-laws and posed potential security risks. The society also maintained that prior permission was mandatory and that Mehta was aware of this requirement.
Court terms Airbnb use as commercial activity
After reviewing the evidence, the court held that listing flats on web portals for short-term stays is “nothing but commercial activity,” comparable to hotel operations. It ruled that such use is impermissible in residential co-operative societies without explicit consent.
Right to livelihood subject to reasonable restrictions
The court also rejected Mehta’s argument that the activity was essential for livelihood, noting that he had sufficient alternative income sources. It observed that while the right to livelihood is protected, it is subject to reasonable restrictions, including adherence to society rules.
The plea of loneliness was similarly dismissed, with the court pointing out that the society had not imposed a complete ban but allowed paying guests under conditions such as longer-term (11-month) stays.
Long-term rentals remain permissible
Importantly, the court clarified that members can still earn income by renting out their premises, provided they comply with society norms. It noted that keeping paying guests for longer durations, such as 11 months, would be permissible and would not fall within the ambit of commercial exploitation.
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Mumbai Court Denies Bail To Amit Thepade In ₹117 Crore Canara Bank Fraud CaseAdvocate Rashi Prakash Sheth, the co-operative society’s advocate, said, "We are truly gratified that after a long-standing legal battle for 12 years, finally the Court has rightly upheld the authority of the general body of a housing society to regulate activities within its premises, and ruled against permitting short-term paying guest rentals through platforms like Airbnb, akin to a hotelier and commercial activity. The judge has held that democratically passed resolutions of the society cannot be interfered with."
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