Discrimination while finding housing: The consequence of (un)constitutional restrictive covenants

In 2015, journalist Omar Rashid in an editorial piece spoke of the discrimination faced by Muslims in metropolitan cities such as Delhi, Mumbai and Pune in finding, buying, renting or leasing a house. He further spoke of the spatial isolation he experienced, having been forced to live in a ‘Muslim ghetto’ in Allahabad, due to a lack of alternatives.

The same year, empirical research undertaken in Delhi-NCR in 2015, found in a sample space of 493 landlords in the rental housing market, that only 165 i.e., 33.47 per cent, had positive responses to housing Muslim tenants, while prospective upper caste Hindu tenants were welcomed with a positive response rate of 99.80 per cent i.e., 492 out of the 493 landlords.

In years subsequent, the rise in religious and communal tensions across the country has created a discriminatory atmosphere that alienates minorities based on their religion, caste etc. Muslims, single women and Dalits seeking housing in metropolitan parts of Delhi and Mumbai have especially borne the brunt of this discrimination.

On November 13, 2021, a Division Bench of the apex court observed that such discrimination is perpetuated in the market for housing by co-operative societies, who blatantly abuse their right to form associations. During proceedings, the Court exclaimed,

“Do you know what societies are doing in exercise of this fundamental right? They are not letting single women occupy flats! They are not allowing members of a particular community! They are denying people who eat some particular food! This is the reality! This is impermissible! We cannot tolerate this attitude from societies!”

It is argued that the discrimination is not only a consequence of the preference for upper caste Hindu tenants, but also the consequence of no existing anti-discrimination legislation, and the use of restrictive covenants in co-operative societies, that prohibit members of a society from either selling or renting their property to certain classes of individuals, on the grounds of ‘exclusivity of identity’.

The Jurisprudence on restrictive covenants

On researching the legal validity of exclusionary negative covenants, as seen above, one would be led to the judgment in Zoroastrian Co-operative Housing Society Ltd v. District Registrar, Co-operative Societies, wherein the apex court held that the co-operative housing society for Parsis could make by-laws restricting the sale of property by a member to non-Parsis. Justice PK Balasubramanyan observed that s. 10 of the Transfer of Property Act would not be attracted by these by-laws as they are not absolute, but only partial restraints on the members' right to alienation. The Court went on to validate the Society’s contentions that Parsis had a constitutional right to preserve their culture as a religious minority under Article 29 of the Constitution, and that the admission via sale of any non-Parsis into the Society would infringe upon their freedom to association under Article 19(1)(c).

Another line of argumentation upheld by the Court was that by opting into the membership of a co-operative society, members forego the ability to make a constitutional challenge to the validity of restrictive covenants within the statute. They are bound to the covenants in the provisions of the legislation through their contracts, which in turn are contracts good in the eyes of public policy, as public policy is what is defined by the statutes governing the co-operative society.

This means that no well-meaning member of a co-operative housing society who may wish to sell or rent her property to an individual or a couple belonging to a discriminated minority excluded by the statute, can challenge the exclusionary covenants’ constitutionality in court. This consequentially disincentivises even those few landlords positively inclined towards having Muslim tenants from doing so, in order to abide by exclusionary covenants which their own membership in the cooperative society is subject to.

Private discrimination while looking for housing

The obvious criticism of this judgment is against the reliance it places on principles specific to protecting the minority interests of Parsis, for laying down a general rule applicable to all housing societies, even those which may be formed with a mala-fide but covert intent to enjoy property rights to the exclusion of minorities. Scholars such as Gautam Bhatia argue that the Court in answering the issue particular to the Parsi Zoroastrian Co-operative Housing Society, has erroneously jumped to give a general rule for all co-operative housing societies registered under the relevant enactments, allowing persons of a co-operative society (‘one herd’) to create qualifiers for membership based on religious or caste exclusivity (viewing anyone who does not qualify as the ‘other’) and therefore, exacerbating the ‘otherizing’ of persons by housing discrimination.

Secondly, in holding that public policy is defined within the legislation creating the housing society, the Court has not only bound the members of the society from exercising their freedom to contract, but has failed to address the contention basis Article 15(2) of the Indian Constitution. It was argued that excluding a prospective non-member’s access to housing in the co-operative society due to their religious identity violates the fundamental protection against discrimination from other citizens in the private domain, when accessing shops, restaurants, etc. The Court, not adequately applying its mind, dismissed the argument through a rhetorical analogy that ultimately is dismissive of the purpose and Constitution makers’ intent behind Article 15(2)(a). This dismissal becomes apparent when juxtaposed with the examination of the Article15(2)(a) that the Court undertook, albeit six years too late, in Indian Medical Association v. Union of India.

In this case, the meaning of ‘shops’ within this Article, was held to mean the same as was laid down by Dr Ambedkar in the Constituent Assembly Debates, wherein ‘shop’ is “…a place where the owner is prepared to offer his service to anybody who is prepared to go there seeking his service … not in the limited sense of permitting entry. It is used in the larger sense of requiring the services if terms of the service are agreed to.”

This means that in a rental housing or real estate market place, Article 15(2)(a) would be attracted to protect prospective buyers, as the sale of house would simulate a situation wherein a prospective buyer seeking a service, i.e., housing, would visit an individual member of a co-operative society who is offering a service, either of renting out his house, or selling it. Therefore, a sale, lease or tenancy agreement would go through, barring only the situations where there is no meeting of minds, i.e., the terms of the service are not agreed upon, and wherein a housing society is created for the preservation of a minority’s culture, if and only if upon judicial scrutiny, the minority is found to require protection under Article 29.

Concomitant future implications

Given the larger outcomes of Zoroastrian Co-operative Housing Society, and the recent pandemic-induced migration crisis at both the intra and inter-state level, wherein multiple labourers had to bear the brunt of housing discrimination basis their identity markers, it is extremely appalling that there is a complete lack of legislative effort being made to create a Central anti-discriminatory legislation, proscribing or prohibiting both direct and indirect forms of horizontal discrimination. Even the draft Equality Bill prepared by the Centre for Law & Policy Research in 2021, is yet to be addressed by the Legislature.

Additionally, in the aftermath of Zoroastrian Co-operative Housing Society, religious groups irrespective of their majority or minority status can claim such restrictive covenants to be an exercise in furtherance of the objective of their freedom to association, implying that they may claim restrictive covenants that exclude on the basis of religion, caste, etc. as an implied right.

It is likely that the apex court may adjudicate the general validity of restrictive covenants again, especially when the Court’s help may be sought by litigants who are aiming to undo the effects of Zoroastrian Co-operative Housing Society, by utilising the transformative interpretation of Article 15(2)(a) made in IMA v. UOI.

Furthermore, the above claim of implied right to restrictive covenant may be weakened, as it has been recognised by the Indian Supreme Court in various landmark judgements including All India Bank Employees’ Association v. The National Industrial Tribunal, that a recognition of the freedom of association does not include within it any resultant right which may be necessary to achieve the object of association, meaning that in adjudicating the validity of any claim of exclusionary covenants as a matter of right, the court may (ideally) deny the use of exclusionary covenants.

While the recent observations of the Supreme Court show signs of a cognisant apex court, it would be essential for the Court in a future case concerning the legality of restrictive covenants to emphasize on the arguments used in this article and to safeguard against the detrimental consequences of housing discrimination such as harassment, intolerance and trauma inflicted on Muslims, Dalits and other minorities with protected attributes. While the status quo threatens an increase in instances of discrimination while shopping for housing, one cannot help but wonder that most victims of such ‘otherization’, unlike Omar Rashid, are likely to be voiceless in the face of the larger herd’s exclusionary powers.

Adi Narayanan Mamandur Kidambi is a second year law student at Jindal Global Law School.