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PETITIONER: B.   M. LALL (DEAD) BY L. RS.

       Vs.

RESPONDENT: DUNLOP RUBBER & CO.  LTD. & ORS.

DATE OF JUDGMENT: 18/07/1967

BENCH: BACHAWAT, R.S. BENCH: BACHAWAT, R.S. SHELAT, J.M. BHARGAVA, VISHISHTHA

CITATION:  1968 AIR  175            1968 SCR  (1)  23  CITATOR INFO :  F          1987 SC 117  (37,60)  R          1988 SC1845  (13)  RF         1989 SC1141  (17)

ACT: West Bengal Premises Tenancy Act (XII of 1956)-s. 13(1) (f)- Limited Company buying premises for housing officers-Whether officer’s  occupation  that  of  tenant  or   ’licensee’-and whether Company’s ’Own occupation’.

HEADNOTE: The respondent limited companies purchased certain  premises in  Calcutta  for  the  purpose  of  providing   residential accommodation  for  their  staff.   They  instituted   suits against the appellants for the recovery of possession of two flats  on the ground that as these flats were  required  for housing  their officers, they were reasonably  required  for the  occupation of the respondents within the meaning of  s. 13(1) (f) of the West Bengal Premises Tenancy Act, 1956. The  Trial  Court  dismissed the suits but  the  High  Court allowed  an appeal and held that a limited company can be  a landlord  within  the  meaning  of  s.  13(1)  (f)  and  can reasonably require the premises for its own occupation;  and that  where there are several landlords, the requirement  of the  premises by the landlords for the occupation of one  or more of them is sufficient to bring the case within s. 13(1) (f).   In  the  appeal before the  Supreme  Court  the  only question  for determination was whether on the  construction of  the  terms  of an agreement which  was  normally  signed between  each  of the respondents and any  officer  who  was allotted  a flat, the officer occupied the flat as a  tenant or  a licensee, and therefore whether the officer’s  occupa- tion  would  be  the company’s  own  occupation  within  the meaning of clause (f). Held:Dismissing the appeal: The High Court nightly held that  the respondent reasonably required the flats  for  the second respondent company’s own occupation through  officers holding flats on its behalf as licensees. [29B] Under the standard form of agreement, the occupation of  the officer  ceased on the termination of his  employment,  upon his death, or on his transfer and the company was at liberty

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to allot him any other flat or to assign the premises to any other employee or other person during his absence.  In  view of  these  and its other terms the agreement operated  as  a license and not as a tenancy.  It created no interest in the land  and gave only a personal privilege or license  to  the servant  to occupy the premises for the greater  convenience of his work. [28F-H] Under s. 105 of the Transfer of Property Act, a lease is the transfer  of a right to enjoy the premises whereas under  s. 52  of the Indian Easements Act a license is a privilege  to do  something  on  the premises  which  otherwise  would  be unlawful.   The  transaction  is a lease  if  it  grants  an interest in the land; it is a license if it gives a personal privilege with no interest in the land. [27E-F] Errington  v. Errington and Woods, [1952] 1 K. B. 290,  298: Associated  Hotels  of India Ltd. v. R.  N.  Kapoor.  [1960] S.C.R.  368; 3815.  Addiscombe Garden Estates Ltd. and  Anr, V. Crabe and Ors. [1958] 1 Q.B. 513, 525; referred to. 24 A service occupation is a particular kind of license whereby a servant is required to live in the premises for the better performance of his duties.  Now it is also settled law  that a servant may be a licensee though he may not be  in-service occupation. [27H] Nippon Menkwa Kalmshiki v. F. Portlock, A.1.R. 1922 Bom. 70; and  Torbett v. Faulkner, [1952] 2 T.L.R. 659, 560; referred to.

JUDGMENT: CIVIL  APPELLATE JURISDICTION: Civil Appeals Nos.  2253  and 2254 of 1966. Appeals  from the judgment and decree dated July 5, 1965  of the  Calcutta  High Court in Appeals from  Original  Decrees Nos. 490  and 489 of 1960 respectively. Sarjoo  Prasad and R. Ganapathy Iyer, for the appellant  (in C.   A. No. 2253 of 1966). Devaprasad  Chaudhury and Sukumar Ghove, for  the  appellant (In C. A. No. 2254 of 1966). A.K. Sen, S. K. Gambhir and D. N. Gupta, for the  respon- dents (in both the appeals). The Judgment of the Court was delivered by Bachawat,  J.The  respondents are limited  companies  having their  head offices in Calcutta.  On May 15, 1953,  the  two Companies  jointly  purchased the premises known  as  King’s Court’  at  No.  46B Chowringhee  Road,  Calcutta,  for  the purpose  of  providing residential accommodation  for  their staff.  They instituted a suit against one B. M. Lall, since deceased, predecessor of the appellants in C. A. No. 2253/66 for  recovery of possession of flat No. 8 in  the  aforesaid premises  in  his occupation as a tenant, and  another  suit against  the appellant in C. A. No. 2254/66 for recovery  of possession  of flat No. 9 in his occupation as a tenant,  on the  ground that they reasonably required the flats for  the occupation of their staff.  By Sec. 13(1) of the West Bengal Premises  Tenancy Act, 1956, (West Bengal Act XII of  1956), the  tenants  are protected from eviction except on  one  or more  of  the  grounds specified in  the  sub-section.   The grounds mentioned in clause (f) of S. 13(1) are: -               "Where the premises are reasonably required by               the  landlord either for purposes of  building               or   re-building   or   for   making   thereto               substantial  additions or alterations  or  for               his  own occupation if he is the owner or  for

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             the occupation of any person for whose benefit               the premises are held;"........ The respondents claim that they reasonably require the flats for  their  own occupation.  The trial court  dismissed  the suits.  From these decrees, the respondents filed appeals in the  High Court at Calcutta.  The High Court set  aside  the decrees  passed  by the trial court and decreed  the  suits. The  present  appeals  have been  filed  under  certificates granted by the High Court. 25 The  High  Court held that (1) a limited company  can  be  a landlord   within  the  meaning  of  s.  13(1)(f)  and   can reasonably require the premises for its own occupation,  and (2)  where there are several landlords, the  requirement  of the  premises by the landlords for the occupation of one  or more  of  them is sufficient to bring the case  within  Sec. 13(1)(f).  These findings are not challenged in  this Court. Before  us it is also conceded by all the appearing  parties that  the respondents are entitled to a decree for  recovery of possession of the two flats under sec. 13(1)(f), if  they establish  that  they reasonably require the flats  for  the occupation of respondent No. 2, Guest Keen and Williams Ltd. only. The  two  courts concurrently found that  respondent  No.  2 reasonably  requires  the flats for the  occupation  of  its staff.   The Company is under an obligation to provide  free residential  accommodation  for its officers  in  properties either rented or owned by it. In view of the acute  scarcity of  accommodation  in the city, it is not possible  to  find other convenient flats for officers who were transferred  to the  city from other stations.  Suitable provision  for  the accommodation  of  officers visiting Calcutta on tour  is  a matter  of  necessity.   The sole question  is  whether  the occupation by its staff officers would be the company’s  own occupation.   The point of dispute on which the  two  courts differed  is whether the officer to whom the flat  would  be allotted  would occupy it as a tenant or as a licensee.   It is common case before us that if he is a licensee his  occu- pation would be on behalf of the company and its requirement would  be for its own occupation.  On the other hand, if  he is  a tenant his occupation would be on his own account  and the   company’s  requirement  would  not  be  for  its   own occupation.   It  appears that the  officers  provided  with accommodation  by  the  Company  are  required  to   execute agreements in a standard form.  The terms and conditions  of the agreement are as follows: -               1 .   The Licensee whilst in the employment of               the Company at               Calcutta  and  for  the sole  purpose  of  the               Licensee  being more conveniently situated  in               such  employment  is hereby permitted  by  the               Company  to  occupy as a Licensee  during  the               term  of his employment at Calcutta  Flat  No.               25,   situated in the Company’s property known               as  Kings Court, Calcutta, or such other  flat               as may be allotted to the Licensee   at    the               company’s discretion (hereinafter referred  to               as  "the said permises") subject to the  terms               and conditions hereinafter contained.               2.    In the event of the Company deciding  to               levy License fees and the Company reserves the               right  to  do  so without  prior  notice,  the               Licensee  shall pay to the Company each  month               such  License fees which may be varied by  the               ’Company  from time to time at its  discretion

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             and  the Company shall be entitled  to  deduct               such  License fees from the emoluments  or  to               become due to the Licensee from Company.               26               3.    The  occupation of the said premises  by               the Licensee is a condition of his  employment               at Calcutta with the company and such right of               occupation  shall  forthwith  cease  upon  his               employment being terminated by the company  or               on  his  leaving  such employment  or  on  his               transfer  away from Calcutta or on  his  death               whichever  is  earlier.  Notice given  by  the               Company  to  the Licensee  of  termination  of               employment  or of transfer away from  Calcutta               shall  be  deemed to be sufficient  notice  of               revocation of the licence.               4.    The   Company  shall  be   entitled   to               determine forthwith the licence hereby granted               if the licensee shall fail to comply with  any               of  the terms and conditions herein  contained               and  on  his  part to  be  observed  and  non-               compliance  with  the  terms  and   conditions               herein contained may be deemed by the  company               to be misconduct.               5.    These presents shall not or shall not be               deemed to create any relationship of  landlord               and   tenant  between  the  company  and   the               licensee in respect of the said premises.               6.    The  company shall pay all  present  and               future revenue and municipal taxes payable  in               respect of the said premises and keep the said               premises  in repair during the continuance  of               these presents.               Conditions   to  be  complied  with   by   the               licensee:-               1.    The  Licensee  shall  pay  the  cost  of               electricity  and gas consumed within the  said               premises and the company may at its discretion               deduct such charges from the emoluments due or               to  become  due  to  the  Licensee  from   the               company.               2.    The  Licensee shall not cause or  permit               to be cause any disturbance or nuisance in  or               in the vicinity of the said premises.               3.    No structure or alteration temporary  or               permanent,  other than common ornaments  shall               be  erected,  fixed  or  carried  out  by  the               Licensee  in  the  said  premises  or   garden               without  prior  written  permission  from  the               company.  The Licensee shall not do or  permit               to  be  done  any act or  thing  which  causes               damage  or  is liable to cause damage  to  the               said  premises.  The cost of rectification  of               such damage will be recoverable in  accordance               with condition (1).               4.    Alterations  of  or  extensions  to  the               installed  electrical  circuit  are   strictly               prohibited.               5.    No notice advertisement or placard other               than  the  Licensee’s own name, which  may  be               fixed  to the main door of the said  premises,               shall be fixed or permitted to be fixed to any               portion of the said premises.               27               6.    The said premises shall be used entirely

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             as  a dwelling place and no business or  trade               shall  be carried out on the said premises  or               any   part  thereof  without   prior   written               permission from the company.               7.    The Licensee will not permit any persons               other than his own personal servants to occupy               the servants’ quarters allotted to him by  the               company   and  will  not  permit  the   garage               allotted to him by the company to be used  for               residential purpose.               8.    The  Licensee  shall  not  take  in  any               paying guest without prior written  permission               from the company and such permission shall  be               deemed to have been withdrawn when the  paying               guest ceases to reside.               9.    The Licensee shall not let or part  with               possession  of  the whole or any part  of  the               said premises to any person, firm or  company.               During  periods  when the Licensee  is  absent               from  Calcutta  the  Company  may  assign  the               premises  to  any other employee  or  suitable               person at its sole discretion. The question is whether the occupier under this agreement is a tenant or a licensee.  The distinction between a  lease and  a license is well known.  Sec. 105 of the  Transfer  of Property  Act  defines  a  lease.  Sec.  52  of  the  Indian Easements  Act  defines  a  license. A  lease......  is  the transfer of a right to enjoy the premises; whereas a license is  a  privilege  to  do something  on  the  premises  which otherwise  would be unlawful.  If the agreement is in  writ- ing,  it  is  a question of construction  of  the  agreement having  regard  to  its  terms and  where  its  language  is ambiguous,   having   regard   to  its   object,   and   the circumstances under which it was executed whether the rights of  the occupier are those of a lessee or a licen  see.  The transaction  is  a lease, if it grants an  interest  in  the land; it is a license if it gives a personal privilege  with no  interest in the land.  The question is not of words  but of  substance and the label which the parties choose to  put upon the transaction, though relevant, is not decisive.  The test of exclusive possession is not decisive, see  Errington v.  Errington and Woods,(1) Associated Hotels of India  Ltd. v. R. N. Kapoor,(2) though it is a very important indication in  favour of tenancy.  See Addiscombe Garden  Estates  Ltd. and  Anr. v. Crabbe and Ors.(3). A servant in occupation  of premises  belonging  to  his master may be  a  tenant  or  a licensee,  see  Halsbury’s Laws of England,  Third  Edition, Vol.  23,  art.  990. p. 411.  A  service  occupation  is  a particular kind of license whereby a servant is required  to live  in  the premises for  the better  performance  of  his duties.   Formerly,  the  occupation  of  the  servant   was regarded as a tenancy unless it was a service occu- (1)[1952] 1 K.B. 290, 298. (2) [1260] 368, 381-5. (3) [1958] 1 Q.B. 513,525. 28 pation, see Nippon Menkwa Kalmshiki v. F. Portlock(1).   Now it is settled law that a servant may be a licensee though he may not be in service occupation.  In Torbett v. Faulkner(2) Denning, L. J. said:               "A  service occupation is, in truth, only  one               form  of licence.  It is a particular kind  of               licence whereby a servant is required to  live               in  the  house in order the better to  do  his               work.   But it is now settled that  there  are

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             other  kinds  of licence which a  servant  may               have.  A servant may in some circumstances  be               a. licensee even though he is not required  to               live in the house, but is only permitted to do               so because of its convenience for his work-see               Ford  v.  Langford 1(1949) 65 The  Times  L.R.               1381, per Lord Justice Asquith, and Webb, Ltd.               v.  Webb  (unreported, October  24,  1951)-and               even   though  he  pays  the   rates,   Gorham               Contractors, Ltd. v. Field (unreported,  March               26,  1952), and even though he  has  exclusive               possession,  Cobb v. Lane (1952) 1  The  Times               L.R. 1037)".               The Lord Justice then continued:               "If a servant is given a personal privilege to               stay in a house for the greater convenience of               his work, and it is treated as part and parcel               of  his remuneration, then he is  a  licensee,               even  though the value of the house  is  quan-               tified  in  money;  but  if  he  is  given  an               interest  in the land, separate  and  distinct               from  his  contract  of  service,  at  a   sum               properly to be regarded as a, rent, then he is               a  tenant, and none the less a tenant  because               he is also a servant.  The distinction depends               on  the truth of the relationship and  not  on               the label which the-parties choose to put upon               it:  see Facchini v. Bryson-(1952 ) The  Times               L.R. 1386)." The  last  observation covers the present case.   Under  the standard  form  of  agreement  of  respondent  No.  2,   the occupation of the officer ceases not only on the termination of his employment but also on his transfer from Calcutta and on his death.  The company is at liberty to allot any  other flat to the officer.  During the absence of the servant from Calcutta,  the company is at liberty to assign the  premises to any other employee or other person.  The accommodation is free,  but  the Company reserves the right to  levy  license fees.   All the terms of the agreement are  consistent  with the  expressed  intention that the officer is  permitted  to occupy  the flat as a licensee and nothing in the  agreement shall  be deemed to create the relationship of landlord  and tenant.  The agreement on its true construction read in  the light of the surrounding circumstances operates as a license and  not as a tenancy.  It creates no interest in the  land. It gives only a personal privilege or license (1)A.I.R. 1922 Botm. 70.        (2) [1952]2 T.L.R. 659,660,  29 of  the  servant  to occupy the  premises  for  the  greater convenience of his work. The High Court rightly held that the respondents  reasonably require  the  flats for respondent No.  2’s  own  occupation through  officers  holding  the  flats  on  its  behalf   as licensee.   If so, it is conceded that it is  not  necessary for the respondents to establish the reasonable  requirement by  respondent No. 1 also for its own Occupation.  The  High Court decided this issue also in favour of the  respondents. As  the  decision  on this issue is not  necessary  for  the disposal  of this appeal, we express no opinion on it.   The High Court rightly decreed the suits. In the result, the appeals are dismissed.  There will be  no order is to costs. R.K.P.S.                                             Appeals dismissed. 30

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