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PETITIONER: S.J. PANDE

       Vs.

RESPONDENT: P.K. BALAKRISHNAN

DATE OF JUDGMENT29/04/1993

BENCH: SAHAI, R.M. (J) BENCH: SAHAI, R.M. (J) RAMASWAMY, K.

CITATION:  1993 AIR 2132            1993 SCR  (3) 460  1993 SCC  (3) 297        JT 1993 (3)   364  1993 SCALE  (2)726

ACT: % Bombay Rent Hotel and Lodging House Rates Control Act, 1947: Section  15A-Licence-Statutory Tenant-Cannot create a  valid licence  unless  he  was deemed on a  par  with  contractual tenant by provision in the statute.

HEADNOTE: The   appellant-landlord  determined  the  tenancy  of   the contractual  tenant  in  1966  and  filed  a  suit  for  his eviction.   The  suit was decreed  ex-parte.   In  execution proceedings  the  licensee  obstructed  and  claimed  to  be protected  licensee  under Section 15A of  the  Bombay  Rent Hotel  and  Lodging  House Rates  Control  Act,  1947.   The objection   was  rejected  by  the  executing  Court.    The appellate Court confirmed the same holding that even  though the first licence was, created in 1966 before  determination of  the  tenancy for a period of six years  and  the  second licence having been created in 1972, it was not necessary to examine  the  validity of the first, as the second  one  was created when contractual tenant had become statutory tenant, and therefore, he was incapable of transferring any right or interest in favour of the licensee. On  appeal,  the  High  Court  upheld  the  finding  of  the appellate court that the licence was created in 1972 It also held  that  creation of licence by a statutory  tenant,  was valid. Being  aggrieved  by  the judgment of the  High  Court,  the appellant landlord preferred an appeal, before the Court. Allowing the appeal, this Court, HELD:     1.1 In the absence of any legislation touching the contract, a contractual tenant is left with no  transferable right after determination of his tenancy. (465-B) 1.2  The  law would operate in favour of a person  who  held the premises under valid licence.  A valid licence could  be created, by a contractual tenant or by a statutory tenant if he continued at par with contractual tenant by 461 operation of legislation. (465-G) 1.3In  the  instant  case, the licence was  granted  by  the contractual  tenant  in  1972.  But  his  tenancy  had  been

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determined  by  the landlord in 1966.  He  thus  had  become statutory  tenant.   He did not, in law had  any  assignable interest  on the date he created the licence.  The  grantor, therefore,  from a cause preceding the grant had  ceased  to have  any interest, and was incapable of creating any  valid licence  unless  he could be deemed to be at  par  with  the contractual  tenant  by any provision in  the  Statute.   In absence  of any such provision in the Bombay Rent  Act,  the licence was invalid and stood revoked. The occupation of the respondent  thus was not as licensee within the  meaning  of Section 15A of the Act. (466-B-C) Vasant  Tatoba Hargude and Ors. v. Dikkaya  Muttaya  Pujari: AIR 1980 Bombay 341, approved. Anand  Nivas  Private  Ltd. v. Anandji  Kalyanji’s  Pedhi  & Others, AIR 1965 SC 414; Jai Singh Morarji and others v. M/s Sovani  (P) Ltd., AIR 1973 SC 772; Damadilal and  others  v. Parashram  and  Others,  AIR 1976  SC  2229  and  Luadhichem Agencies v. Ahmed R. v. Peer Mohamed and Anr., [1982] 1  SCR 51 1, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4233 of 1984. From  the Judgment and Order dated 25.3.1983 of  the  Bombay High Court in W.P. No. 25 of 1982. S.B. Bhasme and A.S. Bhasme for the Appellant. Umesh Bhagwat and V.B. Joshi for the Respondent. The Judgment of the Court was delivered by R.M.  SAHAI J. Can a statutory tenant create a licence?   If the  answer is in affirmative then can such  licensee  claim immunity  from eviction in execution proceedings in view  of Section 15A of this Bombay Rent Hotel and Loging House Rates Control  Act  57 of 1947 (hereinafter referred  to  as  ’the Act’)?  These are questions which arise for consideration in this  appeal directed against the judgment and order of  the Bombay High Court. 462 What  happened was that the landlord determined the  tenancy of  the contractual tenant in October 1966 and filed a  suit for  his eviction in 1967 which was decreed ex-parte on  5th October  1973.   In  execution of the  decree  the  licensee obstructed  and  claimed  to  be  protected  licensee  under Section  15A of the Act.  The objection was rejected by  the executing  and  the appellate court.   The  appellate  court found  that  even though the first licence was,  created  in 1966 before determination of the tenancy for a period of six years but the second licence having been created in 1972, it was  not necessary to examine the validity of the first,  as second  was  created  when  contractual  tenant  had  become statutory tenant therefore he was incapable of  transferring any  right or interest in favour of the licensee.  The  High Court  did  not  disturb the finding that  the  licence  was created  in 1972 but it held that creation of licence  by  a statutory tenant, was valid.  Consequently the licensee  was in  occupation of the premises as licensee on the  date  the Bombay Rent Act was amended and was entitled to the  benefit of Section 15A of the Act.  For this reliance was placed  on certain observations made by a Division Bench of that  Court in Vasant Tatoba Hargude and Others v. Dikkava Mutta Pujari, AIR 1980 Bombay 341 to the following effect:- "On  this point of initial presumption as to the  subsisting incidence of the tenancy, we shall have to follow the  ratio               of  Damadilal’s  case (AIR 1976  SC  2229)  in               preference to the decision in Anand Nivas case

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             and  shall have to proceed on  the  assumption               that statutory tenant does ordinarily  possess               transferable interest in his tenancy.  " Who  is  a statutory tenant, what right or interest  he  can assign  or  transfer have been dealt by this Court  in  more that  one decisions.  In Anand Nivas Private Lid v.  Anandji Kalyanji’s  Pedhi  &  others  AIR 1965  SC  414  a  decision rendered under Bombay Rent Act the majority held, "A person remaining in occupation of the premises let to him after  the determination of or expiry of the period  of  the tenancy is commonly though in law not accurately, called  ’a statutory tenant’.  Such a person is not a tenant at all: he has  no estate or interest in the premises occupied by  him. He  has  merely  the protection of the statute  in  that  he cannot  be turned out so long as he pays the  standard  rent and  permitted  increases, if any, and  performs  the  other conditions   of  the  tenancy.   His  right  to  remain   in possession  after  the  determination  of  the   contractual tenancy is personal: it is not capable of being  transferred or assigned, and devolves on his death 463 only in the manner provided by the statute.  The right of  a lessee  from  a landlord on the other hand is an  estate  or interest in the premises and in the absence of a contrant to the contrary is transferable and the premisses may be sublet by him.  But with the determination of the lease, unless the tenant  acquires  the  right of a tenant  holding  over,  by acceptance  of  rent  or  by assent  to  his  continuing  in possession by the landlord, the terms and conditions of  the lease  are  extinguished, and the rights of  such  a  person remaining  in possession are governed by the statute  alone. Section  12  (1) of the Act merely recognises his  right  to remain  in  possession so long as he pays or  is  ready  and willing to pay the standard rent and permitted increases and performs  the other conditions of the tenancy, but  not  the right  to enforce the terms and conditions of  the  original tenancy after it is determined." In Jai Singh Morarji and others v. M/s Sovani (P) Ltd.,  AIR 1973  SC 772 yet another decision from Bombay the  ratio  in Anand  Nivas was reiterated and It was held that  tenant  in Section  15  of  the Bombay Rent  Actmeant  the  contractual tenant  and  not the statutory tenant.   Then  came  another decision, Damadilal and others v. Parashram and others,  AIR 1976  SC 2229 on M.P. Accommodation Control Act.  It in  the Court traced the genesis of the concept of statutory  tenant derived  from  the  English  Rent  Act  but  carved  out  an exception, where, the sanctity, of the contract’ was touched by  legislation.  It was held that where the statute  itself provided  continuance  in  possession of  the  tenant  after determination of the tenancy in some right the tenant was at par  with contractual tenant.  Reason was the definition  of ’tenant’  under  Section  (2) (i) of the Act.   It  read  as under: "a person by whom or on whose account or behalf for the rent of  any accommodation is, or, but for a contract express  or implied, would be payable for any accommodation and includes any  person occupying the accommodation as a sub-tenant  and also   any  person  continuing  in  possession   after   the termination  of  his  tenancy whether before  or  after  the commencement  of this Act; but shall not include any  person against  whom  any  order or decree for  eviction  has  been made." This section was construed thus, "The  definition  makes a person  continuing  in  possession after  the  determination of his tenancy a tenant  unless  a

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decree or order for eviction has been made against him 464 thus  putting  him on par with a  person  whose  contractual tenancy still subsists.  The incidents of such tenancy and a contractual  tenancy must therefore be the same  unless  any provision  of the Act conveyed a contrary  intention.   That under  this  Act such a tenant retains an  interest  in  the premises,  not merely a personal right of  occupation,  will also  appear  from  Section  14  which  contains  provisions               restricting the tenant’s power of  subletting.               Section 148 is in these terms:................ No such provision existed in the Bombay Rent Act.  The ratio in Damadilal’s case, therefore, could not apply to right  or interest created by a statutory tenant under the Bombay Act. The decisions in Damadilal’s case did not in any way deviate from  the  decisions given earlier by this  Court  in  Anand Nivas  case.  All these cases however were  of  sub-tenants. In 1981 this Court had an occasion to deal with the case  of a  licensee under the Bombay Rent Act and his  rights  under Section  15A of the Act.  The Bench was of the opinion  that the  licensee  was  not entitled to  obstruct  the  eviction proceedings  which had become final against the tenant as  a statutory  tenant  could not assign or create  any  interest after  termination  of  his tenancy.   It  was  observed  in Ludhichem  Agencies  v. Ahmed R. v. Peer  Mohamed  and  Anr. [1982] 1 SCR 51 1: "An  agreement for licence can subsist and continue to  take effect  only  so long as the licensor continues to  enjoy  a right,   title  or  interest  in  the  premises.    On   the termination of his right, title or interest in the premises, the agreement for licence comes to an end.  If the  licensor is  a tenant, the agreement for licence terminates with  the tenancy.   No  tenant  is ordinarily competent  to  grant  a licence enduring beyond his tenancy.  On the termination  of the   licensor’s  tenancy  the  licensee  ceases  to  be   a licensee." On  facts however since the statutory tenancy too cam to  an end  before  Section 15A was amended due to passing  of  the decree by the trial court the High Court distinguished  this decision  ignoring the material difference between  the  two enactments.  What was lost sight of was that the observation made  by this Court in Damadilas’s case at page 2234 to  the following effect, "We  find it difficult to appreciate how in this country  we can  proceed  on the basis that a tenant  whose  contractual tenancy has determined but who is protected against eviction by  the  statute,  has  no right  of  property  but  only  a personal        right   to  remain  in   occupation,   without               ascertaining what his rights 465 are  under the statute.............. It is not  possible  to claim  that the "sanctity" of contract cannot be touched  by               legislation. Were  on the language of the Section as it stood under  that Act.  Therefore, in absence of any legislation touching  the               contract   it  appears  to  be  settled   that               contractual    tenant   is   left   with    no               transferable right after determination of  his               tenancy.  In our opinion the learned judge  in               drawing  an inference from Ludhichem  Agencies               (supra) that, ’a licence by a statutory tenant               would  continue to subsist ’lawfully  till  it               was  terminated and therefore if on the  facts               of  that case the decree of ejectment  against               Saraswatibai  had  been made  after  1.2.1973,

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             then the licence in favour of the  petitioners               could  have been considered to the  subsisting               on 1.2.1973,. committed an error of law. Section 15A reads as under: "15A- (1)Notwithstanding anything contained elsewhere in this  Act or anything contrary in any other law for the time being  in force,  or in any con tract, where any person is on the  lst day  of February 1973, in occupation of any premises or  any part  thereof  which is not less that a room as  a  licensee thereof, he shall on that date he deemed to have become, for               the  purposes of this Act, the tenant  of  the               landlord  in respect of the premises  or  part               thereof in his occupation. (2)The provisions of sub-section (1) shall not affect in any manner the operation of sub-section (1) of Section 15  after the-date aforesaid." The section brought into force with effect from 1st February 1973 undoubtedly protected a licensee form eviction.  But it could operate in his favour only if he was in occupation  of the  premises  on  the date the Act came  into  force  as  a licensee.   It is, thus, not mere occupation but  occupation as licensee which has been statutorily protected.  In  other words  the law would operate in favour of a person who  held the premises under valid licence.  A valid licence could  be created, as explained earlier, by a contractual tenant or by a  statutory tenant if he continued at par with  contractual tenant by operation of legislation.  In absence of any  such provision  in  the Bombay Rent Act the  licence  created  in favour of licensee by the statutory tenant could riot render the respondent, a licensee within the meaning of Section 15A of the Act. 466 Even  a  valid  licence  stands  revoked  in   circumstances mentioned  in Section 62 of the Indian Easements  Act.   Its clause (a) reads as under: "62.  A license is deemed to be revoked- (a)when, from a cause preceding the grant of it, the grantor ceases to have any interest in the property affected by  the license:" The  licence was granted by the contractual tenant in  1972. But his tenancy had been determined by the landlord in 1966. He thus had become statutory tenant.  He did not, in law had any assignable interest on the date he created the  licence. The  grantor therefore from a cause preceding the grant  had ceased  to have any interest, and was incapable of  creating any  valid  licence unless he could be deemed to be  at  par with the contractual tenant by any provision in-the statute. In absence of any such provision in the Bombay Rent Act  the licence  was invalid and stood revoked.  The  occupation  of the  respondent thus was not as licensee within the  meaning of Section 15A of the Act. In  the  result this appeal succeeds and  is  allowed.   The order  passed by the High Court in the Writ Petition is  set aside and it shall stand dismissed.  In the circumstances of the case, however, there shall be no order as to costs. V.M. Pretition dismissed. 467