Holding

The petitioners are not entitled to the protection of the Act; the licence terminated with the licensor’s tenancy and the sub‑tenancy began only in 1962, precluding any benefit under s.14(1) or s.14(2).

Summary

The landlord, Ahmed R.V. Peer Mohamed, let his property to Saraswatibai, who subsequently sub-let cabins to six petitioners. After serving a notice to quit on Saraswatibai in 1962, the landlord obtained a decree for her ejectment, which was executed and later extended to the petitioners. The petitioners claimed they were lawful sub‑tenants or protected licensees under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, seeking a declaration and injunction. The trial and appellate courts held that the licence agreement terminated when the licensor’s tenancy ended, and that the sub‑tenancy began only in 1962, after the 1959 amendment, rendering sections 14(1) and 14(2) inapplicable. The Supreme Court affirmed this view, dismissing the Special Leave Petitions and refusing any statutory protection for the petitioners, though it allowed them temporary possession until September 30, 1982 upon compliance with conditions.

Issues considered

Whether the petitioners, as sub‑tenants or licensees, are entitled to protection under sections 14(1), 14(2) and 15A(1) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947.
Whether a licence agreement subsists after the licensor’s tenancy terminates, thereby converting the licensee into a tenant under s.14(2).
Whether the sub‑tenancy that commenced in 1962 can attract the benefit of s.14(1) in view of the 1959 amendment ordinance.

Legislation cited

Bombay Rents, Hotel and Lodging House Rates Control Act, 1947s. 14(1), s. 14(2), s. 15A(1), s. 5(4A)
Bombay Rents, Hotel and Lodging House Rates Control (Amendment) Ordinance, 1959

Subjects

sub‑tenancylicencestatutory protectionBombay Rents Actevictionejectmentspecial leave petitionlandlord‑tenant law

Judgment

A 112
/• '
LUDHICHEM AGENCIES ETC.
v.
AHMED R.V. PEER MOHAMED AND ANR.

Sfplember 15, 1981

(R. S. PATHAK AND BAHARUL !SLAM, JJ.J
>.,-----

Bombay Rents, Hotel and Lodging House Rates Control Act 1947, Ss 14(1)
C (2) and 15A(l)-Landlord terminating tenancy and obtaining decree for ejectment
-Sub-tenant when entitled to statutory protection.

Respondent No. I who was the landJord and had let out the petition pre·
mises to respondent No. 2, served a notice (dated July 28, 1962) terminating her
tenancy and filed an ejectment suit. A decree for ejcctment was passed (in 1966)
D and the appeal of respondent No. 2 was dismissed (in 1972). The landlord took
out execution of the decree. Obstructionist notice served on the petitioners
who were sub-tenants of respondent No. 2 was made absolute in favour of the
landlord. The p~titioners' .appeal wa11 dismissed.

Di'imissing the petitioners' suits against the landlord for a declaration that
they were lawful sub-ttnants/licensees entitled to the protection of the Bombay
E Rents, Hotel and Lodging House Rates Control Act, 1947 and for an injunction
restraining the landlord from executing the decree for ejectment the trial Court
held that they were not entitled to the benefit of the Act as lawful sub tenants
or as deemed tenants or as protected licensees. The petitioners· appeals were
dismissed on the ground that having been inducted into the premises after 1960
they were not entitled to be regarded as lawful sub-tenants.

F In the Special Leave Petitions to this Court it was contended that the
petitioners: (1) must be regarded as licensees entitled to the benefit of section
14(2) read with section 15-A(J) of the Act: and (2) having been in occupation
since 1943 and having in 1960 merely restricted their occupation to the portions
occupied by them, they were lawful sub-tenants since 1943, and, therefore, by
virtue of section 14{1) they must be regarded as tenants on the determination of
respondent No. 2's tenancy.

G Dismissing the Special Leave Petitions:

IfELD : 1. An agreement for licence can subsist and continue 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 termi-
H nates with the tenancy. I\o tenant is ordinarily competent to grant a
licence beyond his tenancy. On the termination of the licensor's tenancy
the licensee cases to be a licensee. This loss of status is the point
LUDICHEM AGENCIES v. AHMED R.V. (Pathak, J.) 713

from which sub-section (2) of section 14 of the Act begins to operate and in A
consequence of its ooeration, the erstwhile licensee becomes a tenant of the
landlord on the terms and conditions of the agreement. [715 F-H]

In the instant case respondent No. 2 ceased to be a tenant of any description
long before February I, 1973. The contractual tenancy came to an end when the
notice to quit took effect and the statutory tenancy terminated when the decree
for ejectment was passed thereafter. When she had ceased to be tenant, the B
agreement for licence stood autom1tically terminated oy reason of which th.:
petitioners cannot claim to be licensees on Fcbruaiy I, 1973. [715 H-716 B]

2. The b:!nefit of section 14~ I) can be claimed by a sub tenant to whom
the premises had b.!!en lawfully sub-let before the con1m.:ncement of the Bombay
Rents, Hotel and Lodging House Rates Control (Amendment) Ordinance, 1959.
(716 E] C
In the instant case the sub-tenancy has been found to commence from 1962
and not earlier. , The benefit of sub-section (1) of section 14 cannot be available.
and there can be no right to continue 'in po~session. [716 F]

',Madhusudan A Mahafe v. P.M. Gidh and others, 16 Maharashtra Law
Journal, 436 held inapplicable. D

CIVIL APPELLATE JURISDICTION : Special Leave Petition (Civil)
No. 5631 of 1981.
AND
S.L.P. (Civil) No.5632 of 1981 With S.L.P. (Civil) Nos. 5698-5701 E
of 1981.

From the judgment and order dated the 15th July. !981 of the
Bombay High Court in Writ Petition Nos. 1814, 1965, 1966, 1913
and !815of1981 respectively.
F
So/i J. SorabJte, P.H. Parekh and Hemant Sharma for the
petitioners in SLP No. 5631 of 1931.

, D. V. Patel, P.H. Parekh and He·1 ant Sharma for the petitioners
in SLP No. 5632 of 1981.

A nil B. Dewan, S. V. Bhat, R. Satish and E.C. Agarwala for the G
respondents.

The Judgment of the Court was delivered by

PATHAK, J. This and the connected petitions pray for special H
leave to appeal to this Court against the refusal of the Bombay High
Court to grant relief under Article 227 of the Constitution in the
714 SUPREME COURT REPORTS [I 982] I S.C.R.

A matter of the dismissal of six declaratory suits filed by the
petitioners.

The first respondent, Ahmed R.V. Peer Mohamed, is the owner
of a property, "Peerbhai Mansion". situate on Vithalbhai Patel
B Road, Bombay. He let out the entire first floor to the second
respondent, Smt. Saraswatibai Dahyabhai Bhatt. The first floor
consisted of a hall and three rooms and an adjoining terrace. It
>
seems that Saraswatibai sub-divided the hall into a number of cabins,
and transferred them to the occupation of the petitioners in this and
'-
the connected special leave petitions. The landlord served a notice
c dated July 28, 1962 on her terminating her tenancy and thereafter
'
filed an ejectment suit No. 576/5157 of 1962. A decree for ejectment
was passed in 1966. An appeal by Saraswatibai was dismissed in
1972. ·;The landlord took out execution of the decree. Obstructionist
notice was served on all the petitioners and was made absolute ~in
favour of the landlord on February 27, 1974. The petitioners
D appealed, and on November 30, 1976 these appeals were dismissed.

The six petitioners then filed separate suits Nos. 5734 to 5739
of 1976 against the landlord for a declaration that they were lawful
sub-tenants or licensees entitled to the protection of the Bombay
Rents, Hotel and Lodging House Rates Control Act, 1947 and for
E a permanent injunction restraining the landlord from executing the
decree for ejectment obtained against Saraswatibai. During the
trial of the suits the sole issue pressed before the trial Judge was
whtther the petitioners were entitled ~to the benefit of the Act as
lawful sub-tenants or as deemed tenants or as protected licensees.
The Trial Judge ruled that they were not so protected and he dismis-
F sed the suits on March 29, 1978. The petitioners appealed. The
only point raised in appeal was whether the petitioners could be
described as lawful sub-tenants or protected licensees. Affirming
the findings of the trial Judge the appellate Court held that the
petitioners were inducted into the premises after 1960 and, therefore,
were not entitled to be regarded as lawful sub-tenants. It found
G
that Saraswatibai had become a statutory tenant on the termination
of her tenancy by the notice dated July 28, 1962, and the petitioners
were her licensees and after the decree for ejectment against Saras-
watibai on September 30, 1966 her rights and interest in the premises
came to an end and from that date the licensees were not entitled to
any statutory protection. Aceordingly, the appellate Court main-
tained the dismissal of the suits filed by the petitioners.
LUDICHEM AGENCIES v. AHMED R.V. (Pathak, J.) 715

The petitioners filed writ petitions under Article 227 of the A
Constitution before the High Court, and the High Court after
hearing the parties rejected the petitions by its order dated July 15,
1981. These petitions for special leave to appeal are directed
against that order.

Mr. Soli Sorabjee, appearing for the petitioner in S.L.P. No. 8
5631 of 1981, contends that the petitioner must be regarded as a
licensee entitled to the benefit of sub-s. (2) of s. 14 read with sub-s.
(l) of s. 15-A of the Bombay Rents, Hotel and Lodging House Rates
Control Act, 1947. He urges that in virt11e of the definition of
"licensee" set forth in sub-s. (4A) of s. 5 of the Act, that is to say, a
person who is in occupation of the premises under a subsisting agree- c
ment for licence, the petitioner,imust be regarded as a licensee in occu-
pation on February I, 1973, and therefore a tenant falling within the
terms of sub-s. (I) of s. 15-A. On that, learned counsel says, the peti-
tioner must he deemed, pursuant to sub-s. (2) of s. 14, to be a tenant
of the landlord, the first respondent, on the terms and conditions
of the agreement. Now, there can he no doubt that if the petitioner D
can be said to be a licensee in occupation on February I, 1973 he is
entitled to assert that he has become a tenant of the landlord. But
a licensee is one who is in occupation under a subsisting agreement
for licence. The agreement for licence must be subsisting on the
date on which he claims to be a licensee. In the instant case, in
order to establish his claim the petitioner must be in occupation on E
February I, 1973 under an agreement for licence subsisting on
that date.

In our opinion, the petitioner is not entitled to the benefit
claimed by him. An agreement for licence can subsist and continue
to take effect only so long as the licensor continues to enjoy a right, F
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 termi-
nates wit)! 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. This loss of G
status is the point from which sub·s. (2) of s. 14 begins to operate
and in consequence of its operation, the erstwhile licensee becomes
a tenant of the landlord on the terms and conditions of the
agreement.

What have we here " Saraswatibai ceased to be tenant of any H
description long before February I, 1973. The contractual tenancy
716 SUPREME COURT REPORTS [1982] l 5.C.R.

A came to an end when the notice to quit dated July 28, 1962 took
effect and the statutory tenancy terminated when ihe decree for
ejectment was pf.ssed thereafter. Before February I, 1973 she had
ceased to be a tenant. With that, the agreement for licence stood
automatically terminated. In consequence, the petitioner cannot
legitimately claim to be a licensee on February I, 1973.
B
Mr. Sorabjee relies on Madhusudan A. Mahale v. P.M. Gidh
and others, 11) but we are unable to see any support for the peti-
tioner in the judgment in that case .
f
; -
•
In our jndgment, Special Leave Petition No. 5631 of 1981
C must fail.

Mr. D.V. Patel, a, pearing for the petitioner in Special Leave
Petition No. 5632 of 1981, points out that the petitioner had been
in occupation of the entire fiat as a sub-tenant since 1943 and that in
1960 he had merely restricted his occupation to the portion presently
D occupied by him. It must be taken, he contends, that he was a
lawful sub-tenant since 1943, and therefore, by virtue of sub-s. (!)
of s. 14 of the Act he must be regarded as a tenant of the landlord
on the determination of Saraswatibai's tenancy. The contention has
no force. The courts below have found that the occupation of the
petitioner in the premises presently in his possession must be treated
E as dating back to 1962 and not earlier. That being so, the benefit
of sub-s. (I) of s. 14 cannot be available to the petitioner. The
benefit can be claimed by a sub-tenant to whom the premises have
been lawfully sub-let before the commencement of the Bombay
Rents, Hotel and Lodging House Rates Control (Amendment)
Ordinance, 1959. Inasmt ch as the sub-tenancy of the petitioner in
F the premises has been f< und to commence from 1962, we must hold
that this petitioner also has no right to continue in possession. This
Special Leave Petition must also be rejected.

As regards the remaining special leave petitions, it is admitted
- .
that they must be disposed of on the same footing as Spec'ial Leave
G Petition (Civil) No. 5631 of 1981.

In the result these special leave petitions are dismissed.

Learned counsel for the petitioners pray that the petitioners
H may be allowed to continue in possession for a period of eighteen

(I) 16 Maharashtra Law Journal 436,
LUDICHEM AGENCIES v. AHMED R.V. (Pathak, J.) 717

months in view of the great difficulty in securing alternativo acc·Jm· A
modation in Bombay. They point out that the landlord, the first
respondent, had agreed in the High Court to grant that period to
the petitioners but subject to the condition that the petithJOm did
not move this Court in appeal. Having regard to the circumstances
of the case, it appears to us appropriate to direct that the petitioners B
shall not be dispossessed from the accommodation in their posses·
sion upto Sepetember 30, 1982, provided they furnish an undertaking
with the Registrar of this Court within one month from today :

(a) that they will hand over peaceful and vacant possession C
of the said premises to the landlord, the first respon-
dent, on or before September 30, 1982.

(b) that they shall continue to pay to the first respondent
by the 7th day of each month an amount on account
of the use and occupation of the premises equal to the D
monthly amount paid by them to the licensor Saras-
watibai under the agreement for licence,

(c) that they will deposit within three months from today
in the court executing the decree in Ejectment Suit
No. 576/5157 of 1962 all arrears calculated in accor- E
dance with the condition (b) mentioned above for the
period commencing with the date of the decree in that
suit, and

(d) that they shall not induct in the said premises any
other person as sub-lessee, licensee or otherwise.

N. V.K. Petitions dismissed,