Holding

A licence created by a statutory tenant is invalid unless the statute expressly deems the statutory tenant to be on par with a contractual tenant; absent such provision, the licence is void and cannot confer protection under Section 15A.

Summary

The landlord determined the contractual tenancy of his tenant in 1966 and later the tenant, now a statutory tenant, granted a licence to the respondent in 1972. The respondent claimed protection from eviction under Section 15A of the Bombay Rent Hotel and Lodging House Rates Control Act, 1947. The Supreme Court examined whether a statutory tenant can create a valid licence and, if so, whether such a licence confers immunity from eviction. It held that a statutory tenant lacks any assignable interest after his tenancy is determined and can only create a licence if the statute expressly treats him on par with a contractual tenant, which the Bombay Rent Act does not. Consequently, the licence was deemed invalid and revoked, and the respondent could not claim licence‑holder status under Section 15A. The appeal by the landlord was allowed, setting aside the High Court order and dismissing the writ petition.

Issues considered

Can a statutory tenant create a licence under the Bombay Rent Hotel and Lodging House Rates Control Act, 1947?
If a licence is created by a statutory tenant, does the licencee obtain immunity from eviction under Section 15A of the Act?

Legislation cited

Bombay Rent, Hotel and Lodging House Rates Control Act, 1947s. 12(1), s. 14, s. 15A
Indian Easements Acts. 62

Subjects

statutory tenantcontractual tenantlicence validityeviction protectionSection 15ABombay Rent Acttransfer of interestIndian Easements Act

Judgment

S:J.PANDE

v.
-
P.K. BALA KRISHNAN

APRIL 29, 1993
B
[K. RAMASWAMY AND R.M. SAHAL, JJ.]

. Bombay Rent Hotel and Lodging House Rates Control Act, 1947:

Section 15A-Licence-Statutory Tenant-Cannot crea.re a valid licence
c unless he was deemed on a par with contractual tenant by provision in the statute.

. The appellant-landlord determined the tenancy of the contrach.ial
tenant iil.1966 and fded a suit for his eviction. The suit was decreed ex-parte;
fo exe¢uti~n proceedings the licensee obstructed and claimed to he protected
···licensee µnder Section ISA of the Bombay Rent Hotel and Lodging House
D Rate~ 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
.wi)e~ contractual tenant had become statutory tenant, and therefore, he was
E · 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
. sta•tutory tenant, was valid.
F
Being aggrieved by the judgment of the ~:ligh Court, the appellant~
landlQrd prdered an appeal, before the Court.

Allowing the appeal, this Court,

G HELD: 1.1 In the absence of any legislation touching the contract, a
co~tractual tenant is left with no transferable right after determinaticn of his
tenancy. (465-B)

1.2 The law would operate in favour ofa person who held the premises
a{.:ontractual tenant
u~der valid licence. A valid licence could be created, by
H or by a statutory tenant if he continued at par with contractual tenant by

460
PANDE v. BALAKRISHNAN [R.M. SAHA! J.] 461

operation of legislation. (465-G) A

1.3 In the instant case, 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 cause a B
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 ISA of the Act. (466-8-C) 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. Mis Sovani (P) Ltd., AIR 1973 SC 772; D
Damadilal and others v. Parashram and Others, AIR 1976 SC 2229 and
lttdhichem Agencies v.Ahmed R. V. Peer Mohamed and Anr., [1982] 1SCR511,
referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4233 of 1984. E

From the Judgment and Order dated 25.3.1983 of the Bombay High Court
in W.P. No. 25of1982.

S.B. Bhasme and A.S. Bhasme for the Appellant.
F

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 G
affirmative then can such licensee claim immunity from eviction in execution
proceedings in view of Section l 5A of th~ Bombay Rent HoteI and Loging House
Rates Control Act 57 of 1947 (hereinfter referred to as 'the Act')? These are
questions which arise for consideration in this appeal directed against the judg-
ment and order of the Bombay High Court.
H
462 SUPREME COURT REPORTS (1993) 3 S.C.R.

A 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 befort;
B determination of the tenaricy for a period of six years but the second licence having
been created in 1972, it was not necessary to examine the validity ofthe fir.st, 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
C held that creation of licence by a statutory tenant, was valid. Consequently the
licensee was in occupation of the pre.mises as licensee on the date the Bombay
Rent Act was amended and was enatitled to the benefit of Section 15A of th~ Act.
For this reliance was placed on certain observations made by a Division Bench of
that Court in Vasant Tatoba Hargude and Others v. Dikkaya Muttaya Pujari, AIR
1980 Bombay 341 to the following effect:-
D
"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 and shall have to_proceed on the assumption that statutory
tenant does ordinarily possess transferable interest in his ten-
E anC)'.,,

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
F 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 tenanl'.
Such a person is not a tenant at all: he has no estate or interest in the
G 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

H
rent and permitted increases, if any, and perfonns the other condi-
tions 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 ·
-
PANDE v. BALAKRISHNAN [R.M. SAHA! J.] 463

- only in the manner provided by the statute. The right ofa lessee from
alandlord 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
A

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 8
possession by the land,lord. the terms and conditions of the lease are
extinguished, and the rights of such a person remaining in posses-
sion are governed j)y the statute alone. Section 12 (l) 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
c
the right to enforce the terms and conditions of the original tenancy
af~r it is determined."

In Jai Singh Morarji and others v. Mis Sovani (P) Ltd., Al,Rr~I973 SC 772 yet
another decision from Bombay the ratio in Anand Nivas was reiterated and It was D
held that tenant in Section 15 of the Bombay Rent Act meant 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. Acconunodation 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 E
contract' was touched by legislation. It was held that where the statute itself

- provided continuance in possession of the tenant afte~ 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:

F
"a person by whom or on whose account or behalf fof 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 posses-
sion after the termination of his tenancy whether before or after the
commencement of this Act; but shall not include any person against whom G
any order or decree for eviction has been made."

This section was construed thus,

"The definition makes a person cqntinuing in possession after the determinatio_n of
his tenancy a tenant unless a decree or order for eviction has been made against him, ff
464 SUPREME COURT REPORTS [1993) 3 S.C.R.

A thus putting him on par with a person whose contractual tenancy still subsists. The
incidentsof 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, n'ot merely a
personal right of occupation, will also appear from Section 14 which
contains provisions restricting the tenant's power of subletting. Section 14
B
•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
C 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
D tenant as a statutory tenant c9uld 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) l SCR 511:

"An agreement for licence can subsist and continue to take effect only so
E 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 licencor 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
-
F licensor's tenancy the licensee ceases to be a licensee."

On facts however since the statutory tenancy too came to an end before Section
15 A 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
G 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 difficu It 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
H personsal right to remain in occupation, without ascertaining what his rights
PANDE v. BALAKRISHNAN [R.M. SAHAI J.) 465

are under the statute .............. It is not possi~le to claim that the ··sanctity" of A
contract cannot be touched by legislatiop:''

Were on the language of the Section as it stood under that Act. Therefore, in
anbsence of any legislation touching the contract it appears to be settled that
contratual tenant is left with'no transferable right after determination of his B
tenancy. In ouropinion the learned judge in drawing an inference fromludhichem
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, then the licence '
in favour of the petitioners could have been considered to the subsisting on
l.2.1973,. committed an error of law. · C

Sec\io0-l~A reads as under:

"l5A-
D

(l) Notwithstanding anything contained elsewhere in this Act or anything
contrary in any other law for the time being in force, or in any contract, where
any person is on the 1st day of Februa_.ry 1973, in occupation ofany premises
or any part thereof which is not less 'that a room as a licensee thereof, he shall
on that date be deemed to have become, for the purposes of this Act, the E
tenant of the landlord in respect of the premises or part thereof in his
occupation.

- (2) The provisions of sub-section (l) shall not affect in any manner the
operation of sub-section (l) of Section 15 af:er the date aforesaid."
- /
F·

-- The section brought into force with effect from lst 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 G
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 th~ licence created in favour of licensee by the statutory
tenant could not render the respondent. a licensee within the meaning of Section H
\Si\ of \he Act.
SUPREME COURT REPORTS (1993} 3 S.C.R.
466

A Even a valid licence stands revoked in circumstances mentioned in Section
62 of the Indian Easements Act. Its clause (a) reads asdunder: -
"62. A license is deemed to be revoked-
(a) when, from a cause preceding the grant of it, the gi:antor ceases to have
any interest in the property affected by the license:''
B

The licence was granted by the contractual tenant in I 972. 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,
c and was incapable of creating any valid licence unless he could be deemed to be
at par with the contr~ctual tenant by any provision in the statute. In absence of any
such provision in the Bombay Rent ~ct the licence was invalid and st()od revoked.
The occupation of the respondent thus was not as licensee <vi thin the meaning of
Section ISA of the Act.

D In the result this appeal succeeds and is allowed. The order passed by the
.ffigh 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. PretitilJn dismissed.

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