Monday, 21 December 2020

What will be the effect of leave and licence agreement between landlord and deemed tenant?

Section 15A itself has a non-obstante clause, which, as I have noted above, operates notwithstanding anything contrary contained in any inter parties agreement. In other words, the provision of Section 15A cannot be defeated or overriden by a private contract between the parties. As I have noted above, the non-obstante clause at the beginning of Section 15A makes a vital difference and makes its enacting provision incapable of being overridden by a private contract. (This is not a case, where, as a plea of fact, it is claimed that there was a physical surrender of tenancy and creation of a fresh licence post such surrender. What is claimed is that the benefit of Section 15A was waived by the licensee.)


14. The conclusive nature of the facts stated in the agreements of leave and licence (after 1 February 1973) is no answer to the licensee's plea of deemed tenancy either. There is no question here of any facts. The predecessors of Respondent No. 3, no doubt, did purport to create a licence in favour of the Petitioner despite the latter's legally acquired status of a deemed tenant. The question is, whether this licence has the effect of defeating the licensee's legally acquired status of deemed tenancy. That is a question of law. The agreement of licence may be a conclusive proof of the facts stated therein, but the law cannot be decided by the parties through their statements. That is not a matter of volition or individual contract.

16. The sum and substance of the above discussion is that in view of the deemed tenancy of the Petitioner herein, the suit premises are exempted from the application of the Act and as a result, the Competent Authority lacked jurisdiction to entertain any application under Section 24 of the Act in respect of the premises. The impugned orders of the Competent Authority and the Additional Commissioner, thus, deserve to be quashed and set aside.

 IN THE HIGH COURT OF BOMBAY

Writ Petition No. 7931 of 2019

Decided On: 19.05.2020


 EEPC India  Vs.  Additional Commissioner, Konkan Division and Ors.


Hon'ble Judges/Coram:

S.C. Gupte, J.

Citation: MANU/MH/0573/2020, 2020(5) MHLJ 585


1. This petition challenges orders passed by the Competent Authority, Konkan Division and Additional Commissioner, Konkan Division for eviction of the Petitioner under the provisions of the Maharashtra Rent Control Act, 1999 ("Act"). By consent of the parties, Rule is granted and taken up for hearing forthwith.


2. By a leave and licence agreement dated 16 May 1971, one Sita Kayship, who was the owner of the suit premises (which is a fat, being Flat No. 5 in 'Shivsagar' building at Block No. 19, Worli Sea Face, Worli, Mumbai 400018), gave it on licence to the Petitioner. It is the Petitioner's case that this licence was subsisting as on 1 February 1973 and accordingly, the Petitioner became a deemed tenant of the suit premises. It is submitted that though deemed tenancy was a legal status acquired by the Petitioner by operation of law, since, at the request of Ms. Kayship, the rent was to be enhanced from Rs. 525 to Rs. 600, a fresh agreement purportedly extending the licence was executed between the parties on 30 July 1973 providing inter alia for such enhanced rent/compensation. After the suit premises changed hands, purported by purchase from Ms. Kayship to her husband Prannath Kayship and through a gift deed from him to his son Ravindra Kayship, a fresh agreement providing for payment of increased rent was executed between the parties. Ravindra Kayship thereafter sold the suit premises to one late Savitri Dubey, who is the predecessor of the contesting respondent herein (Respondent No. 3). By an agreement dated 21 April 2001, a further licence was purported to be created in favour of the Petitioner by late Savitri, providing once again for further enhanced rent. Sometime in 2005, the Petitioner, fearing eviction from the late Savitri, filed a suit under Section 33 of the Act in the Court of Small Causes at Mumbai (being RAD Suit No. 600 of 2005) for a declaration that it was a deemed tenant of late Savitri. This suit has been pending hearing and final disposal before that court. During the pendency of that suit, late Savitri filed an application (being Application No. 13 of 2005) before the Competent Authority for eviction of the Petitioner as a licensee of the suit premises. The Petitioner applied for leave to defend. Leave was denied by the Competent Authority. Upon the Petitioner's revision application from that order being rejected, the Petitioner filed a civil writ petition (being Writ Petition No. 7380 of 2005). By an order dated 30 January 2013, passed on that petition, the impugned orders were set aside and the Petitioner was granted leave to defend. A Letters Patent Appeal, filed by late Savitri from that order, was rejected by a division bench of this court. So also, was a review petition from the Letters Patent order. Pursuant to leave, which thus became final, the Petitioner filed its written statement and also an additional written statement. Evidence was thereafter led by the parties and the matter was heard by the Competent Authority. By its order dated 15 June 2018, the Competent Authority allowed the eviction application. That order was confirmed in revision by the Additional Commissioner, Konkan Division. These two orders have been challenged in the present petition.


3. Mr. V.A. Thorat, learned Senior Counsel appearing for the Petitioner, makes the following submissions:


(i) It is submitted, firstly, that the Petitioner being a government company, or a public sector undertaking, the suit premises being let to it are exempt from the provisions of the Act. It is submitted that despite holding (in answer to Issue No. 7) that the premises were so exempted, the Competent Authority went on to entertain the application for eviction of the Petitioner from the suit premises under Section 24 of the Act, committing thereby a jurisdictional error.


(ii) Learned Counsel, secondly, submits that the Petitioner being a licensee of the suit premises, not being less than a room, under a subsisting licence as on 1 February 1973 became a deemed tenant of the premises as of that date and could not be evicted from it except under the provisions of Chapter IV of the Act which provides for recovery of possession of tenanted premises by a landlord against a tenant. It is submitted that once the status of a deemed tenant is acquired by law, it continues unless the same is put an end to by a procedure known to law. It is also submitted that such status is a legal consequence and the parties cannot contract out of it. It is submitted that subsequent agreements of licence cannot have the effect of doing away with the deemed tenancy of the Petitioner or in any manner contracting out of it.


4. Mr. Vachasundar, learned Counsel for Respondent No. 3, on the other hand, makes the following submissions:


(i) Learned Counsel submits that the provisions of Section 24 of the Act would operate notwithstanding anything contained in the Act, suggesting thereby that those provisions would operate notwithstanding the exemption provision contained in Section 3(1)(b) of the Act.


(ii) Learned Counsel secondly submits that after repeal of the earlier Rent Act (namely, Bombay Rents, Hotel & Lodging House Rates Control Act, 1947, hereinafter 'Bombay Rent Act'), only those matters which are saved by Section 58, which is the Repeal and Savings clause in the present Act, would stand saved, whereas the deemed tenancy of the Petitioner under Section 15A of the Bombay Rent Act is not such matter and is not therefore saved.


(iii) Learned Counsel lastly submits that whatever may be the position in law, the conduct of the parties, as envisaged by the documents executed by them since 30 July 1973, clearly indicates that the parties did not recognise the purported deemed tenancy of the Petitioner.


5. Before we come to the deemed tenancy of the Petitioner, which is the real nub of the controversy, since both submissions of the Petitioner turn on it, we may dispose of a couple of subsidiary points. The first is the submission of Mr. Vachasundar that the non-obstante clause of Section 24 takes precedence over the exempting clause contained in Section 3(1) (b) of the Act. Sections 3(1)(b) and 24 are quoted below:


"3. Exemption.


(1) This Act shall not apply ----


(b) to any premises let or sub-let to banks, or any Public Sector Undertakings or any Corporation established by or under any Central or State Act, or foreign missions, international agencies, multinational companies, and private limited companies and public limited companies having a paid up share capital of more than rupee one crore or more.


Explanation. - For the purpose of this clause the expression "bank" means,-


(i) the State Bank of India constituted under the State Bank of India Act, 1955;


(ii) a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959;


(iii) a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 or under section 3 of the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1980; or


(iv) any other bank, being a scheduled bank as defined in clause (e) of section 2 of the Reserve Bank of India Act, 1934."



"24. Landlord entitled to recover possession of premises given on license on expiry.


(1) Notwithstanding anything contained in this Act, a licensee in possession or occupation of premises given to him on license for residence shall deliver possession of such premises to the landlord on expiry of the period of license; and on the failure of the licensee to so deliver the possession of the licensed premises, a landlord shall be entitled to recover possession of such premises from a licensee, on the expiry of the period of license, by making an application to the Competent Authority, and, the Competent Authority, on being satisfied that the period of license has expired, shall pass an order for eviction of a licensee.


(2) Any licensee who does not deliver possession of the premises to the landlord on expiry of the period of license and continues to be in possession of the licensed premises till he is dispossessed by the Competent Authority shall be liable to pay damages at double the rate of the license fee or charge of the premises fixed under the agreement of license.


(3) The Competent Authority shall not entertain any claim of whatever nature from any other person who is not a licensee according to the agreement of license.


Explanation - For the purposes of this section,-


(a) the expression "landlord" includes a successor-in-interest who becomes the landlord of the premises as a result of death of such landlord; but does not include a tenant or a sub-tenant who has given premises on license;


(b) an agreement of license in writing shall be conclusive evidence of the fact stated therein."


As is obvious, Section 3(1)(b), which exempts premises, as opposed to relationships, from the provisions of the Act where a government company or a public sector undertaking is a tenant, is a fundamental provision of the Act, which operates vis-a-vis each and every provision of the Act and there is no reason why it should not operate even as regards Section 24 of the Act. If any premises are exempt from the application of the Act, there is no reason why such exemption shall not extend to Section 24. A non-obstante clause, usually appended to a provision of law as an opening, is designed to give the enacting part of the provision, in case of a conflict with either other provisions of the same enactment or other enactments, an overriding effect over these latter provisions. It is, by its very nature, premised on a conflict; if there is no conflict between the other provisions contained within the ambit of the non-obstante clause and the enacting part of the clause, there is no question of overriding these other provisions or, in other words, giving effect to the non-obstante clause. Once it is clear that each and every premises, covered by Section 3(1)(b), are excluded from the operation of the Act, there is no possibility of any conflict as between the application of Section 24 and any other provision of the Act to such premises. The provisions of the Act (including Section 24) are uniformly inapplicable to such premises. The non-obstante clause within Section 24 merely implies that as for premises to which the Act applies, whenever there is any conflict between the other provisions of the Act and section 24, it is the latter that would prevail. There is, thus, no question of Section 24 taking precedence over Section 3(1)(b).


6. In our case, the Competent Authority, in the first place, has come to a categorical conclusion, whilst deciding Issue No. 7 framed by it, that it was established that the suit premises stood exempted under Section 3(1)(b) of the Act. (The position of the Petitioner as a public sector undertaking has not been disputed by learned Counsel for Respondent No. 3.) The Competent Authority has, accordingly, answered Issue No. 7 in the affirmative. Strangely, in the same breath, the Competent Authority appears to have entertained the eviction application of the Petitioner herein in respect of the suit premises. It is axiomatic that, as I have explained above, if the provisions of the Act do not apply to any premises let or sub-let, so would the provisions of Section 24 of the Act. There is no way the Competent Authority could entertain an application in respect of such premises.


7. Mr. Wachasundar, secondly, submits that there is no case of deemed tenancy in the facts of the present case. Learned Counsel submits that the provisions of the old rent control law, namely, the Bombay Rent Act have been replaced by the new law of rent control, namely, Maharashtra Rent Control Act, 1999 ("Act"). Learned Counsel submits that since there is a wholesale repeal followed by a new legislation on the same subject, only those matters under the repealed law, which are saved by Section 58 of the repealing Act, would stand saved. Learned Counsel submits that deemed tenancies of original licensees are not saved under the provisions of Section 58. Learned Counsel relies on the Supreme Court judgment in the case of State of Punjab vs. Mohar Singh Pratap Singh MANU/SC/0043/1954 : AIR 1955 SC 84 in support of his submission. He also relies on a decision of Allahabad High Court in Mahabir Sugar Mills Pvt. Ltd. vs. The Union of India MANU/UP/0057/1975 : AIR 1975 Allahabad 239. Whenever there is a repeal of an enactment, consequences of such repeal, which are laid down in Section 6 of the General Clauses Act, follow, unless as the section itself says, the repealing Act evinces a different intention. What the Supreme Court said in Mohar Singh Pratap Singh's case is that in the case of a simple repeal, there is scarcely any room for expression of a contrary opinion, but when the repeal is followed by a fresh legislation on the same subject, Courts would undoubtedly have to look to the provisions of the new Act for the purpose of determining whether they indicate a different intention. When courts thus look to the provisions of the new law, they would actually be expected to read the new law as a whole to find out if it evinces any different intention, thereby ruling out the application of Section 6 of the General Clauses Act. Looked at it from this point of view, the new Act does not at all indicate that it seeks to do away with all legal consequences which have taken place under, or legal relationships born out of, the provisions of the old law. If anything, it actually affirms such consequences or relationships. The most palpable expression of such affirmation is in the definition of "tenant" in the new Act. Sub-Section (15) of Section 7 of the new Act, which defines the expression 'tenant', includes within it a person, who is a deemed tenant. Deemed tenancy is not provided under the new Act; it is a concept which can only be treated as having been borrowed from the old Rent Act. In other words, it provides that those persons, who had become deemed tenants under the provisions of the then existing law, are to be included within the definition of 'tenant' under it. Our Court, in the case of Hindustan Ferrodo Ltd. vs. Hari Lachman Hasija MANU/MH/0226/2003 : 2003 (4) Mh.L.J. 50, has considered this particular aspect of the matter. That was a case, where the petitioners before this court were in possession of suit premises as licensees as of 1 February 1973, claiming to have acquired the status of deemed tenant as from that date. The court held that their status as deemed tenant was not taken away or put an end to by virtue of the provisions of Section 58 or Section 3 of the Maharashtra Rent Control Act. The petitioners before the court in Hindustan Ferrodo were a company, which fell within the ambit of clause (b) of Sub-Section (1) of Section 3 of the new Rent Act, and thus, were not entitled to claim benefits, privileges or protection under the new Rent Act and yet, our Court said that the character or status acquired by them as a deemed tenant under the old Act continued and unless the same was put to an end by a procedure known to law, they could not be evicted from the premises. This clearly puts paid to any controversy in that behalf.


8. That brings us to the main controversy in the matter, that is to say, whether the suit premises could be said to be let to the Petitioner on the basis of its deemed tenancy under the Bombay Rent Act. As I have already held above, if that is so, the premises would be exempt from the application of the Act and there would be want of jurisdiction in the Competent Authority to order eviction. So also, the deemed tenancy would completely negate the case of licence and its expiry, and thus, even on merits, no order of eviction could lie.


9. There is no dispute that the Petitioner, as a licensee under a subsisting licence, was in possession of premises being not less than a room as on 1 February 1973 and if that is so, as a matter of law, it was entitled to the status of a deemed tenant under Section 15A of the Bombay Rent Act. What Mr. Wachasundar submits is that whatever may be the position of law, the conduct of the parties, as envisaged by the documents executed by them since February 1973, clearly indicates that they did not recognise any deemed tenancy as between Savitri Dubey or her successor on the one hand and the Petitioner on the other.


10. The effect of Section 15A of Bombay Rent Act does not depend on the volition of the parties. Section 15A commences with a non-obstante clause; it provides for the result indicated therein notwithstanding anything contained elsewhere in the Bombay Rent Act, or any other law for the time being in force or indeed in any contract between the parties. It is a legal consequence, which is provided by a statutory enactment, and which follows irrespective of volition of the parties, which it has nothing to do with. Even otherwise, the law of rent control, made in public interest, does not admit of the parties contracting out of its provisions. It is, therefore, impermissible to contend that the contracts between the parties executed after 1 February 1973 nullify the effect of Section 15A of the Rent Act.


11. There is support for the above proposition in the case of Natraj Studios (P) Ltd. vs. Navrang Studios MANU/SC/0477/1981 : (1981) 1 SCC 523 decided by the Supreme Court. In that case, the Supreme Court was considering the exclusive jurisdiction of the Court of Small Causes at Bombay in the face of an arbitration agreement between the parties. The Court held as follows (Para 17):


"The Bombay Rent Act is a welfare legislation aimed at the definite social objective of protection of tenants against harassment by landlords in various ways. It is a matter of public policy. The scheme of the Act shows that the conferment of exclusive jurisdiction on certain courts is pursuant to the social objective at which the legislation aims. Public policy requires that contracts to the contrary which nullify the rights conferred on tenants by the Act cannot be permitted. Therefore, public policy requires that parties cannot also be permitted to contract out of the legislative mandate which requires certain kind of disputes to be settled by Special Courts constituted by the Act. It follows that arbitration agreements between parties whose rights are regulated by the Bombay Rent Act cannot be recognised by a court of law."


12. Mr. Vachasundar, however, relies on the case of Alban Joseph Gonsalves vs. Rallis India Ltd. MANU/MH/1657/2003 : 2004 Bom.R.C. 559 decided by a learned Single Judge of our court. So far as the issue being considered here is concerned, I must say, the facts of that case were in pari materia. The licensee in that case (respondent before the court) was in possession of the suit premises, which was not less than a room, under a subsisting licence as of 1 February 1973. There were, however, leave and licence agreements executed between the parties even after 1 February 1973, as in our case. (Right from 1967 to 1996, there were such agreements.) The learned Judge held that there was waiver, in the premises, of the licensee's right to claim deemed tenancy. Two reasons appear to have weighed with the learned Judge. The first was the statement of law in the case of Martin & Harris Ltd. vs. VI Additional District Judge MANU/SC/0901/1998 : 1998 RCR 1. The learned Judge quoted the following observations from Martin & Harris:


"On the facts of the present case there is no escape from the conclusion that the said benefit of protection, for reasons best known to the appellant, was waived by it though it was alive to the said contention as it was mentioned at the outset in the written statement filed before the prescribed authority. Thereafter it was not pressed for consideration."


"This type of protection to the tenant would naturally be personal to him and could be waived."


"A mandatory provision can be waived if the same be aimed to safeguard the interest of an individual and has not been conceived in the public interest."


The learned Judge also quoted judgments (on which Mr. Vachasundar has also placed strong reliance here) which hold that under Section 13A2(3)(b) of the Bombay Rent Act (which is in pari materia with Section 24 of the Act), a leave and licence agreement is conclusive proof of the facts contained therein. Based on this law, the learned Judge held in favour of the landlord that there was a case of waiver.


13. The learned Single Judge in Alban Joseph Gonsalves (supra) does not appear to have applied his mind to the public policy aspect of the law of rent control, which was considered and applied by the Supreme Court in Natraj Studios (P) Ltd. (supra). That case was not cited before the learned Judge. Secondly, Section 15A itself has a non-obstante clause, which, as I have noted above, operates notwithstanding anything contrary contained in any inter parties agreement. In other words, the provision of Section 15A cannot be defeated or overriden by a private contract between the parties. Even this aspect does not appear to have been addressed by the learned Judge in Alben Joseph Gonsalves (supra). In the Supreme Court case of Martin & Harris Ltd. (supra), relied upon by the learned Judge, the provision of the particular rent control legislation (the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972), which was said to be waived, was about impermissibility of filing of an eviction application before expiry of six months from the date of the service of the suit notice as required by the first proviso to Section 21(1) of the U.P. Act. Though the contention that the eviction suit could not have been filed before expiry of six months of service of notice was raised by the tenant in his written statement, it was not pressed at the subsequent stages of the trial. The contention was said to have been consciously waived by the tenant. What weighed with the Supreme Court was that there was no public interest in the provision itself; it was exclusively for the protection and benefit of the tenant concerned; and it could have been waived. Secondly, as the Supreme Court noted, had the objection been pressed by the tenant at the stage of trial, the landlord could have withdrawn the suit under Order XXIII Rule 1, Sub-Rule (3) of CPC with liberty to file a fresh suit on the same cause of action after expiry of six months' period from the date of service of notice; that opportunity was lost to the landlord, as the tenant did not pursue this contention any further. These facts are clearly distinguishable from the facts of our case, or, for that matter, the facts in Alban Joseph Gonsalves. Here, as in Alban Joseph Gonsalves, the waiver is claimed in respect of a substantial provision of law enacted for the benefit of licensees as a class and in public interest; it cannot be termed as a private benefit of a procedural provision, which could be waived. Besides, as I have noted above, the non-obstante clause at the beginning of Section 15A makes a vital difference and makes its enacting provision incapable of being overridden by a private contract. (This is not a case, where, as a plea of fact, it is claimed that there was a physical surrender of tenancy and creation of a fresh licence post such surrender. What is claimed is that the benefit of Section 15A was waived by the licensee.)


14. The conclusive nature of the facts stated in the agreements of leave and licence (after 1 February 1973) is no answer to the licensee's plea of deemed tenancy either. There is no question here of any facts. The predecessors of Respondent No. 3, no doubt, did purport to create a licence in favour of the Petitioner despite the latter's legally acquired status of a deemed tenant. The question is, whether this licence has the effect of defeating the licensee's legally acquired status of deemed tenancy. That is a question of law. The agreement of licence may be a conclusive proof of the facts stated therein, but the law cannot be decided by the parties through their statements. That is not a matter of volition or individual contract.


15. If and to the extent the judgment of the learned Single Judge in Alban Joseph Gonsalves (supra) does not take into account the non-obstante clause with which Section 15A opens as also the binding judgment of the Supreme Court in Natraj Studios (P) Ltd. (supra), it is per incuriam and does not bind this Court.


16. The sum and substance of the above discussion is that in view of the deemed tenancy of the Petitioner herein, the suit premises are exempted from the application of the Act and as a result, the Competent Authority lacked jurisdiction to entertain any application under Section 24 of the Act in respect of the premises. The impugned orders of the Competent Authority and the Additional Commissioner, thus, deserve to be quashed and set aside.


17. Rule is accordingly made absolute and the petition is allowed by quashing and setting aside the impugned orders dated 15 June 2018 and 24 June 2019, respectively, passed by the Competent Authority (Respondent No. 2) and the Additional Commissioner (Respondent No. 1) and dismissing the application being Application No. 13 of 2005 filed by the predecessor of Respondent No. 3 (late Savitri Dubey).


18. In view of the interim order passed on 17 July 2019, the Petitioner has deposited double the amount of compensation, that is to say, an aggregate sum of Rs. 1,46,200/- in this court. Since the impugned orders of the Competent Authority and Additional Commissioner have now been set aside, one portion of this amount, representing penalty, can be withdrawn by the Petitioner. Accordingly, it is ordered that the Petitioner may be permitted to withdraw Rs. 73,100/- from out of that amount together with corresponding accrued interest. The balance amount together with corresponding accrued interest, if any, be paid to Respondent No. 3. It is made clear that if Respondent No. 3 has any other remedy in law to evict the Petitioner, this order shall not prejudice such remedy.




 

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