Jiwaji Rao Cotton Mills Ltd. vs Aman

A.H. Khan, J.—The facts giving rise to this second appeal in short are that the Defendant was in the employment of the Plaintiff company that as a servant of the Company he was given a quarter situated in the compound of the Company to live in. He was given this quarter for the term of his service, that the Company did not charge him any rent, but only recovered Rs. 1/12/-as maintenance charges. It was further alleged in the plaint that after the termination of the service of the Defendant, the Company served upon him a notice asking him to vacate the quarter but the Defendant did not comply, hence this suit for his eviction. The defendant resisted the suit on the ground that he was a tenant and not a licensee of the Plaintiff Company. The trial Court after recording the evidence of the parties held that the Defendant was a licensee and ordered his eviction in consequence. On appeal the first appellate Court held that the Defendant was not a licensee but a tenant and rejected the Plaintiff''s suit. This is now Plaintiff''s second appeal.

The question for consideration in this appeal is whether the Defendant is a licensee or a tenant.

The learned appellate Court held in para 6 of its judgment that from the evidence on record it is established that (i) the quarter in dispute is situated in the permises of the Company, (ii) that the defendant was in service of the (sic) and was therefore given the quarter for the term of his service, (iii) that the Plaintiff did not charge any rent for the quarter but the amount of Rs. 1/12/- was being recovered from the Defendant only as maintenance charges of the accommodation offered to him, (iv) and that the Plaintiff had control and supervision over the quarter.

The question is whether in the face of these facts, the Defendant is a tentant or licensee of the Plaintiff. Their Lordships of the Supreme Court in a recent-decision in Associated Hotels of India Ltd. Vs. R.N. Kapoor, after seating the difference between a lease and licence, have observed that the intention of the parties was the real test for ascertaining whether a person was a licensee or a tenant.

In view of the finding of the first appellate Court stated above, there is no doubt that no interest in the property was created and therefore it was not a lease. At one time, it was thought that the feature which distinguished a licence from a lease was that when there was exclusive possession of the property, the transaction amounted to a lease. This theory now stands exploded. Their Lordships of the Supreme Court (supra) have considered this aspect of the matter and have observed that if a party gets exclusive possession of the property, prima facie he is considered to be a tenant, but the circumstances may be established to negative the intention to create a lease.

It has been argued by the learned Counsel for the Respondent that the Company has built these quarters for its employees and that these quarters are allotted to the employees during their employment. On the termination of services of an employee, when another man is employed, he is given that quarter.

If the quarter in dispute was given to Defendant, in the circumstance held to be proved by the learned Additional District Judge, then there is no manner of doubt that the employee is a licensee and not a tenant. What is of significance is that no rent was charged but merely maintenance charges were levied on the occupant.

Mr. Inamdar, learned Counsel for the Respondent, has referred me to AIR 1944 42 (Privy Council) . This case can however be distinguished on the ground that the rent was charged of the premises let out and it was further a condition of the lease that the occupier could also sublet it. The Supreme Court ruling, however, referred to above appears to me to be more apt and helps in determination of the question under consideration. Besides that the point involved in the Privy Council case does not refer to the distinction between a lease and licence. It related to the fixation of the valuation of the property assessable u/s 127 of the Municipal Corporation Act.

A point not urged by any of the learned Counsel for the parties, nor, noticed by any of the courts below is the existence of Section 4(k) of the Madhya Pardesh Accommodation Control Act. Clause (k) runs thus: -

That the accommodation was let to the tenant for use as a residence by reason of his being in the service of the landlord and that the said tenant has ceased, whether before or after the commencement of this Act, to be in such service.

From this it is clear that even if the Defendant is a tenant and relation between him and the Plaintiff-Company is one of a lessee and a lessor, the Defendant on the ceasing of his service with the Company (which is an admitted fact) is liable to eviction.

For reasons stated above, the appeal is allowed with costs and setting aside the judgment of the learned Additional District Judge, the judgment of the trial Court is restored.