Dismissed¶100

B. M. Lall (Dead) by L. Rs. v. Dunlop Rubber & Co. Ltd. & Ors.

Supreme Court18 Jul 19671967 INSC 154 · [1968] 1 S.C.R. 231967 INSC 154

Case brief

AI extract

What is this about?

Licence versus tenancy — employee occupying company-owned flat under standard-form service agreement held licensee, not tenant; company's 'own occupation' under s. 13(1)(f), West Bengal Premises Tenancy Act 1956, satisfied through officer-licensees; substance prevails over label; exclusive possession not decisive; lease defined by s. 105 Transfer of Property Act, licence by s. 52 Indian Easements Act; Supreme Court of India, Civil Appeals Nos. 2253 and 2254 of 1966, Bachawat J. (Shelat and Bhargava JJ. concurring), decided July 18, 1967; appeals from Calcutta High Court decree dated July 5, 1965; appeals dismissed, no order as to costs.

What did the court decide?

None; both civil appeals dismissed with no order as to costs. ¶100

B. M. Lall (Dead) by L. Rs. versus Dunlop Rubber & Co. Ltd. & Ors. — Supreme Court (1968) — LawSathi Research

What the court decided

AI extract

Outcome

None; both civil appeals dismissed with no order as to costs.

¶100

Issue for consideration

Whether, on a construction of the standard form of agreement signed between the respondent companies and officers allotted flats, the officer occupied the flat as a tenant or as a licensee, and consequently whether the officer's occupation amounted to the company's 'own occupation' within s. 13(1)(f) of the West Bengal Premises Tenancy Act, 1956.

¶10

Court's answer

The transaction is a lease if it grants an interest in the land, and a licence if it gives only a personal privilege with no interest in the land; the question is one of substance, not of the label the parties put upon the transaction.

¶76

Ratio / Principle

Under the standard form agreement of respondent No. 2, the officer's occupation ceased on termination of employment, transfer away from Calcutta, or death, and the company could allot another flat or assign the premises during his absence.

¶93

Key takeaways

The agreement, on its true construction read in the light of surrounding circumstances, operated as a licence and not as a tenancy; it created no interest in the land and gave only a personal privilege to the servant to occupy the premises for the greater convenience of his work.ratio¶93
The High Court rightly held that the respondents reasonably required the flats for respondent No. 2's own occupation through officers holding the flats on its behalf as licensees.ratio¶99
The Court expressly declined to decide whether reasonable requirement by respondent No. 1 was also necessary, as that issue was not necessary for the disposal of the appeal.

Detailed headnote1 paragraphs

West Bengal Premises Tenancy Act, 1956 (West Bengal Act XII of 1956), s. 13(1)(f) — Limited companies purchased 'King's Court', Calcutta, to house their staff and let flats to officers under a standard-form agreement permitting occupation during employment at Calcutta, terminable on termination of employment, transfer away from Calcutta or death, with liberty to allot another flat or assign the premises, and an express stipulation that no landlord-and-tenant relationship be created — Held, dismissing the appeals: the agreement on its true construction operated as a licence and not a tenancy; it created no interest in the land and gave only a personal privilege to occupy for the greater convenience of the officer's work; the test is substance, not the label chosen by the parties, and exclusive possession is not decisive (Errington v. Errington and Woods, Associated Hotels of India Ltd. v. R. N. Kapoor and Addiscombe Garden Estates Ltd. v. Crabbe referred to; Nippon Menkwa Kalmshiki v. F. Portlock referred to; Torbett v. Faulkner relied on). The officers held the flats on behalf of respondent No. 2, Guest Keen and Williams Ltd., as licensees, so its requirement of the flats was a requirement for its 'own occupation' under s. 13(1)(f). Whether requirement by respondent No. 1 was also necessary was left open. No order as to costs.

¶1

¶2

B. M. LALL (DEAD) BY L RS.

¶3

¶4

DUNLOP RUBaER A CO. L1D. & Oils.

¶5

'l_uly 18, .1967

¶6

¶7

[R. S. 8AOIAWAT, J. M. SHELAT AND V. BHARGAVA, JJ.)

¶8

West Benoal Premises Tenancy Act (XII of 1956)-s. 13(1) _(/)- Limited Company buyina premises f<>r housinQ o.tlicers-Whether o.tlicer'r occupation that of tenant or 'licensee'-and wheth.er Company's 'own occupation'.

¶9

The respondent limited companies purchased certain premises In Calcutta for the purpose of providing residential accommodation C for their staff. They instituted suits against the appellants for the recovei;y of t;••te•i<>n of o flats on the ground that as these fla_ts were required or housing their officers, they were reasonably required for the occupation of the respondents within the meaning of s. 13(1) (f) of the West Bengal Premises Tenancy Act, 16.

¶10

The Trial Qourt dismissed the suits but the High Court allowed an appeal and held that a limited company can be a landlord wit!rln D the meaning of s. 13(1) (f) and can reasonably require the premises . for its own occupation; and that where there are several landlords, the requirement of the premises by the landlords for the occupation of one or more of them is sufficient to bring the case within s. 13(1) (f). In the appeal before the Supreme Coilrt the only question for determination was whether on the construction of the terms of an agreement which was normally signed between each of the respondents and any officer who was &Dotted a flat, the officer oceupied the flat E as a tenant or a licensee, and therefore whether the officer's occupation would be the company's own occupation within the meaning of clause (f).

¶11

Held: Dismissing the appeal: The High Court !lightly held that the respondent reasonably required the flats for the second respondent oomp&IJY's own occupation through officers holding flats m Its behalf as licensees. [29B]

¶12

¶13

Under the standard form of agreement, the occupation of the officer ceased on the termination of his employment, upon his death, or on his transfer and the company was at liberty to allot him•· any other flat or to assign the premises to any other employee or other person during his absence. In view of these and its other terms the agreement operated as a license and not as a tenancy. It created no interest in the land and gave only a .personal privilege or license to G the servant to occupy thei premises for the greater convenience of his work. f28F-Hl

¶14

Under s. 105 of. the Transfer of Property Act, a lease is the transfer of a right to enjoy the premises whereas under s. 52 of the Indian Easements Act a license is a privilege to do something on. the premises which otherwise would be unlawful. The transaction is a leaae If It gralltll an Interest in the land; it is a licehse If It gives a perso- B nal privilege with no interest in the land. [27E-F] . Errington v. Errington and Woods, [1952] 1 K; B. 290, 298: As.w- cia~a Hotels of India Ltd. v. R. N. Kapoor. [1960] 1 S.C.R. 368; 381-5: Add1SCombe Garden Elfate1 !.td. and Anr. v. Crabbe and Ors. [1958] 1 Q.B. 513, S2S; referred to.

¶15

[1968] I s.0.11.

¶16

S'CIP!lmlO OOUllT BBPORTS

¶17

A service oceupatlon Is a 1>articular kind of license whereby a A servant is required to live in the premises for the better performance of hia duties. Nbw It is also settled law that a servant may be a licensee though he may not be in service occupation. [2'7H)

¶18

Nippon Menkwa Kalmshiki v. F. Portlock, A.I.R 1922 Born. ?O; and Torbett v. Faulkner, [1952] 2 T .LR. 659, 560; referred to. OVIL APPELLATE JURISDICl10N: Civil Appeals Nos. 2253 B and 2254 of 1966.

¶19

Appeals Crom the judgment and decree dated July 5, 1965 of the Calcutta High Court in Appeals from Original Decrees NOi:. 490 and 489 of 1960 respectively.

¶20

Sarjoo Prasad and R. Ganapathy Iyer, for the appellant (in 0 C. A. No. 2253 of 1966).

¶21

Devaprosad Chaudhury and Sukumar Ghose, for the appellant (Jn C. A. No. 2254 of 1966).

¶22

A. K. Sen, S. K. Gamb/lir and D. N. Gupta, for the respon· dents (in both the appeals).

¶23

The Judgment of the Court was delivered by

¶24

¶25

lacUwat, l~The respondents are limited companies having their head offices in Calcutta. On May 15, 1953, the two Companies jointly purchased the premises known as 'King's Court' at No. 46B Chowringhee Road, Calcutta, for the purpose of providing residential accommodation for their staff. They instituted a suit against one B. M. Lall, since deceased, predecessor of the E appellants in C. A. No. 2253 / 66 for recovery of possession of flat No. 8 in the aforesaid premises in his occupation as a tenant, and another suit against the appellant in C. A. No. 2254/66 for recovery of possession of flat No. 9 rn his occupation as a tenant, on the ground that they reasonably required the fiats for the occupation of their staff. By Sec. 13(1) of the West Bengal Premises Tenancy F Act, 1956, (West Bengal Act XII of 1956), the tenants are protected from eviction except on one or more of the grounds specified in the sub-section. The grounds mentioned in clause (f) of S. 13(1) are:-"

¶26

"Where the premises are reasonably required by the landlord either for purposes of building or re-building or for making thereto substantial additions or alterations or for his own occupation if he is the owner or for the occupation of any person for whose benefit the premises are held;" ......

¶27

¶28

The respondents claim that they reasonably require the flats for their own occupation. The trial court c&missed the tuitL Prem these decrees, the respondents filed appeals in the High Court at B Calcutta. The High Court set aside the decrees passed by the trial court and decreed the suits. The present appeals have been filed under certificates granted by the High Court.

¶29

LALL t>. J>ma.0P BUBBBB 00. (~ /,)

¶30

211

¶31

A The High Court held that (!) a limited company can be a landlord within the meaning of s. 13(l)(f) and can reasonably require the premises for its own occupation. and (2) where there are several landlords, the requirement of the premises by the landlords for the occupation of one or more of them is sufficient to bring the case within Sec. 13(1)((). These findings are not challenged in this Court. Before us it is also conceded by all the appearing

¶32

B parties that the respondents are entitled to a decree for recovery of possession of the two tlats under sec. 13(1 )((), if they establish that they reasonably require the tlats for the occupation of respondent No. 2, Guest Keen and Williams Ltd. only.

¶33

The two courts concurrently foond that respondent No. 2

¶34

reasonably requires the tlats for the occupation of its stall. The

¶35

C Company is under an obligation to provide free residential accommodation for its officers in properties either rented or owned by it. In view of the acute scarcity of accommodation in the city, it is not possible to find other convenient tlats for officers who were transferred to the city from other stations. Suitable provision for the accommodation of officers visiting Calcutta on tour is a matter

¶36

D of necessity. The sole question is whether the occupation by its stall officers would be the company's own occupation. The point of dispute on which the two courts differed is whether the officer to whom the tlat would be allotted would occupy it as a tenant or as . a licensee. It is common case before us that if he is a licensee his occupation would be on behalf of the company and its requirement

¶37

E would be for its own occupation. On the other hand, if he is a tenant his occupation would be on bis own account and the company's requirement would not be for its own occupation. It appears that the officers provided with accommodation by the Company are required to execute agreements in a standard form. The terms and conditions of the agreement are as follows : -

¶38

I. The Licensee whilst in the employment of the Company at

¶39

r' Calcutta and for the sole purpose of the Licensee being more conveniently situated in such employment is hereby permitted by the Company to occupy as a Licensee during the term of bis employment at Calcutta Flat No. 25, situated in the Company's property known as Kings Court, Calcutta, or such other flat as may be allotted to the

¶40

G Licensee at the company's discretion (hereinafter referred to as "the said permises") subject to the terms and conditions hereinafter contained.

¶41

In the event of the Company deciding to levy License fees and the Company reserves the right to do so without prior notice, the Licensee shall pay to the Company each

¶42

B month such License fees which may be varied by the Company from time to time at its discretion and the Company shall be eatitled to deduct such License fees from the emoluments or to become due to the Licensee from Company.

¶43

¶44

[1968) 1 s.o.a.

¶45

BUPllBllll OOUBT UPORTB

¶46

3. The occupation of the said premises by the Licensee is a condition of his employment at Calcutta with the com· pany and such right of occupation shalJ forthwith cease upon his employment being tenninated by the company or on his leaving such employment or on his transfer away from Calcutta or on his death whichever is earlier. Notice given by the Company to the Licensee of termina· tion of employment or of transfer away from Calcutta shall be deemed to· be sufficient notiee of revocation of the licence.

¶47

The Company shall be entitled to determine forthwith the licence hereby granted if the licensee shall fail to comply with any of the terms and conditions herein contained and on his part to be observed and non-compliance with the terms and conditions herein contained may be deemed by the company to be misconduct.

¶48

5. These presents shall not or shall not be deemed to create any relationship of landlord and tenant between the company and the licensee in respect of the said premises.

¶49

The company shall pay all present and future revenue and municipal taxes payable in respect of the said premises and keep the said premises in repair during the continuance of these presents.

¶50

Conditions to be complied with by the licensee: - I. The Licensee shall pay the cost of electricity and gas con· Sllllled within the said premises and the company may at its discretion deduct such charges from the emoluments due or to become due to the Licensee from the compeny.

¶51

The Licensee shall not cause or permit to be ca\19C any disturbance or nuisance in or in the vicinity of the said premises.

¶52

No structure or alteration temporary or permanent, other than common ornaments shall be erected, fixed or carried out by the Licensee in the said premises or garden· without prior written permission from the company. The Licensee shall not do or permit to be done any act or thing which causes damage or is liable to cause damage to the said premises. The cost of rectification of such damage will be recoverable in accordance with condition (I).

¶53

Alterations of or extensions to the installed electrical circuit are strictly prohibited.

¶54

S. No notice advertisement or placard other than the Licensee's own name. which may be fixed to the main door of the said premises, shall be fixed or permitted to be fixed to any portion of the said premises.

•

LALL "· nmoP RUBBER co. (Baohawat, J.)

¶65

A 6. The said. premises shall be used entirely··as-a dwelling place and no business or trade shall be carried out on the said. premises or any part• thereof· without prior written permission from the company.'

¶66

. - -

¶67

The Licensee will not permit any persons other than his own personal servants to occupy ·the ·servants' quarters

¶68

B allotted .. to him by the company and, will not permit the garage allotted to him· by the company to be· used for residential purpose.

¶69

·The Licensee shall not take in any paying. guest without prior written pemiission ·from the company · and' such permission shall be deemed to have been withdrawn when

¶70

c the paying guest ceases' to· reside. ·

¶71

The Lice.nsee shail not le; or pa~ with possession of the whole or any part of the said premises to any person, firm or company. During periods when the· Licensee· is absent from Calcutta the Company, may assign the ·premises to any other employee or suitable person at its sole . discre-

¶72

D tion. ·

¶73

The question is whether the· occupier under this agreement

¶74

i~ a tenant or a licensee. The distinction between a· lease and a license is· well known. Sec. 105 of the Transfer of Property Act defines a lease. Sec. 52 of the Indian Easements Act defines a

¶75

E license. A lease ...... is the transfer of a right to enjoy the premises; whereas· a license is a· privilege to· do something on the premises which otherwise would be unlawful. H the agreement is in· writing, it is a question of construction of the agreement having regard to its terms and where its language is·ambiguous;·having regard to its' object, and the circumstances under which· it was executed whether the rights of the occupier are those of a· 1essee or a licen-

¶76

F see. The transaction is a lease, if it. grants an interest in the land; it is a license if it gives a personal privilege· with no interest in the land. The question is not of words but of· substance and the label which, the parties choose to put' upon the transaction,· though relevant, is not decisive .. The· test of exclusive possession is not decisive, see Errington v. Errington and. Woods,(') Associated

¶77

¶78

G Hotels.of India Ltd. v. R: N. Kapoor,(') though it is a very important indication in favour of tenancy. See Addiscombe , Garden Estates.Ltd ... and Anr. v. Crabbe and Ors.('). A servant in occupation of premises belonging to his master, may be a tenant or a licensee, see Halsbury's Laws of England, Third Edition, Vol. 23, art. 990. p. 411. A service occupation is a particular kind of license whereby· a servant is required to live in the premises for

¶79

H the better performance of his duties. Formerly, the occupation of the servant was regarded as a tenancy unless it was a service occu-

¶80

(') [1~521 l K.B. 290, 298. (') [19581 l Q,B. 513, 525,

¶81

(¹ ) [1!681 S.C.R. 368, 381-5.

¶82

------·-·---- ·----------~---

¶83

[1968] 1 s.o.L

¶84

¶85

S'Cll'Bm OOUBT :uPOlml

¶86

pation, see Nippon Menkwa Kalmshiki v. F. Portlock('). Now it A is settled law that a servant may be a licensee though he may not be in service occupation. In Torbett v. Fmtlknerri Denning, L. J. said:

¶87

"A service occupation is, in truth, only one form of licence. It is a particular kind of licence whereby a servant is required to live in the house in order the better to do his work. But it is now settled that there are other kinds of licence which a servant may have. A servant may in some circumstances be a, licensee even though he is not required to live in the house, but is only permitted to do so because of its convenience for his work-see Ford v. Langford ((1949) 65 The Times L.R. 138), per Lord Justice Asquith, and Webb, Ltd. v. Webb (unreported, October 24, 1951)-and even though he pays the rates, Gorham Contractors, Ltd. v. Field (unreported, March 26, 1952), and even though he has exclusive possession, Cobb v. Lane (1952 I The Times L.R. 1037)". The Lord Justice then continued:

¶88

"If a servant is given a personal privilege to stay in a house for· the grea.ter convenience of his work, and it is treated as . part and parcel of his remuneration, then he is a licensee, even though the value of the house is quantified in money; but if he is given an interest in the land, separate and distinct from his contract of service. at a sum properly to be regarded as a rent, then he is a tenant, and none the less a tenant because he is also a servant. The distinction depends on the truth of the relationship and not on the label which the_parties choose to put UJl<>ll it: see Facchini v. Bryson-0952 l The Times L.R. 1386)."

The last observation covers the present case. Under the standard r form of agreement of respondent No. 2, the occupation of the officer ceases not only on the termination of his employment but also on his transfer from Oilcutta and on his death. The company is at liberty to allot any other fiat to the officer. Durlnlf the absence of the servant from Calcutta, the company is at liberty to assign the premises to any other employee or other person. The a accommodation is free, but the Company reserves the right to levy license fees. All the terms of the agreement are consistent with the _expressed intention that the officer is permitted to occupy the fiat as a licensee and nothing in the agreement shall be deemed to create the relationship of landlord and tenant. The agreement on its true construction read in the light of the surrounding circum- B stances operates as a license and not as a tenancy. It creates no interest in the land. Jt gives only a personal privilege or license

¶94

(') A.I.R. 1922 Dom. 70.

¶95

(¹ ) [ 1961] 2 T.L.R. M8,641t,

¶96

¶97

LALL 11. DUNLOP Rl'BBER co. (Buhawat J,)

¶98

A to the servant to occupy the premises for the grea.ter convenience of his work.

¶99

The High Court rightly held that the respondents reasonably require the fiats for respondent No. 2's ow.n occupation through officers holding the fiats on its behalf as licensee. If so, it is conceded that it is not necessary for the respondents to establish the B reasonable requirement by respondent No. I also for its own occupation. The High Court decided this issue also in favour of the respondents. As the decision on this issue is not necessary for the disposal of this appeal, we express no opinion on it. The High Court rightly decreed the suits.

¶100

C In the result, the appeals are dismissed. There will be no order as to oosts.

¶101

R.K.P.S.

¶102

Appeals dismissed.

B. M. Lall (Dead) by L. Rs. v. Dunlop Rubber & Co. Ltd. & Ors.

Case brief

What is this about?

What did the court decide?

B. M. Lall (Dead) by L. Rs. v. Dunlop Rubber & Co. Ltd. & Ors.

Case brief

What is this about?

What did the court decide?

Why is it important?

What the court decided

Issues for consideration

Cases cited

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Procedural history

Parties & counsel

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