Full Judgment Text
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PETITIONER:
SANWARMAL KEJRIWAL
Vs.
RESPONDENT:
VISHWA COOPERATIVE HOUSING SOCIETY LTD. & ORS.
DATE OF JUDGMENT08/03/1990
BENCH:
AHMADI, A.M. (J)
BENCH:
AHMADI, A.M. (J)
SHETTY, K.J. (J)
CITATION:
1990 AIR 1563 1990 SCR (1) 862
1990 SCC (2) 288 JT 1990 (2) 200
1990 SCALE (1)398
CITATOR INFO :
D 1991 SC 626 (12,13)
ACT:
Bombay Rents, Hotels & Lodging House Rates Control Act,
1947: Section 15A--Licensee occupying flat in cooperative
Housing Society--Whether entitled to statutory protection of
Rent Act?
Maharashtra Cooperative Societies Act 1960: Section
91(1)--Can licensee occupying flat in a tenant co-partner-
ship society be evicted?
HEADNOTE:
The question for determination is, can a licensee occu-
pying a flat in a tenant co-partnership society be evicted
therefrom under subsection (1) of section 91 of the Maha-
rashtra Cooperative Societies Act, 1960 notwithstanding the
protection extended by Section 15A of the Bombay Rents,
Hotels & Lodging House Rates Control Act, 1947 as amended by
Act XVII of 1973 or whether such proceedings would be gov-
erned by Section 28 of the Rent Act?
The appellant licensee was in actual possession of the
fiat on 1st February 1973 under a license without the ex-
press permission of the Society. He was let in, in 1957 by
one D.P. Kejriwal who was looking after the flat originally
allotted to one Laxmi Devi Kejriwal in 1949. She gifted her
interest as allottee member to her brother who in turn
transferred his interest therein to his brother Hari Kumar
Sharma, respondent No. 2, in July 1967. Even after this
transfer D.P. Kejriwal continued in management of the flat
till 1979 when he received a letter from Respondent No. 2
claiming ownership of the flat. The appellant thereafter
filed an interpleader suit. On disposal of the said suit
Respondent No. 2 deposited a sum of Rs.5,500 with Respondent
No. 1, the Society, towards the cost of the Society to
initiate proceedings for eviction of the appellant from the
flat in question under Section 91(1) of the Societies Act.
The appellant contended that the proceeding under section
91(1) was not competent as the document of leave and licence
in fact created a lease. Alternatively, as he was in actual
possession under a subsisting license right from 1957 to 1st
February 1973, he was a statutory tenant under section 15A
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of Bombay Rent Act and the Cooperative Court had no juris-
diction under section 91(1) of the Societies Act and the
proper court was one under section 28 of the Rent Act which
the Respondent No. 2 had in fact approached.
863
The Co-operative Court passed an ejectment order against
the appellant. The appellant filed an appeal under section
97 of the Societies Act to the State Co-operative Appellate
Court, Bombay. The appellate court dismissed the appeal and
confirmed the order of the Co-operative Court. Feeling
aggrieved by the concurrent findings of the two courts the
appellant preferred a Writ Petition in the High Court of
Bombay. The Writ Petition was also dismissed.
While allowing the appeal and setting aside the judg-
ments of all the Courts below and directing that the claim
application filed under section 91(1) of the Societies Act
shall stand dismissed, this Court,
HELD: The appellant was and is a protected tenant under
section 15A of the Rent Act. The proceedings initiated under
section 91(1) of the Societies Act cannot in the circum-
stances succeed as the Society has failed to prove the fact
of trespass which constituted the foundation for jurisdic-
tion. if the society fails to prove that the appellant has
no right to the occupation of the flat since he is a mere
trespasser, the suit must obviously fall. [883B-C]
The Societies Act, section 91(1), confers jurisdiction
on the Cooperative Court while section 28 of the Rent Act
confers jurisdiction on the Court of Small Causes, Bombay.
[881B]
The Status of a tenant is conferred on him by law as the
legislature desired to extend the protection of the Rent Act
to such licensees. Rights which do not flow from contracts
but are conferred by law such as the Rent Act must be deter-
mined by the machinery, if any, provided by the law confer-
ring the right. [881G-H]
Notwithstanding the absence of privity of contract
between the owner-landlord and the licensee-protected tenant
the latter cannot be evicted except in accordance with the
provisions of the Rent Act. [882B]
Chandavarkar Sita Ratna Rao v. Ashalata S. Gum am,
[1986] 4 SCC 447 at 478; Ramesh Himmatlal Shah v. Harsukh
Jadhavji Joshi, [1975] 2 SCC 105; Hindustan Petroleum Corpo-
ration Ltd. v. Shyam Cooperative Housing Society, [1988] 4
SCC 747=AIR 1989 SC 295; O.N. Bhatnagar v. Rukibai Narsim-
das, AIR 1982 SC 1097; M/s. AVR & Co. & Ors. v. Fairfield
Cooperative Housing Society & Ors., [1988] 4 SCC 408; Sardar
Mohan Singh Ahluwalia v. Maitrai Park Cooperative Housing
Society & Anr., [1988] 4 SCC 416; Hindustan Thompson Associ-
ates Ltd. v. Mrs. Maya Inderson Israni & Ors..
864
1988] 4 SCC 745; Smt. Krishna Rajpal Bhatia v. Miss Leela H.
Advani & Ors., [1989] 1 SCC 52; Deccan Merchant Cooperative
Bank Ltd. v. Pali Chand Jugraj Jain, [1969] 1 SCR 887 and
Co-operative Central Bank Ltd. v. Additional Industrial
Tribunal, Andhra Pradesh, [1970]
SCR 205, referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1369 of
1990.
From the Judgment and Order dated 16.6.1989 of the
Bombay High Court in W.P. No. 2513 of 1989.
Anil B. Diwan, Y.R. Naik, S. Thananjayan and K.R. Choud-
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hary for the Appellant.
Dr. Y.S. Chitale, Y.T. John, C.V. Francies, C.V. Rappai,
3. Prakash and V.K. Purwani for the respondents.
The Judgment of the Court was delivered by
AHMADI, J. Special leave granted.
Can a licensee occupying a flat in a tenant-co-partner-
ship society be evicted therefrom under Sub-Section (1) of
Section 91 of the Maharashtra Co-operative Societies Act,
1960 (Act No. XXIV of 1961), hereinafter called ’the Socie-
ties Act’, notwithstanding the protection extended by Sec-
tion 15A of the Bombay Rents, Hotels & Lodging House Rates
Control Act, 1947 (’Act No. LVII of 1947), hereinafter
called ’the Rent Act’, as amended by Act XVII of 1973 or
whether such proceedings would be governed by Section 28 of
the Rent Act? That is the question which arises for our
determination in he context of the fact that the appellant
licensee claimed to be in actual possession of the flat on
1st February, 1973, under a subsisting licence, albeit
without the express permission of the society. The actual
matrix in which this question needs to be answered may be
briefly stated as under:
The Vishwa Co-operative Housing Society Ltd., respondent
No. 1, hereinafter called ’the Society’, was registered
sometime in 1948 ruder the provisions of the Bombay Co-
operative Societies Act, 1925 and is deemed to be registered
by virtue of Section 166(2) under the present Societies Act.
On 2nd March, 1949 one Laxmi Devi Kejriwal was admitted to
the membership of the society and was allotted Flat
865
No. 25 of the multi-storeyed building known as ’Vishwa
Mahal’ situate on "C" Road, Churchgate, Bombay-20. The said
Laxmi Devi gifted her interest as the allottee-member of the
society to her brother Ambica Prasad Sharma of Udaipur. One
D.P. Kejriwal who was looking after this flat inducted the
appellant therein w.e.f. 1st June, 1957 under a leave and
licence agreement on a licence fee of Rs.400 per month.
While the appellant was in actual occupation of the flat,
the allottee-member Ambica Prasad Sharma transferred his
interest therein to his brother Hari Kumar Sharma, respond-
ent No. 2, sometime in July 1967. The said respondent was
admitted to the membership of the society on 15th July,
1967. It appears that even after this transfer D.P. Kejriwal
continued in management of the flat and collected and re-
ceived the licence fee from the appellant till the middle of
1979 when he received a letter from respondent No. 2 claim-
ing onwership of the flat. The appellant then filed an
interpleader suit in the Court of Small Causes, Bombay,
seeking a direction to whom he should pay the rent for the
flat occupied by him. This interpleader suit was disposed of
on 21st June, 1983. Immediately thereafter respondent No. 2
deposited Rs.5,500 on 28th June, 1983 with respondent No. 1
society towards the society’s cost to initiate proceedings
for eviction of the appellant from the flat in question
under Section 91(1) of the Societies Act. Two days later the
respondent No. 2 filed a suit for the eviction of the appel-
lant from the flat in the Court of Small Causes, Bombay.
After respondent No. 2 deposited Rs.5,500, the society
passed a resolution on 5th July, 1983 to initiate proceed-
ings under Section 91(1) of the Societies Act for the evic-
tion of the appellant from the flat in question. Thereupon
the society served the appellant with a notice to quit dated
11th July, 1983 and thereafter instituted the action under
Section 91(1) of the Societies Act.
The appellant raised several defences, two of which may
be noticed. He firstly contended that the so-called document
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of leave and licence in fact created a lease and, therefore,
the proceeding under Section 91(1) of the Societies Act was
not competent. Secondly he contended that even if it is
assumed that the relationship was of a licensor and a licen-
see under the deed, since he was in actual occupation and
possession of the flat in question under a subsisting li-
cence right from 1957 to 1st February, 1973 he was a statu-
tory tenant under Section 15A of the Rent Act and was,
therefore, entitled to protection from eviction till a
competent court granted eviction on any of the grounds set
out in Sections 12 or 13 of the Rent Act. He, therefore,
contended that the Cooperative Court had no jurisdiction
under Section 91(1) of the Societies Act and the proper
court to approach was
866
the one under Section 28 of the Rent Act, which the respond-
ent No. 2 had in fact approached.
The Cooperative Court came to the conclusion that the
relationship created under the document of leave and licence
was that of a licensor and a licensee. On the question of
tenancy under Section 15A the Court concluded as under:
"So far as second part of the issue regarding opponent No. 2
contending to be tenant of opponent No. 1 is concerned, the
opponent No. 1 in his evidence has mentioned to the effect
that after his becoming a member of the society he initially
accepted the opponent No. 2 as his licensee and allowed him
to occupy the suit flat temporarily on his promise to vacate
when required by opponent No. 1. He has further stated that
he filed the case in the Small Causes Court for ejectment of
opponent No. 2 in his own right as advised by his Advocate
in that case. He has also stated that he accepted Opponent
No. 2 as his tenant because after 1.2.1973 there is change
in law and so he had to accept opponent No. 2 as his tenant.
In view of this evidence I have to give a finding in the
affirmative in respect of part of the issue whether opponent
No. 2 proves that he is a tenant of opponent No. 1".
In other words the Cooperative Court came to the conclusion
that the appellant was a tenant of respondent No. 2 under
Section 15A of the Rent Act since he was in occupation of
the flat on 1st February, 1973. After finding the appellant
to be a tenant of respondent No. 2 under section 15A, the
Cooperative Court proceeded to observe as under:
"Now regarding the effect of findings on the parts of issue
No. 2 as mentioned hereinabove, the position in law is quite
clear that even though the non-member occupant could at best
be regarded as tenant of member, he cannot be deemed as
tenant of the society because the society does not fall
within the definition of the term landlord under the Rent
Act".
The Cooperative Court, therefore, came to the conclusion
that the society could maintain an action under Section
91(1) of the Societies Act notwithstanding the fact that the
occupant was a tenant under Section 15A of the Rent Act qua
the member-allottee. In this view, the
867
Cooperative Court passed an ejectment order against the
appellant and ordered that the member shall personally
occupy the flat in question within 15 days from the receipt
of possession thereof.
The appellant feeling aggrieved by this order filed an
appeal under Section 97 of the Societies Act to the Maha-
rashtra State Cooperative Appellate Court, Bombay, being
Appeal No. 206 of 1988. The said appeal was dismissed with
costs on 22nd December, 1988. The appellate court also took
the view that regardless of the relations between the occu-
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pant of the flat and the member-allottee, the society was
entitled to maintain an action under Section 91(1) of the
Societies Act since there was not and there could not be any
relationship of landlord and tenant between the society and
the occupant. It accordingly confirmed the order passed by
the Cooperative Court.
Feeling aggrieved by the concurrent findings recorded by
the said two courts, the appellant preferred writ petition
No. 25 13 of 1989 in the High Court of Judicature at Bombay.
The said writ petition was summarily dismissed on 16th June,
1989 but by a speaking order. The learned Singe Judge while
dismissing the writ petition observed as under:
"It has now been repeatedly held by the Supreme Court that
the protection even though available to the occupier against
member of the cooperative society, such protection cannot be
claimed against a housing society. A reference to the deci-
sion in O.N. Bhatnagar v. Rukibai Narsindas, reported in AIR
1982 SC 1097, is sufficient".
The decision of this Court in Hindustan Petroleum Corpora-
tion Limited v. Shyam Cooperative Housing Society, [1988] 4
SCC 747= AIR 1989 SC 295 was distinguished as not laying
down any proposition that a licensee is entitled to take
advantage of Section 15A of the Rent Act even against the
society. So stating the learned Judge dismissed the writ
petition. That is how the appellant is before us by special
leave.
Section 91(1) of the Societies Act insofar as relevant
for our purposes reads as under:
"Notwithstanding anything contained in any other law for the
time being in force any dispute touching the constitu-
868
tion, ........... management or business of a Society
shall be referred by any of the parties to the
dispute .......... to the Cooperative Court if both the
parties thereto are one or other of the following:
(a) a society ..........
(b) a member, past member or a person claiming through a
member, past member or a deceased member of the society
Sub-section (3) reads as under:
"Save as otherwise provided under sub-section (2) to Section
93, no court shall have jurisdiction to entertain any suit
or other proceedings in respect of any dispute referred to
in sub-section (1)"
Sub-section (2) of Section 93 lays down that:
"Notwithstanding contained in this Act the Cooperative Court
may, if it thinks fit suspend any proceedings in respect of
any dispute, if the question at issue is one involving
complicated questions of law and fact, until the question
has been tried by a regular suit instituted by one of the
parties or by the society".
Sub-section (1) of Section 99 which begins with a non-ob-
stante clause gets attracted if there arises any dispute
touching the business of a society. Such a dispute can be
referred to a Cooperative Court if both parties to the
dispute are one or other of those enumerated in clauses (a)
to (e) thereof. These include a society, a member or a
person claiming through a member or a past member or a
deceased member. The dispute in the present case is between
the society, its member and appellant, a person stated to be
one claiming through the present member or the past member.
The crucial question which arises is whether the dispute or
controversy between the parties can be said to be one touch-
ing the business of the society. If yes, the Cooperative
Court alone will have jurisdiction since the jurisdiction of
every other court is ousted by virtue of Sub-section (3) of
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Section 91 except for the limited purpose stated in sub-
section (2) of Section 93 of the Societies Act.
869
Under bye-law No. 2 the objects of the society are inter
alia to carry on trade of building, buying, selling, hiring,
letting and developing land on cooperative principles.
Regulation 4 in Form A provides that no tenant-member shall
assign, under-let, vacate or part with the possession of the
tenement or any part thereof without the previous consent in
writing of the society. Bye-law 7A lays down that an outsid-
er-non-member can be allowed to take advantage of the mem-
ber’s flat only on production of a written confirmation of
the member before the society and on the society thereupon
admitting such member as a ’nominal’ member of the society.
Admittedly in the present case no written permission of the
society was obtained either by the member or by the appel-
lant before the latter was put in possession of the flat in
question nor was any request made to the society to admit
the appellant as a nominal-member. It was, therefore, con-
tended on behalf of the society that the entry of the appel-
lant in the flat in question was clearly in violation of
Regulation 4 and bye-law 7A adverted to above and, there-
fore, the dispute was clearly one touching the business of
the society attracting Section 91(1) of the Societies Act.
The appellant’s challenge as pointed out earlier can be said
to be two fold, namely, (1) the dispute between the appel-
lant and the society cannot be said to be in any manner
related to the business of the society and (2) since the
jural relationship between the member and the appellant was
admittedly of landlord and tenant, the jurisdiction of the
Cooperative Court under the Societies Act was clearly barred
by virtue of Section 28 of the Rent Act which is a special
statute dealing with landlord-tenant relationship.
The Rent Act was enacted to amend and consolidate the
law relating to the control of rents and repairs of certain
premises, of rates of hotels and lodging houses and of
evictions and also to control the charges for licence of
premises, etc. Section 15A which was inserted by amending
Act 17 of 1973 provides as under:
"15A(1) Notwithstanding anything contained 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 February, 1973 in occupation of any premises, or any
part thereof which is not less than a room, as a licensee he
shall on that date be deemed to have become for the purposes
of this Act, the tenant of the landlord, in respect of the
premises or any part thereof, in his occupation".
The expression ’licensee’ is defined in sub-section (4A) of
Section 5 as under:
870
’5(4A) licensee’, in respect of any premises or any part
thereof. means the person who is in occupation of the prem-
ises or such part, as the case may be, under a subsisting
agreement for licence given for a licence fee or charge; and
includes any person in such occupation of any premises or
part thereof in a building vesting in or leased to a co-
operative housing society registered or deemed to be regis-
tered under the Maharashtra Co-operative Societies Act,
1960); but does not include a paying guest, a member of a
family residing together, a person in the service or employ-
ment of the licensor, or a person conducting a running
business belonging to the licensor, for a person having any
accommodation for rendering or carrying on medical or para-
medical services or activities in or near a nursing home,
hospital or sanatorium, for a person having any accommoda-
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tion in a hotel, lodging house, hostel, guest house, club,
nursing home, hospital, sanatorium, dharmashala, home for
widows, orphans or like premises, marriage or public hall or
like premises, or in a place of amusement or entertainment
or like institution, or in any premises belonging to or held
by an employee or his spouse who on account of the exigen-
cies of service or provision of a residence attached to his
or her post or office is temporarily not occupying the prem-
ises, provided that he or she charges licence fee or charge
for such premises of the employee or spouse not exceeding
the standard rent and permitted increases for such premises,
and any additional sum for services supplied with such
premises, or a person having accommodation in any premises
or part thereof for conducting a canteen, creche, dispensary
or other services as amenities by any undertaking or insti-
tution; and the expressions ’licence’, ’licensor’ and ’pre-
mises given on licence’ shall be construed accordingly".
The definition of a ’landlord’ in Section 5(3) includes in
respect of a licensee deemed to be a tenant by Section 15A,
the licensor who has given such licence. Similarly the
expression ’tenant’ as defined by Section 5(11) includes
such licensees as are deemed to be tenants by Section 15A.
Section 14(2) may also be noticed which reads as under:
"Where the interest of a licensor who is a tenant of any
871
premises is determined for any reason, the licensee, who
by .. Section 15A is deemed to be a tenant, shall, subject
to the provision of this Act, be deemed to become the tenant
of the landlord, on the terms and conditions of the agree-
ment consistent with the provisions of this Act".
The Courts below have come to the conclusion that the appel-
lant was a tenant of respondent No. 2 by virtue of Section
15A of the Rent Act since he was in actual occupation of the
flat on 1st February, 1973. Having recorded the relationship
of landlord and tenant between the member, respondent No. 2,
and the occupant-appellant, the courts below took the view
that as there was no such jural relationship between the
society and the occupant, the society was entitled to evict
the occupant from the flat in question by taking recourse to
Section 91(1) of the Societies Act as the dispute between
the society, its member and the occupant claiming through
the member was essentially one touching the business of the
society. In other words according to the courts below while
the member could not evict the occupant except through
proceedings initiated under the Rent Act, the society was
free to evict the occupant, without dis-continuing the
membership of the licensor, by virtue of Section 91(1) of
the Societies Act. There is, according to the courts below,
no conflict between Section 91(1) of the Societies Act and
Section 28 of the Rent Act because in order to attract the
latter provision it must be shown that the relationship
between the society and the occupant is that of a landlord
and a tenant or a licensor and a licensee who is entitled to
the benefit of Section 15A of the. Rent Act. Unless such a
relationship is established, the society cannot be precluded
from initiating eviction action under Section 91(1) of the
Societies Act against an occupant with whom it has no privi-
ty of contract, notwithstanding the fact that he was induct-
ed in the flat by the member-allottee, albeit contrary to
the regulations and bye-laws of the society, and by passage
of time a relationship of landlord and tenant has developed
between the two by virtue of Section 15A of the Rent Act.
What impelled the legislature to introduce Section 15A
and the related provisions on the statute book by Act XVII
of 1973? The acute paucity of accommodation, particularly in
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urban and metropolitan centres, is of common knowledge.
Section 15 of the Rent Act initially prohibited sub-letting.
Despite this prohibition sub-letting took place on a large
scale because of non-availability of rented premises. The
legislature had to face this hard reality and was required
to extend protection to such sub-tenants when they were
threatened with evic-
872
tion by enacting the Bombay Rents, Hotels & Lodging Houses
Rates Control Act (Amendment) Ordinance, 1959. Thereafter
also the acute shortage of accommodation continued and to
circumvent the prohibition of sub-letting in Section 15
increasing use of inducting third parties in rented premises
through the expedient of leave and licence agreements was
made. This becomes evident from the Objects and Reasons for
Act No. XVII of 1973, which read as under:
"It is now notorious that the Bombay Rents, Hotel and Lodg-
ing House Rates Control Act, 1947, is being avoided by the
expedient of giving premises on leave and licence for some
months at a time; often renewing from time to time at. a
higher licence fee. Licensees are thus charged excessive
licence fees; in fact, several times more than the standard
rent, and have no security of tenure, since the licensee has
no interest in the property like a lessee. It is necessary
to make provision to bring licensees within the purview of
the aforesaid Act. It is therefore provided by Clause 14 in
the Bill that persons in occupation on the 1st day of Febru-
ary, 1973 (being a suitable anterior date) under subsisting
licences, shall for the purposes of the Act, be treated as
statutory tenants, and will have all the protection that a
statutory tenant has, under the Act. It is further provided
in Clause 8 that in the case of other licences, the charge
shall not be more than a sum equivalent to standard rent and
permitted increases, and a reasonable amount for amenities
and services. It is also provided that no person shall claim
or receive anything more as licence fee or charge, than the
standard rent and permitted increases, and if he does re-
ceive any such amounts, they should be recoverable from the
licensor".
The legislative policy is evident from the opening words
of Section 15A--Notwithstanding anything contained elsewhere
in this Act or anything contrary in any other law for the
time being in force, or in any contract--which convey in no
uncertain terms that the legislature desired to protect
licensees who were in actual occupation of any premises on
1st February, 1973 from eviction by conferring on them the
status of a tenant and thereby bringing them within the
purview of the Rent Act regardless of the other provisions
of the said enactment or any other enactment or contract to
the contrary. A sweeping overriding effect is given over all
laws and other provisions of the Rent Act as well as con-
tract providing to the contrary thereby placing the
873
question of status of licensees in occupation of any prem-
ises on 1st February, 1973 beyond the pale of doubt. To make
matters clear corresponding changes were simultaneously
made, in the preamble of the Rent Act and the definitions of
’landlord’ and ’tenant’ and a new definition’ of ’licensee’
was inserted on the statute book. Not only did the legisla-
ture desire to confer the status of a tenant on such licen-
sees but it went a step further by providing in Section
14(2) that on the determination of the licenser’s interest
in the premises such a statutory tenant under Section 15A
will become the tenant of the landlord, thereby establishing
a jural relationship of landlord and tenant through statute
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as distinguished from contract. It, therefore, seems crystal
clear to us that the legislative policy was to extend the
protective umbrella of the Rent Act to licensees who were in
occupation of any premises on 1st February, 1973 by fiction-
ally conferring on them the status of a tenant, overriding
all other provisions of the statute itself, all other stat-
utes and contracts providing to the contrary. Therefore,
every other provision of the Rent Act, every provision of
any other law and every covenant of a contract which runs
counter to the legislative policy engrafted in Section 15A,
meaning thereby which provides to the contrary, must yield
to Section 15A read with Section 14(2) of the Rent Act. That
is why this Court while overruling the decision of the Full
Bench of the Bombay High Court in Ratanlal Chandiprasad v.
Raniram Darkhand, writ petition No. 76 of 1980 decided on
18th October, 1985 observed in paragraph 69 of its judgment
in Chandavarkar Sita Ratna Rao v. Ashalata S. Gurnatn,
[1986] 4 SCC 447 at 478 as under:
". .... it must be held that all licensees created by
landlords or by the tenant before February 1, 1973 and who
were in actual occupation of a premises which was not less
than a room as licensee on February 1, 1973 would be the
licensees of the landlord or tenant and whether there by any
term in the original agreement for tenancy permitting crea-
tion of such tenancy or licences or not they would become
tenant and enjoy the fights granted under the Act specially
those mentioned in Section 14(2) of the Act".
Therefore, this Court held that a licensee under a licence
created by a tenant, be he a statutory tenant or a contrac-
tual tenant, whether or not his tenancy agreement permitted
the creation of such licence, was entitled to the protection
of Section 15A of the Rent Act. In other words no statutory
bar or contractual bar operated against the conferment of
the statutory tenancy on the licensee in occupation of any
874
premises on 1st February, 1973 under Section 15A of the Rent
Act.
That takes us to the next question whether or not a
member of a co-partnership type of a co-operative society
has such interest in the premises allotted to him as would
entitle him to give the same on leave and licencee basis to
a non-member. In a tenant co-partnership type of society the
members are shareholders; but the title to the property
vests in the society which in turn rents the tenements or
flats to its members. The cost of construction of dwellings
is met from deposits and loans besides the share money. The
rental is usually determined on long term basis so calculat-
ed as to meet the cost of construction and upkeep of the
building and to guarantee perpetuity of occupation on repay-
ment of the whole value of the tenement or flat. At the end
of the period the member is credited with additional shares
equal to the amount paid by him; the interest on these
shares generally matches the rental payable by him to the
society. Thus on full payment the member becomes entitled to
occupy the tenement or flat free of charge as the rental he
has to pay to the society is almost met from the interest
received from shares held by him. Thus a member has more
than a mere fight to occupy the flat.
A similar question came up for consideration before this
Court in Ramesh Himmatlal Shah v. Harsukh. Jadhavji Joshi,
[1975] 2 SCC 105 in the context of whether or not the mem-
ber’s right in the flat was liable to attachment and sale
under Section 60 of the Code of Civil Procedure. This Court
after analysing the various provisions of the Societies Act,
the bye-laws and the regulations framed thereunder, came to
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the conclusion that the member’s right or interest to occupy
is a species of property. Proceeding further this Court made
the following observations in paragraph 18 to 20 of the
Judgment:
"There is no absolute prohibition in the Act or in the Rules
or in the bye-laws against transfer of interest of a member
in the property belonging to the Society. The only transfer
which is void under the Act is one made in contravention off
sub-section (2) of Section 47 [See Section 47(3)]. We have
not been able to find any other provision anywhere to the
same effect. In the Scheme of the provisions a dichotomy is
seen between share or interest in the capital and interest
in property of the Society. While Section 29(2) refers to
transfer of a member’s share or his interest in the capital
or property of any Society, Section 31 in contrast speaks of
’the share or interest of a member in the capital of a So-
875
ciety’. The Act, therefore, makes a clear distinction be-
tween the share or interest in the capital and share or
interest in property of the Society. We have also noticed
that the Act does not recognise interest in the immovable
property of the society as well [See section 41(1)(b)]. We
have seen the qualifications for membership. There is no
reason to suppose that if the qualification under the bye-
laws are fulfilled an application for membership may be
rejected".
After pointing out that the right or interest to occupy is a
species of property this Court went on to add as under:
"We, therefore, unhesitatingly come to the conclusion that
this species of property, namely, the right to occupy a flat
of this type, assumes significant importance and acquires
under the law a stamp of transferability in furtherance of
the interest of commerce. We have seen no fetter under any
of the legal provisions against such a conclusion. The
attachment and sale of the property in this case in execu-
tion of the decree are valid under the law.
XXXXXXXXXXXXXXXXXXXXXXXXX
In absence of clear and unambiguous legal provisions to the
contrary, it will not be in public interest or in the inter-
est of commerce to impose a bar on saleability of these
flats by a tortuous process of reasoning. The prohibition,
if intended by the Legislature must be in express terms. We
have failed to find one".
It becomes clear from this decision that the member’s right
to occupy the flat is a species of property liable to at-
tachment and sale. It is more than a mere right to occupy.
It is transferable and if the transferee answers the quali-
fications under the bye-laws for being admitted to the
membership of the Society, the Society would be precluded
from unreasonably withholding such admittance. There can,
therefore, be no doubt that a member-allottee has a right to
transfer his interest in the flat to a third party and,
therefore, the right to induct a third party on leave and
licence basis.
It was contended by the learned counsel for the appel-
lant that Section 15A was inserted in the Rent Act to serve
a dual purpose namely (1) to curb exploitation of licensee
and (2) to provide security
876
of tenure. If the view taken by the Courts below in the name
of maintenance of the ’distinctive mutuality’ principle is
endorsed, the very purpose of the amendment, argued counsel,
would be defeated. He pointed out that in the State of
Maharashtra the cooperative movement had taken rapid strides
and the legislature was aware that a large number of licen-
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sees were in occupation of flats situate in Cooperative
Societies. It must, therefore, be assumed that the legisla-
ture desired to extend the protection of the Rent Act to
such licensees also by bringing them within the scope of
Section 15A of the Act. In support of this contention he
placed strong reliance on the decision of this Court in
Hindustan Petroleum Corporation Limited (supra). This sub-
mission was countered by the learned counsel for the society
and the member on the plea that the Courts below had rightly
concluded that the jurisdiction of the Cooperative Court
under Section 91(1) of the Societies Act was not ousted
because there was no jural relationship of landlord and
tenant between the society and the appellant. According to
them if non-members could be inducted in tenements or flats
belonging to a Cooperative Housing Society of the present
type, the entire housing movement would become redundant and
the object of forming such cooperative housing societies
would be totally defeated. Therefore. submitted the learned
counsel, even if it is assumed that the appellant had ac-
quired the status of a tenant by virtue of Section 15A of
the Rent Act, the protection extended by the said provision
would extend to the licenser-member only and not to the
society. In this connection strong reliance was placed on
the decision of this Court in O.N. Bhatnagar’s case (supra)
which has been referred to and relied on in four subsequent
decisions namely, M/s A.V.R. And Co. & Others v. Fairfield
Cooperative Housing Society & Others, [1988] 4 SCC 408;
Sardar Mohan Singh Ahluwalia v. Maitrai Park Co-operative
Housing Society and Another, [1988] 4 SCC 416; Hindustan
Thompson Associates Ltd. v. Mrs. Maya Inderson Israni &
Others, [1988] 4 SCC 745 and Smt. Krishna Rajpal Bhatia v.
Miss Leela H. Advani and Others, [1989] 1 SCC 52.
Five decisions were rendered by a Division Bench of this
Court (A.P. Sen & B.C. Ray, JJ.) on a single day i.e. 19th
September, 1988 on the question of applicability of Section
91(1) of the Societies Act. In four of those cases, namely,
A.V.R. & Co. & Others; Sardar Mohan Singh Ahluwalia; Hindu-
stan Thompson Associates Ltd. and Smt. Krishna Ralpal Bha-
tia, this Court on facts took the view that the applicabili-
ty of Section 91(1) of the Societies Act could not be as-
sailed. In all those four cases the Court came to the con-
clusion that the licence was terminated before 1st February,
1973 and, therefore,
877
the occupant could not be said to be in occupation of the
flat under a subsisting licence on 1st February, 1973 and
hence Section 15A of the Rent Act had no application. In
such a fact-situation this Court rightly took the view that
Section 28 of the Rent Act was not attracted and hence the
society was entitled to seek eviction under Section 91(1) of
the Societies Act. In Bhatnagar’s case the occupant was
inducted in the flat on leave and licence basis after the
Society had accepted him as a nominal member. But his li-
cence was terminated by a notice dated 31st March, 1965 and
thereafter his occupation was no more under a subsisting
licence to entitle him to the protection of Section 15A of
the Act. In the case of A.V.R. & Co. also the licensee’s
claim for deemed tenancy was rejected on the ground that the
licence had expired long before 1st February, 1973 and had
not been renewed since then. The Court, therefore, came to
the conclusion that the licence was not in occupation of the
flat under a subsisting licence on 1st February, 1973 and,
therefore, the benefit of Section lSA could not be extended
to him. In the case of Sardar Mohan Singh Ahluwalia also the
Court found that as a matter of fact there was no subsisting
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licence on 1st February, 1973 to attract the application of
Section 15A of the Rent Act. In Hindustan Thompson Associ-
ates Ltd. the facts disclosed that the licence was terminat-
ed by the member on 1st October, 1972 and the occupant was
called upon tO vacate the premises. It was, therefore, held
that since the subsequent occupation of the flat by the
occupant was not under a subsisting licence his occupation
was in the nature of a trespasser and hence Section 15A had
no application. The Court, therefore, concluded that evic-
tion proceedings could be commenced against him under Sec-
tion 91(1) of the Societies Act. In the last mentioned case
of Srnt. Krishna Rajpal Bhatia the court found that the
agreement in question created the relationship of a licensor
and a licensee and the licence had in fact been terminated
by a notice dated 21st May, 1969 and, therefore, the occu-
pant was a mere trespasser when the action was commenced
under Section 91(1) of the Societies Act and was not enti-
tled to the benefit of Section 15A of the Rent Act. It can,
therefore, be seen that the aforesaid 5 decisions on which
considerable reliance was placed by the learned counsel for
the Society and its member can be distinguished on facts
inasmuch as in all those cases the finding of fact recorded
throughout was that the licensee was not in occupation of
the premises in question under a subsisting licence on 1st
February, 1973 to invoke the protection of Section 15A of
the Rent Act.
However, in the case of Hindustan Petroleum Corporation
Limited (supra) the Esso Easter Inc., a company, had taken
flat No. 35
878
in Block No. 8 in Sham Niwas on leave and licence basis for
a period of one year in terms of a written agreement dated
November 26, 1968 from Smt. Nanki M. Malkani. On December 4,
1968 the Society passed a resolution admitting one T.J.
Mansukani, an employee of the company, as a nominal member
of the society since he was to occupy the flat. The licence
agreement was extended from time to time under the renewal
clause incorporated in the agreement. After the company was
taken over under the Esso (Acquisition of Undertakings in
India) Act, 1974 Smt. Nanki M. Malkani sent a communication
affirming the terms and conditions of the licence and again
confirmed the same on 24th March, 1976. It will be seen from
these facts that the licence was subsisting on 1st February,
1973. On 11th September, 1980 the Society passed a resolu-
tion calling upon the appellant-corporation to vacate the
said premises and directed its member Smt. Nanki M. Malkani
to occupy the same herself. Upon the appellant-corporation
failing to vacate the premises the Society commenced pro-
ceedings under Section 91(1) of the Societies Act on 15th
September, 1980 for eviction of the appellant-corporation
and its employee from the flat. The Cooperative Bank Bombay,
after considering the evidence adduced by the parties,
dismissed the claim of the Society holding that the appel-
lant-corporation was entitled to the benefit of Section 15A
of the Rent Act and the said protection could not be taken
away by the Society seeking eviction under Section 91(1) of
the Societies Act. The Society preferred an appeal which
came to be allowed on 17th March, 1984 whereupon the appel-
lant-corporation approached the High Court under Article 226
of the Constitution, but in vain. The appellant-corporation
obtained special leave to appeal to this Court.
This court raised three questions for decision, two of
which are relevant for our purpose. The first question was
whether the appellant corporation as successor-in-interest
of Esso Eastern Inc., the licensee, was entitled to the
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protection of Section 15A of the Rent Act having regard to
the fact that Esso Eastern Inc. was in occupation of the
flat in dispute under a subsisting licence on 1st February,
1973 and whether the society’s action for ejectment of the
occupant of the flat could be said to be a dispute touching
the business of the society within the meaning of Section
91(1) of the Societies Act. After referring to the relevant
statutory provisions of both the Societies Act and the Rent
Act, this Court observed that the finding of the appellate
court that the appellant-corporation was not entitled to the
protection of Section 15A the Rent Act could not be
sustained. This Court concluded in paragraph 14 at page 758
as under:
879
"In the premises, petitioner 1 Hindustan Petroleum Corpora-
tion Ltd., is clearly protected under Section 15A of the
Bombay Rents, Hotel and Lodging House Rates Control Act,
1947. In that view of the matter, we do not think it neces-
sary to deal with the contention as regard the applicability
of Section 91 of the Maharashtra Co-operative Societies Act,
1960. All aspects arising out of the submissions as to the
jurisdiction of the Registrar under Section 91(1) of the Act
have already been considered by this Court in O.N. Bhatnagar
case and we reiterate the principles laid down therein".
This Court did not consider it necessary to deal with the
third contention whether a claim for ejectment of an occu-
pant of a flat in a cooperative housing society who has been
put in possession thereof by the member under a leave and
licence agreement, is a ’dispute touching the business of
the society’ within the meaning of Section 91(1) of the
Societies Act, because in its view it was already covered by
Bhatnagar’s case. To put it differently the Division Bench
accepted the ratio of Bhatnagar’s case as laying down the
correct law and did not see the need to restate the same.
While in Bhatnagar’s case this Court on facts came to
the conclusion that the requirements of Section 15A were not
satisfied and, therefore, action under Section 91(1) of the
Societies Act was maintainable, it repelled the apprehension
that such a view would throw out all licensees of residen-
tial flats in multi-storeyed buildings belonging to Coopera-
tive Housing Societies in the following words:
"The apprehension, if we may say so, appear to be wholly
unfounded. The legislature was fully aware of the acute
paucity of housing accommodation in the metropolitan cities
of Greater Bombay and other urban areas in the State, and
also the fact that lessors of ownership flats were adopting
a device of inducting tenants under the garb of an agreement
of leave and licence which left the licensee with no protec-
tion. The legislature, therefore, stepped in and by Maha-
rashtra Act 17 of 1973 the following provisions were insert-
ed in the Rent Act".
After referring Section 15A(1) and Section 5(4A) of the Rent
Act this Court proceeded to observe as under:
880
"As a result of the introduction of Section 15A and Section
5(4A) of the Rent Act by Maharashtra Act 17 of 1973, the
licensee of any premises or any part thereof in a building
vesting in or leased to a cooperative housing society regis-
tered or deemed to be registered under the Act, who was in
occupation of such premises under a subsisting licence as on
1.2. 1973, is by a legal fiction, deemed to be a tenant and
thus has the protection of Rent Act. In such a case the
dispute between a licensor and licensee relating to posses-
sion of the premises of a fiat would attract Section 28 read
with Section 15A and 5(4A) of the Rent Act and would fail
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outside the purview of the Registrar’s jurisdiction to
adjudicate upon such dispute under Section 91(1) of the Act.
Once this aspect is kept in view, there need be no apprehen-
sion as expressed by learned counsel for the
appellant ................ ,,. .
Indubitably the flat in question fails within the defi-
nition of ’premises’ in Section 5(8) of the Rent Act. The
appellant, a licensee under Section 5(4A), is a deemed
tenant under Section 15A and, therefore, falls within the
definition of ’tenant’ under Clause (bb) of Section 5(11) of
the Rent Act. Such a tenant is entitled to the protection of
the Rent Act and cannot be evicted from the premises in his
occupation except as provided by the said Act. To hold
otherwise would be to render the status conferred on licen-
sees in actual occupation on 1st February, 1973, under a
subsisting licence, nugatory. The appellant was put in
possession of the flat in question by the tenant-co-partner-
member of the Society and was accepted as such by the suc-
cessormembers also. As pointed out earlier a member of a
tenant-copartnership type of Society is under an obligation
to pay a fixed rental every month to the Society. This
rental is, no doubt. determined on the basis of the member’s
financial obligations incurred on account of the cost of
construction, price of land or lease rent, as the case may
be, interest on borrowings, etc. The primary object of such
a society is to provide residential accommodation to its
members on easy payment basis. That is why in Bhatnagar’s
case this Court stated that ’it is as much the concern of
the society formed with the object of providing residential
accommodation to its members, which normally is its busi-
ness, to ensure that the flats are in occupation of its
members, in accordance with bye-laws framed by it, rather
than of a person in an unauthorised occupation, as it is the
concern of the member, who lets it out to another under an
agreement of leave and licence and wants to secure posses-
sion of the premises for his own use after the termination
881
of the licence’. Therefore, this Court held that ejectment
of an occupant, whose licence is terminated and who does not
have the protection of law, such as the Rent Act, can be
secured under Section 91(1) of the Societies Act.
But what happens when competing provisions vesting
jurisdiction under different laws open with a non-obstante
clause and invest jurisdiction in different Courts? The
Societies Act under Section 91(1) confers jurisdiction on
the Cooperative Court while Section 28 of the Rent Act
confers jurisdiction on the Court of Small Causes, Bombay.
This Court observed in Deccan Merchants Cooperative Bank,
Limited v. Dali Chand Jugraj Jain, [1969] 1 SCR 887 that
’the two Acts can be harmonised best by holding that in
matters covered by the Rent Act, its provisions, rather than
the provisions of the Act, should apply’. This view was
approved in Bhatnagar’s case also. In Co-operative Central
Bank, Ltd. v. Additional Industrial Tribunal, Andhra Pra-
desh, [1970] 1 SCR 205 also this Court was required to
harmonise the competing provisions in Section 61 of the A.P.
Co-operative Societies Act, which is substantially the same
as Section 91(1) of the Societies Act, and Section 10(1)(d)
of the Industrial Disputes Act. This Court applying the test
laid down on Deccan Merchants Co-operative Bank’s case held
that a dispute relating to the service condition of an
employee of the society would properly be governed by the
Industrial Disputes Act.
It was, however, submitted by the learned counsel for
the society that the earlier enactment i.e. the Rent Act
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must yield to the later Act, i.e. the Societies Act, if the
competing provisions of the two cannot be reconciled--lex
posterior derogate priori. But the Rent Act is special law
extending protection to tenants, just as the Industrial
Disputes Act which makes provision for the benefit of the
workmen. Ordinarily, therefore, a general provision, a
dispute touching the business of the society, would have to
give way to the special provision in the Rent Act on the
maxim generalia specialibus non derogant. That is why this
Court harmonised the said provisions by holding that in
matter covered by the Rent Act, its provisions, rather than
the provisions of the Societies Act, should apply. In the
present case the appellant seeks protection of the Rent Act
since he is a deemed tenant under Section 15A read with
Section 5(4A) and 5(11)(bb) of the Rent Act. The status of a
tenant is conferred on him by law as the legislature desired
to extend the protection of the Rent Act to such licensees.
Rights which do not flow from contracts but are conferred by
law such as the Rent Act, must, we think, be determined by
the machinery, if any, provided by the law conferring the
right.
882
The submission that the appellant cannot seek protection
against the Society as his entry into the flat was in viola-
tion of the Bye-laws would have been valid had the statute
not intervened. To take such a view would tantamount to
carving out an exception in Section 15A of the Rent Act that
the said provision would not apply to licensees in occupa-
tion of flats owned by tenant-co-partnership societies. The
language of Section 15A read with Section 5(4A) of the Rent
Act does not warrant such a construction. The mere fact that
there was a violation of the Bye-laws would not make any
difference for it is not unknown that even in cases of
breach of statute, the legislature has conferred protection
on those guilty of breach if the prevailing circumstances so
warrant e.g., sub-letting was prohibited by Section 15 but
when the legislature realised the need to protect the sub-
tenants it did so by an ordinance promulgated in 1959.
Similarly when the legislature felt the need to protect
licensees in occupation on 1st February, 1973, it intervened
by enacting Section 15A. The legislative policy is quite
evident from Section 15A and the protection given to licen-
sees cannot be taken away on the plea that the initial entry
of the licensee in the flat was in breach of the Bye-laws.
If the occupant-licensee who is a protected tenant under
Section 15A’can be evicted by the society on the plea of
absence of privity between the society and the protected
tenant, it would render the protection of Section 15A redun-
dant. The situation is more or less similar to the case of
an owner-landlord whose tenant had contrary to the terms of
the contract introduced a licensee who is now protected by
Section 15A of the Rent Act. In such a case notwithstanding
the absence of privity of contract between the owner
landlord and the licensee-protected tenant, the latter
cannot be evicted except in accordance with the provisions
of the Rent Act. We, therefore, do not see any merit in the
contention that notwithstanding the protection given by
Section 15A, the society can proceed to evict him under
Section 91(1) of the Societies Act on the plea that such
protection is not available against the society. Such a view
would defeat the legislative object of Section 15A of the
Rent Act.
But the jurisdiction of the Court in which the action is
originated must be determined on the averments in the plaint
or claim application and not on the defence taken by the
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adversary party. For example, if the plaintiff goes to court
alleging that the defendant is a trespasser, the ordinary
court will have jurisdiction and its jurisdiction will not
be taken away merely because the defendant pleads tenancy.
If, however, the defendant succeeds in proving that he is a
tenant in respect of premises, possession whereof is sought,
the court trying the case would dismiss the suit on the
ground that the plaintiff had failed to prove the
883
jurisdictional fact that the defendant was a trespasser.
Here also the claim was lodged by the society in the Cooper-
ative Court on the ground that the appellant was in wrongful
occupation of the flat in question and was a mere trespass-
er. On facts it is now found that the appellant was and is a
protected tenant under Section 15A of the Rent Act. The
proceedings initiated under Section 91(1) of the Societies
Act cannot, in the circumstances, succeed for the simple
reason that the society has failed to prove the fact which
constitutes the foundation for jurisdiction. If the society
fails to prove that the appellant has no right to the occu-
pation of the flat since he is a mere trespasser, the suit
must obviously fail. That is why even in the case of Hindu-
stan Petroleum Corporation Limited this Court did not con-
sider it necessary to deal with the contention based on
Section 91(1) of the Societies Act in detail and felt con-
tent by observing that the point stood covered by the deci-
sion in Bhatnagar’s case.
For the reasons afore-stated, we are of the view that
the impugned Judgment of the Bombay High Court cannot be
allowed to stand. We allow this appeal, set aside the Judg-
ments of all the Courts below and direct that the claim
application filed under Section 91(1) of the Societies Act
shall stand dismissed. However, in the facts and circum-
stances of the case we make no order as to costs.
R.N.J. Appeal
allowed.
884