Automatic Electric Ltd., Wadala, Bombay v. Sharadchandra Vinayak Tipnis .

1. In this Revision, the main question that arises for my consideration is whether the suit premises were let out for residence as contemplated by section 13-A2 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (hereafter referred to as ‘the Act’). In other words, whether the Competent Authority under the Act was having jurisdiction to decide the matter.

2. A few facts are as follows:—

3. Respondent is the owner of Plot No. 4, Revenue Survey No. 274 situated within Lonavla Municipal Council area. There is a bungalow and out-house constructed by the Respondent. The out-house was consisting of two rooms, two closed Verandas together with bathroom and W.C It is the suit premises. The petitioner is a Company registered under the Companies Act, 1956. It is having its manufacturing unit at Lonavla and registered office at Bombay. Under the agreement dated 1st December, 1976, the Respondent gave to the petitioner the out-house for a period of two years at monthly licence fee of Rs. 350/-. It was given for ‘residence/business’. Even after expiry of the agreement, the petitioner continued to occupy it. In the year 1983, the respondent made some additions and alterations in the out-house. In view thereof, mutually it was agreed that the petitioner would pay Rs. 700/- per month from 1-11-1983. On 10-3-1988, parties entered into another agreement. It contemplated licence for two years expiring on 28-2-1990 with an option to the petitioner to renew the same for two years further. It provided for a licence fee of Rs. 700/- per month (i.e Rs. 350/- as compensation for use of the premises and Rs. 350/- towards the use of furniture and fixtures). It provided that the licensed premises shall be used as a ‘Rest House’ by the licensee and/or its officers. On 22nd December, 1989, the Respondent gave notice terminating the agreement dated 10th March, 1988 and calling upon the petitioner to vacate the same by the end of February 1990. Petitioner did not exercise its right to renew nor vacated the suit premises. Therefore, the respondent filed the petition before the Competent Authority under section 13-A2 of the Act for recovery of possession. Petitioner contested it by contending that the agreement dated 10th March, 1988 was not an agreement for licence, but an agreement to give the suit premises on monthly rent. It was contended that the petitioner was not a licensee, but a tenant under the Act and the Petition under section 13-A2 cannot lie. The petitioner further contended that the premises were not given for residence as contemplated by section 13-A2 and the petition was not maintainable and the Competent Authority had no jurisdiction to decide it.

4. The learned Competent Authority, Pune Division, Pune, by his judgment and order dated 19th April, 1991 held that the agreement was an agreement for licence and the premises were not given to the petitioner on tenancy basis or that the petitioner cannot be called as tenant under the Act. The agreement of 1976 need not be looked into in view of the Explanation (b) to section 13-A2 of the Act. It was also held that the premises were given for residence and not for non-residential purpose and hence the petition filed by respondent fell within the ambit of section 13-A2 of the Act and the Competent Authority was having jurisdiction to decide it. The said judgment is under challenge in this Revision.

5. The learned Advocate for the petitioner raised two contentions. It was first contended that there was an agreement entered into in 1983 between the parties and it was only recorded in writing on 10th March, 1988. Thus the agreement has taken place prior to the maharashtra act 18 of 1987 by which section 13-A2 was introduced. The said provision came to be introduced on 1-10-1987. Therefore, the Competent Authority was having no jurisdiction to decide it. It was next contended that the premises were not given for residence, but for business purpose of the petitioner and hence, the petition of the respondent cannot fall within section 13-A2 and the Competent Authority was having no jurisdiction to decide it.

6. The learned Advocate for the respondent contended that the agreement dated 10th March, 1987 was a fresh one it was effective from 1-3-1988. It provided for fresh terms and in view of Explanation (b) to section 13-A2, only the terms and conditions thereof can be looked into and it was conclusive evidence of the facts stated therein. He further contended that the premises were given for residence and not for non-residential purpose or business purpose. The Competent Authority has rightly found that it was given for residence. Therefore, the Competent Authority was having jurisdiction.

7. It is first to be noted that the point that the agreement was in fact entered into in 1983 and it was merely recorded in writing on 10th March, 1988 was not at all raised in the pleadings or in the Court below. Further, it is not possible to concede to that argument. The agreement dated 10th March, 1988 only recites that the compensation was increased from Rs. 350/- to Rs. 700/- per month from 1-11-1983. It mentions why such increase was made. It does not mean that fresh agreement took place on 1-11-1983 and was recorded in writing on 10-3-1988. Explanation (b) to section 13-A2 is as follows:—

“(b) an agreement of licence in writing shall be conclusive evidence of the fact stated therein.”

8. Therefore, the phrase used is conclusive evidence of the facts stated therein. In view of this, it is not possible to go behind it and to spell out some other earlier agreement. The petitioner has entered into the fresh agreement with open eyes. There is nothing to show that there was any agreement on 1-11-1983 and it was only recorded later on. Therefore, reject this argument.

9. The next point for my consideration is whether the suit premises were given by the respondent to the petitioner for the purpose of residence or for business or any other purpose. Section 13-A2(1) is as follows:—

“(1) Notwithstanding anything contained in this Act, a licensee in possession of occupation of premises given to him on licence for residence shall deliver possession of such premises to the landlord on expiry of the period of licence; 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 licence by making an application to the Competent Authority; and the Competent Authority, on being satisfied that the period of licence has expired, shall pass an order for eviction of a licensee. Section 6(1) of the Act contemplates various purposes i.e residence, education, business, trade or storage and also to open land let for building purposes. This shows that the phrase ‘residence’ is used in section 13-A2 as well as in section 6 of the Act in contradistinction with other uses.

10. The learned Advocates for both sides invited my attention to the terms of the agreements dated 30-11-1976 and 10-3-1988. The agreement dated 30-11-1976 provided that the premises given on leave and licence shall be used exclusively for ‘residential/business’ purpose. It provided that the compensation payable shall be Rs. 350/- i.e Rs. 200/- for the use of the premises and Rs. 150/- towards the furniture and fixtures. While clause 8 of the agreement dated 10th March, 1988 provided that the licensee shall be at liberty to install fans, refrigerators and domestic electric appliances which shall remain the property of the licensee and shall be removed by it on vacating the same. Clause 8 is as follows:—

“8. The licensees shall not during the period of the licence make any structural alterations in the said licensed premises without the written consent of the Licensor but shall be at liberty to install fans, refrigerators and domestic electric appliances which shall remain the property of the Licensees and shall be removed by the Licensees on vacating the said licensed premises.”

11. While clause 9 is as follows:—

“9. The Licensees undertake that it will permit the use of the said licensed premises and the said fixtures as a Rest House by its officers and not for any other purpose.”

12. Clause 12 thereof provided that in case the licensee commits breach of any of the terms and conditions or any objection is raised by the Municipal Council or Government Authorities, the Licensor may revoke the licence by giving seven days notice in writing to the licensee and terminate the agreement. In that event, the licensee shall have to vacate the premises without claiming any loss or damage from the licensor. The schedule to the agreement mentions about the articles which include wooden dining table, six wooden dining chairs, two beds and a Burshane Gas Cylinder, etc. A plain reading of these various clauses indicates that the respondent allowed the petitioner to use the premises for residential purpose and for no other purposes. Clause 9 contained a negative covenant making it clear that the user was a restricted one.

13. The learned Advocate for the petitioner contended that the agreement of 1976 provided both for residence/business. By agreement dated 30-3-1988 it was changed to Rest House. This clearly meant that it was also to be used for business. The learned Advocate for the petitioner pointed out that the petitioner continued the user and the user was same right from the beginning and it was not at all objected. The learned Advocate for the respondent on the other hand pointed out that the agreement dated 10th March, 1988 does not make mention about business. The user was deliberately changed only for rest house i.e for residential purpose. In my opinion, there is much substance in the argument of the learned Advocate for the respondent. The clauses of the agreement show that the purpose was restricted. It meant only for rest and it provided for domestic appliances etc. which indicated that it was to be used for cooking and rest of the officers.

14. It is contended by the learned Advocate for the petitioner that evidence showed that the petitioner used to keep its office files in the suit premises. Its officers used to hold meetings in it, apart from the fact that they used to have night halt for the rest. Therefore, it was dominantly for business purpose. It is not possible to accept this as the main purpose was that the officers of the petitioner used to come to Lonavla who may halt at night for rest. They may be incidentally keeping certain files and holding meetings. But that cannot lead one to the conclusion that the premises were given for non-residential purpose particularly when the agreement makes no mention of any kind of any office equipment. The petitioner is a corporate sole and acts through its officers. Its officers may be discussing the matters after visiting the factory. But that does not mean that the premises were given for holding meetings or storing files.

15. The learned Advocate for the respondent invited my attention to the statement regarding objects and reasons for introducing section 13-A2 by Maharashtra Act 18 of 1987. It reads as follows:—

“There are many a landlord who prefer to keep their premises vacant instead of letting them or giving them on licence fee for fear of not getting the premises back when they want the same for their own use as it requires several years to get possession of such premises through Court of law. It is therefore proposed to encourage the system of giving premises by landlords on licence basis and, on the failure of the licensee to deliver possession of the licensed premises to the landlord on expiry of the period of licence, to enable the landlord to get the possession of the premises from licensee as speedily as possible. For that purpose it is proposed to amend section 6 suitably, and to insert new section 13-A2. This special machinery for this purpose is proposed to be created by clause 19.”

16. The objects and reasons make it clear that many landlords do not let out the premises or on licence fee in view of the difficulty in getting back the premises under the provisions of the Act, whenever they want the same for their own use. It clearly condemns about the long delays caused in prosecuting the litigation in Courts of law regarding getting back the possession of the premises. It was necessary to change this scenario and to encourage landlords to give the premises on licence basis and to provide the machinery to enable the landlords to get back the premises immediately after the expiry of the period of licence. It was necessary to introduce some speedy remedy. This was done by section 13-A2 and special machinery was provided. It was thought by the legislature to induce the landlords to give the premises on licence basis. In my opinion, to subserve the object of this amendment, it is necessary to interpret the phrase ‘rest house’ in a manner to mean residence. If this is not done then it would become extremely difficult for many companies to get the premises on licence for user of their officers for rest house. They shall be left with no alternative but to seek some hotel accommodation which may not be available at the place or may not be available at given time causing great difficulties for its officers.

17. The learned Advocate for the petitioner submitted that a rest house is never used as a home. It is not residence but only temporary occupation. According to the learned Advocate for the petitioner, if the agreement provides that the premises shall be used for residence of its officers, it would mean that it was given for residence and not otherwise. It is not possible to accept this argument. The officers may be resting and taking food. It may be for a temporary period but nonetheless it is residence. It is not user by a guest. The company acts through its officers and the officers go on changing. They may be visiting from Bombay to Lonavla and staying there for a day or more. This was clearly residence. It cannot be accepted that if the accommodation is given for residence of the family of the officers of the company then only it would amount to giving premises for residential purpose. In this case, particularly, the articles which are mentioned in the suit premises indicate that it was for residential purpose. In a mere hotel or lodging house a licensee is not permitted to fix his domestic electrical appliance or there is Burshane Gas Cylinder which is meant for cooking.

18. The learned Advocate for the respondent also drew my attention to the dictionary meaning of the ‘rest house’ as contained in the Oxford Dictionary. It is defined as “a house of resting for travellers”. This also shows that the travellers reside in the premises and it is not a hotel or lodging room.

19. The learned Advocate for the petitioner first relied upon Vol. 27 Chancery Division page 71, Rolls v. Miller. In the said case, the defendant trust was the tenant. The plaintiff filed the suit for injunction on the ground that the defendant has committed breach of the covenant. The covenant provided that no part of the premises should be used for trade or business of any description whatsoever without the consent of the landlord. The premises were used by the tenant for housing or as hostel for working girls. The tenant contended that the user was for residence and not for business. It was also pointed out that no payment was charged for the lodging and boarding of those girls. It was, therefore, contended that it was not used for business. But the contention raised by the tenant was negatived and it was held that the user was for business. It was held that the landlord intended that there should be no user of the premises for business or trade so as not to cause inconvenience to the neighbours. When the girls used it, their parents and friends are bound to visit and cause inconvenience. It was also held that making payment is not a sine qua non for holding that premises were used for business. This case is not attracted in the present case, as it arose out of breach of a specific covenant which prohibited user for business or trade and further under the totally different setting.

20. The learned Advocate for the petitioner relied upon certain observations of Lord Coleridge C.J from Barlow v. Smith, (1892) 9 TLR 57 (C) which are quoted by the Full Bench in AIR 1956 Mysore 57 and are as under:—

“The party may occupy and not ‘reside’ there ….. Residence …… Under the enactment is different from occupation and means where the man lives and where he has his home. It has always been held that a man resides where he lives and has his home”.

21. However, the Full Bench earlier held that phrases ‘reside’, ‘resident’ and ‘residence’ are ambiguous and may receive different meaning according to the position in which it is found and it is a verb capable of different meanings and depends upon the context and purpose of the statute. It may receive larger or restricted meaning according to the intention of the legislature in framing the particular provision in which the word is used. In the present case, I have already pointed out the object in introducing section 13-A2 in the enactment. Considering that the word ‘residence’ must receive larger interpretation and if any user is not strictly falling in any of the other purposes mentioned in section 6 of the Act it should be construed as residential purposes.

22. The learned Advocate for the petitioner then relied upon 1976 Mah LJ 242 : AIR 1976 Bom 258, Bhupatrai Maganlal Ghai v. Rajaram Ghai. In the said case, the tenant issued many advertisements in newspapers etc. and invited lodgers from different nationality and strata of the society and gave them the premises for lodging and boarding. The landlord sought decree under section 13(1)(a) of the Act on the ground of change of user from residence to business. Taking into consideration the facts of the case and as nearly as 28 rooms were used by those paying guests or persons for lodging and boarding, it was held that there was change of user from residence to business. The ratio of this case is totally inapplicable to the facts of our case.

23. The learned Advocate for the respondent first relied upon 27 Bombay Law Reporter page 937, Lakshman Santa Sintre…Defendant Applicant; v. Balkrishna Keshav Shetye…Plaintiff Opponent.. In the said case, the tenant was residing and carrying on tailoring business in one room. It was held that “Where a tenant carries on business or works in the demised premises, which he also uses for dwelling in, the premises remain a dwelling house within the meaning of the Bombay Rent (War Restrictions) Act.” Then he relied upon the judgment of the Apex Court in AIR 1954 SC 316, Sri Sri Sri Kishore Chandra Singh Deo v. Babu Ganesh Prasad Bhagat. In the context of section 33 of the Registration Act, 1908, the phrase ‘reside’ was interpreted as ‘residence’ only connotes that a person eats, drinks and sleeps at that place and that it is not necessary that he should own. The Apex Court in turn relied upon the interpretation put by the Privy Council in AIR 1937 PC 46, Sarat Chandra v. Bijoy Chand in which again the expression ‘residence’ under section 33 of the Registration Act, 1908 was interpreted as ‘there is no reason for assuming that it contemplates only permanent residence and excludes temporary residence. The ratio of these cases may not help strictly as the phrase ‘reside’ or ‘residence’ was interpreted in the context of a particular statutory provision. However, it broadly gives the guideline.

24. The learned Advocate for the respondent next relied upon 1972 Mah LJ 822 : 74 (1972) BLR 623, Kishanchand Murjimal v. Bai Kalavati Hansraj Dwarkadas. In the said case, the plaintiffs-trustees of a charitable trust wanted to demolish the tenanted structure and reconstruct for the purpose of marriage hall, clinic, maternity and nursing home and a charitable hospital including keeping equipments, for garages, for mobile vans and doctors' cars, servants' quarters and other necessary structures. The question arose whether the plaintiffs required it for residence it was held that it was for residential use. It came to be observed as follows:—

“Moreover, the word “residence” must be understood in the context of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, as used in section 6. The words “residential use” as opposed to “non-residential use” must, therefore, be use not for education, business, trade or storage within the meaning of section 6(1). It cannot be said that the construction of a marriage hall or a charitable hospital would be putting the premises to use for education, business, trade or storage within the meaning of section 6.”

25. The learned Advocate for the petitioner tried to distinguish this case on the ground that the premises were required, inter alia, for residence of servants and hence it cannot be applied in the case before us. In my opinion, this attempt to distinguish it is without any substance as the major portion was not required for constructing servants' quarters. Servants' quarters were one of the users for which new structures were going to be put.

26. The learned Advocate for the respondent then relied upon 1990 (3) BCR 736 (Vol. 27), Shri S.B Gaikwad… v. Iyer Subramanya Venkateswara….. In the said case, the tenanted premises were given for residence to the tenant. The landlord wanted it bona fide and reasonably for his use and occupation under section 13(1)(g) of the Act. It was pleaded that the landlord wants to demolish the structure after getting possession, reconstruct it and after reconstruction wants to use it predominantly for lodging. The question arose whether in view of section 25 of the Act the user would be residential and decree can be passed or not. This Court in para 27 has held as follows:—

“….As already stated, the suit premises are not going to be used by the plaintiff or his daughter Geeta in the very form in which they are in existence at present. The same are going to be demolished and a commercial complex is going to be raised in pursuance of the plans which are already sanctioned. The substantial portion of the newly constructed building is going to be utilised for running a lodge. Hence, the dominate user of the newly constructed premises will continue to be used for the residence of lodgers. Consequently, in my view, the passing of the decree would not run in the teeth of section 25 and will not throw the landlord open to the risk of prosecution.”

27. In my opinion, the ratio of the judgment in 1972 Mah LJ 822 : 74 BLR 623, (cited supra) and this judgment shows that the phrase “residence” or “residential” is interpreted in a broader or wider manner, under the Act.

28. The learned Advocate for the respondent then relied upon (1994) 2 SCC 10, Keshav Kumar Swarup v. Flowmore Private Limited. It arose out of Delhi Rent Control Act, 1958. In this case, the company was a tenant. The lease deed provided term No. 5 which was as follows:—

“That the lessee shall use the premises for the residence and personal use of Directors and/or their relatives and for the purpose of the Company.”

29. The question arose whether the premises were ‘residential’ accommodation. The Apex Court observed as follows:—

“4. On a plain reading of clause 5 it is patently clear to us that the landlord authorised the tenant to use the premises in dispute only for residential purpose and for no other purpose. The words ‘for the purpose of the Company’ ought to be read in conjunction with ‘residence’ and when so read there is no escape from the conclusion that what the parties intended was that the premises were to be used for residence of the Directors, their relatives and also others who may have to be accommodated ‘for the purpose of the Company’.”

30. So was the clause in the lease deed which was as follows:—

“11. That the lessee shall not carry out any structural additions or alterations to the said premises, lay-out, fittings or fixtures but can install air conditioners, cooking range etc.”

31. In that context, the Court held that “From clause 11 quoted above, we find that under the agreement only installation of air conditioners and cooking ranges were permitted and there is no mention of any kind of office equipment. Therefore, it was held that it was residential accommodation.”

32. I find there is much similarity as regards the various terms of the licence deed and the terms contained in the lease deed before the Apex Court in (1994) 2 SCC 10 (cited supra). Even in our case, there is clause 8 (quoted above) which is similar to clause 11. Various clauses and the articles mentioned in the schedule of the licence deed clearly spell out the intention of the parties i.e the premises were given on licence for residential purpose. The phrase ‘residence’ cannot partake the character of mere casual occupation or a lodger in a hotel. But here the company's officers stay in the premises, may be temporarily, but that type of residence is not excluded under section 13-A2 of the Act. Considering the object of introducing section 13-A2 in the enactment, as mentioned above, it is amply clear that the phrase ‘residence’ requires to be interpreted in a wider and broader manner. If the user does not strictly fall within any one of the other purposes, other than residence, as enumerated in section 6 of the Act, then it is to be construed as given for residence. In the present case, it cannot be said that the premises were given to the petitioner for education, business, trade or storage. Hence the Competent Authority was right in holding that the premises were licensed for residence.

33. Hence, the following order:—

34. Rule is discharged. In the facts and circumstances of the case, there shall be no order as to costs.

35. Certified copy expedited.

Order accordingly.