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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