The Christian Literature Society v. S. Nathaniel — 1999 DIGILAW 904 (MAD)

Judgment :- 1. This Second Appeal has been preferred against the judgment and decree of the learned IX Additional Judge, City Civil Court, Madras dated 31.7.1986 in A.S. No. 477 of 1985, reversing the judgment and decree in O.S. No. 2479 of 1983 dated 31.8.1984. The plaintiff is the appellant in that suit. 2. The appellant/plaintiff filed the suit for recovery of possession of the ‘B’ Schedule property in the plaint which is a portion of the ‘A’ Schedule property and for recovery of Rs. 4125/- as damages and mesne profits on tthe allegation that the appellant is a Company incorporated under the Indian Companies Act, 1930. The respondent/defendant was employed by the appellant as the Personnel Officer and he was permitted to occupy the ‘B’ Schedule property free of rent. As the respondent was provided with a house, house rent allowance was stopped. Since the appellant required the suit property for the purpose of development, it called upon the defendant to vacate the suit property by letter dated 4.5.1982 and he was informed that he would be paid Rs. 500/- per mensem as house rent allowance. Though the respondent agreed to vacate the property, he failed to do so. On 9.5.1982, the respondent resigned from the plaintiffs Company and his resignation was accepted and from that day he ceased to be the employee of the plaintiff Company. As the respondent refused to vacate the suit property and continues in wrongful possession of the same in spite of being called upon to quit and deliver vacant possession, the licence given to him has been terminated. The provisions of the Tamil Nadu Buildings (Lease and Rent Control) Act do not apply to the suit premises, as the plaintiff is a public religious and charitable institution and is exempted from the said Act as per G.O.Ms. No. 2000 (Home) Department, dated 16.8.1976. The damages and mesne profits to which the appellant would be entitled to, are not less than Rs. 750/- per mensem and the same has been quantified as Rs. 4,125/-. 3. The respondent/defendant resisted the suit stating that the same is not maintainable and that the plaintiff society is not a public and charitable trust and the exemption granted in G.O.Ms. No. 2000, Home, dated 16.8.1976 is not applicable. A sum of Rs. 250/-per month was deducted from his salary towards rent for the portion allotted to him. 4,125/-. 3. The respondent/defendant resisted the suit stating that the same is not maintainable and that the plaintiff society is not a public and charitable trust and the exemption granted in G.O.Ms. No. 2000, Home, dated 16.8.1976 is not applicable. A sum of Rs. 250/-per month was deducted from his salary towards rent for the portion allotted to him. Therefore, he is not a licensee. The allegation that he resigned the services on 9.5.1982 is not true. The services of the respondent were wrongfully terminated from the afternoon of 11.5.1982 and he had filed an appeal T.S.E.A. No. 83 of 1982 under the Tamil Nadu Shops and Establishments Act before the Assistant Commissioner of Labour, Madras. The notice dated 9.8.1982 is not a valid termination notice. The appellant/plaintiff is not entitled to any damages much less Rs. 750/-per mensem. 4. On the above pleadings of the parties, the VII Assistant Judge, City Civil Court, formulated the necessary issues. On a consideration of the evidence adduced by both the parties, the learned trial Judge accepted the case of the appellant/plaintiff and decreed the suit as prayed for with costs. 5. The respondent/defendant preferred A.S. No. 477 of 1985 questioning the correctness of the judgment and decree of the learned trial Judge. The learned First Appellate Judge, on a re-appraisal of the evidence reached the conclusion the appellant/plaintiff failed to prove that it is a public charitable trust and G.O.Ms. No. 2000, Home, dated 16.8.1976 is applicable to them. He also held that the respondent/defendant is a tenant of the suit ‘B’ Schedule property and, therefore, proceeding should be instituted under the Tamil Nadu Buildings (Lease and Rent Control) Act for getting vacant possession of the suit property and the appellant is not entitled to recover possession or damages. Ultimately, the learned First Appellate Judge allowed the appeal, set aside the judgment and decree of the learned trial Judge and dismissed the sui t, which has given rise to the present Second Appeal. 6. Ultimately, the learned First Appellate Judge allowed the appeal, set aside the judgment and decree of the learned trial Judge and dismissed the sui t, which has given rise to the present Second Appeal. 6. The learned counsel for the appellant/plaintiff submitted the learned First Appellate Judge has grievously erred in reaching the conclusion that the respondent/defendant is not a licensee, but a tenant of the suit property and, therefore, the appellant should approach the Rent Control Court and initiate proceedings under the Tamil Nadu Buildings (Lease and Rent Control) Act (hereinafter referred to as ‘the Act’ in short) to get vacant possession of the suit property. It was pointed out that the respondent/defendant became an employee of the plaintiff Company as the Personnel Officer to look after the press run by the plaintiff and the suit property was allotted for his occupation for better management of the press free of rent and there is no relationship of landlord and tenant between the plaintiff and the defendant and in the absence of such relationship, proceedings cannot be initiated under the Act. The fact that no rent had been paid by the respondent/defendant is not in dispute and, therefore, the conclusion of the learned first Appellate Judge that there is a relationship of landlord and tenant is against law and is perverse. The attention of this Court was drawn to the ruling of the Supreme Court of India in Baldev Krishna Sahi v. Shipping Corporation of India Limited and another ( 1987 (4) SCC 361 ). In that ruling, while dealing with the relationship created between a Company and its employee and the consequences of the employee taking possession of the property belonging to the company and withholding possession thereof even after termination of his employment and the interpretation to be placed on Section 630(1) of the Companies Act, 1956, at page 370 it has been held thus: “In our considered opinion, the construction placed by the High Court on the provisions contained in Section 630(1) is the only construction possible. We accordingly uphold the view of the High Court of Bombay that the term ‘officer or employee’ of a Company applies not only to existing officers or employees but also to past officers or employees if such officer or employee either (a) wrongfully obtains possession of any property, or (b) having obtained such property during the course of his employment, withholds the same after the termination of his employment. The decision to the contrary of the High Court of Calcutta in Amritlal Chum case does not lay down good law and is over ruled.” 7. From the above ruling of the Supreme Court of India, it is clear that the provisions of Section 630 of the Companies Act applies not only to the serving employees of the Company but also it applies to the past employees. The learned counsel for the appellant further submitted even though the defendant/respondent had resigned from the Company and his resignation has been accepted and his services have been terminated on and from 10.5.1982, the defendant questioned the same in writ and other connected proceedings, where it was held that his services had not been terminated and he claimed reinstatement. However, the defendant had attained superannuation and at present, he is no more an employee of the Company. 8. The learned counsel for the respondent/defendant contended that though the suit property in question had been allotted to the respondent free of rent, the house rent allowance payable to the defendant had been stopped and, therefore, the said house rent allowance should be considered as the rent for the premises and the learned First Appellate Judge is correct is holding that the defendant is a tenant of the suit premises and, therefore the remedy of the plaintiff/appellant to recover vacant possession of the premises lies with the Rent Control Court. The learned counsel for the appellant submitted only if the defendant/respondent is not provided with residential accommodation belonging to the Company, the plaintiff Company is liable to pay house rent allowance and if the premises belonging to the Company itself has been allotted to its employee, there is no need to pay the house rent allowance and the house rent allowance payable cannot be considered as rent in respect of the premises occupied by the employee belonging to the plaintiffs company. I find the submission made by the learned counsel for the appellant/plaintiff is reasonable and the submission made on behalf of the respondent/defendant is far-fetched and does not stand to reason. My view is fortified by the ruling of the Supreme Court of India in B.M. Lall v. Dunlop Rubber Company (India) Limited and another ( AIR 1968 SC 175 ). In para 4, I find the following observation: “The question is whether the occupier under this agreement is a tenant or a licensee. The distinction between a lease and a licence is well known. Section 105 of the Transfer of Property Act defines a lease. Section 52 of the Indian Easements Act defines a licence. A lease is the transfer of a right to enjoy the premises; whereas a licence is a privilege to do something on the premises which otherwise would be unlawful. If the agreement is in writing it is a question of construction of the agreement having regard to its terms and where its language is ambiguous, having regard to its object, and the circumstances under which it was executed whether the rights of the occupier are those of a lessee or a licensee. The transaction is a lease if it grants an interest in the land; it is a licence if it gives a personal privilege with no interest in the land. The question is not of words but of substance and the label which the parties choose to put upon the transaction, though relevant is not decisive. The test of exclusive possession is not conclusive, see Errington v. Errington And Woods , (1952) 1 KB 290 (298) = Associated Hotels of India Limited v. R.N. Kapoor (1960) 1 SCR 368 at pp. 381-385 = ( AIR 1959 SC 1262 at pp. 1268-1270) though it is a very important indication in favour of tenancy. See Addiscombe Garden Estates Limited v. Crabbe , ] 958-1 QB 513 at p. 525. A servant in occupation of premises belonging to his master may be a tenant or a licensee, see Halsburys Laws of England, Third Edition, Vol. 23 Art. 990, p. 411. A service occupation is a particular kind of licence whereby a servant is required to live in the premises for the better performance of his duties. A servant in occupation of premises belonging to his master may be a tenant or a licensee, see Halsburys Laws of England, Third Edition, Vol. 23 Art. 990, p. 411. A service occupation is a particular kind of licence whereby a servant is required to live in the premises for the better performance of his duties. Formerly, the occupation of the servant was regarded as a tenancy unless it was a service occupation, see Nippon Menkwa Kalmshiki v. F. Portlock , AIR 1922 Bom 70. Now it is settled law that a servant may be a licensee though he may not be in service occupation. In Torbett v. Faulkner , (1952) 2 TLR 659 at p. 660, Denning, LJ. said: “A service occupation is, in truth, only one form of licence. It is a particular kind of licence whereby a servant is required to live in the house in order the better to do his work. But it is now settled that there are other kinds of licence which a servant may have. A servant may in some circumstances be a licensee even though he is not required to live in the house, but is only permitted to do so because of its convenience for his work - see Ford v. Longford , (1949) 65 TLR 138, per Lord Justice Asquith and Webb Limited v. Webb (unreported, October 24, 1951) - and even though he pays the rates, Gorham Contractors, Ltd. v. Field (unreported March 26, 1952), and even though he has exclusive possession, Cobb v. Lane , (1952) 1 TLR 1037”. The Lord Justice then continued: “If a servant is given a personal privilege to stay in a house for the greater convenience of his work, and it is treated as part and parcel of his remuneration, then he is a licensee, even though the value of the house is quantified in money; but if he is given an interest in the land, separate and distinct from his contract of service, at a sum properly to be regarded as a rent, then he is a tenant, and none the less a tenant because he is also a servant. The distinction depends on the truth of the relationship and not on the label which the parties choose to put it: see Facchini v. Bryson , (1952) 1 TLR 1386”. The last observation covers the present case. The distinction depends on the truth of the relationship and not on the label which the parties choose to put it: see Facchini v. Bryson , (1952) 1 TLR 1386”. The last observation covers the present case. Under the standard form of agreement of respondent No. 2, the occupation of the officer ceases not only on the termination of his employment but also on his transfer from Calcutta and on his death. The Company is at liberty to allot any other flat to the officer. During the absence of the servant from Calcutta, the Company is at liberty to assign the premises to any other employee or other person. The accommodation is free, but the-Company reserves the right to levy licence fees. All the terms of the agreement are consistent with the expressed intention that the officer is permitted to occupy the flat as a licensee and nothing in the agreement shall be deemed to create the relationship of landlord and tenant. The agreement on its true construction read in the light of the surrounding circumstances operates as a licence and not as a tenancy. It creates no interest in the land. It gives only a personal privilege or licence to the servant to occupy the premises for the greater convenience of his work. 9. I am of the opinion that the principles of law laid down in the above ruling of the Supreme Court squarely applies to the facts of the present case and therefore, I conclude that the defendant is only a licensee of the suit premises and not a tenant and the learned First Appellate Judge has committed a grave error in holding that he is tenant and the appellant/plaintiff should approach the Rent Control Court for getting vacant possession of the property. The fact that the defendant/respondent has attained superannuation is not disputed. Therefore, he is no more an employee of the plaintiffs Company and the fact that he had been ordered to be reinstated will not help him any more. The Supreme Court has clearly laid down in the decision reported in 1987 (4) SCC 361 , cited supra, that the provisions of Section 630 of Companies Act applies equally to present officers as well as past officers. In view of the above, I am clearly of the opinion that the defendant/respondent cannot withhold possession of the suit property any further. In view of the above, I am clearly of the opinion that the defendant/respondent cannot withhold possession of the suit property any further. I am satisfied that the appellant/plaintiff requires the premises for purposes of development and the defendant/respondent shall vacate the suit property forthwith. 10. In the result, the Second Appeal is allowed and the judgment and decree of the First Appellate Judge are set aside and that of the trial Court are restored with costs throughout.