Gratuitous licence to occupy premises cannot vest in a custodian as part of a textile undertaking

A gratuitous licence to occupy an undivided portion of premises was not an enforceable proprietary right and could not be treated as a lease, tenancy, asset, power, authority or privilege of the textile undertaking. Section 3(2) of the Textile Undertakings (Taking Over of Management) Act, 1983, though broad, did not extend to a mere personal permission to occupy, so the Custodian could not lawfully take over possession or control of the premises on that basis. The demand for possession of an unspecified portion of the premises was therefore unsupported by authority, and relief was granted to the petitioners.

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Issues: Whether the right, power, authority or privilege to occupy an undivided and gratuitous portion of premises could be treated as part of the textile undertaking so as to vest in the Custodian under section 3(2) of the Textile Undertakings (Taking Over of Management) Act, 1983.

Analysis: The occupation in question was found to be only a gratuitous licence and not a lease or tenancy. A licence is a personal permission and is neither transferable nor an enforceable proprietary right. Section 3(2) of the Act, though wide enough to cover the assets, rights, leaseholds, powers, authorities and privileges of the textile company in relation to the undertaking, does not extend to an unenforceable licence to occupy premises. The Court held that such permissive occupation cannot be treated as an asset, right, power, authority or privilege capable of vesting in the Custodian. The demand made for possession of an unspecified portion of the premises was therefore unsupported by authority.

Conclusion: Section 3(2) of the Act was inapplicable to the gratuitous licence, and the respondents had no jurisdiction to take over possession or control of the premises; relief was granted to the petitioners.

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