TaxTMI 
TaxTMI 
1985 (5) TMI 242
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....l legislation of any other State. It is an expression coined by the judges in England and, like many other concepts in English law, it has been imported into the jurisprudence of this country and has become an expression of common use to denote a tenant whose contractual tenancy has been determined but who is continuing in possession of the premises by virtue of the protection against eviction afforded to him by the rent control legislation. Though the expression 'statutory tenant' has not been used in any rent control legislation the concept of statutory tenant finds recognition in almost every rent control legislation. The definition of 'tenant' in Section 2(1) of the Delhi Rent Control Act 1958-and I am referring here to the provisions of the Delhi Rent Control Act 1958 because that is the statute with which we are concerned in the present case-includes a statutory tenant. It says in clause (ii) that 'tenant' includes any person continuing the possession after the termination of his tenancy'. Such a person would not be a tenant under the ordinary law but he is recognised as a 'tenant' by the rent control legislation and is therefore described as a statutory tenant as contra-dist....
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....ts a statutory tenant with the same right, obligations and incidents as a contractual tenant, why should it be difficult to hold that, just like a contractual tenant, a statutory tenant also has estate or interest in the premises which can be inherited. Of course, strong reliance was placed on behalf of the landlord on Section 2(1) (iii) of the Delhi Rent Control Act 1958 to combat this conclusion but that provision merely limits or circumscribes the nature and extent of the protection that should be available on the death of a statutory tenant in respect of residential premises. It does not confer a new right of heritability which did not exist aliunde. My learned brother A.N. Sen, J. has discussed this aspect of the case in great detail and I find myself wholly in agreement with what he has said in regard to the true meaning and import of Section 2(1) (iii). Now a word about Ganpat Ladha's case (supra). It is true that there are certain observations in that case which go counter to what we are holding in the present case and to that extent these observations must be held not to enunciate to correct law on the subject. This Court was not really concerned in that case with the que....
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....s and pass appropriate orders and decrees in the other appeals when they are taken up for disposal. Though the question is mainly one of law, it is necessary for a proper appreciation of the question involved to set out in brief the facts of the present appeal which is being disposed of by this judgment. One Wasti Ram was the tenant in respect of Shop No. 20, New Market, West Patel Nagar, New Delhi under the respondent at the monthly rent of ₹ 110. He came into possession as such tenant on and from 1.9.1959. In April, 1970 the respondent landlord determined the tenancy by serving a notice to quit on the tenant Wasti Ram, since deceased. In September, 1970, the respondent landlord filed a petition under S. 14 of the Act for the eviction of the tenant Wasti Ram from the said shop on the following grounds:-(1) nonpayment of rent, (2) bona-fide requirement, (3) change of user from residential to commercial, (4) substantial damage to property and (5) sub-letting. In the petition filed by the landlord against the tenant Wasti Ram, the landlord had also impleaded one Ashok Kumar Sethi, as defendant No. 2 alleging him to be the unlawful sub-tenant of the tenant Wasti Ram. By judgme....
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....ly, the question of subletting, the Rent Control Tribunal allowed the appeal of the landlord and remanded the case to the Rent Controller to decide the question of sub-letting after affording an opportunity to the parties to lead evidence in this regard. Against the order of the Rent Control Tribunal, Smt. Gian Devi Anand, the widow of the deceased tenant, filed an appeal in the High Court impleading in the said appeal the other heirs of Wasti Ram as pro-forma respondents. The landlord also filed a cross-objection in the High Court after the widow had presented the appeal against the order of the Rent Control Tribunal directing remand on the question of sub-letting. In the cross-objection filed by the landlord, the landlord had challenged the finding of the Tribunal on the question of non-payment of rent and had further raised a contention that view of the death of the original tenant Wasti Ram, who continued to remain in possession of the shop as a statutory tenant, the widow and the heirs of the deceased tenant were not entitled to continue to remain in occupation thereof. The High Court held that on the death of the statutory tenant, the heirs of the statutory tenant had no rig....
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....ch entitles a landlord to recover possession of the premises from the tenant is established. It is contended that the protection to the tenant under the Act is against eviction except on grounds recognised by the Act and the protection is only in the nature of personal protection to the tenant who continues to remain in possession after the termination of the tenancy. The contention is that the tenant loses the estate or interest in the tenanted premises after termination of the contractual tenancy and the tenant by virtue of the Act is afforded only a personal protection against eviction; and, therefore, the heirs of such tenant on his death acquire no interest or estate in the premises, because the deceased tenant had none, and they can also claim no protection against eviction, as the protection under the Act is personal to the tenant as long as the tenant continues to remain in possession of the premises after the termination of the tenancy. The argument, in short, is that the protection against eviction after termination of tenancy afforded to a tenant by the Act creates a personal right in favour of the tenant who continues to remain in possession after termination of his ten....
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....t;statutory tenant" which is not to be found in the Act in question or in the other analogous Rent Acts in force in other States in India, is indeed a creature of the English Rent Act. English Rent Act 1977 which was enacted to consolidate the Rent Act 1968, parts III, IV and VIII of the Housing Finance Act, 1972, the Rent Act 1974, sections 7 to 10 of the Housing Rents and Subsidies Act 1975 and certain related enactments, with amendments to give effect to recommendation of the Law Commission, speaks of protected tenants and tenancies in S.1 and defines statutory tenant in S. 2, English Rent Act, 1977 is in the nature of a complete Code governing the rights and obligations of the landlord and the tenant and their relationship in respect of tenancies covered by the Act. As the provisions of the English Act are materially different from the provisions of the Act in question and other Rent Control Acts in force in other States in India, the decisions of the English Courts and the passages from the various authoritative books including the passages from Halsbury which are all concerned with English Rent Acts are not of any particular assistance in deciding the question involved i....
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....nr.(2). The statute considered in Anand Nivas(1) case was Bombay Rents, Hotel and Lodging Rates Control Act, 1947 as amended in 1959. The question there was, whether a tenant whose tenancy had been terminated had any right to sublet the premises. Of the three learned Judges composing the Bench that heard the appeal, Hidayatullah and Shah, JJ. held that a statutory tenant, meaning a tenant whose tenancy has determined but who continues in possession, has no power of subletting. Sarkar J. delivered a dissenting opinion. Shah J. who spoke for himself and Hidayatullah J. observed in the course of their judgment: 'A statutory tenant has no interest in the premises occupied by him, and he has no estate to assign or transfer. A statutory tenant is, as we have already observed, a person who on determination of his contractual right, is permitted to remain in occupation so long as he observes and performs the conditions of the tenancy and pays the standard rent and permitted increases. His personal right of occupation is incapable of being transferred or assigned, and he having no interest in the property there is no estate on which subletting may operate.' It appears from the judgment of....
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....ion 15 of the Rent and Mortgage Interest (Restriction) Act, 1920. That section which provided inter alia that a tenant who by virtue of that Act retained possession of any dwelling house to which the Act applied, so long as he retained possession, must observe and would be entitled to the benefit of all the terms and conditions of the original contract of tenancy which were consistent with the provisions of the Act, carried the description in the margin 'conditions of statutory tenancy'. Since then the term has been used in England to describe a tenant protected under the subsequent statutes until Section 49(1) of the Housing Repairs and Rent Act, 1954 for the first time define 'statutory tenant' and 'statutory tenancy'. 'Statutory Tenant' was defined as a tenant 'who retains possession by virtue of the Rent Acts and not as being entitled to a tenancy' and it was added, 'statutory tenancy' shall be construed accordingly.' This definition of 'statutory tenancy' has been incorporated in the Rent Acts of 1957 and 1965. In England 'statutory tenancy' does not appear to have had any clear and fixed incidents; the concept was developed over the years from the provisions of the successive....
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.... from the provisions of the English Rent Acts. But it is not clear how it can be assumed that the position is the same in this country without any reference to the provisions of the relevant statute. Tenancy has its origin in contract. There is no dispute that a contractual tenant has an estate or property in the subject matter of the tenancy, and heritability is an incident of the tenancy. It cannot be assumed, however, that with the determination of the tenancy the estate must necessarily disappear and the statute can only preserve his status of irremovability and not the estate he had in the premises in his occupation. It is not possible to claim that the 'sanctity' of contract cannot be touched by legislation. It is therefore necessary to examine the provisions of the Madhya Pradesh Accommodation Control Act, 1961 to find out whether the respondents' predecessors-in-interest retained a heritable interest in the disputed premises even after the termination of their tenancy. Section 2(i) of the Madhya Pradesh Accommodation Control Act 1961 defines 'tenant' to mean, unless the context otherwise requires: 'a person by whom or on whose account or behalf the rent of any accommodati....
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.... very strong reliance has been placed on behalf of the landlords. In this case under Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, the Court was concerned with the question whether the heirs of deceased tenant whose tenancy has been determined and against whom eviction proceeding was pending, were entitled to the benefit of protection afforded to the tenant after the determination of the tenancy in respect of the business premises. This Court noticed at page 202 that the tenancy right was being claimed under S. 5(11) (c) of the said Act which, as recorded in the judgment, is in the following terms : "5(11)(c) : 'tenant' means any person by whom or on whose account rent is payable for any premises and includes- (a) ... ... ... ... ... (b) ... ... ... ... ... (c) any member of the tenant's family residing with him at the time of his death as may be decided in default of agreement by the Court." While dealing with this question, this Court held at pp. 202-204 : "In these circumstances, the question arose for decision whether the present respondent, whose residence is given in the special leave petition as 'Agakhan Building, Haines Road, Bombay', c....
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....e death of a tenant in respect of such premises, any member of the tenant's family carrying on business with the tenant in such premises at the time of his death shall be a tenant and the protection of the Rent Act shall be available to him. But we fail to see the purpose the legislature could have had in view in according protection in respect of business premises to a member of the tenant's family residing with him at the time of his death. The basic postulate of the protection under the Rent Act is that the person who is sought to be protected must be in possession of the premises and his possession is protected by the legislation. But in case of business premises, a member of the family of the tenant residing with him at the time of his death may not be in possession of the business premises; he may be in service or he may be carrying on any other business. And yet on the view taken by the High Court, he would become tenant in respect of the business premises with which he has no connection. We are, therefore, in agreement with the view taken by one of us (Bhagwati J.) in the Gujarat High Court about the correct meaning of Section 5(11) (c) in Perupai Manilal Brahmin & Ors. v. ....
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....s. Under the circumstances it became imperative for the legislature to intervene to protect the tenants against harassment and exploitation by avaricious landlords and appropriate legislation came to be passed in all the States and Union Territories where the situation required an interference by the legislature in this regard. It is no doubt true that the Rent Acts are essentially meant for the benefit of the tenants. It is, however, to be noticed that the Rent Acts at the same time also seek to safeguard legitimate interests of the landlords. The Rent Acts which are indeed in the nature of social welfare legislation are intended to protect tenants against harassment and exploitation by landlords, safeguarding at the same time the legitimate interests of the landlords. The Rent Acts seek to preserve social harmony and promote social justice by safeguarding the interests of the tenants mainly and at the same time protecting the legitimate interests of the landlords. Though the purpose of the various Rent Acts appear to be the same, namely, to promote social justice by affording protection to tenants against undue harassment and exploitation by landlords, providing at the same time ....
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....any person by whom or on whose account or behalf the rent of any premises is, or, but for a special contract would be, payable, and includes- (i) a sub-tenant; (ii) any person continuing in possession after the termination of his tenancy; and (iii) in the event of the death of the person continuing in possession after the termination of his tenancy, subject to the order of succession and conditions specified respectively, in Explanation I and Explanation II to this clause, such of the aforesaid person's- (a) spouse, (b) son or daughter, or, where there are both son and daughter, both of them, (c) parents, (d) daughter-in-law, being the widow of his predeceased son, as had been ordinarily living in the premises with such person as a member or members of his family upto the date of his death, but does not include, - (A) any person against whom an order or decree for eviction has been made, except where such decree or order for eviction is liable to be re-opened under the proviso to section 3 of the Delhi Rent Control (Amendment) Act, 1976. (B) any person to whom a licence, as defined by section 52 of the Indian Easements Act, 1882 has been granted. Explanation I.-The order ....
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....as it stands at present in the Act, is after the amendment of the definition in S. 2(1) of the earlier Act, by the Amendment Act (Act 18 of 1976) which was introduced with retrospective effect. Prior to the amendment, the definition of tenant as it stood in the original Act, 1958 was in the following terms :- "'tenant' means any person by whom or on whose account or behalf the rent of any premises is, or, but for a special contract would be, payable and includes a subtenant and also any person continuing in possession after the termination of his tenancy but shall not include any person against whom any order or decree for eviction have been made". It is, therefore, clear from the definition of tenant, whether in the original Act or in the amended Act, that the tenant within the meaning of the definition of the term in the Act includes any person continuing in possession after the termination of his tenancy. It will be seen that the definition of tenant in Madhya Pradesh Accommodation Control Act, 1961 on which the decision in Damadilal's case (supra) mainly turns, is similar to the definition of tenant as given in the Delhi Act in the sense that the tenant under both t....
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....ay be passed. This section, therefore, clearly postulates that despite the termination of the tenancy and notwithstanding the provisions of any other law which might have been applicable on the termination of the contractual tenancy, protection against eviction is applicable to every tenant as defined in S. 2(1) of the Act. This section clearly establishes that determination of a contractual tenancy does not disqualify him from continuing to be a tenant within the meaning of this Act and the tenant whose contractual tenancy has been determined enjoys the same position and is entitled to protection against eviction. The other sections in this chapter also go to indicate that the tenant whose tenancy has been terminated enjoys the same status and benefit as a tenant whose tenancy has not been terminated, and a tenant after termination of his tenancy stands on the same footing as the tenant before such termination. Chapter III A which provides for summary trial for certain applications also does not make any distinction between a tenant whose tenancy has been determined and a tenant whose tenancy had not been terminated. Chapter IV which deals with deposit of rent consists of sections....
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....ee will come to an end on the passing of an order or a decree for eviction. Until then, under the extended definition of the word 'tenant' under the various State Rent Acts, the tenant continues to be a tenant even though the contractual tenancy has been determined by giving a valid notice under section 106 of the Transfer of Property Act. In many cases the distinction between a contractual tenant and a statutory tenant was alluded to for the purpose of elucidating some particular aspects which cropped up in a particular case. That led to the criticism of that expression in some of the decisions. Without detaining ourselves on this aspect of the matter by any elaborate discussion, in our opinion, it will suffice to say that the various State Rent Control Acts make a serious encroachment in the field of freedom of contract. It does not permit the landlord to snap his relationship with the tenant merely by his Act of serving a notice to quit on him. Inspite of the notice, the law says that he continues to be a tenant and he does so enjoying all the rights of a lessee and is at the same time deemed to be under all the liabilities such as payment of rent etc. in accordance with the law....
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....ises. This interest or estate which the tenant under the Act despite termination of the contractual tenancy continues to enjoy creates a heritable interest in the absence of any provision to the contrary. We have earlier noticed the decision of this Court in Damadilal's case (supra). This view has been taken by this Court in Damadilal's case and in our opinion this decision represents the correct position in law. The observations of this Court in the decision of the Seven Judge Bench in the case of V. Dhanapal Chettiar v. Yesodai Ammal (supra) which we have earlier quoted appear to conclude the question. The amendment of the definition of tenant by the Act 18 of 1976 introducing particularly 2(1)(iii) does not in any way mitigate against this view. The said sub-section (iii) with all the three Explanations thereto is not in any way inconsistent with or contrary to subsection (ii) of Section 2(1) which unequivocally states that tenant includes any person continuing in possession after the termination of his tenancy. In the absence of the provision contained in subsection 2(1)(iii). the heritable interest of the heirs of the statutory tenant would devolve on all the heirs of the 'so ....
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.... let out to the tenant for residential purposes a good ground for eviction of the tenant from such premises. These grounds, however, are not made available in respect of commercial premises. We find it difficult to agree with the observations which we have quoted earlier made by this Court in the case of Ganapat Ladha v. Sashi Kant Vishnu Shinde (supra). It may be noticed that the Legislature itself treats commercial tenancy differently from residential tenancy in the matter of eviction of the tenant in the Delhi Rent Act and also in various other Rent Acts. All the grounds for eviction of a tenant of residential premises are not made grounds for eviction of a tenant in respect of commercial premises. S. 14(1)(d) of the Delhi Rent Act provides that non-user of the residential premises by the tenant for a period of six months immediately before the filing of the application for the recovery of possession of the premises will be a good ground for eviction, though in case of a commercial premises no such provision is made. Similarly, S. 14(1)(e) which makes bona fide requirement of the landlord of the premises let out to the tenant for residential purposes a ground for eviction of t....
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....ing about any change in the status of the tenant and the tenant by virtue of the definition of the 'tenant' in the Act and the other Rent Acts continues to enjoy the same status and position unless there be any provisions in the Rent Acts which indicate to the contrary. The mere fact that in the Act no provision has been made with regard to the heirs of tenants in respect of commercial tenancies on the death of the tenant after termination of the tenancy, as has been done in the case of heirs of the tenants of residential premises, does not indicate that the Legislature intended that the heirs of the tenants of commercial premises will cease to enjoy the protection afforded to the tenant under the Act. The Legislature could never have possibly intended that with the death of a tenant of the commercial premises, the business carried on by the tenant, however flourishing it may be and even if the same constituted the source of livelihood of the members of the family, must necessarily come to an end on the death of the tenant, only because the tenant died after the contractual tenancy had been terminated. It could never have been the intention of the Legislature that the entire family....
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....ly be conceived that the Legislature would intend to deny to one class of tenants, namely, individuals the protection which will be enjoyed by the other class' namely, the Corporations and Companies and other bodies with juristic personality under the Act. If it be held that commercial tenancies after the termination of the contractual tenancy of the tenant are not heritable on the death of the tenant and the heirs of the tenant are not entitled to enjoy the protection under the Act, an irreparable mischief which the Legislature could never have intended is likely to be caused. Any time after the creation of the contractual tenancy, the landlord may determine the contractual tenancy, allowing the tenant to continue to remain in possession of the premises, hoping for an early death of the tenant, so that on the death of a tenant he can immediately proceed to institute the proceeding for recovery and recover possession of the premises as a matter of course, because the heirs would not have any right to remain in occupation and would not enjoy the protection of the Act. This could never have been intended by the Legislature while framing the Rent Acts for affording protection to the t....
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....n afforded by the Rent Act to a tenant after determination of the tenancy and to his heirs on the death of such tenant is a creation of the Act for the benefit of the tenants, it is open to the Legislature which provides for such protection to make appropriate provisions in the Act with regard to the nature and extent of the benefit and protection to be enjoyed and the manner in which the same is to be enjoyed. If the Legislature makes any provision in the Act limiting or restricting the benefit and the nature of the protection to be enjoyed in a specified manner by any particular class of heirs of the deceased tenant on any condition laid down being fulfilled, the benefit of the protection has necessarily to be enjoyed on the fulfillment of the condition in the manner and to the extent stipulated in the Act. The Legislature which by the Rent Act seeks to confer the benefit on the tenants and to afford protection against eviction, is perfectly competent to make appropriate provision regulating the nature of protection and the manner and extent of enjoyment of such tenancy rights after the termination of contractual tenancy of the tenant including the rights and the nature of protec....
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....r the Act. It appears that the High Court passed an order for eviction against the heirs of Wasti Ram only on this ground without going into the merits of the appeal filed by the appellant in the High Court against the order of remand and also without considering the cross-objections filed in the High Court by the landlord. We accordingly, set aside the judgment and order of the High Court and we remand the case to the High Court for decision of the appeal and the cross objection on merits. The appeal is accordingly allowed to the extent indicated above with no order as to costs. Before concluding, there is one aspect which we consider it desirable to make certain observations. The owner of any premises, whether residential or commercial, let out to any tenant, is permitted by the Rent Control Acts to seek eviction of the tenant only on the ground specified in the Act, entitling the landlord to evict the tenant from the premises. The restrictions on the power of the landlords in the matter of recovery of possession of the premises let out by him to a tenant have been imposed for the benefit of the tenants. Inspite of various restrictions put on the landlords right to recover posse....