1. Leave and licence agreement — Expiry of term — Continued occupation — Vacating premises due to fire — Suit for recovery of possession under Section 6, Specific Relief Act. (Para 2 , 3 , 4 , 18 , 19 )
Back
Next 
1991 Supreme(SC) 472
SUPREME COURT OF INDIA
K.Ramaswamy : N.M.Kasliwal
East India Hotels Limited
Versus
Syndicate Bank
Case No. : 3697 of 1991
Date of Decision : 9/12/91
Advocates Appeared: Anand Chetna : Bhushan Shanti : Divan Anil B. : Ganesh S. : Gupta Nina : Kamdar S.U. : Kumar Vineet : Mullick P.K. : Naqvi Syed : Nariman F.S. : Nariman R.F. : Pai V.V. : Parekh P.H. : Parekh P.K. : Ray Tripurari : Sibal Kapil : Thakkar Nitin
Advocates:
Anil B.Divan, Chetna Anand, F.S.NARIMAN, KAPIL SIBAL, NINA GUPTA, Nitin Thakkar, P.H.Parekh, P.K.MULLICK, R.F.NARIMAN, S.GANESH RAO, S.U.KAMDAR, SHANTI BHUSHAN, Syed Naqvi, Tripurari Ray, V.V.PAL, VINIT KUMAR
Anil B.Divan, Chetna Anand, F.S.NARIMAN, KAPIL SIBAL, NINA GUPTA, Nitin Thakkar, P.H.Parekh, P.K.MULLICK, R.F.NARIMAN, S.GANESH RAO, S.U.KAMDAR, SHANTI BHUSHAN, Syed Naqvi, Tripurari Ray, V.V.PAL, VINIT KUMAR
The judgment examines whether a licensee who remains in possession after the license expires (becoming a trespasser) is entitled to recover possession under Section 6 of the Specific Relief Act, 1963, if dispossessed without consent and not in due course of law.
Headnote:(A) Specific Relief Act, 1963 - Section 6 - Suit for recovery of possession - Dispossession without consent - Due course of law - Licensee continuing in possession after expiry of license - Summary remedy under Section 6 is intended to discourage self-help and prevent dispossession otherwise than through legal process, regardless of the title of the parties. (Paras 6, 22, 26, 44)
(B) Settled Possession - A person in settled possession, even if a trespasser, is entitled to protect their possession against the true owner unless evicted in due course of law - Distinction exists between a rank trespasser and one who entered lawfully but continued unlawfully - Possession that is effective, undisturbed, and to the knowledge of the owner constitutes settled possession. (Paras 37, 38, 44)
(C) Licensee vs. Tenant - While a license does not create an interest in the property and legal possession remains with the licensor, a licensee in long-term settled possession may be protected from unilateral dispossession to maintain the rule of law and public order. (Paras 33, 44)
Facts of the case:
An owner granted a leave and license agreement to a financial institution for a specific period. After the license expired, the institution continued to occupy the premises despite repeated requests to vacate. Following a fire, the institution shifted its business operations to another location but left furniture and records in the premises. The owner eventually locked the premises and denied entry, leading the institution to file a suit for recovery of possession under Section 6 of the Specific Relief Act, 1963.
Findings of Court:
The court delivered conflicting judgments. One judge held that a licensee who becomes a trespasser after the license expires has no right to recover possession under Section 6 against the true owner, particularly when the vacation of premises was precipitated by a fire (vis major). The other judge held that a person in settled possession, regardless of title or the expiry of a license, cannot be dispossessed without following the due process of law, as the objective of Section 6 is to prevent high-handedness and self-help.
Issues: Whether a licensee who continues in possession after the expiry of the license period and is subsequently dispossessed without consent is entitled to recover possession under Section 6 of the Specific Relief Act, 1963.
Ratio Decidendi: The conflict arises from two interpretations of Section 6: one that a trespasser cannot claim possession against the true owner, and another that the law protects "settled possession" to ensure that even unauthorized occupants are ejected only through the regular normal process of law to preserve social order.
Result: Conflicting judgments; matter referred to a larger bench for resolution.
Judgement Key Points
- Supreme Court of India case involving East India Hotels Limited (Company) and Syndicate Bank (Bank). (!) (!)
- Special leave granted; appeal against Bombay High Court judgment dated 6/11/1990 decreeing Bank's suit under Section 6 of Specific Relief Act. [1000351770001][1000351770002]
- Company borrowed Rs. 30 lakhs from Bank at 12.5% interest, repayable in 10 years; Bank granted leave and licence for 15,000 sq. ft. in Oberoi Towers for 12 years at Rs. 60,000/month compensation. [1000351770002]
- Licence renewable for another 12 years on Bank's written application if Company deems fit and mutually agreed terms. [1000351770002]
- Company repaid loan; reminded Bank of expiry on 31/12/1986 and requested vacation due to space constraints. [1000351770002]
- Bank requested renewal; Company refused; Bank continued possession post-expiry, Company rejected compensation and served notice on 22/01/1990. [1000351770002]
- Fire on 12/04/1990 forced vacation; Bank shifted business elsewhere, left belongings; Company later restricted access. [1000351770003]
- Bank filed suit under Section 6 on 29/08/1990; parties agreed to treat notice of motion hearing as suit trial, conceding dispossession as alleged. [1000351770003]
- High Court issues: (1) Maintainability of suit; (2) Relief if maintainable. Held Bank, as licensee in settled possession post-expiry, entitled to possession under Section 6; decree stayed 10 weeks. [1000351770004][1000351770005] (!) (!) (!)
- High Court observations: Criticized public bodies like Bank for exploiting litigation delays; suggested Company sue on title. (!) (!) (!) (!) (!)
- Kasliwal J: Section 6 summary remedy for dispossession without consent or due course of law; no inquiry into title. [1000351770005]
- Admitted: Agreement was leave and licence expiring 31/12/1986; no renewal; Bank trespasser post-expiry; no force used by Company. [1000351770005][1000351770006]
- Fire caused Bank to vacate voluntarily; Bank's letter admitted vacation and requested re-possession for repairs. [1000351770006] (!) (!) (!) (!) (!) (!) (!)
- No force in key handover; Bank not dispossessed forcibly; as trespasser, not entitled to Section 6 relief against owner
Legal Category Hierarchy
Table of Contents
2. Whether a licensee continuing after expiry is a trespasser barred from Section 6 relief — Whether dispossession occurred without consent and otherwise than in due course of law. (Para 20 , 21 , 24 )
3. Analysis of due course of law and settled possession — Evaluation of whether a licensee becomes a rank trespasser upon termination of the licence. (Para 5 , 6 , 7 , 8 , 11 , 12 , 14 , 15 , 17 , 22 , 23 , 26 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 )
4. Conflicting views on whether a trespasser can recover possession under Section 6 or if settled possession protects an occupant from unilateral dispossession. (Para 9 , 14 , 15 , 44 )
5. Appeal allowed and suit dismissed by one judge; appeal dismissed by the other; matter referred to a larger bench for resolution of conflict. (Para 16 , 48 , 49 )
6. What is the scope of Section 6 of the Specific Relief Act regarding dispossession?
It provides a summary remedy for any person dispossessed of immovable property without consent and otherwise than in due course of law, regardless of title, provided the suit is filed within six months from the date of dispossession. (Para 6 , 22 , 23 , 26 )
7. Does a licensee who remains in possession after the expiry of the licence qualify as a trespasser?
The court presented conflicting views: one holding that such a person becomes a trespasser with no right to claim possession against the owner, and another holding that they may be in settled possession, requiring eviction through due process of law. (Para 7 , 9 , 15 , 33 , 34 , 44 )
8. What constitutes due course of law in the context of recovering possession?
Due course of law refers to the regular normal process of law operating through a competent tribunal, ensuring the affected person is heard and the controversy is determined by proof in accordance with established legal procedures. (Para 30 , 31 )
9. What is settled possession and how does it affect the right to resist dispossession?
Settled possession is effective, undisturbed possession known to the owner. A person in settled possession, even if a trespasser, cannot be dispossessed by force and must be evicted through legal proceedings to maintain the rule of law. (Para 37 , 38 , 44 )
JUDGMENT
KASLIWAL, JJ.
(1) SPECIAL leave granted.
(2) THIS appeal is directed against the judgment of the Bombay High court dated 6/11/1990 whereby a suit filed by the Syndicate Bank under S. 6 of the Specific Relief Act, 1963 (hereinafter referred to as the Act) has been decreed.
(3) THE East India Hotels Ltd. (hereinafter referred to as the Company) took a loan of Rs. 30 lakhs from the Syndicate Bank. By an agreement dated 27/12/1974 the amount of Rs. 30 lakhs was advanced to the company on interest at the rate of 12.5 per cent per annum and . the amount was repayable in ten years. The Syndicate Bank executed a leave and licence agreement in favour of the company in respect of 15,000.00 sq. ft. on the mezzanine to the ground floor of the hotel Oberoi Towers situated at Nariman Point, Bombay on a monthly compensation of Rs. 60,000.00 per month, belonging to the company, for a period of 12 years. The leave and licence agreement inter alia provided that at the end of the said period of 12 years, the company shall, on the application of the licensee in writing, renew the licence for another period of 12 years if the company so deems fit on the terms and conditions to be mutually agreed upon. Admittedly the company repaid the entire loan and interest within the scheduled period. The company by a letter dated 17/09/1984 reminded the bank that the agreement was going to expire on 31/12/1986. The company also stated that as they were cramped for space, the bank should vacate the premises at the end of the term. The company by another letter dated 18/04/1986 again requested the bank to vacate the premises by the end of December 1986. The bank by its letter dated 8/07/1986 requested the company that the period of license may be renewed for a further period of 12 years. The company by its letter dated 9/08/1986 informed the bank that the request for renewal of licence was not acceptable and again requested the bank to hand over vacant possession on the expiry of the term. The bank did not hand over vacant possession of the premises even after December 1986 and sent the monthly compensation to the bank (sic company). The company did not accept the amount nor acquiesced in the continuance of possession of the bank after the expiry of the period of licence which came to an end on 31/12/1986. Some correspondence went on between the parties but the company did not agree for the extension of the period of licence. The company ultimately served a legal notice through their advocate on 22/01/1990 calling upon the bank to hand over vacant possession. The bank through their advocates sent a reply dated 12/02/1990 staling as under:
"I am gathering necessary instructions in the matter and shall revert to you with my clients reply within a reasonable time.
IN the meantime, I am instructed to state that my clients did not admit any of the contentions raised by your clients in your letter."
(4) ON 12/04/1990 a fire broke out in Oberoi Towers and as a result of which not only the bank but all the other shop owners had to vacate the premises. Thereafter, again some correspondence took place between the parties but the only circumstance necessary to be mentioned is that the bank started functioning its business at another place but its papers, furniture, fixtures etc. continued to remain in the premises. Initially the company permitted the staff of the bank to visit the premises on three days in a week but subsequently with effect from July 1990 the company did not permit them to enter the premises at all. In the above circumstances the bank filed a suit under S. 6 of the Act on 29/08/1990 on the original side of the Bombay High court. The company filed a written statement and contested the suit. A notice of motion was issued^for interim reliefs and it reached for hearing on 1/11/1990. On that date after the arguments of Mr Tuizapurkar, learned counsel for the plaintiff bank were over, Mr Nariman appearing for the defendant
