# NATRAJ STUDIOS (P) LTD v. NAVRANG STUDIOS & ANR

- **Citation:** [1981] 2 S.C.R. 466
- **Court:** Supreme Court of India
- **Decided:** 1981-01-07
- **Case number:** Civil Appeal Nos. 1906-1907 B Of 1980
- **Bench:** R. S. Pathak, 0. CmNNAPPA REDDY, Baharul Islam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/natraj-studios-p-ltd-v-navrang-studios-anr-8117
- **Pages:** 19

## Headnote

Bonzbay Rents, Hotel and Lodging House Rates Control Act 1941-Sectioua
5 and SA and 28-Scope of-Exclusive jurisdiction to try suits under the Act
given to Court of S1nall Causes-Parties, if could confer jurisdiction on a ·arbit~
r.ator by agreement.
1hc respondent granted to the appellant "leave and licence" for the use of
their two studios, machinery, equipment and certain other
materials:
With
effect from February 1, 1973 section 15A was inserted in the Bombay Rents,
Hotel and Lodging House Rates Control Act, 1947 under which any person
who was in occupation of any premises on· February 1, 1973 as a licensee shall
be deemed to have become on that date a tenant of the landlord in respect of
the premises or part thereof in his occupation.
The 'leave and licence' agree·
ment was in force on that date.
In April, 1979 the respondent purporting to
terminate
the
l~ave
and
licence' agreement called upon the appellant to hand over possession of the
studio3 to the first respondent. Immediately thereafter the appellant filed a suit
for a declaration that the appella.nt was a monthly tenant of the two studios and
other structures covered by the agreement.
In August, 1979 the appellant filed an application under section 33 of the
Arbitration Act for a declaration that the arbitration clause in the 'leave and
licence' agreement was invalid and inoperative. The application was dismissed
by a single Judge on the ground that he had no jurisdiction to determine the
rights, if any, of the appellant as a tenant. A Division Bench of the liigh
Court dismissed the appellant's appeal against the order of the single Judge en
the ground that it was not maintainable under section 39 of the Arbitration
Act.
Allowing the first respondent's application under section 8 of the Arbitration Act the High Court appointed the second respondent as the sole arbitrator.
Jn appeal against the dismissal of his suit and against the judgment of the
High Court appointing the second respondent as sole arbitrator it was contended
on behalf of the appellant that under tne 1947 Act the dispute between
the
parties could only be resolved by the Court of Small Causes and that the juris·
djction of every other Court including that of an arbitrator was excluded.
On behalf of the first respondent it was contended that the subject matter
of 'leave and licence' agreement was not 'premises' within the meaning of that
expression as defined in the 1947 Act but the business as· such and therefore the
provisions of the Act were not attracted.
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NATRAJ STUDIOS V. NAVRANG STUDIOS
467
Allowing the appeai
IIELD : A building in which a person is licensed te run a. business is "premises" within the meaning of sections 5(8) and 5(8A), to which part II of the
Act is made applicable by section 6(1) notwithstanding the fact that the build·
ing is not let as such. [474D]
If the definitions of "premises let or given on licence for business", "premises" and "licensee" are read together it will be clear that even a building
so conshucted or designed as to be capable of being used
for running a
tcrtain business Only is "premises" within the meaning of section 5(8)
and
section 5 (SA) and does not cease to be premises merely because the building is
capable of being used for the particular business
only or merely
because
machinery or equipment must necessarily go alongwith the building if it is to
be used for the business. If "premises" did not, by definition, include a build·
ing given on licence but meant only a building which was let, it could perhaps
be argued that the expression 'premises' would not take within its
stride
a
business let as a business, but the situation is changed by the inclusion of any
building given on licence in the definition of "premises" a-nd by the deeming of
a licensee as a tenant under section 15A of the Act. A licensee is not really
a tenant but is a person deemed to be a tenant because of section 15A of the
Act. [474 A-BJ
Uttamchand v. S. M. Lalwani A.l

## Text

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466
NATRAJ STUDIOS (P) LTD.
v.
NAVRANG STUDIOS & ANR.
January 7, 1981
(R. S. PATHAK, 0. CmNNAPPA REDDY AND BAHARUL ISLAM;'JJ.]
Bonzbay Rents, Hotel and Lodging House Rates Control Act 1941-Sectioua
5 and SA and 28-Scope of-Exclusive jurisdiction to try suits under the Act
given to Court of S1nall Causes-Parties, if could confer jurisdiction on a ·arbit~
r.ator by agreement.
1hc respondent granted to the appellant "leave and licence" for the use of
their two studios, machinery, equipment and certain other
materials:
With
effect from February 1, 1973 section 15A was inserted in the Bombay Rents,
Hotel and Lodging House Rates Control Act, 1947 under which any person
who was in occupation of any premises on· February 1, 1973 as a licensee shall
be deemed to have become on that date a tenant of the landlord in respect of
the premises or part thereof in his occupation.
The 'leave and licence' agree·
ment was in force on that date.
In April, 1979 the respondent purporting to
terminate
the
l~ave
and
licence' agreement called upon the appellant to hand over possession of the
studio3 to the first respondent. Immediately thereafter the appellant filed a suit
for a declaration that the appella.nt was a monthly tenant of the two studios and
other structures covered by the agreement.
In August, 1979 the appellant filed an application under section 33 of the
Arbitration Act for a declaration that the arbitration clause in the 'leave and
licence' agreement was invalid and inoperative. The application was dismissed
by a single Judge on the ground that he had no jurisdiction to determine the
rights, if any, of the appellant as a tenant. A Division Bench of the liigh
Court dismissed the appellant's appeal against the order of the single Judge en
the ground that it was not maintainable under section 39 of the Arbitration
Act.
Allowing the first respondent's application under section 8 of the Arbitration Act the High Court appointed the second respondent as the sole arbitrator.
Jn appeal against the dismissal of his suit and against the judgment of the
High Court appointing the second respondent as sole arbitrator it was contended
on behalf of the appellant that under tne 1947 Act the dispute between
the
parties could only be resolved by the Court of Small Causes and that the juris·
djction of every other Court including that of an arbitrator was excluded.
On behalf of the first respondent it was contended that the subject matter
of 'leave and licence' agreement was not 'premises' within the meaning of that
expression as defined in the 1947 Act but the business as· such and therefore the
provisions of the Act were not attracted.
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NATRAJ STUDIOS V. NAVRANG STUDIOS
467
Allowing the appeai
IIELD : A building in which a person is licensed te run a. business is "premises" within the meaning of sections 5(8) and 5(8A), to which part II of the
Act is made applicable by section 6(1) notwithstanding the fact that the build·
ing is not let as such. [474D]
If the definitions of "premises let or given on licence for business", "premises" and "licensee" are read together it will be clear that even a building
so conshucted or designed as to be capable of being used
for running a
tcrtain business Only is "premises" within the meaning of section 5(8)
and
section 5 (SA) and does not cease to be premises merely because the building is
capable of being used for the particular business
only or merely
because
machinery or equipment must necessarily go alongwith the building if it is to
be used for the business. If "premises" did not, by definition, include a build·
ing given on licence but meant only a building which was let, it could perhaps
be argued that the expression 'premises' would not take within its
stride
a
business let as a business, but the situation is changed by the inclusion of any
building given on licence in the definition of "premises" a-nd by the deeming of
a licensee as a tenant under section 15A of the Act. A licensee is not really
a tenant but is a person deemed to be a tenant because of section 15A of the
Act. [474 A-BJ
Uttamchand v. S. M. Lalwani A.l.R. 1965 S.C. 716 and Dwarka Prasad
v. Dwarka Das Saraf, [19761 I S.C.R. 277 held inapplicable.
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The 1947 Act applies to a licence to use a building even if the building is
to be used necessarily and simultaneously along with machinery and
fixtures
separately licensed to be used.
In such a situation there can be no question
Eof the licence to use the machinery and the licence to use the building being
dominant and subsidiary purposes of the agreement. [475 G]
The argument that the agreement was primarily a licence to t!_arry on the
business of shooting films by using the machinery and equipments listed in the
agreement and that the licence to use the building was
only a
subsidiary
incident of the dominant purpose of the agreement is not valid. The two studios
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given on licence would still be premises given on licence for business within the
meaning of the Act so as to attract its protective provisions. [475 H]
The aggrement in the instant case is a composite agreement which gave
"leave and licence" tc use tbc studios and other premises for producing films
and to use the machinery and equipment for the same purpose. The liccnsors
parted with possession of the studios and the machinery in favour of the licen·
sees.
Notwithstanding the fact that the agreement was a composite one and the
two licences were to operate "simultaneously and together" there could be no
gainsaying the fact that the studios and other premises were certainly given on
licence for the business of producing films.
The parties themselves were cons·
cious that the licence granted by the licensor in favour of the licensee was
in
respect of the studios &nd other premises and that there was even a risk of the
lic:ence being construed as a lease. They were, therefore, anxious to emphasise
that what was granted was a licence and not a, lease. Both by reason of section.
28 of the 1947 Act and by reason of the broader consideration of public policy
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468
SUPREME COURT REPORTS
[1981] 2 S.C.R.
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the Court of Small Causes has and the arbitrator has not the
jurisdiction to
decide the question whether the rcspondent-1icensor~landlord is e-ntiiled to seek
p05session of the two studios and other premises together with machinery and
equipment from the appellant-licensee-tenant. [476 G-H]
Section 28(1) of the 1947 Act po.ritively confc-f8 jurisdiction on the Collrt
of Small Causes to entertain and try any suit between, among others, a liccttsor
._II
and a licensee relating to the recovery of licence fee and to decide any application made under the Act and negatively exclude8 the jurisdiction of ony other
Court from entertaining any such suit, proceeding or application or dealing with
such claim or question. [477 D-E]
J)
The scheme of the 1947 Act shows that the conferment of exclusive jurisdiction on certain C-Ourts is pursuant to the social objective at which the legElat1on aims. Public policy requires that contracts to the
contrary cannot
be
permitted. Therefore, public policy requires that the parties cannot.
be permitted to contract out of the legislative mandate which require~ certain kinds
of d;sputes to be settled by special C-Ourts constituted by the Act. [477 G]
Exclusive jurisdiction to entertain arul try certain suits, to
decide
certain
<1pplications or to deal with cert.'"lin claims or questions given to the Court of
Small Causes does not necessarily mean exclusive jurisdiction to decide jurlsdic~
tional facts also. Juri..,dictional facts have necess:)fl1y to be decided by the Court
where the jurisdictional question falls to be decided and the question n1ay fall
for decision before tJ1e Court of exclusive jurisdiction or before the C.ourt of
ordinary jurisdiction. A suit by the landlord against the tenant for recovery
of possession of his premises on grounds· specified in the· Rent Act \Vill have to
be brought in the Court of Small Causes which has been n1ade the Court of
exclusive jurisdiction. [478 A-CJ
In the instant case the relationship between the parties bcin~ that of licensor·
landlord and licensee~tenant and the dispute bei\Veen then1 relating to the possession of the licensed-demised premises the Court of Small Causes alone has the
jurisdiction and the 1\rhitrator has none to adjudicate upon the dispute bct\veen
the parties.
Hablffal Bhurarnal & Anr. v. 1\rt111dra111 Sltivra111 & Ors. [19591 S.C.R. 367,
Rniwda Topandm & Anr. '" M/1 Gorakhrnm Gukalcha11d [1964] 3 S.C.R. 214,
Vas1ulev Gopalkri'shna Tarnwekar v. The Board of Liquidators,
Ilappy Ilomc
Coop~ralii·c /lousing Socit'l)' [19641 3 S.C.R. 964 and Deccan Merchants Cooperatil•c Bank Ltd. v. Af js Dalichand Jugraj Jai11 & Ors. {19691 1 S.C.R. 887
referred to .
. 1G
l'lu1dha Motor Tran.\porr Co. (P) Ltd., Deihl v. R. J\1. Chopra A.l.R. 1968
l)clhi 75, and Basanti Cotton Mills v. Dliingra Brothers, A.I.R. 1949 Cal. 684
apprcved.
The Court of SrnalJ Causes jg 11ot exercising jurisdiction over any arbitration prc.x:·:edings merely because the agreement beh\•een the parties contains &n
arbitration clause and the Court is asked to stay a proceeding before itscl.f. The
jurisdiction under section 34 of the Arbitration: Act may be exercised by the
judicial authority before which tho procttdings are pending and not by the court
which has jurisdiction over the arbitration proceedings. This is clear from the
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NATRAJ STUDIOS v. NAVRANG STUDIOS (Chinnappa Reddy, !.)
469
language of section 34 of the Arbitration Act.
An application under section 34
A
is not an arbitration proceeding; nor is it aa application arising thereout. The
bar under section 40 does not come in the way of the Court of Small Causes
exercising jurisdiction under section 34 of the Arbitration Act to sta-y proceeding pending before it. [483 F-0]
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1906-1907
B
Of 1980.
Appeals by Special Leave from the Judgments and Orders dated
12-11-1979 and 29-2-1980 of the Bombay High Court in Arbitration
Petition Nos. 94/79 and 9/80,
Soli J. Sorabji, Talat Ansari and A. N. Haksar for the Appellant.
P. R. Mridul, P. H. Parekh, Jushubhai and R. N. Karanjawala for
the Respondents.
The Judgment of the Court was delivered by
CHINNAPPA REDDY, J.
The appellant Natraj Studies (P.) Ltd.,
and the first respondent Navrang Studios, a firm,
entered into an
agreement on March 28, 1970, by which the latter granted the former
"leave and licence" for the use of their two studios and other premises
described in list I annexed to the agreement and situated at 194 Kurla
Road, Andheri Bombay, and the machineries, equipments, property.
setting materials etc. mentioned in list No. 2 annexed to the agreement.
Though the agreement was initially for a period of 11 months it was
extended from time to time. By an agreement dated November 5,
1972, the original agreement was extended for a period of eleven
months from Janpary 1, 1973. The 'leave and licence' agreement was
thus in force on February 1, 1973, with effect from which date S. 15A
was inserted in the Bombay Rents, Hotel and Lodging Honse Rates
Control Act, 1947, by an amendment (Maharashtra Act 17 of 1973).
r-The effect of S. 15A was that any person who was in occupation of any
premises o'n February 1, 1973 as a licencee was
w...emed to have .
become, on that date, for the purposes of the Act, a tenant of the
landlord, in respect of the premises or part thereof in his occupation.
On April 28, 1979, the first respondent purported to terminate the
'leave and licence' agreement and called upon the appellrnt to hand
over JXMISession of the Studios to the first respondent.
Immediately,
on May 8, 1979, the appellant filed Declaratory Suit Nd. 2326 of 1979
in the Court of Small Causes, Bombay, praying for a declaration that
the plaintiff-appellant was a monthly tenant of the two studios and all
other structures and open land covered by the agreement
and for
fixation of standard rent and other reliefs.
A. written statement was
filed by the first respondent contesting the suit. Pending disposal of
14-57 SCI/81
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470
SUPREME COURT REPORTS
[1981) 2 S.C.R.
the suit an interim order was made provisionally fixing the rent as
Rs. 11500 per month.
On August 4, 1979, the appellant filed
11n
application under S. 33 of the Arbitration Act in the Bombay High
Court for a declaration that the arbitration clause in the 'leave and
licence' agreement was invalid, inoperative etc. The application was
dismissed by the High Court on November 12, 1979, by a learned
single Judge on the ground that, he had no jurisdiction to detennine
the alleged rights if any of the appellant as a tenant. On January 21,
1980, the first respondent filed an application under s.8 of the Arbitration Act praying !hat the second respondent might be appointed as
the sole arbitrator to decide the disputes and differences between the
parties under the 'leave and licence' agreement dated March 28, 1970.
On February 29, 1980, the High Court allowed the application of the
first respondent and appointed the second respondent as the sole
arbitrator. A day earlier that is, on February 28, 1980, an appeal
filed by the appellant against the judgment and order daled Novem~
ber 12, 1979 of the learned single Judge was dismissed by a Division
Bench of the High Court on the ground that it was not maintainable
under S.39 of the Arbitration Ac!.
The present two Civil Appeals
have been filed by the appellant against the orders of the High Conrt
dated November 12, 1979, and February 29, 1980.
Shri Soli Sorabji and Shri Talat Ansari learned counsel for the
appellant
submitted that the essence of the dispute between
the
parties was the right to the possession of the two Studios, that after
the 1973 Amendment to the Bombay Rents, Hotel and Lodging House
Rates Control Act, 1947, the status of the appellant was at least that
of a 'deemed tenant', that under !he scheme of the Bombay Rent,
Hotel & Lodging Honse Rates Control Act, 194 7, the dispute between
the parties could only be resolved by the Court of Small Causes and
that every other Court's jurisdiction including that of an arbitrator
was excluded. Shri Mridual, learned counsel for the first respondent, ·
argued that the subject matter of the 'leave and licence' agreement
was not 'premises' within the meaning of that expression as defined
in the Bombay Act but the business as such and, therefore, the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act were not attracted at all.
For a clear appreciation of the rival submissions,
the relevant
provisions of the Bombay Rent, Hotel & Lodging House Rates Control Act, 1947, may first be set out.
Section 5 ( 4A) defines a licensee as follows:
"(4A) 'licensee', in respect of any premises or any part
thereof, means the person who is in occupation of the pre-
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NATRAJ STUDIOS v. NAVRANG STUDIOS (Chinnappa Reddy,!.)
471
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mises 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 cooperative housing society registered or deemed to be registered 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 er employment of the licensor, or a person conducting a running
business belonging to the licensor, or a person having any
aceo=odation in a hotel, lodging house, hostel,
guest
house, club, nursing home, hospital sanatorium,
qharmashala, 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 premise$
belonging to or held by any employee or his spouse who on
account of the exigencies of service or provision of a residence attached to his or her post or office
is temporarily not occupying the premises, 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 institution; and the expressions 'licence', 'licensor' and 'premises given on licence' shall
be construed accordingly";
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Section 5(8) defines premises as follows:
~"-(8) 'premises' means-
(a) any land not being used for agricultural purposes,
(b) any building or part of a building let or given on licence
separately (other than a farm building) includingA
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(i) the garden, grounds, garages and out-houses, if any,
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appurtenant to such building or part of a building,
(ii) any furniture supplied by the landlord for use in such
building or part of a building,
(iii) any fittings affixed to such building or part of a building for the more beneficial enjoyment thereof,
H
but dees not include a room or other accommodation in a
hotel or lodging house."
SUPREME COURT REPORTS
(19Sl] 2 S.C.R.
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Section 5 (SA) is as follows:
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"(SA) 'premises Jet or given on licence for business' includes, and
shall be deemed always to have included, premises Jet or given on
licence for the purpose of practising any profession or carrying on
any occupation therein";
Section 5 ( 11) defines tenant as follows:-
"tenant" means any person by whom or on whose account rent is
payable for any premises and includes-
(a)
xxx
xxx
xxx
_,
(aa)· xxx
(b)
xxx
xxx
xxx
xxx
xxx
(bb) such licensees as are deemed to be tenants for the purposes of this Act by Section 15A.
( c)
xxx
xxx
x:xx
. We may add here that the definition of landlord in S.5(3)
was
suitably amended in 1973 so as to include 'in respect of a licensee
deemed to be a tenant by S.15A' 'the licensor who has given such
licence'.
Sec. 6(1) provides:
"(1) In areas specified in Schedule I, this part shall
apply to premises let or given on licence for residence, education, business, trade or storage."
Sec. 15A which deems certain licensees in occupation of premises
on 1.2.1973 as tenants says:
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"15A. (1) Notwithstanding anything contained elsewhere 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 aoy 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 part thereof, in his occupation.
Il
(2) The provisions of sub-section (1) shall not affecf
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in any manner the operation of sub-section ( 1) of cection
15 after the date aforesaid."
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NATRA.J STUDIOS v. NAVRANG STUDIOS (Chinnappa Reddy, J.)
473
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Sec. 28 (1) which prescribes and prohibits the jurisdiction of certain Courts says;
"28(1) Notwithstanding anything contained in any law
and notwithstanding that by reason of the amount of the
claim or for any other reason, the suit or proceeding would
not, but for this provision, be within its jurisdiction,
(a) in Greater Bombay, the Court of Small Causes,
Bombay,
(aa)
in any area for which, a Court of Small Causes
is established under the Provincial Small Cause Courts Act,
1887, such Court and
(b) elsewhere, the Court of the Civil Judge (Junior
Division) having jurisdiction in the area in which the premises are situate or, if there is no such Civil Judge, the
Court of the Civil Judge (Senior Division) having ordinary
jurisdiction,
shall have jurisdiction to entertain and try any suit or
proceeding between a land-lord and a tenant relating to the
recovery of rent or possession of any premises to which any
of the provisions of this Part apply or between a licensor
and a licensee relating to the recovery of the licence fee or
charge and to decide any application made under this Act
and to deal with any claim or question arising out of this
Act or any of its provisions and subject to the provisions
of sub-section (2), no other court shall have jurisdiction to
entertain any such suit, proceeding or application or to deal
with such claim or question."
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Sec. 6( 1) which occurs in Part II of the Act makes the provisions
::~f Part II applicable to "premises let or given on licence for business"
also. Sec. 5 (SA) expands the meaning of the expression "premises
let or given on licence for business" so as to include premises let or
given on licence for the purpose of practising any profession or carrying on any occupation therein.
Sec.
5 ( 8) defines "premises"
among other things, as any building or part of a building let or given
on licence separately', including, among other things, 'any fitting/I
affixed to such building or part of a building for the more beneficial
enjoyment thereof. Sec. 5(4A), while defining licensee as the person
who is in occupation of the premises or any part thereof under a
subsisting agreement for a licence, excludes a person conducting a
running business belonging to the licensor. If the definitions
of
"premises let or given on licence for business",
"premises"
and
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474
SUPREME COURT REPORTS
(1981] 2 S.C.R.
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"licensee" are read together it will at once become clear that even a
building so constructed or designed as to be capable of being used
for running a certain business only is "premises" within the meaning
of Sec. 5(8) and Sec. 5(8A) and does not cease to be premises
merely because the building is capable of being used for the particular
business only or merely because machinery or equipment must necessarily go alongwith the building if it is to be used for the business.
H "premises" did not, by definition include a building given
on
licence but meant only a building which was let, it could perhaps be
argued with great force that the expression premises would not take
within its stride a business let as a business, but the situation is changeg;,-
by the inclusion of auy building given ou licence in the definition of~
"premises", and by the deeming of a licensee as a tenant up.der S. 15A
of the Act. A licensee is not really a tenant but is a person deemed
to be a tenant because of Sec. 15A of the Act. A building in which
a person is licensed to run a business is "premises" within the meaning
of S. 5 (8) and 5 (SA), to which Part II of the Act is made applicable
by S. 6(1) notwithstanding the fact that the building is not let as
such.
Shri Mridul relied upon Uttamchand v. S. M. Laiwani(I) and
Dwarka Prasad v. Dwarka Das Saraf(') in support of his contention that
having regard to the definition of "premise!" the licensee of a business or
industry which is carried on in a building cannot be considered to be
the licensee of the premises as such, independently of the business,
so as to be deemed to be a tenant entitled to the protection of the
provisions of the Bombay Rents, Hotel and Lodging House Rates
Control Act, 1947. In Uttamchand v. S. M. Lalwani (supra) the facts
were that Dal Mill Building with fixed machinery and other accessories
was the subject matter of a lease. The object was to use the building
as a Dal Mill. The question arose whether the subject matter of the
lease was 'accommodation' within the meaning of S. 3 (A) of t~
Madhya Pradesh Accommodation Control Act which defined 'accom- ,
modation' as meaning, among other things, any building or part of
a building and including any fittings affixed to ~uch building or part
of a building for the more beneficial enjoyment thereof.
This Court
held that in construing the lease it was necessary to determine the
dominant intention of the parties. It was found that the dominant intention of the parties was that the building should be used as a Dal Mill It
was not a case where the subject matter of the lease was the building
and alongwith the leased building, incidentally, passed the fixtures of
the machinery in regard to the mill. In truth the Mill was the subject
matter of the lease and it was because the Mill was intended to be let
(1) AIR 1965 SC 716.
(2) [1976] 1 SCR 277.
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No\TRAJ STUDIOS v. NAVRANG STUDIOS (Chinnappa Reddy, !.) 475
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out that the building had inevitably to be let out alongwith the mill.
On that finding it was held that the lease was of the mill and not of
the building and therefore, there was no lease of any 'accommodation'.
Dwarka Prasad v. Dwarka Das Saraf (Supra) was a case of a composite lease of a Cinema theatre consisting of the building for which
the rent was Rs. 400/- per month and the projector, fittings, fans
and other fixtures for which the rent was Rs. 1000 per month. Tue
question arose whether there was a lease
of 'accommodation'
as
defined by Sec. 2(a) of the Uttar Pradesh (Temporary) Control of
Rent and Eviction Act, 1947. Accommodation was there defined as
meaning residential and non-residential accommodation in any building or part of a Building including any fi\tings, affixed to such building
or part of the building for the more beneficial enjoyment thereof. This
Court held that where the lease was composite and had a plurality of
purposes, the decisive test was the dominant purpose of the demise.
Applying the test it was found that the real ~ubject of the lease was
the cinema apparatus and fittings including, 'subsidiarily and i11cidentally', the building. It will be seen that in both the eases there was
no question of a licence, nor any question of a licensee being deemed
to be a tenant. The question concerned a lease and the question was
whether what was demised was a business or a building as such.
If
what was intended to be demised was a bmincss, the Act would not
apply. If what was intended to be demised was a building the Act
would apply.
The test of dominant intentiou was applied and it was
found in each of the cases that the lease was of a business and not
of 'accommodation'.
The question in the present case is entirely different and is one of
construction of the provisions of the Bombay Rent, Hotel & Lodging
Honse Rates (Control) Act, 1947, which deem a licensee to be a
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__ tenant and, by definition, include a building or a part of a building
given on licence within the meaning of the expression "premises",
and, expressly make the Act applicable to "premises" given on licence
for· business.
We are of the view that the Bombay Rent, Hotel &
Lodging House Rates (Control) Act, 1947, r.pplies to a licence to
use a building even if the building is to be used necessarily and simul·
taneously along with machinery and fixtures separately lieenced to
be used.
In such a situation there can be no question of the licence to
use the machinery etc. and the licence to use the building being
dominant and subsidiary purposes of the agreement as suggested by
Shri Mridul in his argument. The submission of Shri Mridul that the
agreement was primarily a licence to carry on the business of shooting
films by using the machinery and equipments listed in the agreement
and that the licence to use the building was only subsidiary incident
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SUPREME COURT REPORTS
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of the dominant purpose of the agreement does not appeal to us.
On
the construction placed by us upon the provisions of the Bombay Rent,
Hotel & Lodging House Rates (Control) Act, 1947, the two studios
given on licence would still be premises given on licence for busi:J.ess
within the meaning of the Act so as to attract its protective provisions.
At this juncture we may refer to the terms of the agreement. The
agreement provided for ( 1) "leave and licence in respect of studios
Nos. 2 and 3 duly sound proofed and electrified and other premises
more particularly described in list No. 1 hereto annexed situated at
194 Kurla Road, Andheri, Bombay, on a monthly compensation of
Rs. 25Q including sound proofing and electrification" and (2) "leave
and licence in respect of the machineries, lights, equipments, setting
and property materials etc. mentioned in list No. 2 hereto annexed on
a monthly compensation of Rs. 7500". The two licences, it was
stipulated, were to be "in force and operation simultaneously and
together" and "not subject to divisibility". The licensees were entitled
to carry on their work of producing motion picture films in the studios
and the machineries and other equipments were to be used for that
purpose only.
The licensees were also entitled to permit the use of
the studios and other premises, machineries and other articles temporarily, by others, whomsoever they liked during the subsistence of the
licences for the purpose of producing motion pictures only. Property
tax and other taxes were to be borne and paid by the licensors while
the licensees were required to pay for the consumption of electricity
and water. During the subsistence· of the licences the licensees were
not to part with the possession of the studios
and other premises,
machineries and equipments.
The Studios and other premises,
machineries and. equipments were to be used by the licensees in a prudent manner. The agreement further stipulated that no tenancy rights .
were to be understood as having been created by the licensors in
favour of the licensees. The interest created was that of lice11Bees
only. The licensees were to carry on their business of motion picture
films' production in the licensed premises under the name and style of
Natraj Studios (P) Ltd. The agreement is thus seen to be a composite agreement which gave 'leave and licence' (1) to use the studios
and other premises for producing films and (2) to use the machinery
and equipment for the same purpose. The licensors parted with possession of the Studios and the machinery in favour of the licensees. Notwithstanding the fact that the agreement was a composite one and the
two licences were to operate 'simultaneously and together', there could
be no gainsaying the fact that the Studios and other premises were
certainly given on licence for the business of producing films.
The
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NATRAJ STUDIOS v. NAVRANG STUDIOS (Chinnappa Reddy, 1.) 477
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parties themselves were conscious that the licence granted by the
licensor in favour of the licensee was in respect of the Studios and other
premises and that there was even a risk the·licence being construed as
a lease.
So they were anxious, at that stage. to emphasise that what was
granted as a licence and not a lease. That was obviously to circumvent
the provisions of the Bombay Rents, Hotel and Lodging House Rates
Control Act, 194.7.
It was apparently thought that the sophisticated
description of the transaction as a 'licence' instead of a lease would
take it out of the clutches of the Bombay Rent, Hotel a'Ud Lodging
? House Rates Control Act. It was precisely the type of agreement that
forced the hand of the legislature to intervene and amend the Act by
introducing S. 15 A by which such licensees were deemed to be tenants
of the landlord.
We may now proceed to consider the submission that the Court
of Small Causes alone has exclusive jurisdiction to resolve the dispute
·between the parties. S. 28 ( 1) of the Bombay Rent Act, positively
confers jurisdiction on the Court of Small Causes
to entertain and
try any suit or proceeding between a landlord and tenant relating to
the recovery of rent or possession of any premises or between a
licensor and a licerlsee relating to the recovery of licence fee or
charge and to decide any application made under the Act and to deal
with any claim or question arising out of the Act or any of its provisions, and negatively it excludes the jurisdiction of any other Court
from entertaining any such suit, proceeding or application or· dealing
with such claim or question.
The Bombay Rent Act is a welfare legislation aimed
at the
definite social objective of protection of tenants against harassment
!ly landlords in various ways.
It is a matter of public policy.
The
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scheme of the Act shows that the conferment of exclusive jurisdiction
on certain Courts is pursuant to the social objective at which the
legislation aims.
Public policy requires that contracts to the contrary which nullify the rights conferred on tenants by the Act cannot
be permitted.
Therefore, public policy requires that parties cannot
also be permitted to contract out of the legislative
mandate which
requires certain kind of disputes to be settled by special courts constituted by the Act. It follows that
arbitration agreements between
parties whose rights are regulated by the Bombay Rent Act cannot
be recognised by a Court of law .
Thus exclusive jurisdiction is given to the Court of Small Causes
and jurisdiction is denied to other Courts (I) to entertain and try
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SUPREME COURT REPORTS
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any suit or proceeding between a landlord and a tenant relating to
recovery of rent or possession of any premises, (2) to try any suit
or proceeding between a licensor and a licensee relating to the
recovery of licence fee or charge, ( 3) to decide any application made
under the Act and, ( 4) to deal witb any claim .or question arising
out of the Act or any of its provisions.
Exclusive jurisdiction to
entertain and try certain suits, to decide certain
appliC'ations or to
deal with certain claims or questions does not necessarily mean exclusive jurisdiction to decide
jurisdictional facts
also.
Jurisdictional
facts have necessarily to be decided by the Court where the jurisdictional question falls to be decided, and the question may fall for
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decision before the
Court
of exclusive
jurisdiction or before
the Court
or ordinary jurisdiction.
A person
claiming to
be a landlord may sue his alleged tenant for possession of a building
on grounds specified in the Rent Act. Such a suit will have to be
brought in the Court of Small Causes, which has been made the Court
of exclusive jurisdiction. In such a suit, the defendant may deny the
tenancy but the denial by the defendant will not oust the jurisdiction
of Court of Small Causes. If ultimately the Court finds that the
defeudant is not a tenant the suit will fail for that reason. If the suit
is instituted in the ordinary Civil Court instead of the Court of Small
Causes the plaint will have to be returned irrespective of the plea of
the defendant. Conversely a person claiming to be the owner of a
building and alleging the defendant to be a trespasser will have to
institute .the suit, on the plaint allegations, in the ordinary Civil Court
only.
In such a suit the defendant may raise the plea that he is a
tenant and not a trespasser.
The defendant's plea will not straightaway oust the jurisdiction of the ordinary Civil Court but if ultimately
the plea of the defendant is accepted the suit must fail on that
ground. So the question whether there is relationship of landlord !!.Ild
tenant between the parties or such other jurisdictional questions may- ~
have to be determined by the Court where it falls for determinationbe it the Court of Small Causes or the ordinary Civil Court. If the
jurisdictional question is decided in favour of the Court of exclusive
jurisdiction the suit or proceeding before the ordinary
Civil Court
must cease to the extent its jurisdiction is ousted.
In Babula/ Bhaurama/ & Anr. v. Nandram Shivram & Ors.,(I) it
was held that S.28 of the Bombay Rents, Hotel and Lodging House
Rates Control Act, 1947, excluded the jurisdiction of the City Civil
Court from entertaining a suit for a declaration that one of the plain- .
tiffs was the tenant of the defendant-landlord and the other plaintiffs
(I) [1959] SCR 367
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NATRAJ STUDIOS v. NAVRANG STUDIOS (Chinnappa Reddy, J.)479
were his sub-tenants and that they were entitled to be protected from
eviction, under the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947. The argument that S.28 applied
only to suits where the relationship of landlord and tenant was admitted was repelled with the observation that the suit did not cease to be
a suit between a landlord and a tenant merely because the defendants
denied the claim of the plaintiffs. It was said:
"On a proper interpretation of the provisions of S.28 of
the suit contemplated in that section is not only a suit
between a landlord and a tenant in which that relationship
is admitted but also a suit in which it is claimed that the
relatioushJt> of a landlord and a tenant within the meaning
of the Act subsists between the parties.
The Courts which
have jurisdiction to entertain and try such a suit are the
Courts specified in S.28 and no other".
In Raizada Topandas & Anr. v. M/s. Gorakhram Gokalchand(')
the plaintiff instituted a suit in the City Civil Court, Bombay, against
the defendant for a declaration that the plainiff was in lawful possession of a shop and for an injunction restraining the defendants from
entering the shop. The plaintiff alleged that the defendant Vl'as licensee for a definite term of years and that the period of licence stipulated
under the agreement had expired (The suit was instituted before
S.15A was introduced into the Act by the 1973 amendment). The
defendant's plea was that there was a
relationship of landlord and
tenant between the parties and that the Court of Small Causes alone
had jurisdiction to try the suit and not the City Civil Court. It was
held by this Court that since the plaintiff did not admit the relationship
of landlord and tenant between him and the defendant, the defendant
could not, by his plea force the plaintiff to go to a forum where, on his
own averments, he could not go.
The Court, however, did not say
that the defence could never be considered to decide the question of
jurisdiction. It would be the duty of the Court to consider the defence
at some stage, and come to a conclusion, if the facts warrant whether
the plaintiff's denial of the relationship of landlord and tenant was a
mere camouflage and whether on the facts there was a relationship of
landlord and tenant between the parties which precluded the Court
from trying the suit any further.
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In Vasudev Gopa/krishna Tamwekar v. The Board of Liquidators,
Happy Home Cooperative Housing Society, (2)
there was a dispute
O
(1) £1964]3 SCR 214.
(2) [1964] 3 SCR 964 .
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SUPREME COURT REPORTS
[1981J 2 S.C.R.
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between a House Building Cooperative Society
and
one
of its
members. The question arose whether the relationship between the
Society and the member was that of a landlord and a tenant. The dispute was referred to a Committee of Arbitrators under the Bombay
Cooperative Societies Act and an award was made. When the award
was sought to be executed it was claimed that it was without jurisdioB
tion as the question whether the relationship between the parties was
that of landlord and tenant could only be determined by the Court
of Small Causes under the Bombay Rents, Hotel and Lodging House
Rates Control Act, 1947 and not by any other ·authority. The Court
found that if the jurisdiction of the Arbitrators was to be excluded,
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the proceedings before the Arbitrators must be between landlord and
tenant and must relate to the recovery of rent or possession of a premises. Where the person invoking the jurisdiction of the Court did not
set up a claim that the opposite party was a tenant or a landlord, the
defendant was not entitled to displace the jurisdiction of the ordinary
Court by alleging the relationship of landlord and
tenant between
them.