Life Insurance Corporation of India v. National Insurance Company Ltd

15. Mr. Khandeparkar, learned senior advocate appearing for NIC submitted that there is no change of user by reason of use of premises as transit accommodation for their employees. He submits that no tenancy agreement is produced by LIC to establish the terms and conditions of tenancy. According to him, the entire case of LIC is founded on the inspection note to evict NIC on the ground of user of the premises as guest house. He submits that it is admitted position that the subject premises are used as transit accommodation for its employees and the said fact was to the knowledge of LIC which is borne out from letters dated 18th January, 2005 and 25th January, 2005, which amounts to acquiescence.

16. He has taken this Court minutely through the evidence of the witnesses and would urge that LIC has failed to prove that the premises are being used as a guest house/lodging house or any commercial activity was being carried out resulting in earning of profit. He would further submit that there is no evidence as regards the bonafide requirement of the premises. He invited the attention of this Court to the communication dated 23rd April, 1973- Exhibit A-15 addressed by LIC to NIC and would submit that the said document has been referred to by the witness as tenancy agreement and there are no terms and conditions therein. He would further point out that Exhibit A-18 relied upon is only a proforma, clause No.5 whereof would nevertheless show that the premises is to be used as per the agreement.

17. As regards the findings of Appellate Court, he submits that the burden was wrongly cast on NIC to prove that transit accommodation was the only use permitted. He would submit that the use being residential the Appellate Court erred in holding that the transit accommodation is different use than residence of one employee at a time. He submits that the findings of Appellate Court are based on presumption that the conditions imposed in Exhibit A-15 will not be imposed if premises are let out for transit accommodation. He placed reliance on the guidelines issued by the Central Government which according to him governed the issue of termination of tenancy.

18. As regards the issue of damages, he points out that no reliance can be placed on the valuation report for the reason that the valuation report is dated 18th May, 2007, whereas, the application in present case has been filed on 17th May, 2007. He submits that no notice of inspection of the premises by valuer was given and visit of the valuer for inspection itself is in doubt in light of the cross-examination. He has taken this Court through the cross-examination of the valuer and would submit that it is admitted that the valuation report has been submitted to LIC after 18th May, 2007 and as such the authenticity of the valuation report is in doubt. He submits that after accepting that there are no reasons as to why the valuer chose Rs.25,000/- as market value and that the valuer’s assumption on area does not appear to be convincing, the Appellate Court ought to have rejected the claim for damages. He submits that the award of damages on the basis of suggested rent of Rs.50/- per square feet by the Appellate Court is erroneous as parties never agreed to the increase in rent.

19. In support of his contentions, he relies upon the following decisions:  D. C. Oswal vs. V. K. Subbiah & Ors. [(1992) 1 SCC 370].  Atul Castings Ltd. vs. Bawa Gurvachan Singh [(2001) 5 SCC 133].  Hari Rao vs. N. Govindachari and Ors. [(2005) 7 SCC 643].  Surya Dev Rai vs. Ram Chander Rai and Ors.[(2003) 6 SCC 675].

20. Per contra Mr. Sen, learned Senior Advocate appearing for the NIC submitted that in view of Section 106 of Transfer of Property Act, 1882 (for short 106 of T. P. Act) there is no requirement of giving of reasons. According to him, the tenant of public premises not having being afforded protection of the rent control legislation, the reading of requirement of setting out grounds of termination would put the tenant on a higher pedestal than a tenant governed by the provisions of Maharashtra Rent Control Act. He would submit that there is no contract executed between the parties and relies upon the letters dated 23rd April, 1973 and 25th April, 1973 to substantiate the terms of tenancy. He would urge that the communications would demonstrate that the premises were let out for occupation of single employee and the use as transit accommodation amounts to change of user. Pointing out the definition of unauthorised occupation under Section 2(g) of PPE Act, he submits that as no reasons for termination are required, upon termination, the occupation becomes unauthorised and eviction should follow. He submits that the ground of bonafide requirement is not pressed in service. He counters the submission of waiver by contending that the principle of waiver requires something more than mere exchange of letters.

21. In regard to the valuation report, he submits that the relevant factors were rightly considered. He submits that merely because the application was filed one day prior to the date of valuation report, the same cannot be discarded. He assails the impugned order of the Appellate Court and submits that after observing that, there is no evidence that structurally the subject flat and inspected flat are different and having accepted that the valuer has considered the area, flat location and the amenities and compared it with market rates, the Appellate Court on the basis of assumption of revised rent of Rs.50/- per sq. ft. has reduced the quantum of damages. He submits that the quantum of damages is linked to market value and as such, the damages based on rent requires interference. He has tendered for consideration of this Court a draft valuation report based on market value of Rs.17,070/- per sq. ft. which considers various factors such as depreciation of building etc. and arrives at a figure of Rs.5,10,127/- per month and would urge this Court to grant damages by taking into consideration the said figure.

22. Mr. Sen would urge that considering the limited power of superintendence under Article 227 of the Constitution of India, as the view taken is possible view, no interference is warranted. He would further submit that the challenge to Clause 5 of the impugned order in Writ Petition No. 9224 of 2010 does not survive as the Apex Court has dissolved the High Power Committee. He relies upon the following decisions: Syndicate Bank vs. Ramachandran Pillai and Ors. [(2011) 15 Supreme Court Cases 398]. S. M. I. Pvt. LTD. vs. State of Maharashtra [2009(2) MH. L.J.] Jiwan Dass vs. Life Insurance Corporation of India and Anr. [1994 Supp (3) SCC 694] Garment Craft vs. Prakash Chand Goel [(2022) 4 Supreme Court Cases 181].  Electronics Corporation of India Ltd. vs. Union of India and Ors. [(2011) 3 SCC 404].  New India Assurance Company Ltd. vs. Nusli Neville Wadia & Anr. [(2008) 3 SCC 279].

23. In rejoinder, Mr. Khandeparkar submits that the provisions of Section 4 of the PPE Act mandates specifying the grounds and the provisions of Section 5 contemplate an inquiry as to the unauthorised occupation. He would submit that the provision of Section 106 of T. P. Act, does not contemplate an inquiry as under PPE Act. He would submit that notice of the Estate officer indicates that the unauthorised occupation is based on three grounds which are stated therein and as such, an inquiry into the same is contemplated. As regards the power under Article 227, he relies upon the decision of the Apex Court in the case of Suryadevi (supra) and would urge this Court to exercise the powers in view of perversity of findings.

24. Considering the relevant provisions and having considered the submissions, the issues which arise for consideration are: (a) Whether the termination of tenancy by LIC is justified when tested on the anvil of fairness expected of public body while dealing with its tenants of public premises (b) Whether on the basis of evidence on record, the grounds on which the eviction is proposed, as set out in the notice of the Estate officer are proved.

25. I have given my thoughtful consideration to the submissions canvassed and have carefully perused the papers and proceedings. The ground of bonafide requirement is not pressed in service and there is no challenge for setting aside of the order of recovery of rent. As such the ground for eviction as per the show cause notice issued by Estate Officer is now restricted to change of user of premises. There is no gainsaying the fact that if the eviction is set aside, the issue of consideration of quantum of damages does not arise.

26. First and foremost this Court is mindful of the fact that the power to be exercised under Article 227 of Constitution of India is supervisory and cannot be used “as the cloak of an appeal in disguise”. At the same time in exercise of supervisory jurisdiction, the findings of fact can be ignored or set aside if there was no evidence to justify such a conclusion or in case of perversity of findings, resulting in grave miscarriage of justice or flagrant violation of law calling for intervention of this Court. With the aforesaid limitations in mind, I proceed to consider the merits of the instant case.

27. Under the provisions of PPE Act, wide powers are given to the public body to determine the tenancy of occupants of public premises by exempting the application of the protection afforded by the rent control legislation. While refusing to curtail the width of the powers granted under the PPE Act, the Apex Court has assumed that the public bodies will not act as private landlords and that their actions will be governed by the concept of fairness. Profitable reference may be made to Dwarkadas Marfatia vs. Board of Trustees Bombay Port, [AIR 1989 Supreme Court 1642] wherein, three judge bench of the Apex Court held thus: ….Being a public body even in respect of dealing with its tenant, it must act in public interest, and an infraction of that duty is amenable to examination either in civil suit or in writ jurisdiction. The contractual privileges are made immune from the protection of the Rent Act for the respondent because of the public position occupied by the respondent authority……...Where any special right or privilege is granted to any public or statutory body on the presumption that it must act in certain manner, such bodies must make good such presumption while acting by virtue of such privileges. …...Every action of the Executive authority must be subject to rule of law and must be informed by reason. So wherever be the activity of public authority, it should meet the test of Art. 14 …..every activity of public authority especially in the background of the assumption on which such authority enjoys immunity from rigours of the Rent Act must be informed by reason and guided by public interest…..

28. Quoting the observations of Dwarkadas Marfatia (supra), the Apex Court in Ashoka Marketing Ltd and Anr. vs. Punjab National Bank and Ors. [(1990) 4 SCC 406], negated the apprehension that the corporations referred to in Section 2(e) 2(ii) of PPE Act, may buy tenanted property at low price and thereafter sell at higher value after evicting the tenants and held in paragraph No. 69 thus: “69. It has been urged by the learned counsel for the petitioners that many of the corporations referred to in Section 2(e) (2)(ii) of the Public Premises Act, like the nationalised banks and the Life Insurance Corporation, are trading corporations and under the provisions of the enactments whereby they are constituted these corporations are required to carry on their business with a view to earn profit, and that there is nothing to preclude these corporations to buy property in possession of tenants at a low price and after buying such property evict the tenants after terminating the tenancy and thereafter sell the said property at a much higher value because the value of property in possession of tenants is much less as compared to vacant property. We are unable to cut down the scope of the provisions of the Public Premises Act on the basis of such an apprehension because as pointed out by this Court in Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay": (SCC p. 306, para 27) "...every activity of a public authority especially in the back- ground of the assumption on which such authority enjoys immunity from the rigours of the Rent Act, must be informed by reason and guided by the public interest. All exercise of discretion or power by public authorities as the respondent, in respect of dealing with tenants in respect of which they have been treated separately and distinctly from other landlords on the assumption that they would not act as private landlords, must be judged by that standard." These observations were made in the context of the provisions of the Bombay Rents, Hotel and Lodging Houses Rates (Control) Act, 1947 whereby exemption from the provisions of the Act has been granted to premises belonging to the Bombay Port Trust. The consequence of giving overriding effect to the provisions of the Public Premises Act is that premises belonging to companies and statutory bodies referred to in clauses (2) and (3) of Section 2(e) of the Public Premises Act would be exempted from the provisions of the Rent Control Act. The actions of the companies and statutory bodies mentioned in clauses (2) and (3) of Section 2(e) of the Public Premises Act while dealing with their properties under the Public Premises Act will, therefore, have to be judged by the same standard.

29. This Court, in the context of challenge to the vires of provisions of PPE Act, in the case of Minoo Framroze Balsara vs.Union of India and Others, [AIR 1992 Bombay 375] differed from the view taken by the Karnataka High Court in the case of Indian Bank Ltd vs M/s Blaze and Central (P) Ltd. [AIR 1986 Kar 258] that the only point of enquiry under Section 5 of PPE Act was whether or not a person was an unauthorised occupant of public premises and nothing more. This Court held that Section 4 and Section 5 are to be read together and harmoniously and even if the Estate Officer is satisfied that the public premises are in unauthorised occupation, he is not obliged to make an order of eviction unless he is satisfied that the person in unauthorised occupation should be evicted. Unless the grounds are stated, the noticee will not be able to show cause as to why his occupation has been construed as unauthorised occupation and why he is required to be evicted. After adverting to Ashoka Marketing Ltd (supra) it held that the Government company or corporation must so act not only when terminating the authority of an occupant of public premises but also when thereafter it seeks its eviction therefrom. The Estate Officer, would, therefore, have to consider whether or not the termination of the authority was informed by reason and guided by public interest and also whether his eviction satisfied the same tests. That the Court is not reading the standards laid down in Marfatia and Ashoka Marketing into Section 4 and 5. The cases set out the norms by which the actions of Government companies and corporations in respect of their tenants have to be judged. Government companies and corporations are obliged to conform to such norms and their actions must be judged by the Estate Officer and in appeal accordingly.

30. In New India Assurance Co. Ltd vs Nusli Neville Wadia, [2008 (3) SCC 279] the Apex Court in different context considered the submission that termination of tenancy itself is sufficient for directing eviction of the tenant. The Apex Court interpreted Section 5 of PPE Act, and observed that when the landlord files an application it in a given situation must be able to lead evidence either at the first instance or after the evidence is led by the noticee and/or in rebuttal to the evidence led by the noticee. It held that literal interpretation of the statute would lead to a situation that it would not be necessary for landlords in any situation to plead in regard to its need for public premises. It could just terminate the tenancy without specifying any cause for eviction. It held that an effective show cause notice can be filed when eviction is sought for a specified ground and the occupants must know the particulars in relation thereto.

31. It can be concluded that the assumption is that the contractual privileges made immune from the protection of the rent control legislation will not be actuated by any profit making motive, or, that the public bodies will not act as private landlords do and that whilst dealing with their tenants, their actions will be informed by reason. It was necessary to advert to the aforesaid enunciation of law in view of the submission canvased by Mr. Sen, that as there is no requirement of giving of reasons for termination, no inquiry is contemplated into the validity of termination and simply upon termination of tenancy, the occupant will be an unauthorised occupant within the meaning of Section 2(g) of PPE Act, and hence liable to be evicted.

32. In this context it will be beneficial to have a look at the relevant provisions viz Section 106 of T.P. Act and Section 4 and 5 of PPE Act (prior to its amendment in the year 2015) which reads thus: Section 106 of Transfer of Property Act: “106. Duration of certain leases in absence of written contract or local usage.-(1) In the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months' notice; and a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days' notice. (2) Notwithstanding anything contained in other law for the time being in force, the period mentioned in sub-section (1) shall commence from the date of receipt of notice. (3) A notice under sub-section (1) shall not be deemed to be invalid merely because the period mentioned therein falls short of the period specified under that subsection, where a suit or proceeding is filed after the expiry of the period mentioned in that sub-section.. (4) Every notice under sub-section (1) must be in writing, signed by or on behalf of the person giving it, and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such party, or to one of his family or servants at his residence, or (if such tender or delivery is not practicable) affixed to a conspicuous part of the property.” Section 4 and 5 PPE Act: “4. Issue of Notice to show cause against order of eviction.–(1) If the estate officer has information that any person is in unauthorised occupation of any public premises and that he should be evicted, the estate officer shall issue in the manner hereinafter provided a notice in writing within seven working days from the date of receipt of the information regarding the unauthorised occupation calling upon the person concerned to show cause why an order of eviction should not be made. (1-A) If the Estate officer knows as or has reasons to believe that any person is in unauthorised occupation of the public premises, then, without prejudice to the provisions of sub-section (1), he shall forthwith issue a notice in writing calling upon the person concerned to show cause why an order of eviction should not be made. (1-B) Any delay in issuing a notice referred to in sub-section (1) and (1-A) shall not vitiate the proceedings under this Act. (2) The notice shall – (a) specify the grounds on which the order of eviction is proposed to be made; and (b) require all persons concerned, that is to say, all persons who are, or may be, in occupation of, or claim interest in, the public premises, –

(i) to show cause, if any, against the proposed order on or before such date as is specified in the notice, being a date not [later than] seven days from the date of issue thereof; and

(ii) to appear before the estate officer on the date specified in the notice along with the evidence which they intend to produce in support of the cause shown, and also for personal hearing, if such haring is desired. (3) The estate officer shall cause the notice to be served by having it affixed on the outer door or some other conspicuous part of the public premises, and in such other manner as may be prescribed, whereupon the notice shall be deemed to have been duly given to all persons concerned.

5. Eviction of unauthorised occupants. – (1) If, after considering the cause, if any, shown by any person in pursuance of a notice under Section 4 and any evidence produced by him in support of the same and after personal hearing, if any, given under sub-clause (ii) of clause (b) of sub-section (2) of Section 4, the estate officer is satisfied that the public premises are in unauthorised occupation, the estate officer shall make an order of eviction, for reasons to be recorded therein, directing that the public premises shall be vacated, on such date as may be specified in the order but not later than fifteen days from the date of the order, by all persons who may be in occupation thereof or any part thereof, and cause a copy of the order to be affixed on the outer door or some other conspicuous part of the public premises: Provided that every order under this sub-section shall be made by the estate officer as expeditiously as possible and all endeavour shall be made by him to issue the order within fifteen days of the date specified in the notice under sub-section (1) or sub-section (1-A), as the case may be, of Section 4. (2) ………

33. Plain reading of Section 4 and 5 of PPE Act, indicates that two fold satisfaction has to be reached by the Estate Officer viz that the occupant is in unauthorised occupation and that he is required to be evicted before the notice under Section 4 of PPE Act, is issued. After having formed an opinion, the Estate Officer is required to issue show cause notice specifying the grounds on which the order of eviction is proposed and calling upon the noticee to appear before the Estate Officer to show cause alongwith the evidence which they intend to produce in support of the cause shown.

34. Section 106 of T. P. Act, which deals with determination of lease provides that the landlord is entitled to terminate the tenancy by giving 15 days notice if the premises is occupied on monthly tenancy. No requirement of specifying the grounds on which tenancy is terminated is contemplated under Section 106 of T.P. Act. The requirement is that the notice must be in writing, signed and sent to the party who is intended to be bound by it. Section 4 of PPE materially differs from Section 106 of

T. P. Act. Section 4 itself contemplates that the notice shall specify the grounds on which order of eviction is proposed to be made. There is no such requirement to be found in relation to the notice issued under Section 106 of T.P. Act. Even if the notice to quit does not state the reasons for termination, the notice is not rendered invalid.

35. Considering the ingredients of Section 106 of T.P. Act, Mr. Sen is right to the extent that there is no requirement of stating of reasons for termination of tenancy. However I am unable to agree with the proposition that no inquiry is contemplated into the action of termination of tenancy. If the provisions of Section 5 of PPE Act are perused, upon the satisfaction of the Estate Officer that the public premises are in unauthorised occupation, the order of eviction is required to be made. For the purpose of arriving at a satisfaction that the public premises are in unauthorised occupation, the validity of the termination is required to be tested. The standard by which the action of the public body will be judged has been summarised in the decisions of the Apex Court in Dwarkadas Marfatia and Ashoka Marketing Ltd.

36. If no inquiry is contemplated into the validity of the termination, the result would be that upon termination, the occupation of the tenant would be rendered unauthorised and as such, the inquiry of the Estate Officer will be limited to consideration of the cause shown by noticee against the proposed eviction. This, in my view, will result in an anomalous situation where upon termination of tenancy although the occupant will be considered as an unauthorised occupant, he will not be evicted if the grounds of eviction are not proved. To harmonise the provisions of PPE Act and to resolve the anomaly, in my view, the inquiry contemplated under Section 5 of PPE Act will include an inquiry into the action of termination tested on the basis of the professed norms. On the basis of the material on record, the Estate Officer will have to consider whether the termination of tenancy was justified and whether eviction should follow. The contention of Mr. Sen ignores the norms set out by the Apex Court in Dwarkadas Marfatia and Ashoka Marketing Ltd governing the action of public bodies. As held by Division Bench of this Court in Minoo Framroze, (supra) the Estate officer during inquiry under Section 5 would have to consider whether or not the termination of the authority to occupy the premises was informed by reason and guided by public interest and whether its eviction satisfied the same tests. As far as the decision in the case of Jiwan Dass (supra) is concerned, relied upon by Mr. Sen, there is no quarrel with the proposition set out therein that it is not permissible to cut down the width of powers given under the PPE Act by reading into it reasonable and justifiable grounds for initiating action for terminating the tenancy under Section 106 of T.P. Act. It needs to be noted that the Apex Court further held that the statute advisedly empowered the authority to act in the public interest and determine the tenancy or leave or license before taking action under Section 5 of the Act. The observation indicates that the Apex Court was live to the norm that the public authority is required to act in public interest whilst determining the tenancy.

37. Although Mr. Sen has canvassed the submission that in view of Section 106 of T.P. Act, there is no requirement of stating of reasons for termination of tenancy, in the instant case, LIC has come with a specific cause for termination of tenancy viz use of guest house/lodging house, change of user without permission, nuisance, bonafide requirement and arrears of rent. In my opinion, the stating of reasons for termination is in consonance with the principle of fairness as applied by the Apex Court as discussed above.

38. Bearing in mind the principle laid down in Dwarkadas Marfatia and Ashoka Marketing Ltd that the exemption is granted from the rent control legislation on assumption that public body will not act as private landlord, the impugned order will have to be examined to ascertain whether the action of termination of tenancy and the order of eviction is based on proper appreciation of evidence and conforms to the norms of fairness.

39. It is admitted by NIC that the subject premises is used as transit accommodation for its employees. The case of LIC on the other hand is that the premises are used as guest house/lodging house and there is a change of user.

40. The relevant pleadings about change of user in the application filed by LIC before the Estate Officer is that the premises were allotted to NIC for their own use and occupation and for residential purpose, that NIC is using the premises as guest house/lodging house without consent of LIC and without obtaining necessary permissions from local authority, semi government authority or Government for running said guest house/lodging house and that the use is in violation of various acts including the B.M.C Act, the use as guest house is causing nuisance and that NIC is in arrears of rent. The pleadings indicate that the case of LIC was of change of user of premises from residential user to non residential user.

41. LIC has examined Building Inspector Sandeep.P. Shitap- AW-1 and Ms. Sanjivani S. Palekar AW-3 to prove the ground of change of user. AW-1 has deposed that he visited the premises on 5th March, 2007 and found that the premises were used as guest house for officers of NIC, that there were three bedrooms with three beds in each bedroom and one Mahavir Singh Rawat was working as caretaker. He deposed that he has given inspection report based on his visit. In the cross-examination the case of NIC was of bogus inspection report and that he had not visited the premises.

42. AW-3 Ms. Palekar has deposed that the tenancy has been terminated that NIC have breached the terms and conditions of tenancy and have illegally unauthorisedly and without the permission of LIC changed the user of premises by using it as guest house/lodging house. During cross-examination she has produced letter dated 18th March, 1957 marked as Exhibit A-15, letter dated 23th April, 1973 addressed by LIC to NIC while changing the name of NIC from National Employers Mutual General Insurance Association Ltd to NIC marked Exhibit A-16 and proforma rent bill which is marked as Exhibit A-18 to prove the terms and conditions of tenancy.

43. NIC has examined its Assistant Manager-Dayanand Pawar who has deposed that the premises was let out for purpose of residence of their employees including use of residence as transit accommodation for employees visiting Mumbai from outside Mumbai for office work. In the cross-examination, the case put to him by LIC is that normally the premises is used as staff quarter for possession and occupation of employee for residential purpose alongwith their family. He has admitted that the premises were used as transit accommodation and that Mahavir Singh is not permanent employee of NIC.

44. Admittedly, there is no contract of tenancy executed between LIC and NIC setting out the terms and conditions and the terms have to be gathered from the communications A-15, A-16 and A-18. If the contents of Exhibit A-15 are perused, it states that the NIC is in occupation of the flat and garage from 1st February 1957 and the rent for the last month amounts to Rs.850/-. As regards Exhibit A-16 it would be necessary to reproduce the letter which reads thus: “This has reference to your letter dated 15-1-1973. As regards your request that the tenancy of the above flat which now stands in the name of National Employees’ Mutual General Insurance Association Ltd., be changed to that of national Insurance Co. Ltd., (Unit…..) we have now to inform your that we are agreeable to change the name as above with effect from 1-1-1973, on the existing terms and conditions and also on the same rental as is now being charged. However, this is subject to (i) that the above premises shall not be passed on to the existing occupant “by name” and (ii) in case the present occupant leaves the service of the G.I.C. – Unit National Employees Mutual, he must vacate the flat irrespective of whether he stays in bombay or not. We now wait your reply to the above when we shall take further action in the matter.”

45. Exhibit A-16 speaks of existing terms and conditions. In the crossexamination in response to question No.31, Ms. Palekar has stated that the terms and conditions on which rent was being accepted as stated “existing terms and conditions” as mentioned in letter dated 23rd April, 1973 and also two more conditions mentioned in line Nos.[9] to 14 of paragraph No.2 of letter dated 23rd April, 1973. There is nothing on record to demonstrate the “Existing terms and conditions”. The change of name was on the condition that the premises shall not be passed on to the existing occupant by name and that in event of the occupant leaving the services he must vacate the flat.

46. Considering Exhibit A-16, at the most the document proves that at the time of issuance of communication, the premises was in occupation of single occupant. Perusal of the terms and conditions printed overleaf of the proforma rent bill indicates that they are general terms and conditions of tenancy and the only noticeable condition is clause No.5 which states that the occupants shall use the said premises only for office/residential purpose as the case may be as per agreement and without causing any disturbance or nuisance to other occupant or the neighbors. Clause No.5 of the terms and condition again refers to an agreement and the admitted position is that there is no tenancy agreement. Although the provisions of Evidence Act are stricto senso not applicable to the proceedings under PPE Act, there has to be material on record to demonstrate that the terms of tenancy contemplated only permanent residence and not temporary residence.

47. The termination notice dated 28th March, 2007 states that there has been change of user to guest house/lodging house which is in violation of provisions of local acts including BMC Act and that NIC has changed the user without obtaining permission from local authority, semi government authority or government. The same case is put forward in the application and the written submissions. In short, the case of LIC is that, the premises is being used for non residential purpose as guest house. AW-1 has deposed that the premises were being used by NIC as guest house for officers of NIC. It is admitted by NIC that the premises are being used as transit accommodation for their employees visiting Mumbai office. There is a sea of difference between non residential user of the premises as guest house in violation of various Acts including BMC Acts which means commercial exploitation of the premises and use of the premises as transit accommodation which indicates temporary residential user of the premises without any commercial dealings. Use of the premises as transit accommodation does not amount to non residential user.

48. The Appellate Court considered the communication dated 23rd April, 1973 addressed by LIC to NIC and observed that the change of the name in the tenancy in favour of NIC was subject to two conditions and that the conditions imposed are not applicable, when the premises are let out or allowed to be occupied as transit accommodation for employee visiting Mumbai. The Appellate Court considered the admission of the witness of NIC that the premises was used for two different purposes i.e. residence of employees and secondly, as transit accommodation and that the same was used since last eight years and as such, held that prior to eight years, the premises were not used as transit accommodation for officers visiting Mumbai. The Appellate Court placed the burden on NIC to prove that transit accommodation was the only purpose for which the premises was leased out to it.

49. As regards the issue as to whether the using the premises as transit accommodation amounts to change in user, the Appellate Court drew a distinction between the use of premises for residence of employee and a transit accommodation for more employees and held that the same constitutes a different use of the premises and as such, running a transit accommodation has resulted in a change in the user. The Appellate Court declined to consider the communications dated 18th November, 2005 and 25th January, 2005 as constituting acquiescence on part of LIC.

50. The Appellate Court held that the change of user has resulted in breach of the understanding for which the premises were let out and from the date of termination, the possession of appellant was unauthorised.

51. In my opinion, the Appellate Court failed to consider that the case of LIC was of change of user to non residential use of premises. The written submissions tendered in the original application also contends that the user was changed to non residential user. The evidence does not point out to non residential user of the premises and there is no commercial exploitation of the subject premises. The deposition of AW-1 is that the premises is used by NIC as guest house for officers of NIC. In cross-examination he has deposed that there were three bedrooms and in each room there were three beds. The evidence indicates that the premises were being used by NIC for residential purpose albeit temporary residence.

52. Even if it is taken that the case of LIC is that the premises were meant for residence of single employee and there has been change of user by using it as transit accommodation, there was no evidence produced to substantiate the terms and conditions of tenancy to demonstrate the prohibition of user as temporary residence. An artificial distinction was created by the Appellate Court between the residence of one employee at a time and transit accommodation for more employees to arrive at a conclusion of change of user. The use of the premises as guest house is for the purpose of providing temporary residential accommodation to the employees of NIC visiting Mumbai for official purpose. Unless it is demonstrated that the user of premises as temporary residence was specifically prohibited, it cannot be stated that there was change in user of premises. On consideration of the evidence produced on record, I do not find that there was prohibition on use of premises for temporary residence of the employees of NIC. It needs to be noted that LIC itself in its communication of 18th January, 2005 has referred to the premises as guest house and as such, had accepted the use as guest house.

53. The Appellate Court erred in placing the burden on NIC to prove that transit accommodation was the only purpose for which the premise was leased out to it. The Apex Court in the case of New India Assurance Company vs. Nusli Neville Wadia (supra) held that when an application for eviction is based on such grounds, which require production of positive evidence on part of the landlord, it would be for it to adduce evidence first. While interpreting the provisions of Section 5 of PPE Act, the Court held in paragraph No. 51 as under: