Arulrajasingham v Thavyogarajah (Dissanayake, J.)
COURT OF APPEAL
DISSANAYAKE, J. AND
A. NO. 1201/99 (F)
C. MT. LAVINIA NO. 431/98
Rent Act, No. 7 of 1972 – Amendment by Act, No. 55 of 1980, sections 22(1),
22(2), 22(2) 1C and 22(C) – Premises let for residence – Tenant in employment
– Cessation of employment – Could he claim protection of the Rent Act? –
Rent Restriction Act, No. 12 of 1948
Under the present Act special provisions had been made in section22(1 )(c) and 2(c) to cover cases where premises are let to an employ-ee for use as a residence by reason of his being an employee of theemployer.
If an action is filed for the ejectment of the tenant – who is an ex-employee all that the landlord – former employer – will have to prove isthat the premises were let to the tenant for use as a residence by rea-son of his being in service or employment.
There will be no question of the landlord having to rely on any of theother grounds mentioned in section 22(1) or on any of the other sec-tions under which a tenant can be ejected from the premises.
Prior to the amendment Act, No. 55 of 1980, there was no special pro-vision made in the earlier legislation, the Rent Restriction Act, No. 12 of1948. If an employer wanted to eject an employee he would have torely on any of the grounds set out in the Act.
APPEAL from the judgment of the District Court of Mt. Lavinia
Case referred to:
1. Felix Singho v The Urban Council of Kaiutara (1970) 74 NLR 215 (dis-tinguished)
Sri Lanka Law Reports
(2003) 2 Sri L.R
R.E. Thambiratnam with P. Sivaloganathan for defendant-appellant
P.A.D. Samarasekera, P.C. with S. Mahenthiran P.C. and A.R. Surendran (orplaintiff-respondent.
April 30, 2002DISSANAYAKE, J.
The plaintiff-respondent instituted this action for ejectment of 1the defendant-appellant from premises bearing No. 2, ‘L’ Block,Bambalapitiya Flats described in the schedule to the plaint on thebasis that the said premises was let to him for his residence by rea-son of his being in service and employment of the plaintiff-respon-dent and that the defendant-appellant had ceased to be an employ-ee on 31st October 1966.
The defendant-appellant by his answer whilst denying theaverments in the plaint prayed for dismissal of the plaintiff-respon-dent’s action.10
The case proceeded to trial on 5 issues and at the conclusionof the trial, the Learned District Judge by his judgment dated29.01.1999, entered judgment for the plaintiff-respondent asprayed for.
It is from the aforesaid judgment that this appeal is preferred.
Learned Counsel for the defendant-appellant contended thatthe District Judge erred when he failed to consider that the defen-dant-appellant was foremost a tenant and the fact that he per-formed services to the plaintiff-respondent was incidental and thattenancy was not conditional upon the performance of service to the 20plaintiff-respondent.
He contended further that the learned District Judge was inerror when he concluded that the defendant-appellant was a ser-vice occupier and not a tenant who is protected by the Rent Act.
At the commencement of the trial the following matters wererecorded as admissions:-
CAArulrajasingham v Thavyogarajah (Dissanayake, J.)177
The receipt of the notice to quit dated 24.03.1998.
The defendant-appellant commenced his employmentunder the plaintiff-respondent from February 1989.
The defendant-appellant occupied the relevant premisesfrom April 1991.
Monthly rent being Rs. 500/-
The defendant-appellant ceased to be in the plaintiff-respondent’s employment on 31st October 1996.
Rent was deducted from the defendant-appellant’s salaryfrom the month of April 1991 to 31st October 1996.
Ownership of the premises is that of the plaintiff-respon-dent.
On 6th April 1998, the defendant-appellant forwarded asum of Rs. 9000/- to the plaintiff-respondent which wasreturned to the defendant-appellant.
The defendant-appellant stated that this sum of Rs. 9000/-was the rent from 1st November 1996 to 30th April 1998.
By the amending Act No. 55 of 1980 section 22(1) and sec-tion 22(2) of the Rent Act No. 7 of 1972 were amended by addingsubsection “(c)” inter alia] section 22(1 )(c) and section 22(2)(c) pro-vided for ejectment of tenants to whom premises were let for resi-dence by virtue of the fact of their being in the service or in theemployment of the landlord and who had ceased to be in the ser-vice of or employment of the landlord.
Therefore the crucial issue in this case is the questionwhether the defendant-appellant was let the premises in suit to beused as a residence by reason of his being in the service or in theemployment of the plaintiff-respondent or not.
The following circumstances that transpired in the evidenceof the plaintiff-respondent establishes that the defendant-appellantwas let the premises in suit to be used as a residence purelybecause he was in the employment of the plaintiff-respondent:-
(1) No efforts made by the plaintiff-respondent to advertisethe house or to engage the services of brokers to get ten-ants for his house.
Sri Lanka Law Reports
 2 Sri L.R
Absence of advance payments of rents or deposit of sumsof money as security for electricity and water bills.Absence of payments of money to the landlord in consid-eration of the lease which is called “key money” in brokersparlance.
The fact that the defendant-appellant is neither a relative
nor a friend of the plaintiff-respondent. However thedefendant-appellant claimed that they are from the samevillage in Jaffna and a distant relative.70
The ability of the plaintiff-respondent to rent out thepremises in suit which is an apartment situated in a primeresidential area at Galle Road, Colombo 04, consisting oftwo bedrooms, one toilet, etc. for much more than Rs.500/- per month.
At the time of renting out, the defendant-appellant being inthe service of the plaintiff-respondent.
There being no transaction between the plaintiff-respon-dent and the defendant-appellant except the relationship
of master and servant.so
Deduction of the monthly rent from the defendant-appel-lant’s monthly wage.
No moneys accepted as rent outside the rent deductedfrom the salary of the defendant-appellant.
Non-stipulation of payment of rents at the end of everymonth. This is evident where in some months two monthsrental is deducted from the salary.
Non-payment of monthly rent by the defendant-appellantfrom the time of the resignation from employment uptoApril 1998 for a period of about one and a half years. If he gowas not a service tenant one would expect the payment ofrents regularly when it falls due at the end of every month.
The provision of residential facilities by the plaintiff-respondent to some of his employees at his office buildingin Colombo II and his stores complex in Colombo 14,which establishes that the plaintiff-respondent is a busi-nessman who has furnished residential facilities to hisneedy employees.
CAArulrajasingham v Thavyogarajah (Dissanayake, J.)179
Contents of letter dated 05.11.1996 (P1 A) that was sent tothe defendant-appellant, which was sent on the termina-tion of employment by the defendant-appellant on31.10.1986, requesting him to hand back the house pro-vided to him by the plaintiff-respondent’s company, inorder that it could be given to some other member of hisstaff.
The Learned District Judge on consideration of some of theabove facts had rightly concluded that the plaintiff-respondent hadlet the premises in suit to the defendant-appellant only for the rea-son of his being in employment under him and for no other.
I considered the contention of learned counsel for the defen-dant-appellant that there was a finding by the learned District Judgeto the effect that the defendant-appellant is a service occupi.er.Having examined the judgment of the learned District Judge I amunable to find such a finding by the learned District Judge in thejudgment. The finding of the learned District Judge is that thepremises was let as a residence to be occupied by the defendant-appellant, by the plaintiff-respondent during the period of hisemployment.
Learned Counsel for the defendant-appellant argued thatonce tenancy is admitted, the fact that the tenant is also an employ-ee can only make him a service tenant, who is protected by the pro-visions of the Rent Act.
He further sought to argue that to eject such a tenant thelandlord will have to avail himself the same grounds that are avail-able against a normal tenant.
Learned Counsel for the defendant-appellant cited the deci-sion of Thamotheram, J. in the case of Felix Singho v The UrbanCouncil, Kalutara 1 where he expressed the view that once tenan-cy is admitted, the fact that the tenant is also an employee can onlymake him a service tenant. He also stated that a service tenant isprotected by the Rent Restriction Act.
The decision of Felix Singho v The Urban Council, Kalutara(supra) was based on the Rent Restriction Act, No. 29 of 1948.
Sri Lanka Law Reports
12003] 2 Sri L.R
The Rent Act, No. 7 of 1972 came into operation on 1stMarch 1972 and repealed the Rent Restriction Act, No. 29 of 1948.
The amending Act, No. 55 of 1980, amended sections 22(1)and 22(2) by bringing in two new subsections (c). This amendmenthas given the right to landlords whose employees have come intooccupation of residences by virtue of their being employees of thelandlords to eject them when the services of the employees termi-nate.
Therefore it is apparent that the decision in Felix Singho vThe Urban Council of Kalutara (supra) has no bearing on this casewhich is an action based on section 22(2)(c) of the Rent Act, No. 7of 1972.
Learned President’s Counsel for the plaintiff-respondentadverted to Robert Megarry on “The Rent Acts” (Volume I)(Eleventh Edition) (1988) at page 76, where it is stated as follows:-
“If an employee is a service tenant properly so-called, heholds a true tenancy, protected by the Acts. His contract ofservice will be relevant only in that either his contractual ten-ancy is made determinable with his employment (a term tothis effect will not normally be implied), or else because theemployment provided the motive for the employer grantingthe tenancy, in which case the Acts in some circumstancesprovide the employer with an additional ground for claimingpossession against the employee”.
Learned President’s Counsel for the plaintiff-respondent alsoadverted to page 68 of “The Rent Act No. 7 of 1972, being an expo-sition of the Act” by Noshir C.J. Rustomjee (1972), under the head-ing “Ejectment of a tenant under section 22(1 )(c) and 22(2)(c) of theAct” where he has stated thus:-
“Sometimes employers find it necessary to have theiremployees residing either on the premises or in close prox-imity to the employers place of work. For instanceStorekeepers and Works Managers are quite often given res-idential premises of the place of work. In some instance,employees, out of a desire to help their employees, provideresidences for their employees, so long as they are in theservice of the employees.
Arulrajasingham v Thavyogarajah (Dissanayake, J.)
In the instances mentioned above, where the employeeceases to be in the employment of the employer, it is only naturaland in the interests of the employee that the premises, which havebeen let out in the circumstances mentioned above, should beoccupied by the successor of the employee, who has left the ser-vices of the employer.”
Prior to this Act coming into operation, there was no specialprovision made in the earlier legislation (The Rent Restriction Act,
No. 12 of 1948) to cover cases which have been mentioned above.
If an employer wanted to eject an employee to whom residential 180premises had been let in the aforementioned circumstances, theemployer would have had to rely on any one of the grounds set outin the Rent Restriction Act, No. 29 of 1948. This provision did causea lot of hardship to employees and in some instances, even dis-couraged employers from providing residential premises for theiremployees, so long as they were in the service of the employers.
Under the present Act, special provision had been made insection 22 (1)(c) and (2)(c) to cover cases where premises are letto an employee for use as a residence by reason of his being anemployee of the employer who in this instance would be the land- 190lord for the employee. If an action is filed for the ejectment of thetenant (who is an ex-employee), all that the landlord (who is the for-mer employer) will have to prove, is that the premises were let tothe tenant for use as residence by reason of his being in the ser-vice or employment. There will be no question of the landlord hav-ing to rely on any of the other grounds mentioned in section 22(1)of the Rent Act, No. 7 of 1972, or on any of the other sections underwhich a tenant can be ejected from the premises.
In the light of the above reasoning I am of the view that thelearned District Judge has rightly entered judgment for the plaintiff- 200respondent as prayed for in the plaint.
I see no reason to interfere with the said judgment of thelearned District Judge.
Therefore I dismiss the appeal of the defendant-appellantwith costs.
SOMAWANSA, J. – I agreeAppeal dismissed.
ARULRAJASINGHAM v. THAVYOGARAJAH