Eviction of Industrial Worker’s Family: Supreme Court Upholds Company’s Right Over Staff Quarters

The Supreme Court of India recently delivered a landmark judgment in the case of M/s Unichem Laboratories Ltd. v. Rani Devi & Ors., affirming the employer’s right to reclaim staff quarters from former employees and their families. The ruling settles a long-standing dispute between an industrial employer and former employees’ families who continued occupying industrial housing after retirement, despite the housing being provided only for workers during their employment.

The case involved a challenge against the High Court’s ruling, which had reversed an eviction order issued by the trial court. The Supreme Court restored the trial court’s order, emphasizing that company-provided housing is only meant for employees and cannot be occupied by their families after their service ends.

Background of the Case

The dispute arose when Unichem Laboratories Ltd., a public limited company, sought to evict the families of its former employees from industrial quarters provided to them under the Uttar Pradesh Industrial Housing Act, 1955. The State of Uttar Pradesh had constructed industrial housing to accommodate workers, and the company was allocated several quarters, which it, in turn, provided to its employees.

The key events leading up to the legal dispute were:

• The company was allotted six quarters in Ghaziabad Industrial Labour Colony under the provisions of the Act.
• One of these quarters was allotted to Dharam Dev Yadav, a worker employed by the company.
• Upon his retirement on January 12, 1992, the company asked him to vacate the quarter.
• He requested a six-month extension, which was granted, requiring him to vacate by June 30, 1992.
• Instead of vacating, he continued occupying the quarter until his death, after which his family, including his wife Rani Devi, continued staying there.
• In 2001, the company filed an eviction suit before the Additional District & Sessions Judge, Small Causes Court, Ghaziabad.

Petitioner’s Argument

The company, Unichem Laboratories Ltd., argued:

• That the quarters were meant only for workers and should have been vacated upon retirement.
• The continued occupation of the quarter by the respondent’s family was illegal and unauthorized.
• There was a contractual obligation on the part of the worker to vacate the premises upon cessation of employment.
• The trial court had ruled in favor of eviction, but the High Court wrongly reversed the ruling.

Respondent’s Argument

The family of the deceased worker, represented by Rani Devi, opposed the eviction, arguing:

• The company was not the owner of the premises, and hence, had no right to seek eviction.
• Since the State Government had constructed the housing, only the State had the authority to initiate eviction proceedings.
• The eviction suit was barred under Section 13 of the Uttar Pradesh Industrial Housing Act.
• The company had no legal standing to file the case, as there was no direct landlord-tenant relationship between them.

Trial Court’s Ruling

The trial court ruled in favor of the company, stating:

• The company was the rightful allottee of the quarter.
• The quarters were strictly for employees, and tenancy ended with the termination of employment.
• The family had no independent right to stay in the premises.
• The company was entitled to evict the respondents and recover damages for unauthorized occupation.

High Court’s Reversal

The respondents appealed to the Allahabad High Court, which reversed the trial court’s ruling and dismissed the company’s suit. The High Court held:

• The company had no standing to file the suit.
• Only the State Government or Labour Commissioner could initiate eviction proceedings.
• The company was merely an intermediary between the government and workers.

Supreme Court’s Observations

The Supreme Court, led by Justices R.K. Agrawal and Abhay Manohar Sapre, ruled in favor of the company, making the following key observations:

1. Company Had a Right to Seek Eviction

“It is not in dispute that the State had allotted the quarters to the appellant under the Act. It is also not in dispute that the allotment of quarters was made by the appellant to their workers for their use and occupation.”

The Court ruled that the company had a direct contractual relationship with workers regarding the housing and was well within its rights to seek eviction.

2. Workers Must Vacate Quarters After Employment Ends

“A contract of tenancy created between the employer and employee in relation to any accommodation terminates on the cessation of the employment.”

The Court reaffirmed that industrial housing is a privilege tied to employment, and former workers or their families cannot claim a permanent right over it.

3. Section 13 of the Act Does Not Bar Eviction Suits

The Supreme Court clarified that Section 13 of the Uttar Pradesh Industrial Housing Act does not prevent companies from seeking eviction. The Court emphasized that after the deletion of Section 21 in 1972, eviction suits could be filed in civil courts.

4. Unauthorized Occupation Warrants Eviction

“The possession of the original allottee became illegal on and after 12.01.1992 when he retired from service. The respondents had no independent right to remain in occupation.”

The Court found the family’s occupation of the quarter to be unauthorized and directed their immediate eviction.

Judgment

The Supreme Court set aside the High Court’s ruling and restored the trial court’s eviction order, ruling:

• The respondents must vacate the premises within three months.
• The family must pay Rs. 1,000 per month as damages from the date of unauthorized occupation.
• Failure to vacate within the stipulated time would result in immediate execution of the eviction order.

Implications of the Judgment

This ruling has significant implications for industrial housing policies and corporate property rights:

• Industrial housing is strictly for workers: This judgment ensures that industrial quarters remain available for active employees.
• Employers have eviction rights: The ruling reinforces companies’ ability to reclaim housing post-retirement.
• Unauthorized occupation can be challenged: Even in government-allotted housing, employers can seek legal recourse.

The Supreme Court’s decision upholds the legal principle that industrial housing must be used strictly for its intended purpose, preventing misuse of such properties.

Don’t miss out on the full details! Download the complete judgment in PDF format below and gain valuable insights instantly!

Download Judgment: Ms Unichem Laborato vs Rani Devi & Anr. Supreme Court of India Judgment Dated 18-04-2017.pdf

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