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The learned single judge of the High Court factually in substance held that the case that the licensee was in possession on the relevant date i.e. on 1st February, 1973 had not been made out. The High Court then examined the question whether in law the appellant could be considered to be a tenant in view of the provisions of section 15A of the said Act. The High Court referred to the full bench decision of the Bombay High Court in Writ Petition No. 76 of 1980 mentioned hereinbefore where one of the questions considered by the bench was whether a statutory tenant governed by the Bombay Rent Act could have created a valid licence before coming into operation of amendment by 15A of the said Act on 1st February, 1973. The learned single judge of the High Court noted that the judgment-debtor was a statutory tenant inasmuch as the decree for ejectment had been passed against him. There was no case that the judgment debtor, under the original terms of the lease between him and the respondent was entitled to create a sub-tenancy or a licence in respect of the premises or any part thereof. The High Court noted that to get the benefit of Section 15A of the said Act, it had to be established that there was a valid licence subsisting on the material date i.e. the date on which section 15A was incorporated. After noting the judgment of the full Bench which we shall separately refer to, the High Court noted the order of the full Bench that there were two categories, namely (A) a tenant who, under the tenancy agreement was specifically entitled to sublease his interest (for short, "category 'A' tenant") and another category 'B' noted as follows:

Section 13(1) (e) entitles the landlord to ask for the eviction of the tenant if the tenant has, since the coming into operation of the Act, unlawfully sublet or after the date of commencement of the Amendment Act, 1973, unlawfully given on licence the whole or part of the premises or assigned or transferred in any other manner his interest therein. It is important to bear in mind, therefore, that the creation of sub-tenancy or grant of licence by the tenant has been prohibited and made a ground for ejectment of the tenant. Section 14 of the Act stipulates that when the interest of a tenant of any premises is determined for any reason, any sub-tenant to whom the premises or any part thereof has been lawfully sublet before the commencement of the Bombay Rents, Hotel and Lodging House Rates Control (Amendment) Ordinance, 1959 shall, subject to the provisions of the Act, be deemed to have become the tenant of the landlord on the same terms and conditions as he would have held from the tenant if the tenancy had continued. Sub- section (2) of section 14 stipulates that where the interest of a licensor, who is a tenant of any premises, is determined for any reason, the licensee, who by section 15A is deemed to be a tenant, shall, subject to the provisions of the Act, be deemed to become the tenant of the landlord, on the terms and conditions of the agreement consistent with the provisions of the Act. The creation of sub-tenancy was prohibited by 1959 Amendment. The result of the two sub- sections of section 14 is that though the sub-tenancy had become prohibited from 1959, sub-tenant became direct tenant of the landlord and licensee who is recognised will become tenant instead of tenant under the landlord. The creation of further licence is prohibited. Section 15(1) provides as follows:

On the aspect whether in law a valid licence could have been created by the tenant in favour of the appellant and as such the appellant was protected under section 15A of the said Act read with section 14(2) of the said Act, according to learned counsel, the Full Bench of the Bombay High Court did not hold as was according to Mr. Tarkunde, wrongly contended on behalf of the appellant that a statutory tenant could not create a valid licene although a contractual tenant in the same circumstances could do so. It was submitted that actually the Bombay High Court has held specifically that statutory tenant continued to be possessed of the same rights and was subject to the same disabilities as a contractual tenant. The decision of the Bombay Full Bench was that both the contractual tenant as well as the statutory tenant were entitled by the terms of the tenancy to sublease its premises. Whereby the terms of tenancy the tenant was authorised or entitled to create tenancy or licence, he has been categorised in category 'A' by the Full Bench. On the other hand a tenant whether contractual or statutory who was not entitled, according to the full bench, to create any valid licence after 21st May, 1959 if his tenancy agreement did not specifically give him a right to create a sub-tenancy has been dealt with as category 'B'.

It was submitted that it was clear from the full bench judgment that the distinction was made by the High Court in view of section 53 of the Indian Easements Act, 1882 read with section 15(1) of the said Act. It was urged that section 53 of the Indian Easement Act, one could grant a licence in the circumstances in which and to the extent to which he is entitled to transfer his interest in the property effected by the licence. Under section 15(1) read with section 15(2) of the said Act, a tenant is not entitled to create any sub-tenancy or to transfer his interest in the premises after 21st May, 1959 unless the contract of tenancy positively allowed him to do so.