Chiranjilal Seksaria vs Nand Kishore Saref

Bachawat, J.—The Respondent seeks to eject the Appellants from a plot of land at No. 5, Nimtolla Ghat Street. The Appellants claim to be thika tenants of the land under the Respondent and they contend that the suit ought to be dismissed because (a) the Respondent did not plead nor prove any ground of eviction under the Act and (b) the trial Court had no jurisdiction to entertain a suit for eviction of the thika tenant.

In order to be a thika tenant the claimant must satisfy the conditions of Section 2(5) of the Calcutta Thika Tenancy Act, 1949, and must be a person

who holds, whether under a written lease or otherwise, land under another person, and is or but for a special contract would be liable to pay rent, at a monthly or any other periodical rate, for that land to that another person and has erected or acquired by purchase or gift any structure on such land for a residential, manufacturing or business purpose.

Now the Appellants pleaded in para. 3 of their written statement that one Ashutosh Sengupta was in possession of the land as a tenant under one Sajan Kumar Ghosh, that on August 19, 1948, they came into possession of the land on payment of Rs. 200 to Ashutosh Sengupta, that in or about March, 1949, there was an arrangement by which they agreed to pay rent for the land to Sajan Kumar Ghosh who in his turn would make out the receipt in the name of Ashutosh Sengupta, that in the premises they became thika tenants of the land and started construction on it for the purpose of carrying on their business, that thereafter the Respondent started various criminal and civil proceedings against Appellant Noranglal, Sajan Kumar Ghosh and Ashutosh Sengupta, that ultimately the Appellants were compelled to enter into the agreement dated July 25, 1949, and that they are thika tenants of the land under the Plaintiff and are entitled to the protection of the Act, Now there is no distinct pleading in the written statement that the Appellants erected any structure on the land. On this state of the pleadings, the parties joined issue and the trial commenced. The Respondent called his brother one Kedarnath Saraf as a witness on his behalf. In cross-examination the Appellants'' counsel suggested to this witness that the Appellants constructed structures on the land after obtaining possession of it from the Respondent. Now this suggestion is at variance with the case made in the written statement that the Appellants started construction on the land between March and July, 1949. The witness denied that the Appellants had erected any structure and his evidence was that the Respondent had erected a gumti or a temporary structure on the land where a person could sit and carry on business. We see no reason to disbelieve this witness. In the absence of a distinct allegation in the written statement that the Appellants had erected structures on the land, we do not blame the Respondent for not calling himself as a witness and for not adducing better evidence to prove that the Appellants had not erected any structures on the land. The structures were not regarded as substantial or worthy of any mention in the agreements of July 25, 1949, or of December 3, 1955. The first Appellant Chiranjilal was examined as a witness on behalf of the Appellants, and he said (Q. 21-24) that the Appellants got possession of an open plot of land from the Respondent, and thereafter erected structures and established an office on it. This witness did not venture to support the case made in the written statement that the Appellants started construction after March, 1949, as to the events before and after it. In cross-examination (Q. 52-54) he added that there was an office room 12'' x 12'' made with wooden planks and another structure with corrugated tins, and that the Respondent did not erect these structures. Now this case of erection of an office room with wooden planks and another structure with corrugated tins was not made in the written statement nor put to the Respondent''s witness in cross-examination. The Appellants did not disclose or tender any book of account or voucher to prove that they incurred any expenses for these constructions. We are unable to accept the testimony of Chiranjilal. We think that he is not a truthful witness. He signed and verified the written statement wherein he denied that the Respondent carried on commission agency business under the name and style of N.K. Saraf and Co., or any other name at No. 5, Nimtolla Ghat Street or any other place, whereas in cross-examination (Q. 61-62) he was compelled to admit that the Respondent carried on business under the name and style of N.K. Saraf and Co. Exhibit 1 is a municipal trade licence for the year 1958-59 issued to Messrs. N.K. Saraf and Co. (proprietor N.K. Saraf) residing or carrying on business at 6, Jadulal Mullick Road and exercising the calling of commission agent in miscellaneous goods. In para. 3 of the written statement which was verified as true to his knowledge the witness had stated that the Respondent had started various criminal and civil proceedings against Appellant Noranjlal, but in cross-examination (Q. 51) he tried to say that he did not remember any criminal proceedings between the Appellants and the Respondent. In all these circumstances we reject the evidence of Chiranjilal, we hold that the Appellants have failed to establish that they erected any structures on the land, and on this ground alone we must hold that the Appellants have failed to establish that they were thika tenants of the land under the Plaintiff. We think that the structures on the land were erected by the Respondent and not by the Appellants.

We think also that the case that the Appellants were thika tenants of the Plaintiff must be rejected on another ground. In order to be a thika tenant under the Respondent, the Appellants must establish that they hold the land under the Respondent and are or but for a special contract would be liable to pay rent for the land to him. To satisfy the test of Section 2(5) of the Calcutta Thika Tenancy Act, 1949, they must be tenants of the land under the Respondent. The Act seeks to make better provisions relating to the law of landlord and tenant in respect of thika tenancies in Calcutta. The preamble to the Act as also the word "holds" in Section 2(5) indicate that the person claiming to be a thika tenant must establish that he is a tenant. Now a bare licensee or a person using the land under a licence from the owner has no interest in the land and cannot claim to be a thika tenant. Section 2(5) of the Calcutta Thika Tenancy Act, 1949, corresponds to Section 3(17) of the Bengal Tenancy Act under which it was well settled that, "There can be no tenancy unless a right to the land has been given to the grantee", see Jatindra Mohan Lahiri v. Abdul Aziz Meah AIR 1920 Cal. 733. The distinction between a lease and a license is well known. A lease is a transfer of right to enjoy the land, whereas a license is a privilege to do something on the land which, otherwise, would have been unlawful. The question whether a transaction amounts to a tenancy or a license is a question of the intention of the parties. If the agreement is in writing, we must look to the intention as expressed in the document. The point must then be decided on a consideration of the contents of the document with the assistance of such extrinsic evidence as may be admissible. The most important, and often the decisive test, is whether the document gave exclusive possession to the grantee, see H.E. Wijesuriya v. Attorney-General for Ceylon [1950] A.C. 493. The grant of a right to use land without a right of exclusive occupation takes effect as a licence but if the effect of the instrument is to give exclusive possession, it will normally take effect as a lease, see Addiscombe Garden Estates Ltd. v. Crabbe [1957] 3 A.E.R. 563, unless the document read as a whole shows an intention to a grant a possessory licence short of a lease, see Isaac v. Hotel De Paris Ltd. [1960] 1 A.E.R. 348, Murray, Bull and Co. Ltd. v. Murray [1953] 1 Q.B. 211. The question is not of words but of substance, see Glenwood Lumber Coy v. Phillips [1904] A.C. 405, O.C. Ganguly v. Kamalpat Singh Dugar (1946) 51 C.W.N. 203, and the label which the parties choose to put on the transaction, though material, is not decisive. The operative words of the agreement may create a tenancy, even if it is framed as a license to use the club-house and tennis Court on a periodical payment called Court-fee, see Addiscombe Garden Estates Ltd. v. Crabbe [1957] 3 A.E.R. 563 or as a contract of employment of the grantor as commission agent for a fixed commission payable periodically, (Messrs. Vallabhdas Champshi and Co. v. Messrs. Berry and Co. and Messrs. Meghraj Mohanlal) Unreported decision of Sen, T. dated 10.12.53 in Civil Rule Nos. 3018 and 3019 of 1952 or as a contract of employment of the grantee with the stipulation that nothing in it shall be construed to create a tenancy, see Facchini v. Bryson (1952) 1 T.L.R. 1386. To give exclusive possession it is not necessary to use express words to that effect, it is sufficient that the nature of act to be done by the grantee requires that he should have exclusive possession, see Mohipal Singh v. Lalji Singh (1912) 17 C.W.N. 166.

The Appellants were let into possession of the land by the Respondent under the registered document dated July 25, 1949. In form the document is a contract of employment of the Respondent by the Appellants for a period of two years with option to extend it by mutual agreement. By Clause 1, the Respondent allotted and made over possession of the land to the Appellants. Clause 8 provided that on the expiry of the agreement the Appellants would give vacant possession of the land to the Respondent. The document read as a whole shows, that the Appellants were given exclusive possession of the land. Clause 3 provided that the Appellants would store their own timber in the land and themselves sell the same. The document imposed no obligation upon the Respondent to effect any sale as commission agents. Clauses 2 and 5 provided for payment of a fixed commission of Rs. 10,500, irrespective of the extent of business, payable in instalments of Rs. 437-8 as. per month. It is plain that this payment was solely for the use and enjoyment of the land and for nothing else and the Appellants were under an obligation to pay rent in the guise of a fixed commission. Though the agreement was in form a commission agency agreement, in substance it amounted to a lease of the land in consideration of a periodical payment of rent. Clause 9 provided that the Respondent would be at liberty to erect any building or structure over the land or any portion thereof and the Appellants would give every facility to this and would not put any hindrance whatever. On a true construction of the document it would appear that the Appellants would be entitled to occupy the building. If an exclusive right of possession is given, the fact that the grant is subject to a reservation of a right to build will not prevent it from being a lease.

On May 27, 1951, the period of this lease expired. Nevertheless the Appellants continued to remain in possession of the land. On July 26, 1954, the Respondent instituted a suit claiming ejectment of the Appellants. On December 3, 1955, a compromise decree was passed in the suit. The compromise provided that "the commission agency business would continue thereafter in terms of the separate agreement executed on that date. The question then arises whether the agreement dated December 3, 1955, amounted to a lease or to a grant of bare licence short of art interest in the land. In form, this document was a contract of employment of the Respondent as a commission agent of the Appellants. The fact that this agreement was in continuation of the previous agreement, which though in form a commission agency agreement was in substance a transaction of lease would appear to suggest that this new agreement also was in substance a lease. But to ascertain the true meaning and effect of this document, we must read it as a whole. By Clause 1, the Respondent was appointed a commission agent for a term of five years from December 1, 1955, on the terms and conditions mentioned in the document. Clause 2 provided, that all stocks of timber, wood, wood products and other stores to be sold through the Respondent would be brought in by the Appellants and stored on the land. Clause 3 provided that the Appellants would be entitled to sell the goods, and they or their employees would be entitled to remain in the premises for the purpose of carrying on the said business and for the safety of the goods. Clause 7 provided that on the expiry or the sooner determination of the agreement, the Appellants would deliver vacant possession of the premises to the Respondent. It would appear that by this document the Appellants were given exclusive possession of the land. But Clauses 9, 10, 11 and 12 contemplated that the Respondent would be entitled to construct rooms or sheds on the land and that, "on completion of the said rooms or sheds the principal will be allowed to use one front room." The agreement proceeded upon the clear assumption that the Respondent would be entitled to occupy the other sheds or rooms. Now it is impossible to read the document as a grant of a lease and re-grant of a right to occupy the sheds or rooms. The true meaning of the agreement is that the Respondent never parted with any interest in the land and was entitled to occupy the sheds or rooms by virtue of his original right in it. We thus find here an indication that the Appellants had no interest in the land and were given a possessory license short of a tenancy. Unlike the first document, this document imposed an obligation upon the Respondent to render services as commission agent. Clause 3 provided that the agent would use his best endeavours to sell the goods of the principal stored at the premises at the price and on the terms and conditions the principal may from time to time in writing direct or instruct. Clause 6 provided for payment of a fixed commission of Rs. 3,720 per year irrespective of the quantity or price of the goods sold to be paid in 12 equal monthly instalments of Rs. 310 each on or before the 7th day of each month for which the commission would be due. By Clause 7, in default of payment of the commission, the agent was given the liberty to terminate the agreement on giving 15 days'' notice to the principal. The agent was to render two-fold service. He would allow the principal to use his land, and he would sell the principal''s goods. The agent was to be paid a remuneration for his two-fold service. It is difficult to hold that in form and substance this payment was on account of use or occupation held by the tenant as contemplated by Sections 2(5) and 2(6) of the Calcutta Thika Tenancy Act, 1949, read with" Section 3(13) of the Bengal Tenancy Act. The character of the payment is an important matter to be considered in determining whether the transaction amounts to a lease of license, see Isaac v. Hotel De Paris Ltd. (Supra). The Respondent''s right to build and occupy sheds and rooms, as also the composite character of the periodical payment indicate strongly that the Appellants had a possessory licence short of a tenancy. The fact that the document was not registered under the Indian Registration Act is also some slight indication that the document was not intended to create an" interest on the land. In all these circumstances it is not shown that the form of the document should be disregarded and that in substance it amounted to a lease. We think that under the agreement dated December 3, 1955, the Appellants had a possessory license only, and were not tenants of the land. Thereafter the character of the possession of the Appellants was that of licensees.

The issue in the trial Court was whether the agreement was invalid, illegal and void being against public policy and was entered into with a view to avoid the consequences of the Calcutta Thika Tenancy Act and/or the West Bengal Premises Rent Control (Temporary Provisions) Act as alleged in paras. 3 and 4 of the written statement. This issue must be answered in the negative. There is nothing in either of the Acts prohibiting the creation of a licence as distinguished from a lease. If there is a genuine licence and not a lease, the transaction is outside the mischief of those Acts. The grant of a licence is not against public policy and is neither illegal nor void. The licensee is not entitled to any protection under those Acts.

Under Clause 3 of the agreement dated December 3, 1955, the agent was required to use his best endeavour to sell goods, if and when the principal gave instructions to the agent in writing. No instructions in writing were given to the agent and the agent did not sell any goods. Mr. Deb contended that in the circumstances the document was not intended to be acted upon as a commission agency agreement. We are unable to accept this contention. The agreement was acted upon, the Appellants continued to use the land on the strength of the agreement, and periodical payments of commission were made under it. Mr. Deb was, therefore, driven to admit that a part of the agreement was acted upon, but nevertheless he contended that those parts of the agreement which gave it a colour of a commission agency transaction were not intended to be acted upon. We think there is neither any pleading no proof of any such case. The pleading was that the entire agreement was illegal, void and against public policy, whereas the contention now made is that the agreement was operative in part, but was not operative as a commission agency agreement. This contention must be rejected.

It follows that the Appellants are not thika tenants. Consequently they cannot claim the protection of the Calcutta Thika Tenancy Act. It also follows that the jurisdiction of the trial Court to entertain the suit is not barred by that Act.

Mr. Deb contended alternatively that the Appellants are entitled to protection from eviction under the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950. Now this contention must be rejected for various reasons. Firstly, the Appellants were licensees and not tenants under the Respondent. Secondly, there is neither any pleading no proof nor any issue that the Appellants were tenants of "premises" within the meaning of Section 2(8) of the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950. Thirdly, the case of the Appellants at the trial was that they took lease of an open plot of land from the Respondent. Fourthly, there is no material on the record to show that the grounds appertained to the structures so that the land and the structures together would constitute a "premises" within the meaning of Section 2(8). Fifthly, assuming that the document dated December 3, 1955, took effect as a lease and not as a licence, there was a demise of an open plot of land only and there was no demise of any structure. Sixthly, even in the memorandum of appeal it is not urged that the Appellants were tenants of premises and as such entitled to the protection of the West Bengal Rent Control (Temporary Provisions) Act, 1950.

The appeal fails and is dismissed with costs.

The stay order will continue for a period of two months.

Arun K. Mukherjea, J.

I agree.