Gopal Lal vs Municipal Council, Udaipur

Dr. Vineet Kothari, J.—1. The appellant/plaintiff, a licensee of a shop allotted to him by the Municipal Council, Udaipur, has filed the present second appeal under Section 100 of CPC, 1908, having concurrently lost the legal battle before the courts below, assailing the judgment and decree dated 04.01.1999 passed by learned Addl. District Judge No. 1, Udaipur, in Civil Appeal No. 32/1998- Gopal Lal Vs. Municipal Council, Udaipur, whereby the learned first appellate court has dismissed the appeal while affirming the judgment and decree dated 20.05.1998 passed by learned Addl. Civil Judge (Jr. Division) No. 1, Udaipur, in Civil Original Suit No. 160/1995-Gopal Lal Vs. Municipal Council, Udaipur, whereby the suit filed by the appellant/plaintiff for injunction against the defendant, Municipal Council, Udaipur not to increase the rent of Rs. 210/- per month for the suit Shop No. 10 situated at Chetak Circle, Udaipur (a prominent and busy business place of Udaipur) was dismissed.

The appellant/plaintiff, Gopal Lal, had filed a suit seeking injunction against the defendant/respondent Municipal Council, Udaipur, not to increase the rent of Rs. 210/- per month for the suit shop, which was given on licence to the appellant/plaintiff on 21.1.1977 @ Rs. 210/- per month. A Circular dated 10.08.1983 came to be issued by the State Government in exercise of powers under Section 138 of the Rajasthan Municipalities Act, 1959, authorizing the Municipal Council to charge a fees for such licence or permission a higher fees, as may be fixed by the State Government and the State Government notified for a 10% increase in licence fees for every year.

The contention raised by the learned counsel for the appellant/plaintiff before the courts below, where the plaintiff/appellant lost the legal battle, was that it was a case of ''lease'' and not'' licence'' and, therefore, in view of Full Bench decision of this Court in the case of State of Rajasthan Vs. Municipal Council, Hanumangarh & Ors. reported in 2003 (2) RLW Raj. 833, the Municipal Council, Udaipur had no right to increase the rent @ 10% per annum. These contentions were refuted by the defendant and the suit was rejected by both the courts below.

While admitting the present second appeal of the plaintiff, vide order dated 18.03.1999, a coordinate bench of this Court, framed the following substantial questions of law and an interim relief was also granted by the coordinate bench restraining the respondent Municipal Council, Udaipur, to recover the enhanced licence fee, which are quoted herein below:--

"1. Whether the defendant respondent was entitled to unilaterally increase the rent of the premises let out to the appellant?

Whether the learned first appellate court after setting aside the finding of licensee rightly held the appellant to be a lessee and if the plaintiff is held to be a lessee, no rent can be enhanced against the mandatory provisions envisaged under Sec. 105 of the Transfer of Property Act?

Whether Section 105 of the Transfer of Property Act envisages an agreement between lessor and lessee relating to consideration?"

The findings of the learned trial court dismissing the suit of the plaintiff/appellant for injunction vide judgment and decree dated 20.05.1998 are quoted herein below for ready reference:--

The findings of the learned first appellate court below upholding the judgment of learned trial court are also quoted herein below for ready reference:

Mr. Salil Trivedi, learned counsel appearing on behalf of appellant/plaintiff heavily relied upon the Full Bench decision of this Court in the case of State of Rajasthan Vs. Municipal Council, Hanumangarh (supra) and urged that the very same Circular/Notification dated 10.08.1983 was interpreted by Full Bench and it was held to be the case of ''lease'' and even though the document in question in the present case as produced by the respondent Municipal Council, Udaipur under the directions of this Court, use the words (Licence), in effect, the tenor of said document is that of a ''lease'' and, therefore, in view of Full Bench decision of this Court, no enhanced rent/lease charges can be demanded from the plaintiff/appellant.

On the other hand, Mr. Anurag Shukla, learned counsel for the respondent/defendant, Municipal Council, Udaipur urged that the Agreement between the parties in question produced before this Court clearly shows that it was a case of ''licence'' only and not of ''lease'' and, therefore, the Notification dated 10.08.1983 clearly applied to the facts of the present case and the Full Bench decision of this Court cited by the learned counsel for the plaintiff/appellant is distinguishable as the agreement in that case before the Full Bench was i.e. ''lease-deed''. He further submitted that two terms have definitely different connotations in law and, therefore, the present case is covered by the said Notification dated 10.08.1983 and the present second of plaintiff appeal is devoid of any merit.

I have heard the learned counsel for the parties at some length and perused the record and the judgment cited at the Bar.

The document in the present case, giving the licence of Shop No. 10 to the plaintiff/appellant containing following terms, is also quoted herein below for ready reference:

From a bare perusal of the said document it is clear that it is a case of ''license'' and not of ''lease''. Merely because, the licence fees is calculated on monthly basis and the same is realized from the licensee, it does not convert the said document into a ''lease-deed''. The said licence fees of Rs. 210/- per month is liable to be realized in case of delay with 18% interest also vide Clause (2). The respondent has also right to cancel said licence without assigning any reasons as per Clause (9) of the said deed. Clause (12) specifically prohibits transfer of any sort of interest to the licensee. Thus, no attributes of ''lease'' are available in the present case and, therefore, the contention of the learned counsel for the appellant/plaintiff, are devoid of any substance.

The facts of the case before the Full Bench of this Court were clearly distinguishable and the document before the Full Bench was a (Lease-Deed), which is quite distinct and different from the licence-deed as involved in the present case and that is why on the last occasion on 07.01.2016 also, after hearing some arguments of learned counsel for the parties, the Court passed the following order on 07.01.2016 calling upon the Municipal Council, Udaipur, to produce the Agreement between the parties on record and that is why the aforesaid document has been produced before this Court.

The Full Bench of this Court in the case of State of Rajasthan Vs. Municipal Council, Hanumangarh (supra) held as under:--

"6. Applying these tests to the facts of the case particularly the document Ex. 1, the substance of the document is to be seen. The agreement is styled as a ''kirayanama'' i.e., lease-deed. The possession of the shops was given to the allottees i.e., the Council has parted with the possession of the shops completely. The deed contains clauses that the allottees will not part with possession of the shops nor sub-let them. This shows that the Council had completely divested itself of the possession of the shops and the same stood vested in favour of the allottees. A further condition was imposed that the premises could be used only as shops. Thus the document creates an interest in the property in favour of the allottees. As against this, a licence is a mere privilege to carry out some activity at the premises the lawful possession whereof remains with the owner. Till the vendors like the petitioners in the writ petitions were selling their vegetables on the foot-path they were mere licensees. However, on construction of the pucca shops they were required to make a fixed monthly payment and possession of the shops was completely left within their control. It is recorded in the document itself that the allottees had received possession of the shops from the Council. It is further stated in the agreement that the allottees will maintain the shops in goods condition and will not cause any damage to the shops. It is also stated in the agreement that the allottees will not carry out any material construction in the shops and they will vacate the shops on one month''s notice and if the allottee does not deliver possession of the shop on the expiry of one month notice period he will pay rent at a penal rate. At various places in the agreement the amount payable by the allottee for the shops to the Council has been described as rent. In our view, it is clear from a perusal of the agreement Ex. 1 that it is a lease-deed and not a licence- deed. Thus, we agree with the learned Single Judge that the basic document in this case is a lease-deed.

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The present is a case of lease. The impugned notification being without jurisdiction, cannot provide source of power to the appellant to revise the rent and the impugned action is wholly without jurisdiction.

Having held that this is a case of lease it follows that the revision of rent has to be in law, if it so permits. We agree with the learned Single Judge that the State Government or the appellant can revise the rent in accordance with law; but, the impugned revision of rent based on the circular dated 10.8.1983 cannot be upheld. The decision of the appellant revising the rent of the shops in question was, therefore, rightly quashed by the learned Single Judge. We agree with the view taken by the learned Single Judge. These appeals are, therefore, dismissed.

We hold that the notification dated 10.8.1983 issued by the State Government does not confer jurisdiction on the Council to increase rent at the rate of 10 per cent every year and the said enhancement is unlawful. The reference is answered accordingly."

Upon a closer scrutiny of the aforesaid judgment and facts of the present case, it is clear that the said judgment of Full Bench is not applicable to the facts of the present case, which is a case of ''licence'' only for the shop given to the appellant/plaintiff and he appears to have filed the suit to avoid the payment of increased licence fees @ Rs. 210/- per month with 10% increase every year when the said Notification dated 10.08.1983 was sought to be applied for demanding the increased licence fees from him. The suit was apparently misconceived and, therefore, was rightly rejected by the learned court below.

Thus, this Courts finds no substance in the arguments of the learned counsel for the appellant/plaintiff (licensee) and the present second appeal of plaintiff against concurrent decrees of both the courts below rejecting his suit for injunction, deserves to be dismissed, the same is accordingly dismissed while answering the substantial questions of law, framed above, in favour of defendant/respondent, Municipal Council, Udaipur, and against the plaintiff/appellant with cost of Rs. 10,000/- which will be paid by the plaintiff to Municipal Council, Udaipur, within a period of three months from today.

The increased licence fees of Rs. 210/- + 10% increase every year in terms of Notification dated 10.08.1983 and the arrears of the same will be paid within six months by the appellant/plaintiff, otherwise, it will bear interest @ 9% per annum from the date of it falling due till the date of actual payment. The increased licensee fees per month shall be payable by the appellant/plaintiff from the date of this judgment from March, 2016. A copy of this judgment be sent to the concerned parties and the courts below forthwith.