Harshadrai Raghanathji Desai vs Paragji Hirabhai and Another

S.T. Raju, J.—This is an application under Article 227 of the Constitution of India. The only contention urged by the petitioner is that there is

an error of law apparent on the face of the record in the order of the Revenue

Tribunal confirming the decision of the Tenancy Mamlatdar in Tenancy Case No. 244/53-54 and the order in appeal dismissing the appeal from

the decision of the Tenancy Mamlatdar. The Revenue Tribunal held that the Tenancy Mamlatdar was right in his decision that opponent No. 1 was

a tenant of the petitioner in respect of the land S. No. 228 in village Kabilpore Taluka Navsari consisting of a bungalow 150 mango trees 100

coconut trees and a well. There was a registered agreement between the parties dated 21-6-1949 and after considering the terms of this

agreement and drawing the presumption u/s 4 of the Bombay Tenancy and Agricultural Lands Act 1948 the Tenancy Mamlatdar held that the

relationship between the parties was one of landlord and tenant. This decision was confirmed in appeal by the Assistant Collector Navsari and also

in revision by the Revenue Tribunal of Gujarat and the only contention urged before us is that there is an error apparent on the face of the record in

the order of the Revenue Tribunal confirming the construction of the document as a lease.

It is contended that the document recites at various places that it is a licence that the property in question was given to opponent No. 1 for

management that the document does not create any interest in immovable property and that by construing the document which is a licence as a

lease the authorities below committed an error of law apparent on the face of the record.

The Learned Counsel for opponent No. 1 relied on Associated Hotels of India Ltd. Vs. R.N. Kapoor, where the distinction between a lease

and licence has been explained. He contends that on a true construction of the document it amounts to a lease and not a licence.

The question therefore is whether on a true construction of the document it amounts to a lease. A lease is defined in Section 105 of the Transfer of

Property Act as follows:

A lease of immovable property is a transfer of a right to enjoy such property made for a certain time express or implied or in perpetuity in

consideration of a price paid or promised or of money a share of crops service of any other thing of value to be rendered periodically or on special

occasions to the transferor by the transferee who accepts the transfer on such terms.

The essential requirements of the lease are therefore (1) there should be a transfer of a right to enjoy immovable property; (2) it should be for a

certain time express or implied or in perpetuity; and (3) it should be in consideration of a price paid or promised or of money a share of crops

service or any other thing of value to be rendered periodically or on special occasions to the transferor by the transferee. The right to enjoy

immovable property would of course amount to an interest in the immovable property. It is not in dispute that the document is for a period of 10

years and that it provides for a consideration as contemplated in Section 105 of the Transfer of Property Act. The real controversy turns upon the

first requirement that there should be a transfer of a right to enjoy such property. The right to enjoy immovable property has to be distinguished

from a right to do or continue to do in or upon the immo veable property of the grantor something which would in the absence of such right be

unlawful and where such right does not amount to an easement or interest in the property. Licence is defined in Section 52 of the Easements Act

and Section 52 reads as follows:

Where one person grants to another or to a definite number of other persons a right to do or continue to do in or upon the immovable property of

the grantor something which would in the absence of such right be unlawful and such right does not amount to an easement or an interest in the

property the right is called a licence.

In the case of a licence there is a right to do or continue to do in or upon the immovable property of the grantor something which does not amount

to an easement or an interest in the property whereas in the case of lease there is a right to enjoy such property and not merely to do something in

or upon the property. In order to apply this distinction various tests have been laid down in Associated Hotels of India Ltd. Vs. R.N. Kapoor, and

their Lordships have laid down the following propositions as well established ones:

To ascertain whether a document creates a licence or lease the substance of the document must be preferred to the form: (2) the real test is the

intention of the parties whether they intend to create a lease or a licence; (3) if the document creates an interest in the property it is a lease; but if it

only permits another to make use of the property of which the legal possession continues with the owner it is licence; and (4) if under the document

a party gets exclusive possession of the property prima facie he is considered to be a tenant; but circumstances may be established which negative

the intention to create a lease.

What is important is the real intention of the parties to the transaction the substance of the document and not merely the form of the document

which embodied the transaction. In the case of a lease as provided in Section 108 Transfer of Property Act there can be a contract between the

parties providing for special rights and liabilities between the lessor and lessee. Such special terms if any in the document do not clinch the issue

and ate inconclusive. 6. We have therefore to see whether in the application of these well established principles to the construction of the document

the Tribunal has committed any palpable error which is apparent on the face of the record. If we turn to the document we find certain words in the

document which stress that the document is by way of a licence. The words licence and licensee are used in 3 or 4 parts of the document. But this

itself is not a conclusive factor. The parties to a transaction cannot turn lease into a licence merely by stating that one of the parties is a licensee and

that the transaction is a licence. The main terms of the agreement and its substance are the deciding factors. The document starts by saying that

possession of the land and bungalow has been given to the lessee for management on behalf of the executant. In term No. 1 it is stated that the

owner can come into the land and bungalow whenever he wishes. But this term in our opinion is not inconsistent with a lease. It is provided in

Section 108(a) of the Transfer of Property Act that the lessee is bound to allow the lessor and his agents at all reasonable times during the term to

enter upon the property and inspect the conditions thereof etc. In our opinion the main terms of the agreement are terms Nos. 4 and 8. Clauses 3

and 4 read as follows:

3 We are to make use of your land and bungalow as a licensee for 10 years. If we fail 10 pay you Rs. 526/regulariy every year you are entitled to

recover the possession before the expiry of the term and you are entitled to recover from us any damages which you incur.

4 If under any circumstances we deliver possession to you within 10 years you can take damages at the rate of Rs. 526/per year for the unexpired

period and we are liable to pay the same.

These terms clearly show that the exclusive possession of the property was given along with the right to make use of the land and bungalow. The

petitioner has also right to re-enter and to take possession of the property in case the tenant made any default in the payment of the annual

consideration. Term No. 4 also clearly shows that the agreement was not a mere licence. A right to enjoy the property was transferred and a

provision was made for a breach of the agreement. It is true that there is a term in the agreement whereby it is agreed that no derivative interest or

sublicence would be created. This term is inconclusive on the question whether the document is a lease or a licence. Clause 7 of the agreement also

gives right to cut mango and coconut trees on the land and it is provided that if the trees are cut half share of the wood of the trees will be given to

the landlord. Clause 8 to the agreement gives a right to the tenant to use the well on the land and also to supply water by means of an engine for the

use of others subject to the restriction that no right of easement should be created. The right was therefore given to the tenant not only to use the

well but to give the well water to others. This is a strong indication in favour of the interpretation put by the Revenue Tribunal.

It is therefore clear from the document that there are several terms in the agreement which support the interpretation put on the document by the

Revenue Tribunal. There are also some terms which support the contention of the Learned Counsel for the petitioner but in such a case it would

not be proper to say that a patent error has been committed by the Revenue Tribunal in interpreting the document. The Revenue Tribunal

considered the various terms of the agreement and held that several of the terms support the view that the transition was one of lease and not

licence particularly terms Nos. 3 4 7 and 8 referred to a above. We cannot say that the view taken by the Revenue Tribunal was unreasonable or

unsound patently erroneous. If two views can be taken as to the construction of a document and the view of the Tribunal cannot be said to be

patently unsound or erroneous the High Court will not exercise its jurisdiction under Article 227 of the Constitution (vide Satyanarayan v.

Mallikarjun 62 BomLR 146.

In this view of the matter it is not necessary to refer to the authorities citied by counsel for opponent No. 1 namely In Re: Burmah Shell Oil

Storage and Distributing Co. Ltd. of India He has also cited the following observations at p. 13 in Hill and Redmans Law of Landlord and Tenant

(Twelfth Edition relying on Facchini v. Bryson ILR (1952) 1386 (C.A. 3rd Digest Supp.):

Prohibition of sub-letting and provision for the owner to enter arid view are terms indicating a lease rather than a licence.

Having construed the document as a lease the Revenue Tribunal did not consider the question whether the Tenancy Mamlatdar was right in

applying the presumption u/s 4 of the Tenancy Act. Having regard to the view expressed by us above it is also not necessary for us to discuss this

question.

In our view this is not a case in which it can be said that there is an error apparent on the face of the record in the decision of The Revenue

Tribunal. That decision appears to be correct.

We therefore dismiss this petition. There Bill be no order as to costs.