Lakshmiammal vs Sivakamu Natesan

M. Natesan, J.—The second appeal and civil revision petition arise out of a suit in ejectment filed by the respondent before the Second

Assistant Judge, City Civil Court, Madras. The defendant in the suit, who is the appellant in the second appeal and petitioner in the civil revision

petition, in defence, claimed the benefits conferred on a tenant of land under the Madras City Tenants Protection Act (III of 1922) and, by LA.

No. 855 of 1961, applied u/s 9 of the Act for purchase of the plaintiff''s right in the suit land. The decree in ejectment granted and dismissal of the

application under the Act by the trial Court were confirmed on appeal by the Additional Judge, City Civil Court, Madras. The second appeal is

directed against the decree in the suit and the civil revision petition is from the order of dismissal of the appeal against the trial Court''s Order in LA.

No. 855 of 1961.

There is no dispute about the title of the plaintiff to the suit plot No. 6, Dr. Nair Road, T. Nagar in the City, stated to measure about six

grounds. The suit land abuts Jagadambal Street on one side and Dr. Nair Road on another. It was the plaintiff''s case that, when the watchman of

the property vacated the hut on the land in 1951, she permitted the defendant to occupy the hut free of rent on the understanding that it should be

vacated whenever the plaintiff required. The plaint averred that, in 1959, when the plaintiff called upon the defendant to vacate the hut so that she

could put up a construction on the property, the defendant failed to vacate the same and proceeded to put up further huts. There have been

exchange of notices between the parties preceding the suit. The plaintiff''s case is that the defendant is a licensee without any interest in the land.

The defendant pleads that she is not a licensee, but a tenant of the land and that she put up the superstructure. Her case is that she became a tenant

of the land about 15 years previously that is, in 1945 or 1946, on a monthly rent of Rs. 3, that the rent was raised to Rs. 5 per month in 1958 and

then to Rs. 6 in 1959, and that the rent was deducted from the price of milk which was supplied by the defendant to the plaintiff. There is evidence

that the defendant has built a small cattle yard on the land, and that she is a milk vendor. That the defendant has been supplying milk to the plaintiff,

is admitted by P.W. 1, nephew of the plaintiff. The documentary evidence consists of notices that passed between the parties, the payment of

licence fee by the defendant in 1956-57 to the Corporation of Madras and vouchers for return of money orders sent as ground rent by the

defendant to the plaintiff in the beginning of 1961. The Second Assistant Judge, from the attendant circumstances referred to by him, inferred that

the defendant was not a tenant but licensee of the plaintiff, and that she was not entitled to the benefits under the City Tenants Protection Act. The

Second Assistant Judge, having regard to the evidence and a conviction of the defendant in 1947 for keeping cattle in Dhanikachalam Chetti Road,

rejected the defendant''s case that she entered on the suit land in 1945 or 1946. He would find that the defendant did not occupy the suit land prior

to 1951, and he accepted the case put forward by the plaintiff, that the defendant must have occupied a hut on the land in 1951.

Alternatively the Second Assistant Judge held that, as the rent had been raised in 1958 and 1959, subsequent to 1955 a fresh tenancy had been

created after the amendment of the City Tenants Protection Act in 1955. As the amended Act applied only to tenancies subsisting on the date of

the amendment even assuming that the defendant was a tenant under the Act when the amended Act came into force, it was held that she was not

entitled to any relief under the Act, as there was termination of the original tenancy and creation of a fresh tenancy when the rent was varied. On

appeal, the learned Additional Judge, City Civil Court, would hold that the defendant was a lessee of the ""plaintiff, and that what was leased by

plaintiff was a vacant site in 1951. He would hold that the superstructure standing on the land belonged to the defendant. However, he agreed with

the learned Second Assistant Judge that, as there was an increase in the rate of rent, a new tenancy came into being, and the defendant lost the

benefits of the City Tenants Protection Act.

Having heard learned Counsel on both sides, I am not satisfied that there has been a proper approach in the appellate Court with reference to

either of the points that called for consideration. To take up the first question whether the defendant was a licensee or lessee, the difference

between a lease and licence is quite often subtle and the precise character of the relationship between the owner and occupier has to be

determined having a conspectus of the entire case and circumstances obtaining at the time of the entry and the conduct of the parties. Certain

guiding principles are to be found in the decisions and they have to be borne in mind in solving the problem. Also what commenced as license may

later become tenancy and the converse is also possible. Both the parties in the case appear to have exaggerated their respective cases, very likely

apprehensive of what the legal position might turn out to be. The defendant in this case would state that she has been on the land from 1945-46.

The plaintiff pleaded that the defendant came on the land in 1951 and occupied a hut on the premises, vacated by her watchman. While the trial

Court accepted the plaintiff''s case in its entirety, the appellate Court having regard to the contents of the notice Exhibit B-l, would hold that the

defendant did not occupy any hut belonging to the plaintiff, but that the defendant took the vacant site in the year 1951. The appellate Court would

find that the defendant was a lessee, having regard to Exhibit B-l. The reasoning is that it was very unlikely that the defendant was allowed to

occupy the suit property free of rent, though it was remarked that there was nothing improbable in the supply of milk by the defendant to the

plaintiff. The learned Additional Judge seems to have been of the view that, once there is a payment of rent, the relationship is that of lessor and

lessee. But it will be presently seen that the payment of rent for occupation call it rent or any other name is not an unfailing test.

The learned Additional Judge has posed the question for consideration on this aspect of the case thus:

Whether the defendant was a licensee in respect of the hut marked A in the plaint plan or whether the defendant was a lessee in respect of the site

and whether she constructed the huts A, B and C?

Here the learned Additional Judge ignores that, even if what had been occupied by the defendant under the plaintiff was land only it does not

necessarily follow that the relationship was that of lessor and lessee. The plaintiff could have permitted the defendant to use the land and hand it

over to her whenever she required the same, without intending to confer on the defendant an interest in the land and make her a tenant. We are not

concerned with the attitude adopted by the defendant subsequently. Even a licensee may be permitted to put up temporary constructions, like the

huts in this case.

Learned Counsel for the plaintiff contends that here is a case where valuable building sites have been acquired by the plaintiff for construction

purposes, and that it is extremely unlikely that she would create an interest in the property in the defendant and permit her to put up structures

thereon as a tenant, which would interefere with her constructing buildings on the property as and when she desired. Learned Counsel submits that,

having regard to the facts and circumstances of the case, one should not readily impute to the plaintiff an intention to create a tenancy. The

argument is that, as there is no document evidencing the precise relationship between the parties and the decisive consideration as to the nature of

the relationship is the intention of the parties, the intention has to be ascertained on a consideration of all the attendant circumstances and they

negative an intention to create a lease. In this regard, Counsel would urge that admittedly no rent was paid in cash by the defendant, that the

defendant was supplying milk to the plaintiff, and that the defendant''s case is merely that a sum of Rs. 3, later on Rs. 5 or Rs. 6 was being adjusted

against the cost of milk supplied by her to the plaintiff. It is submitted that, having regard to the relationship between the parties, the plaintiff who

had no immediate use of the land would have only permitted its user by the defendant as a licensee without conferring any interest on her, as that

would assure to the plaintiff a person to watch the property from trespass by others, apart from creating an obligation with reference to the supply

of milk. Per contra, Counsel for the defendant would argue that, where there has been exclusive occupation by the defendant of the land putting up

structures thereon the presumption should be in favour of tenancy and not of license. The learned Additional Judge for his conclusion seems to lay

some stress on the fact that Exhibit B-l required the surrender of possession of the vacant site, free of the superstructures within 15 days of the

receipt of the notice. I may at once state that the mere fact that a notice has been issued to the occupant to vacate within a given period will not by

itself make the relationship as that of lessor and lessee, if in fact it is not so. It may also be noted that the notice does not terminate the occupation

with the end of a calender month.

In Mrs. M.N. Clubwala and Another Vs. Fida Hussain Saheb and Others, , the Supreme Court enunciates certain guiding principles thus::

While it is true that the essence of licence is that it is revocable at the will of the grantor the provision in the licence that the licensee would be

entitled to a notice before being required to vacate is not inconsistent with a licence. In England it has been held that a contractual licence may be

revocable or irrevocable according to the express or implied terms of the contract between the parties. It has further been held that if the licensee

under a revocable licence has brought property on to the land, he is entitled to notice of revocation and to a reasonable time for removing his

property, and in which to make arrangements to carry on his business elsewhere. (See Halsbury''s Laws of England, 3rd Edition, Vol. 23, page

431). Thus the mere necessity of giving a notice to a licensee requiring him to vacate the licensed premises would not indicate that the transaction

was a lease.

In the same case it is said:

Whether an agreement creates between the parties the relationship of landlord and tenant or merely that of licensor and licensee the decisive

consideration is the intention of the parties. This intention has to be ascertained on a consideration of all the relevant provisions in the agreement. In

the absence, however of a formal document the intention of the parties must be inferred from the circumstances and conduct of the parties.

I may refer also to another recent decision of the Supreme Court in B.M. Lall v. Dunlop Rubber Co., (1968) 1 S.C.J. 644: (1958) 1 S.C.R. 23:

AIR 1958 S.C. 175. It is sufficient to set out the head note of the decision in the AIR report which succinctly gives the principles necessary for

consideration here:

A lease is the transfer of a right to enjoy the premises, whereas a licence is a privilege to do something on the premises which otherwise would be

unlawful. If the agreement is in writing, it is a question of construction of the agreement having regard to its terms and where its language is

ambiguous, having .regard to its object, and the circumstances under which it was executed whether the rights of the occupier are those of a lessee

or a licensee. The transaction is a lease, if it grants an interest in the land; it is a license if it gives a personal privilege with no interest in the land. The

question is not of words but of substance and the label which the parties choose to put upon the transaction, though relevant, is not decisive. The

test of exclusive possession is not conclusive, though it is a very important indication in favour of tenancy. If a servant is given a personal privilege

to stay in a house for the greater convenience of his work, End it is treated as part and parcel of his remuneration, then he is licensee, even though

the value of the house is quantified in money, but if he is given an interest in the land, separate and distinct from his contract of service, at a sum

properly to be regarded as a rent, then he is a tenant, and none the less a tenant because he is also a servant.

Reference may also be made to Associated Hotels of India Ltd. Vs. R.N. Kapoor, , where Subba Rao, J., (as he then was) observed that, if

under a document a party gets exclusive possession of the property, prima facie he is considered to be a tenant, but that circumstances may be

established which negative the intention to create a lease. Having regard to these decisions, Counsel for the plaintiff submits that the relationship

between the parties in this case is that of licensor and licensee. It is submitted that the plaintiff, evidently envisaging the convenience that would

enure to her by the defendant her milk vendor occupying the land, permitted the occupation of the land by the defendant and nothing more.

Learned Counsel points out that the extent of the land involved is large--about six grounds--that the plot has been fenced with barbed wire and

that the defendant is admittedly enjoying only a small portion. Learned Counsel contends that, when under Exhibit B-2 the defendant was informed

that she would be held liable for the barbed wire fencing found missing in various places, the reply of the defendant was that she had nothing to do

with the missing barbed wire used for fencing in the plot. The suggestion is that the defendant had no exclusive occupation of the plot in question.

Even the admitted deduction from the price of the milk supplied as consideration for the occupation--it is pointed out--is negligible. Coming to the

question of rent, neither in Exhibit B-l nor in Exhibit B-2, notices issued by the plaintiff, was any claim for the rent made. When replying to Exhibit

B-l by Exhibit A-l, the defendant, though she claims to be a tenant for over 15 years, does not say that she had been paying any rent--not even that

the rent was being adjusted towards the cost of milk supplied by her to the plaintiff. In this notice Exhibit A-l the defendant claims to be using the

land constructing a small superstructure thereon for residential purposes and also a small cattle yard for tying her cattle. The notice Exhibit A-l was

given by Counsel on 21st June, 1960 in response to Exhibit B-l by the plaintiff dated 9th March, 1960 after a lapse of three months. Exhibit B-2

dated 10th October, 1960 evoked the reply Exhibit A-2 dated 10th December, 1960 from the defendant''s Counsel. In Exhibit A-2 it is stated

that the defendant had been paying a rent of Rs. 6 per month for a portion of the land, over which the defendant has constructed the superstructure

for her residence and also a cattle yard. She has pleaded in her written statement that, after plaintiff stopped purchasing milk towards the end of

1960, she sent the rent by money orders. These money orders are manifestly after disputes has arisen between the parties and the defendant had

set up her right under the City Tenants Protection Act. These money orders have not been delivered to the plaintiff, and one finds in these money

orders, for the first time, an attempt to get an acknowledgment from the plaintiff that the amounts were sent for ground rent. These money orders

being recent have to be ignored, as of no evidentiary value in the circumstances. We do not have clear evidence as to the manner of payment of

rent, subsequent to the notice Exhibit B-l issued by the plaintiff. There appears to have been some personal talks between the parties, as brought

out in the notices and evidence. Payment and acceptance of rent is certainly of great weight, if established; but as stated already it is not decisive of

a tenancy, where it can be otherwise explained. A person''s milk supplier may be accommodated, if she is suffering for want of proper

accommodation for herself and her cattle. The owner by providing accommodation to the milk supplier would assure to herself better service.

Accommodation may be provided or permission granted to occupy land as a personal privilege. As said already in these matters, one has to strive

to find the true relationship by getting at the intention of the parties. The following rule enunciated by Greene, M.R. in Booker v. Palmer (1952) 1

All E.R. 1199, is better borne in mind when ascertaining the true intention.

There is one golden rule which is of very general application, namely, that the law does not impute intention to enter into legal relationship where

the circumstances and the conduct of the parties negative any intention of the kind.

It seems to me that neither of the parties, when they adduced evidence in this case, nor the Courts below have kept before themselves the

principles above set out from the decided cases in coming to their conclusion as to the true relationship between the plaintiff and the defendant in

the matter of latter''s occupation of the plaintiff''s land. Also neither the plaintiff nor the defendant should be penalised for overstating their case and

putting exaggerated versions. If the Court can find the true and real relationship between the parties, notwithstanding some ornamentation some

exaggeration and some trappings in the cases of the parties, the Court should give relief according to the rights found.

I shall next take up for consideration the other point, on which the Courts below have concurred--creation of a new tenancy between the parties

once in 1958 and again in 1959, with the raising of rent from Rs. 3 to Rs. 5 in 1958 and from Rs. 5 to Rs. 6 in 1959. This question arises, if it is

found that the relationship between the plaintiff and defendant, when the defendant occupied the land in 1951, was that of landlord and tenant.

Then on the amendment of the City Tenants Protection Act by Act XIX of 1955 in September, 1955, the defendant became a tenant entitled to

the benefits of the Act. But the protection, afforded by the Act is limited to tenancies of land created before the amendment. If there has been a

fresh tenancy in 1958 or 1959, the Act would not be applicable to the subsequent tenancy. This principle the Courts below applied to this case

holding that the variation of the rent resulted in the creation of new tenancies. But it is not every alteration of rent--be it by agreement between the

parties--that necessarily brings about a fresh tenancy. This question has been considered by me recently somewhat in extenso in Natesa Naicker v.

Arumugha Naicker ILR (1968) Mad. 776, where I pointed out that no new tenancy necessarily follows an increase in rent. The circumstances of a

case may be such that an increase in the rent by itself brings about a new tenancy. The question is one of an inference from the facts and

circumstances of the particular case, the Court having to infer whether the parties intended, by the new terms as to the, rent, to put an end to the

old tenancy and create a new tenancy.

In my view, both the questions involved in this case require fresh determination in the light of the principles indicated above. The cases have

therefore to be remanded back to the lower appellate Court for fresh disposal, in the light of the observations made in this Judgment. If the parties

desire to adduce fresh evidence, this; remand order does not preclude them from doing so. In the result the second appeal and civil revision

petition are allowed. The decree and judgment in A.S. No. 32 of 1963 and the order in C.M.A. No. 43 of 1963 on the file of the Additional

Judge, City Civil Court, Madras are set aside and the cases are remanded back to the Additional Judge for fresh disposal. The Court-fee paid in

the memorandum of second appeal will be refunded. The parties will bear their respective costs in this Court No leave in the second appeal.