Miss Aninha D''Costa vs Mrs. Parvatibai M. Thakur

D.V. Patel, J.—This is an appeal by the defendant who has failed in both the Courts in a suit which arose out of the occupation of the suit premises by the defendant apparently as a licensee. The plaintiff is the owner of the flat in suit situated in the Churchgate Co-operative Housing Society Ltd. On November 15, 1959, the defendant was let into possession on her agreeing to execute a document of leave and licence and the document was actually executed between the parties on November 16, 1959. The document is at ex. A. It purported to be for a period of 11 months. In terms of the document an attempt was made to obtain forcible possession without resort to Court, but the plaintiff did not succeed, with the result that the present suit was filed in the City Civil Court at Bombay as a short cause suit for recovery of possession from the defendant on the basis that the licence was ended or terminated. The relief''s claimed were those of mandatory injunctions and Court-fee was paid on the footing that the suit was one for mandatory injunctions. The defendant resisted the suit contending that she was a tenant, that the premises were let out to her as a tenant and that the Court had no jurisdiction as the dispute was one between a landlord and a tenant. She contended that the amount charged for the occupation was excessive and that she had already filed an application under the Rent Act for determination of standard rent before the Court of Small Causes at Bombay. She objected to the frame of the suit contending that a suit for mandatory injunctions was not maintainable. The learned trial Judge construed the agreement between the parties as an agreement of leave and licence. He negatived the contentions of the defendant and decreed the suit. Against this judgment, the defendant came in appeal which was hoard by Mr. Justice Naik sitting singly. He agreed with the conclusion of the learned Judge of the City Civil Court and dismissed the appeal. Before him, three points were argued by the advocate for the defendant, viz, (i) that the frame of the suit was improper and it was not, therefore, maintainable; (ii) that on a proper valuation being made the Court would have no jurisdiction to deal with the suit; and (iii) that the agreement between the parties was one of tenancy and, therefore, the plaintiff was not entitled to any relief. All these three contentions were negatived by the learned Judge.

The learned advocate for the defendant in this appeal has urged the same three contentions before us. His first contention is that the suit for injunctions as prayed for by the plaintiff is not maintainable, inasmuch as the defendant was in exclusive possession of the premises and the plaintiff''s remedy was, therefore, to ask for possession of the property. In this contention ho is supported by a judgment of the Division Bench of this Court (in which I was a member) in the case of Lakhiram Ramdas Vs. Vidyut Cable and Rubber Industries, But in that case we also pointed cut that the Court would be entitled to construe the plaint, and if on a fair construction the Court could arrive at the conclusion that what was really interned by the plaint was a claim to possession, then the suit ought not to be dismissed only on the ground that Court-fee had been paid as on an injunction. In view of this judgment, Naik J. construed the plaint and directed the plaintiff to pay the Court-fee which she would have been bound to pay as in a suit for possession on the basis of the value of the Property as fixed by him. In our view, the learned Judge was right in the course that he adopted in the matter. This contention, therefore, ought to fail.

The next question is about the market value of the property. Mr. Patel for the appellant invited our attention to the decision of the Division Bench in S. Sohonsingh Chhadda v. Jitkaur, (1963) Letters Patent Appeal No, 13 of 1963 decided by Patel and S. M. Shah JJ., on April 3, 1963 (Unrep.) where held that ordinarily the market value of the property could be arrived at by taking the licence fee as the return on the property and multiplying it by 12 1/2, i. e. at 12 1/2 years purchase. While adopting that rule, we made some basic assumptions which we thought would be appreciated by most. But it seems necessary to amplify the reasons for our doing so.

Now, the Court-fees Act is a finance Act. It requires that proper Court-fee should be paid on a plaint in accordance with the nature of the subject matter of the suit. The section which imposes the Court-fee is s. 6 and it deals with a large number of subjects in respect of each of which it prescribes different amounts of Court-fee. In respect of some of the matters, the Court-fee that is required to be paid is proportionate to the market value of the property depending upon the nature of the relief''s claimed by the plaintiff. We do not think it is necessary to refer to these sub-sections specifically. Section 8 enables the Court, whenever a question Valuation of the subject-matter of the suit is raised to decide the same and to do so ''''it may hold such inquiry as it deems proper". The language shows that the manner of inquiry is left to the Court and would depend upon the nature of the subject-matter of the suit. The reason for the giving of this discretion is quite understandable. The valuation of the property for the purpose of Court-fee is not the real dispute between the parties which falls to be decided by the Court, but is only a collateral matter and that is why the strict procedure which applies for decision of suits need not be applied to such an inquiry. In order to reduce its work and not to waste its time in this inquiry, s. 9 enables the Court to appoint even a Commissioner for certain investigation. Section 10 gives some of the powers of a Court under the CPC to either the Court or the Commissioner making the inquiry. This may suggest that the inquiry may not even be regarded strictly as judicial. Thus the section does not prescribe that the Court which makes the inquiry shall follow a particular procedure such as is done by the Bombay Rent Act and the Tenancy Act. An analysis of the provisions of s, 6 of the Court-fees Act shows that in respect of certain kind of property the method of computing the value is laid down and in such cases no difficulty arises. It only arises in other cases where market value is to be determined.

Now, the words "market value" mean the price which a willing purchaser would pay to a willing seller for the property on the day when the suit is filed. The method of valuation is familiar to most who deal with land acquisition cases. Two methods are very frequently adopted for determining the market value. One is by production of sale deeds of comparable properties in the vicinity of the property in question during the period near about the date with respect to which the price has to be determined. The other is by reference to the net income of the property which it earns. One method is used to also check the result arrived at by the other. However, with all the care, the Court cannot determine the exact value. Sometimes, expert evidence is called to state the value of the property, but experience has shown in many cases that the expert for one party will say that the value is Rs. 100 and the expert for the other side will say that it is Rs. 1,000. Though discretion is given to the Court for adopting such procedure as it deems necessary for making the valuation, it has to determine the value of the property fairly though, of course, the same exactness as one may expect under the Land Acquisition Act may not be required. We, therefore, adopted a ready method for determining the value of the property where it is earning income in the above case.

At this stage, it is also desirable to explain why we took only 12 1/2 years purchase and not longer. If the market value of the property is to be assessed on the basis of the net income, then the number of Years purchase depends on the rate of interest on gold-edged securities. Usually, in respect of non-agricultural income, it has become customary to adopt a rule of 16 2/3 years'' purchase upto even 20 years'' purchase. But then this method is on the hypothesis that the income is the normal income and is likely to be recovered for a reasonably long period. Now, the licence fees which are earned in the present days are very exorbitant and the good or bad days cannot be expected to last for a Considerably long turn. We, therefore, took only 12 1/2 years'' purchase of the licence fee.

The learned Judge says:

Section if of the Bombay Court-fees Act provides the mode and the manner in which the inquiry is to be conducted for arriving at the market value of the property in question. All that section 8 of the Court-fees Act lays down is that the correct valuation of the property is to be arrived at in all cases, where the suit has been wrongly valued by the plaintiff. I do not think that the learned Judges intended to lay down a rule, which will have the effect of superseding the provisions of the statute.

the underlying suggestion being that the Court in L. P. A. No. 13 of 1963 laid down a rule contrary to the provisions of the Court-fees Act, which, to say the least, is hardly fair to the learned Judges. It is almost elementary that the function of the Court is to construe and not to legislate. With all respect to the learned Judge, neither s. 8 nor s. 10 lays down any special procedure for the inquiry. As pointed out above, s. 8 only gives discretion to the Court to hold �such inquiry as it deems proper" and s. 10 only confers powers of a Court upon the Court or the Commissioner holding the inquiry. The word "ordinarily" in our judgment in the case referred to is indicative enough. Mr. Lulla for the respondent practically disowned the argument.

Now, in the present case, it is true that in 1954 the plaintiff had paid approximately Rs. 10,000 for this property. But then that was six years before the date when the question arose. Evidently, if the property was being acquired, the plaintiff herself would not have relied upon the purchase price paid by her in view of the fact that the prices of properties in Bombay are rising by leaps and bounds. Even Mr. Lulla while addressing us on the reasonableness of the compensation stated that the prices had risen very high during the six years and in fixing the amount of compensation the price of the property at that date was taken into account. If that is so, we do not see what injustice can there be in applying the rule that we have laid down. It was suggested by Mr. Lulla before the learned Judge that the compensation for the furniture should be assessed at Rs. 75. Before such figure can reasonably be accepted, one must be put on an inquiry as to what is the value of the furniture, because very often furniture is used as a pretext for earning very high compensation and avoiding the payment of taxes to the Municipal Corporation. The Rent Act which defines the word ''''premises" includes by s. 5, el. (8) in the word, "any furniture supplied by the landlord for use in sued building or part of a building". If that is so, the framers of the Act Clearly intended that the furniture should earn only reasonable compensation and not any exaggerated compensation for its use. In the present case, the document between the parties mentions five pieces of furniture a cupboard, kitchen cupboard, 1 ceiling fan, 2 chairs and 1 bed-and having regard to the fact that we are not valuing the furniture of a millionaire in a palatial flat, the value of the furniture can hardly be about Rs. 1,000 even on a liberal basis. As we said, however, that is a matter of evidence and this is only a conjecture.

However, we do not think that any useful purpose can now be served by going further into this question. After all, in assessing the market value, one has to some extent enter into the realms of conjecture. The defendant had not raised the question of valuation in the trial Court and raised it for the first time in the Court of appeal. In order to arrive at the net income, the outgoings such as taxes and other charges of which there is no evidence have to be ascertained. In the case decided by the Bench, the licence fee was the net income of the tenant. We do not think, therefore, on the whole, that we will be justified in holding that the market value is more than Rs. 15,000, fixed by the learned Judge.

Even assuming that the value of the property is Rs. 25,000 or more, Mr. Patel is concluded by s. 11 of the Suits Valuation Act, which requires that before a judgment can be set aside on the ground of over or under-valuation of the property and consequential want of jurisdiction in the Court, it must be shown that prejudice is caused to the appellant. None has been pointed out by Mr. Patel and accordingly his contention must fail.

The third and the most important contention is whether the agreement between the parties creates relationship of landlord and tenant.

It is well to bear in mind the relevant definitions in our law. Section 105 of the Transfer of Property Act defines a lease of immovable property as a transfer of a right to enjoy the property for a certain time in consideration for a price paid or promised. The price paid is called rent. On the other hand, under s. 52 of the Indian Easements Act, licence is

�Where one person grants to another. .. 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 a right be unlawful, and such right does not amount to an easement or an interest in the property, the right is called a licence",

the underlying assumption in the case of a licence being that the owner continues to be in possession and control of the property. But this is not all. The attributes of a licence can be seen from some of the subsequent provisions in the Easements Act. By s. 56 a licence except one to attend a public place of entertainment is made non-transferable and it is not exercisable even by servants or agents. By s. 60 the licensor''s transferee of the property is not bound as such by the licence. By this section it is also made revocable except in certain cases. In the case of a licence, therefore, there is something less than a right to enjoy the property in the licensee; it cannot be exercised by servants and agents, is terminable and a transferee of the property is not as such bound by the licence. On the other hand, in the case of a lease, there is a transfer of a right to enjoy the property or in other words the lessee is entitled to enjoy the property. Having regard to the statutory provisions, we think that the test of exclusive possession must be regarded as a very important test of tenancy.

The question has come before Courts since very early times and the test then adopted was that if exclusive possession was given to a party, the agreement between the parties must be regarded as a lease. Difficulties were felt in the application of this principle by reason of the stringent provisions of the Rent Acts and in order to meet these, the test has since been modified. In Booker v. Palrmer, [1942] 2 All E. R. 674 the owner had allowed as a matter of concession the appellant whose home was destroyed to live in one of the cottages belonging to him. The appellant then claimed right of tenancy. This claim was negatived by the Court. The learned Judge said ( at p. 676 ) :

...Whether or not parties intend to create as between themselves the relationship of landlord and tenant, under which an estate is created in the tenant and certain mutual obligations arise by implication of law, must in the last resort be a question of intention.

It was held there that having regard to all circumstances no tenancy was intended. It is needless in this connection to refer to all the cases, but we may refer to Errington v. Errington, and Woods [1952] 1 K. B. 290 where after referring to decided cases, Denning L. J. says (p. 298):

The result of all these cases is that, although a person who is lot into exclusive possession is prima facie to be considered to be a tenant, nevertheless he will not be held to be so if the circumstances negative any intention to create a tenancy. Words alone may not suffice. Parties cannot turn a tenancy into a licence merely by calling it one. But if the circumstances and the conduct of the parties show that all that was intended was that the occupier should be granted a personal privilege, with no interest in the land, he will be hold to be a licensee only.

In this connection, we may refer with advantage to the case of Addiscombe Garden Estate Ltd. v. Crabbet [1958] 1 Q. B. 513 wherein the observations of Denning L. J. in Facchini v. Bryson [1952] 1 T. L. R. 1386, at p. 1389 to the following effect are referred to. He says (p. 1389) :

...We have had many cases lately where an occupier has boon hold to be a licensee and not a tenant. In addition to those which I mentioned in Errington v. Errington we have recently had throe more, Gorham (Contractor.) Ltd v. Field, [1952] C. P. L. 266 Forman v. Rudd, Unreported and Cobb v. Lane. [1952]1 T.L.R. 1037 : All E. R. 1199. In all the cases where an occupier has boon held to be a licensee there has been something in the circumstances, such as a family arrangement, an act of friendship or generosity, or such like, to negative any intention to create a tenancy. In such circumstances it would be obviously unjust to saddle the owner with a tenancy, with all the momentous consequences that that entails nowadays, when there was no intention to create a tenancy at all. In the present case, however, there are no special circumstances, It is a simple case where the employer let a man into occupation of a house in consequence of his employment at a weekly sum payable by him....

The Court held that the relationship was that of a service tenant and landlord and that their relationship was determined by the law and not by the label which they chose to put on it. After citing the case of Customs and Excise Commissioners v. Pooh Finance (1937) Ltd., [1952] 1 T. L. R. 792 the learned Judge proceeds:

It is not necessary to go so far as to find the document a sham. It is simply a matter of finding the true relationship of the parties. It is most important that we should adhere to this principle, or else we might find all landlords granting licenses and not tenancies, and we should make a hole in the Rent Acts through which could be driven-I will not in these days say a coach and four, but an articulated vehicle.

If one has regard to the conditions prevailing in Bombay and also at some other places, there can be no doubt about the truism of the remarks In the city of Bombay, in the case of new promises, the Act practically is non-existent. There are also unscrupulous tenants who make huge profits out of their tenancies by inducting what are called licensees. While, therefore, construing the terms of a document, the Court would not lose sight of the fact that ingenious attempts are made to circumvent the provisions of the statute, Indeed, in such cases, it may even be possible to say that the document is bogus or sham. However, ultimately, as the relationship is determined by law irrespective of the label attached to it by the parties, one need not go so far. It is possible that when exclusive possession is given having regard to the special circumstances mentioned by Denning L. J., it can be said that in a given ease a right to enjoy the property was not intended to be transferred or given.

In the case of Associated Hotels of India Ltd. Vs. R.N. Kapoor, the question arose before our Supreme Court, in respect of the occupation of two rooms by the respondent which wore described a ; Ladies and Gents Cloak Rooms where he carried on the business of a hair dresser. S. K. Das and Sarkar JJ. held that the rooms let, being rooms in the hotel were excluded from, the operation of the Ajmer Merwara Rent Control Act, 1947. Subba Rao J. dissenting from the above view considered question whether the relationship was of landlord and tenant. After referring to s. 52 of the Easements Act, the learned Judge in connection with licence says (p. 383) :

...The legal possession, therefore, continues to be with the owner of the property, but the licensee is permitted to make use of the premises for a particular purpose. But for the permission, his occupation would be unlawful.

The learned Judge ultimately formulates the test of intention of the parties. In this case the terms of agreement between the parties as said by Subba Rao J. were apparently appropriate for a licence. Yet he was of the opinion that the legal relationship was that of landlord and tenant.

The terms of the agreement in the present case are :

Whereas the Licensor has agreed to grant leave and licence to use and occupy the flat, furniture and fittings for eleven months renewable at the option of the Licensee every eleventh month...and whereas the said leave and licence. ..does not confer on the Licensee any right or title, whether as tenant or sub-tenant, on the following terms:

That the Licensee shall pay monthly compensation for use and occupation;

that the premises shall be used for residence and business by her and her family;

that the Licensee shall deposit Rs. 675 without any interest for the due performance of the terms and indemnifying the Licensor for loss or damage;

that the Licensor shall pay all taxes except the Chowkidar''s charges of Rs. 10/- which shall be paid by the Licensee;

that if the Licensee fails to observe the terms of the agreement or if she commits any nuisance, the licence shall stand revoked and the Licensor shall have the right to eject the Licensee forcibly;

that the Licensee shall not allow any other person to use and occupy the premises except....;

that the Licensee shall not claim any right as a tenant; and

that the Licensee shall not make any additions and alternations in the flat without the written permission of the Licensor.

In the present case, there are many circumstances connected with the transaction that have to be considered. The plaintiff had inserted an advertisement in the newspaper that a licence was intended to be granted; but then it is hardly likely that a person who wants to circumvent the provisions of the Rent Act would say that the property is to be leased. The giving of the advertisement, in our view, would indicate that she wanted to give out the property to whosoever was prepared to take it and pay the price. Merely from the language employed in the advertisement, it cannot be inferred that a licence was intended. The second circumstance which emerges from the evidence is that admittedly the services of a broker were employed by the plaintiff. It is obvious, therefore, that the intention was not to accommodate any person who was known to the plaintiff, but to have anyone who was needy enough to agree per force to the terms proposed by the plaintiff. The employment of the broker must necessarily suggest that the intention was to earn whatever could be earned out of the property and no other. The amount paid to the broker is also not less. This circumstance also, therefore, cannot support the inference that it was because the plaintiff intended to give a licence only that she had employed the broker. A fair reading of the agreement between the parties leaves no room for doubt that the flat was given in the exclusive possession of the defendant for the USE of herself and the members of her family and its use was intended to be for 11 months. The parties, however, did intend that the term was renewable at the end of 11 months at the option of the licensee. It was, therefore, not a short term accommodation. The learned advocate for the respondent says that as the term appears in the main body of the agreement and not in the subsequent clauses which lay down the terms, it should be held that it was not intended to be acted upon, a contention which found favour with the learned Judge. We cannot agree. As long as the agreement between the parties is clear, the place where the term is to be found cannot matter much. While construing the document, the Court has to consider the whole document and cannot refuse to give effect to a term of the document on the ground that it is placed at one place and not at the other. It specifically says :

Whereas the said Licensor has agreed to grant the leave and licence... for the period of 11 (eleven) months renewable every eleventh month at the option of the Licensee,, .the terms and Conditions, are as follows:.

The main and the important term was embodied in that paragraph and the details were worked out in the subsequent paragraphs and it is no wonder, therefore, that we do not find a repetition of that term in the details. To show that licence was intended, a crude attempt is made by adding the recital that "the parties had cordial relations". The evidence of both the plaintiff and the defendant shows that they did not know each other prior to that date. In fact, the plaintiff had inserted an advertisement for finding a person likely to occupy the flat and the defendant was told about the vacancy of the premises by someone who had gone to see the premises for himself but found them to be unsuitable. This recital is untrue and it shows the working of the mind of the broker and that of the plaintiff. Indeed, the rest of the terms are such* as are to be found in most tenancy agreements, the only difference being that instead of rent the occupational charges are described as compensation. No circumstances such as those described by Denning L. J. in the case cited above are disclosed either by the document or by the evidence of the parties. Why then one must construe the agreement between the parties as a licence and allow the evasion of the Rent Act merely because the plaintiff has chosen to apply the label that it is a licence.

Mr. Lulla has very strenuously argued that some of the terms show an intention that licence was intended by both parties and also relied upon the decision in Ramjibhai Virpal Shah Vs. Gordhandas Maganlal Bhagat, Clause 6 makes possession nontransferable to anyone else; in clause 5 there is a condition that if the defendant commits any act of nuisance the licence shall be deemed to have been cancelled and it would be lawful for the licensor without prejudice to any other remedy to forcibly remove the defendant from the flat; the defendant would have to pay a deposit of Rs. 675 which works out compensation for 3 months and that the monthly payment is called compensation. Evidently, there are leases between landlords and tenants which may prescribe many such similar conditions, but merely because of the existence of such conditions, leases are not converted into licenses. Calling the occupational price compensation does not make it a licence. Ramjibhai Virpal''s case has no application. The principles formulated there are the same as in other cases and having regard to circumstances in the case it was held that tenancy was not intended to be created.

Mr. Lulla tried to take us through, the evidence of the parties and relying on certain statements made by the defendant argued that she also intended that there should he a licence and not a tenancy. Now, one cannot forget the circumstances in which the defendant was. The hardships of finding accommodation in Bombay are well-known. One need not, therefore, wonder at a needy person agreeing to sign whatever document is required to be signed by him so long as he gets the premises and is able to live in the same. The defendant admitted that she agreed to execute the document as desired by the plaintiff as that of a licence, but she said that she was to be tenant. It is true that she has not said that she did so because she was in difficulties. But then this fact cannot be overlooked. Apart from this, as we have stated, oral evidence of prior communing between the parties cannot, be allowed to influence the judgment of the Court in deciding the relationship between the parties. See AIR 1929 34 (Privy Council) Now, what is to be determined is the legal relationship between the parties and, therefore, what they called it is not much material. Giving our best consideration to the terms between the parties and the surrounding circumstances, we hold that the relationship between the parties was that of landlord and tenant. In view of this conclusion, we must hold that the Court had no jurisdiction to decide the dispute between the parties.

In the result, the suit must fail and is dismissed.

The appeal has been filed informal pauperis. Looking to the condition of the plaintiff herself, we do not think that we should require her to pay the Court-fee which she ought to pay. We also do not think that the circumstances demand that we should make an order for costs in these proceedings. We, therefore, direct the parties to bear their own costs throughout.