M.P. Peya Thevar and Others vs The Corporation of Madurai

Ismail, J.—Though all these second appeals arise out of a common judgment of the learned First Additional Subordinate Judge of Madurai,

the suits which gave rise to these second appeals themselves were disposed of in three batches. The first batch can be said to comprise of suits

which were disposed of on 30th April 1974, the second batch can be said to comprise of suits which were disposed of on 31st October 1974 and

the third batch can be said to comprise of suit which were disposed on 21st April 1975.

The first two second appeals, namely, Second Appeal Nos. 1277 and 1278 of 1976 come up for final disposal and the other second appeals

come up for admission only.

The Plaintiffs in the suits are the Appellant. Though the suits themselves were disposed of on three different dates by three separate judgments,

the controversy was the same and the Defendant in the suits, who is the Respondent in all the second appeals is also the same, namely, the

Corporation of Madurai. One distinguishing feature between the first and second batches of suits on the one hand and the hird batch of suits on the

other is that in the first two batches of suits, the transaction between the parties i� evidenced by documents in writing. The first batch of suits

relates to the transaction for the year 1971-72, the second batch of suits relates to the transaction for the year 1972-73 and the third batch of suits

relates to the transaction for the year 1973-74. In ail these cases, the Plaintiff-Appellants instituted the suits for a permanent injunction restraining

the Corporation of Madarai, the Defendant-Respondent, from interfering with their possession and enjoyment of the respective plots, alleging that

the Appellants took the respective plots on lease from the Corporation of Madurai for the purpose of growing gainea grass or Colombo grass in

the said plots and for cutting and removing the grass periodically, for a period of one year; that accordingly the Appellants had executed lease

deeds in favour of the Respondent-Corporation, that they had been growing the said grass in their respective plots, Cutting them periodically and

selling them in the market; that they did all the agricultural operations in their respective plots for growing the said grass; that therefore they were

the lessees under the Corporation in respect of their respective plots; that even after the expiry of the lease period they were continuing in

possession of their respective plots; that they were entitled to the'' benefits of the Tamil Nadu Cultivating Tenants Protection Act and as such their

possession should not be distributed by the Corporation and that as the Corporation was attempting to lease the plots to some other persons, the

Corporation should be restrained by a permanent injunction. The pleadings in all the plaints are substantially the same, as stated above.

The Respondent-Corporation filed separate written statements contending that the plots were never leased to the Appellants and therefore they

could not call themselves as lessees in respect of those plots; that on the other hand they were given only a licence to cut and remove the grass

from the respective plots for a particular period : that ever in respect of such cutting and removal of grass, several conditions were imposed on

them ; that the entire plots continued in the possession of the Corporation and all the necessary agricultural operations required for growing grass in

the said plots were done by the employees of the Corporation and therefore the Appellants could never be called tenants in respect of their plots,

much less cultivating tenants that after the licence period was over the Appellants had no right to be on the plots; and that therefore the Appellants

were not entitled to any permanent injunction against the Corporation. Thus, the defence in all the suit id also the same.

The learned District Munsif who tried the suits and disposed of the same by three separate judgments, held that the Appellants were lessees,

that they were also activating tenants and that they were entitled to the protection of the Tamil Nadu Cultivating Tenants'' Protection Act

Accordingly the suits instituted by the Appellants were decreed by the trial Court. However, on appeals preferred by the Respondent Corporation,

the learned First Additional Subordinate Judge by his judgment dated 30th June 1976 allowed the appeals and dismissed the suit instituted by the

Appellants holding that the Appellants were only licensees and not lessees. It is against this common judgement and decrees that the present

second appeals have been preferred.

As already stated, the first two second appeals, namely, Second Appeal No. 1277 and 1278 of 1976 come up for final disposal and the other

second appeals come up for admission only.

These second appeals are concerned with several plots of land in the sewage farm in Ayan Pappakudi village, belonging to the Municipal

Corporation of Madurai. The total extent of the sewage farm is about 335 acres and in a major portion of the said farm grinea grass or Colombo

grass is grown. Such grass growing is said to be going on in the said farm for the past more than 20 years. Initial planting was done several years

ago. Upgrowing grass will be cut periodically and sold. Whenever grass is cut, the stump to a height of about 9"" will be left and only the grass

above 9"" will be cut and removed. The sewage farm is divided into various plots. The right of cutting and removing the grass from a particular plot

is sold in public auction annually and the right is given to the Highest bidder in the auction. Such practice also is stated to be going on for a long

time. After the particular year is over, the Corporation used to auction the right again for the next year. The conditions under which the auction is

held are published in advance. After the action is over, agreements are taken from the respective parties incorporating all those conditions. As I

have pointed out already, in the batch of suits in which judgment was delivered on 21st April 1975, there was no agreement produced, while such

written agreements were produced in the other two batches of suits disposed of on 30th April 1974 and 31st October 1974. Hoover in all the

three batches of suits, auction notices had been produced. In the first two batches of suits, the Plaintiff were highest bidders who bid at the action

an d who (sic) into agreements with the Corporation of Madurai. In the third bench of suits, there is some controversy as to whether the Plaintiffs

were the highest bidders at all. However, he, principal question that arises for consideration in all these second appeals is, whether the transaction

entered into between the parties was a lease or only a licence. If it is held that the transaction was only a licence, no further question can possibly

arise in the present second appeals because the Appellants will not be entitled to any permanent injunction against the Respondent on the ground

that they are cultivating tenants as contemplated by the Tamil Nadu Act XXV of 1955. On the other hand, if the transaction is held to be a lease,

then a further question will arise as to whether the Appellants can be said to be cultivating tenants as defined in the Tamil Nadu Act XXV of 1955

and therefore entitled to the protection of that Act. Consequently the primary question that arises for consideration is, whether the transaction

entered into between the parties was a licence or lease.

The learned Subordinate Judge in a very carefully considered and elaborate judgment has referred to terms of the transaction entered into

between the parties in detail and considered the relevant principles of law and the decisions applying those principles of law and as a result of such

consideration and application has come to the conclusion that the transaction in question in all these cases was only a licence and not a lease. Since

I agree with the reasoning and conclusion of the learned Subordinate Judge, it is not necessary for me to repeat all the considerations which have

been referred to by the learned Subordinate Judge in his judgment and I. shall indicate the broad features of the case which make the agree with

the conclusion of the learned Subordinat judge.

In Mrs. M.N. Clubwala and Another Vs. Fida Hussain Saheb and Others, the Supreme Court has laid down the principle follows:

Whether an agreement creates between the parties the relationship of landlord and tenant or merely that of licenso 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.

As there is a written agreement evidencing the transaction entered into between the parties in the first two batches of suits, it is not disputed

before me that a decision has to be arrived at with reference to the terms of the written agreement. Equally there is no dispute as to what

distinguishes a lease from a licence.

The Supreme Court after elaborately considering the principles in this behalf gatherable from the earlier decisions as well as the statement of

law contained in Halsbury''s Law of England stated in Qudrat Ullah Vs. Municipal Board, Bareilly, :

There is no simple litmus test to distinguish a lease as denned in S. 105, Transfer of Property Act from a license as defined in S. 52 Easements Act,

but the character of the transaction turns on the operative intent of the parties. To put it pithily, if an interest in immovable property, entitling the

transferors to enjoyment, is created, it is a lease; if permission to use land without right to exclusive possession is alone granted, a license is the

legal result. Margiral variations to this broad statement are possible.

As a matter of fact, the attempt of the learned Counsel for the Appellants war to establish that from the terms of the agreement themselves, it

must be held that the transaction entered into between the parties was only a lease I am of the opinion that terms of the agreement entered into

between the parties make it absolutely clear that the transaction entered into between them was not a lease but only a licence.

The very preamble of the document states that it was an agreement in respect of the right of cutting and selling of guinea grass in the Sewage

Farm belonging to the Madurai Municipality. This description is in accordance with the auction notice which itself referred to the right to be

auctioned as a right to cut and sell guinea grass. As a matter of fact, Clause 3 of the auction notice made it explicitly clear that the licensees will

have no right apart from the right to cut and sell guinea grass. It will be seen that the other terms of the agreement are also in accordance with the

sale of the above right only. In addition to the description of the document as above, for the most part, the document uses the expressions, licence,

licensee and licence amount, even though here and there the expression, lessor, lease or leased occurs. However, even ignoring this nomenclature,

the document, as I have pointed out already, makes it clear that it was only a licence.

Clause 1 of the agreement states that the licensee shall pay into he Corporation Treasury one-fourth of the entire licence amount, excluding the

caution deposit within 7 days from the date of confirmation of the sale, and that the balance of the licence amount shall be paid in equal monthly

Instalments commencing from 1st April 1971 before the 15th day of each month. Clause 2 of the agreement states that if the instalment payments

are not made on the due dates the licensee shall not be allowed to enter the plot, that the licensee will also be liable to pay interest at Rs. 1.50 per

month from the date of default upto the date of payment, and that the licensee should pay such interest and the principal amount within 10 days

from the date of default failing which the licence will be liable to be terminated and the licensee shall be liable for damages that may be incurred by

the Corporation by such cancellation and resale of the licence or by the Departmental management of the plot. Clause 3 of the agreement states

that the licence was only in respect of the right to cut and sell guinea grass from the plot with reference to which auction had been confirmed.

Clause 4 states that the licensee shall not excavate the pipe from out of the earth. Clause 5 states that the licensee shall have no right to the trees if

any standing on the plots nor shall he cut them or any part thereof. Clause 7 states that the licensee shall not alter the nature on the level of the

channels or the bunds or construct new channels. Clause 9 states that the licensee shall not be entitled to take water through any channel and that

the plots will be irrigated by the party only through its employees as per the schedule approved by the Corporation Engineer and the

Commissioner. Clause 10 states that water will be supplied to licensee on a regular basis at an interval of 7 days and that the licensee shall not ask

for flow of water in the interval. Clause 12 states that the licensee shall not graze cattle in the plot or plots leased to him or dig wells or built store

houses. Clause 13 States that the sluice shall not be opened except by the Commissioner''s subordinate and that water should be used only

according to the orders of the officer-in-charge. Clause 14 states that the Commissioner and his Officers shall have the right of entry and access

into the plots for the purpose of inspecting the condition of the underground tile pipes, channels, bunds and other construction and they shall have

right of access also for other purposes. Clause 15 states that the Commissioner reserves the light to terminate the licence at any time within the

licence period, if for any reason he decided to harvest the plots departmentally or if for any other reason it is decided not to grant licence in respect

of plot to the present licensee, that 24 hours notice will be given to the licensee and he will not be liable for the lease amount from the date of

termination of the lease that by such termination the licensee shall not be entitled to any compensation and he cannot question how the plot is

utilised after termination and that proportionate amount to be refunded will be fixed by the Commissioner. Clause 16 states that at the expiry of the

licence period the standing crop of guinea grass should not be removed wholesale but stubbles of 9 should be left. Clause 18 states that the

licensee shall remove the sludge from the plots twice only in the year after giving due notice to the Commissioner in the months of August and

March under the immediate supervision of the Officer deputed for that purpose by the Commissioner without digging up the earth or damaging the

crops, that the sludge so removed shall be taken out of the farm, within 48 hours of such removel, that failure to do so will result in the collection of

fine Rs. 5 per day or part thereof besides damages, that if he fails to remove the sludge it will be removed depart-mentally and the cost shall be

recovered from the licensee, that no commpensation will be paid to the licensee for the sludge removed departmentally and that the licensee shall

also remove the dead stumps from grass plots periodically atleast twice a year. Clause 19 states that the departmental watering mazdoors will

maintain the bunds and channels as per plan of the farm. Clause 20 provides that the departmental watering mazdoor will water the plots-kundu by

kundu from one end right up to the other end and shall intimate at the farm office the Nos. of the kundus watered at every turn immediately after

the close of the turn that the licensee may report failure to do this to the Sewage Farm Superintendent who will thereon take immediate necessary

action and that the licensee has no right to complain as to insufficient supply. Clause 21 states that only workers in possession of vaild permit issued

by the Corporation shall be engaged by the licensee for the work in the farm and that the Corporation is not bound to issue any permit to workers

brought by the licensee. Clause 22 states that the licensee shall sell the grass harvested in the plots only within the zone allotted to him by orders of

the Commissioner, that non-compliance with this provision will result in fine of 2 per cent of the cancellation of licence and that no appeal shall be

against such cancellation. Clause 24 provides that the licensee shall sell guinea grass only in the bundle of 5 kilos at the rate of 15 paise per bundle

inclusive of transport charges to the consumer''s door anywhere within Corporation limits and each bundle shall not weigh less than 5 kilos where

ever weighed ; that the licensee shall exhibit wooden or iron board of 18"" � 12"" on the left side of the cart indicating the name of the licensee, the

cart No., the sale rate and the weight per bundle newly painted; that he shall also have a spring balance with the sales man of the cart to facilitate

checking the weight; and that defaulters on this score shall be liable to a fine not exceeding 2 per cent of the licence amount in addition to the other

penalties and cancellation of licence. Clause 25 states that the watering mazdoor will attend duty by 8-15 a.m. on 12 noon and from 1 p.m. to 5

p.m. only. Clause 26 state that the guinea grass loaded cart going out for sale from the farm shall be weighed by departmental staff and that they

will have powers to check the bundles at any time in the farm limits. Clause 27 requires the licensee to mairtain proper account, for the yield of

grass cut on harvest and of the sludge removed and the accounts of the daily expenditure of each plot and further states that the accounts shall be

produced whenever demanded by the Commissioner or his subordinates. Clause 28 states that the licensee shall arrange to bring his establishment

for atleast once in 3 months for hookworm treatment or as and when ordered to do so by the Commissioner, and that he shall also purchase a pair

of rubber gum boots for every one of his staff and adhere to instructions of the Municipal Health Officer regarding the safety precaution to be

observed from the health point of view. Clause 31 states that without the written permission and order of the Commissioner, the licensee shall not

subdivide or transfer the licence, wholly or partially confirmed in his name to another person. Clauses 32 to 34 are as follows;

The licensee has no right of occupation or possession of lands or in the cultivation of the lands. The licensor alone is in possession of the lands

and is cultivating them.

The licensee is not entitled to the benefits of any provisions of the Madras Cultivating Tenants'' Protection Act, 1955.

The licensee will be permitted by the licence to enter into the sewage farm between 6 a.m. and 10 a.m. on all days for cutting and removing the

guinea grass. The licensee has no right to access beyond these hours.

These clauses in the present agreement entered into between the Appellants and the Respondent-Corporation clearly establish that the

Appellants were granted only the right to cut guinea grass on the plots in question and for the purpose of cutting the said guinea grass to go into the

land. They have no right of exclusive possession and Clause 32 makes it absolutely clear that possession is with the Respondent-Corporation and

that Corporation alone is cultivating the lands. Equally Clause 34 severely restricts the hours of entry into the plots in question by the Appellants

from 6 a.m. to 10 a.m. and they have no access to the plots during other hours. The other clauses also show that there are several restrictions as to

the manner of watering the plots, removal and sale of guinea grass and the persons who alone can enter the plots. Even for cancelling the licence

only 24 hours'' notice is contemplated. The presence of these clauses in the agreement will be totally inconsistent with the transaction between the

Appellants and the Respondent being one of lease. As a matter of fact, it is pertinent to point out that several of the clauses present in the

agreement entered into between the parties in these appeals are similar to the clauses present in the transaction considered by the Supreme Court

in Mrs. M.N. Clubwala and Another Vs. Fida Hussain Saheb and Others, referred to already, in which case also the Supreme Court held that the

stall-holders were only licensees and not lessees.

Great reliance was placed by the learned Counsel for the Appellants on the decision of Ramanujam, J., in Srirangam Municipality v. Nataraja

(1972) 1 M.L.J. 485. That case dealt with a transaction entered into between the Srirangam Municipality and the Respondent in that appeal in

respect of a sewage farm of the Srirangam Municipality. The said transaction was evidenced by a written document, Exhibit B-14 marked in that

case. The learned Judge, after considering the terms of the written document, came to the conclusion that the nature of the transaction was only

that of a lease and not of a licence. However, I am of the opinion that the facts of the present case are entirely different and that consequently the

decision of Ramanujam J., has no application to the present case. Several clauses which are present in the agreement under consideration in these

appeals were not present in the agreement which was the subject matter of consideration by Ramanujam J. In the first place, as I have pointed out

already, in every one of the cases under consideration, the transaction was only for a period of one year. However, in the case considered by

Ramanujam J., the lease was originally for a period of three years and it was subsequently renewed for a further period of three years. The very

short term of one year stipulated in the present cases as against the long term of three years, which was extended to another three years in the case

considered by Ramanujam J., will itself clearly show that the nature of both the transactions cannot be the same. Secondly in the case considered

by Ramanujam J., there was a provision for the licensee or lessee cultivating portion of lands on which guinea grass was not already grown and the

same was consistent with the long period fixed for the transaction. In the present cases, there is no clause whatever enabling the licensees, namely,

the Appellants herein to cultivate any portion of the plots and Clause 32 expressly states that the cultivation is only by the Respondent-

Corporation. Thirdly, there is no clause in the agreement considered by Ramanujam J. corresponding to Clause 32 in the present cases according

to which possession and occupation are only with the Respondent-Corporation and not with the Appellants. Fourthly there is no clause in the

agreement considered by Ramanujam J., corresponding to Clause 34 in the present cases which restricted the access of the Appellants only to 4

hours, namely, from 6 a.m. to 10 am.

Having regard to these distinguishing features, I am of the opinion that that decision is not of any assistance to the case of the Appellants herein

and that the terms of the agreement in the present cases will indisputably and conclusively lead to only one inference, namely, that the Appellants

herein were only licensees of the land and not lessees of the land. Under these circumstances, I have no hesitation in agreeing with the conclusion of

the learned I Additional Subordinate Judge.

As I have pointed out already, in the third batch of suits which has given rise to Second Appeal Nos. 1290, 1416 and 1417 of 1976, there is

no agreement entered into between the parties. u/s 100 of the Madurai City Municipal Corporation Act, every agreement or contract entered into

on behalf of the Corporation shall be in writing in the prescribed form. Since the contracts in respect of these persons were not executed in

accordance with the said provision, they are invalid and therefore t e Plaintiffs in these suits cannot base their relief on such invalid contracts.

Consequently the Plaintiffs had to fail even on that ground.

Independent of the above, in the absence of any written agreement, if the nature of the transaction is considered with reference to the

surrounding circumstances, then also it is clear that the Plaintiffs in these suiss were only licensees and not lessees. It is not in controversy that they

bid at the auction pursuant to the auction notice already referred to. I have already pointed out that the auction notice itself stated that what was

auctioned was only a right to cut and sell guinea grass and that apart from that right the licensee will have no other right in the plots in question.

Therefore, this very fact will show that the Plaintiffs in these cases also were only licensees and not lessees. As a matter of fact, the learned

Subordinate Judge has pointed to the further fact that in Original Suit No. 99 of 1974 which was given rise to Appeal Suit No. 68 of 1975

(Second Appeal No. 1416 of 1976), the Plaintiff was not admittedly a successful bidder in the auction. If so, he could not even claim to be a

licensee of the Corporation.

No other point was urged of this part on the case.

As I have pointed out already, once the appeals fail on this point, no further question arises in these second appeals.

Having regard to all these facts, I am of the opinion that no case has been made out for interference with'' the conclusion of the learned I

Additional Subordinate Judge of Madurai. Hence the second appeals fail and they are dismissed. There will be no order as to costs in Second

Appeal Nos. 1277 and 1278 of 1976. No leave.