N.V. Panchapakesan vs K. Swaminathan

G. Ramanujam, J.—This appeal is directed against the decision of the learned City Civil Judge in A.S. No. 324 of 1964. The facts that gave

rise to this appeal may be briefly stated; the appellant herein filed a suit, O.S.No. 1382 of 1962 for recovery of possession of the suit property and

for arrears of rent. The suit property measured 48 X 60 and it is a portion of door No. 12, Doraiswami Road, T'' Nagar, Madras. The appellant

filed the said suit on the basis that the suit property was given on lease to the respondent in December, 1948 subject to certain conditions, that the

respondent put up a shed for running a fuel shop in 1949, that subsequently he had put up a bunk in 1952, that he was paying a rent of Rs. 15 per

month, that the lease had been duly determined by a valid notice to quit, and that he is entitled to get recovery of the suit property as well as the

arrears of rent due from the defendant-respondent.

The respondent resisted the suit contending that he was entitled to the benefits of the City Tenants'' Protection Act, that he is willing to purchase

the appellant''s right in the suit property and that he had applied u/s 9 of the said Act for the purchase of the property in I.A. No. 2553 of 1962.

The appellant contested the application filed by the respondent u/s 9, on the ground that the transaction between him and the respondent was not a

lease but only a licence, that in any event inasmuch as the suit site sought to be purchased was appurtenant to the residential building the

respondent was not entitled to purchase the said site, and that the respondent had been paying only a low rental of Rs. 15 per month while the suit

site can easily fetch a fair rent of Rs. 110 a month.

The trial Court dismissed the application filed by the respondent u/s 9 and decreed the appellant''s suit for possession on the ground that the

transaction between the appellant and the respondent was one of licence and not a lease, and as such, the respondent was not entitled to claim the

benefits of the City Tenants'' Protection Act. The matter was taken in appeal by the respondent and the lower appellate Court reversed the

decision of the trial Court disagreeing with the findings rendered by the trial Court. The lower appellate Court took the view that the transaction

between the parties by which the respondent came to occupy the suit site was a lease and not a licence, and that as such the respondent is entitled

to the option of purchasing the same u/s 9 of the Madras City Tenants'' Protection Act, and remanded both I.A. No. 2553 of 1962 and the suit for

fresh disposal after finding out the minimum extent of land which may be necessary for the convenient enjoyment by the respondent as required u/s

9 (i) (b) of the Act.

From the evidence adduced in the case by either of the parties, it is seen that the entire door No. 12, Doraiswami Road, T'' Nagar, Madras was

purchased by the appellant in the year 1944. Sometime thereafter he submitted a plan of the building to be constructed on the plot purchased by

him. As there was considerable delay in getting the sanction for the building the appellant allowed the respondent to occupy a portion measuring

48'' X 60'' abutting the road for the purpose of running a firewood depot therein on a monthly payment of Rs. 15. Subsequently the respondent

had put up a thatched shed measuring 15'' X 20'' in the aforesaid plot. Later, in the year 1952 he put up with the permission of the appellant a

wooden bunk to serve as a stall for selling betelnuts, aerated waters etc. Subsequently in 1957 the respondent had converted the thatched roofing

into a zinc shed roofing and extended the shed from 15'' X 20'' to 15'' X 35'' In the year 1961 the appellant issued a notice Exhibit B-I, dated 24th

April, 1961, calling upon the respondent to quit and deliver vacant possession of the property after three months and offering him to pay a sum of

Rs. 500 as compensation. The respondent replied under Exhibit A-I, dated 5th May, 1961, asserting that he is entitled to the benefits of the City

Tenants'' Protection Act. In view of the refusal of the respondent to vacate the suit site, the feelings between the parties became strained and as a

result, there was shifting of the electricity meter from the suit portion to the main house. The respondent thereafter caused a notice, Exhibit B-19,

dated 25th February, 1962, to be sent to the appellant complaining interference with the electricity supply to which the appellant replied under

Exhibit A-2, dated 28th February, 1962. By a further notice, Exhibit B-2, dated 23rd March, 1962, the appellant demanded increased rent from

the respondent for the suit premises and lastly the appellant gave Exhibit B-3, dated 4th April, 1962, terminating the tenancy of the respondent by

1st May, 1962, and demanding possession from the respondent. As the respondent did not surrender possession even after 1st May, 1962, the

present suit came to be filed.

The fact that the respondent was in occupation of the suit site for carrying on his firewood business cannot be disputed for, it is clearly

established by the licences issued by the Corporation in favour of the respondent for running the firewood depot, Exhibits B-7 to B-15 from the

year 1950 and the rent receipts issued by the appellant to the respondent, Exhibits B-4 to B-6, B-16 and B-17 from January, 1949. Hence the

only question that has to be considered in this appeal is whether the respondent''s occupation of the suit site was in his capacity as a licensee or as

a lessee.

The appellant contends that the respondent was only a licensee and not a lessee under him. It is urged that that there is no transfer of interest in

the land and the facts and circumstances under which the respondent came to occupy the suit site would clearly establish that the arrangement

between the appellant and the respondent was only a licence and not a lease. It is also urged that the monthly payment made by the respondent to

the appellant cannot be treated as a lease amount, that the appellant having applied for building licence for erecting a residential building in the plot

would not have agreed to lease the site which practically abuts on the road and practically takes away the benefit of road frontage to the residential

building to be constructed in the entire plot for which sanction was applied for and that in the circumstances the appellant would have intended to

give the property to the respondent only by way of licence. It is argued that the appellant''s application for a building licence to the Corporation and

his obtaining the sanction for the said purpose in 1955 clearly disproves any intention on the part of the appellant to let the suit property on lease. It

is also urged that the fact that the respondent obtained permission of the appellant for erecting wooden bunk in the suit property showed that the

earlier arrangement was only a licence, and not a lease and that the respondent never had exclusive possession of the suit property. But the case of

the appellant that the transaction was only a licence and not a lease was raised for the first time when the respondent filed an application u/s 9 of

the Madras City Tenants'' Protection Act. Practically from the year 1948 when the respondent occupied the suit site for running his firewood

business till the date of filing the application u/s 9 of the Act, the appellant has been treating the transaction only as a lease as will be seen from the

notices that passed between him and the respondent and also the demand made by the appellant for a higher rent. At no stage prior to the

respondent''s filing an application u/s 9 the appellant treated the transaction as a licence. Even the plaint filed in the suit proceeded on the basis that

the respondent was only a lessee. In this case in view of the fact that the transaction between the parties was only oral, its nature has to be

determined from the conduct of the parties and the nature of the interest that was being enjoyed by the respondent in pursuance of that transaction.

As already stated the appellant was getting a monthly payment of Rs. 15 for the respondent''s occupation of the suit site. It is not in dispute that the

respondent had put up a shed, originally a thatched one, and subsequently a zinc shed in the suit site, and that the respondent had enclosed the suit

site with bamboo that is showing that the respondent had exclusive possession of the suit site. The appellant issued the notice, Exhibit B-I in the

year 1961 terminating the lease of the respondent. In this notice it has been alleged that the respondent was a tenant under the appellant occupying

a vacant site on a rent of Rs. 15 per month and the respondent was called upon to vacate on or before 31st July, 1961 and he was offered a sum

of Rs. 500, as compensation for the shed and the bunk put up by him. This notice was issued presumably u/s 11 of the Madras City Tenants''

Protection Act. The respondent sent a reply under Exhibit A-1 dated 5th May, 1961, stating that he was not liable to be evicted as he was entitled

to the benefits of the Act and that he was willing to purchase the appellant''s right in the site. In the notice Exhibit B-2 dated 23rd March, 1962,

issued by the appellant to the respondent the appellant clearly states that the respondent was a tenant under him and a similar statement has been

made even in Exhibit B-3 dated 4th April, 1962, which was a notice issued as per Section 106 of the Transfer of Property Act. Even the plaint

filed in the suit proceeds on the basis that the respondent is only a lessee. Paragraph 3 of the plaint states that...that respondent entered into an oral

tenancy agreement with the appellant in respect of the suit site on a monthly rental of Rs. 15 and that it was agreed between them that the tenancy

should run from month to month and be of a purely temporary measure. In paragraph 6 of the plaint it is stated that what was let out to the

respondent formed the vital part of the entire site of the premises belonging to the appellant that it is required for the free ingress and egress to the

appellant''s house on the back side and that it cannot be said that the portion let out to the respondent was a vacant land in the strict sense of the

word. In paragraph 7 of the plaint also it is stated that the portion let out to the respondent is required by the appellant for the construction of a

bungalow to provide additional and necessary accommodation for the members of the family. The averments in paragraph II are much more

specific. Therein the appellant states that the rent of Rs. 15 per month paid by the respondent was very low and totally unrelated to the present

value of lands in the locality. The appellant states that he is entitled to be paid a monthly rent of Rs. no as against the existing rent of Rs. 15 per

month. A reading of the entire plaint gives me the impression that the appellant instituted the suit only on the basis that the respondent was his

lessee. As a matter of fact, the suit itself has been valued u/s 43(2) of the Madras Court-fees Act, 1955, which applies only to suits for possession

between landlord and tenant. Even in his chief-examination the appellant as P.W.1 has stated:

The defendant is a tenant occupying a portion of the compound of the suit premises. He is paying Rs. 15 as rent. The area demised is 48'' X 60''.

Tenancy was from month to month.

In the face of the several notices issued by the appellant and the averments in his plaint and his evidence before the Court, it is difficult to accept the

contention advanced on his behalf that the transaction entered into in 1948 between him and the respondent was a licence and not a lease.

The learned Counsel for the appellant however wants to get over all the above circumstances by saying that the mere use of the words ""lease

and ""rent"" in the notices, plaint and in the appellant''s evidence cannot be taken as conclusive and that the true nature of the transaction should be

looked into and considered for finding out whether the transaction is a lease or a licence. As pointed out by the lower appellate Court, from the

mere use of the word ""lease"" or ""rent"" the transaction which may otherwise be a licence would not become a lease. But there are no other

circumstances in this case which are inconsistent with the transaction being a lease. The only fact that is relied on by the appellant is that even at the

time when the respondent occupied the suit site on a monthly payment of Rs. 15 he had applied for a building licence and he would not have

intended to lease out the front portion abutting the road much to the detriment and inconvenience of the occupants of the residential building

constructed in the back portion. But this fact alone may not be sufficient to establish that the appellant had no intention to lease out the suit

property. As stated in the plaint he might have let out the suit site to the respondent purely as a temporary measure. Merely because the site was let

out as a temporary measure, it will not make the transaction a licence. In my view the appellant would not have thought about the difference

between a licence and a lease in 1948 when the respondent occupied the suit site, or, at that time, the Madras City Tenants'' Protection Act can

apply to any lessee of a vacant site before 1922 and it is only after the Amending Act of 1955, leases of vacant site after 1922 came to be

attracted by the Act. The evidence in this case discloses that the respondent was in exclusive possession of the property in his occupation and the

mere fact that the appellant was allowed to pluck the coconuts in the trees situate within the suit site cannot be taken to establish the fact that the

respondent was not in exclusive possession of the suit site. In the facts and circumstances of this case I am not in a position to say that the

transaction between the appellant and the respondent was in the nature of a licence and not a lease.

The distinction between a lease and a licence has been pointed out by the Supreme Court in Associated Hotels of India Ltd. Vs. R.N. Kapoor,

, wherein the following proposition were laid down as well established.

(1) To assertain 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 intended 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 a licence.

In Mrs. M.N. Clubwala and Another Vs. Fida Hussain Saheb and Others, , the Supreme Court expressed the view that intention of the parties is

the decisive consideration for finding out whether the agreement between the parties created a relationship of landlord and tenant or merely that of

licensor and licensee, that the intention of the parties has to be ascertained on a consideration of all the relevant provisions in the agreement and

that in the absence of a formal document the intention must be inferred from the circumstances and conduct of parties. Again in Konchada

Ramamurthy Subudhi and Another Vs. Gopinath Naik, , the distinction between a lease and licence has been pointed out. According to the

learned Judges of the Supreme Court to ascertain whether a document creates a lease or licence, the substance of the document must be preferred

to the form. The real test is the intention of the parties, whether they intended to create a lease or licence, that 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 a

licence and that if under the document a party gets exclusive possession of the property, prima facie he is considered to be a tenant, unless

circumstances established the negative-intention. Ramaprasada Rao, J., in Chinna Pillai Vs. N. Govindaswami Naidu and Another, , expressed that

the criterion to determine whether a particular person is a lessee or a licensee mainly depends upon the intention of the parties and if such a

relationship is reduced to writing it is not by itself the sole guide and that if, however, one party has the exclusive right of possession over the

property and if an interest in the property is created, it ought to be construed as a lease.

Following the principles laid down in the above decision, if the facts established in this case are analysed, it clearly establishes that the

respondent was in exclusive possession of the suit site on payment of a monthly rent of Rs. 15 for running his firewood depot and from the user to

which the suit site has been put to by the respondent it has to be taken that he was in exclusive possession of the property. It is true that as pointed

out by Lord Denning in Errington v. Errington (1952) 1 All. E.R. 149, although a person who is let into exclusive possession is, prima facie,

considered to be a tenant, nevertheless he will not be held to be so if the circumstances negative any intention to create a tenancy. In this case I am

not in a position to see any circumstance which negative any intention to create a tenancy. The only circumstance pointed out by the appellants that

he had applied for construction of a building in the entire plot and has enclosed the same by a compound wall with two gates and that it cannot be

presumed that he intended to let out the properties putting himself to considerable inconvenience. Even if the transaction is treated as a licence, still,

the inconvenience will be there. Hence that circumstance alone will not disprove the intention to lease the property.

In the result, I agree with the conclusion arrived at by the lower appellate Court and dismiss the appeal. There will, however, be no order as to

costs. The connected revision, C.R.P. No. 1887 of 1965 arising out of Section 9 application is also dismissed. No costs.