Ram Narain and Another vs Bali Ram and Another

Shamsher Bahadur, J.—This rule at the instance of a tenant is directed against the order of the Appellate Authority under the East Punjab Urban Rent Restriction Act (hereinafter called the Act), making an order of ejectment in respect of the suit premises.

The premises consisting of a shop partitioned into four portions in the ground floor and of a chaubara on the first storey divided into two portions in the town of Nabha were leased by Bali Ram, respondent-landlord, to Pritam Dass on an annual rent of Rs. 775/- on 2-7-2019 Bk. Pritam Dass subsequently obtained the consent of the owner in writing to lease out the premises to the first petitioner Ram Narain. A business was started later in electric goods between Ram Narain petitioner and Prem Chand son of Sadhu Ram under partnership. This firm was dissolved on 5th of December, 1962. On dissolution the stock and trade fell to the share of Prem Chand while the lease-hold rights came to Ram Narain. As Prem Chand wanted to retain some space to dispose of the stock which he acquired on dissolution, it was arranged between him and Ram Narain that these would be kept in one of the, portions of the shop on the ground floor. Document Exhibit A. 1 was'' executed on 24th of December, 1962, to this effect. After the appropriate preamble, it was recited in this document that the shop would continue to remain in possession and control of Ram Narain who would grant licensee rights to Prem Chand up till 30th December, 1963 to enable him to dispose of the stock. It was mentioned specifically that the permission was being granted to Prem Chand by Ram Narain as a matter of concession and naturally there was no mention of any rent. Considering that a sub-lease had been created by Ram Narain in favour of Prem Chand without his consent, the respondent-landlord started proceedings for ejectment under clause (ii) of sub-section (2) of section 13 of the Act on the ground that the tenant had "transferred his right under the lease... without his written consent." This petition for ejectment was opposed on two grounds; firstly, that the permission granted to Prem Chand was only a license and not a lease, and secondly, because the landlord having granted permission to Pritam Dass to sub-lease could not bring an action against Ram Narain alone on the ground that there was no privity of contract between them. The Rent Controller decided in favour of the tenant and dismissed the application of the landlord on 11th of June, 1963. The District Judge, as the Appellate Authority, haying taken a different view of the matter, the order for ejectment was made in favour of the landlord. Both Pritam Dass and Ram Narain have moved this Court in the exercise of its revisional jurisdiction against the order of ejectment made by the Appellate Authority.

The kernel of the dispute centres on the legal status acquired by Prem Chand in consequence of the agreement Exhibit A, 1. It is the case of the tenant that Prem Chand has colluded with the landlord and the document Exhibit A. 1 has been used as a handle to bring about the ejectment of the petitioner. The answer to the question really turns on the manner in which this document has to be construed. In the very opening of the document, it is stated that Ram Narain and Prem Chand had been carrying on a partnership under the name and style of Messrs. Nabha Electric Stores and this firm had been dissolved on 5th of December, 1962, the goods having fallen to the share of Prem Chand. Prem Chand agreed to take over the shop from Ram Narain to whose share it had fallen on dissolution. It is mentioned that the use of a portion of the shop had been given only temporarily to Prem Chand as a licensee uptil 30th of December, 1963. On the expiry of this period, Prem Chand undertook to vacate the shop in which he had no other connection except as a licensee. If on the expiry of the period the shop was not vacated by Prem Chand, Ram Narain would be entitled under this agreement to have it vacated through the Court. It was again reiterated that the concession to store the goods had been granted by Ram Narain to Prem Chand as a matter of grace.

It is true that the nature of the document has to be determined by its terms and not merely by its form. If in fact it were a lease the transaction would not become a license merely because the parties have chosen to call it so. The incidents of a license and lease have been fully discussed and elucidated by their Lordships of the Supreme Court in Associated Hotels of India Ltd. Vs. R.N. Kapoor, Two of the four tests laid down by Mr. Justice Subba Rao at page 1269 in this connection are of importance and are in these words:

(1) To ascertain whether a document creates a license or lease, the substance of the document must be preferred to the form;

(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.

It is only the user of a portion of the premises which has been I granted to Prem Chand. The interest in the lease was kept intact with Ram Narain. There is actually no transference of any tenancy rights in favour of Prem Chand. No doubt the lessee has stated in the witness-box that he had been paying rent to Ram Narain, but there is no proof of it as no receipt has been produced. The document itself supports the assertion made by Ram Narain that no rent was either paid or stipulated. The period of the user was also specified. In a Punjab case decided by Tek Chand in Pooran Chand v. Malik Mukhbain Singh (1963), L.R. 490, a mere pesmission to use premises though on payment of rent and for indefinite period was construed as a license. What weighed with the appellate authority was that the permission was given for only temporary occupation as a licensee, the condition being that the premises shall vest and remain with the lessee and would be vacated at 48 hours notice. It is to be noticed that in that case, as well, it was specifically stated in the writing that the premises had been given to the licensee on a temporary basis on payment of Rs. 10/- as rent every month. The licensee remained in the premises for many years and it is obvious that the mere length of period of user does not convert a license into a lease. I do not agree with the Appellate Authority that the case of Pooran Chand v. Malik Mukhbain Singh 2 (supra) is in any way distinguishable from the facts of the instant case. Exhibit A. 1 in this case mentions that the shop was to be used on a temporary basis as a license and no mention of rent was made at all. When the parties themselves have created a limited interest in the estate, it cannot be enlarged by the oral testimony of the beneficiary when it is contrary to the terms of the document itself.

Mr. Babu Ram Aggarwal, the learned counsel for the petitioners, has further contended that Prem Chand having refused to, vacate, an order for his ejectment has since been obtained and actually he is no longer in the premises which was given to him for a definite period under Exhibit A, 1. In this view of the matter, it is not necessary to decide the second question whether the landlord could have brought an application for ejectment when leasehold rights had been transferred to Ram Narain with the consent of the landlord. I would accordingly allow this petition with costs, and set aside the order of ejectment passed by the Appellate Authority.