JUDGMENT
S.B. Sinha, J.
1. This case has been placed before this bench in view of the difference of opinion between two of the Hon’ble Judges of this court. The question succinctly put is as to whether the memorandum of agreement dated 7th February, 1979 entered into by the parties constitutes a lease or licence.
2. The basic fact of the matter is not in dispute.
The plaintiffs-respondents are the joint owners of a premises bearing No. 2 Netaji Subhas Road, Calcutta as described in the schedule appended to the plaint. The appellant Bank approached the plaintiffs with a proposal to purchase the said premises at a price of Rs. 81 lakhs. For the said purpose negotiations had been held between July ’78 and February 79. The parties also discussed about observance and performance of various
formalities in this regard. However, as the plaintiffs had some difficulties in execution the deed of sale in favour of the defendant-appellant Immediately, as it appears from the minutes of discussion dated 6th November, 1995, it was suggested that pending execution of the formal deed of sale the parties may enter into a leave and licence agreement for one year at the first instance: pursuant whereto the aforementioned agreement had been entered into.
3. In terms of the said agreement the respondents agreed to allow the appellant to use and occupy the ground floor of the said premises which was expected to be vacant by 15th February, 1979 and the remaining floors as soon thereafter as the then occupier would vacate. Pursuent to the said agreement the appellant was put in possession of a portion of the premises in question which was vacant. On the expiry of the aforementioned period of one year, the said period was extended thrice. Admittedly, the agreement to sell the said premises by the respondent in favour of the appellant failed through. The respondents, on the expiry of the extended period filed a suit against the appellant in the Original Side of this court which was marked as suit No. 644 of 1984 praying, inter alia, for the following reliefs :–
“(a) Decree for vacant possession of the determined portion of the said premises No. 2. Netaji Subhas Road, Calcutta, indicated in yellow border in the plan annexed hereto as annexnre ‘A’ full particulars whereof are set out in annexure ‘A’ hereto;
(b) Decree for vacant possession of the portions of the said premises No. 2 Netaji Subhas Road, Calcutta encroached upon by the defendant and beyond the portions covered by the said leave and licence being the said common areas and the said retained areas as indicated in violet and green borders respectively on annexure A and full particulars whereof are set out in annexure ‘E’.
(c) Decree for damages and/or mesne profits at the rate of Rs. 19,500/-per diem from 15th August, 1984 as stated in paragraph 9 of the plaint.
(d) Decree for damages and/or mesne profits at the rate of Rs. 3000/-per diem as stated in paragraph 14 of the plaint.
(e) in the alternative and enquiry into the damages suffered by the plaintiffs by reasons of wrongful occupation of the said premises by the defendant and decree for the sum found due thereupon.
(f) Decree for Rs. 12,49,295.04 P. towards municipal rates and taxes as pleaded in paragraph 17 of the plaint.”
4. In the written statement the appellants, inter alia, took a plea that the parties had entered into an agreement of lease and not a mere leave and licence.
5. The learned trial Judge in view of the pleadings of the parties framed as many as 9 issues, the material issues however, are as follows:–
1. What were the terms and conditions on the basis of which the defendant entered into possession of premises No. 2, Netaji Subhas Road, Calcutta, under the plaintiffs.
2. Did the defendant become a tenant or a licensee under the plaintiffs.
6. The learned trial Judge decreed the said suit in part. As regard issue No. 1 and 2 it was held that the appellant was not a tenant but a licensee under the respondents. An appeal was preferred against the said judgment and decree dated 23.2.1996 by the appellant resulting in difference of opinion between the two learned Judges of this court. Bhattacharya, J. held that the defendant was a tenant under the plaintiffs and thus in absence of any of the grounds enumerated under section 13 of the West Bengal Premises Tenancy Act, 1956 the suit was not maintainable, whereas, Gupta, J, however, held that the memorandum of agreement dated 7lh February, 1979 entered into by the parlies constitutes a licence and not a lease and, thus, directed dismissal of the appeal.
7. Mr. Biswarup Gupta, the learned Senior Counsel appearing on behalf of the appellant, inter alia, submitted that having regard to the conduct of the parties and other relevant factors it would appear that the parties had entered into a tenancy agreement. According to the learned counsel, the conduct of the parties would clearly show that the terms and conditions of the memorandum of agreement dated 7th February, 1979 had not been adhered to. Reliance in this connection had been placed on .Associated Hotels of India Ltd. R.N. Kapur . M/s. Shalimar Tar Products Ltd. v. H.C. Sharma and Ors. . Dipak Banerjee v. Smt. Lilabati Chakraborty , Smt. Rajbir Kaur and anr. v. M/s. S. Chokosiri and Company , Captain B.V.D’Souza v. Antonio Fausto Fernandes and Sohan Lal Narain Das v. Laxmidas Raghunath .
8. The learned counsel contends that admittedly the appellant had been in exclusively possession of the suit property and also had been paying the Munclpal rates and taxes. It has further been pointed out that the intention of the parties in entering into the transaction was to allow the appellant to carry on its business by shifting its Head Office and as such possession had been delivered with a view to complete the transaction of sale of the said premises at a price which was fixed at Rs. 81 lakhs, and, thus, there cannot be any doubt whatsoever that the intention was that the appellant should be allowed to continue to possess the premises in suit. It has been pointed out that the respondents had allowed the plaintiffs even to appropriate the sum paid by Tata Finance Ltd. which was a former tenant in the said premises. It was pointed out that the possession had been delivered to the appellant in a phased manner viz. as and when the said tenant vacated the other portions of the premises. It has also been pointed out that admittedly an air conditioning plant had been set up and respondents admittedly had no access to the premises in question.
9. Mr. Anindya Mitra, the learned senior counsel appearing on behalf of the respondents, on the other hand, submitted that as possession had been delivered pending execution of a deed of sale, the appellant must be held to have been put in possession in terms of section 53A of the Transfer of Property Act and as such the question of a relationship of lessor and lessee coming into being would not arise. The learned counsel pointed out that an agreement having been entered into initially for a period of one year,
in case of lease the same was required to be evidenced by a registered Instrument. It has further been urged that it is not a case where a subtenancy had been created in the guise of a licence or by way of camouflage with a view to avoid the provisions of law contained in West Bengal Premises Tenancy Act as also condition Imposed by the lessor on the lessee restricting creation of a sub-tenancy. Mr. Mitra will urge that keeping in view the status of parties and further in view of the fact that they had all along been getting legal assistance and as also in view of the fact that the appellant Itself had sought for extension of the period of leave and licence and as further having all along been referring to the said memorandum of agreement dated 7th February, 1979 as a leave and licence agreement upto the Institution of the suit, it could not for the first time set up a plea of tenancy in the written statement. The learned counsel submits that an exclusive possession is not decisive for determining the relationship of the parties. Mr. Mitra would submit that the intention of the parties must be gathered from the document Itself and for that purpose even the surrounding or attending circumstance cannot be looked into. In support of the aforementioned contentions strong reliance had been placed by Mr. Mitra on Swam Singh v. Madan Singh , Puran Stngh Sahini v. Sundari Bhagwandas Kripatni (Smt.) & Ors. , Khalil Ahmed Bashir Ahmad v. Tafethussein Samasbhi Sarangpurwala , Shankar Ghosh v. Arun Kumar Dasgupta reported in 84 CWN 817 and Vayallakath Muhammedkutty v. Illikhal Moosakutty .
10. Before proceeding to deal with the rival contention as noticed hereinbefore it is profitable to note that on 9th January 1979 a meeting took place by and between the plaintiffs and defendant at 14, India Exchange, Calcutta, the minutes whereof is contained in Exit, E, the relevant portion of the said minute of meeting is as under :–
“Initiating the discussions the Chairman and Managing Director reiterated the Bank’s willingness to purchase the property at No. 2, Netajl Subhas Road, Calcutta-1. It was further explained to Shri Mahtab that if conveyance can take place as quickly as possible then the purchase consideration can be transfered in the names of vendors provided they can obtain the Income Tax clearance and other statutory clearances.
Shri Mahtab explained that it would be difficult to obtain the tax clearance quickly and that too not before the 28th February, 1979. The date has been mentioned because there are apprehensions in their minds that the benefit of capital gains tax available to any vendor for keeping the sale proceeds with a Nationalised Bank, may be abolished in the ensuing budget. In that event, the vendors will not be benefltted by this deal and, the position would call for reconsideration.
Shri B.B. Man, Law Officer of the Bank immediately explained that a via media has been suggested to him as follows :–
(i) The bank can take possession of the property on a leave and licence basis for a specified period say one year or more. The Licence will be terminable at any time earlier by Bank on one month’s prior notice.
(ii) in the said leave and licence agreement a specific undertaking will be given by the Bank and agreed to by the owners of the property that the Bank will have absolute right to purchase this property within a specifed period say six months from the date of taking possession by payment of the agreed purchase consideration amount viz. Rs. 81 lacs. Such right exercised by the Bank shall be subject to clause (V) hereunder and the terms and conditions of sale of this property as already settled by correspondence between the Bank and the owners including the points raised there regarding the suit No. 62 of 1975 pending in Calcutta High Court concerning one third undivided share of Shri Molay Chand Mahtab in tills property.
(iii) During the period the Bank occupies the premises as a licensee under the leave and licence, the Bank will pay to the owners a fee of Rs. 1,95,000/- per month and any increase in the municipal levy and other outgoings in respect of the property on account of owners occupiers share or otherwise.
(iv) …..
(vii) So long as the bank is occupying the premises under the abovementloned leave and licence agreement the Bank will continue to pay the fee as indicated above. The Bank shall not claim this leave and licence as tenancy or anything else in court or outside under any circumstances.”
11. It appears that the common Attorney of the parties was M/s. Orr Dignam and Company and thus, it was agreed that it would draft the leave and licence agreements pursuant to the terms agreed to in the said minutes of meetings, a memorandom of agreement had been entered into wherein the respondents had been described as grantors which expression Includes their heirs, executors, administrators and the appellants as grantees. The relevant terms and conditions of the said agreement are as follows :–
1. Subject to the control and supervision of the grantors, they the grantors hereby grant to the grantee leave and licence or occupation of the said accommodation consisting of 49,000 (forty nine thousand) square feet of space as aforesaid hereinafter called the licensed premises together with the right of egress and Ingress and the right of user of the passage, staircase in common with the grantors. All such accommodation and amenities are more particularly shown in the plan hereto annexed and thereon coloured yellow, such grant being for a period of twelve month until terminated earlier as hereinafter provided from the day when the grantors occupy the said accommodation.
2. The grantee shall not make any additions or alterations in the licensed premises during the continuance of this licence.
3. The grantee shall not carry on any offensive trade on the licenced premises nor shall store any dangerous explosive or easily combustible articles thereon nor do any act or acts which is or are prohibited by any Law, Rules and Regulations in force. Provided that nothing herein contained shall preclude or prevent the Grantee from storing
in the said licenced premises or any part thereof such articles and things as may be necessary for its business purposes.
4. The Grantee shall be permitted by the Grantors to keep the licenced premises in reasonable state of repair and condition during the term of the licence.”
12. The agreement between the parties although contained a clause that the grantee shall not make any addition or alteration in the premises in question but it is accepted that such alterations have been made to the knowledge of the plaintiffs-respondents as would also appear from the report of the Special Officer as contained in Exbt. FP.
13. Condition 5 of the said agreement reads thus :–
“In the event of the conveyance in favour of the grantee being concluded between the parties the leave and licence hereby granted would automatically terminate as from the date of such purchase by the grantee from the grantors. Provided always that the licence hereby granted will in any event terminate on the expiry of the term for which such licence is granted unless in the meantime there has been an extension of such licence by mutual consent. Provided further that in the event of sale being completed in respect of the shares of Saday Chand Mahtab and Pranay Chand Mahtab two of the Grantors the licence in respect of the shares of Malay Chand Mahtab will continue on the same terms and conditions until final disposal and determination of the suit No. 62 of the 1975 in the Hon’ble Calcutta High Court.”
14. Despite the said provision admittedly extension had been granted. The proviso appended to the said clause is important inasmuch as no provision has been made therein as regard the contingency which might arise in the event Benichand does not choose to extend the terms and conditions.
Conditions 7 and 9 read thus :–
“7. It is made clear that the permissibe use allowed to the grantee is not Intended to create in its favour any right or interest in property and such occupation of the grantee in terms of this licence would be always subject to the control of the licensor and under their supervision.
9. The grantee shall pay all Increase in the municipal rates either in the owner’s share or in the occupier’s share and such sum as may be levied as surcharge for non-residental use of the premises the liability and/or obligation of the licensor being to bear and pay such rates as are payable currently.”
15. Interpretation of documents is not an easy task.
16. The real Intention of the framer of the deed, the written declaration of whose mind it is always considered to be. Is the end and object, to the discovery and effectuating of which all the rules of construction, properly so called, are uniformly directed.
17. Frankfurter, J. In Massachusetts B and INS Co. v. United States 352 US, page 128, 1 L ed 2d 189, 77 S Ct 186 while considering an amendment in Massachusetts Death Act observed :–
“There is no surer way to misread any document than to read it literally …..” Guiseppi v. Waling (CA2d) 144 F2d 608, 624 (concurring opinion). 155 ALR 761.”
18. Recently in Inderjeet Singh Stal v. Karam Chand Thapar , the apex court observed :–
“The commodity goes by its value, not by the wrapper in which it is packed. A man is known for his worth, not for the clothes he wears. Royal robes worn by a beggar would not make him a king. The document is weighed by its content, not the title. One needs to go to the value, not the glitter. All the same, we do not wish to minimise the Importance of the right words to be used in documents. What we mean to express is that if the thought is clear, its translation in words, spoken or written, may, more often than not, tend to be faulty. More so in a language which is not the mother tongue. Those faulted words canot bounce back to alter the thought. Thus in sum and substance when the contracting parties and the draftsman are assumed to have known that the word ‘royalty’ is meant to be employed to secure for the State something out of what the State conveys, their employment of that word for private ensuring was not Intended to confer on the assignor the status of the sovereign or the State, and on that basis have the document voided. Therefore, we are of the view that the word ‘royalty’ was used in the deed misdescriptively and was really meant to cover an Important item of the consideration due for future payments.”
19. In Megarry’s Manual of the law of Real Propcry, 7th Edition, at page 109 the learned author states :–
“What must be considered is what the parties have in fact done, and notwhat they intended, or pretended to do. Their Intention is Important, however, in deciding whether or not they Intended to enter into legal relations, or whether the transaction was a mere family arrangement or act of friendship of generosity.”
20. However, as regards pretences or shams the learned author states : “In determining whether or not a tenancy has been granted, the court will ignore any provisions in the agreement which are mere pretences or shams seeking to negative a tenancy.”
21. In Addiscombe Garden Estate Ltd. & Anr. v. Carabbe & Ors. reported in 1957(3) All. ER, Page 563, the question which arose for consideration was as to whether the document in question was a lease or a licence. It was held that the relationship between the parties to the agreement was to be determined by law and not by the description given to the agreement by the parties and the agreement on consideration of its relevant provisions and having regard to its showing as Intention to confer right to exclusive possession created the relationship of landlord and tenant between the parties to it. The learned Judges held that the words ‘use’ and ‘enjoyment’ of the said premises in consideration was not decisive. Upon considering the document as a whole the learned Judges observed that the words landlord and tenant have been avoided in the document. However, the right to repair and maintain the club house was held to be inappropriate for creation of a licence.
22. Upon taking into consideration the entire circumstances, the learned Judges were of opinion that it was a case of tenancy.
23. In coming to the said conclusion the learned Judges also noticed the decision in Facchini v. Bryson(1) reported in 1952(1) TLR 1386 wherein there existed a clause ‘nothing in this agreement shall be construed to create a tenancy’ but in that case also it was held that the agreement must be construed as a whole, and the relationship should be determined by the law and not by the lebel whfch they chose to put on it.
24. In Smt. Rajbir Kaur v. M/s. S. Chokostri & Co. , a case where a tenant submitted Kwallty restaurant for supply of softy ice cream given up for consideration. In that case also interconnection between two parties of the tenanted premises namely Sareu Sansal and Kwallty ice cream came up for consideration. It was noticed that the Ice Cream parlour could be locked from outside Independently. On appreciation of evidence the Rent Comptroller held :–
“Evidence of the petitioners clearly establishes that there is a separate cabin for selling Ice cream which is under the control of ice cream sellers. The deed is only a cloak to hover the real relationship of the respondent with M/s. Kwallty Restaurant, sector 17, Chandigarh. It is not believable at all that the respondent parted with a portion of the premises to M/ s. Kwallty Restaurant, sector 17-E, Chandigarh, without any consideration and just for the sake of supplying Ice-cream to the customers that too after charging the price. It is all against the natural conduct that the respondent may part with a portion of the premises Just for this more facility.”
25. In , it has been held :–
“Following Sohan Lal Naraindas v. Laxmidas Raghunath Gadit, we reiterate that the Intention of the parties to an agreement has to be gathered from the terms of the agreement construed in the context of the surrounding, antecedent and consequent circumstances. The crucial test would be what the parties Intended. If in fact it was intended to create an interest in the property, it would be a lease, if it did not, it would be a licence. In determining whether the agreement was a lease or licence, the test of exclusive possession, though of significance, is not decisive. Interest for this purpose means a right to have the advantage accruing from the premises or a right in the nature of property in the premises but less than title.”
26. It is, therefore, not correct to contend that the circumstances whether antecedent or subsequent cannot be considered at all. The question as to whether a transaction constitutes a lease or licence is an Intricate question of law. Section 52 of the Easements Act reads thus :–
“Licence defined–Where one person grants to another, or to a definite number of other persons, 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 right, be unlawful, and such right does not amount to an easement or an Interest in the property, the right is called a licence.”
27. Section 105 of the Transfer of Property Act reads thus :–
“A lease of Immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, on consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.
The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share service or other thing to be so rendered is called the rent.”
28. The essential features of the licences are :
1. A licence is not connected with the ownership of any land, but creates only a personal right or obligation, hence, it cannot be assigned.
2. It is purely permissive right arising only by permission express or Implied, and not by adverse exercise or in any other way, hence, it is generally revocable at the will of the grantor.
3. It only legalises a certain act which would otherwise be unlawful and does not confer any Interest in the property itself in or upon or over which such act is allowed to be done.”
29. In Associated Hotels of India v. R.N. Kapoor , the following propositions had been laid down for ascertaining as to whether a transaction constitutes a lease or licence :–
“(i) To ascertain whether a document creates a lease or licence the substance of the document must be preferred to form;
(ii) the real test is the intention of the parties–whether they Intended to create lease or licence.
(iii) 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 legal possession continues with the owner, it is a licence; and (vi) if under the document a party gets exclusive possession of the property, 'prima facie' he is considered to be a tenant; but circumstances may be established which negative the intention to create a lease." 30. There cannot be any doubt whatsoever and in fact it has been accepted at the Bar that the question as to whether a transaction constitutes licence or lease depends on the Intention of the parties and the nature of possession granted. 31. In R.Srinivasa Chetty v. G.Nagarajan reported in 1982(1) MLJ 25 it has been held that the following circumstances may lead to a conclusion that the transaction is a lease: (1) Exclusive possession of the premises; (2) The opposite party had no access to the portion of the premises occupied by the person in possession; (3) The portion occupied by the person in possession was provided with a sub-meter for electricity; (4) The monthly payment, though termed as 'Compensation and commission', was, in reality, rent for the premises occupied by person in possession: (5) The demise was for a fixed term. 32. Similarly in Woodfall's Law of Landlord and Tenant Vol-2, 1978 Edn. at page 2361 the meaning of the tenancy has been stated in the following term :--
“There must be a tenancy–The Act does not apply to licences. Whether an agreement gives rise to a tenancy or a licence depends on the ordinary principles for distinguishing tenancy from licence. The word ‘tenancy’ means a tenancy created either immediately or derivatively out of the freehold, whether by a lease or under-lease, by an agreement for a lease or under-lease or by a tenancy agreement or in pursuance of any enactment (including the Act of 1954). but does not include a mortgage term or any interest arising in favour of a mortgagor by his attorning tenant to his mortgagee, and references to the granting of a tenancy and to demised property are to be construed accordingly section 69(1). It follows from this definition that the tenancy must, unless it took effect pursuant to statute, as under the Act of 1927 or 1954, have been created by some form of agreement, thus ruling out tenancies on sufference.”
33. The ingredients for creating a lease or sub-lease are same. It is, therefore, not possible to accept the contention of Mr. Mitra to the effect that in a case of sub-lease there exists a hidden agenda on the part of the tenant and a sub-tenant to circumvent the law as engrafted in the tenancy statute or the restriction imposed by landlord in the matter of creation of sub-tenancy. Where a tenancy is governed by a statute instances are not unknown where parties had taken recourse to subterfuge to term the transaction as a licence and not a lease.
34. In M/s. Shalimar Tar Products Ltd. v. H.C. Sharma & Ors. , the apex court clearly held that for the purpose of constituting the sub-letting, a party must have the legal possession by the lessee which means possession with the right to Include and also right to exclude others must take place.
35. In Capt. B.V. D’Souza v. Antonto Fausto Fernandes, , it was held :–
“The question of execution a sub-lease or sub-letting can arise only by a tenant. If a licensee inducts any person in the property as his tenant. It cannot be described as subletting. In clause 15 it is stated that on the expiry of the period, the deed “shall be renewable thereafter at the will of the licensee”: and in the event of the licensee not desiring to renew, “shall give one month’s notice in writing”. These terms are not consistent with the respondent’s case of licence, and Indicate that an interest in the property was created in favour of the appellant in pursuance of which he was put in possession with a right of renewal. When compared with the terms of the documents set out in the Judgments in Associated Hotels of India Ltd. v. R.N. Kapoor : and Sohan Lal Naraindas v. Laxmidas Raghunath Gadit : ,
relied upon by the learned counsel for the appellant, which were construed by this court as creating lease in spite of their description as licence deeds, the appellant’s case stands out as stronger. If the approach adopted by the courts below in Interpreting the document is accepted, it shall defeat the object of the Rent Acts, by permitting the parties to camouflage the real nature of the transaction by resorting to skilful drafting.”
36. This aspect of the matter has recently been considered by a Division Bench of this court in Shyam Sundar Ganeriwalla and etc. v. Delta Internationl Ltd. and anr. wherein speaking for the Division Bench I had held :–
“It is now a well settled principles of law that the question as to whether the terms, conditions and covenants contained in an agreement constitutes lease or licence will depend on the Intention of the parties. The distinction between a lease and a licence is a veritable right boggling effort into which has fallen a whole army of jurist and legally thinkers. The court will in a given case may be especially careful to see that wool is not being pulled over its eyes and in deciding whether a lease is masquerading as a licence, will consider the factual background against which a particular document is to be construed,”
37. However, it is an accepted principle that the question as to whether the grant constitutes a licence or lease would depend on creation of an interest or estate in the property which is the subject matter of agreement. Delivery of exclusive possession is one of the most relevant factors though not decisive Inasmuch as it can be shown that merely a privilege has been conferred.
38. In Ktdar Nath v. Swamt Parshad. reported in AIR 1978 PunJ & Har. 204, it has been held that where exclusive possession of the premises had been given on payment of a certain sum of money in every month is payable and the parry in possession had the right to instal machinery and had the electric meter in his name and to make repair the premises, the same would be a case of lease and not a licence.
39. In Mohan Sons (Bombay) P. Ltd. v. Lady Sanoo Jamsetjt Jejebhoy , it has been held that the party which has given exclusive possession but contends that the agreement was a bare agreement of leave and licence must show why he gave exclusive possession. No such evidence has been adduced on behalf of the plaintiff in the Instant case.
40. It is also well settled that the use of the expression lease’ or licence’ is not decisive.
41. In Glenwood Lumber Co. Ltd. v. Philips, reported in 1904-1907 All ER (Reprint) 203, it was held :–
“In the so-called licence Itself it is called differently a licence and a demise, but in the Act it is spoken of as a lease, and the holder of it described as the lessee. It is not, however, a question of words, but of substance. If the effect of the instrument is to give the holder an exclusive right of occupation of the land though subject to certain reservations
or to a restriction of the purposes for which it may be used, it is in law demise of the land itself.”
42. It is, however. Interesting to note that Lord Denning M R in Shell-Mex and B.P. Ltd. v. Manchester Garages Ltd.. reported in (1971) 1 All ER 841, observed :–
“I turn, therefore, to the point : was this transaction a licence or a tenancy? This does not depend on the label which is put on It. It depends on the nature of the transaction Itself : see Addsombe Garden Estates Ltd. v. Crobbe. Broadly speaking, we have to see whether it is a personal privilege given to a person in which case it is a licence, or whether it grants an Interest in land. In which case it is a tenancy, At one time it used to be thought that exclusive possession was a decisive factor, but that is not so.”
43. In Marchant v. Charters, reported in (1977)3 All ER 918, Lord Denning again reiterated the said position and held :–
“The test whether the occupant of a single room was a tenant or licensee did not depend on whether he had exclusive occupation, whether the room was furnished or whether the occupation was permanent or temporary. Those were all relevant factors but none was conclusive. The true test was the nature and quality of the occupation ; whether it was intended that the occupation should have a stage in the room or whether he only had permission for himself to occupy the room personally, whether under a contract or not. Applying that test to the circumstances of the case C was not a tenant but a contractual licensee and so was not entitled to security of tenure under the 1968 Act.”
44.The court of appeal again in Somma v. Hezelhurst, reported in (1978)2 All ER 1011 held that :–
“having regard in particular to the fact that H and S were liable only for the consideration they had each contracted to pay and were not Jointly and severally liable for the total consideration, the separate obligations contained in the two agreements could not be reconstructed into one joint obligation without doing violence to the Intention of the parties and rewriting the agreements : it followed that, since there was no Joint agreement, there could be no tenancy as neither occupant had the necessary exclusive possession to found one.”
45. There can be no doubt that where the language is plain and unambiguous, the same has to be adhered to. However, it is interesting to note that Halsbury, L.C. In North Eastern Rail Co. v. Lord Hastings, reported in (1900-1903) All ER (Reprint) 199, held that in particular circumstances an adherence to the letter of a contract may produce an apparent Injustice.
46. The Supreme Court, however, explained Shell Mex and B.P.Ltd. v. Manchester Garages Ltd. (1971)1 All ER 841 (supra) in Copt. B. V. D’Souza. v. Antonio Fausto Fernandas, wherein L.M. Sharma, J. (as his Lordship then was) while construing an agreement labelled as leave and licence, in the light of the provisions of the Goa, Daman and Diu Buildings (Lease, Rent and Eviction Control) Act, 1986 held (para 3 of AIR) :–
“However, this cannot answer the disputed Issue as it creates a licence or lease, the substance of the document must be referred to the form. As was observed by this court in Associated Hotels of India Ltd, v. R.N. Kapoor. . the real test is the Intention of the parties—whether they Intended to create a lease or licence. If an interest in the property is created by the deed it is a lease but if the document only permits another person to make use of the property “of which the legal possession continues with the owner” it is a licence. If the party in whose favour the document is executed gets exclusive possession of the property prima facie he must be considered to be a tenant : although this factor by itself will not be decisive. Judges in this light, there does not appear to be any scope for Interpreting Ex. 20 as an agreement of leave and licence.”
The apex court thus observed that if the parties in whose favour the document is executed gets exclusive possession of the property, prima facie he must be considered to be a tenant. Although this by itself will not be decisive. The question as to whether a document is to be construed as a lease or licence, the labelling thereof would not matter.”
47. Thus, there cannot be any doubt that exclusive possession of a property would prima facie constitute a tenancy subject of course to the intention of the parties which has to be gathered not only from reading the contentions of the agreement as a whole, the circumatances attending thereto but also subsequent conduct of the parties.
48. Let me now consider the decisions cited by Mr. Mitra.
49. In Swam Singh v. Madan Singh , the apex court was interpreting a document which was unambiguous and in that situation it was held that surrounding circumstances and intention should not be looked into. In that case the possession and control of the premises in question was in favour of grantor.
50. In Puran Singh Sahini v. Sundari Bhagwandas Kripalni (Smt.) & Ors. , the apex court held that exclusive possession in the property may not be decisive.
51. In Vayailakath Muhammedkutty v. Illikkal Moosakutty , a Division Bench of the apex court found as of fact that the terms and conditions laid down in the document in question would lead to the conclusion that the defendant was allowed to run the business as a licensee. The apex court, however, observed that for consideration as to whether a document creates a lease or licence, the substance of the document must be preferred to the form. It has further been held that exclusive possession of a party is Irrelevant but at the same time it is also not conclusive. It has clearly been held that the pith and substance of the document are required to be considered for the purpose of finding out the true import of a document, viz. whether a document creates a lease or a licence.
52. In Sankar Ghosh v. Arun Kumar Dasgupta reported in 84 CWN 817, a Division Bench of this court referred to various decisions Including Associated Hotels (supra) and held :–
“In our opinion, as we read the Judgment of the Supreme Court it can be said that the intention of the parties cannot be gone into even if the terms of the deed are not ambiguous. In the background of this case it appears to us that it is always necessary to go into the question and find out what was the intention of the parties by which the plaintiff came into possession of the property. It is clear from the documents and letters addressed by the plaintiff to the defendant that the plaintiff was in dire necessity of some accommodation. The defendant had in his possession a flat as a tenant under the Co-operative society. It was not possible at that point of time for the defendant to occupy the flat. He applied before the Co-operative Society, tenant under the Calcutta Improvement Trust to give him permission to sublet the premises. Permission was granted for one year and thereafter reciting all these facts in the document itself a tenancy was created for one year only.”
53. In that case keeping in view the facts and circumstances of this case the court held that a licence had been created. In the aforementioned backdrop the Intention of the parties have to be gathered. The premises in question was earlier occupied by a tenant. It was being used for business purpose but the said tenant Tata Finance Ltd. was to vacate the same. At that Juncture the appellant expressed its intention to purchase the premises for a sum of Rs. 81 lakhs. From the minutes of meetings dated 9.1.79 it is evident that the respondents expressed their difficulties in executing a deed of sale Immediately as they may not get the benefit of the capital gain taxes in view of the impending budget and it was in that situation the Law Officer of the Bank explained that a via media had been suggested to him. the relevant clause whereof have been referred to hereinbefore. The agreement had been entered into on the basis of the aforementioned negotiation. In the agreement the expression ‘grantors’ was stated to include their heirs, executors, administrators, representatives and assigns an Instrument of licence cannot be assigned nor does it survive the death of the licensors. As the heirs, executors, administrators, representatives and assigns have been included in the term ‘grantors’ there cannot be any doubt that the parties Intended to create to long term arrangement.
54. The very fact that in the minutes of meetings it has clearly been stated that the premises were required by the appellant for the purpose of its business is also a pointer to the fact that a mere deed of licence was not sought to be created. It is also important to note that in terms of the minutes of meetings dated 9th January, 1979 the licence was terminable prior to expiry of the period of one year at the instance of the bank on one month’s prior notice. No such right had been granted to the plaintiffs-respondents. It is also admftted that despite the purported condition, the said Memorandum dated 7th February, 1979 whereby restriction had been Imposed upon the appellant to make any addition or alteration, such additions, alterations and in fact new construction had been made by the appellant to the knowledge of the respondents. No claim has been raised therefore by way of damages. No issue had also been raised about non-grant of mesne profit.
55. In the report dated 2.7.1996 of the Special Officer (Exbt. FF) appointed by the court. It has been found :–
“(a) Existence of 12″th plastered masonry walls shown in drg. by letter ‘MN and ‘NO’
(b) Non existence of 10″ and 5″th wall as shown by letters ‘KR’ in the leave and licence plan (Exh-S.O.1).
(c) Provision of spiral staircase. The portion is used exclusively as A.C. Plant room by the defendant.”
56. From a perusal of the said report it would appear that various other constructions have been made by the appellant The Special Officer had found that such construction are an old ones and entire premises had been found to be in exclusive possession of the appellant. No objection to the said report had been filed nor the correctness thereof had been questioned before this court.
57. The proviso apended to Clause 3 of the said Memorandum clearly permits the appellant to store in the premises such articles and things as may be necessary for its business purpose. Furthermore, despite Clause 4 of the said Memorandum in terms whereof the plaintiffs-respondents were to make expenditure relating to the maintenance of the building, no amount had been spent by the plaintiff-respondents and the entire expenditure therefore had been borne by the appellant. Clause 5 of the said agreement clearly states that the same was entered into pending execution of the deed of sate. The appellant had paid the consideration amount Clause 5 also provides for extension of the period. The proviso appended thereto clearly indicates that Jn case deed of sale is effected at least to the extent of share of Saday Chand Mahata and Pranay Chand Mahata, the premises shall continue to be under the occupation of the appellant on the same terms and conditions. Such a provisions could not have been made, had the intention of the parties was only to create a licence inasmuch as in the event a sale deed is executed filed by Saday Chand Mahata and Pranay Chand Mahata; the appellant could not have been thrown out of the 1/3rd share belonging to Benichand inasmuch as in the said event it would have been open to him to revoke the licence at any time. As indicated hereinbefore, a provision that the grantee shall not claim the premises in question to have been leased out to him is of no consequence in view of the decision in Facchini v. Bryson reported in 1952(1) TLR. 1386.
58. A licensee is normally not allowed to pay the rates and taxes of the municipality but such a provision has been made in clause 9 of the agreement. Thus, in terms of the said provision the entire outgoings had to be paid and in fact had been paid by the appellant. No amount has been paid by the plaintiffs respondents, and thus, the later part of the clause 9 has also not been adhered to.
59. Before the suit was disposed of, l/3rd interest of the respondents had been locked up. Biswanath Ghosh. P.W.1 who was present during negotiation between the parties, in answer to a question stated :
“what purpose the defendant Bank wanted to have the premises?/They wanted to possess in order to shift their head office at this premises in question. Earlier it was in 14, India Exchange Place.
I am further suggesting to you that the bank has shifted their head office from the previous office Indian Exchange Place to this premises on the
basis that they will remain there either on a permanent basls?Yes, I agree. They were prospective’buyers and they were in need of immediate possession of that premises.”
60. It Is, therefore, clear that the parties had all along been having knowledge that the appellant Intended to shift their head office in the premises in question from 14 India Exchange Place, as is evident from the answer to question No. 97 that the appellants wanted to shift the premises on a permanent basis. It also appears from answers to the question Nos. 101 and 102 that the plaintiffs themselves raised the price from Rs. 81 lakhs to Rs. 1 crore 11 lakhs and the bank agreed to pay upto Rs. 1 crore 6 lakhs and only on that account the agreement to purchase the premises failed through.
61. The fact that the appellant was in exclusive possession of the property has also been admitted by P.W.1 as would appear from the following materials :–
“Have you any opportunity to have access to this premises without the permission of the bank?Yes, I visited the premises several times on official work.
Except for official duty can anyone enter into any part of this without the permission of the Bank?No. we cannot.”
62. That even permission for entry in the premises was sought for by the respondents is evident from the letters dated 20th June, 1984 (Exbt. Y/4) and 17th August, 1984 (Exbt.5) which had been refused to by the appellant by a letter dated 20th August, 1984 as contained in Exbt. 6.
63. It appears that even during pendency of the suit one of the plaintiffs-respondents Dr.P.C. Mahatab sought for financial assistance which was granted to the extent of Rs. 7.5 lakhs by a letter dated 5th June, 1997 and therein repayment clause was stated in the following manner :–
“Rs. 25,000/- p.m. plus quarterly interest. Instalment and Interest will be adjusted out of rental amount of Rs. 65,000/- p.m. payable by the bank to you. The first Instalment will be realised from the following month of disbursement.”
64. The said respondents in terms of letter (exbt. 11) accepted the terms and conditions stated therein unconditionally. Apart from the report of the said officer exclusive possession and total control over the premises by the appellant becomes evidents. Even the erstwhile tenant had reported the matter relating to the vacation of the premises to the appellant in terms of its letter dated 17th September, 1979 (exbt. 9) in the following term :–
“This is to place on record that while delivering vacant possession of the above building to you on 17.9.79, we have removed all Items of furniture etc. belonging to us.
65. It may please be noted that we have no claim against one another in respect of the above property on any account whatsoever.”
The plaintiffs also in their letter dated 30th August, 1979 (Exbt. 2) confirmed the same stating :–
“Regarding delivery of possession of the entire building by Tata FInlay Limited we confirm having been advised that you have received a letter from Tata Finlay Limited that they would shift to their new office premises at 1, Bishop Lefroy Road by mid September.”
66. The submission of Mr. Mitra to the effect that a lease cannot be held to have been granted in part performance of the contract is misconceived in the fact situation of the case. When a person is put in a possession in part performance of contract he is neither a lessee nor a licensee. He continues to possess the subject matter of the property in his own right and under the agreement. The further submission of Mr. Mltra to the effect that a lease for a period of one year would require a registration although correct, runs counter to the contention of the plaintiffs-respondents. A lease for a priod of one year or more if not evidenced by a registered document would nonetheless create a relationship of landlord and tenant but the same would only create a monthly tenancy.
67. It is also difficult to accept the submission of Mr. Mltra to the effect that the attending circumstances could not be looked into in view of the provisions contained in sections 91 and 92 of the Indian Evidence Act.
68. The Memorandum of Agreement dated 7th February, 1979 is certainly ambiguous and, thus, attending circumstances could be looked into. It is also evident from the conduct of the parties that although the said agreement was entered into pending execution of the sale deed, the intention of the parties was that the appellant was to continue to possess the said properties on permanent basis. The possession of a premises for a short period pending the execution of the deed of sale, admittedly was not within the contemplation of the parties. The parties had taken steps in furtherence of the agreement for sale and, thus. It cannot be said that the intention was to take possession of the premises on a lease and licence basis for a short period. The court in a case of this nature is also not entitled to come to the conclusion is to what would have been the proper annual rent or whether 4% of the value of the property should be assessed as annual rent keeping in view the fact that the same was not the case of either of the parties. It has also to be borne in mind that interpretation of document gives rise to a question of law.
69. From the discussions made hereinbefore, it is clear that all the Ingredients for creation of a lease have been fulfilled.
70. Keeping in view the facts, and circumstances of this case 1 am of the opinion that by reason of suchadocument a lease and not a licence had been granted. I would, therefore, in agreement with the Judgment of Bhaskar Bhattacharjee, J. allow the appeal and set aside the judgment of the learned trial Judge.
71. Appeal allowed