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Chandrakant Gordhandas Shah Vs. Union Bank of India and ors. - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtMumbai High Court
Decided On
Case NumberWrit Petition No. 2188 of 1979
Judge
Reported in1986(1)BomCR563
ActsBombay Rents, Hotel and Lodging Houses Rates Control Act 1947 - Sections 15(2); Transfer of Property Act, 1882 - Sections 105; Easements Act, 1882 - Sections 52
AppellantChandrakant Gordhandas Shah
RespondentUnion Bank of India and ors.
Appellant AdvocateRam Jethmalani and ;Shellim Samuel, Advs.
Respondent AdvocateM.O. Chinoy and ;Zia Mody, Advs., i/b., Gagrat & Co. for respondent No. 1
Excerpt:
.....1882 - respondent gave room in building on lease to defendant no. 1 - defendant no. 1 given half portion of room to defendant no. 2 under agreement of lease and licence - tenancy of defendant no. 1 terminated by respondent - respondent filed suit against defendant no. 1 for possession of room - trial court passed decree of eviction against defendant no. 1 - licence granted in favour of defendant no. 2 subsisting licence on 01.02.1973 - licence did not end by filing of suit by respondent against defendant no. 1 - defendant no. 1 not terminated licence of defendant no. 2 at any time prior to 01.02.1973 - defendant no. 2 became protected licensee under section 15a - decree of eviction passed against defendant no. 2 set aside. - - 14. the licensee shall keep the portion of the..........in respect of the area in his occupation is correct.9. before examining the terms of the leave and licence agreement it is necessary to bear in mind the basic distinction between a sub-tenant and a leave and licence. this distinction has been reiterated in several decisions of this court as well as the decisions of the supreme court and i will summarise the position briefly. a sub-tenancy or a sub-lease would involve a transfer of a right to enjoy the property in consideration for a price paid or promised as set out in section 105 of the transfer of property act. the creation of a sub-tenancy would essentially involve creation of an interest in the property which is so transferred to the sub-lessee. a licence on the other hand is merely a right to do or continue to do upon the immoveable.....
Judgment:

Sujata V. Manohar, J.

1. The petitioner carries on business in the name and style of M/s. Suren (India) Traders. The petitioner is occupying half portion of Room No. 413 on the 4th floor of Union Bank Building, situate at 66/80 Apollo Street, Fort, Bombay under an agreement of leave and licence between the petitioner and one H.D. Commercial Corporation. The first respondent, Union Bank of India is the owner of the said building. Room No. 413 in the said building was originally given on lease to M/s. H.D. Commercial Corporation at a monthly rent of Rs. 215.36 paise. The tenancy of the said Corporation was terminated by the Union Bank of India by their Advocate's letter dated 6th February, 1965. Thereafter another notice was issued to the said Corporation dated 18th August, 1966 terminating the tenancy and calling upon the said Corporation to pay the rent of the said premises from 1-4-1965 to 31-7-1966. Thereafter, the Union Bank of India (hereinafter referred to as the plaintiff) filed a suit in the Court of Small Causes at Bombay being RAE & R Suit No. 799/6720 of 1966 for possession of the said room. M/s. H.D. Commercial Corporation were the first defendants in the said suit. The present petitioner who is in occupation of a half portion of the said room, was joined as defendant No. 2. One Raghunath N. Rao, doing business in the name and style of M/s. S.S. Machinery Parts (India) and occupying the other portion of the said room was joined as defendant No. 3. During the pendency of the said suit defendant No. 3 left the said premises. M/s. Shyama Coastal Shipping Co. Private Limited and M/s. Shyama Engineering Industries were inducted into the said premises (the other half of the said room) during the pendency of the suit and they were also impleaded as party defendants 4 and 5 in the said suit.

2. The proprietor of M/s. H.D. Commercial Corporation was adjudicated insolvent during the pendency of the suit and his estate vested in the Official Assignee.

3. In the said suit it was the contention of the 2nd defendant (who is the petitioner herein) that he was a lawful sub-tenant of the half portion of the said room which was in this occupation from a period prior to 21st May, 1959. During the pendency of the suit, the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 came to be amended. As a result certain licensees, as defined in the said Act, who were in occupation of premises under a subsisting licence prior to 1st February, 1973 were also given protection under the said Act. Thereafter the 2nd defendant amended his written statement and raised a plea that he was a protected licensee under the provisions of the said Act as amended.

4. At the hearing of the suit, various issues were raised as between the plaintiffs and the 1st defendant as also between the plaintiffs and the second defendant. The issues between the plaintiffs and interest defendant were decided in favour of the plaintiffs and the trial Court by its judgment and decree dated 30/31st March, 1979 passed a decree of eviction, inter alia, against the 1st defendant. This decree was not challenged in appeal by the 1st defendant. I am not concerned in the present petition with this decree which has been passed against the 1st defendant.

5. The 2nd defendant's first contention was to the effect that he came to occupy a half portion of the said room prior to 21st May, 1959. He was therefore, a lawful sub-tenant in respect in respect of the said portion, The trial Court held that there was no evidence in support of the 2nd defendant's plea that he had come to occupy a part of the said room prior to 21st May, 1959. It, therefore, negatived the claim of the second defendant as a lawful sub-tenant in respect of the said portion in his occupation. This part of the finding given by the trial Court was not seriously challenged before the Appeal Court. Hence this aspect of the 2nd defendant's case also need not be considered at this stage.

6. The main contention of the 2nd defendant is that he is a protected licensee in respect of the half portion of the said room which is demarcated on a plan which is Ex. 2 in the proceedings before the trial Court. As per this plan Room No. 413 is divided into two equal parts by a wooden partition which is erected dividing this room into two equal parts. The area enclosed by the partition which is in possession of the 2nd defendant is demarcated on the plan as BCDE. The remaining area is demarcated as ABEH; The entrance to Room No. 413 is through a door which is in the area ABEH. This door is hereinafter described as the main entrance. The entrance to the cabin of the 2nd defendant is from a door opening into the portion ABEH.

7. The 2nd defendant has entered into an agreement of leave and licence dated 12th March, 1964 with the 1st defendant. It is described as an agreement of leave and licence. Under the said agreement of leave and licence it is provided as follows :

'WHEREAS the licensors are the tenants of office premises No. 13 on the 4th floor, of 'Union Bank Building', Dalal Street, Fort, Bombay-1, AND WHEREAS the licensee has approached the licensors for revocable licence of half the portion of the said premises for a period of 11 months with option to extend the period for further 11 months AND WHEREAS the Licensors and the Licensee have agreed to certain terms and conditions on which the said Licence is to be granted ; NOW THIS AGREEMENT WITNESSETH AND IT IS HEREBY MUTUALLY AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS :

1. That the licensors hereby give to the licensee a revocable license to use and occupy on leave and licence basis the half portion of the said premises of which they are tenants situated on the 4th floor of the Union Bank Building, at Dalal Street, Fort, Bombay-1. The said half portion is to be determined by the licensors in their absolute discretion and the licensee shall occupy such half portion as may be determined by the licensors.

2. The licensees shall pay to the licensors a sum of Rs. 300/- per month as compensation for the use and occupation of the said half portion of the premises which will be inclusive of the electricity and the telephone rental charges. The said sum of Rs. 300/- shall be paid by the licensee to the licensors in advance on or before the 10th day of each and every month. The licensee shall further pay the telephone call charges in respect of actual telephone calls made by him every month.

3. For the faithful performance of the terms and conditions of this agreement and also for the purpose of providing for any loss or damage that may be caused to the premises of the licensors and by way of security the licensee shall deposit with the licensors a sum of Rs. 5000/- (Five thousand ) only ,on or before the execution of these presents which amount shall remain deposited with the licensors without interest and shall be refunded to the licensee on the expiration of the period of this agreement, or its earlier determination or extended period, after deduction of all charges losses, damages, costs etc. as hereinafter provided.

4. The licensors hereby agree with the licensee to keep the office premises open from 9 a.m. to 8 p.m. on working days and the licensee shall so adjust his working hours as to keep his office open between the aforesaid hours. The licensors may however for convenience sake allow the licensee to have a duplicate key, but the licensee shall not misuse the same, and the same shall not be interpreted as creating any rights in the premises except as created by this agreement.

5. The licensee on a request being made to the licensors and at their cost, but for and on behalf of the licensors, may construct a cabin in the space so allotted by the licensors to the licensee, but it is distinctively understood and agreed that merely by reason of the construction of such a cabin, which shall at all times belong to the licensors, the licensee shall have no right to the premises either by way of exclusive use, or occupation, or otherwise except those created by this agreement.

6. The licensors shall during the said office hours of 9 a.m. to 8 p.m. afford all facilities and his servants and agents and other visitors to have free access to the said half portion which is allotted to the licensee by the licensors.

7. The period of this agreement shall be for 11 months, and may be extended at the request of the licensee for a further period as may be mutually agreed upon, provided that in the meantime the compensation has been regularly paid and all the terms and conditions of this agreement have been complied by the licensee. On the expiration of the said period of 11 months, or extended period the licensee shall quit and vacate the said half portion, allotted to him by the licensors for use and occupation. The licensors shall be entitled to determine this agreement before the expiry of the period of 11 months, or its extended period for any breach which the licensee may commit in respect of the terms and condition of this agreement. On such determination the licensee shall vacate the said premises allotted to him by the licensors within a period of 2 months.

8. xx xx xx

9. The licensors have agreed to grant leave and licence to the licensee only to use and occupy the said half portion of the premises only for his own personal use and the licensee shall not use the said premises for any other purposes.

10. The licensors shall permit the licensee to put up a small name board underneath their own board.

11. The licensee shall not store any combustible articles and shall not create any nuisance to the tenants and occupants of the said building or to the licensors.

12. The licensee shall have no right, title, interest or claim in respect of the said half portion of the premises allotted to him under this licence, either as sub-tenant or otherwise and this agreement shall not be construed as creating any tenancy rights in favour of the licensee.

13. The licensee shall have no right to let, sub-let or assign or create any tenancy or grant any such licence to any other person, or persons or company.

14. The licensee shall keep the portion of the premises in good condition and agrees not to make any additions or alterations in the said portion of the premises allotted to him except as provided in Clause 5 hereinabove.

15. The licensee hereby agrees not to claim any sum by way of damages, compensation or otherwise for the termination of the licence granted to him, or for any other reason.

16. The licensee shall comply with all Municipal laws and bye-laws and the Shops and Establishments Act and other rules and regulation relating to the running of an establishment and shall be solely responsible for the breach of such rules and regulations. The licensors shall not be responsible in any manner for any breaches committed by the licensee of any such rules and regulations.'

8. Pursuant to the said agreement of leave and licence the area BCDE demarcated by the partition was occupied by the 2nd defendant. The 2nd defendant also has a duplicate key to the main entrance to the said premises. The possession of the area ABEH seems to have changed lands from time to time. I am not concerned with these changes. The only question is whether the finding given by the trial Court that the 2nd defendant is not a licensee of the 1st defendant but a sub-tenant of the 1st defendant in respect of the area in his occupation is correct.

9. Before examining the terms of the leave and licence agreement it is necessary to bear in mind the basic distinction between a sub-tenant and a leave and licence. This distinction has been reiterated in several decisions of this Court as well as the decisions of the Supreme Court and I will summarise the position briefly. A sub-tenancy or a sub-lease would involve a transfer of a right to enjoy the property in consideration for a price paid or promised as set out in section 105 of the Transfer of Property Act. The creation of a sub-tenancy would essentially involve creation of an interest in the property which is so transferred to the sub-lessee. A licence on the other hand is merely a right to do or continue to do upon the immoveable property of the grantor, something which would, in the absence of such right, be unlawful. Giving such a right does not create any interest in the property. Vide section 52 of the Indian Easements Act, 1882.

10. The question whether an agreement amounts to a lease or a licence depends upon the intention of the parties as expressed under the terms of the agreement and surrounding circumstances.

11. In the case if Associated Hotel of India Ltd. v. R.N. Kapoor, reported in : [1960]1SCR368 the Supreme Court observed that if a document gives only a right to use the property in a particular way or under certain terms while it remains in possession and control of the owner thereof, it will be a licence. Legal possession, therefore, continues to be with the owner of the property, but the licensee is permitted to make use of the premises for a particular purpose. But for the permission his occupation would be unlawful. It does to create in his favour any estate or interest in the property. There is, therefore, clear distinction between the two concepts. The Supreme Court goes on to observe that the test of exclusive possession is no longer considered as a conclusive test in order to determine whether there is creation of a lease or a licence though it would undoubtedly be an important circumstance. The Supreme Court has laid down the following propositions as well established :

'(1) To ascertain 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; and (4) 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.'

12. In the case of Sohan Lal Naraindas v. Laxmidas Raghunath Gadit, reported in (1972)74 Bom.L.R. 144 the Supreme Court held that the intention of a party to an instrument must be gathered from the terms of the agreement examined in the light of the surrounding circumstances. The description given by the parties may be evidence of the intention but is not decisive. A mere recital that the agreement does not create a tenancy is also not decisive. One will have to have a look at the agreement to know what was in fact the relationship between the parties by the terms of the agreement. The same tests were applied by the Division Bench of this High Court in the case of Vasudeo Mirchumal Deviani and others v. Hindustan Chemicals Works Ltd. and another, reported in 1984 Mh.L.J. 503.

13. In the present case, therefore, the terms of the agreement between the parties will have to be examined in order to decide whether the agreement is an agreement of sub-lease or a licence. In this connection Clause (1) of the said agreement does not give to the 2nd defendant any specific area of the said room on leave and licence. However, it is an accepted position that a specific half portion which is demarcated by the wooden partition is in possession of the 2nd defendant. The trial Court has relied strongly upon this circumstance in coming to a conclusion that the agreement was an agreement of lease rather than a licence. But in this connection it is important to note that under the agreement no right is created in favour of the licensee in respite of any specific part of the room. It is equally important to notice that the division of the room as effected by partition as set out in the plan shows that the defendant's access to the portion which is under his occupation is through the main entrance to the room which is under the control of the first defendant. In fact Clause 4 of the said agreement provides that the licensor will keep the office premises open during certain hours of working days so that the second defendant may have access to his cabin. Similarly Clause 6 also provides that during the said hours the licensor will provide all facilities to the licensee, his servants, agents and visitors to have free access to the cabin in the possession of the second defendant. Thus the licensor retained control over the room. It is true that for the sake of convenience a duplicate key of the main entrance is given to the 2nd defendant as provided under Clause 4 of the said agreement. But this would not in any way detract from the fact that the room was under the licensor's control. The possession of the area where the main entrance is located was retained by the licensor. In these circumstances the licensee's exclusive possession of the cabin cannot by itself be considered as sufficient to create in favour of the licensee any interest in the property.

14. The agreement in Clause 5 permits the licensee to construct a cabin at his own cost. But it is also provided that the cabin so constructed will belong to the licensor and that the licensee will not have any right, either by way of exclusive use or occupation or otherwise, in respect of the said cabin save and except the rights which may be created under the agreement.

15. Clause 9 of the agreement makes it clear that the agreement only gives a licence to the licensee for his own personal use. Clause 13 provides that the licensee will not have any right to let, sub-let, assign or create or grant any licence in favour of any other party. These clauses would also indicate that the intention of the parties was to create only a personal right in favour of the licensee and there was no intention to create any interest in the property.

16. Under Clause 15 the licensee is not entitled to claim any damages or compensation for the termination of the licence. These terms would indicate that the intention of the parties was not to create any interest in respect of the said premises in favour of the 2nd defendant. The fact that access is granted under the agreement only during specific hours of every day would also indicate that the intention was not to create any interest in the premises.

17. The trial Court has relied upon some of the surrounding circumstances for the purpose of interpreting the agreement of sub-tenancy. It has said that this was a business transaction between strangers. This by itself is not sufficient for the purpose of establishing that there is a sub-tenancy rather than a licence. After all, licences are also created for money consideration and there is nothing in law which would require that a licence could only be created as between friends or acquaintances.

18. The second circumstance relied upon by the trial Court is that there is no evidence to show that the licence which was originally for 11 months was continued or renewed at the option of the 2nd defendant. This by itself also would to lead to a conclusion that an interest in the property was created. In the present case, after the filing of the suit, the 1st defendant has become insolvent. This circumstance would also have a bearing on the parties entering into any fresh agreement or renewal of license.

19. The second defendant has initially taken a stand that he was a lawful sub-tenant. He has subsequently pleaded that he has is a protected licensed after the said Act was amended in 1973. The stand of the second defendant has certainly changed depending upon the exigencies of the case. But this cannot change the nature of the relationship between the parties which was created by the agreement of 12th March, 1964. The subsequent conduct of the parties cannot really throw any light on the rights created under the agreement. The intention of the parties has to be gathered from the terms of the agreement, and at the highest, from surrounding circumstances at the time of execution of the agreement. Subsequent conduct of the parties cannot be looked at in order to determine what the intention of the parties was at the time when the agreement was entered into. In these circumstances, in my view, form the terms of the agreement and the circumstances surrounding its execution, the intention of the parties was to create a licence in favour of the 2nd defendant in respect of the portion which was given to the 2nd defendant.

20. It is not the case of the plaintiffs that the agreement of leave and licence was a sham and bogus document and that the real agreement between the parties was something totally different. Such a plea was not taken in the plaint nor was any evidence lead by the plaintiff in support of any such plea. Hence in the present case the question of lease or licence depends entirely upon the interpretation of the document and the surrounding circumstance.

21. Since this petition is only filed by the second defendant I am not concerned with the decision in so far as it affects the other defendants. The licence which was granted in favour of the 2nd defendant was a subsisting licence on 1st of February, 1973. On that date the landlord had already filed a suit against the licensor of the 2nd defendant that is to say, the tenant, for ejectment and made the second defendant a party to that suit. But by reason of filing of such a suit, the licence which was granted to the 2nd defendant by the 1st defendant did not come to an end. It is nobody's case that the 1st defendant terminated the licence of the 2nd defendant at any time prior to 1st February, 1973. In these circumstances, the 2nd defendant became a protected licensee under the provisions of section 15A of the Bombay Rents, Hotel and Lodging Houses Rates Control Act, 1947 read with section 5(4-A) of the said Act.

22. The Appeal Court has summarily dismissed the appeal and hence it is not necessary to consider at length the reasoning of the Appellate Court.

In the premises the petition is granted. The decree of eviction passed against the second defendant is set aside and the 2nd defendant is declared as a protected licensee in respect of the portion marked 'BCDE' of Room No. 413. The decree relating to the remaining portion remains unaffected.

The rule is made absolute accordingly.

In the circumstances of the case there will be no order as to costs.


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