Hari Swarup, J.
1. This is a defendant's appeal arising out of a suit for ejectment of the defendant and for possession over the shop in dispute. The plaintiff's case, in brief, was that the plaintiff Municipal Board was the owner of the property in dispute and the defendant was a licensee, the licence in favour of the defendant was created by the Municipal Board on 9-1-1962 for the period ending 31-3-1963 at a premium of Rs. 335/- and as the period of licence had expired it stood automatically revoked by lapse of time, and in any case impliedly revoked by the institution of the suit. The defence in the suit was that the defendant was not a licensee but a lessee and that the lease was still continuing by holding over, and unless it was terminated the defendant could not be ejected.
2. The trial Court, on a consideration of the evidence held that the defendant was a lessee and not a licensee, and since the lease had not been terminated, the suit for ejectment was not maintainable. It accordingly dismissed the suit. On appeal filed by the plaintiff the decree of the trial Court was set aside and the plaintiff's suit for ejectment was decreed. The first appellate court took the view that the transaction created a licence and not a lease and the licence having become extinct by revocation through lapse of time, the defendant was liable to be ejected. Against the decree of the lower appellate court the defendant has filed the present appeal.
3. The basic question to be determined in the case is whether the defendant is a lessee or a licensee. The facts leading to the transaction of 1962 are as follows:
There was a shop belonging to the Municipal Board and the Municipal Board auctioned its occupation. The defendant was the highest bidder and accordingly his bid was accepted and he was let into possession. The invitation to offer bids, contained the terms of auction; it contained a clause saying that the transaction will be deemed to be a licence and not a lease. It fixed the period of such licence and possession as ending on 31-3-1963. Learned counsel for the plaintiff has contended that the terms of the auction had made it clear that the transaction was going to create a licence and not a lease and hence the entry of the defendant into possession, on the basis of that auction, must be deemed to be on the basis of a licence. It is not possible to accept the contention because by merely saying thata transaction is a licence and not a lease the nature of the transaction cannot be changed. A lease cannot be converted into a licence merely by calling it a licence. It will have to be determined whether in the circumstances of the present case the possession of the defendant was that of a licensee or a lessee.
4. There is no dispute that the defendant was put in exclusive possession of the property. One of the ingredients of ownership is possession. If possession is transferred an interest in the property of the owner can, prima facie, be deemed to be transferred. Hence, the transfer of exclusive possession by an owner must be deemed to be indicative of the intention of the parties that they wanted the transaction to be a lease and not a licence. The question was considered by the Supreme Court in the case of Associated Hotels of India Ltd. v. R. N. Kapoor, (AIR 1959 SC 1262). It was pointed out 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 licence. It was also pointed out that if a party gets exclusive possession of the property, prima facie, he is considered to be tenant. In that case it was held that as there was a transfer of the right to enjoy the rooms it had created a tenancy and not a licence. The Supreme Court emphasized that it is not the form of a document but the substance of it that was material.
Again, in the case of M. N. Clubwala v. Fida Husain, (AIR 1965 SC 610) the Supreme Court emphasized the importance of exclusive possession as a factor for determining whether the transaction had created a lease or a licence subsequently, again, in the case of Qudrat Ullah v. Municipal Board, Bareilly, (AIR 1974 SC 396) the same proposition was reiterated. It was observed as under:
'To put it pithily, if an interest in immovable property, entitling the transferee to enjoyment is created, it is a lease, if permission to use land without right to exculsive possession is alone granted, a licence is the legal result.'
In the present case as there is no dispute that exclusive possession was transferred to the defendant, the transaction must, prima facie, be held to be creating a lease and not a licence.
5. Looking from a different angle there is no term in the notice of auction which might bring the transaction withinthe definition of a licence. Under Section 52 of the Easements Act a licence comes into operation where one person grants to another 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 interest in the property. In the present case there was nothing which the defendant was required to do or continue to do n the shop in dispute. He could have even kept it locked. As he was not given a right to do any particular act, but to enjoy exclusive possession of the property, the transaction could not be deemed to create a licence. The notice of auction contemplated transfer of possession by the Municipal Board and payment of premium by the defendant. The defendant must therefore be held to have become a lessee and not a licensee when he entered into possession in 1962.
6. Learned counsel for the plaintiff contended that it was not possible for the Municipal Board by reason of Sections 97 and 124 of the U. P. Municipalities Act to create a lease for more than one year without a registered document, and, therefore, the transaction must be deemed to be creating only a licence and not a lease. There is no merit in this contention too. Certainly, lease for more than a year cannot be created except by a registered instrument. Section 124 of the U. P. Municipalities Act bars the creation of leases for a term exceeding one year except by a written instrument. The proviso, however, makes it clear that a lease for a term not exceeding one year can be created without a written instrument. As Section 124 of the U. P. Municipalities Act does not bar the creation of such a lease, Section 97, which deals with ;he execution of contract can also not bar the making of a lease under the Transfer of Property Act- A lease can come into existence by an oral agreement coupled with delivery of possession. In the present case there was delivery of possession, on the basis of an agreement and the premium was also fixed. Therefore a lease could have come into existence for a period not exceeding one year. Then applying the principle laid down in Section 106 of the Transfer of Property Act as the purpose of the lease is not said to be either manufacturing or agricultural, the tenancy would be deemed to be a monthly tenancy.
7. Learned counsel then contended that as the period fixed at the time ofauction had expired the defendant was liable to be ejected. There is no merit in the contention as the period of lease would foe deemed to be monthly period and not a fixed period as no lease was executed for a longer period contemplated by the notice of auction by any instrument in writing. There is then the circumstance that after the expiry of the period of lease contemplated by the original auction, the defendant had continued in possession and the plaintiff accepted from the defendant premium for the subsequent period ending March 31 1964. Once the lease had come into existence, the defendant could be ejected only on the termination of the lease. As the lease has not been terminated decree for ejectment could not be passed.
8. In the result the appeal is allowed, the decree of the Lower Appellate Court is set aside and that of the trial court is restored. As the original auction mentioned the word licence and not the lease, it would not be fair to saddle the plaintiff with costs; accordingly, the parties will bear their own costs throughout.
9. The amount which has been deposited by the defendant will be paid over to the Municipal Board.