1. These are defendants' appeals arising out of suits for arrears of rent and for possession of the land by removal of the constructions thereon made by the defendants.
2. The land in dispute is situate in Barhaj Bazar of which the Raja of Majhauli was the proprietor. On plot No. 90 the defendants and other persons obtained from the Raja permission to construct stalls for keeping shops by entering into agreements with the Raja. It was stated at the Bar that the agreements were all on similar terms and contained a stipulation that the defendants would construct temporary stalls for the purpose of keeping shops and that they would vacate the land if required to do so by the Raja's agent or officials. It was also stipulated that the defendants could be given one week's notice by the Raja to vacate the land and that so long as the land was used for keeping the stalls, the defendants would pay a certain amount mentioned in the document as 'baithaki' for keeping the stalls. On 27th November 1950, the plaintiff took a permanent lease of the entire plot No. 90 from the Raja together with the transfer of the ownership rights of the trees and permanent structures standing on the plot. In the lease taken by the plaintiff, it was mentioned that the plaintiff would be entitled to eject the defendants. Accordingly the plaintiff served the defendants with one week's notice for vacating the land. On the defendants' failing to do so, the plaintiff instituted these suits for arrears of rent and for possession. The suits were connected and it was urged in defence that land was permanently settled by the Raja with them (defendants) as lessees, and that the contracts under which the defendants took the land from the Raja were not reduced to writing but the defendants made over blank stamped papers after affixing their signatures and it was alleged that the Raja was an influential person and he got scribed on those stamped papers the agreements containing unconscionable terms, that the contract was not valid and that the plaintiff was only one of the two lessees of the land and was not entitled to evict the defendants. It was further urged that the right to sue the defendants for eviction which was purported to be transferred under the document dated 27th November 1950 was not transferable according to law. The defendants also pleaded that the agreement with the Raja was invalid because of undue influence. It was pleaded that permanent structures had been made on the land and the suit was barred by estoppel and by limitation.
3. Several issues were framed. The learned Munsif found that one of the main questions arising in each of these cases was as to whether the position of the defendants was that of lessees or of licensees. The learned Munsif held that the defendants were lessees of the plots in suit He further found that the defendants had made constructions which could not be considered to be purely temporary and that all these constructions were made to the knowledge of the Raja and his officials, and that therefore the suits were barred by estoppel. It was further held that the agreements signed by the defendants and delivered to the Raja were perfectly valid and binding on them and they were not vitiated by undue influence. The learned Munsif found that the plaintiff being only one of the two lessees was not entitled to determine the tenancy of the defendants or to sue them for eviction. He held that no valid notice determining the defendants' tenancy was served on them. On these findings the plaintiff's suit for possession was dismissed though it was decreed for the recovery of arrears of rent.
4. The plaintiff appealed. The lower appellate Court took the view that the position of the defendants was that of licensees and not of lessees. The appeals were allowed and the plaintiff's suits for possession were also decreed.
5. Learned counsel for the appellants has argued the case at some length. The document dated 27th November 1950, under which the plaintiff claimed title to the land, was assailed as invalid and it was urged that under that deed the plaintiff could not claim the right to eject the defendants. Learned counsel contended that the position of the defendants was that of lessees, and so long as the property in dispute was in possession of lessees another lease could not be granted by the proprietor. It was further contended that a mere right to sue or to eject was not transferable and even if such a right would be transferable, the transfer could not be effected by a unilateral document which the document dated 27th November 1950 admittedly was. Learned counsel further contended that two persons, Gorakh Prasad and Ganpat Lal being the transferees under the document dated 27th November 1950, Gorakh Prasad alone was not competent either to determine the tenancy of the defendants or to sue them for eviction. It was urged that the defendants are lessees and not licensees. On these grounds it was claimed that the plaintiff's suit should not have been decreed. Two main questions that emerge for consideration were :
1. As to whether Gorakh Prasad alone was competent to bring this suit; and
2. Whether the position of the appellants is that of lessees or of licensees?
6. The plaintiff bases his title on the document dated 27th November 1950 which purports to be a deed of transfer so far as the constructions standing on the plots and the trees are concerned and to be a perpetual lease so far as plots Nos. 90, 94/3, 95, 94/1 aggregating to 2.29 acres are concerned. Out of the consideration mentioned in the document Rs. 15,000/- are said to be the premium for the perpetual lease and Rs. 10,000/- are said to be in respect of the constructions and the trees. The document is registered and is executed by the Raja of Majhauli as the first party and by Sri Gorakh Prasad Jaiswal as 'Malik' of the firm Gorakh Prasad Ganpat Lal as the second party. In fact in the document itself the second party is shown as 'Gorakh Prasad Jaiswal son of Bhairo Ram Jaiswal and Ganpat Lal Jaiswal son of Gorakh Prasad Jaiswal residents of Barhaj, Pargana Salempur Majhauli, district Deoria. It is not clear whether Gorakh Prasad signed this document as 'Malik' of firm Gorakh Prasad Ganpat Lal or he was acting as a partner of a firm or was only describing his family business as firm Gorakh Prasad Ganpat Lal and was entering into the transaction as the head of the family. Whatever be the position it is clear that Gorakh Prasad was the second party. If he acted on behalf of a firm other partners of the firm would be entitled to the benefits derived by him under the deed. If he acted as head and Karta of the family the family would be entitled to the benefit of that transaction. It is difficult to say how this document can be treated to be invalid as a transfer of the property it conveyed or as a perpetual lease which it purports to be in respect of the plots mentioned in the document.
The Raja purported to transfer whatever rights he had in the land and as he was the proprietor and there were certain persons allowed by him to be in possession as stall holders, he obviously granted a lease to Gorakh Prasad of his proprietary rights. This document does not contravene the provisions of Section 107 of the Transfer of Property Act and there does not appear to be any reason why it should not operate as a valid perpetual lease of the land in dispute in favour of Gorakh Prasad. As such Gorakh Prasad was the person entitled to possession and competent to bring these suits. The answer to the questions as to whether the notice given by Gorakh Prasad allowing only one week's time to the defendants to vacate was valid or not and the other question as to whether a notice under Section 106 of the Transfer of Property Act was essential would depend on whether the position of the defendants is that of lessees or licensees.
7. The main question therefore that calls for a finding is, as to whether the position of the defendants is that of lessees or licensees. A licence has been defined in Section 52 of the Indian Easements Act as follows:
'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 license.'
8. Section 105 of the Transfer of Property Act defines a lease as:
'a transfer of a right to enjoy such property made for a certain time express or implied or in perpetuity, in 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.'
9. Comparing the two definitions it appears that a lease is, to start with a transfer of a right to enjoy immovable property. Such a transfer has been construed judicially to be a transfer of an interest on property. A licence, on the other hand, comes into existence when a right is granted by a person to another person to do something in or upon immovable property of the grantor which would, in the absence of such right, be unlawful, fare has been taken to state in the definition of a licence that such right must not amount either to an easement or to an interest in the property. The difference between the two legal concepts of lease and license therefore is that while in the case of lease an interest in the property is transferred in a license a right to do something is granted which right expressly does not amount to an interest in the property. The other features of a lease are (1) that it is either expressly or impliedly for a certain time or in perpetuity (2) that it is in consideration of a price paid or promised or to be paid periodically. A license however does not require that there should be any consideration for the grant or that the grant should be for a certain period or in perpetuity. The above two features of a lease therefore are not essential features of a license. It cannot be seriously denied that in the case of a license also the grant may be for a certain specified period and that some fee may be charged either at the time of the grant or periodically for the grant of the license. If a fee is charged periodically it may have much similarity to what may called 'rent' in the case of a lease. But the fact that a license is granted for a period or that a fee is charged for the grant of the license would not remove the essential difference between a lease and a license which lies in the fact that in the case of a license no interest in the property as such is transferred to the licensee.
10. Several cases were cited to illustrate the difference between a lease and a license. Learned counsel for the appellant contended that exclusive possession of a certain piece of land was an essential feature of lease and if the appellants are found to be in actual possession of certain plots of land to the exclusion of the owner the status of the appellants should be held to be that of lessee. The distinction between a lease and license was drawn by a Division Bench of the Bombay High Court in Sherif Dadu Miyaji v. Emperor, AIR 1930 Bom 165 (A). The Bombay Municipality acquired certain premises for Municipal workshops. At the date of the acquisition some persons were in occupation of the premises from the original owner and were using the premises as bullock and buffalo stables. The Municipal Committee did not demolish the stables but allowed the occupants to continue on the premises. Later, the Municipality experienced a difficulty in collecting compensation for the leave and license under which they had remained in possession and entered into an agreement with these persons including the applicant whereby the applicant was to pay to the Municipality a monthly sum of Rs. 180/- as compensation for use and occupation by him as licensee of the said premises. During the continuance of the agreement the licensee was to be at liberty to continue occupation together with the remaining 15 occupants of the premises as licensee, to recover from them the amounts they had agreed to pay for their occupation of the premises as licensee and in case any of them vacated the premises to substitute for him any other occupant but on condition that such new occupant was to occupy the premises only as licensee and would vacate the same on being given 48 hours' notice. The agreement further provided that the applicant was to give vacant possession of the premises to the municipality on being given one month's notice. The learned Judges held: 'The terms of the agreement no doubt do not use the terms lease, demises, or rent But to constitute a lease it is not essential that such terms should be used........ It is clear from the terms of the agreement that the applicant was put in exclusive possession of the premises although the time for which the property was to remain in the applicant's possession is not expressly specified. But there is a provision that he need not give vacant possession without a month's notice. That provision in our opinion implies that the exclusive possession or enjoyment of the property which the applicant was to have under the agreement was to be at least for a period of one month. Further there is provision in the agreement that a sum of Rs. 180/- was to be paid every month in respect of the use and occupation of the premises by the applicant. The consideration here set out would, in our opinion, be the money rendered periodically within the terms of the definition in Section 105, T. P. Act.'
11. The learned Judges observed that in deciding about the relationship between the parties regard must be bad to the 'substance of the agreement' subsisting between them. If the substance was that exclusive possession was delivered it would be justifiable to hold that it was a lease. The learned Judges applied the test of exclusive possession which in some English cases cited before them was held to be the 'main test' to be applied in deciding the issue.
12. The same view was taken by a Bench of this Court in Behari Lal v. Chhote : AIR1933All911 . A gift was made by owner of a building containing a shop to a certain person. The 'business run in the shop was made a gift of to another person. The document expressly stated that 'so long as the donee or his heirs continued to carry on business so long the donor and his heirs will allow the business to be carried in the pucca shop.' The learned Judges observed :
'This shows that the donor contemplated the grant of something more than a mere personal permission applicable only to himself and to the donee personally. In the second place it is clear that under the terms of this deed of gift the donee was to have the right of exclusive possession of the pucca shop. This is, in our opinion, the important criterion for determining whether the donee was a mere licensee or whether some interest in the property bad been transferred to him.''
It was held that the case was that of a lease and the case was not that of a mere license.
13. Lord Davey delivering the judgment of the Judicial Committee of the Privy Council in Glen-wood Lumber Co. Ltd. v. Phillips, 1904 AC 405 (C), observed :
'It is not however a question of words but of substance. It the effect of the instrument is to give the holder an exclusive right of occupation of the land, though subject to certain reservation or to a restriction for the purposes for which it may be used, it is in law a demise of the land itself,'
14. This dictum was followed by the Nagpur High Court in Baldeo Prasad v. Rewaram Ramnath, AIR 1950 Nug 107 (D). That was a case where a Lambardar had granted a lease of banjar land over which the co-sharers exercised certain rights. The action of the Lambardar fell within the scope of his powers and he was held to have acted on behalf of the whole proprietary body. The document evidencing the transaction was styled as a lease in perpetuity, given for the 'nistar' of grass land in occupancy right and it stated that the yearly rent was Rs. 7/8/-. The rent of this land was liable to revision at the next settlement. The terms of the document were considered and the Court held that having regard to all the circumstances of the case including the fact that the document purported to create an occupancy tenancy and a rent was fixed which was revisable at the following settlement the transaction was a lease and not a license. In all these cases the view taken that the intention of the parties concerned had to be gathered from the terms agreed upon and the real nature of the transaction was to be ascertained and the mere fact that a certain name was given by the parties to the transaction was not the determining factor.
15. In the present case, learned counsel for the appellant contended that the iqrarnamas executed by the defendants contained inter alia the terms that the defendant concerned would be entitled to remain in possession and be succeeded in possession by his heirs; that he would be liable to be evicted only after a week's notice, that the specific plot was the subject matter of the agreement in each case and that plot was to remain in the exclusive possession of the defendant concerned so long as he used it for the purpose of keeping his stall and lastly a periodical payment had to be made which the learned counsel said can be called nothing but rent. These facts, it was contended, indicated that the transaction amounted to a lease and was not a mere license.
16. The fact that an amount had to be paid as 'baithaki' periodically is not inconsistent with the plaintiff's claim that the transaction was a license. It is open to the grantor of a license to stipulate that the grantee shall make a periodical payment by way of fee. The use of the word 'baithaki' in the documents executed by the defendants is significant. The fact that they refrained from using the expression Kiraya' or rent cannot be ignored in an effort to get at the real intention of the parties. If what was to be paid was 'baithaki' meaning squatting charges the payment appears to have direct reference to the use for which the grant was made. Having regard to the fact that the entire land has developed into a market place the assignment of a particular place where the defendant may beep his stall was obviously necessary to avoid confusion and conflicts.
This cannot be taken to indicate that the idea was that possession over a particular piece of land as such was to be given to the defendant concerned. When a large number of people had to be granted the permission to keep stalls in the same plot, and as appears to be the case, many other persons, perhaps hawkers, were to be allowed to come and occupy temporarily some place in the bazar for selling their goods on market days, some sort of arrangement was essential. If therefore a particular stall keeper kept his stall at a particular place it could not be taken to be evidence of the fact that possession over the particular land was transferred to him. The agreement relating to a week's notice is still less material or indicative of a lease. In tact one of the iqrarnamas the one dated the 30th January 1948 was read out in Court.
One of the terms was that the executant promised to vacate the site when asked to do so by the Raja's manager or agent. Later in the document it is written that in case the Raja wanted the site to be vacated a week's notice would be necessary. These terms do appear to be inconsistent with the idea of a monthly or annual tenancy and from the fact that a week's notice was to be given it is not possible to infer that a lease was intended to be created. The terms in the iqrarnama under which a stall keeper was entitled to be succeeded to and was entitled to pass right of keeping the stalls to his successors do not furnish any proof of the fact that a perpetual or any lease was intended to be created. The term is not inconsistent with the grant of a license. The parties could obviously intend that so long as the grant was not revoked a stall keeper would remain in possession.
What should happen when a stall keeper dies was perhaps thought of and if it was mentioned in the document that the successor of a stall keeper would pay the 'baithaki' due and would remain in possession and would be similarly liable to be asked to vacate, it does not appear to be a justifiable inference to draw that any lease and much less a perpetual lease was intended to be created. In the cases cited by learned counsel for the appellants which have been referred to above the terms of the agreement between the parties were considered and certain circumstances were found to justify an inference that the exclusive possession granted was intended to be a transfer of an interest in land as such and the courts held on the facts of the respective cases that the transaction amounted to a lease.
17. R.K. Megarry in his Manual of the Law of Real Property discusses the essentials of a lease;
'The tenant must have the right to exclude all other persons from the premises demised. A right to occupy certain premises for a fixed period cannot be a tenancy if the person granting the right remains in general control of the property, as is normally the case with rooms in an inn or boarding house. Thus in Wells v. Kingston-upon-Hull Corporation, (1875) 10 C. P. 402 (E), a graving dock was let by a corporation subject to certain rights of control, e.g., as to opening and shutting the dock gates and seeing that the dock was cleaned out each day; it was held that no lease had been created.
The same applies if no defined premises are in question; thus if there is a contractual obligation to. store goods but the rooms in which they are stored may be changed from time to time at the convenience of the owner of the premises, there is no lease. In such cases a mere license is created, even if the language used clearly indicates that the parties intended to create a lease. But if the premises are clearly defined, the mere imposition of severe restrictions on the use which can he made of them will not prevent a lease from being created.'
18. If possession of the premises clearly defined is transferred as such and the restrictions on the use are mere impositions, the transaction would be a lease. Exclusive possession over immovable property does indicate apparently that the person in possession has some interest in the property but if the possession is conveyed through a specific agreement or grant the exact legal position can be ascertained without placing too much reliance on the fact of possession alone. Possession is not incompatible with a license.
19. In Minister of Agriculture and Fisheries v. Matthews, 1949-2 All ER 724 (F), Cassels, J., had to consider a case where exclusive possession of a land was found to be the result of a mere license, The agricultural land involved in that case amounting to about 300 acres was not found to be cultivated according to the principles of good husbandry and with the permission of the Minister of Agriculture the Norfolk Agricultural Committee took possession in 1942, they remained in possession till October 11, 1944, when under the defence regulations the Minister let the defendant into possession.
An agreement was executed a year later under which the defendant promised to pay 400 a year, and was given the right to cultivate land. The period for which the Minister could, under the law, keep the owner out of possession was limited to three years and on the expiry of the period for which the Ministry of Agriculture could hold the land as acquired was limited to three years after the expiry of the regulation, which in fact expired on February 24, 1946. The plaintiffs right therefore to hold the land ceased on the 24th February, 1949, when the defendant was expected to surrender so that the land may be made available to the owner. The defendant refused to surrender and the question arose as to whether the defendant was a lessee entitled to remain in possession. The agreement did look like a tenancy agreement but the real question involved was as to whether the Minister had any power to grant a lease. The learned Judge observed:
'The Minister of course, has only such powers as the regulation confers on him. He is not the owner of land. He has no interest in the land and therefore he cannot grant a lease. He merely has possession through the Agricultural Committee. Under the Regulation he can only pass on what he has himself, viz.,--the use of the land. Quoting Lord Greene, Mr. Ros the learned Judge, said: 'The power given to an authority under a Statute is limited to the four corners of the power given. It would entirely destroy the whole doctrine of ultra vires if it was possible for a donee of a statutory power to extend the power by effecting an estoppel. It was held that what the defendant got was only the right to use the land and not a lease.
20. In the case, Acting Secretary, Board of Revenue v. Agent, S. I. Ry. Co. Ltd., AIR 1925 Mad 434 (FB) (Q), the Court had to construe a document and find whether it amounted to a lease for the purposes of the Stamp Act, The document was entered into between the South Indian Railway and certain coal merchants by which the latter were given leave to stack coal on small plots of land measuring 100 ft. by 25 ft. in station yards and the question was whether they were mere licensees or were lessees. Spencer, C. J., observed:--
'Ordinarily a lease is a grant of property for a time by one who has a greater interest in the property, the consideration being usually the payment of rent. A license, on the other hand, is a permission to do some act which without such permission, it would be unlawful to do.'
Cases were cited to show that the distinction between a lease and a license depended upon whether sole and exclusive occupation of the land was given. The learned Chief Justice however found that 'the drawer of the document was evidently anxious to avoid giving a lease so as not to contravene the instructions of the Govt. of India that Railway Companies have no permission to lease lands in their possession without the concurrence of the Secretary of State. The expression 'licensee' was used and it was also said in one of the terms that 'nothing herein contained shall be construed to create a tenancy in favour of the licensee.' Such expressions and certain conditions of the agreement were found to indicate necessarily that the transaction was not a lease.
In the present case also the defendants had agreed to put up temporary structures only and these were to be erected with the sole object of protecting the stock in trade. The nature of the constructions which were agreed to be made on the site taken and the very clear promise to vacate whenever asked to do so furnish ample indication that the parties did not intend to create a lease. Like the Madras case mentioned above, the mere fact that the exclusive possession of the site allotted was to. be given to the grantees could not be taken to imply necessarily that a lease had been granted.
21. An interesting and important case which did evoke certain amount of criticism in certain journals is that of Errington v. Errington and Woods, 1952-1 All ER 149 (H), which was decided by the Court of Appeal in England, In 1936 a father bought a house for his son and daughter-in-law. He paid 250 in cash and borrowed 500 from a building society on the security of the house, the loan being repayable by instalments of 15s. a week. The house was in the father's name and he was responsible to the building society for the payment of the instalments. He told the daughter-in-law that the 250 was a present to her and her husband, handed the building society book to her and said that if and when she and her husband had paid all the instalments the house would be their property. From that day onwards the daughter-in-law paid the instalments as they fell due out of the money given to her by her husband. In 1945 the father died and by his will left the house to his widow. Shortly afterwards the son left his wife.
In an action by the widow against the daughter-in-law for possession it was held (1) that the occupation of the house by the son and the daughter-in-law was not determinable by the widow on demand since they were entitled to remain in possession so long as they paid the instalments to the building society, and, therefore, they were not tenants-at-will of the premises. (2) the payments of instalments could not be regarded as payments of rent made for convenience to the building society and not to the father, since the daughter-in-law and her husband were not bound under any agreement with the father to make those payments, and, therefore they were not weekly tenants or tenants for the period during which the instalments fell to be paid, and (3) the daughter-in-law and her husband were licensees having a permissive occupation short of a tenancy, but with a contractual or equitable right to remain in possession so long as they paid the instalments which would grow into a good equitable title to the house when all the instalments were paid and, therefore, the widow was not entitled to an order for possession.
22. This case furnishes an example of possession which was consistent with the legal position of a licensee. The case aroused a controversy and an article was published by Professor H. W. R. Wade, in Vol. 68, Law Quarterly Review, p. 352, and is entitled as 'licenses and third parties'. The entire article is a discussion of the principles enunciated in Errington v. Errington (H), and makes an illuminating reading. The learned author has criticised the view taken and has said that if the father instead of asking for payment himself directed the payment to be made to the building society the legal position could not be altered.
Another article was published by Mr. A. D. Hargreaves entitled 'Licensed Possessors'' in Vol. 69 of the L. Q. R. at p. 466. The enunciation of the law however by the learned Judges as laid down by Denning, L. J., in the Errington's case (H), does deserve the highest respect and furnishes an example of how new facts have led to the re-examination and re-adjustment of legal principles by Judges in England. Lord Justice Denning has examined a number of cases to show that exclusive possession of land though prima facie an index of tenancy could not be held to be so if the circumstances negatived any intention to create a tenancy.
23. In the present case there is no evidence to show that these sites in the bazaar were transferred to the defendants by the Raja for any valuable consideration paid initially. There is no evidence to show as to who was to manage the bazaar generally, who was to be responsible for the cleanliness of the place, who was to make arrangements regarding the hawkers who were to come to display their wares or stock in trade for sale on the bazaar days or during market time. The entire arrangement as evidenced by the various iqrarnamas on record was to be done by the Raja's officials and the terms agreed upon lead unmistakably to the inference that no interest in the land was intended to be transferred by the Raja and that the defendants were in fact no more than licensees. The mere length of the period for which they were in possession could not improve their rights. Having given the facts of the case anxious consideration. I am unable to take the view that the defendants are lessees.
24. The appeals therefore fail and are dismissed with costs. Leave to appeal is granted.