1. This is an appeal by special leave from the judgment of the High Court ofMadras reversing the decisions of the courts below and granting a number ofreliefs to the plaintiffs-respondents.
2. The main point which arises for consideration in this appeal is whetherthe plaintiffs-respondents are the lessees of the appellants who were defendant4 and 5 in the trial court or only their licensees. In order to appreciate thepoint certain facts need to be stated.
3. The appellants are the owners of a private market situate in Madras knownas Zam Bazar Market. There are about 500 odd stalls in that market and meat,fish, vegetables etc., are sold in that market. The practice of the appellantshas been to farm out to contractors the right to collect dues from the users ofthe stalls. Defendants 1 to 3 to the suit were the contractors appointed by theappellants for collecting rent at the time of the institution of the suit. Twoof these persons died and their legal representatives have not been impleadedin appeal as they have no interest in the subject-matter of litigation. Thethird has been transposed as respondent No. 7 to this appeal. They were,however, alive when the special leave petition was filed and were shown asappellants 1 to 3, but two of them were struck out from the record after theirdeath and the third transposed as Respondent No. 7. Though the building inwhich the market is located is owned by the appellants it cannot be used as amarket for the purpose of sale of meat or any other article of humanconsumption without the permission of the municipal council under s. 303 of theMadras City Municipal Act, 1919 (hereafter referred to as the Act). Before sucha permission is granted the owner has to obtain a licence from the MunicipalCommissioner and undertake to comply with the terms of the licence. The licencegranted to him would by for one year at a time but he would be eligible forrenewal at the expiry of the period. Section 306 of the Act confers power onthe Commissioner to require the owner, occupier or framer of a private marketfor the sale of any animal or article of food to do a number of things, forexample to keep it in a clean and proper state, to remove all filth and rubbishtherefrom, etc. Breach of any condition of the licence or of any order made bythe Commissioner would result, under s. 307, in suspension of the licence andthereafter it would not be lawful for any such person to keep open any suchmarket. Section 308 of the Act confers powers on the Commissioner to makeregulations for markets for various purposes such as fixing the days and hourson and during which any market may be held or kept for use, requiring that inthe market building separate areas be set apart for different classes ofarticles, requiring every market building to be kept in a clean and properstate by removing filth and rubbish therefrom and requiring the provision ofproper ventilation in the market building and of passages of sufficient widthbetween the stalls therein for the convenient use of the building. We are toldthat regulations have been made by the Commissioner in pursuance of the powersconferred upon him by S. 308 of the Act. Thus as a result of the Act as well asthe regulations made thereunder a number of duties appear to have been placedupon the owners of private markets. It would also appear that failure to complywith any of the requirements of the statute or the regulations would bring onthe consequence of suspension or even cancellation of the licence. We arementioning all this because it will have some bearing upon the interpretationof the documents on which the plaintiffs have relied in support of thecontention that the relationship between them and the appellants is that oftenants and landlord.
4. The suit out of which this appeal arises came to be filed becausedisputes arose between the plaintiffs and the defendants 1 to 3 who became thecontractors for collection of rent as from February 9, 1956. These disputeswere with regard to extra carcass fees and extra fees for Sunday Gutha whichwere claimed by the contractors. The respondents further alleged that the relationshipbetween them and the appellants was, as already stated, that of lessees andlessors while according to the appellants, the respondents were only theirlicensees. The respondents further challenged the extra levies made by thecontractors, i.e., the original defendants 1 to 3 who are no longer in thepicture. The reliefs sought by the respondents were for an injunction againstthe appellants and the defendants 1 to 3 restraining them from realising theextra levies and for further restraining them from interfering with theirpossession over their respective stalls as long as they continued to pay theirdues. The First Additional City Civil Court Judge before whom the suit had beenfiled found in the respondents' favour that the extra fees sought to be leviedby the contractor were sanctioned neither by the provisions of the MunicipalAct nor by usage but upon the finding that the respondents were bare licenseesdismissed their suit.
5. The appellate bench of the City Civil Court before whom the respondentshad preferred an appeal affirmed the lower court's decision. The High Courtreversed the decision of the courts below and in the decree passed by itpursuant to its judgment granted a number of reliefs to the respondents. Herewe are concerned only with reliefs (ii) (e), (f) and (g) since the appellantsare not interested in the other reliefs. Those reliefs are :
'(ii) that the respondentsdefendants, in particular defendants 1 to 3 (respondents 1 to 3) be and herebyare restrained from in any manner interfering with the appellants-plaintiffs 1to 4, 6 and 7 carrying on their trade peacefully in their respective stall atZam Bazar Market, Royapettah, Madras and imposing any restrictions orlimitations upon their absolute right to carry on business as mentionedhereunder :
. . . . .
(e) Interfering with thepossession and enjoyment of the respective stalls by the appellants plaintiffs1 to 4, 6 and 7 so long as they pay the rents fixed for each stall;
(f) increasing the rents fixedfor the appellants plaintiffs' 1 to 4, 6 and 7 stalls under the writtenagreements between the said plaintiffs and defendants 4 and 5;
(g) evicting of theappellants-plaintiffs 1 to 4, 6 and 7 or disturbing and plaintiffs and theirarticles in their stalls by defendants 1 to 3.'
6. Further we are concerned in this case only with the relationship betweenthe meat vendors occupying and using some of the stalls in the market (as theplaintiffs-respondents belong to this category) and the appellants-landlords.What relationship subsists or subsisted between the appellants and otherstall-holders vending other commodities is not a matter which can be regardedas relevant for the purpose of deciding the dispute between the appellants andthe respondents.
7. It is common ground that under the licence granted by the MunicipalCorporation, the market is to remain open between 4 A.M. and 11 P.M. and thatat the end of the day the stall-holders have all to leave the place which hasthen to be swept and disinfected and that the gates of the market have to belocked. None of the stall-holders or their servants is allowed to stay in themarket after closing time. In point of fact this market used to be opened at 5A.M. and closed at 10 P.M. by which time all the stall-holders had to go away.It is also common ground that the stalls are open stalls and one stall isseparated from the other only by a low brick wall and thus there can be noquestion of a stall-holder being able to lock up his stall before leaving themarket at the end of the day. The stall-holders were required to remove thecarcasses brought by them for sale by the time the market closed. Meat being anarticle liable to speedy decay the stall-holders generally used to finish theirbusiness of vending during the afternoon itself and remove the carcasses. They,however, used to leave in their stalls wooden blocks for chopping meat,weighing scales, meat choppers and other implements used by them in connectionwith their business. There used to be left either in boxes or almirahs kept inthe stall and locked up therein.
8. It is also an admitted fact that some of the stall-holders have beencarrying on business uninterruptedly in their stalls for as long as forty yearswhile some of them have not been in occupation for more than five years. It isin evidence that these stall-holders have been executing fresh agreementsgoverning their use and occupation of stalls and payment of what is styled inthe agreements as rent whenever a new contractor was engaged by the appellantsfor collecting rents.
9. The next thing to be mentioned is that the agreements referred to themoney or charges payable by the shall-holders to the landlords as 'rent' andnot as 'fee'. It has, however, to be noted that the dues payable accrue fromday to day. Thus in Ex. A-1 the rent of Re. 1/- is said to be payable every dayby 1.00 P.M. In all these agreements there is a condition that in case there isdefault in payment of rent for three days the stall-holder was liable to beevicted by being given 24 hours' notice. A further condition in the agreementsis that a stall-holder may be required by the landlord to vacate the stallafter giving him 30 days' notice. There is a provision also regarding repairsin these agreements. The liability for the annual repairs is placed by theagreement upon the landlord and these repairs are ordinarily to be carried outin the month of June every year. Where, however, repairs became necessary onaccount of the carelessness of a stall-holder they were to be carried out atthe expense of that stall-holder. It may be also mentioned that theseagreements are obtained by the contractors from the stall-holders in favour ofthe landlord and bear the signatures only of the stall-holders.
10. It was contended before us by Mr. R. Gopalakrishnan that in order toascertain the relationship between the appellants and the respondents we mustlook at the agreements alone and that it was not open to us to look intoextraneous matters such as the surrounding circumstances. It is claimed onbehalf of the respondents that the lease in their favour is of a permanentnature. But if that were so, the absence of a registered instrument would standin their way and they would not be permitted to prove the existence of thatleas by parol evidence. From the fact, however, that with every change in thecontractor a fresh agreement was executed by the stall-holders it would belegitimate to infer that whatever the nature of the right conferred by theagreement upon the stall-holders, it could not be said to be one which entitledthem to permanent occupation of the stalls. It could either be a licence ascontended for by the appellant or a tenancy from month to month. In either casethere would be no necessity for the execution of a written agreement signed byboth the parties. Here, the agreements in question are in writing, though theyhave been signed by the stall-holders alone. All the same, oral evidence toprove their terms would be excluded by s. 92 of the Evidence Act. To thatextent Mr. Gopalakrishnan is right. Though that is so, under the 6th proviso tothat section the surrounding circumstances can be taken into consideration forascertaining the meaning of the word 'rent' used in the agreements. Indeed, thevery circumstance that rent is to fall due every day and in default of paymentof rent for three days the stall-holder is liable to be evicted by being givenonly 24 hours' notice it would not be easy to say that this 'rent' is payablein respect of a lease. On the other hand, what is called rent may well be onlya fee payable under a licence. At any rate this circumstance shows that thereis ambiguity in the document and on this ground also surrounding circumstancescould be looked into for ascertaining the real relationship between theparties. Indeed, the City Civil Court has gone into the surroundingcircumstances and it is largely on the view it took of them that it found infavour of the appellants.
11. The High Court, however, has based itself upon the agreementsthemselves. To start with it pointed out - and in our opinion rightly - thatthe use of the word 'rent' in Ex. A-1 did not carry the respondents' case far.The reasons given by it for coming to the conclusion that the transaction was alease, are briefly as follows :
(1) Notice was required to begiven to the stall-holder before he could be asked to vacate even on the groundof non-payment of rent;
(2) the annual repairs were to becarried out by the landlord only in the month of June;
(3) the stall-holder was liableto carry out the repairs at his own expense when they are occasioned by himcarelessness;
(4) even if the landlord wantedthe stalls for his own purpose he could obtain possession not immediately butonly after giving 30 days' notice to the stall-holder;
(5) the possession of the stallsby the respondents had been continuous and unbroken by virtue of the terms ofthe agreement and that the terms of the original agreement were not shown tohave been substituted by fresh agreements executed by the respondents.
12. The High Court, therefore, held that from the general tenor of thedocuments it is fairly clear that as between the appellants and the respondentsthe terms created only a tenancy in respect of the stalls and not a merelicence or permissive occupation. After saying that if the occupation of thestall-holders was only permissive the condition as to payment of rent, evictionfor default in payment of rent for more than 3 days, the provision for annualrepairs being carried out by the landlord, the further provision that repairsthat might be occasioned by the carelessness of the respondents should becarried out at their expense and the adequate provision for 30 days' notice forvacating the stalls if they were required by the landlord would all seem to beinconsistent and irrelevant, it observed :
'As a matter of fact, there is no evidencewhatsoever to show that any of these plaintiffs were at any time turned out oftheir possession of their stalls at the will of the landlords or for default ofany of the terms and conditions stipulated in the agreements. The specificprovision for 30 days' notice for vacating and delivering possession seems tobe conclusive of the fact that the plaintiffs were to occupy the stalls aspermanent tenants and not as mere licensees. The terms of the agreementsfurther disclose that the plaintiffs were to be in exclusive possession ofthese stalls for the purpose of their trade as long as they comply with theterms and until there was a notice of termination of their tenancy in respectof the shops held by them. The very tenor of the agreements, the intentionbehind the terms contained in the agreements and the measure of controlestablished by the terms of the agreements, all point only to the fact that theplaintiffs were to be in undisturbed and exclusive possession of the stalls aslong as they paid the rent and until there was a valid termination of theirright to hold the stalls as such tenants.'
13. While it is true that the essence of a licence is that it is revocableat the will of the grantor the provision in the licence that the licensee wouldbe entitled to a notice before being required to vacate is not inconsistentwith a licence. In England it has been held that a contractual licence may berevocable or irrevocable according to the express or implied terms of thecontract between the parties. If has further been held that if the licenseeunder a revocable licence has brought property on to the land, he is entitledto notice of revocation and to a reasonable time for removing his property, andin which to make arrangements to carry on his business elsewhere. (SeeHalsbury's Laws of England 3rd edn. vol. 23, p. 431). Thus the mere necessityof giving a notice to a licensee requiring him to vacate the licensed premiseswould not indicate that the transaction was a lease. Indeed, s. 62(c) of theIndian Easements Act, 1882 itself provides that a licence is deemed to berevoked where it has been either granted for a limited period, or acquired oncondition that it shall become void on the performance or non-performance of aspecified act, and the period expires, or the condition is fulfilled. In theagreements in question the requirement of a notice is a condition and if thatcondition is fulfilled the licence will be deemed to be revoked under s. 62. Itwould seem that it is this particular requirement in the agreements which hasgone a long way to influence the High Court's finding that the transaction wasa lease. Whether an agreement creates between the parties the relationship oflandlord and tenant or merely that of licensor and licensee the decisiveconsideration is the intention of the parties. This intention has to beascertained on a consideration of all the relevant provisions in the agreement.In the absence, however, of a formal document the intention of the parties mustbe inferred from the circumstances and conduct of the parties (Ibid p. 427).Here the terms of the document evidencing the agreement between the parties arenot clear and so the surrounding circumstances and the conduct of the partieshave also to be borne in mind for ascertaining the real relationship betweenthe parties. Again, as already stated, the documents relied upon being merelyagreements executed unilaterally by the stall-holders in favour of thelandlords they cannot be said to be formal agreements between the parties. Wemust, therefore, look at the surrounding circumstances. One of thosecircumstances is whether actual possession of the stalls can be said to havecontinued with the landlords or whether it had passed on to the stall-holders.Even if it had passed to a person, his right to executive possession would notbe conclusive evidence of the existence of a tenancy though that would be aconsideration of first importance. That is what was held in Errington v.Errington and Woods (1957) 1 K.B. 290 and Cobb v. Lane (1952) 1 All. E.R.1190. These decisions reiterate the view which was taken in two earlierdecisions : Clore v. Theatrical Properties Ltd. and Westby & Co. Ltd.,(1936) 3 All. E.R. 483 and Smith & Son v. The Assessment Committee forthe Parish of Lambeth (1882) 10 Q.B.D. 327. Mr. S. T. Desaiappearing for the appellants also relied on the decision of the High Court ofAndhra Pradesh in Vurum Subba Rao v. The Eluru Municipal Council I.L.R. (1956)A.P. 515, as laying down the same proposition. That was a case inwhich the High Court held that stall-holders in the municipal market who wereliable to pay what was called rent to the municipality were not lessees butmerely licensees. The fact, therefore, that a stall-holder has exclusivepossession of the stall is not conclusive evidence of his being a lessee. If,however, exclusive possession to which a person is entitled under an agreementwith a landlord is coupled with an interest in the property, the agreementwould be constructed not as a mere licence but as a lease. (See AssociatedHotels of India Ltd. v. R. N. Kapoor : 1SCR368 ). In the case beforeus, however, while it is true that each stall-holder is entitled to theexclusive use of his stall from day to day it is clear that he has no right touse it as and when he chooses to do so or to sleep in the stall during thenight after closure of the market or enter the stall during the night after11-00 P.M. at his pleasure. He can use it only during a stated period every dayand subject to several conditions. These circumstances, coupled with the factthat the responsibility for cleaning the stalls, disinfecting them and ofclosing the market in which the stalls are situate is placed by the Act, theregulations made thereunder and the licence issued to the landlords, is on thelandlords, would indicate that the legal possession of the stalls must also bedeemed to have been with the landlords and not with the stall-holders. Theright which the stall-holders had was to the exclusive use of the stalls duringstated hours and nothing more. Looking at the matter in a slightly differentway it would seem that it could never have been the intention of the parties togrant anything more than a licence to the stall-holders. The duties cast on thelandlord by the Act are onerous and for performing those duties they wereentitled to free and easy access to the stalls. They are also required to seeto it that the market functioned only within the stated hours and not beyondthem and also that the premises were used for no purpose other than of vendingcomestibles. A further duty which lay upon the landlords was to guard theentrance to the market. These duties could not be effectively carried out bythe landlord by parting with possession in favour of the stall-holders byreason of which the performance by the landlords of their duties andobligations could easily be rendered impossible if the stall-holders adopted anunreasonable attitude. If the landlords failed to perform their obligationsthey would be exposed to penalties under the Act and also stood in danger ofhaving their licences revoked. Could, in such circumstances, the landlords haveever intended to part with possession in favour of the stall-holders and thusplace themselves at the mercy of these people We are, therefore, of theopinion that the intention of the parties was to bring into existence merely alicence and not a lease and the word 'rent' was used loosely for 'fee'.
14. Upon this view we must allow the appeal, set aside the decree of theHigh Court and dismiss the suit of the respondents in so far as it relates toreliefs (ii) (e), (f) and (g) granted by the High Court against the appellantsare concerned. So far as the remaining reliefs granted by the High Court areconcerned, its decree will stand. In the result we allow the appeal to theextent indicated above but in the particular circumstances of the case we ordercosts throughout will be borne by the parties as incurred.
15. Appeal partly allowed.