Avadh Behari, J.
(1) These are four appeals against the order of the Additional District Judge, Delhi dated October 7, 1972.
(2) First the facts. There is shop No. 89 situated at Ghaffar Market, Karol Bagh, New Delhi. Sajjan Singh was the owner of the shop. He allowed Jagan Nath and his brother Tarlok Nath to use a part of the verandah outside his shop for selling their wares. This was in the year 1957. It was agreed that Jagan Nath will pay Rs. 5.50 per day for the use of a portion of the veraadah. This came to Rs. 165.00 per month.
(3) Jagan Nath put a counter in a portion of the verandah. He put three almirahs. One almirah is hanging on one of the pillars of the verandah. The other almirah is on a portion of the wall. The third almirah is hanging on the common wall of shops Nos. 89 and 90. It is full length almirah up to the end of the wall. Jagan Nath is selling ladies' purses at the counter.
(4) On March 6, 1962, Sajjan Singh brought a suit against Jagan Nath for recovery of license fee at the rate of Rs. 165.00 per month. License fee was claimed for the period from March 1, 1959 to February 28, 1962.
(5) In that suit the sole defense of Jagan Nath was that he was a tenant and not a licensee. The trial court rejected his plea. Sajjan Singh's suit was decreed on March 22, 1963 by the Subordinate Judge. He, however, granted him a decree at the rate of Rs. 55.00 per month instead of Rs. 65.00 per month.
(6) Jagan Nath appealed to the High Court. His appeal was dismissed by a Division Bench of this court on February 9, 1970.
(7) During the pendency of this litigation four more suits were brought by Sajjan Singh. These are the particulars of the suits :
1.For recovery of license fee of Rs. 665.00 for the period from 1-3-62 to 31-3-68 at the rate of Rs. 55.00 per month. In this suit the defendant filed his written statement on October 31, 1963. 2. For recovery of license fee Rs. l,045.00 for the period from 1-8-63 to 31-10-64 at the rate of Rs. 55.00 per month. In this suit the defendant field his written statement on May 13, 1965. 3. For recovery of Rs. l,870.00 for the period from 1-3-65 to 31-12-67 at the rate of Rs. 55.00 per month. In this suit the defendant filed his written statement on April 15, 1968. 4. For recovery of Rs. 1.320.00 for the period from 1-1-68 to 31-12-69 at the rate of Rs. 55.00 per month. In this suit the defendant filed his written statement on March 2, 1970.
(8) Again Jagan Nath's defense to all the four suits was that he was a tenant and not a licensee. It will be recalled that the trial court had held in the first litigation on March 22, 1963 that Jagan Nath was a licensee. The appeal of Jagan Nath against .that decision was pending in the High Court. thereforee, Jagan Nath pleaded the same defense which he had pleaded in the earlier litigation. Even after the High Court had dismissed his appeal on February 9, 1970, nothing new was said in the written statement which was filed by him in the fourth suit on March 2, 1970.
(9) After the decision of the High Court Jagan Nath moved an application on April 27, 1970, under 0. 6 rule 17, Code of Civil Procedure in the trial court. He sought amendment of all his four written statements. He pleaded that in certain Court cases between Sajjan Singh and another man Sri Ram there were admissions of Sajjan Singh to the effect that Jagan Nath was his tenant. He sought leave to plead those admissions. On that basis it was pleaded that Sajjan Singh had admitted that Jagan Nath was his tenant. It was said that suits for recovery of license fee were not maintainable.
(10) The trial judge held that Jagan Nath remained a licensee as before and that the legal position of the parties did not change. He decreed all the for suits for license fee. This decision was made on September 15, 1971.
(11) Jagan Nath appealed to the District Court. The Additional District Judge took a contrary view. He came to the conclusion that there was relationship of landlord and tenant between the parties. He set aside the decrees of the lower court and instead decreed plaintiff's suits for rent. Now there are four appeals to this court by the heirs of Sajjan Singh for Sajjan Singh had died on November 28, 1971 when the case was still pending in the trial court.
(12) There are three considerations on the basis of which the Additional District Judge came to the conclusion that Jagan Nath was a tenant under Sajjan Singh. Firstly he held that previously the place allotted to Jagan Nath was undemarcated. Now after the first litigation it was demarcated and specified. This conclusion was based on a plan filed by Sajjan Singh in the trial court.
(13) What appears to have happened is this. The trial court made an order on July 22, 1970 that the planitiff should specify the portion in respect of which he claimed the license fee. The plaintiff filed a plan. In this plan he showed the exact place where the defendant's counter was standing and his three almirahs were hanging. In his statment made on August 7,1970, the plaintiff's counsel stated that Jagan Nath was a licensee in respect of the counter and three almirahs. From this the first appellate court reached the conclusion that Jagan Nath was a tenant of the specified portion.
(14) The second factor which was taken by the first appellate court into consideration was that Jagan Nath was in exclusive possession of the portion in his occupation. This conclusion was derived from the fact that in the plan Jagan Nath's portion was separately shown. The court formed the opinion that Jagan Nath was in exclusive possession and Sajjan Singh had no right to interfere with his possession.
(15) Thirdly the appellate court relied on two statements made by Sajjan Singh in his suits filed against Sri Ram. One statement was made on January 25, 1966 and the other was made on October 3, 1976 (D3 and D5). The cumulative result of these two statements is that Jagan Nath was there described as a tenant by Sajjan Singh and it was said that he was paying Rs. 165.00 as rent.
(16) There was a third statement on which the appellate court also relied. It was the statement of Daljit Singh, a grand son of Sajjan Singh. This statement was made in a suit brought by Sajjan Singh against Sri Ram. In that statement on November 3, 1965. Daljit Singh said that Jagan Nath was a tenant in respect of the verandah of shop No. 89.
(17) In my opinion the statement of Daljit Singh is clearly inadmissible in evidence. Daljit Singh is not a party to these suits. His statement made in a different litigation cannot be read in evidence in this case. In any case it is not an admission of Sajjan Singh.
(18) The appellate Court also relied upon four other documents. They are D1, D4, DX3 and DX4. D1 is a copy of the assessment of house- tax. It is said in this document that there are five tenants in shop No. 89. One of them was paying Rs. 55.00 per month. This has perhaps reference to Jagan Nath. The other document D4 is a statement of Vasudev, Inspector of Municipal Corporation. In a report which was prepared by another Inspector it was said :
'JAGANNath used to pay Rs. 55.00 as rent.'
Similarly in Dx 4 which is a copy of Inspector's report the name of Jagan Nath appears under the column 'name of occupant or occupier'. The area in his occupation is shown as a corner space with showcase along with a portion of the verandah. He was shown to be paying Rs. 55.00 per month as rent.
(19) These three documents apparently were prepared by the Municipal Corporation of Delhi for the purpose of assessment of house- tax. Sajjan Singh, it is said, filed objections to the assessment of house- tax. This was on February 1, 1965. In these objections (DX 3) he was referring to the wooden tak heats which had been unauthorisedly put by his tenants. Sajjan Singh there in substance said that his tenants had made encroachments. He admitted that he was Realizing rent from them at one time but at the time of filing objections he was not Realizing rent as he had filed suits against them in court. His request to the Corporation was that the house-tax be reduced.
(20) On the basis of these documents, namely, the statements made in court by Sajjan Singh and the documents of Municipal Corporation the trial judge came to the conclusion that there was no change of legal relationship between the parties. He considered these documents along with oral evidence adduced in the case by Jagan Nath. Jagan Nath examined as many as nine witnesses. On a consideration of written and verbal evidence the trial judge found that the true relationship between the parties was one of licenser and licensee. It was the same as it existed in 1962 when the first litigation was fought which went right up to High Court and was finally decided in February, 1970.
(21) The appellate judge considered these statements of Sajjan Singh and the documents of the Municipal Corporation. He did not take into consideration the oral evidence adduced in the case. He confined himself to the documentary evidence. His conclusion was that the admission made by Sajjan Singh clearly showed that it was a case of relationship of landlord and tenant.
(22) Now in the application for amendment of the written statement which was made after the decision of the High Court in the first litigation the case of Jagan Nath was that there was 'a renovation and creation of fresh tenancy' in his favor. This was the new stand which he took in his amended written statement. I think what Jagan Nath meant was that there was a novation. The word 'renovation' was a misnomer. The term 'renovate' means to renew or repair or restore by replacing damaged parts.
(23) The term 'novation' means to replace by a new obligation, debt etc. 'Novation' means substitution of a new debtor, creditor, contract etc. in place of an old one. It is the introduction of something new which was not there before.
(24) There can be a novation of a contract but not of a lease. A lease is not merely a contract. It is a transfer of intrest in land and creates a right term. (See Mulla-Transfer of Property Act, 6th Edition, page 645). It means creation of an estate in immovable property.
(25) What appears to me to be the case of Jagan Nath is that there was a creation of a fresh tenancy between him and Sajjan Singh. He was basing himself on the admission made by Sajjan Singh in other litigation to prove that Sajjan Singh had admitted him to be his tenant. This was his entire effort in litigation.
(26) Now the most important feature of the present litigation is the earlier litigation which was fought from 1963 till 1970. It is true that litigation related to the period from January 1, 1959 to February 1, 1962 but the point there was the same as now before me. Jagan Nath pleaded that he was a tenant. The trial court found that he was a licensee. The High Court affirmed that finding. That was the only material issue there as here.
(27) In the earlier litigation the High Court said in the first appeal :
'.........WEare of the opinion that the appellants have failed to disprove the respondent's case of a license as distinguished from a tenancy. In his statement before the Court, Jagan Nath, appellant No. 1, has stated that his counter is in the verandah; that there is no door to the verandah; that the respondent can pass through the verandah; that the verandah is in front of the shop which is occupied by the respondent; that during the day time the appellants keep their goods in the respondent's shop as well as on floor of the verandah but at night time the goods are kept in the almirahs of the appellant's that he had seen the respondent's cot in the verandah and the respondent sleeps in it; 'That the passage in the verandah has not been demarcated and respondent also keeps his chair in the verandah. From this evidence it is not possible to conclude that there was any exclusive possession of the verandah with the appellants and the case of the respondent that the relationship was only that of a licensor and licensees is in our opinion, established.'
(28) It would thereforee appear that the High Court held that Jagan Nath did not have exclusive possession of the verandah. The finding of the trial court was upheld on appeal by the division bench.
(29) The past determines the future. The present cannot be viewed except in relation to the past. It is against the background of past litigation that the case of Jagan Nath in these four suits has now to be examined.
(30) In the earlier litigation the courts have returned a finding that intention was to create a license. What has happened subsequently to displace that finding Nothing. The parties remain the same. The space is the same. License fee is the same. Relations remained embittered as before. New suits were pending.
(31) The appellate court examined the problem in isolation. It did not have regard to the events immediately preceding it. Its approach was wrong. The trial court's conclusion was right. It saw the whole thing steadily and as a whole.
(32) Firstly the appellate court held that there was a change of premises. The premises in two cases, it thought, were different. The premises previously were undemarcated. These was now demarcated in its view. Secondly there was exclusive possession, the claim to which was positively rejected by the High Court in the earlier litigation.
(33) I cannot accept this view of the appellate court. The premises remain the same. All that Jagan Nath was entitled to was to sell his wares from a counter which he had placed in a corner of the verandah. He was also entitled to put his three almirahs on the walls and the pillars. In his statement as his own witness Jagan Nath clealry admitted that since 1957 his position has remained the same. It has not altered in any way.
(34) As to exclusive possession it is not possible to come to that finding as there was no evidence. All that Jagan Nath said for that Sajjan Singh had no right to interfere with the portion in his occupation. That this is so cannot be doubted. But this does not mean that the entire verandah has passed into the possession of Jagan Nath as a tenant or that Sajjan Singh has lost his right to the use of the remainder of the verandah, such as is not in the possession of Jagan Nath. It was admitted by Jagan Nath that Sajjan Singh had a right of passage to his shop through the verandah. The passage is one foot. The solid fact remains that Sajjan Singh has a right to such portion of verandah as is not covered by the counter and the almirahs. Nor was this case of Jagan Nath that Sajjan Singh could not use the remainder of the verandah. The shop remains with Sajjan Singh. Access to the shop can be had through the verandah through there is another entrance from Ajmal Khan side also. That portion has now been given to Daljit Singh and there is a partition wall between the portions of Sajjan Singh and Daljit Singh. Sajjan Singh thereforee had no other entrance except to pass through the verandah.
(35) The first appellate court had laid great stress on the admissions which were made by Sajjan Singh. The sum total of the admissions is that he has called Jagan Nath as a tenant and the he was paying rent to Sajjan Singh. It has been held time and again that mere use of the term 'rent' or 'tenant' is not conclusive. The mere use of words is not decisive. Whether a given transaction is one of lease or license is a matter not of words but of substance. The decisive consideration is the intention of the parties. In each case intention of the parties has to be determined. Intention can be gathered from the conduct and the surrounding circumstances. (See Associated Hotels of India Ltd. v. R. N. Kapoo^, H.S. Rikhy v. New Delhi Municipality, M.N. Clubwala v. Fida Hussain Subudhi v. Gopinath. As Denning, L.J. said in Errington v. Errington (1952)1 All E. R. 149:
'.........ALTHOUGHa person who is let into exclusive possession in prima facie to be considered to be a tenant, nevertheless he will not be held to be so if the circumstances negative any intention to create a tenany. Words alone may not suffice. 'Parties cannot turn a tenany into a license merely by calling it one. But if the circumstances and conduct of the parties show that all that was intended was that the occupier should be granted a personal privilege with no intrerest in the land, he will be held only to be a licensee.'
(36) I find that there was no intention to create a tenancy in favor of Jagan Nath. There was no change of relationship. Jagan Nath had a mere personal privilege to remain there.
(37) It is important to notice that in the written statements which were filed in 1963, 1965, 1968 and 1970 Jagan Nath did not build his case on admissions though all these admissions were of the year 1965, 1966 and 1967. In the earlier litigation Jagan Nath ordinarily would have relied upon these admissions if there was in truth any creation of tenancy in his favor. This would have been the most powerful weapon in his armoury to defeat Sajjan Singh in the litigation which lasted as long as seven years.
(38) In the amended written statement Jagan Nath did not plead that there was any specific agreement between him and Sajjan Singh with regard to the creation of tenancy and its terms. All that was said was that Sajjan Singh had admitted him to be a tenant. That Jagan Nath was described as a tenant by Sajjan Singh at some places is not in dispute. But thereby Sajjan Singh was riot clothing Jagan Nath with the rights of a tenant. He did not confer the status of irremovability on him. Nor is it possible to conceive that a man who fought with his license for seven long years and finally succeeded would agree to the creation of a tenany in the course of a few days immediately after February 9, 1970. Is it believable that he gave up the gains of the litigation for no advantage to himself? There is nothing on the record to suggust that any specific agreement was entered into between the parties under which Japan Nath became a tenant of Sajjan Singh.
(39) In his evidence Jagan Nath said that there were talks of compromise between him and Sajjan Singh in 1964 and 1970. At that time Sajjan Singh said to him that he was interested only in rent and that he can go on occupying the place if he would pay rent regularly. On this slander evidence which has not even been supported by his other witnesses I cannot endorse the view of the appellate judge that there was a specific agreement by which Jagan Nath from a licenses became a tenant.
(40) In my oppinion the trial court's approach was correct. Its views was right. The appellate court inferred a tenancy. from the admissions made by Sajjan Singh in various suits. The question here is not one of inference. The question is : What was the intention of the parties
(41) Lord Greene Mr said in Booker v. Palmer, (1952)1 All F.R.149 :
'TOsuggest there is an intention there to create a relationship of landlord and tenant appears to me to be quite impossible. There is one golden rule which is of very general application, namely, that the law does not impute intention to enter into legal relationships where the circumstances and the conduct of the parties nagative any intention of the kind.'
These are emphatic words. They aptly apply to this case.
(42) In this case the question is not so much of intention of the parties as of the creation of tenancy by agreement. Jagan Nath's case in defense was that the license was converted into a tenancy.
(43) In his oral evidence he stated that in 1964 there were talks between Sajjan Singh and him. Other persons were also present at that time. Sajjan Singh then told him that he was only interested in rent and if he (Jagan Nath) was willing to pay rent he might go on staying in the premises. Sajjan Singh agreed at that time, it is said, to make a statement in court. But no statement was ever made by Sajjan Singh. Again it is said that in 1970 a few day after the decision of the appeal by the High Court in February, 1970 there was a talk between them and Sajjan Singh agreed to with draw his suits.
(44) From this evidence it appears that there was an inconclusive discussion. No concluded agreement as to tenancy was reached between the parties. Sajjan Singh did not make any statement in court about the compromise between them. Nor did he withdraw his suits. The trial judge discussed the evidence of Jagan Nath and his witnesses. He came to the conclusion that there was no specific agreement, express or implied, between the parties as to tenancy. He refused to believe that Sajjan Singh ever agreed to take Jagan Nath as a tenant.
(45) The appellate court has not discussed the oral evidence of the parties. There was the oral evidence of Jagan Nath himself in the previous case which also was brought to his attention in cross-examination. This also has not been considered.
(46) I am thereforee of opinion that there was neither an agreement nor an intention to change the relationship of licenser into that of landlord and tenant at any time either prior to or after the decision of the appeal by the High Court in February 1970. The conduct and circumstances indicate that the real relationship was that of licenser and licensee. Circumstances clearly negative an intention to the contrary.
(47) The trial court has found that there was no agreement or intention regarding exclusive user of the portion in occupation of Jagan Nath. It further found that in fact there is no specified portion from which a tenancy can be inferred. The appellate court has based itself mainly on the documents I have discussed above wherein Jagan Nath has been described as a tenant and the payment of money has been described as lent by him.
(48) Again the appellate court has completely ignored the statement of Jagan Nath himself. He clearly admitted that since 1957 he is in occupation of the same place. Since then he is having a counter and three almirahs exactly at the place where he started in 1957. I cannot agree with the appellate court that there is evidence for exclusive user or user of specified portion.
'THEtest of exclusive possession is by no means decisive'. This test has often give rise to misgivings because it may not correspond to realities (Errington v. Errington, supra). In this case conduct and circumstances negative any intention to create a tenancy. Sajjan Singh has not turned a license into a tenancy merely by using the terms 'tenant' and 'rent'.
(49) Jagan Nath's own statement demolishes his case. It is admitted that the verandah has not been enclosed. It is an open verandah as before. Jagan Nath continues to occupy the same space for his counter and the almirahs. No limitation on Sajjan Singh's right to use the remainder of the verandah was proved. I find there is no change of premises nor of user by Jagan Nath. He was given no more right than that of a licensee. This leave or license given to him to use a part of the verandah remained throughout the same. It is true that his counter and the almirahs are placed in a specified portion of the verandah. This does not mean that he has got the rights of a tenant.
(50) My conclusion, thereforee, is that there is no change in the conduct of the parties and in the circumstances of the case which would enable a court of law to inter a novation of an agreement or a conscious creation of a tenancy in favor of Jagan Nath.
(51) The counsel for Jagan Nath has argued that sitting in second appeal as I do, I should not disturb the findings of the first appellate court as they are findings of fact. I do not agree. The proper legal effect of proved facts is essentially a question of law. What is the nature of juridical relationship between the parties Is it the relationship of licenser and licensee Or is it the relationship of landlord and tenant This is essentially a question of law. See Sree Meenashi Mills Ltd. v. Commissioner, of Income-tax, Madras, and Radha Nath v. Hripada.
(52) Then vital evidence has been left out from consideration by the first appellate court, as I have already said. The trial court has not acce- the evidence of Jagan Nath and his witnesses. The appellate court has not considered that evidence at all. It confined itself to the documents, D1, D2, D3, D4, D5, Dx 3 and DX4. Since in these documents Jagan Nath has been described to be a tenant and it is written that he has been paying rent the first appellate court has inferred that there was novation. This is not the correct approach. A conclusion arrived at without taking into consideration the oral evidence of Jagan Nath in this as well as in the previous litigation is bound to be vitiated. It can only lead to a partial view. It will not enable the court from a total view. This court can interfere in second appeal if relevant verbal evidence on the record has altogether been omitted from consideration; See Deo Chand and others v. Shiv Ram and others.
(53) The appellate Judge was of the view that in respect of the first suit which was brought by Sajjan Singh for the period from March 1, 1962 to July 31, 1963 the relationship of the licenser and licensee subsisted at that time. This decree, it held, was unassailable since it related to the period prior to 1964. In other three cases he was of the view that the relationship of landlord and tenant existed in place of licenser and licensee. But it is surprising that the Court has allowed the appeal of Jagan Nath in respect of all the four suits which were decreed on the basis of relationship of landlord and tenant. This is another infirmity in the decrees appealed from.
(54) For these reasons I would reverse the decrees of the first appellate court. I would restore the decrees of the trial court in all the four cases. My conclusion is that the relationship of licenser and licensee continued thoughout and Sajjan Singh's legal heirs are entitled decrees on account of license fee. I, however, leave the parties to bear their own costs throughout.