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The Acting Secretary, Board of Revenue, Separate Revenue Vs. the Agent, South Indian Railway Company, Ld. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtChennai
Decided On
Judge
Reported in(1925)ILR68Mad368
AppellantThe Acting Secretary, Board of Revenue, Separate Revenue
RespondentThe Agent, South Indian Railway Company, Ld.
Cases ReferredMammikkutti v. Pushakkal Edom I.L.R.
Excerpt:
indian stamp act (ii of 1819 and vi of 1922 ), article 4(c) or article 30 of schedule i-a - lease--licence--distinction between--test--sole and exclusive possession, whether granted--transfer of interest--agreement executed to a consignee of coal to stack coal on a plot of ground in station yard, whether a lease or licence--construction of document. - .....the instructions of the government of india that railway companies have no permission to lease lands in their possession without the concurrence of the secretary of state. throughout the document the person who is given possession is called a 'licensee,' and in clause 12 there is an express provision that 'nothing herein contained shall be construed to create a tenancy in favour of the licensee.' the fact that certain clauses of the agreement impose conditions which would be ordinarily implied by the grant of a licence but would be exceptions to the grant of a lease, does not necessarily indicate that it is a lease. these clauses were probably inserted eai abundante cautela; for instance, under clause 4.the licensee shall allow the general traffic manager * * * or any one.....
Judgment:

Charles Gordon Spencer, Officiating C.J.

1. This is a reference made to us by the Board of Revenue under Section 57 of the Stamp Act, and the question we are called upon to decide is whether certain documents entered into between the South Indian Railway Company and certain coal merchants, by which the latter are given leave to stack coal on small plots of land measuring 100 feet by 25 feet in station yards, are required to be stamped as leases under Article 80 of Schedule I-A, or whether they are mere licences which fall within the description of agreements not otherwise provided for under Article 4(c).

2. 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. licence, on the other hand, is a permission to do some act which, without such permission, it would be unlawful to do. All the cases to which we have been referred make the distinction between a lease and a licence to depend upon whether sole and exclusive occupation is given.

3. Now, the document in its terms contains a number of restrictions which might be consistent with the grant of a, lease but which collectively indicate in my opinion that what was granted was a licence. The drawer of the document was evidently anxious to avoid giving a lease so as not to contravene the instructions of the Government of India that Railway Companies have no permission to lease lands in their possession without the concurrence of the Secretary of State. Throughout the document the person who is given possession is called a 'licensee,' and in Clause 12 there is an express provision that 'nothing herein contained shall be construed to create a tenancy in favour of the licensee.' The fact that certain clauses of the agreement impose conditions which would be ordinarily implied by the grant of a licence but would be exceptions to the grant of a lease, does not necessarily indicate that it is a lease. These Clauses were probably inserted eai abundante cautela; for instance, under Clause 4.

The licensee shall allow the General Traffic Manager * * * or any one authorized by him in this behalf free access at all times to the said land.

4. Clause 1 makes the use of the land subject to any regulations or bye-laws as may from time to time be passed. Under Clause 2 the licensee is prohibited from erecting any building on the land. Under Clause 3 he cannot allow the land to be used for any other goods but his own. Under Clause 6 there is an agreement to pay rent, but that of itself will not make the document a lease. It is simply a misuse of the term to call it 'rent' instead of 'fees,' if it is not a lease. Clause 10 further provides for the 'privileges,' as they are termed, not being transferred or sub-let without the consent of the General Traffic Manager. Clause 11 provides for the licence being revokable on 15 days' notice on either side. Finally, the document is one signed by both parties to the agreement and is not a unilateral deed. All these terms which I have quoted indicate that the merchants were not given sole and exclusive occupation of the plots of the ground upon which they were to deposit the coal.

5. That being so, the intention of the parties as gathered from the document is against its being construed as a demise of an interest in property. The ground put forward by the Agent of the Railway for holding that the document is a licence rather than a lease, namely, that in every lease the lessor should have a legal right to lease out the land, does not affect my judgment. Even a person without a title to land may execute what purports to be a lease of that land. The test is not the ' right of the lessor to give the lease, but the interest intended by him to be created by the document. The fact however that the Railway Company is prohibited by orders of the Government of India from executing leases of lands in their possession is important for understanding the intention of the framer of the document, as showing that the Company would be naturally averse to giving away any rights that ought to be reserved. A number of cases have been quoted before us, but the two which, to my mind, appear to have most bearing on the question are Frank Warr & Co., Limited v. London County Coundl (1904) 1 K.B., 713 where the use of refreshment rooms was given by the lessees of a theatre, and Sweetmeat Automatic Delivery Company v. Commissioners of Inland Revenue [1895] 1 Q.B., 484 where automatic machines were placed on the platform of Railway Stations. In both these cases the permission given was held to fall short of a lease, for the reason that no interest in land was given by the agreements.

6. Coming now to decisions of this Court, both in Seeni Chettiar v. Santhanathan Cheltiar I.L.R., (1897) Mad., 58 and in Mammikkutti v. Puzhakkal Edom I.L.R., (1906) Mad., 353 the test of whether a document was a lease or not was held to be whether it vested any exclusive interest in immovable property in the transferee or whether it gave him merely a right to outer on the property and to do something thereon.

7. For these reasons, I think, we must hold that the Specimen document in the reference sent to us is not a lease but is an agreement not otherwise provided for.

Kumaraswami Sastri, J.

7. I agree with my lord. The question is whether the document which is before us is a lease or only a licence. The document purports to be an agreement between the South Indian Railway Company and persons who got consignments of coal. The object of the document was to provide facilities for the unloading of coal and for its removal from the Railway Station. Ordinarily the coal would have to be removed as soon as it arrived or within the time allowed by the Railway ; otherwise demurrage would be charged. The object of the agreement was to allow the coal to remain stacked in the Railway premises and to be removed at the convenience of the consignees. A 'lease' is defined in Section 105 of the Transfer of Property Act, and a 'licence' is defined by Section 52 of the Easements Act. In both cases certain rights are conferred on the lessee or the licensee. In the case of a licence something may be paid as consideration for allowing a person to do an act on another man's land. Both have several elements in common but it seems to me that the difference between a lease and a licence is that in the case of a licence, there is no interest in immovable property transferred to the licensee ; while in the case of a lease there is a transfer or carving out of the interest in favour of the person in whose favour the lease is granted. One chief consideration is whether there is any right of exclusive possession given. When a document is clear and unambiguous we cannot go outside its terms for the purpose of determining the stamp duty but where it is otherwise I think the question is whether, having regard to the purpose of the agreement and the terms in which it is expressed, the document can be said to confer any interest in the land on the licensees. Numerous cases have been cited on both sides, but I think the case which is most in point is the case reported in Frank Warr and Co., Limited v. London Country Council [1904] 1 K.B., 713. As observed by Romee, L.J., in that case, where a document does not amount to a demise or to a parting, in respect of any portion of the premises, with the possession which the owner has when he executes the document, it would only amount to a licence and not a lease. Having regard to the purpose of the document, I think that the purpose was simply to allow the consignees to store coal upon a portion of the land in the railway compound ; and it could not have been the intention of the Railway Company to part with any interest in the property in favour of the lessee. It is important to note in this connection that, having regard to the orders of the Government of India, the Railway Company had no right to execute any lease of this property and it was with a view to protect themselves that they have inserted Clause 12 in the agreement that it was not to be a lease of the property. It is no doubt true, as observed by the Privy Council in Glenwood Lumber Company v. Phillips [1904] A.C., 405 that, if the effect of the document is to give the holder an exclusive right of occupation of the land, it will be a demise of the laud and that it is not a mere question of words bat of substance. The mere calling a document a licence would not affect the question ; but in arriving at a conclusion where the terms are not clear, one has to see what the circumstances are, to judge of the intention of the parties. Now, the Railway Company had no power to grant a lease, and it is hardly likely that they would, with the knowledge that they had no power, try to execute a lease or do something which would be ultra vires so far as they are concerned. We start, therefore, with the fact that the Railway Company had no power to grant a lease; I may add here that, if they executed a document the terms of which amount to a lease, want of power would not of itself decide the question. But in considering whether the document is a lease or a license, I think it is relevant to consider what the rights of the parties were and what the object of the agreement was. On both these points I think the considerations weigh in favour of the view taken by the Railway Company that they only intended to grant a licence and never intended to part with possession of the piece of land in the railway compound. My Lord has referred to the various terms of the document. I agree with him in thinking that some of those clauses were put in by way of abundant caution, and that the Railway Company did not intend to give up possession or part with possession of the property. I think Clause I is a very important clause. It expressly reserves to the Railway Company a great measure of control as regards the transport, discharge and storage of the coal. It may be that the mere fact that there are restrictive covenants would not by itself make a lease a licence if the other terms are clear but in considering what the intention of the parties was, it is relevant to see what control the one party has over the property on which another party is allowed to do certain things. Hero I think the Railway Company reserved to itself a very large measure of control; and, reading the document as a whole, I think it is merely a licence given to the grantees to keep the coal on the Railway premises for some time and to pay for the privilege which they have got.

8. I would answer the question by saying that the document is not a lease but would come under Article 4(c) as an agreement not otherwise provided for.

Krishnan, J.

9. In this case we have been called upon to express our opinion as to what the proper stamps are on three documents which have been referred to us by the Revenue Board. They are all more or less similar in terms; one of them alone has been printed and placed before us; it is the document executed by the South Indian Railway Company to the Chairman, Municipal Council, Chidambaram.

10. It is contended by the Railway Company that the document in question amounts only to a licence and falls under Schedule I-A, Article 4 (c) and need be stamped only as an 'agreement not otherwise provided for' under the Act. On the other hand, it is contended for the Revenue Board by the learned Government Pleader that the document amounts to a lease and should be stamped as such under Article 30 of the same schedule. The question we have to decide is which view is correct.

11. The document is certainly drawn up in terms as a licence. It throughout speaks of the grantee tinder it as a 'licensee' But I agree that the question is not a question merely of words but of substance and that parties cannot by the mere use of a term of art alter the truth as pointed out by Hamilton, J., in Young & Co. v. Liverpool Assessment Committee [1911] 2 K.B., 195. We have, therefore, to look at the substance of the arrangement between the parties and decide under what article the document really falls. I do not think that we should go outside the language of the document in deciding what the proper stamp is or pay any attention to the circumstances under which it was executed or to the authority of the grantor. We are not concerned with the title of the grantor, but we should decide the case with reference solely to the language of the document, That is my view. But taking that view I am glad to find myself in agreement with the learned Chief Justice and my learned brother in thinking that this document really amounts only to a licence and does not go far enough to be held to be a lease. There is an express clause in paragraph 12 of the document which says, 'Nothing herein contained shall be construed to create a tenancy in favour of the licensee of the said land.' Is there anything in the document which would lead us to throw overboard that statement and hold that the document is still, by its character and by the terms agreed to between the parties under it, a lease What it purports to give to the grantee, as I read it, is a right to stack coal on a plot of land in the station yard to be pointed out by the Railway Company; for though it refers to a schedule as describing the piece of land dealt with, no schedule is produced. It gives the right to the grantee to use the piece of land for the purpose of storing or stacking coal which he gets for his own use. His right to do that is itself subject to the rules, by-laws and regulations that the Railway Company may make from time to time as regards transport, discharge and storage of the coal, see paragraph 1. There is no particular plot of land whose possession can be insisted upon by the grantee, so far as I can gather from the document, for he is entitled only to get such plot of land as the Railway Company may point out for the storage of coal, and for that it is provided that he is to pay a certain consideration, namely, at the rate of Rs. 7-8-0 a month for a plot which is 100' X 25' in extent. He has also to pay a deposit of Rs. 10 for such a plot as a guarantee that he would perform his part of the contract properly. He may take one such plot or more than one, the rate being as stated above. Either party is given power to cancel the arrangement by 15 days' notice. This is clearly merely a licence, no interes being given in the land itself except to the right of limited user of it.

12. The learned Government Pleader has referred to certain terms of the document as supporting him in his argument that it is a lease. The first point he urged was that in Clause 4 there was a special provision put in which said that

the licensee should allow the General Traffic Manager for the time being or any one authorized by him in this behalf free access at all times to the said land.

13. He argues that, if the grantee was a mere licensee, there is no necessity for such a provision at all because it is always open to a licensor to have access, possession being with him and not transferred to the licensee under the law. This may be so, but, as observed by the learned Chief Justice, this provision might have been put in merely by way of abundant caution so that no disputes might arise in the future when the Railway Authorities require the land.

14. The next point referred to by the learned Government Pleader was the use of the word 'rent' in Clause (6). No doubt, that is not a happy word to have been used if the transaction was a licence ; the proper word would have been 'fee.' But I do not think that we can draw any inference from the careless use of the word 'rent'; for if it was used to connote a lease as argued by the learned Government Pleader, Clause 12 of the document, which expressly says, 'Nothing herein contained shall be construed to create a tenancy in favour of the licensee' contradicts it.

15. The next point taken by the learned Government Pleader was with reference to the wording in Clause 10 of the document. It says, 'The licensee shall not transfer or sub-let the privileges mentioned in Clause 1 without the consent in writing of the said Manager.' Here again, no doubt, it is an unnecessary provision altogether if the arrangement is to be treated as a licence, for a licensee has no power under the law of transferring his privileges unless it is given to him by contract. Here again one may well accept the explanation given by the Railway Company that it was put in to avoid all disputes in the future.

16. The strongest point in the learned Government Pleader's favour is what is stated in Clause 12 which says that

upon the determination of the licence the Administration may of their mere motion re-enter upon and re-take and absolutely retain possession of the said land.

17. This would seem to indicate that possession had been given ; but, as a matter of fact, no legal possession was intended to be given at all. The only right that the transferee was intended to have was the right to go upon this land to stack coal and nothing more. In fact, it seems to me that there is nothing in the document to prevent the Railway Company from changing, from time to time, the plot which the grantee was to have if the Railway Company desired it. When that is so, it seems to me that this case is very near the case of Sweetmeat Automatic Delivery Company v. Commissioners of Inland Revenue [1895] 1 Q.B., 484. There is really no lease of any particular plot of land at all but only a licence or permission granted to the grantee to store coal on a plot pointed out by the Railway Company. I have no doubt whatever that this is a case of a mere licence and not of a lease. In this connection the case in Fragile Warr and Co., Limited v. London County Council [1904] 1 K.B., 713 may also be consulted. There it was held by their Lordships that the use of certain rooms for the purpose of storing wine, etc., by the persons to whom the exclusive right of selling refreshments in a theatre was given did not give them a lease at all but only a licence, as the right to sell refreshments itself was a licence. The principles enunciated there might well be applied here. There are two cases in our High Court in Seem Cliettiar v. Santhanathan Chettiar I.L.R., (1897) Mad., 58 Mammikkutti v. Pushakkal Edom I.L.R., (1906) Mad., 353 where the points of difference between a lease and a licence had to be considered. In both those cases it was held that the right to cut and enjoy timber on a certain land did not amount to a lease but was only a licence.

18. Since the transaction in this case did not amount, in my view, to a lease, the only article under which the document before us can fall is Article 4 (b) of Schedule I-A. It is true that there is no definition of the word 'lease' in the Stamp Act as it contents itself with saying in Section 2, Clause (16) what a lease includes ; it includes among other things (b) a Kabuliyat or other undertaking in writing, not being a counterpart of a lease, to cultivate, occupy, or pay or deliver rent for immovable property ; but there is no definition of the word ' lease.' The present document cannot be brought under Clause (b) either, as we cannot say that it is an 'undertaking in writing to occupy, or pay or deliver rent for, immovable property.' Although the document uses the word 'rent,' it is not used in the same sense as it is used in the statute. In the statute it is clearly used as meaning rent as defined in the Transfer of Property Act, i.e., as something which a tenant is bound to pay a landlord. The definition of 'lease' given in the Transfer of Property Act is, I think, the proper definition to take in this case. The word 'licence' is defined in the Basements Act and we are entitled to use that definition as the proper definition of the term for the Stamp Act.

19. In these circumstances, I agree with my Lord the Chief Justice and my learned brother in thinking that this document cannot be brought under the term 'lease' and that we should answer the reference accordingly.


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