Puran
Singh Sahni Vs. Smt. Sundari Bhagwandas Kripalani & Ors [1991] INSC 55 (20 February 1991)
Saikia,
K.N. (J) Saikia, K.N. (J) Punchhi, M.M.
CITATION:
1991 SCR (1) 592 1991 SCC (2) 180 JT 1991 (2) 24 1991 SCALE (1)303
ACT:
Bombay
Rents, Hotel and Lodging House Rates (Control ) Act, 1947] Transfer of Property
Act, 1882: Ss.5(4A), 5(11)(bb), 15A/s. 105- Agreement giving temporarily for a
fixed period, use of Premises with furniture and fittings on compensation for
use and occupation without creating any interest in the grantee-Whether a leave
and licence or a lease-Licence terminated w.e.f. 10.3.1972-Status of the
occupant thereafter-Whether entitled to Protection as a deemed tenant under s.
15-A `Leave and licence' and `Lease'- Distinction between.
Constitution
of India: Art. 14: S. 91, Maharashtra Co-
operative "Societies Act, 1960-Whether ultra vires.
Maharashtra
Co-operative Societies Act, 1960: S. 91- Eviction of a nominal member by a
tenant copartner member of a tenant copartnership Co-operative Housing
Society-Whether a dispute touching `business of a society'-Whether the society
and tenant co-partner member can raise a dispute under-Jurisdiction of
Co-operative Courts-Whether bared by s. 28(1) of Bombay Rents, Hotel and
Lodging House rates (Control) Act, 1947.
HEAD NOTE:
The
second respondent was a tenant copartnership co- operative Housing Society and
father of the first respondent was its tenant co-partner member. By an
application dated 10.6.1969 he sought permission of the society to temporarily
induct the appellant into his flat. On the same date the appellant applied to
the said Society for its nominal membership stating that he intended to take
the flat for temporary use and occupation, that he would not claim any right of
permanent nature and that on receipt of notice he would vacate the flat. By an
agreement of leave and licence dated 11.6.1969, the father of respondent no. 1
(licensor)gave use of the flat with its furniture and fittings to the appellant
(licensee) on Rs. 1,000 per month as compensation for use and occupation for a
period of 11 months with a facility of renewal of the agreement for two such
further periods. The Managing Committee of the Society, by its Resolution dated
13.6.1969. I granted the permission.
593
The licensor by letter dated 22.1.1972 purported to terminate the licence w.e.f.
10.3.1972, and asked the appellant to vacate the flat, but the latter declined
to do so. On receiving intimation from the licensor, the Society, by its letter
dated 22.2.1972, required the appellant to vacate the flat and deliver its
possession to the licenser before the stipulated date, but in vain. Instead,
the appellant on 13.3.1972 applied to the Court of Small Causes, Bombay for fixation of standard rent of
flat.
In
April 1972 the licensor and the Society raised a dispute under s. 91 of the Maharashtra
Co-operative Societies Act, 1960 to recover possession from the appellant,who
in turn filed a suit in the Court of Small Causes, Bombay for declaration that he was tenant
of the flat. He also filed an interim application for stay of the dispute
proceeding till disposal of his application for fixation of standard rent,
which was rejected and his writ petition against the said order was also
dismissed by the High Court on 7.9.1977.
The Co-operative Court, Bombay dismissed the dispute proceeding holding that the appellant
was a licensee and not a tenant but the society was an idle party which acted
in collusion with the licensor to evict the appellant.
On
appeal by the licenser and the Society, the Maharashtra State Co-operative
Appellate Court set aside the order of the Co-operative Court, against which
the appellant filed a writ petition before the High Court contending that the
agreement, though style as a leave and licence, was a lease; that s. 91 of the Maharashtra
Co-operative Societies Act was not attracted and could not have been invoked by
the respondents; and that s. 91 itself was ultra vires Art. 14 of the
Constitution to the extent it tried to reach non- members of co-operative societies.
The High Court dismissed the writ petition. Hence the present appeal by special
leave.
By Maharashtra
Act 17 of 1973, ss. 5(4A), and 15-A were introduced in the Bombay Rents, Hotel
and Lodging House Rates (Control) Act, 1947,to confer the status and protection
of a tenant on a licensee, who, on the first day of Feb. 1973, had a subsisting
agreement and was on that date in occupation of any premises or part thereof,
which was not less than a room, as a licensee.
On the
question whether:(1) the agreement dated 11.6.1969 was one of leave and licence
or if lease, and if it was so, whether the 594 occupant was entitled to benefit
of s. 15-A of the Rent Act; and (2) the matter was one touching the business of
the society so as to attract s.19 of the Maharashtra co- operative Societies
Act within the jurisdiction of Co- operative Courts.
Dismissing
the appeal, this Court
HELD:
1.1 By mere use of the word lease or licence the correct categorisation of an
instrument under law cannot be affected. Whether a particular grant amounts to
lease or a licence, depends on its substance. If a document gives only a right
to use the property in a particular way or under certain terms while it remains
in possession and control of the owner thereof, it will be a licence. If there
is a transfer of interest in law and exclusive possession is given to the
grantee or where the ingredients of a lease are present and the licensee is,
according to law, a tenant, then it is a lease and he ought to be given benefit
of the Rent Act. [602B-E]
1.2 In
determining whether the agreement was a lease or licence, the test of exclusive
possession, though of significance, is not decisive and exclusive possession
itself will not amount to creation of interest nor would it militate against the
concept of a licence, if the circumstances negative any intention to create a
tenancy. [602G, E-F]
1.3
The intention of the parties in making the agreement is determinative of the
question whether it was a lease or licence. The intention has to be gathered
from the terms of the agreement construed in the context of the surrounding,
antecedent and consequent circumstances. The crucial test would be what the
parties intended. If in fact it was intended to create an interest in the
property it would be a lease, if it did not, it would be a licence Interest for
this purpose means a right to have the advantage accruing from the premises or
a right in the nature of property in the premises but less than title. [603H,
602F-H]
2. In
the instant case, it is clear from the tenor of the agreement that the
intention of the parties was to create only a licence and not a lease.
Positively it speaks of a licence for the use of the flat and negatively that
the licensee would not-claim any tenancy or subtenancy. What was given to the
licensee was the use of the flat with furniture, fittings etc., which could not
be said to have created any interest in the flat though in effect the use
continued for a stipulated period of time. [602A-C] 595 Board of Revenue etc.
v. A.M. Ansari etc.,[1976] (3) SCR 661; Tarkeshwar Sio Thakur Jiu v. Dar Dass Dey
& Co. & Ors., [1979] 3 SCC 106, relied on; Sohan Lal Naraindas v. Laxmidas,
Raghunath Gadit (1971) 1 SCC 276, followed.
Antoniades
v. Villiers and Anr., [1988] (3) All. E.R. 1058; N.E. Railway v. Hastings, [1900] A.C. 260, Isaac v. Hotel De
Paris, Ltd. [1960] (1) All E.R. 348, Booker v. Palmer [1942] 2 All E.R. 674
referred to.
3.1
Section 15A read with s. 5(11)(bb) of the Bombay Rents, Hotel and Lodging House
Rates (Control) Act, 1947, makes the tenant one of status rather than of
contract.
Intention
to create a licence as defined in the Act if the other requirements fulfilled,
would, therefore, be enough to confer that status from the specified date.
Section 15A required that the occupant must be in occupation of the premises as
a licensee as defined in s.5(4A) on the first day of Feb. 1973. If he be such a
licensee, the non- obstante clause of s.15A(1) gives him the status and
protection of a tenant in spite of there being anything to the contrary in any
other law or in any contract. Even as against the express terms of the
subsisting contract licence, a person in occupation of any premises or part
thereof, which is not less than a room, as a licensee, shall, in view of these
provision, be deemed to have become a tenant on the first day of Feb. 1973, and
would enjoy the benefits of s. 15A. But if he was not a licensee under a
subsisting agreement on the
1st of Feb. 1973, then
he did not get the advantage of the amending provision of the Rent Act.
[608E-F, 610AB]
3.2
The sine qua non for the applicability of s. 15A of the Rent Act was that a
licensee must be in occupation as on Feb.1, 1973, under a subsisting licence. A
person continuing in possession after termination, withdrawal or revocation of
the licence is a trespasser or a person who has no semblance of any right to
continue in occupation of the premises. Such a person by no stretch of
imagination could be called a licensee. [612B-C, 610C]
4. The
appellant would, otherwise, be included in the definition of licensee under s.
5(4A) of the Rent Act, but as he had no subsisting licence, the same having
stood terminated by notice on 10.3.1972, the licence as defined by the Rent Act
itself would not apply to appellant's case, and he was nothing but a rank
trespasser not entitled to the protection of s. 15A of the Rent Act and could
not, therefore, plead the bar of s. 28(1) thereof.[608A, 609A, 612C-D] 596 D.H.
Maniar and Ors. v. Waman Laxman Kudav, [1976] 4 SCC 118, O.N. Bhatnagar v. Smt.
Rukibai Narsindas & Others, [1982] 3 SCR 681, relied on. Chandavarkar Sita Ratna
Rao v. Ashalata S. Guram, [1986] 4 SCC 447, referred to.
Hindustan
Petroleum Corporation Ltd. & Anr. v. Shyam Cooperative Housing Society
& Ors, [1988] 4 SCC 747, distinguished.
5. The
matter of eviction of the appellant was a dispute touching the business of the
society as envisaged by s.91 of the Maharashtra Co-operative Societies Act and
the Co-operative Courts rightly exercised jurisdiction.[611B;
613B] Smt.
Krishna Rajpal Bhatia and Ors. v. Miss Leela H.
Advani
& Ors., [1989] 1 SCC 52, relied on. Deccan Merchants Cooperative Bank Ltd.
v. M/S Dalichand Jugraj Jain & Ors., [1969] 1 SCR 887 referred to.
6.
Since the appellant was involved in a dispute touching the business of the
society of which he was a nominal member, his contention that s. 91 of the Maharashtra
Co-operative Societies Act to the extent it tries to reach persons who are not
members is ultra vires Art. 14 of the Constitution, was not tenable. [613C-D]
CIVIL
APPELLATE JURISDICTION: Civil Appeal No. 2846 of 1989.
From
the Judgment and Order dated 24.4.1989 of the Bombay High Court in W.P.No. 4118
of 1986.
H.S.
Guru Raja Rao, S. Markandeya and Ms. C. Markandeya, for the Appellant.
L.A. Kriplani
and S.K. Jain for the Respondents.
The
Judgment of the Court was delivered by K.N. SAIKIA, J. This appeal by special
leave is from the Judgment and Order of the High Court of Bombay dated
24.4.1989 in Writ Petition No. 4118 of 1986 dismissing the petition.
The
second respondent Shyam Cooperative Housing Society Ltd. was a tenant
co-partnership cooperative society (for short, `the 597 Society') and Panjumal
H. Advani late father of the first respondent (for short, `Advani') was its
tenant co-partner member. By an application dated 10.6.1969, Advani obtained
permission of the Society to induct the appellant temporarily into his flat and
accordingly, the appellant took on rent from Advani flat No. 24, Block No.
1,second floor, Nanik Niwas, situate at Bhulabhai Desai Road, Bombay (for
short, `the flat') on a monthly rent of Rs. 1,000 (Rupees one thousand) on
10.6.1969. On the same date the appellant, under the Society's rules, applied
for its nominal membership stating, inter alia, that he intended to take the
flat for temporary use and occupation; that he would not claim any right of
permanent nature; and that he would vacate the flat on receipt of notice
thereof. By an agreement of leave and licence dated 11.6.1969 entered into
between the appellant and Advani, the appellant took exclusive possession of
the flat. The agreement was for a period of 11 months and was renewable for 2
further periods of 11 months each. Vide Resolution No. 208 dated 13.6.1969, the
Managing Committee of the Society granted the permission.
By
letter dated 22.1.1972 Advani purported to terminate the licence with effect
from 10.3.1972 and asked the appellant to vacate the flat and the appellant
having not acceded to the request, Advani informed the Society, which, vide
letter dated 22.2.1972 required the appellant to vacate the flat and to deliver
possession thereof to Advani on or before the 10th March, 1972. The appellant
instead of vacating the flat filed an application in the Court of Small Causes,
Bombay on 13.3.1972 for fixation of its standard rent. In April 1972, Advani
and the Society raised a dispute under section 91 of the Maharashtra
Cooperative Societies Act to recover possession from the appellant who in turn
filed declaratory suit No. 989/5305 of 1972 in the Court of Small Causes,
Bombay on 10.11.1972 seeking a declaration that he was the tenant of the flat,
with an interim application for stay of the proceeding till the disposal of his
application for fixation of standard rent;
but
that application was rejected and the appellant was thereafter unsuccessful in
the High Court which was dismissed on 7.9.1977. The learned Judge of the IInd
Cooperative Court, Greater Bombay by his Judgment dated 6.3.1985 dismissed the
suit holding that the appellant was a licensee and not a tenant, but the
Society was an idle party and had acted in collusion with Advani to vacate the
appellant.
Advani
and Society appealed therefrom to the Maharashtra State Cooperative Appellate
Court, Bombay in Appeal No. 397 of 1985 which was
allowed and the impugned Judgment of the IInd 598 Cooperative Court was set
aside on 31.7.1986.
The
appellant impugned the appellate order in Writ petition No. 4118 of 1986 in the
High Court of Judicature at Bombay, contending, inter alia, that the agreement
between the appellant and Advani, though styled as a leave and licence, was a
lease; that section 91 of the Maharashtra Cooperative Societies Act, 1960 was
not attracted and could not have been invoked by Advani and the Society; and
that section 91 itself was ultra vires the Article 14 of the Constitution of
India to the extent it tried to reach persons who were not members of
cooperative societies.
The
High Court, while dismissing the writ petition, inter alia, held that the
agreement was of temporary nature and no interest in the flat having been
created in favour of the appellant, even though he had exclusive possession, it
could not have been a lease; that the alleged collusion between Advani and the
Society to evict the appellant was based on conjectures and could not take the
matter out of the purview of section 91 of the Cooperative Societies Act which
was not ultra vires.
Mr.
S.S. Gururaja Rao, the learned counsel for the appellant submits, inter alia,
that the agreement dated 11.6.1969 between Advani and the appellant was one of
lease with all its ingredients and not one of leave and licence;
that
the agreement having been a lease the cooperative Court had no jurisdiction in
respect thereof and it was the Civil Court envisaged under the Bombay Rents,
Hotel and Lodging House Rates (Control) Act, 1947 that would have jurisdiction
in the matter; and that even assuming that the Cooperative Court had
jurisdiction in respect of a leave and licence created under the provisions of
the Act, that Court would not have jurisdiction in this matter, the appellant
being only a nominal member and not a tenant member of the Society.
Mr.
L.A. Kripalani, the learned counsel for the respondents, submits that the
agreement was one of leave and licence and not of lease; that in the matter of
the agreement the Cooperative Court alone has jurisdiction and no other court;
and that being a nominal member of the Society in view of his application for
such a membership the appellant would come within the jurisdiction of the
Cooperative Court.
The first
question to be decided in this appeal, therefore, is 599 whether the agreement
dated 11.6.1969 was one of lease or of leave and licence.
In the
agreement dated 11.6.1969 the Party of the First part has been called the
`licensor' and the Party of the Second part has been called the `licensees'.
The licensor is stated to be a shareholder and member of the Society.
Its
recitals said:
"AND
WHEREAS the Licensor is the absolute owner of the said flat and whereas the
party of the Second part has approached the Party of the First part to allow
them the use of the said flat with, fittings, fixtures and furniture lying
therein.
AND
WHEREAS the Party of the First part has agreed to allow the party of the Second
part to use the said flat along with fittings, furniture, fixtures etc.
The
following were the relevant terms of the agreement:
"1.
The `licensor' has given the use of his flat No.24, 2nd floor, Nanik Niwas,
Block No. 1, Bhulabhai Desai Road on Leave and Licence basis.
2. The
licence in the initial stage is for the period of 11 months to be renewed by
another period of 11 months and a second option of 11 months also, to make up
the period of 33 months.
3. The
Licensees shall pay compensation of Rs. 1,000 (Rupees one thousand only) per
month to the `licensor' the use of the said flat along with fittings, fixtures
and furniture lying therein more fully described in the schedule herewith
attached;
This
compensation payable by the said `Licensees' to the said `Licensor' shall
include all the charges and taxes leviable either by the Shyam Cooperative
Housing Society Ltd., Bombay -26 or by the Bombay Municipal Corporation or by
any local or State authorities except the changes which are specially mentioned
hereunder.
xxx xxx
xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx 600
9. It
is agreed by this agreement that only `Licensee' is intended to be given to the
`Licensees' to use the flat and fixtures, fittings, furniture etc. more fully
described in the schedule attached herewith and the `Licensees' will at no time
claim tenancy or sub-tenancy of the premises. The premises are in Nanik Niwas,
Block No.1, Second Floor, Flat No.24, of the Shyam Cooperative Housing Society
Ltd., and the rules regulations and bye-laws of the said Society do not permit
any tenancy or sub-tenancy being created in respect of the premises.
xxx xxx
xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx
22.
That the `Licensee' will not surrender their rights under this agreement in favour
of anyone else except the `Licensors'. That the `Licensees' shall observe all
rules, regulations, and by-laws of the Shyam Cooperative Society as nominal
members during the period of this licence.
From
the above recitals and the terms and conditions there is no doubt that ex facie
it is one of leave and licence for use of the flat and fixtures, fittings,
furniture etc. and that the licensee would at no time claim tenancy or
sub-tenancy in respect of the flat. There is also no doubt that in his
application for nominal membership, the appellant stated that he intended to
take the flat for temporary use and occupation and that he would not claim any
right of permanent nature. In the Managing Committee Resolution No.208 dated
13.6.1969, the appellant was admitted as a nominal member of the Society and
was permitted to temporarily occupy the flat. Thus, there appears to be no room
for contending, contrary to the terms of the agreement, that the agreement was
a lease and the appellant was a tenant of Advani, as such the Bombay Rents,
Hotel and Lodging House Rates Control Act, 1947, hereinafter referred to as
`the Rent Act', was applicable to him.
However,
relying on Antoniades v. Villiers and Anr., reported in 1988 (3) All E.R. 1058,
it is submitted for the appellant that he having been given exclusive
possession of the flat for a time, the agreement must be construed as a lease
and him as a tenant. In that case the respondent let a flat to the appellants,
a young unmarried couple, under separate but identical agreements termed
`licenses', which were executed contemporaneously and stipulated with
reiterated emphasis that the appellants were not to have exclusive possession.
In particular, 601 by clause 16, that agreement stated that the licensor shall
be entitled at any time to use the rooms together with the licensee and permit
other persons to use all of the rooms together with the licensee and further
stated that the real intention of the parties in all the circumstances was to
create a licence which did not come under the Rent Acts.
The
rental payable was 87 pounds per month by each occupant and the agreements were
determinable by one month's notice by either party. The respondent never
attempted to use any of the rooms or authorised any other persons to use the
rooms. In July 1986 the respondent gave the appellants a notice to quit and
applied to the court for an order for possession, but his claim was dismissed
on the ground that the appellants were tenants who were entitled to the
protection of the Rent Acts. The respondent appealed to the Court of Appeal,
which allowed his appeal. The appellants having appealed to the House of Lords
it was held that the agreements were interdependent on one another and were
therefore to be read together as constituting one single transaction. Since it
was the intention of the two appellants to occupy the flat as man and wife and
since that intention was known to the respondent, the true nature of the
arrangement was to create a joint tenancy and the purported retention by the
respondent of the right to share the occupation of the small flat with the
appellants or to introduce an indefinite number of third parties to do so was
clearly a pretence to deprive them of the protection of the Rent Acts. It
followed that the agreements created a joint tenancy and not a licence, and the
appeal would therefore be allowed. It may be noted that in the above case there
was no obligation of or relation to any cooperative society and laws governing
members thereof, whereas in the instant case admittedly Advanai was a tenant
co-partner member of the Society and the appellant by virtue of the agreement
of licence was also admitted to nominal membership accepting his statement in
his application. While interpreting the agreement we have also to see what
transpired before and after the agreement. Ex praecedentibus et consequentibus
optima bit interpretation. The best interpretation is made from the context.
"It is a true rule of construction that the sense and meaning of the
parties in any particular part of an instrument may be collected ex antecedentibus
et consequentibus; every part of it may be brought into action in order to
collect from the whole one uniform and consistent sense, if that may be
done." As was said in N.E. Railway v. Hastings, [1900] A.C. 260(267):
"The
deed must be read as a whole in order to ascertain the true meaning of its
several clauses, and the words of each clause should be so interpreted as to
bring them into 602 harmony with the other provisions of the deed if that
interpretation does no violence to the meaning of which they are naturally
susceptible.
In the
agreement the intention to create a licence is clear. Positively it speaks of a
licence for the use of the flat and negatively that the licensee would not
claim any tenancy or sub-tenancy. That the intention of the parties was to
create only a licence and not a lease is clear from the tenor of the agreement.
True, by mere use of the word lease or licence the correct categorisation of an
instrument under law cannot be affected. What was given to the licensee was to
use of the flat with furniture, fittings etc., which could not be said to have
created any interest in the flat though in effect the use continued for a
stipulated period of time. It is true, where the ingredients of a lease are
present and the licensee is according to law, a tenant, he ought to be given
the benefit of the Rent Act.
As was
held in Board of Revenue etc. v. A.M. Ansari etc., AIR 1976 SC 1813: 1976 (3)
SCR 661, it is the substance of the agreement between the parties which is a
decisive consideration on the question whether a particular grant amounts to a
lease or a licence. In Tarkeshwar Sio Thakur Jiu v. Dar Dass Dey & Co.
& Ors., AIR 1979 SC 1669: (1979) 3 SCC 106, the document though named as licence
was construed as a lease. If a document gives only a right to use the property
in a particular way or under certain terms while it remains in possession and
control of the owner thereof it will be a licence. If there is a transfer of
interest in law and exclusive possession is given to the grantee then it is a
lease. Thus, exclusive possession by itself will not amount to creation of
interest. Exclusive possession by itself would not militate against the concept
of a licence, if the circumstances negative any intention to create a tenancy.
Following
Sohan Lal Naraindas v. Laxmidas Raghunath Gadit, [1971] 1 SCC 276, we reiterate
that the intention of the parties to an agreement has to be gathered from the
terms of the agreement construed in the context of the surrounding, antecedent
and consequent circumstances. The crucial test would be what the parties
intended. If infact it was intended to create an interest in the property, it
would be a lease, if it did not, it would be a licence. In determining whether
the agreement was a lease or licence, the test of exclusive possession, though
of significance, is not decisive. Interest for this purpose means a right to
have the advantage accruing from the premises or a right in the nature of
property in the premises but less than title.
603
Lease has been defined in section 105 of the Transfer of Property Act as under:
"A
lease of immovable property is 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 essential elements of a lease are:
1. the
parties
2. the
subject matter, or immovable property
3. the
demise, or partial transfer
4. the
term, or period 5. the consideration, or rent.
The
relationship of lessor and lessee is one of contract. In Bacon's Abridgement, a
lease is defined as "a contract between the lessor and the lessee for the
possession and profits of land, etc., on the one side and recompense by rent or
other consideration on the other." Hence it has been held that "a
mere demand for rent is not sufficient to create the relationship of landlord
and tenant which is a matter of contract assented to by both parties."
When the agreement vests in the lessee a right of possession for a certain time
it operates as a conveyance or transfer and is a lease. The section defines a
lease as a partial transfer, i.e., a transfer of a right of enjoyment for a
certain time.
This
Court has held that a renewal of a lease is really grant of a fresh lease
though it is called a renewal because it postulates the existence of a prior
lease. Where the initial term was, say one year, it could not co-exist with a
renewal of that very lease within one year. Renewal could take place only on
the expiry of the initial lease, and not before.
The
intention of the parties in making the agreement is determinative of the
question whether it was a lease or licence.
In Halsbury's
Laws of England, 4th Edn. Vol. 27, at paragraph 6,
on General Principles 604 for determining whether agreement creates lease or a licence
we read:
"In
determining whether an agreement creates between the parties the relationship
of landlord and tenant or merely that of licensor and licensee the decisive
considerations is the intention of the parties. The parties to an agreement
cannot, however, turn a lease into a licence merely by stating that the
document is to be deemed a licence or describing it as such. The parties'
relationship is determined by law on a consideration of all relevant provisions
of the agreement; and an agreement labelled by the parties to it as a `licence'
will still be held to create a tenancy if the substance of the agreement
conflicts with that label. Similarly, the use of operative words (`let', `lessor'
etc.) which are appropriate to a lease will not prevent the agreement from
conferring only a licence if from the whole document it appears that it was
intended merely to confer a licence. Primarily the court is concerned to see
whether the parties to the agreement intend to create an arrangement personal
in its nature or not, so that the assignability of the grantee's interest, the
nature of the land and the grantor's capacity to grant a lease will all be
relevant considerations in assessing what is the nature of the interest created
by the transaction.
In the
absence of any formal document the parties' intention must be inferred from the
circumstances and the parties' conduct." It has been submitted for the
appellant that the very fact of exclusive possession of the flat being given to
the appellant was sufficient to make him lessee and Advani his landlord. We do
not agree with the submission in an unqualified form. There have been cases
where exclusive possession has been given outside the Rent Act. In Isaac v.
Hotel De Paris, Ltd., [1960] (1) All E.R.348, the respondent company owning the
hotel de Paris where the lessees of another building called the P.Hotel, it was
held that the respondent company were entitled to an order for possession
because the relationships between the parties was not that of landlord and
tenant but of licensor and licensee, even though there was exclusive possession
by the appellant and the acceptance of the amount of the rent by the respondent
company, the circumstances and the conduct of the parties showing that all that
was intended was that the appellant should have a personal privilege of running
a night bar at the P.Hotel with no interest 605 in the land at all, and this
privilege came to an end with the notice of May, 1956 and that after the notice
the appellant remained in occupation at sufferance, and, in the circumstances,
the acceptance of rent by the respondent company did not waive their right to
immediate possession.
It was
observed that there were many cases in the books where exclusive possession had
been given of premises outside the Rent Restriction Acts and yet there had been
held to be no tenancy. Lord Denning quoted from Booker v.Palmer, [1942] 2 All
E.R. 674 (677):
"There
is one golden rule which is of very general application, namely, that the law
does not impute intention to enter into legal relationship where the circumstances
and the conduct of the parties negative any intention of the kind.' The
following passaged was also cited with approval:
"It
is clear from the authorities that the intention of the parties is the
paramount consideration and while the fact of exclusive possession together
with the payment of rent is of the first importance, the circumstances in which
exclusive possession has been given and the character in which money paid as
rent has been received are also matters to be considered." On the question
of nature and effect of the grant of exclusive possession in paragraph 7 of Halsbury's
Laws of England, 4th Edn., Vol.27, we read:
"The
fact that the agreement grants a right of exclusive possession is not in itself
conclusive evidence of the existence of a tenancy, but it is a consideration of
the first importance, although of lesser significance than the intention of the
parties.
In
deciding whether a grantee is entitled to exclusive posession regard must be
had to the substance of the agreement. In order to give exclusive possession
there need not be express words to that effect; it is sufficient if the nature
of the acts to be done by the grantee requires that he should have exclusive
possession.
However,
the grant of an exclusive right to a benefit can be inferred only from language
606 which is clear and explicit. If an exclusive right of possession is subject
to certain reservations or to a restriction of the purposes for which the
premises may be used, the reservations or restriction will not necessarily
prevent the grant operating as a lease." We may now examine the position
of the appellant under the Rent Act. The Rent Act has not defined a `lease'. As
defined in section 5(11) `tenant' means any person by whom or on whose account
rent is payable for any premises and includes-
(a) such
sub-tenants and other persons as have derived title under a tenant before the
1st day of February, 1973;
(aa)
any person to whom interest in premises has been assigned or transferred as
permitted or deemed to be permitted, under section 15;
(b) any
person remaining, after the determination of the lease, in possession, with or
without the assent of the landlord, of the premises leased to such person or
his predecessor who has derived title before the 1st day of February, 1973;
(bb)
such licensees as are deemed to be tenants for the purpose of this Act by
section 15A;
(c) xxx
xxx xxx xxx xxx xxx"
Thus
the above sub-section (bb) read with section 15A of the Rent Act makes the
`tenant' one of status and not of contract. the licensee has been conferred the
status of a tenat. This reminds us of what Sir Henry Maine observed in Ancient
Law. "The movement of progressive societies had been from status to
contract". But Lord Simmonds pointed out in Johnson v. Merston, [1978] 8
All E.R. 37, that since the days of Maine, the movement of the progressive societies in various fields, has been
almost the reverse, that is, from contract to status. With acute dearth of
accommodation and dire need for it people may agree to a pretence or
unreasonable term from which law alone can protect them and render justice to
the parties.
As
defined in the section 5(4A) of the Rent Act `licensee', in respect of any
premises or any part thereof means:
607
"The person who is in occupation of the premises or such part as the case
may be under a subsisting agreement for licence given for a licence fee or
charge; and includes any person in such occupation of any premises or part
thereof in a building vesting in or leased to a co-operative housing society
registered or deemed to be registered under the Maharashtra Cooperative
Societies Act, 1960; but does not include a paying guest, a member of a family
residing together, a person in the service or employment of the licensor, or a
person conducting a running business belonging to the licensor or a person
having any accommodation for rendering or carrying on medical or para-medical
services or activities in or near a nursing home, hospital or sanatorium, or a
person having any accommodation in a hotel, lodging house, hostel, guest house,
club, nursing home, sanatorium, dharamshala, home for widows, orphans or like
premises, marriage or public hall or like premises, or in a place of amusement
or entertainment or like institution, or in any premises belonging to or held
by an employee or his spouse who on account of the exigencies of service or
provision of a residence attached to his or her post or office is temporarily
not occupying the premises, provided that he or she charges licence fee or
charge for such premises of the employee or spouse not exceeding the standard
rent and permitted increases for such premises, and any additional sum for
services supplied with such premises, or person having accommodation in any
premises or part thereof for conducting a canteen, creche,dispensary or other
services as amenities by any undertaking or institution; and the expressions `licence',
`licensor' and `premises given on licence' shall be construed
accordingly." The above definition is comprehensive one. A licence is a
power or authority to do some act which, without such authority, could not
lawfully be done. In the context of an immovable property a licence is an
authority to do an act which would otherwise be a trespass. It passes no
interest, and does not amount to a demise, nor does it give the licensee an
exclusive right to the use of the property. The definition in the Rent Act
includes any person in occupation under a subsisting agreement for licence
given for a licence fee or charge of any premises or part thereof in a building
vesting in or lease to a cooperative housing society registered or deemed to be
registered under the 608 Maharashtra Cooperative Societies Act, 1960. The
appellant would, otherwise, be included within this definition. But he has no
subsisting licence, the same having been cancelled on 10.3.72.
Section
15A of the Rent Act which was inserted by Maharashtra Act 17 of 1973 provides:
"Certain
licensee in occupation on 1st February 1973
to become tenants.
(1)
Notwithstanding anything contained elsewhere in this Act or anything contrary
in any other law for the time being in force, or in any contract, where any
person is on the 1st day of February 1973 in occupation of any premises, or any
part thereof which is not less than a room, as a licensee he shall on that date
be deemed to have become, for the purposes of this Act, the tenant of the
landlord, in respect of the premises or part thereof, in his occupation .
(2) The
provisions of sub-section (1) shall not affect in any manner the operation of
sub-section (1) of section 15 after the date aforesaid." Thus, section 15A
read with section 5(11) (bb) of the Rent Act makes the tenant one of status
rather than of contract. Intention to create a licence as defined in that Act
if the other requirements fulfilled would, therefore, be enough to confer that
status from the specified date. The above provisions applies to person in
occupation of any premises or part thereof which is not less than a room, as a
licensee he shall on the date be deemed to have become a tenant on the first
day of February 1973. The licence of the appellant was cancelled on 10.3.72.
Again, in the instant agreement what has been given is only the use of the flat
and the furnitures and fittings.
`Licence'
had earlier been defined in section 52 of the Indian Easements Act, 1882:
"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 609 an interest in the property, the right is
called a license." In view of licence of the appellant having been
cancelled on 10.3.72, licence as defined by the Rent Act itself, would not
apply, to the appellant's case. He would, therefore, not be protected under s.
15A of the Rent Act.
The
learned counsel for the appellant submits that due to scarcity of
accommodation, the appellant had to accept the terms that he would not, by
virtue of the agreement of leave and licence, claim any right of tenancy or sub
tenancy and that should not be a bar to his being given the benefit under the
Rent Act. However, considering the facts and circumstances of this case we are
not inclined to hold that the appellant should not be bound by the expressed
intention in the agreement.
In Chandavarkar
Sita Ratna Rao v. Ashalata S.Guram, [1986] 4 SCC 447, this Court held that licence
was a privilege and not an interest in property. A tenant, whose interest in
the tenancy is determined for any reason but who is protected by the statute,
was entitled to create a licence in favour of another person until a decree of
eviction has been passed against him. A statutory tenant was in the same
position as a contractual tenant until a decree for eviction is passed against
him and the rights of contractual tenant including the right to create licence
even if he was transferor of an interest which was not in fact the transfer of
interest. If the licence have been created before February 1, 1973, the
licensee must, by the express terms of section 15A of the Rent Act be deemed to
be a tenant and he should, subject to provisions of the said Act be deemed
tenant of the landlord on the terms and conditions of the agreement consistent
with the provisions of the Act. At paragraph 58 of the report it was observed
that there was no reason and there was nothing in the Rent Act or the Statement
of Objects and Reasons to indicate that restricted meaning to the expression
"licence" should be given. As the amended section said that whoever
was in possession as a licensee should be deemed to have become for the purpose
of the Act the tenant of the landlord and there was no warrant to restrict the
ordinary meaning of that expression. If the restricted meaning was given then
the apparent scheme or the purpose for introduction of the amendment would be
defeated at least to a large section of licensees who were contemplated to be
protected, as the objects of the Act sought to do.
The
Rent Act was amended by Maharashtra Act 17 of 1973.
By 610
the Amending Act section 5(4A) and section 15A were introduced in the parent
Act to confer on the licensee, who had a subsisting agreement of February 1,
1973 the status and protection of a tenant under the Rent Act. Section 15A
required that the occupant must be in occupation of the premises as a licensee
as defined in section 5(4A) on the 1st of February, 1973. If he be such a licensee, the non- obstinate clause of
section 15A (1) gives him the status and protection of a tenant in spite of
there being anything to the contrary in any other law or in any contract. In
other words, even as against the express terms of the subsisting contract of licence,the
licensee would enjoy the benefits of section 15A. But if he was not a licensee
under a subsisting agreement on the 1st of February, 1973, then he did not get the advantage of the amending
provision of the Rent Act. A person continuing in possession of the premises
after termination, withdrawal or revocation of the licence continued to occupy
it as a trespasser or as a person who has no semblance of any right to continue
in occupation of the premises. Such a person by no stretch of imagination could
be called a licensee.
In
D.H. Maniar and Ors. v. Waman Laxman Kudav, [1976] 4 SCC 118, this position was
made clear. The appellant in the instant case was not in possession as a
licensee on 1st of February, 1973, the licence having been terminated prior to
that date. This takes us to the next question, namely, whether the Cooperative Court had jurisdiction over the matter.
Section
91(1) of the Maharashtra Cooperative Societies Act which deals with disputes,
provides:
"(1)
Notwithstanding anything contained in any other law for the time being in force
any dispute touching the constitution, elections of the committee or its
officers other than the elections of committees of the specified societies
including its officers, conduct of general meetings, management of business of
a society shall be referred by any of the parties to the dispute, or by a
federal society to which the society is affiliated or by a creditor of the
society, to a cooperative Court if both the parties thereto are one or other of
the following:- (a) a society its committee, any past committee, any past or
present officer, any past or present agent, any past or present servant or
nominee, heir or legal representative of any deceased officer, deceased agent
or deceased servant of the society, or the Liquidator of the society;
611
(b) a member, past member or a person claiming through a member, past member or
a deceased member of a society, or a society which is a member of the society
or a person who claims to be a member of the society.
xxx xxx
xxx xxx xxx xxx Under the above provision the matter of eviction of the
appellant by the tenant co-partner member of the society can be said to be
touching the business of the society.
In Deccan
Merchants Cooperative Bank Ltd. v. M/s Dalichand Jugraj Jain & Ors., [1969]
(1) SCR 887, it has been held that the word "business" in the
expression `touching the business of a society' in section 91 (1) does not mean
affairs of the society. It has been used here in a narrower sense and means the
actual trading or commercial or other similar business activity of the society
which the society is authorised to enter into under the Act and the Rules and
its bye-laws. It was, however, held that section 91 of the Maharashtra
Cooperative Societies Act did not affect the provisions of section 26 of the
Bombay Rents, Hotel & Lodging House Rates Control Act, 1947. Although both
these provisions start by excluding "anything contained in any other
law", two Acts could be harmonized best by holding that in matters covered
by the Rent Act, its provisions rather than the provisions of the Maharashtra
Cooperative Societies Act, should apply. The latter Act was passed in the main,
to shorten litigation, lessen its cost and to provide a summary procedure for
the determination of the disputes relating to internal management of the
society.
But
under the Rent Act a different social objective was intended to be achieved and
for achieving that social objective it was necessary that the dispute between
the landlord and the tenant should be dealt with by the courts set up under the
Rent Act and in accordance with the special provisions of that Act and this
social objective did not impinge on the objective underlying the Maharashtra
Cooperative Societies Act.
In O.N.Bhatnagar
v. Smt. Rukibai Narsindas & Ors., [1982] 3 SCR 681, which was also case of Shyam
Cooperative Housing Society Limited, it was held that the claim of the society
together with such member for ejectment of a person who was permitted to occupy
having become a nominal member thereof, upon revocation of licence was a
dispute falling within the purview of section 1 of the Maharashtra Cooperative
Societies Act, 1960 and that the proceeding under section 91(1) of the Maharashtra
Cooperative Societies Act, 1960 were 612 not barred by the provisions of
section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act,
1947. The two Acts, could be best harmonized by holding that the matters
covered by the Rent Acts, its provisions, rather than the provisions of the
Cooperative Societies Act should apply. But where the parties admittedly did
not stand in the jural relationship of landlord and tenant, as their dispute
would be governed by section 91(1) of the Societies Act and that the appellant
by virtue of his being a nominal member, acquired a right to occupy the flat as
a licensee, but his rights were inchoate,. In the facts of the instant case
upon the terms of sections 5(4A) and 15A of the Rent Act, it is clear that the
appellant was not entitled to the protection of section 15A. The sine qua non
for the applicability of s. 15A of the Rent Act was that a licensee must be in
occupation as on February
1, 1973 under a
subsisting licence. It is not disputed that the appellant did not answer that
description since the agreement of leave and licence in his favour admittedly
stood terminated by the notice of the respondent No. 1 on 10.3.1972. That being
so, the appellant was nothing but a rank trespasser and was not entitled to the
protection of section 15A of the Rent Act and could not, therefore, plead the
bar of section 28(1) thereof.
In
Hindustan Petroleum Corporation Ltd. & Anr. v. Shyam Cooperative Housing
Society & Ors., [1988] 4 SCC 747, at paragraph 14 it was held under the
facts of that case that the petitioner Hindustan Petroleum Corporation Ltd. was
clearly protected under section 15A of the Rent Act and in that view of the
matter the jurisdiction of the Registrar under Section 91(1) of the Cooperative
Societies Act would be as laid down in O.N. Bhatnagar's case (supra). The
proceedings initiated under section 91 were accordingly quashed. This case is,
therefore, distinguishable on facts.
Following
Bhatnagar's case in Smt. Krishna Rajpal Bhatia and Ors. v. Miss Leela H. Advani
& Ors., [1989] 1 SCC 52, where a tenant co-partner member of a registered
co- partnership type cooperative housing society inducting another person into
her flat for a term of eleven months subject to renewal of the term from time
to time after obtaining society's permission and after the person so inducted
becoming a nominal member of the society and the agreement between the parties
embodied in usual standard form of leave and licence, it was held that the
tenant co- partner member only created a licence and not a lease and that the Maharashtra
Cooperative Societies Act, 1960 was applicable. There also the nominal
membership of the society was obtained in terms of the society's bye-laws and
the licence was 613 terminated by notice after expiry of the term, but the
occupant was not vacating. Claim made by the co-partner under section 91 of the
Maharashtra Cooperative Societies Act, 1960 for ejectment of the occupant was
held to constitute a `dispute touching the business of a society' within the
meaning of section 91 and hence the Registrar's jurisdiction to entertain the
claim was held not to have been barred under section 28 of the Rent Act.
Applying
the law laid down in the above decisions we are of the view that the instant
dispute is one envisaged in section 91 of the Maharashtra Cooperative Societies
Act and the Cooperative Courts rightly exercised jurisdiction.
The
next question, namely, section 91 is ultra vires the Article 14 of the
Constitution of India to the extent it tries to reach persons who are not
members is not tenable, inasmuch as the appellant is involved in a dispute
touching the business of the Society and he was a nominal member of the Society
by dint of his agreement of leave and licence and he was made so on his
application.
Result
is that this appeal fails and it is dismissed, but under the facts and
circumstances of the case without any order as to costs. Interim orders stand
vacated.
R.P.
Appeal dismissed.
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