Gujarat High Court
Amit Swarupchand Koradia vs Dushyant Manishankar Pandya on 9 February, 2024
NEUTRAL CITATION
C/FA/510/2024 ORDER DATED: 09/02/2024
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 510 of 2024
With
CIVIL APPLICATION (FOR STAY) NO. 1 of 2024
In R/FIRST APPEAL NO. 510 of 2024
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AMIT SWARUPCHAND KORADIA
Versus
DUSHYANT MANISHANKAR PANDYA
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Appearance:
MR JF MEHTA(461) for the Appellant(s) No. 1
for the Defendant(s) No. 1,2
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CORAM:HONOURABLE MR. JUSTICE DEVAN M. DESAI
Date : 09/02/2024
ORAL ORDER
1. Heard learned advocate Mr.J.F.Mehta for the appellant - original defendant No.1.
2. By way of the present First Appeal filed under Section 96 of the Code of Civil Procedure Code, 1908, the appellant has challenged the judgment and decree dated 19.12.2023 passed by learned City Civil Court, Ahmedabad in Civil Suit No.986 of 2017, whereby the learned Court has partly allowed the suit of the plaintiff.
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3. The appellant has challenged the judgment and decree passed by the learned City Civil Court, Ahmedabad in Civil Suit No.986 of 2017, whereby the suit of the respondent for possession was decreed and defendant No.1 was directed to pay Rs.16,000/- per month as mesne profits to the plaintiff along with interest at the rate of 6% per annum from 01.06.2017 till the possession is handed over. It was also directed that, the excess amount paid towards Municipal Tax by defendant No.1, be adjusted towards mesne profits and interest accrued thereon.
4. Learned advocate for the appellant has submitted that respondent No.1 - original plaintiff had filed a Civil Suit No.986/2017 for the relief of possession of the property known as 'Vishwanth-4' situated at final plot No.132 of T.P. Scheme No.21, Vastrapur.
4.1 The submission of the learned advocate for the appellant is that the appellant is in possession of the suit Page 2 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined property since the year 2006, by virtue of Leave and License Agreement dated 24.05.2006 with furniture and fixture. The said agreement was renewed from time to time and the last Leave and License Agreement was executed on 25.06.2016, which has expired in the year 2017.
4.2 Learned advocate for the appellant has placed on record the compilation of the documents which contains the Written Statement, Leave and License Agreement dated 24.05.2006 and other documents.
4.3 It is pointed out by the learned advocate for the appellant that the appellant is in exclusive possession of the suit property since the year 2006. It is further submitted that though the agreement was termed as leave and license, the intention and conduct of both the parties was to treat the agreement as a lease agreement. Since the intention of the parties to treat the same as lease, the present suit without issuing the notice under Section 106 Page 3 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined of the Transfer of Property Act,1882 is not maintainable and the learned trial Court has committed grave error in decreeing the suit.
4.4 It is further submitted that the learned trial Court has committed an error in distinguishing the definition of Leave and License Agreement on one hand, and definition of lease on the other hand. In the present case, the intention of the parties were never to create a license and in view of the facts pleaded by the plaintiff as well as the contentions raised in the Written Statement, intention could be gathered that the intention was to create a lease. It is submitted that after completion of the license period, the present suit came to be filed. It is further submitted that before the institution of the suit, a notice through email dated 03.05.2017 was served to the present appellant, whereby the possession of the suit property was sought for and the said notice was replied by the appellant and the appellant had filed Reply on Page 4 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined 01.06.2017. Thereafter, some communications were ensued between the parties.
4.5 Learned advocate for the appellant has relied upon the decision passed by the Hon'ble Supreme Court in the case of Delta International Limited Vs. Shyam Sundar Ganeriwalla reported in 1999(0) GLHEL-SC 7596.
5. Against the plaint, the defendant filed a Written Statement at Exh.22, and thereafter, the learned trial Court framed issues at Ex.45, which are reproduced hereunder:-
ISSUES (1) Whether the plaintiff proves that he is the owner of the suit property?
(2) Whether the plaintiff proves that the disputed property was given to defendant no.1 on the basis of the leave and license agreement?
(3) Whether the plaintiff proves that defendant no.1 is using the suit property illegally?
(4) Whether the defendant no.1 proves that he is in possession of the suit property since 2006?
(5) Whether the defendant no.1 proves that the Page 5 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined furniture and fixtures in the suit property have been purchased by him?
(6) Whether the defendant no.1 proves that he has legally occupied the suit property?
(7) Whether the plaintiff proves that he is entitled for mandatory injunction?
(8) Whether the plaintiff is entitled to get the relief as prayed for?
(9) What order and decree?
6. The learned trial Court has decreed the suit and directed the present appellant to handover the peaceful and vacant possession of the suit property being Flat No.42, 4th Floor, Vishwanath-4 apartment and further directed to pay Rs.16,000/- per month as mesne profits to the plaintiff alongwith interest at the rate of 6% per annum from 01.06.2017 till handing over of the vacant and peaceful possession of the suit property. It was further directed that the plaintiff was given adjustment towards the amount, to be received by the plaintiff from the Page 6 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined defendant qua the excess amount paid towards Municipal Tax.
7. I have heard the learned advocate for the appellant and perused the papers which are placed on record. The respondent No.1 filed a suit for the possession of the suit property and for mesne profits. The case of the plaintiff is that the suit property was given by virtue of Leave and License Agreement dated 25.06.2016, and the period of license was expired on 31.05.2017. Thereafter, there was no renewal of the said Leave and License Agreement. It is the contention of the plaintiff in the plaint that since the Leave and License Agreement was not renewed, the possession of the suit property by defendant No,1 was illegal and without any authority. The plaintiff was examined and the defendant was also examined. It is an admitted fact on record that the defendant No.1 was in possession of the suit property since the year 2006 on the Page 7 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined basis of Leave and Licence Agreement, which were renewed from time to time, but after 31 st May, 2017, the same was not renewed.
8. It is also gathered from the averments made in the plaint that on 03.05.2017, defendant No.1 was informed that on expiry of the terms of the Leave and License Agreement, he will hand over the possession of the premises by 31.05.2017. Thereby, the defendant No.1 was asked to vacate the premises. It is also contended in the notice dated 03.05.2017 that the plaintiff wants to renovate the entire building and wants to add more facilities in the apartment, and for that purpose, the possession was sought for. The said notice was replied by defendant No.1 on 27.05.2017 and denied the request of plaintiff to vacate the premises.
9. The learned trial Court has framed the issues, more particularly, issue No.2 and 3 are relevant for Page 8 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined deciding the present First Appeal. The admitted fact on record is that after 31st May, 2017, there was no renewal of the Leave and License Agreement. Upon perusal of the Leave and License Agreement dated 25.06.2017, parties have agreed in Clause Nos. 8, 14 and 15, which are reproduced hereunder:-
"8. On the expiry of this License or in the event of its termination for any breach of any of the terms of conditions, the License shall forthwith without any delay remove himself/all occupants and all his/their belongings, articles and things from the said premises. Upon the licensee failing to take over or remove his/its belongings the same shall be removed by Licensor at the completed absolute cost and risk of Licensee and after such removal it shall not be open for the Licensee to raise any claim or dispute with regard to the same.
14. Nothing contained herein shall be construed as creating any right, interest, easement, tenancy or sub-tenancy of the said premises in favour of the Licensee, other than the permissive right of use and enjoyment of the said premises hereby granted.
15. The Licensor shall have the right to inspect Page 9 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined the said premises by any trustee or through authorized agent, to satisfy himself/themselves that the said premises are used in accordance with the terms and conditions of this Agreement. It is explicitly agreed and understood that the Licensee is granted only permissible use of the premises and is not exclusive possession of the premises. The Licensor is having and shall always have two set of keys of the main door of the flat."
10. On close reading of the said clauses of the Leave and License Agreement, Clause No.8 clearly speaks that on the expiry of the License or in the event of its termination for any breach of any of the conditions committed by the Licensee, the Licensee shall forthwith without any delay remove himself from the suit premises, failing which, Licensee shall be removed by Licensor at his own risk and cost, and that time, the Licensee shall not resist such action taken at the behest of Lincessee. The parties have clearly admitted the terms that the appellant is given a permissive right to use and enjoy the suit property and no right given by the tenancy or sub-
Page 10 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined tenancy can be construed. It is also agreed by and between the parties that the Licensor shall have the right to inspect the said premises by any trustee or through authorized agent, to satisfy himself/themselves as to the fact that whether the premises are being used in accordance with the terms and conditions of the Leave and License Agreement. It is also agreed by and between the parties that the Licensee is granted only permission to use the premises and there is no exclusive possession of the premises. Thus, the intention of parties was not to create tenancy and the License took possession by virtue of terms and conditions of Leave and License Agreement which was renewed from time to time till 31.05.2017.
11. On scrutinizing the aforesaid Clauses of Leave and License Agreement the submission of learned advocate for the appellant that the appellant was enjoying the suit properties exclusively and the intention of the parties was Page 11 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined not to create Leave and License Agreement but was to create a tenancy/lease does not hold ground. The parties are governed by the Leave and License Agreement on 25.06.2016 and even prior Leave and License Agreement and there is no scope for any other interpretation. As per the submission of the learned advocate for the appellant that since the year 2006, Leave and License Agreement were executed between the parties on the same terms and conditions, which were renewed from time to time clearly suggest that the intention of parties was not create a License and not leave.
12. The decision relied upon by the learned advocate for the appellant in the case of Delta (supra) is not helpful to the case of the appellant, more particularly, the facts narrated in para 2, which are hereunder:-
2. These appeals are filed against the Judgment and Decree dated 2nd December, 1997 passed by the Division Bench of the High Court of Calcutta in Page 12 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined Appeal from Original Decree Nos. 148 of 1992 and 165 of 1992 (reported in AIR 1998 Cal 233).
Undisputed facts of the matter are that original owner of the premises was Abhiram Mullick (Since deceased) who created tenancy of the premises, namely, No. 4D, Council House Street, Calcutta in favour of Mallika Investment Company Private Limited. Dewars' Garage India Private Limited was inducted into the premises as the monthly tenant under Mallika Investment Company Private Limited. Dewar's Garage (India) Private Ltd. (in short `Dewar') was maintaining and running a petrol service station for sale of motor spares and components at the tenanted premises, Dewar had erected and built certain structures on the said premises. Dewar was subsequently amalgamated into Delta International Limited (appellant-plaintiff). By an agreement dated 18th July, 1970, they were executed leave and license agreement in Favour of ESSO Standard Eastern Inc. (in short ESSO). The ESSO in turn permitted Shyam Sunder Ganeriwalla, respondent no. 1, to run a petrol service station. By an Order passed in Company Petition No. 331 /91, Dewar was amalgamated with plaintiff (Delta International Limited). Further, the business undertakings and the estates of ESSO also had been taken over by the Act of Parliament and has been transferred and assigned by the Central Government in favour of M/s. Hindustan Petroleum Corporation Limited. In 1985, Delta International Limited filed Civil Suit No. 491/85 in the High Court of Calcutta for a perpetual injunction restraining the Defendants and/or their servants, agents and assigns from using any of the fixtures, fittings and accessories lying at suit premises; for damages, for wrongful use and occupation of the premises at the rate of Rs, 20,000 p.m. from 1st May, 1985, that is, the date of termination of leave and license as claimed in the plaint and for decree for possession of the said premises and other reliefs. The learned Single Judge Page 13 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined passed the decree in favour of the plaintiff by holding that the agreement in question was only a license agreement and it was not a sub-lease. In appeal, the said Judgment was reversed by holding mat the agreement in question constitutes a lease mainly on the basis of exclusive possession and the Division Bench observed that "to put is pithily, if an interest in immovable property entitling the transferees to enjoyment is created, it is a lease, if permission to use land without right to exclusive possession is alone granted, a licence is the legal result."
13. In the case of Delta (supra), the Hon'ble Apex Court has laid down the following propositions in paragraph No.14:-
14. The right given to the respondent to give it on sub-license was given, as respondent was only to operate petrol station, [clause 19] (5) On the basis of the aforesaid terms of the document, Mr. Ashok Desai, learned Senior counsel for the appellant submitted that the construction of the document would depend upon its pith and substance and not upon the labels that the parties may put upon it. Paramount test for determining whether it is lease or license is `the intention of the parties'. He submitted that exclusive possession of the premises being granted, although an important factor, does not preclude the court from holding that the document is in fact a license, particularly in cases where if the grantor did not have the power to grant a lease or is forbidden by Page 14 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined the provisions of the Rent Control legislations. He emphasised that dominant intention is to be found out in such cases from the document itself. He referred to the following principles stated in the decisions of this Court to advance his contention:
(a) The construction of a document would depend upon its pith and substance and not upon the labels that the parties may put upon it. This principal was laid down by this Court in the decisions of Inderjeet Singh Sial & Anr, v. Karam Chand Thapar and Ors., [1995] 6 SCC 166 and Vayallakath Muhammedkuty V/s. lllikkal Moosakutty, [1996] 9 SCC 382.
(b) The paramount test is `the intention of the parties' as stated in the case of Capt, B.V. D'Souza v. Antonio Fansto Fernandes, [1989] 3 SCC 574 and [1996] 9 SCC 382.
(c) Exclusive possession of the premises being granted, although an important factor, does not preclude the Court from holding that the document is in fact a license as decided in the case of Sohan Lal Naraindas v/s. Laxmidas Raghunath Gadit, [1971] I SCC 276 at p. 279 and Rajbir Kaur and Anr, v, M/s S. Chokesiri & `Co., [1989] 1 SCC I9 at p. 3l.33.
(d) Even where exclusive possession is granted, only a license will be created if the grantor did not have the power to grant a lease. This principal was laid down in the case of [1989] 1 SCC 19(supra).
(e) The appellant, as a monthly tenant, was forbidden by Section 14(1 ) of the Act to sublet the premises without the prior written consent of the Page 15 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined landlord. It is nobody's case that the prior written consent of the landlord was in fact obtained in the present case. It is, therefore, not possible to contend that any sub-lease was granted and any such purported disposition would be unenforceable arid void, (Decided in the case of Waman Shriniwas Kini v. Ratilal Bhagwandas & Co. (1959) Suppl. (2) SCR 217.
(f) Where the dominant intention is to use the premises with fittings and fixtures for the purpose of running a business, the same does not tantamount to a lease of immoveable property as decided in the case of Uttam Chand v.S.N. Lalwani, AIR (1965) SC 716, paras 11 and 12.
(6) As against this, Mr. D.P. Gupta, learned senior counsel for the respondent no, 1 submitted that for resolving the dispute that the document is a lease or a license, the legal principles have been laid down in a long line of decisions which inter alia are as under ; -
(a) The Court looks at the substance of the transaction and not the label which the parties may have agreed to put on the transaction. The Court is entitled to decide whether or not the agreement between the parties is a mere camouflage to get round the rigours of rent control legislations,
(b) Irrespective of the label that may have been put upon the transaction by the parties, the Court would gather the true intention of the parties as to whether an interest in land or premises was sought to be created or not.
(c) Exclusive possession is a most significant Page 16 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined indicator to hold that the document creates tease.
(7) In support of his contentions, learned counsel for the respondent referred to the decisions of this Court in the cases of Associated Hotels (P) Ltd v.
R.N. Kapoor, (I960) 1 SCR 368; Sohonlal Naranidas v. Laxmidas Raghunath Gadit, [1971] 1 SCC 276, Capt. B,V. De'Souza v. Antonio Fqnsto Fernandes, [1989] 3 SCC 574, Tulsi v.Paro (dead), [1997] 2 SCC 706 and K. Achuta Bhat v. Veeramaneni Manga Devi & Anr,, [1989] 1 SCC 9.
(8) Further, the learned counsel for the respondent referred to various clauses of the Deed for finding out the intention of the parties and referred to certain terms such as :-
(a) The licensee is described in the agreement so as to include its successors and assigns as per the Memorandum of Agreement.
(b) The expression "demised premises" has been used three times in clause 18 which leaves no doubt that interest in the property is created.
(c) The operative clause is in the language of a format lease. What is granted and given to use, occupy, enjoy, run and work is the premises described in the First Schedule together with the plant and machinery, fixtures and fittings set out in the Second Schedule.
(d) ESSO was to pay for electricity^ was liable to repair the fittings and fixtures and to keep them in proper running and usable condition, was entitled to bring in and instal other machinery, was to take out necessary licenses and Insurance policies, could Page 17 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined continue the business either in its own name or in the name of Dewar (subject to indemnity) and would not assume any liability or responsibility for taking over the existing employees, [clauses 5,6, 7, S and 11].
(e) ESSO would have the right to grant leave and license to a third party during the continuance of the agreement, [clause 13]
(f) It was contemplated that if the Dewar is able to obtain a lease of the said premises on terms which would not be inconsistent with ESSO's standard form, then Dewar will grant a sub-lease to ESSO for at least a period of 10 years with three renewal options; [clause 15 (a)] (9) From the aforesaid submissions it is apparent that the common contention of the learned counsel for both the parties is that the Court has to gather and find out the true intention of the parties' as to whether the document creates a lease or license;
the dominant intention of the parties is to be gathered from the terms of the document irrespective of the labels that the parties may put upon it. It is to be stated that even though it is the common contention of the learned counsel for the parties that dominant intention of the parties is to be gathered from the document, yet all throughout the question had remained a vexed one, having no easy solution and precise mathematical tests. Because ultimately `intention of the parties' is to be inferred. For this purpose, we would first refer to the tests laid down by this Court in the case of Associated Hotels of India Ltd. v. R.N. Kapoor, [1960] 1 SCR 368 which are relied upon in subsequent decisions. In minority judgment Page 18 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined rendered by Subba Rao, J, the Court held that there is a clear distinction between lease and license: the dividing line is clear, though sometimes it becomes very thin or even blurred and observed that for such determination following propositions may be taken as well established ;
(1) To ascertain whether a document creates a licence or lease, the substance of the document must be preferred to the form;
(2) The real test is the intention of the parties- Whether they intended to create a lease of a licence;
(3) If the document creates an interest in the property, it is a lease; but if it only permits another to make use of the property, of which the legal possession continues with the owner, it is a licence; and (4) if under the document a party gets exclusive possession of the property, prima facie, he is considered to be a tenant; but circumstances may be established which negatived the intention to create a lease."
(10) Before laying down the aforesaid proposition, the Court held as under-
"At one time it was thought that the test of exclusive possession was infallible and if a person Was given exclusive possession of a premises, it would conclusively establish that he was a lessee. But there was a change and recent trend of judicial opinion is reflected in Errington v. Errington, wherein Lord Denying reviewing the case law on Page 19 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined the subject summarizes the result of his discussion thus:
"The result of all these cases is that, although a person who is let into exclusive possession is, prima facie, to be considered to be tenant, nevertheless he will not be held to be so if the circumstances negative any intention to create a tenancy."
The Court of Appeal again in Cobb v. Lane considered the legal position and laid down that the intention of the parties was the real test for ascertaining the character of a document. At p. 1201, Somervell, L. J., stated :
"... the solution that would seem to have been found is, as one would expect, that it must depend on the intention of the parties."
Denning, L.J., said much to the same effect:
"The question in all these cases is one of intention : Did the circumstances and the conduct of the parties show that all that was intended was that the occupier should have a personal privilege with no interest in the land?"
11. At this stage, it would be worthwhile to quote some more instructive discussion from the case of Cobb and Another V. Lane, (1952) 1 All. E.R, 1199 rendered by three learned Judges in their judgments given separately :-
Somervell, L,J, observed ;
"Certainly under the old cases (and I doubt if this Page 20 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined has been affected by the modem authorities), if all one finds is that somebody has been in occupation for an indefinite period with no special evidence of how he got there or of any arrangement being made when he went into occupation, it may be that the court will find a tenancy at will. I am assuming that there is no document, or clear evidence as to terms. The modern cases establish that, ft there is evidence of the circumstances in which the person claiming to be a tenant at will went into occupation those circumstances must be considered in deciding what the intention of the parties was."
The learned judge further observed :
"No doubt, in former days, except for the question of the statute, the distinction between a tenancy, whether at will or for a period, and a licence was not so important as it has become since the Rent Restrictions Acts came into operation. In many cases under those Acts it has a special importance. That fact has led to an examination of the distinction, and the solution that -would seem to have been found is, as one -would expect, that it must depend on the intention of the parties."
Denning, L.J, further observed to the same effect as under :
"Under the old cases there would have been some colour for saying that the brother was a tenant at will, but the old cases can no longer be relied on. Owing to the impact of the Rent Acts, the courts have had to define more precisely the difference between a tenant and a licensee.". ...The question in all these cases is one of intention: Did the Page 21 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined circumstances and the conduct of the parties show that all that was intended was that the occupier should have a personal privilege with no interest in the land?"
Delivering concurring judgment, Romer. LJ, further considered the facts and observed :
"She was not a tenant at will, and unless she was, she could not create the tenancy on which the defendant relies. In the absence of a sufficient title or interest in her to carve out or to create a similar tenancy in the defendant, his claim. I say, fails in limine."
12. Further, in his judgment, Lord Denning, 1. referred to an earlier decision in the case of Errington V. Errington, (1952) 1 AII.E.R. 149 wherein the Court held that the test of exclusive possession is by no means decisive. For determining what was the intention of the parties the Court relied upon following observations from the decision in the case of Booker v. Palmer, (1942) AH England Law reporter 677 wherein Lord Greene, M.R. held :.-
"To suggest 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 relationship where the circumstances and the conduct of the parties negative any intention of the kind. "
13. Alongwith other cases, the aforesaid case was referred to and relied upon in the case of Rajbir Page 22 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined Kaur and Another v. Ms,. S, Chokesiri and Co., [1989] 1 SCO 19, this Court considered and held that ultimately the question whether a transaction is a lease or licence "turns on the operative intention of the parties and there is no single, simple litmus test to distinguish one from the other."
13. The relevant discussion in paragraph 22 is as under : -
"22. It is essential to the creation of a tenancy that the tenant be granted the right to the enjoyment of the property and that, further, the grant be for consideration. While the definition of `lease' in Section 105 of the Transfer of Property Act, 1882, envisages the transfer of a right to enjoy the property, on the other hand the definition of a `licence' under section 52 of the Indian Easements Act, 1882, consistently with the above, excludes from its pale any transaction which otherwise, amounts of an "easement" or involves a transfer of an interest in the property, which is usually involved in the case of a transfer of right to enjoy it. These two rights viz. Easements and lease in their very nature, are appurtenant to the property. Oh the other hand, the grant only for the right to use the premises without being entitled to the exclusive possession thereof operates merely as a licence. But the converse implications of this proposition need not necessarily and always be true. Wherever there is exclusive possession, the idea of a licence is not necessarily ruled out. English law contemplates what are called `Possessory Licences' which confer a right of exclusive possession, marking them off from the more usual type of licences which serve to Page 23 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined authorise acts which would otherwise be trespassess Thus exclusive possession itself is not decisive in favour of a lease and against a mere licence, for, even the grant of exclusive possession might turn out to be only a licence and not a lease `where the grantor himself has no power to grant the lease. In the last analysis the question whether a transaction is a lease or a licence "turns on the operative intention of the parties" and that there is no single, simple litmus test to distinguish one from the other. The "solution that would seem to have been found is as one would expect, that it must depend on the intention of the parties.
"(Emphasis added) Dealing with the contention that intention of the parties is to be determined upon a proper construction of the deed entered into between the parties, and that alone is a decisive matter, the Court dealt with the said contention in paragraph 32 and observed as under : -
"Indeed learned counsel placed strong reliance on the following observations by this Court in Mrs. M.N. Clubwala V. Fida Hussain Saheb, (1964) 6 SCR 642:-
"Whether an agreement creates between the parties the relationship of landlord and tenant or merely that of licensor and licensee the decisive consideration is the intention of the parties. This intention has to be ascertained on a consideration of all the relevant provisions in the agreement."
(Emphasis supplied) Page 24 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined The proposition of Dr. Chitale as to the conclusiveness of What emanates from the construction of the documents has, in this case, its own limitations. The import, significance and conclusiveness of such documents making, or evidencing, the grants fall to be examined in two distinct contexts. The dispute may arise between the very parties to the written instrument, where on the construction of the deed one party contends that the transaction is a `licence' and the other that it is a `lease'. The intention to be gathered from the document read as a whole has, quite obviously, a direct bearing. But in cases where, as here, the landlord alleges that the tenant has sublet the premises and where the tenant, in support of his own defence sets up the plea of a mere licensee and relies upon a deed entered into, inter se, between himself and the alleged licensee, the landlord who is not a party to the deed is not bount by emanates from the construction of the deed. At best, it is a piece of evidence, the weight to be accorded to which will necessarily depend upon all the other circumstances of the erase; The tenant arid the subtenant, who jointly set up a plea of licence against the landlord may choose to camouflage the truth and substance of the transaction behind a facade of a self-serving and conveniently drafted instrument."
14. The facts in the aforesaid case were that the tenancy was created and thereafter sub-lease was created.
Thereafter, the premises was given on leave and license to the occupier. The suit was filed for permanent injunction Page 25 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined restraining the defendant from using the furniture fixtures and for damages of wrongful use and occupation of the premises. In the present case right throughout the intention of parties was to create a License and on permission the suit property was handed over to appellant.
15. The contention of not issuing the notice under Section 106 of the Transfer of Property Tax Act, 1882 has no place in the background of the facts. In the present case, as observed above, the intention was not to create a lease but the intention was specific and clear which can be gathered from the pleadings and oral evidence. The Leave and License Agreement which was for a limited period.
Once the license is terminated by the licensor, the status of licensee is seize and the nature of possession becomes illegal and without any permission. Once the Licensor establishes that the license agreement has come to an end and there is no renewal of the license agreement, the Page 26 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined Licensee has no right to retain the possession of the suit property.
16. As per the submission of learned Advocate for the appellant, the case of Maria Margarida Sequeria Fernandes and Ors.Vs. Erasmo Jack de Sequeria (Dead) through L.Rs. reported in AIR, 2012 SCC 1727, does not apply to the facts of the present case, since the case before the Hon'ble Apex Court was not pertaining to the tenancy, and in the present case, the intention of the parties was to create a lease. Such submission has no force on the ground that in the Written Statement there is no contention of the appellant that the intention of the parties was to create the tenancy and not a license, this being a vital defence which is missing in the written statement. Now, at this stage, the appellant can not take the defence of intention of creating a lease.
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17. In the case of Maria (supra), the Hon'ble Supreme Court has observed in paragraph Nos. 81, 82, 84, 85, 101 and 102 which is as under:-
"81. Due process of law means nobody ought to be condemned unheard. The due process of law means a person in settled possession will not be dispossessed except by due process of law. Due process means an opportunity for the defendant to file pleadings including written statement and documents before the Court of law. It does not mean the whole trial. Due process of law is satisfied the moment rights of the parties are adjudicated by a competent Court.
82. The High Court of Delhi in a case Thomas Cook (India) Limited v. Hotel Imperial 2006 (88) DRJ 545 held as under:
"28. The expressions `due process of law', `due course of law' and `recourse to law' have been interchangeably used in the decisions referred to above which say that the settled possession of even a person in unlawful possession cannot be disturbed `forcibly' by the true owner taking law in his own hands. All these expressions, however, mean the same thing -- ejectment from settled possession can only be had by recourse to a court of law. Clearly, `due process of law' or `due course of law', here, simply mean that a person in settled possession cannot be ejected without a court of law having adjudicated upon his rights qua the true owner.Page 28 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024
NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined Now, this `due process' or `due course' condition is satisfied the moment the rights of the parties are adjudicated upon by a court of competent jurisdiction. It does not matter who brought the action to court. It could be the owner in an action for enforcement of his right to eject the person in unlawful possession. It could be the person who is sought to be ejected, in an action preventing the owner from ejecting him. Whether the action is for enforcement of a right (recovery of possession) or protection of a right (injunction against dispossession), is not of much consequence. What is important is that in either event it is an action before the court and the court adjudicates upon it. If that is done then, the `bare minimum' requirement of `due process' or `due course' of law would stand satisfied as recourse to law would have been taken. In this context, when a party approaches a court seeking a protective remedy such as an injunction and it fails in setting up a good case, can it then say that the other party must now institute an action in a court of law for enforcing his rights i.e., for taking back something from the first party who holds it unlawfully, and, till such time, the court hearing the injunction action must grant an injunction anyway? I would think not. In any event, the `recourse to law' stipulation stands satisfied when a judicial determination is made with regard to the first party's protective action. Thus, in the present case, the plaintiff's failure to make out a case for an injunction does not mean that its consequent cessation of user of the said two rooms would have been brought about without recourse to law."
83. We approve the findings of the High Court of Delhi on this issue in the aforesaid case.
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84. False claims and defences are really serious problems with real estate litigation, predominantly because of ever escalating prices of the real estate. Litigation pertaining to valuable real estate properties is dragged on by unscrupulous litigants in the hope that the other party will tire out and ultimately would settle with them by paying a huge amount.This happens because of the enormous delay in adjudication of cases in our Courts. If pragmatic approach is adopted, then this problem can be minimized to a large extent.
85. This Court in a recent judgment in Ramrameshwari Devi and Others (AIR 2011 SC (Civ) 1776 : 2011 AIR SCW 4000) (supra) aptly observed at page 266 that unless wrongdoers are denied profit from frivolous litigation, it would be difficult to prevent it. In order to curb uncalled for and frivolous litigation, the Courts have to ensure that there is no incentive or motive for uncalled for litigation. It is a matter of common experience that Court's otherwise scarce time is consumed or more appropriately, wasted in a large number of uncalled for cases. In this very judgment, the Court provided that this problem can be solved or at least be minimized if exemplary cost is imposed for instituting frivolous litigation. The Court observed at pages 267-268 that imposition of actual, realistic or proper costs and/or ordering prosecution in appropriate cases would go a long way in controlling the tendency of introducing false pleadings and forged and fabricated documents by the litigants. Imposition of heavy costs would also control unnecessary adjournments by the parties. In Page 30 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined appropriate cases, the Courts may consider ordering prosecution otherwise it may not be possible to maintain purity and sanctity of judicial proceedings.
Grant or refusal of an injunction
86. Grant or refusal of an injunction in a civil suit is the most important stage in the civil trial. Due care, caution, diligence and attention must be bestowed by the judicial officers and judges while granting or refusing injunction. In most cases, the fate of the case is decided by grant or refusal of an injunction. Experience has shown that once an injunction is granted, getting it vacated would become a nightmare for the defendant. In order to grant or refuse injunction, the judicial officer or the judge must carefully examine the entire pleadings and documents with utmost care and seriousness.
87. The safe and better course is to give short notice on injunction application and pass an appropriate order after hearing both the sides. In case of grave urgency, if it becomes imperative to grant an ex-parte ad interim injunction, it should be granted for a specified period, such as, for two weeks. In those cases, the plaintiff will have no inherent interest in delaying disposal of injunction application after obtaining an ex-parte ad interim injunction. The Court, in order to avoid abuse of the process of law may also record in the injunction order that if the suit is eventually dismissed, the plaintiff undertakes to pay restitution, actual or realistic costs. While passing the order, the Court must take into consideration the pragmatic realities and pass proper order for mesne profits. The Court Page 31 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined must make serious endeavour to ensure that even- handed justice is given to both the parties.
88. Ordinarily, three main principles govern the grant or refusal of injunction.
a) prima facie case;
b) balance of convenience; and
c) irreparable injury, which guide the
Court in this regard.
89. In the broad category of prima facie case, it is imperative for the Court to carefully analyse the pleadings and the documents on record and only on that basis the Court must be governed by the prima facie case. In grant and refusal of injunction, pleadings and documents play vital role.
Mesne Profits
90. Experience has shown that all kinds of pleadings are introduced and even false and fabricated documents are filed in civil cases because there is an inherent profit in continuation of possession. In a large number of cases, honest litigants suffer and dishonest litigants get undue benefit by grant or refusal of an injunction because the Courts do not critically examine pleadings and documents on record. In case while granting or refusing injunction, the Court properly considers pleadings and documents and takes the pragmatic view and grants appropriate mesne profit, then the inherent interest to continue frivolous litigation by unscrupulous litigants would be reduced to a large extent.
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91. The Court while granting injunction should broadly take into consideration the prevailing market rentals in the locality for similar premises. Based on that, the Court should fix adhoc amount which the person continuing in possession must pay and on such payment, the plaintiff may withdraw after furnishing an undertaking and also making it clear that should the Court pass any order for reimbursement, it will be a charge upon the property.
92. The Court can also direct payment of a particular amount and for a differential, direct furnishing of a security by the person who wishes to continue in possession. If such amount, as may be fixed by the Court, is not paid as security, the Court may remove the person and appoint a receiver of the property or strike out the claim or defence. This is a very important exercise for balancing equities. Courts must carry out this exercise with extreme care and caution while keeping pragmatic realities in mind and make a proper order of granting mesne profit. This is the requirement of equity and justice.
93. In the instant case, if the Courts below would have carefully looked into the pleadings, documents and had applied principle of the grant of mesne profit, then injustice and illegality would not have perpetuated for more than two decades.
94. We have heard the learned counsel for the parties at length and perused the relevant judgments cited at the Bar. In the instant case, admittedly, the Page 33 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined respondent did not claim any title to the suit property. Undoubtedly, the appellant has a valid title to the property which is clearly proved from the pleadings and documents on record.
95. The respondent has not been able to establish the family arrangement by which this house was given to the respondent for his residence. The Courts below have failed to appreciate that the premises in question was given by the appellant to her brother respondent herein as a caretaker. The appellant was married to a Naval Officer who was transferred from time to time outside Goa. Therefore, on the request of her brother she gave possession of the premises to him as a caretaker. The caretaker holds the property of the principal only on behalf of the principal.
96. The respondent's suit for injunction against the true owner - the appellant was not maintainable, particularly when it was established beyond doubt that the respondent was only a caretaker and he ought to have given possession of the premises to the true owner of the suit property on demand. Admittedly, the respondent does not claim any title over the suit property and he had not filed any proceedings disputing the title of the appellant.
97. This Court in Puran Singh v. The State of Punjab (1975) 4 SCC 518 held that an occupation of the property by a person as an agent or a servant at the instance of the owner will not amount to actual physical possession.
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98. This Court in Mahabir Prasad Jain (supra) has held that the possession of a servant or agent is that of his master or principal as the case may be for all purposes and the former cannot maintain a suit against the latter on the basis of such possession.
99. In Sham Lal v. Rajinder Kumar & Others 1994 (30) DRJ 596, the High Court of Delhi held thus:
"On the basis of the material available on record, it will be a misnomer to say that the plaintiff has been in 'possession' of the suit property. The plaintiff is neither a tenant, nor a licensee, nor a person even in unlawful possession of the suit property. Possession of servant is possession of the real owner. A servant cannot be said to be having any interest in the suit property. It cannot be said that a servant or a chowkidar can exercise such a possession or right to possession over the property as to exclude the master and the real owner of the property from his possession or exercising right to possession over the property.
Possession is flexible term and is not necessarily restricted to mere actual possession of the property. The legal conception of possession may be in various forms. The two elements of possession are the corpus and the animus. A person though in physical possession may not be in possession in the eye of law, if the animus be lacking. On the contrary, to be in possession, it is not necessary that one must be in actual physical contact. To gain the complete idea of possession, one must consider Page 35 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined
(i) the person possessing, (ii) the things possessed and, (iii) the persons excluded from possession. A man may hold an object without claiming any interest therein for himself. A servant though holding an object, holds it for his master. He has, therefore, merely custody of the thing and not the possession which would always be with the master though the master may not be in actual contact of the thing. It is in this light in which the concept of possession has to be understood in the context of a servant and & master."
100. The ratio of this judgment in Sham Lal (supra) is that merely because the plaintiff was employed as a servant or chowkidar to look after the property, it cannot be said that he had entered into such possession of the property as would entitle him to exclude even the master from enjoying or claiming possession of the property or as would entitle him to compel the master from staying away from his own property.
101. Principles of law which emerge in this case are crystallized as under:-
1. No one acquires title to the property if he or she was allowed to stay in the premises gratuitously.
Even by long possession of years or decades such person would not acquire any right or interest in the said property.
2. Caretaker, watchman or servant can never acquire interest in the property irrespective of his long possession. The caretaker or servant has to give possession forthwith on demand.
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3. The Courts are not justified in protecting the possession of a caretaker, servant or any person who was allowed to live in the premises for some time either as a friend, relative, caretaker or as a servant.
4. The protection of the Court can only be granted or extended to the person who has valid, subsisting rent agreement, lease agreement or license agreement in his favour.
5. The caretaker or agent holds property of the principal only on behalf of the principal. He acquires no right or interest whatsoever for himself in such property irrespective of his long stay or possession.
102. In this view of the matter, the impugned judgment of the High Court as also of the Trial Court deserve to be set aside and we accordingly do so. Consequently, this Court directs that the possession of the suit premises be handed over to the appellant, who is admittedly the owner of the suit property.
18. In the present case, the learned trial Court has considered various clauses of the Leave and License Agreement and has also considered the oral evidence led by the parties. The learned trial Court has rightly observed that in absence of renewal of Leave and License Agreement, defendant No.1 has no right to retain the possession of the suit property. Applying the aforesaid Page 37 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024 NEUTRAL CITATION C/FA/510/2024 ORDER DATED: 09/02/2024 undefined principles, the learned trial Court has rightly observed that the possession of the suit property by defendant No.1 is illegal and rightly decreed the suit.
19. In the totality of the facts and considering the decision of Maria (supra), this Court is of the view that the impugned judgment and decree passed by the learned trial Court does not suffer any infirmity either in law or on facts and this Court confirms the same. Hence, First Appeal is dismissed as devoid of merits. No order as to costs.
ORDER IN CIVIL APPLICATION In view of the order passed in the main matter, the present Civil Application does not survive and stands disposed of accordingly.
(D. M. DESAI,J) MANOJ Page 38 of 38 Downloaded on : Fri Feb 23 21:04:04 IST 2024