Shri Atul Gupta And Ors. vs Delhi Cloth & General Mills Co. ...
1991 Latest Caselaw 6 Del

JUDGMENT

Sunanda Bhandare, J.

1. This landlord's second appeal is directed against the judgment and order of the Rent Control Tribunal (hereinafter referred to as the Tribunal) dated 14.9.1973. The brief facts of the case are as follows :

2. Three shops bearing No. 5, 6 and 7 Krishna Building, Paharganj, New Delhi were let out at a monthly rent of Rs. 102/-, to respondent No. 1 by late Smt. Kishen Devi, predecessor in interest of the appellants. A petition for eviction on the ground of sub-letting was filed by Smt. Kishen Devi on 1.2.1968 against the respondents alleging that respondent No. 1 had parted with possession of the aforesaid shops in favor of respondent No. 2 without the consent in writing of Smt. Kishen Devi, The contractual tenancy was terminated by notice dated 18.11.1967 and the shops being in the walled city of Delhi, necessary permission was obtained from the Competent Authority under the Slum Areas (Improvement & Clearance) Act for filing the eviction petition. The respondents resisted the eviction petition and denied the allegations of sub-letting. The respondent No. 2 was an agent of respondent No. 1 under the terms of agreement of agency dated. 20.5.1964 for selling the goods manufactured by respondent No. 1 It was submitted by

respondent No. 1 that the furniture and the goods lying in the demised premises exclusively belong, to respondent No. 1, and respondent No. 2 was carrying on the business in the demised premises as an agent for and on behalf of respondent No.I. It was averred that respondent No. 1 had a right to remove respondent No.2 from the premises in terms of the agency agreement and, therefore, the legal possession was the respondent No. 1 and there was no sub-letting, assignment or parting with possession of the demised premises in favor of respondent No. 2 as contemplated under Section 14(1)(b) of the Delhi Rent Control Act (hereinafter referred to as the Act). The Additional Rent Controller (hereinafter referred to as the Controller) by his order dated 23.4.1970 held that respondent No. 2 was in exclusive possession of the demised premises and be was selling some goods on his own behalf from the demised premises and paying Rs 102/- per month as rent to respondent No.1 and, therefore, the appellant had proved sub-letting by respondent No.1 and consequently allowed the eviction petition and ordered recovery of possession in favor of Smt. Kishen Devi. Feeling aggrieved by the said order of the Controller, respondent No.1 herein filed an appeal before the Tribunal. During the pendency of the appeal Smt. Kishen Devi died and her legal heirs i. e. the appellants herein were substituted in her place vide order of the Tribunal dated 20.7.1973. The Tribunal by the impugned order allowed the appeal filed by respondent no I herein and set aside the judgment ands order of the Controller dated 23.4.1970. The Tribunal held that the clauses of the agency agreement between respondent No. 1 and respondent No.2 clearly indicated that respondent No.1 had a right to re-enter the premises and it could not be said that the tenant had parted with the legal possession of the premises in favor of the agent. It is this order of the Tribunal which is challenged by the appellant in the present second appeal.

3. It was contended by the learned counsel for the appellants that the agency agreement entered by respondent No.1 with respondent No.2 was only an eye-wash and respondent No. 2 was carrying on his business as well from the demised premises. Respondent No.2 had obtained a license under the Delhi Shops and Establishments Act in his own name. He paid electricity and other charges in respect of the shops The commission received by respondent No.2 from respondent No.1 is less than Rs 500/ per month and respondent no, 1 is deducting Rs. 102/- per month towards rent of the shops from this commission All the staff in the shops is employed by respondent No.2 is now in full possession of the shops and respondent No.1 has nothing to do with the shops any more. Learned counsel submitted that the main business of respondent No.2 is sale of silk cloth and other goods which are not manufactured by respondent No.1 and the agency agreement is a camouflage and is in fact a lease deed permitting respondent No. 2 to use the shops. Learned counsel referred to Smt. Rajbir Kaur and Anr. v. S. Chokosiri & Co. , Sh. K. Achuta Bhat v. Smt. Veerammeni Manga Devi and Anr. and Permanand Gulabchand & Co. v. Mooligi Visanji, and submitted that the real test is to find out whose business is it, that is being run from the premises.

4. On the other hand, it was contended by the learned counsel for respondent No. 1 that the High Court should not interfere with the finding of the Tribunal unless a substantial question of law is raised in the appeal. Learned counsel submitted that the Tribunal has considered the agency agreement between respondent No.1 and respondent No.2 and has come to a positive finding that there is no sub-letting, assignment or parting with possession and this Court should not re-appreciate the evidence and consider

the agency agreement and form its own opinion in that regard. Learned counsel further submitted that the appellant had not raised the question regarding the authenticity of the agency agreement before the Controller or in is replication filed in reply to the written statement filed by respondent No. 1 It is, therefore, not open the appellants to now allege that the agency agreement is bogus or that it is a camouflage. Learned counsel further submitted that the clauses in the agency agreement are very clear. Clause 21 of the agreement clearly stipulates that in case of violation of any of the terms of the agreement, the company (respondent No. 1) will have the right to enter the premises including the right to break open the lock of the shops and take possession of all the goods in stock and sale proceeds at any time without notice to the Agent. Clause 27 of the said agreement stipulates that on the death of the agent, the agency agreement will automatically stand terminated as it is a contract of personal service and his legal heirs would not have any right to continue in the premises Coupled with this, the fact that the board put up on the shops mentioned the name of respondent No. 1, the staff was also to be engaged by respondent No. 2 according to the standards specified by respondent No. 1 and the furniture in the shops belong to respondent No. 1. All these facts show that the real control continues with respondent No. 1 and there is no question of parting with possession or subletting by respondent No. 2. Learned counsel submitted that in fact respondent No. 2 expired during the pendency of the second appeal and now the agency has not devolved on all the legal heirs of respondent No. 2 Learned counsel relied on Sh. B.M.

Lall and Anr. v. Dunlop Rubber Co. and Anr., , Mst. Lajwanti v. Lal Chand and Anr., 1969 (1) RCR 48, Vinod Kumar v. Ajit Singh Ahluwalia and Ors., 1969(1) RCR 181, Smt. Shanti Devi and Anr. v State and Ors., and Helper Girdhari Lal v. Ajit Singh Ahluwalia and Ors., , and submitted that what is important to be seen is who has the legal possession of the shops and not who is in occupation of the shops. Learned counsel submitted that when a company is the tenant it is not physically possible for the company or its directors to be in occupation of the premises all the time. The Company has to appoint agents to run its business. Thus, if the control of the premises is of the company it does not amount to subletting.

5. At the outset, I must refer to the observations made by the Tribunal regarding the authenticity of the agency agreement Ext. R-1. In paragraph 12 of the judgment, it is observed that" it is nobody's case that the document was a fake document and that it did not repose genuine terms of the arrangement between the appellant and respondent No. 2". Learned counsel for the appellant relied on the judgment of the Supreme Court in Smt. Rajbir Kaur's case (supra) and submitted that the parties proceeded on the basis that such an allegation was in fact made by the appellant regarding the genuiness of the agency agreement. Undoubtedly, in parties had proceeded to trial on certain basis even though the pleadings were defective, it would not preclude a party from raising the question of authenticity of the agency agreement either before the Controller or before the Tribunal. The parties have not led evidence on this issue and I find that the appellants have not raised a ground to that effect even in the second appeal filed in this Court. It is only at the stage of arguments that the learned counsel raised doubt regarding the genuineness of the agency agreement. The appellants thus cannot challenge the genuineness of the agency agreement at this late stage.

6. The second question is whether the agency agreement is a camouflage and is in fact a lease agreement between respondent No. 1 and respondent No. 2 It is well settled that a lease is a transfer of an interest in the immoveable property where the Lesser parts with his rights to enjoy the property during the term of the lease and the lessee gets an exclusive right to the said property to the exclusion of the Lesser. However, if a document gives a right to use the property under certain terms and conditions and the owner keeps the control himself, it is a license. In the case of a license the legal possession continues to be with the owner of the property but only a permission is given to use the premises for a particular purpose to the license. The Supreme Court in Association Hotels of India Limited v. R.N. Kapur, has enunciated the tests for deciding whether a particular document creates a lease or a license. I find that the Tribunal has considered the agency agreement Ext. R1 in the light of the tests laid down by the Supreme Court in Association Hotels of India Limited's case (supra) to ascertain whether the agency agreement creates a lease or a license and came to the conclusion that the clauses in the agency agreement did not create a lease but respondent No. 2 is given a license to use the shops under certain terms and conditions. The Tribunal has found that respondent No. 1 has not surrendered the tenancy right in favor of respondent No. 2. I find that the Tribunal has considered the agency agreement and the question ol lease and license from all angles in the light of the law laid down by the Supreme Court and it does not call for interference under Section 32 of the Act. However, with the assistance of the learned counsel for the parties I have also perused the various clauses of the agency agreement Ext R1. The most important clauses in the said agreement are Clause 9(a), Clause 21 and Clause 27 which read thus :--

"9(a) All the goods shall be sold by the Agent at such rates as may be notified to him by the Company from time to time strictly on cash basis and all sale proceeds, including those from sale of bardana & empty cases etc. shall be credited to the Company's account. Cheques may be received by the Agent against payment of the Company's due solely at the Agent's risk and the Agent shall be responsible to the Company for their encashment.

21. The Company shall have the right to enter the premises of the store, including the right to break open the lock of the store and take possession of all the goods in stock and sale proceeds at any time without notice to the Agent, in the event of there being any actual or suspected breach of any of the terms of this agreement, any foul play and/or misconduct on the part of the Agent or his representatives in that connection, for which the company acting through its authorised representatives shall be tbe sole judge.

27. The Company reserves the right to open other stores under any other management at the place where the Agent has been given the store. In the event of the death of the agent, the agency agreement will automatically stand terminated from the date of the death of the agent as it is a contract for personal service and his legal heirs, executors or administrators shall be liable to band over complete charge of the store i e. cash, cloth, furnitures and any other assets of the Company, for which the agent was liable to account for, to the authorised representative of the Company."

7. On reading the afore-mentioned clauses it cannot be said that an interest in tbe shops was created in favor of respondent No. 2. I do not find any force in the contention of the learned counsel for the appellants that the rent being deducted from (he commission indicated that the shops were sub-

let to respondent No. 2. Under the terms of the agency agreement, in fact the premises were to be hired by the agent but in the present case, the premises were hired by the company (respondent No. 1) and were allowed to be used by the agent (respondent No. 2) for the purpose of selling the goods belonging to the company.

8. Thus, if the agent was made to re-pay the rent payable by the company, it cannot be said that there was sub-letting. That the agent was authorised to employ the staff at his cost or that he opens and shuts the shops every day or that he sells his own goods in violation of the agency agreement do not prove the sub tenancy as long as respondent No. 1 had not parted with the legal possession of the shops. Moreover, I do not find anything on record to show that the business of respondent No. 2 of sale of silk cloth was the major business. The Supreme Court in Smt. Rajbir Kaur's case (supra) has observed that the question whether a transaction is a lease or a license turns on the operative intention of the parties and there is not a single, simple litmus test to distinguish one from the other. This intention has to be ascertained on consideration of all the relevant provisions in the agreement. In the present case, from the terms of the agency agreement, it is clear that the intention is not to create a lease but is only to create an agency and the shops were given by respondent No. 1 to respondent No. 2 only as a licensee. I am satisfied that the Tribunal has come to the correct conclusion.

9. In the circumstances, the appeal is dismissed. Parties are left to bear their own costs.