Megh Raj vs M/S. D.C.M. Limited
2000 Latest Caselaw 153 Del

ORDER

Dr. M.K. Sharma, J.

1. The main issue that falls for consideration in this appeal is whether the appellant is a lessee or a licensee which is to be arrived at on the basis of the interpretation and construction of the agreement between the appellant/defendant and the respondent/plaintiff and marked Ex.PW2/1 and on the basis of surrounding circumstances. The trial court held that the appellant is a licensee which was affirmed by the appellate court as against which the present appeal has been preferred.

2. The respondent/plaintiff is the owner of shop No.5, Line No. C, Gaushala marg, Kishan Ganj, Delhi. The appellant/defendant took the aforesaid shop from the plaintiff as a licensee vide license deed dated 11.6.1980 at the rate of Rs. 50/-per month for the purpose of selling milk and milk products for the benefit of workers and their families residing in the DCM colony. The said license was for 2 years and was revokable even prior to that without assigning any reason. The said license was revoked by the respondent/plaintiff by a notice dated 12.8.1981. As the appellant defendant failed to deliver possession of the said shop even after revocation of the license a suit was instituted in the court of Subordinate Judge, Delhi seeking for a decree for possession and for recovery of Rs. 100/- as license fee and Rs. 500/-as damages. The appellant filed a written statement raising a preliminary objection that the plaintiff was not the owner of the property in question. It was also alleged that the appellant was not a licensee but is a lessee and a tenant there being relationship of landlord and tenant. On the pleadings of the parties six issues were framed in the suit. During the trial the parties led their evidence both oral and documentary and on closure of the same arguments of the counsel appearing for the parties were heard by the Subordinate Judge and by his judgment and decree dated 19.5.1989 a decree for possession was granted by the Subordinate Judge in favour of the respondent alongwith a decree for payment of Rs. 600/- with costs and also for payment of damages Rs. 250/- per month. Being aggrieved by the said judgment an appeal was preferred before the Additional District Judge, who by judgment dated 5.6.1999 dismissed the appeal. Being aggrieved by the same the present appeal has been preferred in this court by the appellant, on which I have heard the learned counsel appearing for the parties.

3. Mr. Sabharwal appearing for the appellant submitted that the agreement between the parties which is proved as Ex.PW2/1 ex facie indicates that the parties intended to create a tenancy and therefore, the civil court would have no jurisdiction to try the suit for possession as its jurisdiction would be barred by Section 50 of Delhi Rent Control Act. He also submitted that on a proper interpretation and construction of the said document as also the attending circumstances it is proved and established that the parties intended to creat a tenancy and not a license and therefore, the conclusion arrived at by the courts below are illegal and void. In support of his contention the learned counsel appearing for the appellant relied upon the decisions of the Supreme Court in B.M. Lall and others Vs. M/s. Dunlop Rubber Company (India) Limited and another , ; Smt. Rajbit Kaur and Another Vs. M/s. Chokesiri & Co. ; M/s. Permanand Gulabchand & Co. Vs. Mooligi Visanji, & M/s. Quality Cut Pieces & etc. Vs. M/s. M. Laxmi and Co., .

4. Learned counsel appearing for the respondent however, submitted that in a proper and true interpretation of the aforesaid document it is proved and established that what was intended to be created was a mere license and not a lease and therefore, the conclusions arrived at by both the courts below are legal and justified .

5. The question, therefore, to be decided in the present appeal is whether the agreement Ex.PW-2/1 dated 11.6.1980 was one of lease or license. The said deed is produced and proved during the trial as Ex.Pw-2/1. The relevant recitals and the clauses of the said deed are extracted below in order to appreciate the contentions of the counsel for the parties and also to arrive at a just decision in the appeal:

"THIS DEED OF LICENCE made at Delhi this 11th day of June,1980, between the Delhi Cloth and General Mills Co. Limited, ..... ..... (hereinafter referred as Company of the one part) and Shri Megh Raj S/o Shri Ram Pal Singh, Goushala Marg, Delhi (hereinafter referred as Licensee of the other part) witnesseth as follows:

That the company is the owner of DCM shop No. 5. Line No. C, Municipal No. 8659, Ward No. 16E, Goushala Marg, Delhi and the Company hereby agrees to give on licence the said shop to the licensee for carrying on the business of Milk in shop No. 5, Line No.C, Municipal No. 8659,Ward No.16E on terms and conditions as given below:

1) The shop will be run only for the sale of Milk and Milk Products viz., Butter, Ghee, Cream etc., for the benefit of the workers and their families residing in the DCM Housing Colonies.

4) The licensee shall not part with the physical possession of the premises or otherwise sublet or mortgage the said shop or any part thereof.

5) The licensee will not personally run the business so long he continues to be on the Company's role. However, he is allowed to run the business with the help of his representatives/Employees.

6. That this licence is neither heritable nor assignable and the licensee agrees not to part with its possession or otherwise assign, sublet mortgage etc. the said shop or any part thereof.

7. This licence is initially for a period of 2 years and can be renewed on same terms and conditions by the Company at its option after expiry of two years in which case it will not be deemed necessary to execute any fresh deed of licence.

8) Notwithstanding clause (2) above this licence is revocable at the will of the company without assigning any reason thereof whatsoever, and on such revocation of this licence the licensee agrees to hand over possession of the said shop in the same condition as he took from the company on licence (excepting reasonable wear and tear).

9) These presents do not and shall not be deemed to create any relationship of Landlord and tenant between the parties to his agreement.

10) The Company agrees to charge Rs. 50/- per month as licence fee at present for the use of the said shop, but it reserves to itself the right to charge such enhanced fee as it may determine at a later stage, solely at the discretion of the Company.

11A) The licensee further agrees that he shall not use the shop for any purpose other than that specified earlier in Clause No. 1. In case of change of trade without Company's written permission, this licence will automatically stand terminated and the licensee shall be liable to vacate the shop forthwith.

14. This licence shall stand terminated on breach of any of its conditions by the licensee, in which case the licensee shall vacate the shop and handover its vacant possession to the company.

6. The trial court and the appellate court on interpretation of the aforesaid clauses and the other attending circumstances and the vidence on record came to the conclusion that the aforesaid agreement was in fact a license and not a lease. It was also held that the aforesaid agreement did not create any interest in the property in favour of the appellant.

The expression 'lease' has been definded under Section 105 of the Transfer of Property Act to mean -

"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."

Section 52 of the Indian Easement Act defines the expression 'licence as:-

"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 an interest in the property. "

7. In B.M. Lal's case (supra) a similar question came up for consideration and in the said decision the distinction between a lease and a license was succinctly brought out by their Lordships of the Supreme Court. It was held that the lease is a transfer of a right to enjoy the premises, whereas the license is a privilege to do something on the premises which otherwise would be unlawful. It was also held that if the agreement is in writing, it is a question of construction of the agreement having regard to its terms and where its language is ambiguous, having regard to its object, and the circumstances under which it was executed whether the rights of the occupier are those of a lessee or a licensee. The Supreme Court further held that the transaction is a lease, if it grants an interest in the land, and it is a license if it gives a personal privilege with no interest in the land. It was held that the question is not of words but of substance and the label which the parties choose to put upon the transaction, though relevant is not decisive. It was also held that the test of exclusive possession is not conclusive, though it is a very important indication in favour of tenancy.

8. In Rajbir Kaur's case (supra) the Supreme Court after analysing the principles laid down by the English and Indian Courts, held that one of the twin principal tests by which a lease is distinguishable from the relationship created under a licence is the element of the right to exclusive possession involving the transfer of an interest in the property, the other being the 'rent' stipulated for the grant.

Making the point clear it was observed thus-

"In the last analysis the question whether a transaction is a lease of a license `turns on the operative intention of the parties' and that there is no single, simple litmus-test to distinguish one from the other",

It was also held that-

"in deciding whether a grant amounts to a lease or only a licence, regard must be had more to the substance than the form of the transaction. It is determined by the law and not by the label the parties choose to put on it. To give exclusive possession, there need not be express words to that effect;it is sufficient if the nature of the acts done by the grantee show that he has and was intended to have the right of exclusive possession. The fact that the agreement contains a clause that no tenancy is to be created will not, of itself, preclude the instrument from creating a lease",

9. In M.N. Clubwala Vs. Fida Hussain Saheb; Supreme Court has held thus-"Whether an agreement creates between the parties the relationship of landlord and tenant or merely that of a licensor and licensee, the decisive consideration is the intention of the parties. Its intention has to be ascertained on a consideration of the relevant provisions in the agreement. The aforesaid passage quotes in Rajbir Kaur's case would also show that apart from the provisions of the greement subsequent conduct of the parties can also be relied upon",

10. In a decision of this court in R.S.A. No. 62/1986 between Shri Kedar Singh Vs. Delhi Cloth & General Mills Co. Ltd. decided on 18.10.1996 this court laid down the marked distinction between a lease and license holding that the distinguishing features are- (1) To ascertain whether a document creates a license or a 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 or license;(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 license; 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 negatives the intention to create a lease.

11. One of the arguments of the respondent before the Courts below was that the aforesaid privilege of granting a license was given to the appellant because he was a servant of the respondent company. A similar question as to whether a personal privilege granted to a servant to occupy the accommodation of the employer for the greater convenience for his work came before the Supreme Court in the case of B.M. Lal and another Vs. M/s.Dunlop Rubber Co. (India) Ltd. (supra), It was held in the said case by the court that such a personal privilege granted to an employee is nothing but a license. It is only when he gets interest in the land, separate and distinct from his contract of service, this alone could be a lease. In the said case it was further held that since personal privilege and enjoyment of employer's house did not create an interest in the land, therefore, it was held to be a license.

12. In the present case the deed is described as a license deed but the said nomenclature as has been held by the Supreme Court, may be relevant but what is relevant is the nature of the allotment for which we have to consider the other relevant clauses which have been extracted above. Clause (1) thereof categorically provides that the shop would be run only for the sale of milk products namely-for butter, ghee, cream etc. for the benefit of the workers and their families residing in the DCM colony. Clause (6) thereof also categorically provides that license is neither heritable nor assignable and the licensee agrees not to part with or otherwise assign, sublet, mortgage etc, the said shop or any part thereof. Clause (5) provides that the licensee would not personally run the business so long as he continues to be on the Company's rolls but he shall run the business with the held of his representative or his employees. The license was also revokable at the will of the company without assigning any reason thereof and on such revocation the possession of the shop was required to be handed over in the same condition as it was taken from the Company on license. The express intention of the parties therefore, was that the shop would be run only for sale of a particular product and the aforesaid sale to be carried out from the said shop was to cater to the needs of a particular group of people namely - the workers and their families residing within the DCM housing colony. It was also one of the express conditions that the license would not be heritable or assignable and on expiry of the period of license i.e. a period of 2 years and on expiry of the renewed period, if any, possession was to be handed over to the respondent. It was also made clear in the deed that the appellant would not use the shop for any other purpose than for the purpose of selling the milk and milk products from the said shop. Similar clauses came up for consideration in a Full Bench decision of this court i.e. in DCM Limited and another Vs. Lt, Governor, Delhi and others; FAO(Os) No. 217/1990 decided on 1.10.1993 wherein the court considered the terms of the deed and construed it to be a license.

13. The aforesaid clause, therefore, would indicate that the aforesaid shop was allotted to the appellant as a personal privilege of working with the respondent. He was allowed to sell milk and milk products from the aforesaid shop meant only for a particular class of people and none else. Exclusive possession of the shop in question was not intended to be parted with, for the possession of the shop in question was given to him for a particular period which again was not made heritable or assignable. The parties, therefore,intended to create a license and not a lease and therefore, the courts below were justified in giving a concurrent finding of fact on the said aspect.

14. I find no merit in this appeal. The appeal stands dismissed without any costs.