Delhi High Court
Shiv Enterprises vs Govt. Of Nct Of Delhi & Anr on 26 September, 2024
$~27
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Order: 26.09.2024
+ W.P.(C) 5742/2012
SHIV ENTERPRISES .....Petitioner
Through: Mr. Asutosh Lohia, Ms.
Shraddha Bharggav, Mr. Sharan
Mehta and Mr. Rohit Sarajwat,
Advs.
versus
GOVT. OF NCT OF DELHI & ANR .....Respondents
Through: Ms. Astha Gupta, Adv.
CORAM:
HON'BLE MS. JUSTICE TARA VITASTA GANJU
TARA VITASTA GANJU, J.: (ORAL)
1. The grievance of the Petitioner as set out in the present Petition
is that the Petitioner has been charged with payment of deficient stamp
duty including penalty in respect of its property at Shop No. GF-003
Ground floor measuring approximately licensable area i.e. Super area
of 990 sq. ft. having covered area of 594 sq. ft., Pacific-Delhi,
Najafgarh Road, Khayala, Delhi [hereinafter referred to as the "subject
property"]. In addition, the Petitioner also impugns the notices as well
as the assessment order issued in furtherance of the impugned
notice(s) and consequential proceedings emanating therefrom.
2. Notice in the present Petition was issued by a Coordinate Bench
of this Court on 12.09.2012 directing that the Impugned Notices and
penalty shall remain stayed. This position has continued as is since
then.
3. It was the case of the Petitioner that the Petitioner on
24.02.2011 entered into an agreement/license deed with M/s Pacific
Development Corporation Limited [hereinafter referred to as "PDCL"]
for taking on license fee basis an area of 990 sq. ft. for a period of nine
years in the superstructure commonly known as Pacific Mall situated
at Najafgarh Road, Khyala, Delhi for running a silverware and high-
end giftware. [hereinafter referred to as "the Agreement"].
4. Learned Counsel for the Petitioner submits that initially on
13.03.2012, a notice bearing No. F.COS/RG/2011-12/2612-2646 was
issued alleging that the Pacific Mall had sold the constructed/given on
lease shops and had not paid any stamp duty thereon nor registered the
agreement with the Sub-Registrar of that area.
4.1 In response to the notice, the Petitioner appeared and filed a
reply dated 20.03.2012 which is annexed along with the Petition. The
Petitioner, in the said reply, set out that it is a license agreement and
that there is no agreement to sell and/or to lease between the Petitioner
and the Pacific Mall.
4.2 Despite the said reply, on 24.03.2012, a second notice was
received by the Petitioner. It was further set out in the notice dated
24.03.2012 that in the event that the Petitioner does not appear, the
stamp duty assessed ex-parte at market value at present prevalent
circle rates shall be imposed on the Petitioner.
4.3 The Petitioner in March 2012 replied to the said notice again
reiterating that there was only a license deed entered into and that the
Petitioner was a licensee and there was no agreement to sell or lease
entered into.
4.4 The Respondent No. 2 subsequently issued a demand letter
dated 02.08.2012, bearing no. F.SDM(RG)/COS/2012-13/9559 calling
upon the Petitioner to make payment in the sum of Rs. 1,26,800 as
penalty towards deficient stamp duty. The notice dated 02.08.2012 was
followed up by another notice dated 24.08.2012 reiterating the earlier
notice. No reasons for this conclusion, that there exists an agreement to
lease/sell have however been set out by the Respondents in either of its
notices. This led to the filing of the present Petition.
5. The Counter-Affidavit was filed by the Respondents wherein it
was contended that after going through the contents of the license
agreement that Respondent No.2 opined that the premises were not
licensed, but given out on lease. Since, the agreement dated
24.02.2011 is a lease agreement, the demand for stamp duty has been
assessed accordingly. It is further stated that a challan was issued to
the representative of the Petitioner stating the total amount of stamp
duty has not been paid by the Petitioner.
6. Learned Counsel for the Petitioner submits that on the face of it,
the document which has been filed is a license agreement. He seeks to
rely thereupon, more specifically, Sections 4, 5 and 7 of the Schedule
of the Agreement, as well as clauses of the document which is termed
as General Conditions of License (Retail) [hereinafter referred to as
"General Conditions"]. In addition, he submits that license was for a
period of nine years and that the agreement has come to an end by
efflux of time.
6.1 He further submits that from a reading of the notices, more
specifically notice dated 24.03.2012, quite clearly the Respondents
have proceeded on the basis that this was an agreement to sell and not
an agreement to lease.
7. Learned Counsel for the Respondents, on the other hand,
submits that the Respondents have proceeded on the basis of the
agreement to lease and that they have adjudicated the stamp duty in
accordance with Article 35(a)(iii) of the Schedule to Indian Stamp Act,
1899 as applicable to Delhi [hereinafter referred to as "the Stamp
Duty"].
7.1 Learned Counsel for the Respondents further submits that this is
not a license deed but is a lease deed. It is contended that in terms of
the judgment of Bharat Petroleum Corporation Ltd. v. Chembur
Service Station1, it has been held that the shops in malls despite being
labelled as licenses, are effectively leases. The licensee retains key
rights, such as stocking and locking the shop, while the licensor
controls business hours and maintenance. Thus, the arrangement
functions as a lease, protecting the licensee from dispossession or
eviction without legal recourse, and as such in this case, the instrument
2011 SCC OnLine SC 424
will be construed as a lease rather than a license2.
7.2 Learned Counsel for the Respondents also raises an objection
that the remedy of Appeal is available under Section 47-A of the
Indian Stamp (Delhi Second Amendment) Act, 2001 and that such
remedy has not been exercised by the Petitioner prior to approaching
this Court.
8. In Rejoinder, learned Counsel for the Petitioner submits that the
provision as cited by the learned Counsel for the Respondents for
filing of an Appeal has no application as the same pertains to a
document transferring a property sent for registration.
9. License is defined in Section 52 of the Indian Easements Act,
1882 as under:
"52. 'Licence'
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 an interest in the property, the right
is called a licence."
9.1 The plain reading of this shows that a licence granted by the
owner enables a licensee a right to do or continue to do certain
specified things in or upon an immovable property.
Illustration B
23. The owner of a land constructs a shopping mall with hundred shops. The owner of the mall
earmarks different shops for different purposes, that is sale of different types of
goods/merchandise, that is, shops for exclusive clothing for men, shops for exclusive clothing for
women, shops for hosieries, shops for watches, shops for cameras, shops for shoes, shops for
cosmetics and perfumes, shops for sports goods, shops for electronic goods, shops for books, shops
for snacks and drinks, etc. The mall owner grants licences in regard to individual shops to licensees
to carry on the identified or earmarked business.
10. It is no longer res integra that the difference between lease and
a license has to be culled out from an examination of the documents
and the intent of parties. The Supreme Court in Associated Hotels of
India Ltd v. R. N. Kapoor3 [speaking through K. Subba Rao, J. for the
majority] held that the true construction of a document turns upon the
terms of the said document but it is the substance of the agreement and
not the form which sets out the real intention between the parties. It
further held that where a particular document gives the right to use the
property in a particular way or under certain terms while it remains in
the possession and control of the owner, it will be a license. The
relevant extract is below:
"28. There is a marked distinction between a lease and a
licence. Section 105 of the Transfer of Property Act defines a
lease of immovable property as a transfer of a right to enjoy
such property made for a certain time in consideration for a
price paid or promised. Under Section 108 of the said Act, the
lessee is entitled to be put in possession of the property. A
lease is therefore a transfer of an interest in land. The interest
transferred is called the leasehold interest. The lessor parts
with his right to enjoy the property during the term of the lease,
and it follows from it that the lessee gets that right to the
exclusion of the lessor. Whereas Section 52 of the Indian
Easements Act defines a licence thus:
"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 an interest in the property, the right
is called a licence."
Under the aforesaid section, 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. The legal possession, therefore,
AIR 1959 SC 1262
continues to be with the owner of the property, but the
licensee is permitted to make use of the premises for a
particular purpose. But for the permission, his occupation
would be unlawful. It does not create in his favour any estate or
interest in the property. There is, therefore, clear distinction
between the two concepts. The dividing line is clear though
sometimes it becomes very thin or even blurred. 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 the recent trend of judicial opinion is
reflected in Errington v. Errington [(1952) I All ER 149],
wherein Lord Denning reviewing the case-law on the subject
summarizes the result of his discussion thus at p. 155:
"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 [(1952) I All ER
1199] 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 at p. 1202:
"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?"
[Emphasis supplied]
10.1 Although the document in the particular case was held to be a
lease, the distinction between a lease and a license were discussed and
certain propositions were set out to distinguish the two. The relevant
extract of the Associated Hotels case is below:
"The following propositions may, therefore, 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 or 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 negative the intention to create a lease.
Judged by the said tests, it is not possible to hold that the
document is one of licence. Certainly, it does not confer only a
bare personal privilege on the respondent to make use of the
rooms. It puts him in exclusive possession of them,
untrammelled by the control and free from the directions of
the appellants. ..."
[Emphasis supplied]
10.2 The Supreme Court in Associated Hotels case has further held
that a lease of an immovable property is a transfer of an interest in the
land, however, where 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, will be a license.
11. The Supreme Court in CM Beena v. P.N. Ramachandra Rao4
has further explained the license to use the premises for a particular
purpose while the owner retains the control and possession of such
premises. The relevant extract is set out below:
"8.....
Only a right to use the property in a particular way or under
certain terms given to the occupant while the owner retains
the control or possession over the premises results in a licence
being created; for the owner retains legal possession while all
that the licensee gets is a permission to use the premises for a
particular purpose or in a particular manner and but for the
2004 (3) SCC 595
permission so given the occupation would have been
unlawful....."
[Emphasis supplied]
11.1 A Division Bench of this Court in Jagjit Cotton Textiles Ltc.
Vs. Col. A.K. Malhotra5 has held that a clause allowing unrestricted
entry into the premises to a licensor indicate that the instrument is a
license and not a lease. It further states that when an agreement grants
unrestricted right of entry into a premises, such an instrument can only
be construed as a license and not a lease. The relevant extract reads as
follows:
".........
7. The most important clause which is the key to the
determination of the question is clause 7. As seen above, this
clause clearly specifies that the licensor i.e. the respondent
shall continue to have full possession and control of the
premises, fittings and telephone. The clause also confers on
him an unrestricted right of entry into and use of the premises.
Thus the agreement recognises that the first appellant and its
officer did not have exclusive possession of the premises. It is
well settled that mere permission to use the premises without
being entitled to exclusive possession thereof creates only a
licence. Therefore the first appellant has only a status of a
licensee under the agreement.
......
9. In Sohanlal Naraindas Vs. Lawnidas Raghunath Gadit 1971
(1) SCC 276 the Supreme Court faced with the question
whether the agreement created a lease or licence held as
follows:
"9. Intention of the parties to an instrument must be
gathered from the terms of the agreement examined
in the light of the surrounding circumstances. The
description given by the parties may be evidence of
the intention but is not decisive. Mere use of the
words appropriate to the creation of a lease will
not preclude the agreement operates as a licence. A
recital that the agreement does not create a tenancy
1995 SCC OnLine Del 624
is also not decisive. The crucial test in each case is
whether the instrument is intended to create or not
to create an interest in the property the subject
matter of the agreement. If it is in fact intended to
create an interest in the property it is a lease, if it
does not, it is a licence. In determining whether the
agreement creates a lease or a licence the test of
exclusive possession, though not decisive, is of
significance.........."
......
10. In Khalil Ahmed Bashir Ahmed Vs. Tufelhussein Samasbhai
Sarangpurwala (1988) 1 SCC 155 the Supreme Court while
construing the instrument as a licence deed, inter alia, relied
upon clause 12 thereof which gave the licensor the right to
enter upon the premises and inspect the same at any time and
in this regard observed as follows:
"To put it precisely if an interest in immovable
property entitling the transferee to enjoyment was
created, it was a lease; if permission to use land
without exclusive possession was alone granted, a
licence was the legal result. We are of the opinion
that this was a licence and not a lease as we
discover the intent."
11. Again in Smt. Rajbir Kaur and another Vs. M/s. S.
Chokesiri & Co. JT 1988(3) SC 593 at 601 the Supreme Court
stated the principle in determining whether the agreement
created a lease or licence thus:
"........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"
......
14. Having regard to the aforesaid decisions it is apparent that
where the agreement grants to a person only the right to use
the premises without being entitled to the exclusive possession
thereof, it merely creates a licence in his favour. But even
where exclusive possession is transferred, the grant may or
may not operate as a lease since the test of exclusive
possession, though significant is not decisive and the idea of a
licence is not necessarily ruled out.
15. In the instant case clause 7 of the agreement grants full
possession of the premises to the owner. It entitles him to an
unrestricted right of entry into the premises. This right of
entry clause clinches the point in favour of the plaintiff. It
puts the matter beyond all doubt that the instrument creates
only a licence and not a lease..."
[Emphasis supplied]
12. The Agreement entered into between the Petitioner and PDCL is
in three parts: a short Agreement, a Schedule and General Conditions.
The Agreement sets out the party names, and that the PDCL permits
the Petitioner to use the premises on the terms and conditions as set
out in the Schedule and the General Conditions. The Schedule and
General Conditions of the document contain detailed terms of the
contract between the parties. Section 4 of the Schedule sets out the
term as 9 years from the commencement date, and Section 5 sets out
that the license fee is chargeable on the super area. Section 7 of the
Schedule specifies the purpose of the business which is stated to be for
a retail under the name and style of "Momentz", for silverware and
high-end giftware. It further states that the licensee shall not be
permitted to change the nature of the business or the
brand/merchandise category. It additionally sets out other clauses
which include refundable security deposit.
12.1 The General Conditions to the Agreement as titled "General
Conditions of License (Retail)" in Clause 3.1 sets out that basic license
fee shall be the monthly basic license fee payable by the licensee to the
licensor during the license period as set out in Section 5.1 of the
Schedule. Clause 5 of the General Conditions sets out that the licensee
(Petitioner herein) shall use the premises solely as is set out in Section
7 of the Schedule, and that the licensee is not permitted to change the
nature of the business during its tenure. Clause 5.1 of the General
Conditions and Section 7 of the Schedule are set out below:
"5.1 The Licensee shall use the premises solely for the
purposes set out in Section 7 of the Schedule and under Its
trade name set out in Section 7 of the Schedule unless
permitted by Licensor in writing and acknowledges that it
shall not have an exclusive right to any particular type of
business being conducted in the building.
7. Purposes for For the retail operation, under the name and
which premises style of "Momentz" under silverware and
are let/permitted highend giftware.
business
The License shall not change the nature of
business carried from the demised premises
and shall not change the permitted
brand/merchandise category, till the tenure of
the agreement.
[Emphasis supplied]
12.2 Clause 8.1 of the General Conditions of the Agreement sets out
that licensor (PDCL) shall have the right to enter the premises on any
day for inspecting the premises. Clause 8.2 further sets out that the
licensee shall permit the licensor to enter the premises to check for
compliances. Clauses 8.1 and 8.2 are set out below:
"8.1 The Licensor or its designated representative shall have
the right from time to time during the normal business hours on
any working day with prior notice to the Licensee to enter upon
the Premises for the purpose of inspecting the service and
maintenance in the Premises.
8.2 The Licensee shall permit the Licensor or its authorized
representative to enter into the Premises at all reasonable
times to check for the compliance with the Agreement."
13. As stated in Section 7 of the Schedule, the purposes for which
the premises was let out was very specific i.e., to carry out the
business of silverware and high-end giftware.. In addition, the licensee
was not permitted to change the brand or the merchandise category
during the tenure of the Agreement. Use of the premises beyond the
specified hours would lead to additional charges. These types of
restrictive covenants would not be present in a lease agreement.
13.1 In addition, the licensor had access to the premises at any time
and the entry of the licensor was not subject to the permission of the
licensee (Petitioner herein) which would normally be required for in a
lease deed. Thus, there were several restrictions on the Petitioner
under the Agreement.
14. The Petitioner in its reply dated 20.03.2012 to the notice issued
by the Respondents set out that what was entered into with PDCL was
a license agreement and not an agreement to sell or lease. It further set
out that the Petitioner did not have 24-hour unrestricted rights of
ingress and egress to the premises. The licensee of the premises was
not entitled to use the premises for a purpose other than as specified.
In addition, it was contended by the Petitioner that it is not able to
change the nature of its business or category of its business without the
permission of the licensor/PDCL. The relevant extract of the Reply is
below:
"...In this regard I wish to submit that our status with M/s
Pacific Mall with regard to Shop No. GF/019 at Pacific Mall,
Subhash Nagar/Delhi, is strictly as that of a licensee alone.
This fact is evidently clear from a bare reading of the licence
agreement and the scheduled annexed thereto (which are
forming a part of the present reply). Apparently, your good
offices have been mis-informed since we have not entered into
any agreement to sell and/or lease with the Pacific Mall.
That the arrangement between us and Pacific Mall is that of a
license - is clear from the following facts:
(i) We do not have 24 hour unrestricted rights of free
ingress and egress to the licensed premises.
(ii) We cannot use the licensed premises for any purpose
other than the one specified in the license Agreement.
(iii) We are liable and have already paid the stamp duty
on license fee, (wherever applicable).
(iv) We are paying operating costs on the licensed
premises as per the rates specified in clause 5.2 of the
schedule annexed to the License Agreement.
(v) In case, we use/occupy the licensed premises for
timings beyond the normal business hours (as specified in
the license agreement) we are liable to pay extra
operating costs/damages for the same.
(vi) We cannot unilaterally change the nature of business
and/or category of business carried out from the licensed
premises.
(vii) We are liable to make compulsory contributions to
the marketing fund set-up by the Mall Authorities...."
14.1 The reply(ies) of the Petitioner were not examined by the
Respondents prior to issuing of the second notice or the penalty order
on 02.08.2012.
15. The notice dated 13.03.2012 sets out that the notice is relying
upon order no. F.1(7)/Regn./DC/2001/372 dated 22.10.2001 issued by
the Divisional Commissioner, Delhi wherein it is stated that the
agreement to sell is compulsorily registerable with the Sub-Registrar.
This order/circular has not been placed on record, however, quite
clearly, it is referring to registration/stamp duty payable on an
agreement of sale. The notices, thus, refer to an agreement to sell, not
a lease or license. The relevant extract is set out below:
"Whereas as per the Order No. F.l(7)/Regn./DC/2001/372
dated 22.10.2001 issued by the I.G.R./C.C.R.A./Divisional
Commissioner; Delhi, the Agreement to sell is compulsory
registrable with the Sub-Registrar but the evidence on record
shows that neither stamp duty has been paid nor documents
have been registered."
[Emphasis supplied]
15.1 The issue is clinched by the second notice dated 24.03.2012
where in addition, to relying on the said order dated 20.10.2001, it
further states that the failure of the Petitioner to appear before the
under signed would lead to the property "being assessed ex-parte at
market value at present prevalent circle rates". Circle rate is the
guidance value or minimum price at which immovable property can be
sold. It is subject to change from time to time depending on various
factors such as location and market rent. The relevance of circle rate
comes into play where the value of the sale consideration in a sale-
purchase transaction (sale deed / agreement to sell) is less than the
circle rate. The stamp duty for such transaction will be valued as per
the circle rate and computed accordingly. Thus, any reference to circle
rate would only be applicable in an agreement of sale and not of lease.
16. A reference to the provisions for a stamp duty on a lease will
show that there is no "circle rate" or "market value" mentioned
therein. The stamp duty payable is the same duty as a conveyance is
levied under the Act for a consideration of an amount of the average
annual rent. Article 35 (a) (iii) and Article 23 of the Schedule IA of the
Indian Stamp Act6 as applicable to Lease Agreements in Delhi are
extracted below:
Description of Instrument Proper Stamp-Duty
35. LEASE, including an under-lease ...
or sub lease and any agreement to The same duty as a Conveyance (No.
let or sub-let- 23) as levied by this Act, for a
(a) where by such lease the rent is consideration equal to the amount or
fixed and no premium is paid or value of the average annual rent
delivered - received....
...
(iii) where the lease purports to be
for a term exceeding five years and
not exceeding ten years...
23. CONVEYANCE as defined by Three per cent of the consideration
section 2(10) not being a Transfer amount set forth in the instrument.
charged or exempted under No. 62. Further reduced to two per cent in
Exemption - Assignment of respect of individually/jointly held
copyright under the Copyright Act, immovable property by
1957, section 18. woman/women:
CO-PARTNERSHIP DEED - See Provided that in cases of jointly held
Partnership (No. 46) immovable property, the reduced
rate of stamp duty shall apply only to
the share(s) held by woman/women.]
17. Without doubt, thus, the examination that was taking place by
the office of the Respondents was with respect to an agreement to sell
and not an agreement to lease as there is no assessment of "prevalent
circle rates" in ascertaining stamp duty in an agreement to lease. As
stated above, for lease, a stamp duty would be with respect to the value
of the average annual rent received.
18. There is one other reason why the Court has reached its
conclusion. The record shows, that the Respondents did not undertake
Schedule 1-A as applicable to Delhi
any kind of exercise in examining whether the document is a lease or a
license and have merely set out that it is an agreement to
sell/agreement to lease.
18.1 In fact, the impugned notices do not set out which of the two
category- "lease" or "sale" - has the Respondent opined that the
Agreement falls under. The Respondent in its Counter-Affidavit stated
that the SDM "opined" that the premises were not licenced but given
on lease. No reason for such opinion nor analysis has been set forth.
No examination of the terms of the Agreement or the intention of the
parties has been undertaken by the Respondent No.2 prior to passing
the Impugned Order or the Impugned Penalty Notice.
19. Learned Counsel for the Respondents has attempted to justify
the notices by relying on the judgment in the Bharat Petroleum case,
to submit that a license deed executed for a Mall has been held to be a
lease.
19.1 The Supreme Court in the Bharat Petroleum case examined the
issue of termination of a license to use a petrol pump premises for the
purpose of sale of petroleum products and whether the license to use a
petrol pump premises for the sale of petroleum products granted could
be construed as a license as defined in Section 5(4A) of the Old
Bombay Rent Act and so as to attract Section 15A of the said Act on
the occupation of the premises. The two Judge Bench of the Supreme
Court gave their separate judgments on the nature of the license
granted to the Respondents. The extract relied by the Respondents
forms part of the Judgment given by R.V. Raveendran, J, which is
deferred with by H.L. Gokhale, J.
19.2 In view of the dissenting opinions of the two judges, the
judgment in the Bharat Petroleum case was referred to a larger bench
of the Supreme Court on 02.03.2011. However, the issue remained
inconclusive in view of the fact that the case was withdrawn by the
Appellant on 21.08.20247.
20. The Supreme Court in Khalil Ahmed Bashir Ahmed Vs.
Tufelhussein Samasbhai Sarangpurwala8 has held that where an
interest is granted in property giving permission to lease land without
exclusive possession, it constitutes a license and where a clause grants
a licensor the right to enter upon a premises and inspect the same at
any time, the document would be a license and not a lease. From an
examination of the language used in the Agreement and the
restrictions put upon in the use of the premises in question by the
Appellant (licensee) including that the user was for 20 hours and that
the licensor has the right to enter upon the subject premises and
inspect the same at any time, the Supreme Court held that the
Agreement was a licence and not a lease. While citing Halsbury's
Laws of England9, it further held that whether an agreement creates
tenancy or a license, the decisive consideration would be the intention
of the parties.
Order dated 21.08.2024 in Civil Appeal No.2276/2011
(1988) 1 SCC 155
9 th
4 Edition Volume 27 Page 13
"10...To put it precisely if an interest in immovable property
entitling the transferee to enjoyment was created, it was a lease
if permission to use land without exclusive possession was
alone granted, a licence was the legal result. We are of the
opinion that this was a licence and not a lease as we discover
the intent. For this purpose reference may be made to the
language used and the restrictions put upon the use of the
premises in question by the appellant. In the document in
question the expression "licence" was introduced and clause
(2) said that it was only for the business purposes. The licence
fee was fixed. It permitted user only for 20 hours. Restriction
in the hours of work negates the case for a lease. Clause (12)
is significant which gave to the licensor the right to enter
upon the premises and inspect the same at anv time. In our
opinion the background of the facts of this case and the back
ground of the entire document negate the contention of the
appellant that it was a lease and not a licence.
...
12. The distinction between leave and licence has been well
summarised in Halsbury's Laws of England, Fourth Edition,
Volume 27 page 13. In determining 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. Lord Greene, M. R.
had observed this in Booker v. Palmer. This is a salutary test."
[Emphasis supplied]
21. As discussed above, there are several restrictions in the
Agreement/its Schedule and the General Conditions. These include the
fact that the licensee is not permitted to change the nature of its
business carried out from the premises. It is not permitted to change
the brand or the merchandise category. Additionally, the licensor
(PDCL) has the right to enter upon the premises on any day. The hours
of use by the licensee are also restricted to the timings set out by the
PDCL and in the event that the hours are extended, the Petitioner is
liable to pay additional fees to the PDCL. Thus, from an examination
of the Agreement and its restrictive nature, the intention of the parties
is to enter into a license and not a lease. Relying on the judgments of
the Supreme Court in the CM Beena case and the Khalil Ahmed case,
this Court finds that the intention of the parties was to assign rights
without any transfer of title.
22. Lastly, the objection of alternate remedy as set out by the
Respondent is also not available. Under Section 47-A of the Indian
Stamp (Delhi Second Amendment) Act, 2001 which is relied upon, as
it gives the power to the registering authority, while registering a
document of transfer, to refer the same to Collector, to determine its
value if such document of transfer appears to him as being
undervalued. It reads as:
"47A. (1) If the Registering Officer, while registering any
instrument transferring any property, has reason to believe that
the value of the property or the consideration, as the case may
be, has not been truly set forth in the instrument, he may, after
registering such instrument, refer the same to the Collector for
determination of the value or consideration, as the case may
be, and the proper duty payable thereon.
xxx
(4) Any person aggrieved by an order of the Collector under
sub-section (2) or sub-section (3) may appeal to the District
Court within whose jurisdiction the property transferred is
situated.
(5) An appeal under sub-section (4) shall be filed within thirty
days of the date of the order sought to be appealed against."
22.1 Concededly, this provision is inapplicable to the present case as
the alternate remedy is available only in circumstances where while
registering in instrument of transfer, the Registrar is of the opinion that
the stamp duty has not been correctly set forth. It refers such
instruments to the Collector for determination of the value to be
ascribed on the instrument. It is in those circumstances if a person is
aggrieved by the order of the Collector that an Appeal may be filed.
No such adjudication or determination has been undertaken in the
present case.
23. In view of the aforegoing discussions, the Petition is allowed.
The impugned notices, penalty orders and all proceedings emanating
therefrom are set aside.
24. Parties will act based on the digitally signed copy of the order.
TARA VITASTA GANJU, J
SEPTEMBER 26, 2024/r
Corrected and uploaded on 11.10.2024
