Law Web: How to ascertain whether particular agreement is lease deed or leave and licence agreement?

Here, the residential portion was let out only as a stopgap

arrangement, and the licence was terminable on the happening of a

contingency. That contingency—the return of the landlady’s son—will

terminate the agreement, the agreement period notwithstanding.

Besides that, there have been restrictions on the use: for example, how

and only for what purpose the bathroom could be used.

70. In Tulsi, the Supreme Court has held that a licensee gets the

possession only with the consent of the licensor and is liable to vacate

when so asked. Then, Shrikant contends that he has had uninterrupted

possession. According to him, though the alleged licence expired in

1989, until 1994 his possession had not been disturbed. That said, once

it is a licence, merely because the licensor has not asked the licencee to

vacate soon after the licence period does not transform the licence into

lease. The length of the period is not, I must say, a determinative factor.

71. In Achintya Kumar Saha, the Supreme Court has reiterated

that the nature of lease and licence to be gathered from surrounding

circumstances. In Amratlal Valji, this Court has relied on the Supreme

Court’s proposition in C.M. Beena’s case. It has held that the difference

between lease and licence is to be determined based on the document

and surrounding circumstances.

(b) What sort of possession does the occupier have?

72. Shrikant contends that it would have been impossible for him

to enjoy the property, had he not been in possession. A person’s

occupying a residential property speaks volumes about that occupier’s

possessing the property, and enjoyment without possession, according

to him, is unthinkable and impracticable.

73. In this context, I may note that there are many shades of

possession: say, corporeal possession, incorporeal possession,

constructive possession, adverse possession, de facto possession, de jure

possession, mediate possession, and immediate possession. Indeed,

immediate possession is a direct or primary possession. The person in

direct possession has a higher control over the thing possessed. It means

there is no intermediary or medium. On the contrary, if someone

possesses something through another, the thing remains in possession

of another. That is, the possessor has a lesser control over the thing he

has physically possessed, though.

74. Lexically speaking, ‘possession’ is a chameleonhued

word. G.

W. Paton in his A Textbook of Jurisprudence has ‘pessimistically states’

that the search for its proper meaning is likely to be a fruitless one.[26]

The expression 'possession' is a polymorphous term which assumes

different colours in different contexts. It may carry different meanings

in contextually different backgrounds. It is impossible, as was observed

in Superintendent & Remembrancer of Legal Affairs, West Bengal v. Anil

Kumar Bhunja[27], to work out a completely logical and precise

definition of "possession" uniformly applicable to all situations in the

context of all statutes.

75. As noted in Gunwantlal v. The State of M.P.[28], possession in

a given case need not be physical possession but can be constructive,

having power and control over the article in case in question, while the

persons to whom physical possession is given holds it subject to that

power or control. That is, the word 'possession' means the legal right to

possession. In an interesting case, it was observed that where a person

keeps his firearm in his mother's flat which is safer than his own home,

he must be considered to be in possession of the same. (See Sullivan v.

Earl of Caithness.[29]

76. Here, I must hold that what Shrikant has is mediate

possession, like the mother’s possessing the son’s firearm in Sullivan. To

conclude, his possession is mediate and permissive.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

WRIT PETITION NO. 2219 OF 2006

Shrikant Dattatraya Deshpande Vs Shalini Waman Bhat

CORAM

: DAMA SESHADRI NAIDU, J.

DATE OF PRONOUCEMENT : 13th September 2019.

Petitioner Shrikant Dattatraya Deshpande claims to be a “tenant”.

Indeed, much turns upon that expression, for respondent Jayant

Waman Bhat asserts that Shrikant is only a licencee. Originally, Shalini

Waman Bhat, Jayant’s mother, as the owner, filed Application No.17 of

2004 under Section 24 of the Maharashtra Rent Control Act, for

evicting Shrikant. She filed that application before the Competent

Authority, Pune Division. Through its order, dated 29th January 2005,

the Competent Authority allowed that application.

2. Aggrieved, Shrikant filed Revision No.166 of 2005 before the

Additional Commissioner, Pune. But the Additional Commissioner, too,

dismissed the revision, through order dated 3rd March 2005. Then,

Shrikant has filed this writ petition. Pending these proceedings, Shalini

Waman Bhat died; so her son, Jayant, as the legal representative, has

been prosecuting the case.

3. Though the facts seem to lie in a narrow compass, this case has

a chequered history. It all began in 1986. So I need to set out the facts,

as well as the course of litigation, briefly though.

4. On 1st June 1986, Shrikant and Mrs. Bhat signed an

agreement. That agreement was for three years, that is until 31st May

1989. Through that agreement, Mrs. Bhat permitted Shrikant to live in

a portion of her house. The bone of contention throughout has been

whether the agreement created a lease or a licence. Plainly put, is

Shrikant a tenant or a licensee?

5. Though the agreement ended in 1989, Shrikant continued to

enjoy the property. On 3rd March 1994, Mrs. Bhat allegedly disrupted

the power supply to the leased portion of the house. Therefore, Shrikant

filed Application No.193 of 1994, before the Small Cause Court, Pune.

He invoked Section 24 of the nowrepealed

Bombay Rents, Hotel and

Lodging House Rates Control Act, 1947. In that case, the issue was

about the restoration of power supply. Incidentally, there arose a

question about whether Shrikant is a tenant or a licensee.

6. Through its order dated 25th August 1994, the Small Cause

Court ordered the restoration of power supply. Besides that, it also held

that Shrikant is a tenant. Aggrieved, Mrs. Bhat filed a revision. The

District Court allowed that revision. It seems that it has felt that the

Small Cause Court ought not to have determined the status of the

parties. At any rate, Shrikant impugned the revisional order in WP

No.1272 of 1998. In June of the same year, this Court allowed that writ

petition. Then, Mrs. Bhat filed a Civil Application in that disposedof

Writ Petition.

7. In the Civil Application No.5856 of 1998, Mrs. Bhat contended

that the Court’s observation that Shrikant was a tenant would prejudice

her cause before the Civil Court, where she had sued for recovery of

possession. I will refer to it soon. Then, this Court, through its Order,

dated 17th June 1998 in the Civil Application, held that the expressions

employed in the order about the parties’ status should not prejudice

their rights before the Civil Court.

8. Now, I will refer to the Civil Suit. Mrs. Bhat filed Special Civil

Suit No.8 of 1995 before the Civil Judge, Senior Division, for recovery

of possession from Shrikant. In that suit, first, Mrs. Bhat maintained

that Shrikant is a licensee and that the agreement is a leave and license

agreement. She has pleaded that her remedy before the Authorities

under the Act stands barred by efflux of time. So she sought from the

Civil Court the remedy of recovering possession from Shrikant.

9. Then, Shrikant, as the defendant, applied under Order 7, Rule

11 of CPC. He wanted the Civil Court to dismiss the suit for want of

jurisdiction. As a result, on 24th June 2003, the Civil Court dismissed

the suit. Aggrieved, Mrs. Bhat filed Writ Petition No.346 of 2004. This

Court, through its Judgment, dated 13th April 2004, disposed of the

writ petition holding that Mrs. Bhat had an efficacious alternative

remedy, for an order under Order 7 Rule 11 is a deemed decree.

10. But Mrs. Bhat pursued no alternative remedy against the Civil

Court's rejecting the plaint. Instead, she invoked Section 24 of the

Maharashtra Rent Control Act and applied before the Competent

Authority for Shrikant’s eviction. Indeed, she pleaded that Shrikant is a

licensee and that the licence expired long back. The competent

Authority allowed that application, as I have noted earlier.

11. On revision, the Revision Authority, too, refused to interfere.

So Shrikant has filed this writ petition, invoking Article 227 of the

Constitution of India.

Submissions:

Petitioner:

12. In the above factual background, Shri D. J. Bhanage, the

learned counsel for the petitioner, has submitted that the civil courts

and this Court, throughout, have held that Shrikant is a tenant. For

that assertion, Shri Bhanage has emphasised the Small Cause Court’s

observations in Shrikant’s Application No.193 of 1994.

13. While faced with subsequent developments and, especially,

the reversal in the reversion, Shri Bhanage has insisted that a finding of

fact does not get diluted even in the face of the doctrine of merger.

According to him, this Court may have observed in the later round of

litigation that the parties could agitate the issue before the Civil Court.

But that observation will not help the owner’s cause.

14. At any rate, Shri Bhanage has taken me to the agreement,

dated 1st June 1986. Reading out from, as he puts it, a literalEnglish

translation of the agreement, Shri Bhanage has asserted that the

document unmistakably establishes the parties’ intention: the

agreement is a lease, and Shrikant a tenant.

15. Shri Bhanage has submitted that calling Shrikant a licencee is

a misnomer. First, he could not have been living in the house without

having its effective possession. Second, as it is a bungalow, Shrikant’s

not having access to the other parts of it will not defeat his right to be a

tenant to the extent leased to him. About the restrictions on the use of

the property, Shri Bhanage insists that any restrictions on the use of the

property for its safety or upkeep cannot amount to a restriction on its

enjoyment. At any rate, those conditions would not affect Shrikant’s

leasehold right.

16. According to Shri Bhanage, the competent Authority and the

Revision Authority have not addressed the issue in its proper legal

perspective. Referring to the judgment the Authorities have relied on,

Shri Bhanage stresses that the ratio of those judgments favours

Shrikant.

17. To elaborate, Shri Bhanage has submitted that this Court’s

observation about the relationship between the parties stands

undisturbed. And though the Court is said to have left the issue open

about the tenancy, that liberty was confined to Civil Suit No. 8 of 1995.

When the suit was dismissed for want of jurisdiction, the owner did not

take the matter to its logical end. So, Shri Bhanage has urged this Court

to allow the writ petition.

18. Shri Bhanage has relied on Sohan Lal Naraindas v. Laxmidas

Raghunath Gadit[1], Manika Dei v. Dhadi Madgul[2], Capt. B.V. D’Souza

v. Antonio Fausto Fernandes[3], Ramachandra Sahu v. Pramila Sahu[4],

Vafati Lalmohamed v. Sarfunisa Abdulmajid[5], Globe Publications v.

Madan Gopal[6], Tulsi v. Paro[7], Bharamappa Nemanna Kawale v.

Dhondi Bhima Patil[8], C.M. Beena v. P.N Ramachandra Rao[9], Smt.

Krishnabai v. Baburao[10], Laxman Vitthal Rewankar v. Rajaram

Narayan Pohurkar[11], Gulabchand Chhotalal Parikh v. State of

Gujarat[12], Choudhary Sahu v. Surajballi Sah[13], Centre of Indian

Trade Unions v. Union of India[14], Amratlal Valji v. Dr. G.S. Shah[15],

and Achintya Kumar Saha v. Nanni Printers[16].

Respondent:

1[] (1971) 1 SCC 276

2[] AIR 1987 ORI 74

3[] AIR 1989 SC 1816

4[] AIR 1992 Orissa 183

5[] AIR 1993 Gujarat 163

6[] AIR 1996 P & H 115

7[] (1997) 2 SCC 706

8[] AIR 1997 SC 122

9[] (2004) 3 SCC 595

10[] AIR 1978 Bombay 290

11[] AIR 1979 Bombay 305

12[] AIR 1965 SC 1153

13[] AIR 1982 SC 98

14[] AIR 1997 Bombay 79

15[] 2007 (1) Bom. CR., 390

16[] AIR 2004 SC 1591

19. Shri A. V. Anturkar, the learned Senior Counsel for the first

respondent, has formulated, in his words, seven points to counter

Shrikant’s assertions. To begin with, the alleged lease deed falls within

the mischief of Section 107 of the Transfer of Property Act. As the

period mentioned in it was three years, it required compulsory

registration. In its absence, the document could not be considered for

any other purpose than collateral. To elaborate, Shri Anturkar has

submitted that only possession, nothing else, could be gathered from

Exh. A2 agreement.

20. Then Shri Anturkar has, as his second proposition, drawn my

attention to Sections 91 and 92 of the Evidence Act. He has contended

that the agreement was reduced to writing. That done, in terms of

Section 92 of the Evidence Act, no further evidence could be led to

dilute the contractual terms reduced to writing. As his third proposition,

the learned Senior Counsel has submitted that the burden was heavy on

Shrikant to establish before the Court or the authorities that there was

tenancy and the relationship between them was that of landlady and

tenant. According to him, Shrikant has not even got into the witness

box to discharge his burden. Instead, Shrikant has marked the

documents, such as copies of depositions in some other suit. In that

context, Shri Anturkar has contended that the depositions in other cases

become only the previous statements without any independent

evidentiary value.

21. As to his fourth proposition, Shri Anturkar has elaborated on

Shrikant’s alleged exclusive possession. He has taken me through the

agreement to highlight, as he puts it, the restrictions the landlady

imposed on Shrikant’s enjoying the property. He has also emphasized

that the parties executed the agreement without any legal advice or

assistance. Therefore, it reflected the parties’ true intention. In praise of

the parties, he has submitted that the agreement contained absolutely

neutral expressions, with no reference to either lease, rent, or receipt,

much less to any exclusive possession.

22. Eventually, as part of his remaining propositions, the learned

Senior Counsel has taken me through Section 11 of CPC. Then, he

contended that the eviction proceedings remain unaffected by the

principle of res judicata. He has contended that the Civil Court that

refused to entertain Suit No. 8 of 1995 is incompetent to decide the

dispute. It is the Competent Authority that has the jurisdiction under

Section 24 of the Act. So, the basic ingredient of Section 11 of CPC

finds missing—a decision on merits by a competent court in an earlier

round litigation.

23. In the alternative, Shri Anturkar has submitted that if the

judgment in Suit No. 8 of 1995 were to bind the parties, there was a

clear finding that the suit property admittedly was given on license to

Shrikant. If it was an erroneous observation, Shrikant ought to have

tried to have it modified or corrected.

24. Thus, eventually, the learned Senior Counsel has relied on

Anthony v. K. C. Ittoop & Sons[17], Delta International Ltd., v. hyam

Sundar Ganeriwalla[18], and Sevoke Properties Pvt. Ltd. v. West Bengal

State Electricity Distribution Company[19].

Reply:

25. Shri Bhanage, in reply, has submitted that the expression

“admittedly” in the Civil Court’s judgment was in the context of the

pleadings but not an observation by the Court. He has also submitted

that the first respondent has never raised the issue of registration or the

burden of proof before any Authority.

26. Heard Shri D. J. Bhanage, the learned counsel for the

petitioner, and Shri A. V. Anturkar, the learned Senior Counsel for the

respondent.

17[] (2000) 6 SCC 394

18[] (1999) 4 SCC 545

19[] AIR 2019 SC 2664

Discussion:

27. This matter needs decluttering. Many rounds of litigation

have only led to confusion; so let us identify the issues.

Issues:

Issue No.1: Are the Owner’s proceedings barred by Res Judicata? Or, is

there any judicial finding or declaration that the occupier is a tenant in

the earlier round of litigation?

Issue No.2: If treated as a lease deed, does the Agreement, dated 1st June

1986, require registration?

Issue No.3: What is the Agreement, dated 1st June 1086: is it a lease deed

or a leave and licence agreement?

Issue No.4: Does the marking of the Previous Depositions in Other Cases

Between the Same Parties amount to Substantive Evidence?

Issue No.5: Have the Competent Authority and Revisional Authority

Committed any Jurisdictional Error requiring this Court’s Judicial

Intervention?

Discussion:

28. This case has seen a few rounds of avoidable litigation

already. So it pays to trace its litigious roots.

The Roots of Litigation:

Case Details Result Remarks

Application

No.193/1994

U/s. 24 of the

Bombay Rent

Act (Old Act)

25.8.94:

Allowed

(Shrikant)

(1) The landlady was asked to

restore power supply;

(2) “The intention of the parties

was to create lease, and so the

applicant is the tenant of the suit

premises.”

CRA

Nos.135/94 &

136/94

29.11.97

Allowed

(Mrs. Bhat)

(1) “It nowhere mentions that a

person whose status is not accepted

by the other side as a tenant can

apply for restoration of the

electricity supply as per the section

(Section 24).”

(2) “The status of a person cannot

be inquired into.”

WP No. 1272

of 1998

23.06.1998

Allowed

(Shrikant)

Reversed the order in revision and

restored the trial Court’s order.

C A.

No.22498/19

in WP

No.1272 of

1998

17.07.1998

Clarified

“No expressed any opinion on the

issue as to whether the petitionerapplicant

is the tenant of the suit

premises.”

Civil Suit No.

8 of 1995

(6th Joint

Civil judge

Senior

Division,

Pune.)

24.06.2003

Mrs. Bhat’s

suit was

dismissed

for want of

jurisdiction

(1) “On perusal of the pleadings

itself, the defendant as licensee of

the suit property was given to him

on leave and license basis.

(2) “Admittedly the suit property

was given on license to the

defendants. Admittedly the

defendants approaching the Small

Cause Court for . . . restoration of

electricity supply. In the same

judgment, it was observed that the

defendant was tenant of the suit

premises, the same thing was

confirmed by the Hon’ble High

Court. It is endless to mention that

the order passed by the above Court

has not been challenged . . .”

(3) The pleadings are sufficient to

infer that the Civil Court does not

have any justification to entertain

to suit for possession and arrears of

license fees as claimed by the

plaintiff.

WP No.346 of

2004

13.04.2004

Dismissed

(Mrs. Bhat

lost)

Mrs. Bhat has an efficacious

alternative remedy against the trial

Court’s judgment, dt.24.06.2003 in

Suit No.8 of 1995.

Application

No.17 of 2004

U/s. 24 of

MRC Act,

before the

Competent

29.01.2005

Allowed

(Mrs. Bhat

won)

The Competent Authority allowed

it: ordered Shrikant’s eviction.

Findings:

(1) Shrikant filed on record

documents with ListExh.

38 but he

did not adduce any oral evidence.

Authority (2) Interpreted the agreement to be

a leave and licence agreement

(para 34)

(3) Earlier nowhere has there been

a declaration that Shrikant is a

tenant (para 36).

Revision

Application

No.166 of

2005

Before the

Addl.

Commissioner

03.03.2006

Dismissed

(Shrikant

suffered

concurrent

findings)

The Revisional Authority concurred

with the Competent Authority and

affirmed the Order, dt.29.01.2005

Issue No.1: Are the Owner’s proceedings barred by Res Judicata? Or, is

there any judicial finding or declaration that the occupier is a tenant in

the earlier round of litigation?

29. Shrikant has strenuously and persistently contended that the

courts below have already declared that he is a tenant. Indeed, there

was a finding in the Small Cause Court’s Order, dated 25th August 1994,

in Shrikant’s Application under Section 24 of the Bombay Rent Act. It

was for the restoration of power supply. In revision, that observation

was upset. But this Court in Writ Petition No.1272 of 1998, restored it.

Eventually, through its order, dated 17th July 1998, in CA. No.22498 of

1998, once again this Court has nullified the observations. So that

observation has perished.

30. In Manika Dei and Ramachandra Sahu of Orissa High Court,

Vafati Lalmohamed of Gujarat High Court, Globe Publications of Punjab

and Haryana High Court, and Laxman Vitthal Rewankar of this Court

hold that the finding as to the relationship of landlord and tenant given

by the Authority under the Rent Control Act is the finding given by a

‘’court of limited jurisdiction’’ and operates as “resjudicata’’

in the

subsequent suit.

31. In Bharamappa Nemanna Kawale, the Supreme Court has

held that if the ‘Decree’ held by a party who is not the tenant has

become final, it is not open to another party to contend in the executing

Court that the first party is still a tenant. But this decision presupposes

that the ‘decree’ was by a competent court. Otherwise, as it is wellknown,

the observations, or even findings, by a court without

jurisdiction are of no consequence.

32. This Court in Krishnabai has noticed that the landholders

elected to choose one of the two inconsistent remedies and obtained

relief under one statutory provision. It was on the footing that the

occupier was their tenant. In that context, the Court has held that the

landholders, then, could not approbate and reprobate and contend in

other proceedings that the occupier was never their tenant but only a

partner in cultivation. Such a plea would be barred by principles of res

judicata because of the previous order.

33. Here, the landlady all along contended that Shrikant was a

licencee. She contended before the Civil Court that her remedy before

the Authorities was barred by limitation. Then the Civil Court has held

that the case was not barred under any law. She could have her

remedies against the “licencee.”

34. In Gulabchand Chhotalal Parikh v. State of Gujarat20, the

Supreme Court has held that the general principles of res judicata will

apply to a decision on merits in a Writ Petition. Subsequent Suit is

barred. In Centre of Indian Trade Unions, this Court has held that the

doctrine of res judicata is not confined to civil suits; it applies to writ

petitions, too. Then, after explaining the doctrine, this Court has further

held that constructive res judicata applies to PILs. In Choudhary Sahu,

the Supreme Court has held that if no appeal is filed, a decree or order

becomes final.

35. Here, the Civil Court rejected the plaint; it was on the ground

that the landlady, as per her pleadings, must have another statutory

remedy, and for that the forum was different. Then, after an initial

20AIR 1965 SC 1153

aborted attempt to challenge that order or decree, the landlady chose to

have the remedy the Civil Court held available.

36. Now we will turn to the suits. In Civil Suit No. 8 of 1995, the

trial Court, through its judgment dated 24.06.2003, rejected the suit. It

seems that was in response to Shrikant’s application under Order 7,

Rule 11 of CPC. It has mostly recorded the rival contentions about

Shrikant’s status or the nature of the agreement. Its employing

“admittedly” more than once for both the rival contentions may have to

be understood in that context. But it dismissed the suit, as I gather,

based on Mrs. Bhat’s pleadings: “the pleadings are sufficient to infer

that the Civil Court does not have any justification to entertain to suit

for possession and arrears of license fees as claimed by the plaintiff.”

37. This Court in WP No. 346 of 2004 has only held that Mrs.

Bhat has an alternative remedy. Once the Civil Court has rejected a

plaint or even the very suit on the grounds that it has no jurisdiction, it

becomes coram non judice. In other words, a court declaring itself

coram non judice, yet declaring some right, if it were, is nothing but a

contradiction in terms. A judicial oxymoron. So, I reckon there is no

declaration about Shrikant’s status.

38. The past litigation put behind, now I will focus on the

impugned order and its legality.

The Present Litigation:

What is Challenged?

39. Shrikant assails the Order, dated 3rd March 2006, passed in

Appeal No.166 of 2005 by the learned Additional Commissioner, who is

the Revisional Authority under Section 44 of the Maharashtra Rent

Control Act 1999. That order confirms the Competent Authority’s Order,

dated 29th January 2005, passed under Section 24 of the Act. So the

challenge is against the concurrent findings.

What is the Subject?

40. Shrikant has been occupying the first floor of a residential

property belonging to Jayant, the present owner. His mother let him in.

Shrikant claims that he has been in exclusive possession of the property

since 1986. So he asserts he is a lessee. The possession is undisputed,

but his status is. Contrary to Shrikant’s claim, the landlady and, later,

her son Jayant maintain that he is a licencee who must vacate.

On What Basis?

41. Mrs. Bhat and Shrikant signed an agreement on 1st June

1986. The primary dispute is about the nature of the agreement: is it a

lease deed or a leave and licence agreement? Even the duration is a

bone of contention. The Agreement was initially supposed to be for

three years—from 01.06.1986 to 31.05.1989. But Shrikant contends

that it was intended to be for an indefinite period since the landlady

was occupying the rest of the whole bungalow along with her husband,

who was then alive.

Issue No.2: Does the Agreement, dated 1st June 1986, if treated as a lease

deed, require registration?

42. Section 17(1)(d) of the Registration Act and Section 107 of

the Transfer of Property Act provide that leases of immovable property

from year to year or for any term exceeding one year or reserving a

yearly rent can be made only by a registered instrument. Particularly

Section 107 of TP Act mandates:

“A lease of immovable property from year to year, or for any term

exceeding one year or reserving a yearly rent, can be made only

by a registered instrument.

43. Section 49 of the Registration Act, 1908, sets out the effect of

nonregistration

of documents required to be registered. That Section

reads:

“49. Effect of nonregistration

of documents required to be

registered:

No document required by section 17 or by any provision of the

Transfer of Property Act, 1882 (4 of 1882), to be registered shall

—

(a) affect any immovable property comprised therein, or

(b) confer any power to adopt, or

such property or conferring such power, unless it has been

registered:

Provided that an unregistered document affecting immovable

property and required by this Act or the Transfer of Property Act,

1882 (4 of 1882), to be registered may be received as evidence of

a contract in a suit for specific performance under Chapter II of

the Specific Relief Act, 1877 (3 of 1877), or as evidence of any

collateral transaction not required to be effected by registered

instrument.”

44. Let us examine Section 49 of the Registration Act. This

provision describes the “effect of nonregistration

of documents

required to be registered.” If we assume that a document requires

registration under Section 17 or under the Transfer of Property Act, but

it has not been registered. Then, that document cannot (a) affect any

immovable property shown in the document; or (b) confer any power to

be adopted, or (b1) be received as evidence of any transaction affecting

the property shown in the document. Here, an agreement of lease, if it

were, needs to be registered.

45. But Section 49 provides for exceptions. The unregistered

document “may be received as evidence of a contract in a suit for

specific performance,” or as evidence of any collateral transaction not

required to be effected by a registered instrument. Interpreting Section

49 of the Registration Act, the Supreme Court in SMS Tea Estates

Private Limited v. Chandmari Tea Company Private Limited[21] has held

that “a collateral transaction is not the transaction affecting the

immovable property, but a transaction which is incidentally connected

with that transaction.”

46. We may as well examine the semantic significance of “affect”

21[] AIR 2011 SC 4484

in Section 49 of the TP Act. In Atluru Saraswatamma v. Atluru

Paddayya[22], in 1923, a Division Bench of the Madras High Court has

held that all sorts of transactions may remotely affect the immovable

property. So Section 49 of the Registration Act must be read in the light

of Section 17 of the same Act and Section 91 of the Evidence Act. If this

is done, the word "affecting" will be seen to be only a compendious term

for expressing the phrase "purporting or operating to create declare,

assign, limit or extinguish, whether in present or in future, any right,

title or interest whether vested or contingent." And leasehold right is a

right under Section 49 of the TP Act.

47. In Anthony, the Supreme Court has held nonregistration

the document produces only two consequences. One is that no lease

exceeding one year is created. The other is that the instrument becomes

useless for creating any lease. But the presumption that a lease not

exceeding one year stands created by the conduct of the parties remains

unrebutted. In that context, Anthony has also observed that to the

parties to an unregistered lease deed, the Rent Control Act does apply.

48. So the conclusion is that the agreement, dated 1st June 2008,

ought to have been registered if it were treated as a lease deed.

(a) Is NonRegistration

a Curable Defect?

49. A learned Full Bench of this Court in Hemendra Rasilal Ghia

v. Subodh Mody[23] has categorized, in paragraph 71 of the judgment,

the objections about document marking into three categories: (i) the

objection to the documents insufficiently stamped; (ii) the objection

about the mode of proof; and (iii) the objection about the document ab

initio inadmissible in evidence. In view of Section 17 (1) (d) of the

Registration Act and Section 107 of the TP Act, read with Section 49 of

the same Act, a document which requires registration but has not been

22[] AIR 1923 Mad 297

23[] 2008(6) Mh.L.J. 886

registered renders itself ab initio inadmissible. It is unlike insufficient

stamp duty, which is curable.

(b) Can this Objection be raised at any Stage?

50. Nonregistration

vitiates a document; it robs the document of

both its solemnity and value. It can affect no immovable property

shown in the document, nor can it be received as evidence of any

transaction affecting the property shown in the document. As the

document is ab initio inadmissible, the objection can be raised at any

stage.

51. Suffice it to refer to Rana Vidya Bhushan Singh v. Ratiram[24].

A threeJudge

Bench of the Supreme Court has held that a document

required by law to be registered is inadmissible as evidence of a

transaction affecting the immovable property if it is unregistered. But it

may be admitted as evidence of collateral facts, or for any collateral

purpose. Then, in the context of that case, as is here, their Lordships

have held that if an agreement was unregistered, it could not create in a

party’s favour, say, the right of tenancy for a ‘specified period.’ The

agreement, to that extent, is inadmissible in evidence. “But in support

of the plea that his possession was that of a tenant”, the party could rely

upon the recitals in that agreement of lease.

52. That said, neither Mrs. Bhat, the original landlady, nor her

son and successor, Jayant, the present landlord, is prepared to agree

that it is a lease deed. They maintain that it is a leave and licence

agreement. Does the agreement, dated 1st June 1986, pass muster as a

deed of licence?

Issue No.3: What is Agreement, dated 1st June 1086: is it a lease deed or

a leave and licence agreement?

53. For this purpose, we should construe that document. Ext. C is

the agreement. The title of the document reads: “Agreement in respect

24[] 1969 (1) UJ 86

of Residential Premises.” Then, it describes the purpose of the

agreement. In May 1986, the landlady’s son, that is the respondent in

this writ petition, was transferred to another place. At the same time,

Shrikant needed some accommodation. So the landlady gave the

residential portion (described) “for use.” The period of the agreement is

three years—to end on 31st May 1989. Then, Shrikant must hand over

the premises “in the condition in which the same was taken in

possession along with material.”

54. The conditions of the agreement were enlisted: (a) Shrikant

should deposit with the landlady Rs.20,000/.

It would be returned on

31st May 1989, after her taking the possession back. (b) For using the

premises, Shrikant must pay Rs.1,000/per

month in advance. (c)

Shrikant should pay the electricity charges; until a meter was received

from MSEB, he should pay the electricity charges as per the submeter.

(d) No changes could be made to the premises without the landlady’s

leave. (e) No obstacle should be created on the staircase. (f) The

bathroom on the first floor (where Shrikant lives) should not be used

for washing clothes and utensils. Now comes the most important

condition, and it reads:

(8) (a) However, before completion of the period of this

agreement, if my son gets transfer, I will require the place. In

these circumstances you will have to leave the place before

completion of the period of agreement.

(n) If I require possession of the place before completion of the

agreement/or if you want to leave the place before the

completion of the limitation, a notice of minimum one month will

have to be given by both.”

55. As respondent Jayant contends the agreement is contentneutral.

It has no telltale

expressions such as lease, rent, possession,

enjoyment, and so on. Nor does it have expressions like licence,

permission, and so on either, for us to conclude that it is a licence. First,

it is in the vernacular; second, it is the translation provided by the

petitioneroccupier,

who is facing eviction. The owner does not object to

any expressions in the translation. Fairness belongs to the counsel that

translated the document at whatever level of the litigation.

56. The agreement speaks of a stopgap

arrangement until her

then transferred

son came back. Though the agreement period was

three years, it was tentative. It was actually coterminous with her son’s

return. Plainly put, three years or her son’s return, whichever is earlier.

True, the landlady’s son did not return in three years, nor did she seek

the possession at the end of the agreement period. With hindsight, we

may note that if she had asked then for the return of possession, this

litigation would have started a little earlier than it actually started.

Noting more.

57. The agreement employs the expression “use” rather than

“enjoy”. Standing alone, the expression “use” is devoid of any specific

connotation and valueneutral.

Contrasted, But “enjoying” is “using as

one likes”. So “use” is permissive and “enjoy” is pervasive. Shrikant

could use the premises. Shrikant had to pay the electricity charges. The

landlady assured him a separate meter. So Shrikant insists that the

arrangement showed the parities’ intention. I am afraid nothing turns

on it. The meter, if arranged, was to ensure the charges were calibrated

separately.

58. There are restrictions on the use of the property: no obstacles

on the staircase; the bathroom on the first floor (where Shrikant lives)

should not be used for washing clothes and utensils.

59. There are two conditions that dealt with how the agreement

should terminate. The former stipulated that if the landlady’s son

returned before three years, Shrikant had to leave the place. The latter

condition provided for one month’s notice. If either party to the

agreement wanted to terminate the agreement before the threeyear

period, she or he should give one month’s notice. Do these two

conditions contradict? They do not.

60. The former condition is categorical; it admits of no ambiguity.

The return of the landlady’s son would spell the doom for the

agreement. That was nonnegotiable.

Besides that, for any other reason,

if either party to the agreement wanted the contract to end, then the

noticeperiod

was stipulated.

(a) What distinguishes a lease from a licence?

61. Section 105 of the TP Act defines “lease.” It is a transfer of a

right to enjoy any immovable property. Under Section 108 of that Act,

the lessee is entitled to be put in possession of the property. On the

other hand, Section 52 of the Easements Act, defines “licence” as a

grant from person to another, 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 crux of the

lease is the creation of interest in the property; the crux of the licence is

its absence—the absence of any interest in the property. In the lease,

enjoyment is the prerogative, and in the licence it is permissive.

62. There is a marked distinction, declares the Supreme Court in

Associated Hotels of India Ltd. v. R.N. Kapoor, between a lease and a

license. A lease is, the decision holds, transferring 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 the

lessee gets that right to the exclusion of the lessor. Taking the above

discussion forward, K. Subba Rao J (as his Lordship then was) in his

concurring opinion, has also noted the statutory contours of Section 52

of the Indian Easement Act.

63. After analysing the above provision, Associated Hotels

observes that if a document gives only a right to a person to use the

property in a particular way or under certain terms while the property

remains in the owner’s possession and control, it will be a license. The

legal possession, therefore, continues to be with the owner, but the

licensee is permitted to use the premises for a particular purpose. “But

for the permission, his occupation would be unlawful.” Associated Hotels

observes that the license does not create in the licensee’s favour any

estate or interest in the property.

64. Acknowledging the conceptual confusion about the nature of

the licensee’s possession, Associated Hotels observes that “the dividing

line [between a lease and license] is clear though sometimes it becomes

very thin or even blurred.” Then, it refers to the oncefavoured

test of

exclusive possession as an infallible measure to determine the nature of

possession. After referring to a handful of English caselaw, Associated

Hotels enlists the tests that can determine whether a transaction is lease

or license: (a) To ascertain whether a document creates a license or

lease, by preferring substance of the document over the form; and (2)

to ascertain the intention of the parties—that is, whether they intended

to create a lease or a license. Then, it rules that if the document creates

an interest in the property, it is a lease; but if it only permits another to

use the property, of which the legal possession continues with the

owner, it is a license. On the other hand, if under the document a party

gets exclusive possession of the property, prima facie, he is considered a

tenant; but circumstances may be established which negative the

intention to create a lease.

65. In C.M. Beena v. P.N. Ramachandra Rao[25], the Supreme

Court has held that a few principles are well settled. User of the terms

like 'lease' or licence', 'lessor' or 'licensor', 'rent' or 'licence fee' are not by

themselves decisive of the nature of the right created by the document.

An effort should be made to find out whether the deed confers a right

to possess exclusively coupled with the transfer of a right to enjoy the

property, or it is merely a right to use the property while the owner

retains the possession. The parties’ conduct before and after the

25[] AIR 2004 SC 2103

creation of the relationship is relevant for our discovering their

intention.

66. In Delta International, the Supreme Court has exhaustively

examined the concept of “intention” of the parties to a deed. It has held

that the intention must be gathered from the words they have used, and

there could be no intention independent of that meaning. Recently, the

Supreme Court in Sevoke Properties has held that the only purpose for

which an unregistered lease can be looked at is for assessing the nature

and character of the occupier’s possession.

67. Here, Mrs. Bhat allowed Shrikant to “use” the property. She

dictated what Shrikant should do and should not do: he was enjoined to

use even the bathroom only in a particular way. He was asked to leave

the property the movement Mrs. Bhat’s son came back on a transfer, the

agreement period notwithstanding.

68. Now, I will also refer to the decisions Shrikant has cited.

Sohan Lal Naraindas. In that case, the document is titled ‘leave and

licence agreement.’ But on facts, the Supreme Court notes that the

defendant was put in exclusive possession of the loft. There is no

evidence that the loft was given to the defendant out of sympathy or

because of friendship, or relationship, or any similar motive. It was

stipulated that the plaintiff may terminate the agreement by giving one

month's clear notice, the agreement could not be terminated by notice

of a shorter duration.

69. Here, the residential portion was let out only as a stopgap