It must be noted here that the notice threatened forcible eviction of respondent by granting him just 3 days time to vacate the suit shop, and, therefore, the notice was in clear violation of Section 106 of the Transfer of Property Act, with the agreement between the appellant and the respondent being one of lease and not the licence. The said Act does not confer any special power on the Corporation to forcibly evict the tenants or lessees facing a situation as in the present case, bypassing the provisions of the Transfer of Property Act and powers of Civil Court. Therefore, the rejection of its objection by both the Courts below is legal and proper and cannot be interfered with.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY (NAGPUR BENCH)
S.B. SHUKRE, J.
Nagpur Municipal Corporation Vs. Bhaurao s/o. Marotrao Mohod (D) thr. Legal Heirs
Second Appeal No.205 of 1993
22nd April, 2014
Citation: 2014(6) ALL MR 537
JUDGMENT :- This appeal is preferred against the judgments and decrees passed by Seventh Additional District Judge, Nagpur in Regular Civil Appeal No.470/1986 and Joint Civil Judge, Junior Division, Nagpur in Regular Civil Suit No.1281/1984 on 31/12/1985.
2. The respondent, the original plaintiff, claimed that he was a lessee of shop no.1 having been inducted therein by the appellant, the original defendant, on 1/11/1968, initially at the rent of Rs.50/- per month and later at the rent of Rs.150/- per month. The respondent submitted that although the suit shop was given to him on lease on 1/11/1968, the lease agreement was styled as agreement of licence provided for the allotment of the suit shop for the period of one year from 1/04/1969 to 31/03/1970. The contract was never renewed in writing but the rent continued to be paid by the respondent up to the date of the suit. Initially, the respondent was carrying on business of cotton and general brokership from the suit shop and later on he changed his business to that of sale of liquor from the suit shop. He also obtained a liquor licence from the competent authority. Suddenly on 18/08/1984, the respondent received a notice from the appellant calling upon him to vacate the suit shop alleging that the liquor business being carried on from the suit shop by the respondent was leading to nuisance and filing of complaints by the persons in the vicinity of the shop and that change of user of the suit shop amounted to breach of conditions of licence. By the notice, the appellant also threatened the respondent that if he failed to vacate the suit shop, he would be forcibly evicted therefrom. Respondent, therefore, filed a Civil Suit against the appellant for declaration and permanent injunction.
3. The appellant resisted the suit by filing his written statement. Occupation of the respondent of the suit shop with effect from 1/11/1968 was not denied. However, it was contended that the suit shop was given on licence with effect from 1/04/1969 for a period of one year expiring on 31/03/1970. It was further contended by the appellant that as per the conditions of the licence, particularly condition no.6, the respondent could not change the user of the suit shop without permission of the appellant. It was further submitted that since this condition was breached by the respondent, a notice for vacating of the suit shop was issued by the appellant to the respondent. It was submitted that the appellant being an autonomous body had necessary powers for eviction and, therefore, respondent was not entitled to seek any protection from the Court. It was also submitted that the suit was bad in law for want of statutory notice under Section 384 of Nagpur Municipal Corporation Act, a mandatory requirement for instituting a suit against it. On these grounds, it was urged by the appellant that the suit be dismissed.
4. The trial Court framed several issues and after considering the evidence, decreed the suit with costs. By the judgment and decree passed on 31/12/1985, the trial Court declared that respondent was in occupation of the suit shop as a tenant and that the notice dated 18/08/1994 was illegal and inoperative. The appellant was also permanently restrained from interfering with the tenancy right of the respondent, till he was evicted therefrom in due course of law. Appeal filed against this judgment and decree by the appellant was also dismissed with costs by the judgment and decree passed on 22/10/1992 by Seventh Additional District Judge, Nagpur. It is these judgments and decrees, which are challenged in the present appeal.
5. I have heard learned Counsel for the appellant and learned Counsel for the respondent. With their assistance, I have carefully gone through the impugned judgments and decrees, paper book of the appeal and the record of the trial Court. The substantial question of law that arises for my consideration is as follows:-
What is the impact of clause 16 in agreement at Exhibit 48 upon the interpretation of the agreement (Exhibit 48)?
6. At the centre of the controversy between the parties herein lies one agreement executed between appellant and the respondent which is at Exhibit 48. Both the trial Court as well a the first appellate Court have held that this agreement in Marathi styled as "Parwana Prapatra" is in effect and reality a lease agreement and therefore the respondent was further found to be entitled to a declaration that he is a tenant of the appellant. For recording these concurrent findings, as seen from the judgments of both the Courts below, well established principles of law distinguishing a licence from lease and also the terms and conditions of the document at Exhibit 48 together with the attending circumstances indicating intention of the parties have been taken into consideration.
7. Learned Counsel for the appellant has submitted that interpretation so placed upon this document is absolutely erroneous and, therefore, needs to be corrected by this Court. In support of his argument, learned Counsel for the appellant has taken me through the entire document at Exhibit 48 and has particularly invited my attention to clause 16 of this agreement. He submits that all the terms and conditions of the agreement at Exhibit 48 taken together only indicate that it essentially grants licence to the respondent to carry on the business of partnership in cotton as mentioned therein and not any lease of the suit shop for the purpose of carrying out of the said business. He further submits that clause 16 of this agreement, in particular, shows that in the absence of cancellation of the agreement, the agreement is deemed to be renewed every year and all the terms and conditions of the agreement are also accordingly deemed to be renewed and, therefore, the finding given by the trial Court that this agreement expired on 31/03/1970 and was not renewed thereafter is perverse. He submits that non-renewal of the agreement vide Exhibit 48 specifically in writing and acceptance of the licence fee of Rs.150/- every month by the appellant were the circumstances wrongly construed by the trial Court as leading to an inference that the intention of the parties was to create a tenancy or lease in respect of the suit shop and not any licence. Such reasoning given by the trial Court, was also affirmed by the first appellate Court erroneously, so submits the learned Counsel for the appellant. He submits that this agreement, by applying well settled principles of law, ought to have been interpreted as only granting licence and not any lease.
8. On the other hand, learned Counsel for the respondent submits that the terms and conditions of the agreement vide Exhibit 48 when considered in their entirety would only show that the intention of the appellant was to grant lease and not any licence to the respondent and, therefore, he submits that the appeal deserves to be dismissed.
9. Learned Counsel for the appellant has referred to me the case of Mangal Amusement Park (P) Ltd. V/s. State of Madhya Pradesh & Ors. reported in (2012) 11 SCC 713. In this case, the distinguishing features of an agreement of licence and an agreement of lease have been enumerated on the basis of which a document can be found to be either in the nature of a licence or a lease. These features are :-
"(i) to ascertain whether a document creates a license or lease, the substance of the document must be preferred to the form;
(ii) the real test is the intention of the parties - whether they intended to create a lease or a license;
(iii) 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
iv) 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."
10. These features would help us in determining as to whether a document grants a right of use of the premises in a particular way without any creation of interest or estate therein or whether it amounts to the transfer of a right to enjoy the suit premises for a certain time for a price paid or promised. In the former case, the document is called a licence and in the latter case, it is called a lease. There is, therefore, a clear distinction between a licence and the lease, though sometimes it becomes difficult to know the difference, as is observed by the Hon'ble Supreme Court in the case of Associated Hotels of India Ltd. V/s. R. N. Kapur reported in AIR 1959 SC 1262, thus:
(27) .. "The dividing line is clear though sometimes it becomes very thin or even blurred."
Therefore, what has to be looked for is the intention of the parties to be gathered from the terms of the document, conduct of the parties and all attending circumstances. If the intention is to grant right to use the premises in a certain way while it remains in possession or control of the owner thereof, it can be said that intention is to grant licence. In such a case, the legal possession continues to be with the owner of the property and what is granted is only a limited right to do or continue to do something which would, in the absence of such right, be unlawful. By grant of such right there is no transfer of right to enjoy the property and there is no creation of interest in the property. On the other hand, if the intention is to transfer an interest in the property to the transferee whereby the transferee comes in exclusive possession of the property for a certain time for a price, such transfer of interest would amount to creation of a lease. It is to be noted that in case of a lease, the transfer of right to enjoy the property is always for a consideration of price paid or promised. But, in case of a licence, the grant of right to use the property need not necessarily be under a consideration of price paid or promised and need not be expressly confined to a particular span of time.
11. The above referred principles of law have also been stated in the case of Capt. B.V. D'Souza V/s. Antonio Fausto Fernandes reported in (1989) 3 SCC 574 by the Hon'ble Apex Court, which case has been referred to me by learned Counsel for respondent.
12. In the light of this legal position, let us now examine the submissions of the rival parties for which purpose it would be necessary to consider the relevant clauses of the agreement vide Exhibit 48. This document is in Marathi and styled as "Parwana Prapatra" which when freely translated means "Licence Proforma". It begins with recitals that the respondent is being granted licence, with effect from 1/04/1969 to 31/03/1970, in respect of shop no.1 for the purpose of business of cotton and general brokership on the conditions stated in the document. It incorporates in all 17 conditions, out of which conditions incorporated in clauses 4,8,11,12 and 16 are very relevant. Clause 4 implies that for making construction inside or outside the suit shop, permission can be obtained form the Corporation. Clause 8 creates a possibility for the legal heirs of the occupier of the suit shop to occupy it in their own names with the permission of the Corporation. Clause 11 contemplates that the occupier of the shop would have to obtain electricity metre and do the necessary electrical fittings at his own costs and make the payment of electricity bill without reference to the Corporation. Clause 12 requires the occupier of the shop to give intimation to the Corporation of any business partner that may be kept by him and also mentions consequences of any failure to give such intimation to the Corporation. Clause 16 states that till the time the grant is cancelled, the grant would be deemed to be renewed on month to month basis together with deemed renewal of all the terms and conditions of the agreement which shall be binding upon the occupier of the shop till 31st March.
13. From the above referred conditions, it is obvious that what the Corporation or the appellant has granted to the respondent is not a mere right to use the suit shop in a particular way or under certain terms or conditions, but also something beyond that. It also grants possession of the suit shop together with right to enjoy the possession of the suit shop. If this were not so, the Corporation would not have allowed the occupier of the shop i.e. respondent to obtain electricity metre in his own name and install necessary electrical fittings in the suit shop. Similarly, it would also not have agreed upon a possibility of mutating the suit shop in the name of legal heirs or relatives in the discretion of the Corporation, in the event of death of the occupier of the shop. It would also not have contemplated prior permission for making construction either inside or outside of the suit shop. It would also not have provided for deemed renewal of the agreement vide Exhibit 48, in the event of it being not expressly cancelled by the Corporation. We have seen earlier that in case of a licence the legal possession remains with the licensor and the licensee is only permitted to make use of the premises. But, the document nowhere states nor indicates that some or the other control in respect of the suit shop has been retained with the Corporation.
14. The terms and conditions discussed above unmistakably point towards the intention of the parties to create a lease and not a licence. The document allows the suit shop to be in exclusive possession of the respondent and that is the reason why it is specifically stated in clause 3 that upon receipt of the notice of cancellation of Parwana (licence), the respondent would be required to vacate the suit shop within 3 days failing which authorised officers of the Corporation would get the shop, through force of the Corporation, vacated. The use of expression "vacating of the suit shop" together with conditions discussed earlier does show that the document is in the nature of lease and not licence.
15. This conclusion is also supported by the circumstances in which the possession of the suit shop was enjoyed by the respondent without even a whisper of protest being raised by the appellant until the notice dated 18/08/1984 was issued. It has come on record through the pleadings of the respondent as well as the evidence adduced by him that he had changed the user of suit shop at least twice before switching over to business of liquor and on both these occasions no objection was taken by the officers of the appellant. The appellant had invested about some rupees 20 to 25 thousand for facilitating his business in the suit shop and no one would invest such a money unless he is assured that the suit shop is in his exclusive possession and has a right to enjoy its possession to the exclusion of others. The pleadings and the evidence on this aspect of the case have not been refuted or controverted by the appellant. On the contrary, evidence of witness no.1 of the respondent DW1 Madhukar, who was at the relevant time working as Moharil in Nagpur Municipal Corporation shows that the Corporation was aware that in or about 1980, the respondent was running a hotel in the suit shop. This was the change of user of the suit shop and, therefore, a breach of condition no.6 of the agreement at Exhibit 48. But there is no evidence brought on record by the appellant that any action in this regard was taken by the Corporation against the respondent.
16. Even the respondent in his evidence has stated that the suit shop no.1 was given to him on rent with effect from 1/11/1968 and that at that time itself he was given possession of the said shop. He has also stated that in the beginning in 1968, the rent as Rs.50/- per month. Giving of the suit shop to the respondent with effect from 1/11/1968 has not been denied by the appellant. The appellant has only submitted that the agreement of licence in respect of the suit shop that was executed between the parties was for a period of one year starting from 1/04/1969 and expiring on 31/03/1970. The cross-examination of the respondent, the original plaintiff Bhaurao, s/o. Marotrao Mohod, taken on behalf of the appellant does not show that his assertion that he was given possession of the suit shop with effect from 1/11/1968 at the initial rent of Rs.50/- per month, has been controverted in any manner by the appellant. The agreement vide Exhibit 48 does not make any mention of giving of the suit shop to the respondent with effect from 1/11/1968 nor does it clarify that it was on the basis of an oral licence granted to the respondent.
17. The above referred circumstances coupled with the clauses of the document of agreement vide Exhibit 48 discussed earlier would only show that the intention of the parties was to grant to the respondent the lease of the suit shop and not any licence. Even clause 16 had the effect of deemed renewal of the grant, found to be the lease, and since the lease has not been determined in accordance with law, the respondent would be entitled to the declaration as well as permanent injunction as sought for by him. The observation of the trial Court that the agreement vide Exhibit 48 came to an end on 31/03/1970 and that thereafter there was no renewal of this agreement and consequently no renewal of clause 6 is of course erroneous as it is in ignorance of clause 16 contemplating deemed renewal of the agreement. But, the erroneous observation would not adversely impact final conclusions as fact remains that the lease of the suit shop was created and it could have been terminated only in accordance with law, which in effect means issuance of notice to the respondent under Section 106 of the Transfer of Property Act was neessary, which was not given. The trial Court as well as appellate Court therefore have rightly held that without following the due process of law, the respondent cannot be evicted from the suit shop.
18. In the circumstances, I find that the impact of clause 16 of the agreement vide Exhibit 48 would not so as to make the document of agreement as of licence and not of lease. This agreement, for the reasons stated earlier, essentially remains to be an agreement of lease. The substantial question of law is answered accordingly.
19. Learned Counsel for the appellant has also argued that since the suit was instituted against the appellant, a Corporation constituted in accordance with the provisions of City of Nagpur Corporation Act, 1948 without any notice issued to it under Section 384 of the said Act, the suit as filed is bad in law. Similar objection has been taken by the appellant before both the Courts below and it has been appropriately rejected by them. The reason stated by the Courts below for rejecting the objection is that notice under Section 384 is required to be issued only when the suit that is filed is in respect of any act done in pursuance or execution of the provisions of the Act or in respect of any alleged neglect or default in the execution of the Act or any rule or any byelaw made under the Act and since the notice dated 18/08/1984 was not issued in pursuance or execution of the Act or any alleged neglect or default in the execution of the Act, the suit as filed by the respondent is not hit by Section 384 of the said Act. It must be noted here that the notice threatened forcible eviction of respondent by granting him just 3 days time to vacate the suit shop, and, therefore, the notice was in clear violation of Section 106 of the Transfer of Property Act, with the agreement between the appellant and the respondent being one of lease and not the licence. The said Act does not confer any special power on the Corporation to forcibly evict the tenants or lessees facing a situation as in the present case, bypassing the provisions of the Transfer of Property Act and powers of Civil Court. Therefore, the rejection of its objection by both the Courts below is legal and proper and cannot be interfered with.
20. In the result, the appeal deserves to be dismissed. The Appeal stands dismissed. In the circumstances of the case, parties to bear their own costs. Decree be drawn up accordingly.
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