Sunday, 17 April 2016

When licensee will not become tenant?

Once it is found that the occupation of the appellant was purely
as a licensee, the only question that remains to be considered is whether such
licensee would be covered by the term “tenant” as defined in Clause 2(5) of
the Rent Control Order.  As per Clause 2(5), a person by whom or on whose
account rent is payable for the premises is a tenant.  It cannot be disputed
that the appellant is in possession of a stall that is given on license and hence
he is in possession of premises as defined by Clause 2(4A)(b) of the Rent
Control Order.       However, merely because the appellant is occupying the
stall which is “premises” under Clause 2(4A)(b) of the Rent Control Order
that by itself would not make him a tenant of said premises.  The documents
on the basis of which he was inducted show that he was a licensee as found
herein above.  Merely because electrical energy charges are included in the
amount of rent as urged by relying upon Clause 10 of the Rent Control Order,
that  would  not   change   the  nature  of  the   appellant's   occupation.     Under
Clause   13(1)(a)   of   the   Rent   Control   Order,     written   permission   of   the
Controller is necessary for determining the lease after giving notice to the
tenant.  Clause 13(1)(a) reads as under:  
“Clause   13(1):   No   landlord   shall,   except   with   the
written permission of the Controller ­ 
(a) give notice to a tenant determining the lease or
determining the lease if the lease is expressed to be
determinable at his option; or”

Thus, if the lease of a tenant is required to be determined only then written
permission of the Controller would be necessary.  
The matter can be viewed from another angle.   Under Clause
13(1) of the Rent Control Order, written permission of the Rent Controller is
necessary before giving a notice determining the lease.  After obtaining such
written  permission,  the lease can be determined  by issuing notice under
Section 106 of the Transfer of Property Act.   However, for determining a
'licence', no written permission of the Rent Controller is necessary.   The
distinction between a lease and a licence is well recognised.  As noted above,
the possession of the appellant was on the basis of licence deeds at Exhibits
38 to 40 and for determination of said licence, there was no requirement of
obtaining the written permission of the Rent Controller.  
IN THE HIGH COURT OF JUDICATURE AT BOMBAY NAGPUR BENCH
NAGPUR.
SECOND  APPEAL   NO.    194    OF     2010
Suresh Champatrao Chincholkar,

VERSUS
Magan Sangrahalaya Samiti,

CORAM:   A. S. CHANDURKAR  J.
                           
                                  Dated    :   DECEMBER   04, 2014.
 Citation: 2015(3)MhLj744, 2015(7) ALLMR338

In   this   appeal   filed   under   Section   100   of   the   Code   of   Civil
Procedure, the appellant­ original defendant has challenged the decree for
possession   passed   in   respect   of   a   stall   in   the   premises   owned   by   the
respondent ­original plaintiff.   The second appeal was admitted by framing
the following substantial question of law:

Whether   the   licensee   paying   license   fee   would   be
covered by the term “tenant” as defined in clause 2(5)
of   the   C.   P.   &   Berar   Letting   of   Houses   and   Rent
Control Order 1949 and whether the permission of the
Rent Controller would be necessary for evicting such a
licensee? 
2] During pendency of the second appeal the original plaintiff filed
Civil     Application   No.   825   of   2014   for   dismissal   of   the   appeal   and   for
directions to the original defendant to deposit occupation charges.  According
to  the plaintiff after the second  appeal was  admitted  the defendant had
stopped paying any amount towards occupation of the suit premises.   The
defendant has filed his reply opposing the aforesaid application.  When said
civil application was taken up for consideration, the learned counsel for the
parties jointly submitted that the appeal itself would be heard on merits
considering the limited nature of controversy.  Accordingly, with the consent
of learned counsel for the parties the second appeal itself has been taken up
for final consideration.
3] The respondent ­original plaintiff claims to be a public trust that is
duly registered under the provisions of Bombay Public Trust Act, 1950.  The
object   of   the   trust   is   promotion   and   propagation   of   Khadi   and   Village
Industry  in   the   City  of  Wardha.       In   the   premises   owned   by  it,   a   stall
admeasuring 29 ft. X 17.6 ft. is the subject matter of present proceedings.
According   to   the   respondent   the   appellant   had   represented   to   the   trust
authorities that he was having the knowledge of khadi and village industry
and hence was capable of running stalls that were located in the premises of
the trust.   Accordingly the appellant was permitted to occupy one stall on

payment of license fees of Rs. 700/­ P. M. for a period of one year.   Initially
license   was   executed     for   the   period   from   01.04.1997   to   28.02.1998.
Thereafter a fresh deed of license was executed for a period from 01.03.1998
to 31.01.1999 and finally for the period from 01.02.1999 to 31.12.1999.  
4] According to the respondent it resolved to revoke license of the
appellant and after passing resolution in that regard, notice dated 02.12.1999
was issued to the appellant.   He was called upon to vacate the stall.  The
appellant replied to the aforesaid notice on 15.12.1999.  As he did not vacate
said stall, the respondent­trust filed suit for possession along with damages
for wrongful use and occupation.
5] The appellant filed his written statement and took the plea that
he had attained a status of a tenant and hence under provisions of C. P. And
Berar Letting of Premises and Rent Control Order, 1949 (for short, the Rent
Control Order) he could not be evicted without obtaining permission from
the Rent Controller. 
6] The trial Court after considering the evidence on record came to
the   conclusion   that   the   respondent   had   proved   that   it   was   entitled   for
possession of the said stall.   It was further held that the appellant was not a
tenant of said stall.  It, therefore, decreed the suit and directed the appellant
to handover possession of the said stall to the respondent.
7] The   appeal   preferred   by   the   original   defendant   was   also
dismissed holding that the appellant was a licensee and that the trust was
entitled for possession of the stall after the license was revoked.  Said decree

is the subject matter of challenge in the present second appeal.   
8] In   support   of   the   appeal   Shri   J.   R.   Kidelay,   learned   counsel
appearing   for   the   appellant   submitted   that   though   a   licensee   deed   was
executed between the parties, the appellant was in fact a tenant of the said
stall and that in absence  of any permission from  the Rent Controller as
required by Clause 13(1) of the Rent Control Order, the appellant could not
have been evicted.   He relied upon various provisions of the Rent Control
Order especially Clauses 2(4A), Clause 2(5), Clause 6 and Clause 10 thereon
in support of aforesaid submissions.  He further submitted that though in the
license it had  been stated that license fee was being paid, in effect what was
being paid was rent which included electricity charges and hence it was clear
that  appellant  was  a  tenant   of  the  premises  in  question.     In  support   of
aforesaid submissions, the learned counsel relied on the judgment of  learned
Single Judge  in Nababkhan Abdullakhan and another  Vs.  Jamrubi w/o
Abdullakhan 1992 Maharashtra Law Journal 260 and the decision in M. I.
Quereshi s/o Yasin Mohammad   Vs.   Khatoonbi wd/o M. A. Qadar and
others 2005 (1) Maharashtra Law Journal 98.  According to him merely
because license fee was being paid, that would not change the nature of
occupation of the appellant and in fact the occupation of the appellant was as
tenant of the premises in question.       
9] On the other hand Shri P. A. Gode, learned counsel appearing for
the respondent supported the impugned judgments.  He submitted that on a
plain reading of the license deed, it was clear that the occupation of the

appellant was merely as a licensee.   He submitted that a licensee paying
license fee was not covered by the definition of the term “tenant” as defined
in   Clause   2(5)   of   the   Rent   Control   Order.   He   submitted   that   while
determining whether the document in question was a lease or license, the
intention and surrounding circumstances have to be taken into account.  He,
therefore, submitted that from the surrounding circumstances it was clear
that the trust merely intended to create a license in favour of the appellant.
In support of aforesaid submission the learned counsel placed reliance on the
following decisions:   
1]  Loreal  India   Pvt.   Ltd.   Mumbai     Vs.     Global   Earth   Properties   And
Developers Pvt. Ltd., Mumbai and another 2009(5) Maharashtra Law
Journal 215; 
2] Bakubhai Keshavlal Shan (deceased)   Vs.   Shri Babulal Prabhudas
Shah & Anr. 2003(1) ALL MR 558; 
3] Bhagwanji Mohandana Chauhan & others   Vs. Keshavji Manjibhai
Chauhan 2004(Supp.2) Bom.C.R. 504;
4]Shri Paulo Godinho  Vs.  Shri hari Jaivant Sinai Bhangui 1999(2) ALL
MR 541;
5]C. M. Beena  Vs.  P. N. Ramchandra Rao (2004) 3 Supreme Court Cases
595.
10] The  license deed is the material document on the basis of which
the controversy is required to be resolved.  Copies of the license deeds were
placed on record vide Exhs. 38 to 40.   As per aforesaid license deed, the

appellant was to pay security deposit of Rs. 2100/­ and license fee of Rs.
700/­ P. M.  The material terms of said license deed are at Sr. No. 2, 5 and 6
which read thus: 
“2.   The   overall   control   and   superintendence   of  the
said   stall   shall   remain   vested   in   the   Samiti   whose
authorised   representatives   shall   at   all   reasonable
hours be entitled to inspect the said stall about its
bonafide use and about its state of repairs.  The Samiti
shall be bound to keep the stall in good repair and
remedy defect or leakage with in seven days of the
notice given by the licensee to the Samiti. 
5. The licensee shall display,exhibit, offer for sale or
actually sell only those goods, materials, handicrafts or
articles which are produced, manufactured or created
in   the   sector   of   Khadi   and   Village   industries   as
approved by the KVIC.  In this respect it is expressly
agreed that the decision of the Samiti (Inclusive of the
person   authorised   by   it   in   this   behalf)   shall   be
conclusive and absolutely binding on the licensee and
shall not be subject to dispute or review. 
6.   The   licensee   may   exhibit   advertisements   and
placards in such parts of the stall or area around it as
may be approved by the Samiti.” 
   
11] From the aforesaid license deed duly signed by the parties it was
agreed that over all control and superintendence of the stall in question
would remain vested in the trust and that an authorised representative would
be   entitled   to   visit   and   inspect   said   stall   at   all   reasonable   hours.     The
appellant was entitled to sell only those goods which were produced and
manufactured in the Khadi and Village Industries Sector.  
12] According to the appellant his occupation of the aforesaid stall
was as a tenant.  Though he was paying license fee, as the same was inclusive

of electricity charges  the amount actually paid was in the nature of rent as is
clear from the provisions of Clause 10 of the Rent Control Order.  According
to   the   learned   counsel   for   the   appellant   the   stall   in   his   occupation   was
“premises” as defined by Clause 2(4A) and hence the appellant was a tenant
in terms of Clause 2(5) of the Rent Control Order.   Aforesaid submission
though attractive, the same cannot be accepted.  In C. M. Beena and another
(supra), it was held by the Supreme Court that the difference between a lease
and license has to be determined by finding out the real   intention of the
parties on the basis of the document in question.   In para 8 thereof it has
been observed as under: 
“Generally speaking, the difference between a “lease”
and “licence” is to be determined by finding out the
real intention of the parties as decipherable from a
complete reading of the document, if any, executed
between   the   parties   and   the   surrounding
circumstances.   One 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   permission   so   given   the
occupation would have been unlawful (see Associated
Hotels   of   India   Ltd.   V.   R.   N.   Kapoor   AIR   1959   SC
1262).”
As noted above, the deed of license clearly stipulated that the over all control
and   superintendence   of   the   stall   would   remain   with   the   trust   and   its
authorised  representative was entitled to inspect the same at all reasonable
hours.  The manner in which the goods were to be displayed and sold was
also stipulated.  Similarly, the manner in which advertisement and placards

were to be exhibited was subject to the approval of the trust.  It is thus clear
that  as   per   aforesaid   stipulations   of  the  licence   deed,   the   appellant  was
merely a licensee and no lease was created in his favour.  
13] Once it is found that the occupation of the appellant was purely
as a licensee, the only question that remains to be considered is whether such
licensee would be covered by the term “tenant” as defined in Clause 2(5) of
the Rent Control Order.  As per Clause 2(5), a person by whom or on whose
account rent is payable for the premises is a tenant.  It cannot be disputed
that the appellant is in possession of a stall that is given on license and hence
he is in possession of premises as defined by Clause 2(4A)(b) of the Rent
Control Order.       However, merely because the appellant is occupying the
stall which is “premises” under Clause 2(4A)(b) of the Rent Control Order
that by itself would not make him a tenant of said premises.  The documents
on the basis of which he was inducted show that he was a licensee as found
herein above.  Merely because electrical energy charges are included in the
amount of rent as urged by relying upon Clause 10 of the Rent Control Order,
that  would  not   change   the  nature  of  the   appellant's   occupation.     Under
Clause   13(1)(a)   of   the   Rent   Control   Order,     written   permission   of   the
Controller is necessary for determining the lease after giving notice to the
tenant.  Clause 13(1)(a) reads as under:  
“Clause   13(1):   No   landlord   shall,   except   with   the
written permission of the Controller ­ 
(a) give notice to a tenant determining the lease or
determining the lease if the lease is expressed to be
determinable at his option; or”

Thus, if the lease of a tenant is required to be determined only then written
permission of the Controller would be necessary.  
The matter can be viewed from another angle.   Under Clause
13(1) of the Rent Control Order, written permission of the Rent Controller is
necessary before giving a notice determining the lease.  After obtaining such
written  permission,  the lease can be determined  by issuing notice under
Section 106 of the Transfer of Property Act.   However, for determining a
'licence', no written permission of the Rent Controller is necessary.   The
distinction between a lease and a licence is well recognised.  As noted above,
the possession of the appellant was on the basis of licence deeds at Exhibits
38 to 40 and for determination of said licence, there was no requirement of
obtaining the written permission of the Rent Controller.  
14] In  Nawabkhan Abdullakhan  (supra) it was held that a licensee
who was not paying rent was not covered by the term “tenant” under Clause
2(5) of the Rent Control Order.   After considering the expression “tenant”
which means a person on whose account rent was being paid, it was held that
such licensee was not a tenant.   Similar view has been   taken in  M. I.
Quereshi (supra).  Ratio of aforesaid decisions cannot be made applicable to
the facts of the present case when it is found that the appellant was a licensee
on the basis of deed of license and there was no lease executed in his favour.
In  Balwantsinghji   Anand     Vs.     Bhagwantrao   Ganparrao
Deshmukh 1980 Maharashtra Law Journal 459, while considering nature
of occupation it was found that when the licensor had reserved right of

entering and visiting the premises in question it was clearly a case of license
being given and not of a lease being executed.  In the present case as found
from the documents at Ex. 38 to 40 as well as the findings recorded by both
the Courts, the occupation of the appellant was only a licensee.   Hence, it
cannot be said that the appellant was entitled to   protection under Clause
13(1) of the Rent Control Order.   Mere payment of license fee would not
make the appellant a “tenant” under Clause 2(5) of the Rent Control Order.  
15] In view of aforesaid the substantial question of law as framed is
answered by holding that the appellant who was paying license fee was not
covered by the term “tenant”, as defined by Clause 2(5) of the Rent Control
Order.   As a necessary corollary, there is no question of seeking permission
of the Rent Controller for evicting the appellant.     
16] As   a   consequence   of   aforesaid   discussion,   the   decree   for
possession as passed by the trial Court and affirmed by the first appellate
Court is maintained.   The Second Appeal is accordingly dismissed with no
order as to costs.  Consequently, pending Civil Applications are also disposed
of. 
As  the   appellant  is   in  possession  of   the  aforesaid   stall,   he  is
granted time of eight weeks to handover the possession of the same to the
respondent. 
JUDGE

Print Page

No comments:

Post a Comment