while deciding whether a document is of leave and license or
of lease, the Court has to ascertain the intention of the parties
from its terms. The way parties choose to describe it is not
always determinative of its nature. Exclusive possession of the
premises is not the conclusive test. Though it is an important
circumstance in certain cases, other circumstance may disprove
the existence of lease. There is no simple litmus test to
distinguish agreement of lease from that of leave and license.
The intention has to be gathered from the terms of the
agreement except where it is proved that the document is a
camouflage. If it is alleged that the document is a camouflage,
the mask or veil is required to be removed for determining the
true intent and purpose of the document. If the terms of the
document are not clear, the surrounding circumstances and the
conduct of the parties have also
to be borne in mind for
ascertaining real relationship between the parties.”
IN THE HIGH COURT OF BOMBAY AT GOA
FIRST APPEAL NO. 185 OF 2003
1. Mr. Guy Vigney Athanasius D'Melo
v/s.
1. The Government of Goa Daman and Diu
: U.V. BAKRE,J.
DECIDED ON;
| December 16, 2011. Citation;2012(7) All M R 747 |
This appeal is directed against the Judgment, Order and Decree
dated 05/03/2003 passed by the learned 3rd Additional District Judge,
South Goa, at Margao in Civil Suit No. 10/1987/III. The Appellants are the
Plaintiffs and they shall hereinafter be referred to as the Plaintiffs whereas
the Respondents shall hereinafter be referred as the Defendants.
2.
The suit was for mandatory injunction, permanent injunction and
eviction with following prayers :
(a)
the defendants no. 3 and 4 be ordered to deliver the said
business of bar cum restaurant presently known as ALFA BAR
AND RESTAURANT and the fresh meats business, presently known
as ALFA COLD STORAGE along with all the fittings and furniture
mentioned in the schedule to the Agreement dated 21/05/1971;
(b)
the defendants no. 3 and 4 be ordered to pay Rs. 1000/- per
month from the date of the filing of the suit up to the date of Decree
and from the date of Decree up to the delivery of the business to the
3
plaintiffs;
(c )
the defendants no. 3 and 4 be ordered to pay Rs.5000/- for the
period from 22/08/1986 to 21/01/1987;
(d)
the defendants no. 3 and 4 be restrained by permanent
injunction from doing any acts of nuisance and throwing dirt and
dirty water and /or urine into the property situated at the backside of
the shop and wherein the plaintiffs have their residential house;
(e)
the defendants no. 3 and 4 be restrained by permanent
injunction from in any way doing any acts of damage either to the
goodwill of the business or to the suit structure wherein the business
is housed and also from doing any alteration or change to the suit
structure;
(f)
the defendants no. 1 and 2 be restrained by permanent
injunction from issuing any license for the sale of liquor into the suit
premises, in favour of the defendants no. 3 and 4.
3.
The case of the plaintiffs, in short, is as follows :
The plaintiffs are owners in possession of the property known
as “ GURGUNTI ” situated at Village Chinchinim, bearing survey no.
298/16. In the said property there are two structures: one consisting of
commercial shops and other which is the residential house of the plaintiffs.
4
The structure consisting of commercial shops belonged to Fr. Crisologo de
Melo who is the brother of the plaintiff no.1. Fr. Crisologo de Melo had
leased out one shop comprising of 4 divisions to one Mr. Roberto Silva in
the year 1964 or 1965 at the monthly rent of Rs. 45/- and the said Roberto
Silva was running therein a bar and restaurant in the name of “Silva Bar
and Restaurant”. By Deed of Sale dated 21/05/1971, the plaintiff no. 2
purchased the said business with furniture and other fixtures from said
Roberto de Silva and conducted the business under the name of “Capitol
Bar and Restaurant” till 28th July, 1973. On 28/07/1973, the plaintiff no.2
entered into an agreement with one Mr Benedito Gracias for conducting
the business of said bar and restaurant for a period of 11 months on
payment of compensation of Rs. 125/- per month. The liquor licence stood
in the name of Roberto Silva who expired on 23/2/1977. By the same
agreement, the plaintiff no. 2 also permitted said Mr. Benedito Gracias to
start business of fresh provisions store. Mr. Benedito Gracias conducted
the said business till November 1983 and thereafter handed over the said
business back to the plaintiff no.2. The defendant no.3, who had been
helping Mr. Benedito Gracias in running the said business, offered to run
the business in the absence of plaintiff no.2 from Goa and also undertook to
maintain day to day accounts till the plaintiff no.2 returns to Goa and
undertook to run the business on behalf of the plaintiff no.2. The plaintiff
5
no. 2 returned to Goa in June, 1994 and demanded the accounts and also
told the defendant no.3 that he should stop coming to the shop. The
defendants no. 3 and 4 refused to do so and even changed the name of
business to “Alfa Bar and Restaurant”. The defendants no. 3 and 4 dug a
tube well in the kitchen without consent and also constructed a loft and
started storing heavy material on the loft. The defendants also obtained
additional electric connection and all the above acts were done without
permission. The defendant no. 3 approached the excise department for
fresh licence. The plaintiffs issued legal notice dated 13/08/1986 to the
defendant no. 3, inter-alia, demanding delivery of the suit premises back to
the plaintiffs. The defendants no. 3 and 4 refused. Hence the suit.
4.
The defendants no.3 and 4 filed their written statement denying
the case of the plaintiff. In short, their case is as under:
Mr. Benedito Gracias is a seaman and it was his wife Mrs. Aida
Gracias who was running the said business and she did it till September
1977. The said Aida Gracias entered into an agreement with the defendant
no.3 and the said business was taken over by the defendant no. 3 and the
furniture in the said shop which belonged to Mr. Benedito Gracias was also
sold to the defendant no.3.
Mrs. Aida Gracias sold the business to the
defendant no. 3 with the consent of the plaintiffs as can be seen from the
letter dated
04/11/1977 written by the plaintiff no.1 to Mr. Benedito
Gracias and his wife and also the letter dated 01/08/1982 written by the
plaintiff no. 1 to the defendant no.3. The defendants no. 3 and 4 are the
lessees of the suit premises and they have paid rent into Bank Account of
the plaintiffs.
5.
Based on the pleadings, as many as 22 issues were framed by
the Trial Judge, however the main issue is issue no. 22 which reads as to
whether the defendants no.3 and 4 prove that they are lessees of the suit
premises and the said lease has not been terminated by the plaintiffs. The
plaintiffs examined the plaintiff no. 1 as PW-1; one Ramesh Naik as PW-2,
Smt Julia D'Silva, widow of Mr. Roberto D'Silva as PW-3 and one
Francisco Mascarenhas as PW-4. The defendants NO. 3 and 4 examined the
defendant no. 3 as DW-1.
6.
The learned Trial Judge came to the conclusion that the
defendants no. 3 and 4 were lessees in the respect of the suit premises and
therefore he has no jurisdiction to decide the suit in view of Section 56 of
the Goa, Daman and Diu Buildings (Lease, Rent and Eviction) Control Act,
1968 (Rent Control Act, for short).
The suit therefore came to be
dismissed. The plaintiffs, being aggrieved by the impugned Judgment and
7
Decree, have approached this Court with this appeal.
7.
Heard arguments.
Learned Advocate Shri C.A. Coutinho,
argued on behalf of the Plaintiffs whereas learned Advocate Shri Sudin
Usgaonkar, argued on behalf of the Defendants no. 3 and 4.
8. I have gone through the entire material on record.
9. The main points that arise for determination are as under:
(a)
Whether the Plaintiffs have proved that Mr. Benedito Gracias
ran the business till November 1983 and in the same month
handed over the said business back to the plaintiff no.2 and at
the request of the defendant no.3, the plaintiff no.2 allowed
him to conduct the business in her absence from Goa and the
defendant no.3 undertook to maintain day to day accounts and
to run the business on behalf of plaintiff no.2 till she returns to
Goa; and
(b)
Whether the defendants no.3 and 4 are lessees of the suit
premises.
10.
As far as the first point is concerned, the evidence on record
in clear terms establishes that the plaintiffs have made false averments
with regard to the same.
11.
Let us see as to how, when and by whom the defendant no.3
came to be inducted into the suit premises. Admittedly, the entry is not
illegal. The entry of the defendant No. 3 in the suit premises is the
foundation for the claim of the plaintiffs one one side and the defendants
no. 3 and 4 on the other side. It is here, while laying the foundation itself,
that the plaintiffs have made false averments in the pleadings thereby
suppressing the truth. In paragraph 13 of the plaint, it is pleaded that the
said business was run by Mr. Benedito Gracias till November, 1983, in
which month he handed over the said business to the plaintiff no.2. In
paragraph 14 of the Plaint, it is pleaded that the defendant no.3, who was
helping said Mr. Gracias, requested the plaintiff no. 2 to allow him to
conduct the business in her absence from Goa and the defendant no.3
undertook to maintain the day to day accounts and also undertook to run
the business on behalf of plaintiff no.2 till she returns to Goa. In paragraph
15 of the plaint, it is pleaded that the plaintiff no.2 returned to Goa in June,
1984 and demanded accounts from the defendant no.3 and told him that he
should no longer come to the shop. In paragraph no. 16, it is pleaded that
defendant no.3 refused to hand over the business of the sale of fresh
9
meats and the business of Bar and Restaurant.
First of all, the above
pleadings are very weak in nature since it is not stated any where as to in
what capacity the defendant no. 3 was allowed to conduct the business and
maintain the accounts and as to what was the consideration for the same.
12.
In his examination-in-chief at page no. 2, PW-1 who is the
plaintiff no.1 has stated that Mr. Benedito Gracias ran the business till the
end of the 1983 and wife of Mr. Benedito Gracias namely Mrs. Aida
Gracias wrote a letter stating that she is facing problem in running the suit
shop and that she would give the suit shop to the defendant no.3 in the
same manner as she was running and on their behalf. PW1 has further
stated that at that time the plaintiff no. 2 was in Bombay with children and
he was abroad. The above deposition of PW-1, in his examination-in-chief,
which is contrary to the pleadings, was recorded on 01/02/1993. But on
16/2/1998, when the evidence continued further, PW 1 changed the above
version and stated all that is pleaded in paragraphs 13 to 16 of the plaint.
Till the time PW-1 was shown the letter dated 04/11/1977 (Exhibit PW-
1/O), in his cross-examination, he maintained his above referred stand. But
after he was shown said letter dated 04/11/1977, he admitted that it bears
his signature and that in this letter he has expressed his satisfaction that the
bar was given to the defendant no. 3 by Aida and Benedito and that in
10
case Ferraro runs the bar he is agreeable and told Aida to collect the rent
of the bar and deposit the same in bank. PW-1 has also stated that he
authorised defendant no.3, Alvaro Ferrao to keep stock of bar in his
residential house, prior to 1983.
PW-1 was shown the letter dated
01/08/1982 (Exhibit PW-1/P) and he identified his signature on the same
and stated that as per this letter, defendant no.3, Alvaro Ferrao was
supposed to vacate the residential house by 01/09/1982 and he authorised
defendant no.3 to keep the bar stock inside the house. PW-1 has stated that
prior to writing this letter exhibit PW-1/P, the defendant no.3 was running
the
bar with his stock. The above deposition of PW-1, in his cross-
examination, reveals that the defendants no. 3 and 4 were not strangers to
the plaintiffs and infact were even occupying their house. It is further
revealed from the above that the business was handed over to the defendant
no. 3 by Mr. Benedito Gracias and this was in the year 1977 and this fact
was made known to the plaintiffs and on 4/11/1977, the plaintiff no. 1
consented for the same.
13.
PW-1 in his cross-examination has also stated that right from
the year 1982 till May, 1986 the amount has been regularly transferred
from the account of the defendants no.3 and 4 to the account of his wife
and Alfa stores mentioned in the entry is the business run by defendants no.
11
3 and 4. PW 1 has stated that prior to December, 1982 rents were collected
from the defendants no. 3 and 4 by Mrs. Aida Gracias. The above clearly
proves that the plaintiffs have falsely pleaded in the plaint that the business
was run by Mr. Benedito Gracias till November, 1983.
14.
It was argued by Mr. C. A. Coutinho, the learned Advocate for
the plaintiffs that the plaintiffs did make some averments in paragraphs 13
to 16 of the plaint which they could not prove but the same does not make
much difference. He argued that the plaintiffs might not have given the
premises to the defendant no. 3, but still the main question is whether there
is lease or licence. I do not agree with the contention that the evidence on
record only reveals that the plaintiffs could not prove some of their
pleadings and that this does not make much difference. In fact, the cross-
examination of PW-1 clearly establishes that the plaintiffs have knowingly
made false averments in the plaint in order to mislead the Court to believe
that the defendant no. 3 was engaged by the plaintiffs only to conduct the
business on behalf of the plaintiffs during the absence of the plaintiff no. 2,
either as their agent or employee, and to maintain the accounts till she
returned back to Goa. The plaintiff have approached the Court with unclean
hands.
12
15.
The point (a) is not at all proved by the plaintiffs. On account
of making false averments in the plaint, regarding the foundation of the
case i.e. about the entry of the defendants no. 3 and 4 in the suit premises,
the case of the plaintiffs that the defendants no. 3 and 4 are trespassers has
become very weak.
16.
DW-1, the defendant no.3 has stated that he continued with the
business of Bar and Restaurant in the suit premises pursuant to the
agreement entered into with Mrs. Aida Gracias. This agreement dated
07/10/1977 is at Exhibit DW-1/A. The said agreement (Exhibit DW-1/A)
clearly shows the intention of Mrs. Aida Gracias, who has signed the
agreement for self and on behalf of her husband, to part away the exclusive
possession of the suit premises to the defendant no.3. By this agreement at
Exhibit DW-1/A, the occupier of
the suit premises i.e. Mr. Benedito
Gracias has agreed to sell the furniture existing in the suit premises to the
defendant no.3. The agreement in its recital clause shows that the occupier
desires to give on lease the premises occupied by him for the purpose of
cold storage shop temporarily for a period of six months ending on 31 st
March, 1978 to the defendant no.3 on rental basis at the rate of Rs. 40/- per
month. It is further stated in this agreement that the defendant no. 3 shall
be permitted to occupy the premises for the purpose of business beyond the
13
stipulated date only if he is duly authorized by the proprietor. Thus, what is
delivered
to
the
defendant
no.
3
by
this
agreement
at Exhibit DW-1/A is the premises for business that is the suit premises
and not merely the business.
17.
It is seen from the evidence that subsequently on 4/11/1977,
which is within one month from the date of the Agreement (Exhibit DW-
1/A), the plaintiff no.1 wrote to Mrs. Aida Gracias and Mr. Benedito
Gracias a letter (Exhibit PW-1/O), in which he has expressed his
satisfaction for having handed over the business of fresh meats to Mr.
Alvaro Ferrao (Defendant No.3). He has specifically agreed for the same
and has further written that he has no objection for the defendant no. 3 to
run the business of the bar and that he would enter into an agreement with
the defendant no.3 after coming to Goa. Thus, as requisitioned in the
agreement (Exhibit DW-1/A), there was authorisation/written consent by
the proprietor to the defendant no.3 to occupy the suit premises for the
purpose of business of bar and cold storage beyond the stipulated date in
the said agreement at Exhibit DW-1/A.
18.
There is no dispute that if the defendant no. 3 is a lessee, then
he is controlled by the provisions of the Rent Control Act. In terms of
14
section 22(2) (b) (i) of the Rent Control Act, inter-alia, a tenant can be
evicted if he has, without written consent of the landlord, transferred his
right under the lease or sublet the entire building or portion thereof. Thus,
if the transfer takes place with the consent of the landlord, the tenant cannot
be evicted. In the present case, the contents of the letter dated 04/11/1977
(Exhibit PW-1/O) read with the evidence of PW 1 in his cross-examination
duly establish the written consent of the plaintiff No.1, for the act of
handing over the suit premises along with business, by Mrs. Aida Gracias
and Mr. Benedito Gracias to the defendant no.3. The letter dated
1/8/1982(Exhibit PW-1/P) written by the plaintiff no. 1 to the defendant no.
3 himself further shows that the plaintiffs had consented, since by this
letter, the plaintiff no 1 has further authorised the defendant no. 3 to even
keep the bar stock inside their house.
19.
No doubt the said handing over of the suit premises had taken
place on 07/10/1977, vide the agreement at Exhibit DW-1/A whereas the
said written consent under Exhibit PW-1/O is dated 04/11/1977.
The
question is therefore whether prior consent of the landlord was required for
such transfer. The provision of section 22(2)(b)(i) of the Rent Control Act
does not specifically say that the consent should be prior. In this regard, the
learned Advocate Mr. Sudin Usgaonkar, on behalf of the defendants no. 3
15
and 4, has relied upon “ Banarsi Dass vs. Faqir Chand and others”
(AIR 1976 Punjab and Haryana 27), wherein it has been held that the
expression “written consent” given in the lease-deed, Exhibit R-1, dated
July 27, 1965, works both backwards and forwards, and there is no warrant
for qualifying the expression “written consent” used in clause (ii) of sub-
section (2) of Section 13 of the 1949 Act with the word “prior”.
It has
been held that so long as written consent for subletting is given by a
landlord before filing of the petition for eviction whether before or after
actual subletting, the case cannot fall within the mischief of section 13(2)
(ii) (a) of the 1949 Act. Therefore, the written consent in the form of the
letter, Exhibit PW-1/O, works in favour of the defendants no. 3 and 4.
20.
The question now remain to be seen is whether Mr. Benedito
Gracias and Mrs. Aida Gracias were lessees of the suit premises because as
has been rightly argued by learned Advocate Shri. C.A. Coutinho , right of
defendants no. 3 and 4 cannot be more than that of Mr. Benedito Gracias
and Mrs. Aida Gracias . In other words, unless Mr. Benedito Gracias and
his wife were tenants, they could not have transferred “tenancy” with the
consent of their landlord.
21.
Section 52 of the Indian Easements Act, 1882 defines license as
16
under:
“ 52.- 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 immoveable 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 license.”
Thus, a license is an authority to do an act, in relation to an
immovable property, which would otherwise be a tress pass. The license
does not pass interest and does not amount to a demise, nor does it give the
licensee an exclusive right to the use of the property.
22.
The case of the plaintiffs, as pleaded in the plaint, does not
make out a case of license granted to the defendants no.3 and 4 but the
same appears to be either of employment given to the defendants no. 3 and
4 or of agency, which case is otherwise not at all proved.
23.
Learned Advocate Shri Coutinho, on behalf of the plaintiffs,
pointed out that in the said lease and licence agreement (Exhibit PW-1/C),
the expression “the owner” i.e. the plaintiff no. 2 has been stated to include
her heirs, successors, administrators and executors and/or assigns, but the
17
expression “the conductor” i.e. Benedito Gracias is not stated to include the
said persons. He therefore argued that the agreement was a personal
agreement. He further argued that the said Benedito, in terms of clause 11
of the agreement, could not have parted away the possession of the said
premises to any third party. He further pointed out that the conductor was
supposed to pay the amount of Rs. 125/- per month which was by way of
compensation and royalty. He also showed that the name “Capitol Bar and
Restaurant” and its goodwill had to be maintained. The above, according to
Shri Coutinho, are necessarily the conditions of a license and are not akin
to lease.
24.
However, there are various clauses in the said agreement
(Exhibit PW-1/C) which are inconsistent with a license but akin to a lease.
Lease has been defined in section 105 of the Transfer Of Property Act as
under:
“ 105.-
A lease of immoveable property is a transfer of a
right to enjoy such property, made for a certain time,express or
implied, or in perpetuity, in consideration of a price paid or
promised, or of money, a share of crops, service or any other
thing of value.”
18
25.
Gracias
The agreement between plaintiff no.2 and Mr. Benedito
which is at Exhibit PW-1/C is termed as “Lease and license
agreement for conducting business”.
This title gives an idea that the
agreement is for lease of the premises and for license to conduct the
business existing in the said premises. In clause 3 of the said agreement, it
is stated that bar premises consist of 4 rooms and the conductor shall not
change and alter the nature of business except that in one room adjacent to
the main bar the conductor may as an additional business activity start
fresh provisions stores subject to the conditions of this agreement. Clause
7 authorizes the conductor to make payments of electricity and water
charges. As per clause 8, if the conductor intends to discontinue the
business at any time during the period of agreement, he has to give notice
in writing to the owner, 30 days in advance. Clause 9 says that
the
conductor shall not install in the said business premises any additional
furniture and fixtures and he shall not be entitled to make any alterations,
modifications and repairs in the said business premises of bar and
restaurant without permission in writing of the owner. Clause no. 11 of the
said agreement provides that the conductor shall not part away or give the
possession of the said premises to any third party and he shall not allow
any third party to use or make use of the said premises of Capitol Bar and
Restaurant. Clause no. 12 thereof states that the conductor shall use and
19
make use of all the furniture, fixtures and utensils in the shop premises
during the period of this agreement and on the expiry of this agreement or
on the expiry of the thirty days' notice period, in case of termination prior
to the expiry period of 11 months( period of Agreement), the conductor
shall hand over the peaceful possession of the premises of the Capitol Bar
and Restaurant alongwith the furniture, fixtures, utensils as enlisted in the
Schedule 'A' signed and acknowledged by both the parties. Clause no. 14
of the agreement states that on the termination of the contract or on the
expiry of the period of the Agreement or Contract, the conductor shall
handover the peaceful possession of the business premises along with the
articles and stocks described in the Schedule “A” where separate list is
attached with this Agreement.
Lastly, clause no. 16 gives right to the
owner to terminate the agreement, in the event of any breach of conditions,
and to take possession of the premises along with all the articles, furniture,
fixtures, etc.
26.
The learned advocate Mr. C.A. Coutinho, while contending that
the transaction between the plaintiff no. 1 and Mr Benedito Gracias was a
pure licence, has relied upon various citations:
(a)
In the case of
“Vayallakath Muhammedkutty vs.
Illikkal Moosakutty [(1996) 9 SCC 382], the defendant was given
20
exclusive possession of the disputed premises for running
the hotel
business, but he was not given right of sub-leasing the premises. It has
been held in the case supra that in order to find out whether the transfer is
lease or license, the substance of the document should be considered. It
has been further held that giving of exclusive possession of the premises to
the defendant and embargo against the subletting under the agreement are
not conclusive factors indicating that it was a lease.
(b)
In the case of
“Puran Singh Sahni vs. Sundari
Bhagwandas Kripalani” [(1991) 2 SCC 180], also, it has been held that
the fact that agreement grants a right of peaceful possession is not in itself
conclusive evidence of the existence of a tenancy, but it is a consideration
of the first importance, although of lesser significance than the intention of
the parties. It has been observed that in deciding whether the grantee is
entitled to exclusive possession regard must be had to the substance of the
agreement. In order to give exclusive possession there need not be express
words to that effect and it is sufficient if the nature of the acts to be done by
the grantee requires that he should have exclusive possession.
(c)
In the case of “Rajbir Kaur and Another vs/ S.
Chokesiri and Co.” (AIR 1988 SC 1845), it has been held that ultimately
the question whether a transaction is a lease or license turns on the parting
intention of the parties and there is no single simple litmus test to
21
distinguish one from the other. The Hon'ble Apex Court further held that
wherever there is exclusive possession, the idea of a license is not
necessarily ruled out.
(d) In the case of the “East India Hotels Limited vs.
Syndicate Bank” [1997(1) ALL MR 81], also, it has been held that the
exclusive possession is not a conclusive test and it does not rule out license.
(e) In “Associated Hotels of India Limited vs. R.N.
Kapoor”( AIR 1959 SC 1262), the Apex Court held that there is a clear
distinction between lease and license, the dividing line is clear, though
sometimes it becomes very thin or even blurred. The Hon'ble Apex Court
observed that in such determination following propositions may be taken as
well-established:
(1)
to ascertain whether a document creates a license 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 lease or license;
(3)
if the document creates an interest in the property, it is a lease;
but, if it only permits another to make use of the property, of
which the legal possession continues with the owner, it is a
license; and
(4)
if under the document a party gets exclusive possession of
22
the property 'prima-facie', he is considered to be a tenant;
but circumstances may be established which
negative
the intention to create a lease.
(f)
In the case of “ Sohan Lal Naraindas vs. Laxmidas
Raghunan Gadit” [(1971) 1 SCC 276], the Hon'ble Supreme Court has
observed as under :
“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 their intention, but is not decisive.
Mere use of the words appropriate to the creation of a lease
will not preclude the agreement operating as license . A
recital that the agreement does not create a tenancy 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 license. In determining whether the
agreement creates a lease or license, the test of exclusive
possession though not decisive is of significance.
(g) In the case of
“B.V. D'Souza v. Antonio Fausto
Fernandes”, (AIR 1989 SC 1816), it has been held that for ascertaining
whether a document creates a license or lease, the substance of the
23
document must be preferred to the form. It is not correct to say that
exclusive possession of a party is irrelevant, but at the same time it is not
conclusive. The other tests, namely, intention of the parties and whether
the document creates any interest in the property or not, are important
consideration.
(h) In the case of “ Dr. Ramchandra Vishnu Paranjape vs.
Smt. Sharayu Jugalkishore Gupta” [ 2003 (3) All MR 810], it has been
held that:
“ while deciding whether a document is of leave and license or
of lease, the Court has to ascertain the intention of the parties
from its terms. The way parties choose to describe it is not
always determinative of its nature. Exclusive possession of the
premises is not the conclusive test. Though it is an important
circumstance in certain cases, other circumstance may disprove
the existence of lease. There is no simple litmus test to
distinguish agreement of lease from that of leave and license.
The intention has to be gathered from the terms of the
agreement except where it is proved that the document is a
camouflage. If it is alleged that the document is a camouflage,
the mask or veil is required to be removed for determining the
true intent and purpose of the document. If the terms of the
document are not clear, the surrounding circumstances and the
conduct of the parties have also
to be borne in mind for
ascertaining real relationship between the parties.”
24
(i) In the case of “Smt. Ramuben Bhimji and others, vs.
Padmabai and others”, (AIR 1991 BOMBAY 85), it has been held that
mere fact that deceased licensor had not taken any action against the
licensee during his life time for securing possession, would not convert
license into lease.
(j) In the case “Miss. Maria Manuela Piedade Bernadete
Tereza Quiteria Moniz @ Maria Manuela Moniz Vs. Mr. Vasant Shet
Shirodkar” [2006(5) ALL MR 457], it has been held that for ascertaining
whether a document creates a license or lease, what is to be seen is the
substance of the document and it is the substance which must be preferred
to the form and real and dominant test being the intention of the parties
whether the parties intended to create a lease or a license. It is further
observed that a lease is a transfer of the right to enjoy the premises where
as a license is a privilege to do something on the premises which otherwise
would have been unlawful and the transaction is a lease if it grants an
interest in the land and it is a license if it gives personal privilege with no
interest in the land.
(k) In the case of “ Delta International Limited v/s. Shyam
Sunder Ganeriwalla and another” [1999(2) ALL MR 576], the Apex
Court, after considering almost all the previous decisions, summarized the
legal position as under :
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“(1) To find out whether the document creates lease or license
real test is to find out 'the intention of the parties'; keeping in
mind that in cases where exclusive possession is given, the
line between lease and license is very thin.
(2) The intention of the parties is to be gathered from the
document itself. Mainly, intention is to be gathered from the
meaning and the words used in the document except where it
is alleged and proved that document is a camouflage. If the
terms of the document evidencing the agreement between the
parties are not clear, the surrounding circumstances and the
conduct of the parties have also to be borne in mind for
ascertaining the real relationship between the parties.
(3) In the absence of a written document and when somebody
is in exclusive possession with no special evidence how he
got in, the intention is to be gathered from the other evidence
which may be available on record, and in such cases exclusive
possession of the property would be most relevant
circumstance to arrive at the conclusion that the intention of
the parties was to create a lease.
(4) If the dispute arises between the very parties to the written
instrument, the intention is to be gathered from the document
read as a whole. But in cases where the landlord alleges that
the tenant has sublet the premises and where the tenant in
support of his own defence sets up the plea of a mere licensee
and relies upon a deed enter into inter se, between himself and
the alleged licensee, the landlord who is not a party to the
deed is not bound by what emanates from the construction of
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the deed; the tenant and the subtenant may jointly set up the
plea of a license against the landlord which is a camouflage.
In such cases, the mask is to be removed or veil is to be lifted
and the true intention behind a facade of a self-serving
conveniently drafted instrument is to be gathered from all the
relevant circumstances. Same would be the position where the
owner of the premises and the person in need of the premises
executes a deed labeling it as a license deed to avoid the
operation of rent legislation.
(5) Prima facie, in absence of a sufficient title or interest to
carve out or to create a similar tenancy by the sitting tenant, in
favour of a third person, the person in possession to whom the
possession is handed over cannot claim that the sub-tenancy
was created in his favour; because a person having no right
cannot confer any title of tenancy or sub-tenancy. A tenant
protected under statutory provisions with regard to occupation
of the premises having no right to sublet or transfer the
premises, cannot confer any better title. But, this question is
not required to be finally determined in this matter.
(6) Further lease or licence is a matter of contract between the
parties. Section 107 of the Transfer of Property Act inter alia
provides that leases of immoveable property may be made
either by registered instrument or by oral agreement
accompanied by delivery of possession; if it is a registered
instrument, it shall be executed by both the lessee and the
lessor. This contract between the parties is to be interpreted or
construed on the well laid principles for construction of
27
contractual terms, viz. for the purpose of construction of
contracts, the intention of the parties is the meaning of the
words they have used and there can be no intention
independent of that meaning; when the terms of the contract
are vague or having double intendment one which is lawful
should be preferred; and the construction may be put on the
instrument perfectly consistent with his doing only what he
had a right to do.”
27.
From all the above citations one thing becomes clear that
giving of exclusive possession of the premises is one of the major factors in
determination of the question as to whether the transfer is a lease or a
licence. As has been observed by Lord Denning in “Errington V/s
Errington”[ 1952(1) ALL ER 149], a person who is let into exclusive
possession, is prima facie, to be considered to be tenant and he will not be
held so if the circumstances negative any intention to create a tenancy. In
the present case, it is proved that exclusive possession of the suit premises
was given to Mr. Benedito Gracias who transferred the same to the
defendants no. 3 and 4, with the consent of the plaintiffs. The plaintiffs
have absolutely no control over the suit premises since 1973. It is also
clear from the above citations that if the terms of the document are not
clear, surrounding circumstances and the conduct of the parties have to be
borne in mind for ascertaining the real relationship between the parties. In
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the present case, the conduct of the plaintiffs is notable. Though the
defendants no. 3 and 4 were occupying their house which is behind the suit
premises, they have not pleaded so in the plaint. Though in fact the suit
premises were handed over to the defendant no.3 by wife of Mr. Benedito
Gracias and the plaintiffs had consented to the same, however the plaintiffs
have made false averments in the plaint that Mr. Benedito Gracias had
handed over the suit premises back to them and that they themselves at the
request of the defendant no. 3 allowed him to conduct the business on their
behalf and maintain the accounts. This conduct of the the plaintiffs leads
the Court to believe the case of lease as pleaded by the defendants no.3
and 4, in the light of exclusive possession of the suit premises being being
parted with.
28.
The defendants no. 3 and 4 came in exclusive possession of
the suit premises, in the year 1977 and the plaintiffs had consented for the
same in the same year. According to the plaintiff's in June, 1984, the
plaintiff No.2 told the defendant no.3 to stop coming to the shop. First of
all, this is after about seven years from the date of entry of the defendants
no. 3 and 4 into the suit premises. The plaintiffs say that the defendant no.
3 refused to hand over the business. However, plaintiffs still keep quiet till
13/08/1986,on which date the Advocate's notice which is at Exhibit PW1/
29
D is sent to the defendants no. 3 and 4 to deliver the suit premises to the
plaintiffs along with the business, within one month from the date of that
notice. There is no explanation as to why the plaintiff after June, 1984,
waited for further period of more than two years to send the notice. Thus,
the defendants no. 3 and 4 were in exclusive possession of the suit premises
for a long period of about nine years without any action or objection from
the plaintiffs. In this regard, the learned Advocate Shri C.A. Coutinho has
relied upon “ Ramuben Bhimji”(supra), wherein it has been held that
mere fact that deceased licensor had not taken any action against the
licensee during his life time for securing possession would not convert the
license into lease. In my view, the above case is completely different from
the case before me, as the facts in the case supra clearly reveal that there
was a license. In the present case before me, the inaction on the part of the
plaintiffs to take back possession for several years read with their conduct
in making false averments in the plaint, to make out a case of agency, do
go to lend a strong helping hand to the plea of the defendants that they are
lessees.
29.
It should be kept in mind that in the letter dated 04/11/1977
(Exhibit PW1/O), the plaintiff no.1 has written to Mrs Aida Gracias and
Mr. Benedito Gracias to collect the rent of the shop of the bar and to
30
deposit the same in the Bank. The plaintiff no.1 does not say that the
compensation or royalty of the bar business should be collected. He says:
“Barachea lozachem badem” which means rent for the shop wherein the
bar exists. In the cross-examination, PW 1 has stated that Mr. Aida Gracias
collected rent of suit shop from 1977 when he wrote the letter, till 1983.
There are on record two rent receipts dated 30/06/1979 and 07/10/1978
which have been marked as Exhibit PW1/Q and PW1/R. Learned Advocate
Shri Coutinho, on behalf of the plaintiffs, argued that these receipts have
not been proved since the makers of those receipts have not been examined
to prove their signatures on them. This objection regarding the mode of
proof of the said receipts, has been raised for the first time in this appeal.
Learned Advocate Shri Sudin Usgaonkar has relied upon “R.V.E.
Venkatachala Gounder V/s Arulmigu Viswesaraswami & V.P. [(2003) 8
SCC 752], wherein the Apex Court has explained the rule of fair play. The
Supreme Court has held that where the objection does not dispute the
admissibility of the document in evidence but is directed towards the mode
of proof alleging the same to be irregular or insufficient, the objection
should be taken when the evidence is tendered and once the document has
been admitted in evidence and marked as an exhibit, the objection that it
should not have been admitted in evidence or that the mode adopted for
proving the document is irregular, cannot be allowed to be raised at any
31
stage subsequent to the marking of the document as an exhibit. Thus, there
is no strength in the contention of the learned Counsel of the plaintiffs that
the receipts in Exhibits PW-1/Q and PW-1/R are not admissible. These are
rent receipts. PW 1 has further stated that in the year 1982 or 1983, when
he came down to Goa, he came to know that the defendant no.3 was
depositing the rent in his wife's account No. 5508 in the Bank of India,
Chinchinim. PW 1 knows that in the year 1978 itself, the defendant no. 3
got the business registered under the Shops and Establishment Act, in the
name of Alfa Cold Storage Bar and Restaurant and showing the name of
the employer as Alvaro Ferrao i.e. the defendant no.3. The registration
certificate of the establishment dated 08/12/1978 is at exhibit PW1/S.
30.
Admittedly, initially in the year 1964 or 1965, one
Mr.
Roberto de Silva had taken the suit premises from Fr. Crisologo de Melo
on lease and not on licence. Roberto de Silva sold the business to the
plaintiff no.2 with prior approval of Fr. Crisologo de Melo by Sale Deed
dated
25/05/1971 which is at exhibit PW1/A.
The plaintiff no. 1
purchased the five shops including the suit premises from Fr. Crisologo de
Melo by Sale Deed dated 19/05/1972 which is at exhibit PW1/B. Fr.
Crisologo de Melo is the brother of the plaintiff no.1 and he had reserved
the right of usufructo of the said five shops. The evidence on record
32
reveals that there were tenants of the other three tenements.
PW 1 has
stated that there was joint account of Fr. Crisologo de Melo and himself,
bearing no. 1026 in Bank Of India, Chinchinim and Mrs Aida Gracias and
Mr. Benedito Gracias used to deposit the rent of all the shops in that
account. When prior to plaintiffs' becoming owners of the suit premises,
there was a tenant of the same and further when there are tenants of other
tenements also, the question arises, as to why only Mr. Benedito Gracias
would be a licensee and not a tenant (lessee). These surrounding
circumstances are also relevant and they favour the case of lease pleaded
by the defendants no. 3 and 4.
31.
In the year 1972, the plaintiffs had become the owners of the
suit premises, with only rider that the usufructo was reserved by
Fr.
Crisologo de Melo. This means that whatever income that is generated
from the suit premises would go to Fr. Crisologo de Melo till he is alive.
Though in clause (2) of the agreement (exhibit PW1/C), the income of
Rs.125/- per month to be paid by the defendant no.3 to the plaintiff no.2 is
called as “compensation and royalty”, however the same is termed as “rent”
in clause 6 thereof to be paid by owner to Fr. Crisologo de Melo as
usufructo.
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32.
In view of the above, in my considered opinion, it is duly
established that the transaction relating to the suit premises which was with
Mr. Benedito Gracias was a lease and therefore what was transferred in
favour of the defendant no.3 is also a lease. Point (b) therefore gets
answered in the affirmative.
33.
In view of the section 56 of the Rent Control Act, the Civil Court has
no jurisdiction to settle, determine or deal with any question, which is
required under the Act to be settled by the Authorities under the said Act.
Therefore the trial court has rightly dismissed
the suit, for want of
jurisdiction.
34.
The impugned Judgment and decree is in accordance with the
settled principles of law, based on correct appreciation of the evidence on
record. No interference is called for.
35.
In the result, the appeal stands dismissed. Parties to bear their
own costs.
U.V. BAKRE,J.
MV
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