Full Judgment Text
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PETITIONER:
PURAN SINGH SAHNI
Vs.
RESPONDENT:
SMT. SUNDARI BHAGWANDAS KRIPALANI AND OTHERS
DATE OF JUDGMENT20/02/1991
BENCH:
SAIKIA, K.N. (J)
BENCH:
SAIKIA, K.N. (J)
PUNCHHI, M.M.
CITATION:
1991 SCR (1) 592 1991 SCC (2) 180
JT 1991 (2) 24 1991 SCALE (1)303
ACT:
Bombay Rents, Hotel and Lodging House Rates (Control )
Act, 1947] Transfer of Property Act, 1882: Ss.5(4A),
5(11)(bb), 15A/s. 105- Agreement giving temporarily for a
fixed period, use of Premises with furniture and fittings on
compensation for use and occupation without creating any
interest in the grantee-Whether a leave and licence or a
lease-Licence terminated w.e.f. 10.3.1972-Status of the
occupant thereafter-Whether entitled to Protection as a
deemed tenant under s. 15-A ‘Leave and licence’ and ‘Lease’-
Distinction between.
Constitution of India: Art. 14: S. 91, Maharashtra Co-
operative "Societies Act, 1960-Whether ultra vires.
Maharashtra Co-operative Societies Act, 1960: S. 91-
Eviction of a nominal member by a tenant copartner member of
a tenant copartnership Co-operative Housing Society-Whether
a dispute touching ‘business of a society’-Whether the
society and tenant co-partner member can raise a dispute
under-Jurisdiction of Co-operative Courts-Whether bared by
s. 28(1) of Bombay Rents, Hotel and Lodging House rates
(Control) Act, 1947.
HEADNOTE:
The second respondent was a tenant copartnership co-
operative Housing Society and father of the first respondent
was its tenant co-partner member. By an application dated
10.6.1969 he sought permission of the society to temporarily
induct the appellant into his flat. On the same date the
appellant applied to the said Society for its nominal
membership stating that he intended to take the flat for
temporary use and occupation, that he would not claim any
right of permanent nature and that on receipt of notice he
would vacate the flat. By an agreement of leave and licence
dated 11.6.1969, the father of respondent no. 1
(licensor)gave use of the flat with its furniture and
fittings to the appellant (licensee) on Rs. 1,000 per month
as compensation for use and occupation for a period of 11
months with a facility of renewal of the agreement for two
such further periods. The Managing Committee of the
Society, by its Resolution dated 13.6.1969. I granted the
permission.
593
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The licensor by letter dated 22.1.1972 purported to
terminate the licence w.e.f. 10.3.1972, and asked the
appellant to vacate the flat, but the latter declined to do
so. On receiving intimation from the licensor, the Society,
by its letter dated 22.2.1972, required the appellant to
vacate the flat and deliver its possession to the licenser
before the stipulated date, but in vain. Instead, the
appellant on 13.3.1972 applied to the Court of Small Causes,
Bombay for fixation of standard rent of flat.
In April 1972 the licensor and the Society raised a
dispute under s. 91 of the Maharashtra Co-operative
Societies Act, 1960 to recover possession from the
appellant,who in turn filed a suit in the Court of Small
Causes, Bombay for declaration that he was tenant of the
flat. He also filed an interim application for stay of the
dispute proceeding till disposal of his application for
fixation of standard rent, which was rejected and his writ
petition against the said order was also dismissed by the
High Court on 7.9.1977.
The Co-operative Court, Bombay dismissed the dispute
proceeding holding that the appellant was a licensee and not
a tenant but the society was an idle party which acted in
collusion with the licensor to evict the appellant.
On appeal by the licenser and the Society, the
Maharashtra State Co-operative Appellate Court set aside the
order of the Co-operative Court, against which the appellant
filed a writ petition before the High Court contending that
the agreement, though style as a leave and licence, was a
lease; that s. 91 of the Maharashtra Co-operative Societies
Act was not attracted and could not have been invoked by the
respondents; and that s. 91 itself was ultra vires Art. 14
of the Constitution to the extent it tried to reach non-
members of co-operative societies. The High Court dismissed
the writ petition. Hence the present appeal by special
leave.
By Maharashtra Act 17 of 1973, ss. 5(4A), and 15-A were
introduced in the Bombay Rents, Hotel and Lodging House
Rates (Control) Act, 1947,to confer the status and
protection of a tenant on a licensee, who, on the first day
of Feb. 1973, had a subsisting agreement and was on that
date in occupation of any premises or part thereof, which
was not less than a room, as a licensee.
On the question whether:(1) the agreement dated
11.6.1969 was one of leave and licence or if lease, and if
it was so, whether the
594
occupant was entitled to benefit of s. 15-A of the Rent Act;
and (2) the matter was one touching the business of the
society so as to attract s.19 of the Maharashtra co-
operative Societies Act within the jurisdiction of Co-
operative Courts.
Dismissing the appeal, this Court
HELD: 1.1 By mere use of the word lease or licence the
correct categorisation of an instrument under law cannot be
affected. Whether a particular grant amounts to lease or a
licence, depends on its substance. If a document gives
only a right to use the property in a particular way or
under certain terms while it remains in possession and
control of the owner thereof, it will be a licence. If
there is a transfer of interest in law and exclusive
possession is given to the grantee or where the ingredients
of a lease are present and the licensee is, according to
law, a tenant, then it is a lease and he ought to be given
benefit of the Rent Act. [602B-E]
1.2 In determining whether the agreement was a lease or
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licence, the test of exclusive possession, though of
significance, is not decisive and exclusive possession
itself will not amount to creation of interest nor would it
militate against the concept of a licence, if the
circumstances negative any intention to create a tenancy.
[602G, E-F]
1.3 The intention of the parties in making the
agreement is determinative of the question whether it was a
lease or licence. The intention has to be gathered from the
terms of the agreement construed in the context of the
surrounding, antecedent and consequent circumstances. The
crucial test would be what the parties intended. If in fact
it was intended to create an interest in the property it
would be a lease, if it did not, it would be a licence
Interest for this purpose means a right to have the
advantage accruing from the premises or a right in the
nature of property in the premises but less than title.
[603H, 602F-H]
2. In the instant case, it is clear from the tenor of
the agreement that the intention of the parties was to
create only a licence and not a lease. Positively it speaks
of a licence for the use of the flat and negatively that the
licensee would not-claim any tenancy or subtenancy. What
was given to the licensee was the use of the flat with
furniture, fittings etc., which could not be said to have
created any interest in the flat though in effect the use
continued for a stipulated period of time. [602A-C]
595
Board of Revenue etc. v. A.M. Ansari etc.,[1976] (3)
SCR 661; Tarkeshwar Sio Thakur Jiu v. Dar Dass Dey & Co. &
Ors., [1979] 3 SCC 106, relied on; Sohan Lal Naraindas v.
Laxmidas, Raghunath Gadit (1971) 1 SCC 276, followed.
Antoniades v. Villiers and Anr., [1988] (3) All. E.R.
1058; N.E. Railway v. Hastings, [1900] A.C. 260, Isaac v.
Hotel De Paris, Ltd. [1960] (1) All E.R. 348, Booker v.
Palmer [1942] 2 All E.R. 674 referred to.
3.1 Section 15A read with s. 5(11)(bb) of the Bombay
Rents, Hotel and Lodging House Rates (Control) Act, 1947,
makes the tenant one of status rather than of contract.
Intention to create a licence as defined in the Act if the
other requirements fulfilled, would, therefore, be enough to
confer that status from the specified date. Section 15A
required that the occupant must be in occupation of the
premises as a licensee as defined in s.5(4A) on the first
day of Feb. 1973. If he be such a licensee, the non-
obstante clause of s.15A(1) gives him the status and
protection of a tenant in spite of there being anything to
the contrary in any other law or in any contract. Even as
against the express terms of the subsisting contract
licence, a person in occupation of any premises or part
thereof, which is not less than a room, as a licensee,
shall, in view of these provision, be deemed to have become
a tenant on the first day of Feb. 1973, and would enjoy the
benefits of s. 15A. But if he was not a licensee under a
subsisting agreement on the 1st of Feb. 1973, then he did
not get the advantage of the amending provision of the Rent
Act. [608E-F, 610AB]
3.2 The sine qua non for the applicability of s. 15A of
the Rent Act was that a licensee must be in occupation as
on Feb.1, 1973, under a subsisting licence. A person
continuing in possession after termination, withdrawal or
revocation of the licence is a trespasser or a person who
has no semblance of any right to continue in occupation of
the premises. Such a person by no stretch of imagination
could be called a licensee. [612B-C, 610C]
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4. The appellant would, otherwise, be included in the
definition of licensee under s. 5(4A) of the Rent Act, but
as he had no subsisting licence, the same having stood
terminated by notice on 10.3.1972, the licence as defined by
the Rent Act itself would not apply to appellant’s case, and
he was nothing but a rank trespasser not entitled to the
protection of s. 15A of the Rent Act and could not,
therefore, plead the bar of s. 28(1) thereof.[608A, 609A,
612C-D]
596
D.H. Maniar and Ors. v. Waman Laxman Kudav, [1976] 4
SCC 118, O.N. Bhatnagar v. Smt. Rukibai Narsindas & Others,
[1982] 3 SCR 681, relied on. Chandavarkar Sita Ratna Rao v.
Ashalata S. Guram, [1986] 4 SCC 447, referred to.
Hindustan Petroleum Corporation Ltd. & Anr. v. Shyam
Cooperative Housing Society & Ors, [1988] 4 SCC 747,
distinguished.
5. The matter of eviction of the appellant was a
dispute touching the business of the society as envisaged by
s.91 of the Maharashtra Co-operative Societies Act and the
Co-operative Courts rightly exercised jurisdiction.[611B;
613B]
Smt. Krishna Rajpal Bhatia and Ors. v. Miss Leela H.
Advani & Ors., [1989] 1 SCC 52, relied on. Deccan Merchants
Cooperative Bank Ltd. v. M/S Dalichand Jugraj Jain & Ors.,
[1969] 1 SCR 887 referred to.
6. Since the appellant was involved in a dispute
touching the business of the society of which he was a
nominal member, his contention that s. 91 of the Maharashtra
Co-operative Societies Act to the extent it tries to reach
persons who are not members is ultra vires Art. 14 of the
Constitution, was not tenable. [613C-D]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2846 of
1989.
From the Judgment and Order dated 24.4.1989 of the
Bombay High Court in W.P.No. 4118 of 1986.
H.S. Guru Raja Rao, S. Markandeya and Ms. C.
Markandeya, for the Appellant.
L.A. Kriplani and S.K. Jain for the Respondents.
The Judgment of the Court was delivered by
K.N. SAIKIA, J. This appeal by special leave is from
the Judgment and Order of the High Court of Bombay dated
24.4.1989 in Writ Petition No. 4118 of 1986 dismissing the
petition.
The second respondent Shyam Cooperative Housing Society
Ltd. was a tenant co-partnership cooperative society (for
short, ‘the
597
Society’) and Panjumal H. Advani late father of the first
respondent (for short, ‘Advani’) was its tenant co-partner
member. By an application dated 10.6.1969, Advani obtained
permission of the Society to induct the appellant
temporarily into his flat and accordingly, the appellant
took on rent from Advani flat No. 24, Block No. 1,second
floor, Nanik Niwas, situate at Bhulabhai Desai Road, Bombay
(for short, ‘the flat’) on a monthly rent of Rs. 1,000
(Rupees one thousand) on 10.6.1969. On the same date the
appellant, under the Society’s rules, applied for its
nominal membership stating, inter alia, that he intended to
take the flat for temporary use and occupation; that he
would not claim any right of permanent nature; and that he
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would vacate the flat on receipt of notice thereof. By an
agreement of leave and licence dated 11.6.1969 entered into
between the appellant and Advani, the appellant took
exclusive possession of the flat. The agreement was for a
period of 11 months and was renewable for 2 further periods
of 11 months each. Vide Resolution No. 208 dated 13.6.1969,
the Managing Committee of the Society granted the
permission.
By letter dated 22.1.1972 Advani purported to terminate
the licence with effect from 10.3.1972 and asked the
appellant to vacate the flat and the appellant having not
acceded to the request, Advani informed the Society, which,
vide letter dated 22.2.1972 required the appellant to vacate
the flat and to deliver possession thereof to Advani on or
before the 10th March, 1972. The appellant instead of
vacating the flat filed an application in the Court of Small
Causes, Bombay on 13.3.1972 for fixation of its standard
rent. In April 1972, Advani and the Society raised a
dispute under section 91 of the Maharashtra Cooperative
Societies Act to recover possession from the appellant who
in turn filed declaratory suit No. 989/5305 of 1972 in the
Court of Small Causes, Bombay on 10.11.1972 seeking a
declaration that he was the tenant of the flat, with an
interim application for stay of the proceeding till the
disposal of his application for fixation of standard rent;
but that application was rejected and the appellant was
thereafter unsuccessful in the High Court which was
dismissed on 7.9.1977. The learned Judge of the IInd
Cooperative Court, Greater Bombay by his Judgment dated
6.3.1985 dismissed the suit holding that the appellant was a
licensee and not a tenant, but the Society was an idle party
and had acted in collusion with Advani to vacate the
appellant.
Advani and Society appealed therefrom to the
Maharashtra State Cooperative Appellate Court, Bombay in
Appeal No. 397 of 1985 which was allowed and the impugned
Judgment of the IInd
598
Cooperative Court was set aside on 31.7.1986.
The appellant impugned the appellate order in Writ
petition No. 4118 of 1986 in the High Court of Judicature at
Bombay, contending, inter alia, that the agreement between
the appellant and Advani, though styled as a leave and
licence, was a lease; that section 91 of the Maharashtra
Cooperative Societies Act, 1960 was not attracted and could
not have been invoked by Advani and the Society; and that
section 91 itself was ultra vires the Article 14 of the
Constitution of India to the extent it tried to reach
persons who were not members of cooperative societies.
The High Court, while dismissing the writ petition,
inter alia, held that the agreement was of temporary nature
and no interest in the flat having been created in favour of
the appellant, even though he had exclusive possession, it
could not have been a lease; that the alleged collusion
between Advani and the Society to evict the appellant was
based on conjectures and could not take the matter out of
the purview of section 91 of the Cooperative Societies Act
which was not ultra vires.
Mr. S.S. Gururaja Rao, the learned counsel for the
appellant submits, inter alia, that the agreement dated
11.6.1969 between Advani and the appellant was one of lease
with all its ingredients and not one of leave and licence;
that the agreement having been a lease the cooperative Court
had no jurisdiction in respect thereof and it was the Civil
Court envisaged under the Bombay Rents, Hotel and Lodging
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House Rates (Control) Act, 1947 that would have jurisdiction
in the matter; and that even assuming that the Cooperative
Court had jurisdiction in respect of a leave and licence
created under the provisions of the Act, that Court would
not have jurisdiction in this matter, the appellant being
only a nominal member and not a tenant member of the
Society.
Mr. L.A. Kripalani, the learned counsel for the
respondents, submits that the agreement was one of leave and
licence and not of lease; that in the matter of the
agreement the Cooperative Court alone has jurisdiction and
no other court; and that being a nominal member of the
Society in view of his application for such a membership the
appellant would come within the jurisdiction of the
Cooperative Court.
The first question to be decided in this appeal,
therefore, is
599
whether the agreement dated 11.6.1969 was one of lease or of
leave and licence.
In the agreement dated 11.6.1969 the Party of the First
part has been called the ‘licensor’ and the Party of the
Second part has been called the ‘licensees’. The licensor
is stated to be a shareholder and member of the Society.
Its recitals said:
"AND WHEREAS the Licensor is the absolute owner of
the said flat and whereas the party of the Second
part has approached the Party of the First part to
allow them the use of the said flat with, fittings,
fixtures and furniture lying therein.
AND WHEREAS the Party of the First part has agreed
to allow the party of the Second part to use the
said flat along with fittings, furniture, fixtures
etc.
The following were the relevant terms of the agreement:
"1. The ‘licensor’ has given the use of his flat
No.24, 2nd floor, Nanik Niwas, Block No. 1,
Bhulabhai Desai Road on Leave and Licence basis.
2. The licence in the initial stage is for the
period of 11 months to be renewed by another period
of 11 months and a second option of 11 months also,
to make up the period of 33 months.
3. The Licensees shall pay compensation of Rs.
1,000 (Rupees one thousand only) per month to the
‘licensor’ the use of the said flat along with
fittings, fixtures and furniture lying therein more
fully described in the schedule herewith attached;
This compensation payable by the said ‘Licensees’
to the said ‘Licensor’ shall include all the
charges and taxes leviable either by the Shyam
Cooperative Housing Society Ltd., Bombay -26 or by
the Bombay Municipal Corporation or by any local
or State authorities except the changes which are
specially mentioned hereunder.
xxx xxx xxx xxx xxx xxx xxx xxx xxx
xxx xxx xxx xxx xxx xxx xxx xxx xxx
600
9. It is agreed by this agreement that only
‘Licensee’ is intended to be given to the
‘Licensees’ to use the flat and fixtures, fittings,
furniture etc. more fully described in the
schedule attached herewith and the ‘Licensees’ will
at no time claim tenancy or sub-tenancy of the
premises. The premises are in Nanik Niwas, Block
No.1, Second Floor, Flat No.24, of the Shyam
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Cooperative Housing Society Ltd., and the rules
regulations and bye-laws of the said Society do not
permit any tenancy or sub-tenancy being created in
respect of the premises.
xxx xxx xxx xxx xxx xxx xxx
xxx xxx xxx xxx xxx xxx xxx
22. That the ‘Licensee’ will not surrender their
rights under this agreement in favour of anyone
else except the ‘Licensors’. That the ‘Licensees’
shall observe all rules, regulations, and by-laws
of the Shyam Cooperative Society as nominal members
during the period of this licence.
From the above recitals and the terms and conditions
there is no doubt that ex facie it is one of leave and
licence for use of the flat and fixtures, fittings,
furniture etc. and that the licensee would at no time claim
tenancy or sub-tenancy in respect of the flat. There is
also no doubt that in his application for nominal
membership, the appellant stated that he intended to take
the flat for temporary use and occupation and that he would
not claim any right of permanent nature. In the Managing
Committee Resolution No.208 dated 13.6.1969, the appellant
was admitted as a nominal member of the Society and was
permitted to temporarily occupy the flat. Thus, there
appears to be no room for contending, contrary to the terms
of the agreement, that the agreement was a lease and the
appellant was a tenant of Advani, as such the Bombay Rents,
Hotel and Lodging House Rates Control Act, 1947,
hereinafter referred to as ‘the Rent Act’, was applicable
to him.
However, relying on Antoniades v. Villiers and Anr.,
reported in 1988 (3) All E.R. 1058, it is submitted for the
appellant that he having been given exclusive possession of
the flat for a time, the agreement must be construed as a
lease and him as a tenant. In that case the respondent
let a flat to the appellants, a young unmarried couple,
under separate but identical agreements termed ‘licenses’,
which were executed contemporaneously and stipulated with
reiterated emphasis that the appellants were not to have
exclusive possession. In particular,
601
by clause 16, that agreement stated that the licensor shall
be entitled at any time to use the rooms together with the
licensee and permit other persons to use all of the rooms
together with the licensee and further stated that the real
intention of the parties in all the circumstances was to
create a licence which did not come under the Rent Acts.
The rental payable was 87 pounds per month by each occupant
and the agreements were determinable by one month’s notice
by either party. The respondent never attempted to use any
of the rooms or authorised any other persons to use the
rooms. In July 1986 the respondent gave the appellants a
notice to quit and applied to the court for an order for
possession, but his claim was dismissed on the ground that
the appellants were tenants who were entitled to the
protection of the Rent Acts. The respondent appealed to the
Court of Appeal, which allowed his appeal. The appellants
having appealed to the House of Lords it was held that the
agreements were interdependent on one another and were
therefore to be read together as constituting one single
transaction. Since it was the intention of the two
appellants to occupy the flat as man and wife and since that
intention was known to the respondent, the true nature of
the arrangement was to create a joint tenancy and the
purported retention by the respondent of the right to share
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the occupation of the small flat with the appellants or to
introduce an indefinite number of third parties to do so was
clearly a pretence to deprive them of the protection of the
Rent Acts. It followed that the agreements created a joint
tenancy and not a licence, and the appeal would therefore be
allowed. It may be noted that in the above case there was
no obligation of or relation to any cooperative society and
laws governing members thereof, whereas in the instant case
admittedly Advanai was a tenant co-partner member of the
Society and the appellant by virtue of the agreement of
licence was also admitted to nominal membership accepting
his statement in his application. While interpreting the
agreement we have also to see what transpired before and
after the agreement. Ex praecedentibus et consequentibus
optima bit interpretation. The best interpretation is made
from the context. "It is a true rule of construction that
the sense and meaning of the parties in any particular part
of an instrument may be collected ex antecedentibus et
consequentibus; every part of it may be brought into action
in order to collect from the whole one uniform and
consistent sense, if that may be done." As was said in N.E.
Railway v. Hastings, [1900] A.C. 260(267):
"The deed must be read as a whole in order to
ascertain the true meaning of its several clauses,
and the words of each clause should be so
interpreted as to bring them into
602
harmony with the other provisions of the deed if
that interpretation does no violence to the meaning
of which they are naturally susceptible.
In the agreement the intention to create a licence is
clear. Positively it speaks of a licence for the use of the
flat and negatively that the licensee would not claim any
tenancy or sub-tenancy. That the intention of the parties
was to create only a licence and not a lease is clear from
the tenor of the agreement. True, by mere use of the word
lease or licence the correct categorisation of an instrument
under law cannot be affected. What was given to the
licensee was to use of the flat with furniture, fittings
etc., which could not be said to have created any interest
in the flat though in effect the use continued for a
stipulated period of time. It is true, where the
ingredients of a lease are present and the licensee is
according to law, a tenant, he ought to be given the benefit
of the Rent Act.
As was held in Board of Revenue etc. v. A.M. Ansari
etc., AIR 1976 SC 1813: 1976 (3) SCR 661, it is the
substance of the agreement between the parties which is a
decisive consideration on the question whether a particular
grant amounts to a lease or a licence. In Tarkeshwar Sio
Thakur Jiu v. Dar Dass Dey & Co. & Ors., AIR 1979 SC 1669:
(1979) 3 SCC 106, the document though named as licence was
construed as a lease. If a document gives only a right to
use the property in a particular way or under certain terms
while it remains in possession and control of the owner
thereof it will be a licence. If there is a transfer of
interest in law and exclusive possession is given to the
grantee then it is a lease. Thus, exclusive possession by
itself will not amount to creation of interest. Exclusive
possession by itself would not militate against the concept
of a licence, if the circumstances negative any intention to
create a tenancy.
Following Sohan Lal Naraindas v. Laxmidas Raghunath
Gadit, [1971] 1 SCC 276, we reiterate that the intention of
the parties to an agreement has to be gathered from the
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terms of the agreement construed in the context of the
surrounding, antecedent and consequent circumstances. The
crucial test would be what the parties intended. If infact
it was intended to create an interest in the property, it
would be a lease, if it did not, it would be a licence. In
determining whether the agreement was a lease or licence,
the test of exclusive possession, though of significance, is
not decisive. Interest for this purpose means a right to
have the advantage accruing from the premises or a right in
the nature of property in the premises but less than title.
603
Lease has been defined in section 105 of the Transfer
of Property Act as under:
"A lease of immovable 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, to be rendered periodically or on
specified occasions to the transferor by the
transferee, who accepts the transfer on such
terms."
The essential elements of a lease are:
1. the parties
2. the subject matter, or immovable property
3. the demise, or partial transfer
4. the term, or period
5. the consideration, or rent.
The relationship of lessor and lessee is one of
contract. In Bacon’s Abridgement, a lease is defined as "a
contract between the lessor and the lessee for the
possession and profits of land, etc., on the one side and
recompense by rent or other consideration on the other."
Hence it has been held that "a mere demand for rent is not
sufficient to create the relationship of landlord and tenant
which is a matter of contract assented to by both parties."
When the agreement vests in the lessee a right of possession
for a certain time it operates as a conveyance or transfer
and is a lease. The section defines a lease as a partial
transfer, i.e., a transfer of a right of enjoyment for a
certain time.
This Court has held that a renewal of a lease is
really grant of a fresh lease though it is called a renewal
because it postulates the existence of a prior lease. Where
the initial term was, say one year, it could not co-exist
with a renewal of that very lease within one year. Renewal
could take place only on the expiry of the initial lease,
and not before.
The intention of the parties in making the agreement is
determinative of the question whether it was a lease or
licence. In Halsbury’s Laws of England, 4th Edn. Vol. 27,
at paragraph 6, on General Principles
604
for determining whether agreement creates lease or a licence
we read:
"In determining whether an agreement creates
between the parties the relationship of landlord
and tenant or merely that of licensor and licensee
the decisive considerations is the intention of the
parties. The parties to an agreement cannot,
however, turn a lease into a licence merely by
stating that the document is to be deemed a licence
or describing it as such. The parties’
relationship is determined by law on a
consideration of all relevant provisions of the
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agreement; and an agreement labelled by the parties
to it as a ‘licence’ will still be held to create a
tenancy if the substance of the agreement
conflicts with that label. Similarly, the use of
operative words (‘let’, ‘lessor’ etc.) which are
appropriate to a lease will not prevent the
agreement from conferring only a licence if from
the whole document it appears that it was intended
merely to confer a licence. Primarily the court is
concerned to see whether the parties to the
agreement intend to create an arrangement personal
in its nature or not, so that the assignability of
the grantee’s interest, the nature of the land and
the grantor’s capacity to grant a lease will all be
relevant considerations in assessing what is the
nature of the interest created by the transaction.
In the absence of any formal document the parties’
intention must be inferred from the circumstances
and the parties’ conduct."
It has been submitted for the appellant that the very
fact of exclusive possession of the flat being given to the
appellant was sufficient to make him lessee and Advani his
landlord. We do not agree with the submission in an
unqualified form. There have been cases where exclusive
possession has been given outside the Rent Act. In Isaac
v. Hotel De Paris, Ltd., [1960] (1) All E.R.348, the
respondent company owning the hotel de Paris where the
lessees of another building called the P.Hotel, it was held
that the respondent company were entitled to an order for
possession because the relationships between the parties
was not that of landlord and tenant but of licensor and
licensee, even though there was exclusive possession by the
appellant and the acceptance of the amount of the rent by
the respondent company, the circumstances and the conduct of
the parties showing that all that was intended was that the
appellant should have a personal privilege of running a
night bar at the P.Hotel with no interest
605
in the land at all, and this privilege came to an end with
the notice of May, 1956 and that after the notice the
appellant remained in occupation at sufferance, and, in the
circumstances, the acceptance of rent by the respondent
company did not waive their right to immediate possession.
It was observed that there were many cases in the books
where exclusive possession had been given of premises
outside the Rent Restriction Acts and yet there had been
held to be no tenancy. Lord Denning quoted from Booker
v.Palmer, [1942] 2 All E.R. 674 (677):
"There is one golden rule which is of very general
application, namely, that the law does not impute
intention to enter into legal relationship where
the circumstances and the conduct of the parties
negative any intention of the kind.’
The following passaged was also cited with approval:
"It is clear from the authorities that the
intention of the parties is the paramount
consideration and while the fact of exclusive
possession together with the payment of rent is of
the first importance, the circumstances in which
exclusive possession has been given and the
character in which money paid as rent has been
received are also matters to be considered."
On the question of nature and effect of the grant of
exclusive possession in paragraph 7 of Halsbury’s Laws of
England, 4th Edn., Vol.27, we read:
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"The fact that the agreement grants a right of
exclusive 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.
In deciding whether a grantee is entitled to
exclusive posession 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; it is sufficient if the
nature of the acts to be done by the grantee
requires that he should have exclusive possession.
However, the grant of an exclusive right to a
benefit can be inferred only from language
606
which is clear and explicit. If an exclusive
right of possession is subject to certain
reservations or to a restriction of the purposes
for which the premises may be used, the
reservations or restriction will not necessarily
prevent the grant operating as a lease."
We may now examine the position of the appellant under
the Rent Act. The Rent Act has not defined a ‘lease’. As
defined in section 5(11) ‘tenant’ means any person by whom
or on whose account rent is payable for any premises and
includes-
(a) such sub-tenants and other persons as have derived
title under a tenant before the 1st day of February,
1973;
(aa) any person to whom interest in premises has been
assigned or transferred as permitted or deemed to be
permitted, under section 15;
(b) any person remaining, after the determination of
the lease, in possession, with or without the assent of the
landlord, of the premises leased to such person or his
predecessor who has derived title before the 1st day of
February, 1973;
(bb) such licensees as are deemed to be tenants for the
purpose of this Act by section 15A;
(c) xxx xxx xxx xxx xxx xxx"
Thus the above sub-section (bb) read with section 15A of the
Rent Act makes the ‘tenant’ one of status and not of
contract. the licensee has been conferred the status of a
tenat. This reminds us of what Sir Henry Maine observed in
Ancient Law. "The movement of progressive societies had
been from status to contract". But Lord Simmonds pointed
out in Johnson v. Merston, [1978] 8 All E.R. 37, that since
the days of Maine, the movement of the progressive societies
in various fields, has been almost the reverse, that is,
from contract to status. With acute dearth of accommodation
and dire need for it people may agree to a pretence or
unreasonable term from which law alone can protect them and
render justice to the parties.
As defined in the section 5(4A) of the Rent Act
‘licensee’, in respect of any premises or any part thereof
means:
607
"The person who is in occupation of the premises or
such part as the case may be under a subsisting
agreement for licence given for a licence fee or
charge; and includes any person in such occupation
of any premises or part thereof in a building
vesting in or leased to a co-operative housing
society registered or deemed to be registered
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under the Maharashtra Cooperative Societies Act,
1960; but does not include a paying guest, a member
of a family residing together, a person in the
service or employment of the licensor, or a person
conducting a running business belonging to the
licensor or a person having any accommodation for
rendering or carrying on medical or para-medical
services or activities in or near a nursing home,
hospital or sanatorium, or a person having any
accommodation in a hotel, lodging house, hostel,
guest house, club, nursing home, sanatorium,
dharamshala, home for widows, orphans or like
premises, marriage or public hall or like
premises, or in a place of amusement or
entertainment or like institution, or in any
premises belonging to or held by an employee or his
spouse who on account of the exigencies of service
or provision of a residence attached to his or her
post or office is temporarily not occupying the
premises, provided that he or she charges licence
fee or charge for such premises of the employee or
spouse not exceeding the standard rent and
permitted increases for such premises, and any
additional sum for services supplied with such
premises, or person having accommodation in any
premises or part thereof for conducting a canteen,
creche,dispensary or other services as amenities
by any undertaking or institution; and the
expressions ‘licence’, ‘licensor’ and ‘premises
given on licence’ shall be construed accordingly."
The above definition is comprehensive one. A licence
is a power or authority to do some act which, without such
authority, could not lawfully be done. In the context of an
immovable property a licence is an authority to do an act
which would otherwise be a trespass. It passes no interest,
and does not amount to a demise, nor does it give the
licensee an exclusive right to the use of the property. The
definition in the Rent Act includes any person in occupation
under a subsisting agreement for licence given for a licence
fee or charge of any premises or part thereof in a building
vesting in or lease to a cooperative housing society
registered or deemed to be registered under the
608
Maharashtra Cooperative Societies Act, 1960. The appellant
would, otherwise, be included within this definition. But
he has no subsisting licence, the same having been cancelled
on 10.3.72.
Section 15A of the Rent Act which was inserted by
Maharashtra Act 17 of 1973 provides:
"Certain licensee in occupation on 1st February
1973 to become tenants.
(1) Notwithstanding anything contained elsewhere in
this Act or anything contrary in any other law for
the time being in force, or in any contract, where
any person is on the 1st day of February 1973 in
occupation of any premises, or any part thereof
which is not less than a room, as a licensee he
shall on that date be deemed to have become, for
the purposes of this Act, the tenant of the
landlord, in respect of the premises or part
thereof, in his occupation .
(2) The provisions of sub-section (1) shall not
affect in any manner the operation of sub-section
(1) of section 15 after the date aforesaid."
Thus, section 15A read with section 5(11) (bb) of the
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Rent Act makes the tenant one of status rather than of
contract. Intention to create a licence as defined in that
Act if the other requirements fulfilled would, therefore, be
enough to confer that status from the specified date. The
above provisions applies to person in occupation of any
premises or part thereof which is not less than a room, as a
licensee he shall on the date be deemed to have become a
tenant on the first day of February 1973. The licence of
the appellant was cancelled on 10.3.72. Again, in the
instant agreement what has been given is only the use of the
flat and the furnitures and fittings.
‘Licence’ had earlier been defined in section 52 of
the Indian Easements Act, 1882:
"Where one person grants to another, or to a
definite number of other persons, a right to do, or
continue to do, in or upon the immovable property
of the grantor, something which would, in the
absence of such right, be unlawful and such right
does not amount to an easement or
609
an interest in the property, the right is called a
license."
In view of licence of the appellant having been
cancelled on 10.3.72, licence as defined by the Rent Act
itself, would not apply, to the appellant’s case. He would,
therefore, not be protected under s. 15A of the Rent Act.
The learned counsel for the appellant submits that due
to scarcity of accommodation, the appellant had to accept
the terms that he would not, by virtue of the agreement of
leave and licence, claim any right of tenancy or sub tenancy
and that should not be a bar to his being given the benefit
under the Rent Act. However, considering the facts and
circumstances of this case we are not inclined to hold that
the appellant should not be bound by the expressed intention
in the agreement.
In Chandavarkar Sita Ratna Rao v. Ashalata S.Guram,
[1986] 4 SCC 447, this Court held that licence was a
privilege and not an interest in property. A tenant, whose
interest in the tenancy is determined for any reason but who
is protected by the statute, was entitled to create a
licence in favour of another person until a decree of
eviction has been passed against him. A statutory tenant
was in the same position as a contractual tenant until a
decree for eviction is passed against him and the rights of
contractual tenant including the right to create licence
even if he was transferor of an interest which was not in
fact the transfer of interest. If the licence have been
created before February 1, 1973, the licensee must, by the
express terms of section 15A of the Rent Act be deemed to be
a tenant and he should, subject to provisions of the said
Act be deemed tenant of the landlord on the terms and
conditions of the agreement consistent with the provisions
of the Act. At paragraph 58 of the report it was observed
that there was no reason and there was nothing in the Rent
Act or the Statement of Objects and Reasons to indicate
that restricted meaning to the expression "licence" should
be given. As the amended section said that whoever was in
possession as a licensee should be deemed to have become for
the purpose of the Act the tenant of the landlord and there
was no warrant to restrict the ordinary meaning of that
expression. If the restricted meaning was given then the
apparent scheme or the purpose for introduction of the
amendment would be defeated at least to a large section of
licensees who were contemplated to be protected, as the
objects of the Act sought to do.
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The Rent Act was amended by Maharashtra Act 17 of 1973.
By
610
the Amending Act section 5(4A) and section 15A were
introduced in the parent Act to confer on the licensee, who
had a subsisting agreement of February 1, 1973 the status
and protection of a tenant under the Rent Act. Section 15A
required that the occupant must be in occupation of the
premises as a licensee as defined in section 5(4A) on the
1st of February, 1973. If he be such a licensee, the non-
obstinate clause of section 15A (1) gives him the status and
protection of a tenant in spite of there being anything to
the contrary in any other law or in any contract. In other
words, even as against the express terms of the subsisting
contract of licence,the licensee would enjoy the benefits of
section 15A. But if he was not a licensee under a
subsisting agreement on the 1st of February, 1973, then he
did not get the advantage of the amending provision of the
Rent Act. A person continuing in possession of the premises
after termination, withdrawal or revocation of the licence
continued to occupy it as a trespasser or as a person who
has no semblance of any right to continue in occupation of
the premises. Such a person by no stretch of imagination
could be called a licensee. In D.H. Maniar and Ors. v.
Waman Laxman Kudav, [1976] 4 SCC 118, this position was made
clear. The appellant in the instant case was not in
possession as a licensee on 1st of February, 1973, the
licence having been terminated prior to that date. This
takes us to the next question, namely, whether the
Cooperative Court had jurisdiction over the matter.
Section 91(1) of the Maharashtra Cooperative Societies
Act which deals with disputes, provides:
"(1) Notwithstanding anything contained in any
other law for the time being in force any dispute
touching the constitution, elections of the
committee or its officers other than the elections
of committees of the specified societies including
its officers, conduct of general meetings,
management of business of a society shall be
referred by any of the parties to the dispute, or
by a federal society to which the society is
affiliated or by a creditor of the society, to a
cooperative Court if both the parties thereto are
one or other of the following:-
(a) a society its committee, any past committee,
any past or present officer, any past or present
agent, any past or present servant or nominee, heir
or legal representative of any deceased officer,
deceased agent or deceased servant of the society,
or the Liquidator of the society;
611
(b) a member, past member or a person claiming
through a member, past member or a deceased member
of a society, or a society which is a member of the
society or a person who claims to be a member of
the society.
xxx xxx xxx xxx xxx xxx
Under the above provision the matter of eviction of the
appellant by the tenant co-partner member of the society
can be said to be touching the business of the society.
In Deccan Merchants Cooperative Bank Ltd. v. M/s
Dalichand Jugraj Jain & Ors., [1969] (1) SCR 887, it has
been held that the word "business" in the expression
‘touching the business of a society’ in section 91 (1) does
not mean affairs of the society. It has been used here in a
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narrower sense and means the actual trading or commercial or
other similar business activity of the society which the
society is authorised to enter into under the Act and the
Rules and its bye-laws. It was, however, held that section
91 of the Maharashtra Cooperative Societies Act did not
affect the provisions of section 26 of the Bombay Rents,
Hotel & Lodging House Rates Control Act, 1947. Although
both these provisions start by excluding "anything
contained in any other law", two Acts could be harmonized
best by holding that in matters covered by the Rent Act, its
provisions rather than the provisions of the Maharashtra
Cooperative Societies Act, should apply. The latter Act was
passed in the main, to shorten litigation, lessen its cost
and to provide a summary procedure for the determination of
the disputes relating to internal management of the society.
But under the Rent Act a different social objective was
intended to be achieved and for achieving that social
objective it was necessary that the dispute between the
landlord and the tenant should be dealt with by the courts
set up under the Rent Act and in accordance with the special
provisions of that Act and this social objective did not
impinge on the objective underlying the Maharashtra
Cooperative Societies Act.
In O.N.Bhatnagar v. Smt. Rukibai Narsindas & Ors.,
[1982] 3 SCR 681, which was also case of Shyam Cooperative
Housing Society Limited, it was held that the claim of the
society together with such member for ejectment of a person
who was permitted to occupy having become a nominal member
thereof, upon revocation of licence was a dispute falling
within the purview of section 1 of the Maharashtra
Cooperative Societies Act, 1960 and that the proceeding
under section 91(1) of the Maharashtra Cooperative Societies
Act, 1960 were
612
not barred by the provisions of section 28 of the Bombay
Rents, Hotel and Lodging House Rates Control Act, 1947. The
two Acts, could be best harmonized by holding that the
matters covered by the Rent Acts, its provisions, rather
than the provisions of the Cooperative Societies Act should
apply. But where the parties admittedly did not stand in
the jural relationship of landlord and tenant, as their
dispute would be governed by section 91(1) of the Societies
Act and that the appellant by virtue of his being a nominal
member, acquired a right to occupy the flat as a licensee,
but his rights were inchoate,. In the facts of the instant
case upon the terms of sections 5(4A) and 15A of the Rent
Act, it is clear that the appellant was not entitled to the
protection of section 15A. The sine qua non for the
applicability of s. 15A of the Rent Act was that a licensee
must be in occupation as on February 1, 1973 under a
subsisting licence. It is not disputed that the appellant
did not answer that description since the agreement of leave
and licence in his favour admittedly stood terminated by the
notice of the respondent No. 1 on 10.3.1972. That being so,
the appellant was nothing but a rank trespasser and was not
entitled to the protection of section 15A of the Rent Act
and could not, therefore, plead the bar of section 28(1)
thereof.
In Hindustan Petroleum Corporation Ltd. & Anr. v. Shyam
Cooperative Housing Society & Ors., [1988] 4 SCC 747, at
paragraph 14 it was held under the facts of that case that
the petitioner Hindustan Petroleum Corporation Ltd. was
clearly protected under section 15A of the Rent Act and in
that view of the matter the jurisdiction of the Registrar
under Section 91(1) of the Cooperative Societies Act would
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be as laid down in O.N. Bhatnagar’s case (supra). The
proceedings initiated under section 91 were accordingly
quashed. This case is, therefore, distinguishable on facts.
Following Bhatnagar’s case in Smt. Krishna Rajpal
Bhatia and Ors. v. Miss Leela H. Advani & Ors., [1989] 1 SCC
52, where a tenant co-partner member of a registered co-
partnership type cooperative housing society inducting
another person into her flat for a term of eleven months
subject to renewal of the term from time to time after
obtaining society’s permission and after the person so
inducted becoming a nominal member of the society and the
agreement between the parties embodied in usual standard
form of leave and licence, it was held that the tenant co-
partner member only created a licence and not a lease and
that the Maharashtra Cooperative Societies Act, 1960 was
applicable. There also the nominal membership of the
society was obtained in terms of the society’s bye-laws and
the licence was
613
terminated by notice after expiry of the term, but the
occupant was not vacating. Claim made by the co-partner
under section 91 of the Maharashtra Cooperative Societies
Act, 1960 for ejectment of the occupant was held to
constitute a ‘dispute touching the business of a society’
within the meaning of section 91 and hence the Registrar’s
jurisdiction to entertain the claim was held not to have
been barred under section 28 of the Rent Act.
Applying the law laid down in the above decisions we
are of the view that the instant dispute is one envisaged in
section 91 of the Maharashtra Cooperative Societies Act and
the Cooperative Courts rightly exercised jurisdiction.
The next question, namely, section 91 is ultra vires
the Article 14 of the Constitution of India to the extent
it tries to reach persons who are not members is not
tenable, inasmuch as the appellant is involved in a dispute
touching the business of the Society and he was a nominal
member of the Society by dint of his agreement of leave and
licence and he was made so on his application.
Result is that this appeal fails and it is dismissed,
but under the facts and circumstances of the case without
any order as to costs. Interim orders stand vacated.
R.P. Appeal dismissed.
614