Kunhali Koya v. Adoor Industries Ltd. — 1955 DIGILAW 67 (KER)

Judgment :- 1. First defendant is the appellant. The suit is for eviction and for recovery of property on the strength of title. The allegations in the plaint are the following:- The plaint property belongs to the plaintiff-company. The compound in which the company building is situated was entrusted on varom arrangement with the first defendant on 20.1.1120 for which he executed a varom-chit, Ext. B, in favour of the company. Under the terms of the varam-chit the first defendant was allowed to take the usufructs from the fruit-bearing trees in the property such as cocoanut trees and jack trees and also to raise catch-crops. He was to take the income from the trees and from the catch-crops in the presence of the Managing Director of the Company. Half the income was to go to the company and the other half to the first defendant. There were some temporary sheds in the property. One-half of the rent from those sheds was also to be given to the plaintiffs. The varam amount due to the plaintiff for the year 1120 was found to be Rs. 17-8-0. Out of this, only Rs. 15/- was paid to the plaintiff. The balance amount of Rs. 2-8-0 and also the varam for the year 1121 were due from the first defendant. From the three temporary sheds put up by the first defendant and let out on rent to defendants 2 to 4 he was realising Rs. 24/- a year. Plaintiff was entitled to one half of this amount also. When notice was issued to the first defendant demanding varam he denied the varam arrangement and set up case of oral lease. The property has never been leased to the first defendant. After the denial of the varam arrangement by the first defendant he must be deemed to be in possession of the property as a trespasser and the plaintiff is entitled to recover possession of the property on the strength of title with mesne profits which was estimated at Rs. 60/- a year. 2. The first defendant denied the varam arrangement and contended as follows:- He was holding the property under the plaintiff-company on oral lease from the year 1114 onwards. Till the year 1116 the annual pattam was Rs. 12/-. In the year 1116 the pattam was enhanced to Rs. 15/- and the lease arrangement was made permanent. 60/- a year. 2. The first defendant denied the varam arrangement and contended as follows:- He was holding the property under the plaintiff-company on oral lease from the year 1114 onwards. Till the year 1116 the annual pattam was Rs. 12/-. In the year 1116 the pattam was enhanced to Rs. 15/- and the lease arrangement was made permanent. But, the company insisted on getting a varam chit executed by him. Accordingly, a varam chit was executed by him in the year 1116. That varam-chit was not intended to be acted upon and nothing was done in pursuance to it. Even after the execution of the varam-chit the first defendant was in possession of the property as lessee. He is entitled to the benefits of the Cochin Verumpattomdars Act and is not liable to be evicted from the property. The pattom for the years 1117 to 1119 has been paid by him. In the year 1120 the company insisted on getting another varam-chit from him and accordingly he executed a varam-chit on 20.1.1120. That document is really a lease deed though styled a varam-chit. He continued to be in possession of the property as lessee even after the execution of the varam-chit. The plaintiff is entitled to get only the annual pattom of Rs. 15/-. Plaintiff is not entitled to get any share of the rent from the sheds put up by him. He deposited Rs. 31-3-8 arrears of rent for the years 1121 and 1122 and interest thereon. 3. The main question to be decided in the case was whether the first defendant was holding the property as a lessee or whether he was only a licensee. The trial court found that the first defendant was only a licensee and not a lessee and that he was not entitled to the benefits of the Cochin Verumpattomdars Act. That court, therefore, decreed the suit. Mesne profits were awarded at the rate of Rs. 50/- a year. The appeal filed by the first defendant in the District Court was also dismissed. Hence this second appeal. 4. The only question for decision in the second appeal is whether Ext. B evidences a lease or a licence. That court, therefore, decreed the suit. Mesne profits were awarded at the rate of Rs. 50/- a year. The appeal filed by the first defendant in the District Court was also dismissed. Hence this second appeal. 4. The only question for decision in the second appeal is whether Ext. B evidences a lease or a licence. Lease is defined thus in S. 105 of the Transfer of Property Act: "A lease of immovable property is a transfer of a right to enjoy such property, made for 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". Licence is defined in S. 52 of the Easements Act as follows: "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 granter, 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 a licence". In the case of a lease there is transfer of a right to enjoy the property and that right amounts to an interest in the property. But, a licence does not create any interest in the property. A lease is a partial transfer of property, i.e., a transfer of the right of enjoyment of the property for a specified time or in perpetuity. In the case of a licence there is no transfer of property. The licencee is only given the right to use the property in a particular way and on certain terms while the property continues to be in the possession of the owner. 5. In Ag. Secretary, Board of Revenue v. S.I. Ry. Company (1925 Mad. 434 F.B.) it was held that the test whether a document creates a lease or a licence is whether it vests any exclusive interest in immovable property in the person in whose favour it is executed or whether it gives him merely a right to enter into the property and do something thereon. Company (1925 Mad. 434 F.B.) it was held that the test whether a document creates a lease or a licence is whether it vests any exclusive interest in immovable property in the person in whose favour it is executed or whether it gives him merely a right to enter into the property and do something thereon. The distinction between a lease and a licence was thus explained by Mudholkar, J., in Baldeo Prasad v. Rewaram Ramanath (1950 Nag. 107): "For deciding whether a particular grant amounts to a lease or a licence regard must be had to the substance of the agreement. If according to the contract the land is to be used in a certain way and on certain terms while its possession and control remained with the owner himself, the right conferred would be merely a licence and nothing more. But if the nature of the acts to be done by the grantee requires that he should be in exclusive possession or if the agreement provides that he shall be in exclusive possession, the proper inference to be drawn would be that it is a lease. The essential condition about the creation of a tenancy over a corporeal hereditament is that tenant should have a right to the exclusive possession of the premises. This view was taken in a large number of cases including Glenood Lumber Co. v. Philips (1904 A.C. 405) where Their Lordships of the Privy Council have observed: 'If the right granted conveys to the grantee an exclusive right of occupation of the land, though subject to certain reservations or to a restriction of the purposes for which it may be used, it is in law a demise of the land itself"'. 6. The question was considered by this Court in Ouseph v. Kunjathu (1951 K.L.T. 44). Govinda Pillai, J., observed in that case: "An agreement for the cultivation of land under which a person is to cultivate another's land and the two are to share the products in certain proportions may be a lease if there is an intention to transfer an interest in the property. But if there is no such intention such agreement cannot create a lease the matter is, as held in Brahmamoyee Baramain v. Mansur (1920 Cal. 548), one purely of construction in each case. But if there is no such intention such agreement cannot create a lease the matter is, as held in Brahmamoyee Baramain v. Mansur (1920 Cal. 548), one purely of construction in each case. If there is no intention to transfer an interest in the property, the right will be a licence and not a lease. The use of the words pattam and pattachit is not of much consequence. It had been laid in Lumber v. Phillips (1904 A.C. 405) and King v. Allen & Sons (1916 (2) A.C. 54) that in construing such grants the substance of the transaction must be considered and not merely the nomenclature used by the parties. The rulings in re Burmah Shell Oil Storage & Distributing Company Limited of India (1933 All. 735), Sherif Bodum Ivaji v. Emperor (1930 Bom.165), Sabdi Bapari v. Budhai (1925 Cal. 370) and B.N.W. Rly. Company Limited v. Janaki Prasad (1936 Pat. 362) are also in support of this position". 7. To the same affect is the decision of this court in Venkiteswara Pai v. Padmavathi Ammal,1953 K.L.T. 368 (A.I.R. 1953 T.C. 582) in which case Kumara Pillai, J., discussed the question with reference to the decisions of the Cochin High Court in'Stamp Reference No.1 of 1097' (14 C.L.R. 42), Mariam v. Ernakulam Municipal Council (23 C.L.R. 709) and Lekshmana Iyer v. Mrs. T. Francis (32 C.L.R. 307); of the Calcutta High Court in O.C. Tungul v. Kamalpat Singh (1947 Cal. 236) and in Ram Protan v. National Petroleum Co. Limited (1950 Cal. 23); of the Madras High Court in Ag. Secretary, Board of Revenue v. S.I. Ry. Company (1925 Mad. 434); and of the Bombay High Court in Indian Hotels Co. v. Phiroz Sorabji (1923 Bom. 238). The same principle was laid down in all those cases. 8. The question, whether Ext. B created a lease or a licence, will have to be considered in the light of the above principle. But before doing so, it is necessary to refer to the circumstances under which the document happened to be executed. The first defendant executed Ext. A, varam-chit in favour of the plaintiff-company on 15.8.1116. Although he contended that Ext. B created a lease or a licence, will have to be considered in the light of the above principle. But before doing so, it is necessary to refer to the circumstances under which the document happened to be executed. The first defendant executed Ext. A, varam-chit in favour of the plaintiff-company on 15.8.1116. Although he contended that Ext. A did not come into effect and that he was holding the property under an oral lease both the courts below have concurrently found that the oral lease set up by him is not true and that he was holding the property under Ext. A. Ext. A was executed as a varam-chit. It was expressly stated in the document that the property would continue to be in the possession of the plaintiff-company and that the first defendant would have only the right to take the usufructs from the trees and to raise catch-crops in the land. The income from the trees and catch-crops was to be divided equally between the company and the first defendant. The arrangement was to continue for one year and after the expiry of the period the first defendant was to return the varam-chit to the plaintiff. 9. After the fixity of tenure was conferred on verumpattom tenants by Act VIII of 1118 (Cochin), the first defendant set up verumpattom right in the property and sent pattom to the plaintiff-company by money orders. The company refused to accept the money orders and issued notice to evict the first defendant. He then requested the company to allow him to continue as a varam tenant. These facts are clear from the minutes book of the company produced in the case. They are also admitted by the first defendant in Ext. B itself. This is what is stated in the document: The circumstances under which Ext. B happened to be executed leave no room for doubt that what the parties intended was that a varam chit should be executed. The document was also styled a varam-chit. 10. But, it is contended by learned counsel for the appellant that, even if the parties intended the document to be executed as a varam-chit, if the terms of Ext. B show that in law it amounts to a lease, it has to be taken to be a lease. The document was also styled a varam-chit. 10. But, it is contended by learned counsel for the appellant that, even if the parties intended the document to be executed as a varam-chit, if the terms of Ext. B show that in law it amounts to a lease, it has to be taken to be a lease. For this position he relied on the decision of the Privy Council in Banindra Chandra v. Durgu Prasad Singh (38 I.C. 929). In that case, Lord Parmoor observed: "The decision of the subordinate judge is rested on evidence of the intention of the parties to the deed, but this evidence is clearly inadmissible. In construing the terms of a deed the question is not what the parties may have intended, but what is the meaning of the words which they used. In Monypenny v. Monypenny (1861 H.L.C. 114) Lord Wensleydale said: "The question is not what the parties to a deed may have intended to do by entering into a deed, but what is the meaning of the words used in the deed - most important distinction in all cases of construction, and the disregard of which often leads to erroneous conclusions". To the same effect is the following observation of Lord Halsbury in Leader v. Duffy (1888 (13) A.C. 294): "You will be arguing in a vicious circle if you begin by assuming an intention apart from the language of the instrument itself, and, having made that fallacious assumption, you bend the language in favour of the assumption so made". The principle laid down in these cases was followed by the Cochin High Court in Doraswamy Kounder v. Chellappa Kounden (22 C.L.R. 126). 11. We have, therefore, to go into the question whether the terms of Ext. B amount to creating a lease or only a licence. The operative portion of the document is to the following effect: What the " Acc (previous arrangement) was is stated in the early portion of the document which has already been extracted. Ext. A also gives the terms of the previous arrangement. It is expressly stated in Ext. B that the property was in the possession of the company on the date of the execution of the document. It is, therefore, clear that the first defendant did not get possession of the property under Ext. A. There was no transfer of possession under Ext.B also. It is expressly stated in Ext. B that the property was in the possession of the company on the date of the execution of the document. It is, therefore, clear that the first defendant did not get possession of the property under Ext. A. There was no transfer of possession under Ext.B also. There is also no provision in the document for surrendering possession of the property to the company on the termination of the varam arrangement. The provision is only for returning the varam-chit. I have no doubt that the first defendant did not get possession of the property under Ext. B. 12. It was, however, contended on behalf of the first defendant that, under the terms of Ext. B, he got the right to take the yield from the trees, that it amounted to a transfer of interest in immovable property and that, therefore, the transaction amounted to a lease. Reliance was placed on the decision of the Madras High Court in Venugopala v. Thirunavukkarasu (1949 Mad. 148). In that case, by an agreement of rent in respect of the toddy yield of cocoanut trees, the defendant obtained the right to enjoy the toddy yield from the trees and the right to enter upon the land for that purpose. It was held that the defendant was not a lessed so far as the land was concerned but that the right to tap the cocoanut trees and obtain toddy was a benefit which arose out of the land and that that right was of the nature of a lease-hold. Rajammannar, Offg. C.J., (as he then was) observed thus: "Can the right to tap the coconut trees for toddy be said to be a benefit to arise out of land? If it can be, then the right which the defendant obtained under Ext. P1 would be immovable property. To decide this question, it is useful to refer to the leading case of Marshall v. Green (1875 (1) C.P.D. 35) for the statement of the law with regard to this subject, which is contained in the judgment of Lord Coleridge, C.J. He cites 'the following passage from the notes of Sir Edward Vaugham Williams to the case of Duppa v. Mayo (Wms. Saunders, 1871 Edition, Page 394). Saunders, 1871 Edition, Page 394). "The principle of these decisions appears to be this, that whereever at the time of the contract it is contemplated that the purchaser should derive the benefit from the further growth of the thing sold, from further vegetation and from the nutriment to be afforded by the land, the contract is to be considered as for an interest in land; but where the process of vegetation is over, or the parties agree that the thing sold shall be immediately withdrawn from the land, the land is to be considered as a mere warehouse of the thing sold, and the contract is for goods". This proposition has been applied again and again because it affords a clear and intelligible rule. It was applied in the Full Bench decision of this Court in Seeni Chettiar v. Santhanathan Chettiar (20 Mad. 58) where it was decided that a document which assigned a right to cut and enjoy trees, etc. standing in the village tank for a period of four years from its date conveyed an interest in immovable property because it was contemplated that the assignee should derive a benefit from the further growth of the thing sold, from further vegetation and from the nutriment to be afforded by the land". Reference was also made to the decision of the Allahabad High Court in Mahabit Prasad v. Enayat Elahi (1951 All. 608). In that case a lease of the crop of a mango grove for a period of five years under which the lessee was entitled also to the grass which would grow on the land was held to be a lease creating an interest in the trees and the land itself. 13. I do not think that these decisions would apply to the facts of the present case. In the Madras case, under the agreement of rent the defendant had exclusive right to tap the cocoanut trees and take toddy from them for a period of three years and his liability was only to pay a fixed rent to the owner, while in the present case no exclusive right is conferred on the first defendant to take the yield of the trees. The yield has to be taken in the presence of the managing director of the plaintiff-company, and the first defendant is to be given one-half of the yield, the other half being taken by the company. The words used in Ext. B are: It is, therefore, clear that even in the case of the trees the defendant had no right of exclusive possession. In the Allahabad case also the learned judge who decided the case proceeded on the basis that the person who was given the right to take the crop of the mango grove was given possession of the land also as is clear from the following passage in the judgment:- "There was no specific mention that possession over the grove or its land would be transferred to the lessee. But there was a clause laying down that, after the expiry of this period of five years, possession over the grove was to be returned by the lessee to the lessor'. In the present case there can be no doubt that possession of the land was not given to the first defendant. 14. I am clearly of opinion that the terms of Ext. B evidence the creation of only a licence in favour of the first defendant and not a lease. The rights conferred on him under the document are only to take care of the trees standing on the property and to get one-half of the income from the trees and from the catch-crops he was allowed to raise in the property, such income being taken in the presence of the managing director of the plaintiff-company. It is expressly stated in the document that the property is in the possession of the company. There is no provision for surrender of possession at the expiry of the varam arrangement. The only provision is to return the varam-chit. The document is styled a varam-chit. Although the nomenclature of the document is not conclusive as to its real nature that also can be taken into consideration in construing the terms of the document if the terms are ambiguous. The circumstances under which the document was executed can also be taken into consideration for this purpose. 15. For these reasons, I agree with the finding of the courts below that only a licence was created in favour of the first defendant under Ext. B and that he is not a lessee. The circumstances under which the document was executed can also be taken into consideration for this purpose. 15. For these reasons, I agree with the finding of the courts below that only a licence was created in favour of the first defendant under Ext. B and that he is not a lessee. He is, therefore, not entitled to the benefits of the Cochin Verumpattomdars Act and is liable to surrender possession of the property to the plaintiff-company. 16. The judgments and decrees of the courts below are confirmed and the second appeal is dismissed with costs. Dismissed.