MEHATHA SILK CENTRE v. SAMPATHRAJ — 1997 DIGILAW 658 (KAR)

T. N. VALIINAYAGA, J. ( 1 ) BOTH the appeals are concerned with the shop No. B-23, Mohan Building, A. M. Lane, chickpet, Bangalore. The appellants are M/s Mehta Siik Centre, represented by the second defendant Surajmal, claimed to be in occupation of the premises. One Mohanlal when he was alive was a person who entered into an arrangement between him and aforesaid Mehta Silk centre for the purpose of occupation of the shop by the latter. While Mohanlal, after his death his L. Rs. , would call the arrangement as a licence, Mehta Silk Centre, calls this arrangement as a lease, ( 2 ) FEARING forcible eviction by Mohanlal and sons, Mehta Silk Centre came forward with the suit for recovery in O. S. 1615 /74, out of which R. A. 639/80 has arisen relating to R. S. A. 334/97, An injunction against the disturbance of their possession was granted by the trial Court, but negatived by the Appellate Court on appeal and therefore they are here before this Court in the above R. S. A. 334/97. ( 3 ) MOHANLAL when he was alive filed a suit for possession against the aforesaid Mehta Silk Centre in O. S. 1883/74, out of which R. A. 640/80 has arisen resulting in RSA 335/97. The eviction was denied by the Trial Court, but ordered by the Appellate Court on appeal by the plaintiffs and therefore Mehta Silk Centre, the defendant in that case, are before this Court in this second appeal. ( 4 ) THE main question to be considered in these second appeals is one whether the transaction between the parties is a licence or lease. If it is construed it is a licence then Mohanlal's sons who are brought on as L. Rs have to succeed in the suit for possession. If it is held to be a lease then the suit for possession has to be dismissed on the ground that as lessee Mehta Silk Centre would be protected under the provisions of the Rent Control Act. If it is held to be a lease then the suit for possession has to be dismissed on the ground that as lessee Mehta Silk Centre would be protected under the provisions of the Rent Control Act. Apart from this, another question has also arisen, namely, Mehta Silk Centre has chosen to attorn the tenancy to the owner of the premises one Kapoorchad Trust and their contention is that there is a deeming surrender of possession by Mohanlal to his landlord and consequently a new tie has been established of landlord and tenant between the said Kapoor Trust and Mehta Silk Centre. Therefore, the second question is whether the attornment of tenancy by the aforesaid Mehta Silk Centre in favour of the trust would nullify the suit for possession filed by M/s. Mohanlal and his L. Rs. ( 5 ) THE trial Court construing the document executed between the parties as a lease, rendered a judgment in favour of Mehta Silk Centre. The Appellate Court, on the other hand, took the view that it is only a licence and consequently dismissed the suit for injunction and granted the decree for possession in favour of the L. R. s of Mohanlal. ( 6 ) ON behalf of the appellants, it was submitted that it is only a lease as they are in exclusive possession of the property. The term 'licence' has been used only for the purpose of getting over the consequence of Rent Control Act. The second submission was that they have paid the rent directly to the owner of the building, namely, Kapoor Trust, and by such payment the tenancy by the aforesaid Mohanlal viz; Trust, has come to an end and there was a deemed surrender of possession of lease by operation of law. The third submission was that there was a subsequent suit filed between the parties wherein the L. Rs of Mohanlal claimed licence fee in respect of the property and the said suit cam to be dismissed holding that the arrangement between the parties was only a lease and not licence. This finding rendered by the trial Court has become final, therefore binding on the L. Rs. of Mohanlal in this proceeding as well. There was a threat, according to them, from the original owner, they were, obliged to attorn the tenancy in favour of the original owner. This finding rendered by the trial Court has become final, therefore binding on the L. Rs. of Mohanlal in this proceeding as well. There was a threat, according to them, from the original owner, they were, obliged to attorn the tenancy in favour of the original owner. In support of his submission, the learned Counsel for the appellants relied upon the decision in HANUMANTHAIYA v. THAVAKAL SAN AND ANR. , A.. R. 1950 mysore, 9 and referred to the following observation: "the rule embodied in Section 116, no doubt, precluded the tenant form denying title at the time of the creation of the tenancy but admits of the qualification that subsequent to the creation of tenancy the tenant is not debarred from contending that the landlord's title is subsequently lost or defeated. " "where a third party dispossesses both the lessor and the lessee by purchase in execution of a decree by title paramount and the lessee subsequently attorns to such third party by payment of rent, the title of the lessor becomes extinguished and there is a surrender of lease by operation of law. Hence the lessor is not entitled to claim rent from the lessee subsequent to the period of eviction. " He also relied upon the dictum in KEWAL RAM v. MANGU MAL, A.. R. 1974 Rajasthan, 201 and relied upon the following passage: "thus, in the circumstances of the case, it was open to the owner to enter into an agreement of lease directly with the sublessee and remove the lessee from the scene, and thereby bring about cessation of the relationship of sub-tenancy between the lessor Mangu Mal and the sub-lessee kewal Ram. Admittedly, no rent had been paid by Kewalram to Mangu Mal after the date of the alleged attornment evidenced by Ex. A-1 dated 4. 6. 1968. Nandkumar admits that he has received rent from the sub-tenant Kewalram for the period commencing from January 1968. In this view of the matter, I have come to the conclusion that the relationshiop of lessor and lessee between the tenant Mangu Mal and the sub-tenant Kewalram came to an end from the date of attornment by Kewalram in favour of the owner Nandkumar. In this view of the matter, I have come to the conclusion that the relationshiop of lessor and lessee between the tenant Mangu Mal and the sub-tenant Kewalram came to an end from the date of attornment by Kewalram in favour of the owner Nandkumar. This finding disposes" of the question of the alleged conclusion between the owner Nandkumar and the sub-tenant Kewalram because in the circumstances of the case, it was permissible for Nandkumar and Kewalram to enter into such an agreement, and thereby defeat the rights of Mangu Mal under the sub-lease. " he also relied upon the dictum in D. SATYANARAYANA v. P. JAGADISH, AIR1987 SC 2192 , JT1987 (3 )SC 571 , 1987 (2 )SCALE577 , (1987 )4 scc424 , [1988 ]1 SCR145 , 1988 (1 )UJ175 (SC ) and referred to the following passage: "where on a notice of eviction being served by the paramount title holder of the premises on the sub-tenant, the sub-tenant had attorned in favour of the paramount title holder and stopped paying rent to the tenant who had inducted him in the premises and thereupon a eviction petition was filed by the tenant against the sub-tenant under Section 10 (2) (i) and (vi) of A. P. Act on ground of non-payment of rent and denial of title of landlord, and that petition was allowed by the High Court on ground of estoppel, the order of the High court was improper. No order of termination in terms of Section 10 (2) (i) of A. P. Act could be passed unless it could be said that in the facts and circumstances of the case the dispute as to title raised by the sub-tenant was not bona fide. It cannot be said having regard to the fact that the sub-tenant was under threat of eviction by the title paramount, that the rule of estoppel under Section 116 of the Evidence Act applies and therefore he was not entitled to dispute the title of respondent. Furthermore, the sub-tenant after being served with the notice of eviction attorned to the paramount title holder, and had been paying rent to him regularly and therefore was not in arrears of rent," ( 7 ) TWO other points are also raised by the learned Counsel for the appellant - Mehta Silk Centre. Furthermore, the sub-tenant after being served with the notice of eviction attorned to the paramount title holder, and had been paying rent to him regularly and therefore was not in arrears of rent," ( 7 ) TWO other points are also raised by the learned Counsel for the appellant - Mehta Silk Centre. One is that the L. Rs of Mohanlal are having some other non-residential premises where they are carrying on the business. It is stoutly denied by the learned Counsel for the respondents appearing for Mohanlal and his grievance was that he has been deprived of possession from 1974 for the last over 23 years and he is very anxious and interested to get the premises for his business, as there are no other premises available for him. The second point is that the agreement of licence is not an agreement at all and it is only a camouflage to get over the Rent Control Act. Therefore, applying the principle of impari delicto the L. Rs of Mohanlal should be non-suited. It does not matter whether the tenant Mehta Silk Centre also suffers in respect of his suit which is the suit for injunction. This submission does not have the legs to stand for the simple reason once it is admitted that such an agreement is entered into then he admits that it is a licence. In view of my finding it is only a licence and the intention of the parties is only a licence, this principle will have no application at all. Despite the fact that the Rent Control Act come into force, the provisions of t. P. Act cannot be forgotten and even today the parties can be governed by an arrangement of licence. The very fact that M/s Mehta Silk Centre are found to be not in exclusive possession, clearly goes to show that it was not a tenant but only a licensee. A reading of several recitals in the document, as discussed by the lower Appellate Court, clearly lead to the one and the only inference that it was only a licence and not a lease. ( 8 ) AS against this, the Counsel for the L. Rs. of Mohanlal submitted that the arrangement between the parties was only a licence. In fact, even today his furniture are found inside the premises. ( 8 ) AS against this, the Counsel for the L. Rs. of Mohanlal submitted that the arrangement between the parties was only a licence. In fact, even today his furniture are found inside the premises. Therefore, there is no exclusive possession handed over to Mehta Silk Centre. At best it can be concluded as a joint possession and in the absence of exclusive possession, it cannot be termed as a lease. He further submitted that there was no threat of eviction from the original owner, therefore it is not open to the aforesaid Mehta Silk Centre to attorn the tenancy directly in favour of the Trust. Thirdly, he relied upon Section 116 of the Evidence Act, which reads as follows: "116. Estoppel of tenant and of licensee of person in possession. No tenant of immovable property, or person claiming through such tenant, shall during the continuance of the tenancy, be permitted to deny that the landlord of such tenant had, at the beginning of the tenancy, a title to such immovable property; and no person who came upon any immovable property by the licence of the person in possession thereof, shall be permitted to deny that such person had a title to such possession at the time when such licence was given. " He contended that whether he is the licensee or tenant is not entitled to deny the title of mohanlal unless he surrenders possession back to the L. Rs of Mohanlal. Any amount of authority cannot take away the effect of the provisions of law as embodied in Section 116. The learned Counsel has also relied upon the decision in Mrs. M. N. CLUBWALA v. FIDA hussain SAHEB, AIR1965 SC 610 , [1964 ]6 SCR642 for the proposition that the intention of the parties is important to decide whether the arrangement between the parties is a licence or lease. The following passage is relied upon by him. "whether an agreement creates between the parties the relationship of landlord and tenant or merely that of licensor and licensee the decisive consideration is the intention of the parties. This intention has to be ascertained on a consideration of all the relevant provisions in the agreement. In the absence, however, of a formal document the intention of the parties must be inferred from the circumstances and conduct of the parties. This intention has to be ascertained on a consideration of all the relevant provisions in the agreement. In the absence, however, of a formal document the intention of the parties must be inferred from the circumstances and conduct of the parties. Similarly where the terms of the document are not clear the surrounding circumstances and the conduct of the parties have to be borne in mind for ascertaining the real relationship between the parties. The fact that the premises are in exclusive possession of a person would not make him a lessee. If, however, exclusive possession to which a person is entitled under an agreement with a landlord is coupled with an interest in the property, the agreement would be construed not as a mere licence but as a lease. " "appellant owned a market consisting of stalls which were occupied by Stall-holders. The appellant had been granted a licence by the municipal corporation under which he was required to discharge certain duties like cleaning the stalls disinfecting them and of opening and closing the market at specified time. Further, the stall-holders were not allowed to remain in occupation of the stalls beyond the closing hour and were required to pay certain rent of each day of occupation. On the question whether the stall-holders were lessees of appellant or mere licensees. Held that the stall holders were licensees of the appellant. The intention of the parties was to bring into existence merely a licence and not a lease and the word 'rent' was used loosely for 'fee'". He also relied upon the dictum in KHALIL AHMED BASHIR AHMED v. TUFELHUSSEIN samasbhai SARANGURWALA, , AIR1988 SC 184 , (1987 )89 bomlr600 , JT1987 (4 )SC 342 , 1987 (2 )SCALE1034 , (1988 )1 SCC155 , [1988 ]1 scr1057 , 1988 (1 )UJ133 (SC ) to prove his case that he was only a licence and not a lease. The following passage is relied upon" "in the instant case the agreement was described as an agreement of 'leave and licence'. The parties had been described as the licensor' and the 'licensee'. The following passage is relied upon" "in the instant case the agreement was described as an agreement of 'leave and licence'. The parties had been described as the licensor' and the 'licensee'. The recitals therein recite that the licensor was seized and possessed of and was otherwise well entitled as the monthly tenant of the workshop premises situated being the premises in dispute, and whereas the licensee had approached the licenser to allow him to occupy and use the said premises for the purpose of carrying out his business of workshop for a period of five years and whereas the licenser had agread to allow the licensee to use the premises under the said leave and licence of the licenser for a period of five years. It was stated that the licenser gave and granted- his leave and licence to the licensee to use and occupy the said premises for the period of five years. Clause 2 of the said agreement recites that the licensee had agreed to use the premises as above and merely for the purpose of workshop business. If further goes on to state that the 'licensee shall not under any circumstances be allowed to use the premises for the residential purposes or any other purpose save and except specified therein'. The period of leave and licence was to commence from 1st september, 1965 to 31st August, 1970 and it was further stated that the licensee and the licenser shall not terminate the said agreement earlier save and except on the ground of breach of any of the terms of conditions written therein. The licenser was entitled to terminate the agreement earlier notwithstanding the fact that the period of the agreement might not have expired. It further stipulated that the licensee should deposit a sum of Rs. 2500/-, for the due performance of the terms and conditions of the agreement. The said deposit was to be kept free of interest and the same was to be refunded to the licensee on the licensee surrendering possession of the said premises by removing himself and his belongings on the expiry of the period of the agreement or sooner termination or determination thereof after deducting all the dues if any for payment of compensation. If further stipulated that the licensee shall pay to the licenser a monthly compensation of Rs. 225/- per month. If further stipulated that the licensee shall pay to the licenser a monthly compensation of Rs. 225/- per month. It was stipulated that the licensee would be entitled to keep the keys of the said premises with him and shall be at liberty to work in the said premises for twenty hours subject to restriction of rules and regulations imposed by the Municipal or any other local authority or authorities. It was further provided that the licensee shall be alone responsible and liable for any breach or contravention of any rule or regulations of the said authorities and he shall indemnify the licenser thereof. The document further stipulated that the licensee shall be at liberty to construct loft and electric fittings and apparatus and tools and shall be entitled to the ownership thereof and shall be free to carry away such articles and the licenser agreed and undertook that he shall not obstruct the removing of such articles at the time of the delivery of the possession of the said workshop. It was further mentioned in the said agreement that it was agreed by the licensee that if he commits any default of any terms and conditions or fails to pay the compensation for two months or if the licensee at any time puts up false or adverse claim of tenancy, or sub-tenancy the licenser shall be entitled to terminate the agreement and cancel and revoke and withdraw the leave and licence granted earlier and shall be entitled to take possession forthwith of the said premises. It was further stipulated that the licensee shall pay the electric charges in respect of consumption of electricity and the rent of the said premises should be paid by the licenser only. The agreement recited that the licensee shall not allow any other person to use and occupy the said premises and shall not do any unlawful or illegal business therein. The agreement further recited that the licenser shall have the full right to enter upon the premises and inspect the same at any time. Held, in view of the intention of the parties in the document and the facts and circumstances of the case, the agreement was a licence and not a leased. The agreement further recited that the licenser shall have the full right to enter upon the premises and inspect the same at any time. Held, in view of the intention of the parties in the document and the facts and circumstances of the case, the agreement was a licence and not a leased. " ( 9 ) AFTER hearing arguments of both the Counsel, I am convinced that the arrangement between the parties has to be construed only as a licence and not a lease. Admittedly, the very fact that even today the things of Mohanlal are found inside the premises and under the terms he has got a right to go and inspect the premises, the arrangement has to be construed only as a licence. In fact, the Supreme Court is clear in , AIR1988 SC 184 , (1987 )89 bomlr600 , JT1987 (4 )SC 342 , 1987 (2 )SCALE1034 , (1988 )1 SCC155 , [1988 ]1 scr1057 , 1988 (1 )UJ133 (SC ) wherein the Supreme Court has held that when the licenser shall have the full right to enter upon the premises and inspect the same at any time, the intention of the parties is to be held as creating only licence and not a lease. The lower Appellate Court has considered this aspect in depth and detail and perusing and analysing the terms of the agreement has come to the conclusion that the arrangement has intended to by the parties is only a licence. Reference can be made to the discussions found in pages 45 to 49 and 51 and 52. As rightly pointed out by the Counsel for Mohanlal, being a final Court of fact, the factual finding rendered by the first appellate Court cannot be easily interfered with by this Court sitting in second appeal unless it is shown to be perverse finding or an error apparent on the fact of the records. I am satisfied that the finding rendered by the first appellate Court on facts has arrived at a reasonable appreciation of facts and proper application of mind. Contra to the finding rendered by the first appellate Court, the lower Court was taken away by the facts that there was payment of rent by Mehta Silk Centre to the owner-trust, and having been immersed in that angle of approach, the lower court has rendered a finding on lease. Contra to the finding rendered by the first appellate Court, the lower Court was taken away by the facts that there was payment of rent by Mehta Silk Centre to the owner-trust, and having been immersed in that angle of approach, the lower court has rendered a finding on lease. It has not considered the point raised and the evidence analysed by the first appellate Court. ( 10 ) THE submission that the reason for attornment of tenancy directly to the owner was due to the threat received by Mehta Silk Centre from the original owner Kapur Trust cannot be accepted. There is nothing on record to show that the trust issued any notice of eviction both against the chief tenant, L. Rs of Mohanlal as well as on Mehta Silk Centre. In the absence of any threat of eviction exercised or demonstrated by the owner of the premises, the dictum in AIR1987 SC 2192 , JT1987 (3 )SC 571 , 1987 (2 ) SCALE577 , (1987 )4 scc424 , [1988 ]1 SCR145 , 1988 (1 )UJ175 (SC ) cannot come to the aid of M/s Mehta Silk centre. The reliance on a finding rendered by the Civil Judge in the subsequent suit between the parties during the pendency of this suit cannot be said to be binding or can be construed as a res judicata because the issue was directly not an issue there. On the other hand, the question whether it is a lease or licence is directly in issue in both the suits. The parties are aware of the proceedings they were instituted and in this circumstance it cannot be said that the finding rendered is binding to make it the relationship of the landlord and tenant between Mohanlal and mehta Silk Centre. The decision of the Division Bench of this Court in AIR 1950 Mysore 9 (Hanumanthaiya v. Thavakal San) does not contemplate the situation that is available in this case. That was a case of execution of a decree by title paramount and when the decree is executed naturally both the chief tenant and the sub-tenant have to be thrown out of the premises. The facts are different. That dictum will not apply to the facts of this case. That was a case of execution of a decree by title paramount and when the decree is executed naturally both the chief tenant and the sub-tenant have to be thrown out of the premises. The facts are different. That dictum will not apply to the facts of this case. Even the dictum of Rajasthan High Court is not applicable because it was found therein that there was a collusion between the owner and the sub-tenant and it was found that the collusion cannot be made a ground to defeat the rights of the chief tenant. The facts of that case are not applicable to the facts available in this case. The estoppel that operates against the licensee or a tenant under section 116 of the Evidence Act cannot be easily get over by the tenant Mehta Silk Centre. In any event, as I have held that it is only a licence and not a lease, the question of consideration of possession of tenant or sub-tenant may not be very much relevant. In any event, as this point was raised, I am obliged to deal with the same in the manner aforesaid. ( 11 ) IN this view, I hold that there is no merit in the second appeal and both the appeals are dismissed, confirming the judgment and decree of the first Appellate Court.