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2001 DIGILAW 855 (MP)

R. Swaminathan v. Rekha Handa w/o Late S. K. Handa

2001-11-23

S.P.KHARE

body2001
ORDER S.P. Khare, J. 1. This is a revision by the non-applicant under section 23-E of the M.P. Accommodation Control Act, 1961 (hereinafter to be referred to as 'the Act') against order dated 29-6-2001 in Case No. 7/RCA/93 of the Rent Controlling Authority (R.C.A.), Bhopal by which he has been directed to deliver possession of the suit accommodation to applicant Smt. Rekha Handa, a widow, on her application under section 23-A of the Act. 2. It is not in dispute that S.K. Handa was owner of House No. E-2/108, Arera Colony, Bhopal and he placed non-applicant R. Swaminathan in possession of this house as per Agreement dated 1-2-1989 (Ex.P-4) on payment of Rs. 2,750/- per month as "licence fee". In this agreement the non-applicant has been addressed as "Licensee", and has been granted the right to "use and occupy the said premises for the purpose of residential accommodation from 1-2-1989 to 1-2-1991". As per terms of the agreement the licensee has to keep the said premises in "good and occupyable condition", leave the same at the end of the determination of the agreement, the owner would have the right to go in the premises for its repairs, the licensee would be responsible for normal maintenance and minor repairs and the licensee has to pay the electricity and water charges. Clause 7 of the agreement provides: "Nothing herein contained shall be construed as creating any right interest easement tenancy or sub-tenancy in favour of the company in or over or upon the said premises or transferring any interest therein in favour of the Licensee other than the personal and permissive right of use and occupancy hereby granted or as entitling the licensee for possession of the said premises and the owner shall be in exclusive juridical possession and full control and charge of the said premises all times. It is the express intention of the parties here to that this Agreement shall be mere Agreement of leave and license to occupy the said premises and the owner shall at all times have free and unobstructed access to the said premises." 3. S.K. Handa died on 6-3-1990 and applicant Smt. Rekha Handa is his widow who comes in the category of "Landlord" in section 23-J of the Act. S.K. Handa died on 6-3-1990 and applicant Smt. Rekha Handa is his widow who comes in the category of "Landlord" in section 23-J of the Act. She filed the application under section 23-A of the Act in February, 1993 for eviction of the non-applicant on the ground that she bona fide requires the suit accommodation for her own residence and she has no other residential accommodation of her own in her occupation for this purpose in the city. Before filing this application she served the notice dated 5-12-1992 on the non-applicant treating him to be her tenant in the suit accommodation. In the application also she described him as a tenant. The non-applicant in his reply to the application has stated that the applicant does not in fact require the suit house for her residence and she wants to let it out on higher rent or sell it. It has also been pleaded by the non-applicant that he is not the lessee but a licensee in this house and therefore the application under section 23-A of the Act is not maintainable and the R.C.A. has no jurisdiction to entertain it as there is no relationship of landlord and tenant between the applicant and the non-applicant. 4. The R.C.A. by the impugned order held that the applicant is an issueless widow and she "bona fide requires" the suit house for her own residence and she has no other alternative accommodation in the city for this purpose. On the point of lease or licence the R.C.A. after considering the terms of the agreement Ex. P- 4, other documentary and oral evidence, the attendant circumstances and conduct of the parties has held that the non-applicant is lessee and not the licensee. It has been found that the non-applicant was placed in "exclusive possession" of the house when he was inducted in it and he is living therein with his family; and the applicant is not in possession of even "an inch of the house"; and she has never been allowed entry in this house. The R.C.A. has taken into account the finding of the Additional District Judge in Civil Suit No. 78-A of 1998 by judgment dated 4-7-1998 that it is a case of lease and not licence. The R.C.A. has taken into account the finding of the Additional District Judge in Civil Suit No. 78-A of 1998 by judgment dated 4-7-1998 that it is a case of lease and not licence. The admission of the non-applicant in letter dated 18-2-1991 (Ex.P-13) that he is "tenant" and the amount which he is paying is "rent" has also been taken into consideration. On a cumulative consideration of the entire material and appreciation of the evidence the R.C.A. has recorded the finding of fact that the non-applicant is lessee (tenant) and not the licensee. 5. The learned counsel for the petitioner at the time of hearing of this revision on the question of admission could not and has not challenged the finding of the R.C.A., on the point of "bona fide requirement" of the suit house by the applicant. She is issueless widow and has no other house at Bhopal. She is employed in Larsen and Toubro Company which has an office at Bhopal and she can get herself posted there. She has been promised by her employer that she would be posted there. Her husband was also an employee of this Company. It is the subjective choice of the applicant where she should settle and if she has shown her predilection to live in the house which has been left by her deceased husband there is nothing unreasonable and neither the non-applicant nor the Court can dictate her to live elsewhere. So the finding of the R.C.A. on this point is wholly unassailable. The legislative mandate in section 23-D of the Act is that a widow is entitled to eviction order within six months but the present case has already dragged on for eight years. 6. The point which has been vehemently argued by the learned counsel for the petitioner is that the non-applicant is licensee and not the lessee in the house in question and the finding of the RCA that he is the lessee is perverse. According to him, the recitals in the Agreement Ex. P-4 leave no doubt that it was a case of "licence" and the RCA could not ignore them or go behind them to hold that it was a case of lease. According to him, the recitals in the Agreement Ex. P-4 leave no doubt that it was a case of "licence" and the RCA could not ignore them or go behind them to hold that it was a case of lease. Reliance has been placed upon the decision of the Supreme Court in Provash Chandra Dalui vs. Biswanath Banerjee AIR 1989 SC 1834 , in which it has been held that in construing a contract the Court must look at the words used in the contract unless they are such that one may suspect that they do not convey the intention correctly. If the words are clear, there is very little the Court can do about it. This was not a case in which distinction between lease and licence was drawn. 7. The leading case on the point is the decision of the Supreme Court by a three-judge Bench in Associated Hotel of India vs. R.N. Kapoor, AIR 1959 SC 1262 . In that case the agreement was described as "deed of licence" - and the parties were described as licensor and licensee. There were recitals to the effect that the licensor granted to the licensee the right to use and occupy the premises. The document used the phraseology appropriate to a licence, Subba Rao, J. observed: "it is the substance of the agreement that matters and not the form, for otherwise clever drafting can camouflage the real intention of the parties". The following propositions may, therefore, be taken as well-established; (1) to ascertain whether a document creates a licence or lease, the substance of the document must be preferred to the form; (2) the real test is the intention of the parties - whether they intended to create a lease or a licence; (3) if the document creates an interest in the property, it is a lease; but, if it only permits another to make use of the property, of which the legal possession continues with the owner, it is a licence; (4) if under the document a party gets exclusive possession of the property, "prima facie", he is considered to be a tenant; but circumstances may be established which negative the intention to create a lease. After adverting to the terms of the agreement it was observed that the clever phraseology used or the ingenuity of the document-writer hardly conceals the real intent. 8. After adverting to the terms of the agreement it was observed that the clever phraseology used or the ingenuity of the document-writer hardly conceals the real intent. 8. There have been numerous decisions of the Supreme Court on lease vs. licence but the principles laid down in the above case are of classic significance and have remained undiluted to this date. The latest decisions are Vayallakath Muhammedkutty vs. Illikkal Moosakutty (1996) 9 SCC 382 and Sultana Begum vs. Prem Chand Jain, AIR 1997 SC 1006 . The pith and substance must be seen. The right to exclusive possession is the basic feature of the tenancy created by lease. Licencee's possession, on the contrary, is only permissive and "he can be thrown out at any time". It would be enough to refer to one more decision of the Supreme Court in Lakhi Ram vs. M/s Vidyut Cable and Rubber Industry, 1970 MPU 69 (SC) where it has been observed that several landlords attempt to by pass the provisions of the statutes affording protection to the tenants against eviction by entering into contracts which have a superficial appearance of licences. Therefore, it is the duty of the Court to go behind the facade and find out the real nature of the contract. 9. It is thus well settled that if the document creates an interest in the property it must be held to be a lease. Placing a party in "exclusive possession" of the property is indicative of lease. The recitals in the document are not decisive. The Court can always go behind the facade to reach the factum. The veil of documentation is not conclusive or final and can be pierced open or lifted. The real intent must be seen. The contracting out of the Accommodation Control Act or Rent Acts by resorting to camouflage, clever phraseology, ingenuity or dexterity in drafting, "distinctive flavour or deceptive labels", or rheotorical recitations is not permissible. 10. There is a decision of the House of Lords in A.G. Securities vs. Vaughan, (1988) 3 All ER 1058 in which the agreement was described as a "licence". The terms of the agreement were almost the same as in the present case in Ex. P-4. It was stipulated in that agreement with reiterated emphasis that the appellants were not to have exclusive possession. The terms of the agreement were almost the same as in the present case in Ex. P-4. It was stipulated in that agreement with reiterated emphasis that the appellants were not to have exclusive possession. In particular, by clause 16, the agreements 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. The same or substantially the same language has been used in clause 7 of the Agreement Ex. P-4 in the present case. It was held that the recitals in the agreement were clearly "a pretence to deprive to the appellant of the protection of the Rent Acts." Lord Temple man observed that parties to an agreement cannot contract out of the Rent Acts; if they were able to do so the Acts would be dead letter because in a state of housing shortage a person seeking residential accommodation may agree to anything to obtain shelter. The Rent Acts protect a tenant but they do not protect a licensee. Since parties to an agreement cannot contract out of the Rent Acts, a document which expresses the intention genuine or bogus, of both parties or of one party to create a licence will nevertheless create a tenancy if the rights and obligations enjoyed and imposed satisfy the legal requirements of a tenancy. A person seeking residential accommodation may concur in any expression of intention in order to obtain shelter. Since parties to an agreement cannot contract out of the Rent Acts, a document expressed in the language of a licence must nevertheless be examined and construed by the Court in order to decide whether the rights and obligations enjoyed and imposed create a licence or a tenancy. In considering one or more documents for the purpose of deciding whether a tenancy has been created, the Court must consider the surrounding circumstances, including any relationship between the prospective occupiers, the course of negotiations and the nature and extent of the accommodation and the intended and actual mode of occupation of the accommodation. Landlords dislike the Rent Acts and wish to enjoy the benefits of letting property without the burden of the restrictions imposed by the Acts. Landlords dislike the Rent Acts and wish to enjoy the benefits of letting property without the burden of the restrictions imposed by the Acts. The duty of the Court is to enforce the Acts. Parties cannot contract out of the Acts. The enjoyment of exclusive occupation for a term in consideration of periodical payments creates a tenancy. 11. In the earlier decision in Street vs. Mountford (1985) 2 All ER 289 of the House of Lords, Lord Templeman laid down three principles. First, parties to an agreement cannot contract out of the Rent Acts. Second, in the absence of special circumstances, not here relevant, the enjoyment of exclusive occupation for a term in consideration of periodic payments creates a tenancy. Third, where the language of licence contradicts the reality of lease, the facts must prevail. The facts must prevail over the language in order that the parties may not contract out of the Rent Acts. It was designed to disguise the grant of a tenancy and to contract out of the Rent Acts. An express statement of intention is not decisive and that the Court must pay attention to the facts and surrounding circumstances and to what people do as well as to what people say. 12. In Halsbury's Laws of England Fourth Edition Volume 27 (I) page 25 the law relating to the distinction between the lease and licence has been recapitulated. It is stated : "Save in exceptional circumstances, an agreement creates the relationship of landlord and tenant and not that of licensor and licensee where there is the grant of exclusive possession for a fixed or periodic term at a stated rent. Where the agreement is made in writing, the question whether it creates a tenancy or a licence is determined by a consideration of the substantive terms of the agreement and not by the labels or terminology used. The professed intentions of the parties are irrelevant in determining whether the agreement creates a tenancy or a licence. Similarly, the effect of statutory security of tenure or other protection is irrelevant in determining whether an agreement creates a tenancy or a licence. The Court is, however, required to be astute to detect and frustrate sham devices and artificial transactions whose only object is to disguise the grant of a tenancy and to evade the occupier's claiming statutory protection." 13. The Court is, however, required to be astute to detect and frustrate sham devices and artificial transactions whose only object is to disguise the grant of a tenancy and to evade the occupier's claiming statutory protection." 13. The R.C.A. in the present case after considering the terms of the document, other evidence and circumstances and the nature extent of the accommodation has recorded the finding that the transaction between the parties was that of the lease. The relevant legal principles have been kept in view and the finding is consistent with those principles. The finding cannot be said to be perverse or unreasonable. There is stark reality that the non-applicant was placed in "exclusive possession" of the whole of the house for residential purpose and he is living therein with his family on monthly payment of Rs. 2750/- and he continues in possession of the same. The applicant is not permitted by him to enter into the house. She or her husband could not enter into the house as the non-applicant was living therein with his family. Therefore, recitals in para 7 of the agreement Ex. P-4 were incorporated to disguise the real transaction of lease. The non-applicant was given the "exclusive possession" of the house on consideration of payment of rent. There was transfer of right to enjoy the property i.e. the house. There was actual demise. The recitals in the agreement Ex. P-4 appear to have been copied from some other document with the avowed object to see that the person who was given possession of the house is not protected by the provisions of the M.P. Accommodation Control Act, 1961. The applicant realised and was properly advised that he must stick to the real state of affairs and for that reason she is treating the non-applicant as tenant - clothing him with better rights and seeking eviction through the due process of law or the procedure established by law. In case she had sued the non-applicant treating him as a licensee, he would have definitely come up with the plea that he is in reality the tenant in the suit house having the umbrella of protection of the M.P. Accommodation Control Act, 1961. In case she had sued the non-applicant treating him as a licensee, he would have definitely come up with the plea that he is in reality the tenant in the suit house having the umbrella of protection of the M.P. Accommodation Control Act, 1961. In order to avoid the institution of such a suit which would have ended in futility after consuming a number of years she proceeded taking into consideration the real transaction between the parties and filed the application for eviction based on the ground of eviction available to her- a more tedious path than suing a licensee after the licence stood terminated by efflux of time and the non-applicant would have had no legal right to resist or prevent the entry of the applicant in the house. It is well known that after the revocation or termination of the licence the possession of a licensee becomes unlawful and he becomes liable to eviction without establishing any ground for eviction. It can be gleaned by making a reference to decided cases that it is generally the owner of the house who comes forward with a case of licence and the occupier of the property sets up the plea of tenancy as by doing so he can be protected by the statutory provisions of the Rent Acts but curiously enough in the present case the non-applicant has come with a story that the transaction was that of licence rendering his position more vulnerable and thereby land himself nowhere. 14. The finding of the R.C.A. that the non-applicant is lessee in the suit accommodation cannot at all be said to be perverse or unreasonable. Some assistance has been derived by the RCA from the judgment of the Civil Court which is under appeal but even on independent appraisal of the evidence the RCA has arrived at the same finding. The finding recorded by the Civil Court in the separate suit being under challenge in appeal may not constitute res judicata at the moment but it is definitely a relevant piece of evidence under section 13 and 43 of the Evidence Act. Even if the finding of the Civil Court is excluded at the moment, the finding of the RCA of his own is unassailable. He has to act with expedition and examine the case on practical realities and not so much on forensic niceties. Even if the finding of the Civil Court is excluded at the moment, the finding of the RCA of his own is unassailable. He has to act with expedition and examine the case on practical realities and not so much on forensic niceties. The finding is neither perverse nor unreasonable. It is not open to interference in revision. 15. The revision is dismissed.