Decided on February 28,1973

Banwarilal Chokhani Appellant


R.S. Bindra, J. - (1.) THIS Second Appeal arises out of a suit instituted by Banwarilal Chokhani against the Union of India in its capacity as the owner of North -East Frontier Railway, hereinafter called the N. F. Railway, and 12 others. The reliefs claimed in the suit were, (a) for a declaration of plaintiffs' tenancy right, with possession over the lands in dispute, (b) grant of a lease or leases to him by Union of India of the same lands, (c) withdrawal and cancellation of the licences granted by the N. F. Railway to the defendants Nos. 2 to 13, (d) permanent injunction restraining Union of India from evicting the plaintiff from the lands in dispute pursuant to the provisions of the Public Premises (Eviction of Unauthorised Occupants) Act, 1958, hereinafter called "the Act". (e) confirmation of the plaintiff's possession as a tenant over the suit lands, and (f) for cancellation of licences issued by the N. F. Railway in favour of defendants Nos. 2 to 13, besides the costs of the suit. The suit was dismissed by the trial Court on the findings that the agreement entered into between the plaintiff and the N. F. Railway was in the nature of a licence and not of a lease, that that licence had long since been terminated, that the lands in dispute were presently in occupation of defendants Nos. 2 to 13 and not of the plaintiff, and that as such the suit was altogether misconceived. The plaintiffs' appeal against the trial Court's decree taken to the Court of Assistant District Judge proved abortive. The learned Assistant District Judge affirmed the finding of the trial Court that the agreement between the parties created a licence and not a lease, and held, in addition, that the suit filed by the plaintiff Banwarilal was not maintainable inasmuch as the contracting party was Joharmal Murlidhar and Co. and not Banwarilal personally.
(2.) SHRI J. P. Bhattacharjee very fairly stated at the bar, while arguing the appeal on behalf of Banwarilal, that the fate of the appeal hangs by the finding whether the contract made between the parties was in the nature of licence or of lease. To appreciate the parties' respective contentions it is necessary that I should read the definitions of the expressions 'lease' and of 'licence' as given respectively in Section 105 of the Transfer of Property Act and Section 52 of the Indian Easements Act. Section 105 of the Act reads: - "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." Section 52 of the Easements Act is in the following terms: - "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 a right does not amount to easement or an interest in the property, the right is called licence." The most conspicuous distinction between the lease and the licence brought out by the respective definitions is that whereas in the case of lease there is a transfer of right to enjoy the immovable property concerned, no such transfer comes about in the case of licence. However, it is common experience that in case of leases no words are specifically used to show that there is a transfer of a right to enjoy the demised property but such a transfer is always deducible from the terms of the agreement if studied carefully. It is for the reason of that peculiarity that it is quite often said that the dividing line between lease and licence is rather thin and occasionally blurred. However, certain guiding principles have been laid down in various judicial pronouncements that help and aid in distinguishing a lease from the licence. An accepted principle both in England and India, for finding out whether an agreement between the parties creates the relationship of lessor and lessee or merely that of licensor and licensee is to determine what was the intention of the parties. To quote the words of Lord Dering in Cobb v. Lane,, (1952) 1 All ER 1199 at p. 1202: "The question in all these cases is one of intention: Did the circumstances and conduct of the parties show that all that was intended was that the occupier should have a personal privilege with no interest in the land." The same view was expressed, though in somewhat different words by Lord Greene M. R. in Booker v. Palmer, (1942) 2 All ER 674. He observed: "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." Another guiding principle which appears to be well settled is that the substance of the document rather than the form in which it is couched should be looked into for determining the character of relationship established by it. The artifice or skill or ingenuity of the document writer, on his own or at the instance of any interested party, cannot be permitted to cloud the real intention of the parties which alone is material for settling the issue whether the contract creates a lease or a license. The test of exclusive possession as indicative of relationship of landlord and tenant no longer holds the field though it is still recognised that a person who is let into exclusive possession of the property is prima facie considered to be a tenant The rider added to the last mentioned proposition is that the circumstances may be established which negative the intention to create a lease. Reference in this connection is invited to : AIR 1968 SC 919, Konchada Ramamurty v. Gopinath. In this judgment the Supreme Court cited with approval the following observations of Subba Rao, J. as he then was, made in : AIR 1959 SC 1262. Associated Hotels of India Ltd. v. R. N. Kapoor. "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; hut if it only permits another to make use of the property, of which the legal possession continues with the owner, it is a licence, and (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." It remains to be said that whereas lease creates an estate in the premises, an estate that is heritable, a licence does not. Licensee gets only a personal right to enjoy the property without transfer of any right to him and it comes to an end with his death, or earlier at the sweet will, or even at the caprice, of the owner once the latter expresses his intention to terminate it.
(3.) IT is in the light of these well settled principles that I proceed to examine the terms of the agreement concluded between the parties with a view to find out whether it creates a lease or a licence.;

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