- (1.) THIS is a defendant's appeal arising out of a suit for ejectment of the defendant and for possession over the shop in dispute. The plaintiff's case, in brief, was that the plaintiff Municipal Board was the owner of the property in dispute and the defendant was a licensee, the licence in favour of the defendant was created by the Municipal Board on 9-1-1962 for the period ending 31-3-1963 at a premium of Rs. 335.00 and as the period of licence had expired it stood automatically revoked by lapse of time, and in any case impliedly revoked by the institution of the suit. The defence in the suit was that the defendant was not a licensee but a lessee and that the lease was still continuing by holding over, and unless it was terminated the defendant could not be ejected.
(2.) THE trial Court, on a consideration of the evidence held that the defendant was a lessee and not a licensee, and since the lease had not been terminated, the suit for ejectment was not maintainable. It accordingly dismissed the suit. On appeal filed by the plaintiff the decree of the trial Court was set aside and the plaintiff's suit for ejectment was decreed. The first appellate court took the view that the transaction created a licence and not a lease and the licence having become extinct by revocation through lapse of time, the defendant was liable to be ejected. Against the decree of the lower appellate court the defendant has filed the present appeal. The basic question to be determined in the case is whether the defendant is a lessee or a licensee. The facts leading to the transaction of 1962 are as follows: There was a shop belonging to the Municipal Board and the Municipal Board auctioned its occupation. The defendant was the highest bidder and accordingly his bid was accepted and he was let into possession. The invitation to offer bids, contained the terms of auction; it contained a clause saying that the transaction will be deemed to be a licence and not a lease. It fixed the period of such licence and possession as ending on 31-3-1963. Learned counsel for the plaintiff has contended that the terms of the auction had made it clear that the transaction was going to create a licence and not a lease and hence the entry of the defendant into possession, on the basis of that auction, must be deemed to be on the basis of a licence. It is not possible to accept the contention because by merely saying that a transaction is a licence and not a lease the nature of the transaction cannot be changed. A lease cannot be converted into a licence merely by calling it a licence. It will have to be determined whether in the circumstances of the present case the possession of the defendant was that of a licensee or a lessee.
(3.) THERE is no dispute that the defendant was put in exclusive possession of the property. One of the ingredients of ownership is possession. If possession is transferred an interest in the property of the owner can, prima facie, be deemed to be transferred. Hence, the transfer of exclusive possession by an owner must be deemed to be indicative of the intention of the parties that they wanted the transaction to be a lease and not a licence. The question was considered by the Supreme Court in the case of Associated Hotels of India Ltd. v. R.N. Kapoor, (AIR 1959 SC 1262). It was pointed out that 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 licence. It was also pointed out that if a party gets exclusive possession of the property, prima facie, he is considered to be tenant. In that case it was held that as there was a transfer of the right to enjoy the rooms it had created a tenancy and not a licence. The Supreme Court emphasized that it is not the form of a document but the substance of it that was material. Again, in the case of M.N. Clubwala v. Fida Husain, (AIR 1965 SC 610) the Supreme Court emphasized the importance of exclusive possession as a factor for determining whether the transaction had created a lease or a licence subsequently, again, in the case of Qudrat Ullah v. Municipal Board, Bareilly, (AIR 1974 SC 396) the same proposition was reiterated. It was observed as under: "To put it pithily, if an interest in immovable property, entitling the transferee to enjoyment is created, it is a lease, if permission to use land without right to exclusive possession is alone granted, a licence is the legal result." In the present case as there is no dispute that exclusive possession was transferred to the defendant, the transaction must, prima facie, be held to be creating a lease and not a licence.;