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SUPREME COURT OF INDIA
A.N. RAY AND D.G. PALEKAR, JJ.
The State of U.P., Appellant
Versus
Zahoor Ahmad and another, Respondents.
Civil Appeal No. 1718 of 1967, D/-8-8-1973.
Transfer of Property Act, 1882 - Section 106 and 116 - Crown Grants Act - Government Grants Act, 1895 - Section 2 and 3 - Possession of Leased Property - Determination of Lease - Rent - Respondent remained in possession of leased properly after determination of lease - Appellant allowed respondent to be in occupation for three years - Respondent did not agree to give any undertaking after as in year to agree to abide by decision of Government - Appellant was on one hand anxious to charge as high rent as possible and respondent on other was willing to pay reasonable rent - Forest Officer of appellant wrote to respondent for discussion regarding rent for year - There is no evidence - Whether there was any such discussion – Held, In present case High Court correctly found on facts that respondent after determination of leave held over - Even if Government Grants Act applied Section 116 of Transfer of Property Act was not rendered inapplicable - Effect of Section 2 of Government Grants Act is that in construction of an instrument governed by Government Grants Act court shall construe such grant irrespective of provisions of Transfer of Property Act - It does not mean that all provisions of Transfer of Property Act are inapplicable - Meaning of Sections and. 3 of Governments Grants Act is that scope of that Act is not limited to affecting provisions of Transfer of Property Act only - Government has unfettered discretion to impose any conditions, limitations, or restrictions in its grants, and right privileges and obligations of grantee would be regulated according to terms of grant, notwithstanding any provisions of any statutory or common law - Appeal dismissed.
The distinction between a lease and a license primarily hinges on the nature of the right conferred and the legal implications of each.
A lease grants a possessory interest in the property, conferring certain rights to the lessee, such as exclusive possession for a fixed term, and is generally governed by the Transfer of Property Act. It creates a proprietary interest that can be transferred, assigned, or inherited, and typically involves a consideration, such as rent. A lease is thus a more permanent and legally recognized interest in the property, with clear terms and conditions that define the rights and obligations of both parties (!) .
In contrast, a license merely confers permission to use the property without creating any interest or estate therein. It does not grant exclusive possession but rather a personal right that is revocable at the will of the licensor. Licenses are generally governed by contractual principles and can be terminated at any time, subject to the terms of the license agreement. They do not transfer any interest in the property and cannot be assigned or inherited (!) .
Regarding allotments, these are often made by the State or public authorities under conditional terms. Such allotments may be subject to specific conditions, including restrictions on use, duration, or purpose. Moreover, the State typically retains the right to resume or cancel the allotment for public purposes or under regulations applicable to land revenue or other statutory provisions. These conditions and the State's reservation of the right to resume are often explicitly stipulated in the grant or allotment terms, emphasizing that such allotments are not absolute interests but conditional grants that can be revoked or resumed as per the statutory or regulatory framework (!) .
In summary, the key differences are that a lease creates a proprietary interest with certain legal protections and transferability, whereas a license is a personal permission that is revocable and does not confer any interest. Allotments made by the State are often conditional, with the right of resumption reserved for public purposes, aligning with the principles of conditional grants and land revenue regulations.
Judgment
RAY, C. J.:- This is an appeal by special leave from the judgment dated 23 October, 1964 of the Allahabad High Court.
2. The High Court reversed the decree for Rs. 11,000|- and passed a decree for a sum of Rs. 3,000/- with proportionate costs in favour of the appellant State.
3. The appellant is the proprietor of the reserved forest in Uttar Pradesh. The respondent took lease from the appellant of a plot of land at Chandan Chowki, Sonaripur Range in the North Kheri Forest Division at an annual rent of Rs. 1,000/-.
4. The High Court found these facts. The appellant had granted a lease to the respondent for one year from 18 March, 1947 at an annual rent of Rs. 100/-. The lease was renewed the following year on 10 June, 1948 with effect from 18 March, 1948 for one year. The lease was renewed again in 1949 for one year. The lease expired on 18 March, 1950. After the termination of the lease in March, 1949 the respondent continued to be in possession of the land and agreed to abide by the terms to be fixed by the appellant. Under the terms fixed by the appellant the respondent was required to pay Rs. 1,000/as annual rent for the occupation of the land till 15 July, 1950.
5. The respondent remained in possession of the leased properly after the determination of the lease on 15 July, 1950. The appellant allowed the respondent to be in occupation for three years beyond 15 July, 1950. The respondent did not agree to give any undertaking after 15 July, 1950 as in the year 1949 to agree to abide by the decision of the Government. The appellant was on the one hand anxious to charge as high rent as possible and the respondent on the other was willing to pay reasonable rent On 27 August, 1951 the Forest Officer of the appellant wrote to the respondent for discussion regarding the rent for the year 1950-51. There is no evidence as to whether there was any such discussion. There is however a letter of the appellant dated 4 December, 1951 to the respondent where the respondent was asked to pay Rs. 3000/for the year 1950-51 and if the respondent did not agree to pay the amount the rent would be reduced to Rupees 1800/- but the mill would not be allowed to have the lease in future in any circumstance. The respondent was allowed to continue in occupation of the land without any agreement as to the amount of rent payable for the year 1950-51. On 29 October, 1952 the Conservator of Forests on part of the appellant sent a notice to the respondent that the appellant offered to allow the respondent to run the mill beyond 15 July, 1950 for three years provided the respondent paid Rs. 3000/per annum and for one year only in case the respondent was prepared to pay Rs. 1800/- with the further condition that the lease would not be renewed. The notice further stated that since the respondent had not executed any lease incorporating the terms the respondent was a mere licensee The respondent was asked to remove the plant within one month of the date of receipt of the notice and to pay Rupees 6000/- as damages for use and occupation. If the respondent did not do so the appellant gave notice of filing a suit for recovery of damages at the rate of Rs. 5000/- per annum for future use and occupation.
6. On the facts found by the High Court, the High Court concluded that the respondent continued in occupation with the consent of the appellant without any agreement as to the amount of rent or without any undertaking that the respondent would pay the rent fixed by the appellant. The appellant, therefore, after the determination of the lease on 15 July, 1950 assented to the respondent continuing in possession. -The lease was for industrial purposes. Under the terms of Section 106 of the Transfer of Property Act such lease is from year to year. Therefore, there being no agreement to the contrary the continuance by the respondent in possession of the leased premises amounted to renewal of the lease from 16 July, 1950 as a lease from year to year. It would be a lease
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