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SUPREME COURT OF INDIA
J.C.Shah, CJI., A.N.Grover : K.S.Hegde, JJ.
Sohan Lal Naraindas
Versus
Laxmidas Raghunath Gadit
Case No. : 2443 of 1966
Date of Decision : 1/8/71
Advocates Appeared: Bhartari P.C. : Dadachanji J.B. : Malik Ramesh : Nariman F.S. : Patel D.V. : Rai Ganpat
Constitution of India, 1950 – Article 133 – Bombay Rents, Hotel and Lodging House Rates Contract Act, 1947 – Ejection – Neglect – Agreement of licence – Termination – Plaintiff-commenced an action in City Civil court, Bombay, for a decree in ejectment against Laxmidas Raghunath alleging that defendant was occupying a loft 19 x 15 on the upper floor of a building at Pragraj Galli, Mulji Jetha Market, Bombay, under an agreemnt of licence, and that licence had been duly terminated and withdrawn, but defendant had failed and neglected to vacate loft notwithstanding demand – Defendant contended that lie was a tenant of loft, that tenancy had not been duly terminated as required by law, that he was entitled to protection of Bombay Rents, Hotel and Lodging House Rates Contract Act, 1947 and that court had no jurisdiction to try suit. – Held, Intention of parlies to an instrument must be gathered from terms of agreement examined in light of the surrounding circumstances – Description given by parties may be evidence of intention but is not decisive. – Mere use of words appropriate to creation of a lease will not preclude agreement operating as a licence. – A recital that the agreement does not create a tenancy is also not decisive. – Crucial test in each case is whether instrument is intended to create or not to create an interest in property subject-matter of agreement. – If it is in fact intended to create an interest in the property it is a lease. – If it does not, it is a licence. – In determining whether agreement creates a lease or a licence the test of exclusive possession, though not decisive, is of significance – Trial court retarded exclusive possession of premises given to defendant as conclusive of question whether loft was in occupation of defendant as a tenant. – Court observed that on a consideration of clauses of agreement it was unable to reach a conclusion whether agreement was intended to operate as a lease or as a licence but since exclusive possession was given it must be regarded a lease. – High court considered all covenants and attendant circumstances and reached conclusion that having regard to exclusive possession given to defendant it was intended to confer an interest in loft and on that account agreement operated as a lease and not as a licence. – Court have carefully considered the covenants in the light of the relevant surrounding circumstances. – Court is unable to disagree with view taken by High court that by terms of agreement an interest was created in loft in favour of defendant – Appeal Dismissed
J.C.Shah, C.J.I.
(1) SOHAN Lal Naraindas-hereinafter referrid to as the plaintiff-commenced an action in the City Civil court, Bombay, for a decree in ejectment against Laxmidas Raghunath-hereinafter called "the defendant-alleging that the defendant was occupying a loft 19 x 15 on the upper floor of a building at Pragraj Galli, Mulji Jetha Market, Bombay, under an agreemnt of licence, dated 3/11/1958 and that the licence had been duly terminated and withdrawn, but the defendant had failed and neglected to vacate the loft notwithstanding the demand. The defendant contended that lie was a tenant of the loft, that the tenancy had not been duly terminated as required by law, that he was entitled to the protection of the Bombay Rents, Hotel and Lodging House Rates Contract Act, 1947 and that the court had no jurisdiction to try the suit.
(2) THE Trial court dismissed the suit holding that the defendant was a tenant of the plaintiff and not his licensee. The decree was confirmed in appeal by the High court of Bombay. The High court held that on the terms of the agreement and in the light of the surrounding circumstances the relationship between the parties was that of landlord and tenant. With certificate granted by the High court the plaintiff has appealed to this court.
(3) THE certificate granted by the High court is defective. The plaintiff applied for certificate under Article 133 (1) (a) of the Constitution and in the alternative under Article 133(1) (c) of the Constitution. The High court passed an order certifying the case under Article 133 (1) (c). A certificate granted by the High court must be supported by adequate reasons. It is obligatory upon the High court to set out the question of public or private importance which in their opinion fall to be determined in the proposed appeal. Since we are of the view that there is no merit in this appeal, we have not thought it fit to vacate the certificate.
(4) THE agreement, dated 3/11/1958, was recorded formally in writing and was duly executed. The plaintiff was the lessee of a shop No. 11 in Pragraj Galli, Mulji Jetha Market and the loft of that shop was the subject-matter of that agreement. The period of the agreement was one year. It was stated in the agreement that the loft "was given on lease and licence basis for use and occupation" of the defendant on the terms and conditioned mentions therein. The relevant conditions were:
"1. The owner (the plaintiff) has agreed to grant the lease and licence for use and occupation of the said loft (Medo) of the said shop for a period of one year commencing from Aso Vad 13 S. Y. 2014 to Aso Vad 12 S. Y. 2015.
2. The licensee (the defendant) shall pay to the owner monthly compensation or licence fee at the rate of Rs. 250.00 per month and the licensee has paid Rs. 3,000.00 (rupees three thousand) only to the owner as compensation or licence fee for the said period in advance on or before the execution of this agreement.
3. The licensee shall have no right as a tenant or sub-tenant in respect of the said loft (Medo) of the said shop. The licensee shall not sub-let allow to use, transfer or assign in any way the said loft (Medo) of the shop to any one else.
4. The owner shall bear and pay the rent of the said shop.
5. The licensee shall use and occupy the said loft (Medo) of the said shop as a cloth merchants only and shall not be entitled to carry on any other business.
6. The parties hereto shall give one months clear notice of their intention to terminate this agreement in writing.
7. X X X
8. If the licensee commits breach of any of the terms of this agreement in that case the owner shall be entitled to terminate and revoke the lease and licence hereby granted without giving notice to the licensee."
(5) THE defendant was put in exclusive possession of the loft. The plaintiff did not reserve possession of any part of the loft or a right of entry therein. The loft had a
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