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2000 Supreme(Del) 143

High Court Of Delhi
MEGH RAJ - Appellant
Versus
D.C.M.LIMITED - Respondent
Regular Second Appeal 72 of 1999
Decided On : 02/09/2000

Advocates Appeared:
SANJIV CHANDRA, VINAY SABHARWAL

The main legal point established in the judgment is that the nature of an agreement should be determined by the substance of the document and the intention of the parties, rather than the label used. The court emphasized the importance of analyzing the terms of the agreement and the surrounding circumstances to distinguish between a lease and a license.

Headnote:

lessee - Interpretation of Agreement - Delhi Rent control Act - Section 50, Transfer of Property Act - Section 105, Indian Easement Act - Section 52 - The court discussed the interpretation and construction of the agreement between the appellant/defendant and the respondent/plaintiff and marked Ex. PW2/1. The court also referred to the relevant sections of the Delhi Rent control Act, Transfer of Property Act, and Indian Easement Act to determine whether the appellant is a lessee or a licensee.

Fact of the Case:

The appellant/defendant took a shop from the plaintiff as a licensee for selling milk and milk products. The plaintiff revoked the license and filed a suit for possession and recovery of fees and damages. The appellant claimed to be a lessee and tenant, while the plaintiff claimed the appellant was a licensee. The trial court granted a decree for possession and damages in favor of the plaintiff, which was affirmed by the appellate court. The appellant appealed to the present court.

Finding of the Court:

The court found that the agreement between the parties indicated the creation of a license and not a lease. The court analyzed the relevant clauses of the agreement and the surrounding circumstances to determine the nature of the agreement. The court referred to legal provisions and previous court decisions to support its finding.

Issues: The main issue was whether the agreement was one of lease or license. The court also considered the revocability of the license and the intention of the parties in determining the nature of the agreement.

Ratio Decidendi: The court held that the nature of the agreement should be determined by the substance of the document and the intention of the parties. The court referred to legal provisions and previous court decisions to distinguish between a lease and a license.

Final Decision: The court dismissed the appeal, affirming the lower courts' findings that the appellant was a licensee and not a lessee. The court held that the agreement created a license and not a lease, and the appellant was not entitled to possession or damages.

DR. M. K. SHARMA. J.

( 1 ) THE main issue that falls for consideration in this appeal is whether the appellantis a lessee or a licensee which is to be arrived at on the basis of the interpretationand construction of the agreement between the appellant/defendant and therespondent/plaintiff and marked Ex. PW2/1 and on the basis of surroundingcircumstances. The trial court held that the appellant is a licensee which was affirmedby the appellate court as against which the present appeal has been preferred.

( 2 ) THE respondent/plaintiff is the owner of shop No. 5, Line No. C, Gaushala marg,kishan Ganj, Delhi. The appellant/defendant took the aforesaid shop from the plaintiffas a licensee vide license deed dated 11. 6. 1980 at the rate of Rs. 50. 00per month forthe purpose of selling milk and milk products for the benefit of workers and theirfamilies residing in the DCM colony. The said license was for 2 years and wasrevokable even prior to that without assigning any reason. The said license wasrevoked by the respondent/plaintiff by a notice dated 12. 8. 1981. As the appellantdefendant failed to deliver possession of the said shop even after revocation of thelicense a suit was instituted in the court of Subordinate Judge, Delhi seeking for adecree for possession and for recovery of Rs. 100. 00 as license fee and Rs. 500. 00asdamages. The appellant filed a written statement raising a preliminary objection thatthe plaintiff was not the owner of the property in question. It was also alleged that theappellant was not a licensee but is a lessee and a tenant there being relationship oflandlord and tenant. On the pleadings of the parties six issues were framed in the suit. During the trial the parties led their evidence both oral and documentary and onclosure of the same arguments of the counsel appearing for the parties were heardby the Subordinate Judge and by his judgment and decree dated 19. 5. 1989 adecree for possession was granted by the Subordinate Judge in favour of therespondent alongwith a decree for payment of Rs. 600. 00 with costs and also forpayment of damages Rs. 250. 00per month. Being aggrieved by the said judgment anappeal was preferred before the Additional District Judge, who byjudgment dated5. 6. 1999 dismissed the appeal. Being aggrieved by the same the present appealhas been preferred in this court by the appellant, on which I have heard the learnedcounsel appearing for the parties.

( 3 ) MR. Sabharwal appearing for the appellant submitted that the agreement betweenthe parties which is proved as Ex. PW2/1 ex facie indicates that the parties intendedto create a tenancy and therefore, the civil court would have no jurisdiction to try thesuit for possession as its jurisdiction would be barred by Section 50 of Delhi Rentcontrol Act. He also submitted that on a proper interpretation and construction of thesaid document as also the attending circumstances it is proved and established thatthe parties intended to creat a tenancy and not a license and therefore, the conclusionarrived at by the courts below are illegal and void. In support of his contention thelearned counsel appearing for the appellant relied upon the decisions of the Supremecourt in B. M. Lall and others Vs. M/s. Dunlop Rubber Company (India) Limitedand another, reported in AIR 1968 SC 175; Smt. Rajbit Kaur and Another Vs. M/s. Chokesiri and Co. reported JT 1988 (3) SC 593; M/s. Permanand Gulabchand andco. Vs. Mooligi Visanji, reported in AIR 1990 Ker 190 and M/s. Quality Cutpieces and etc. Vs. M/s. M. Laxmi and Co. , reported in AIR 1986 Bom 359.

( 4 ) LEARNED counsel appearing for the respondent however, submitted that on aproper and true interpretation of the aforesaid document it is proved and establishedthat what was intended to be created was a mere license and not a lease andtherefore, the conclusions arrived at by both the courts below are legal and justified.

( 5 ) THE question, therefore, to be decided in the present appeal is whether theagreemen













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