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High Court Of Delhi
DIDI MODES PRIVATE LIMITED - Appellant
Versus
HIND TRADING MANUFACTURINGCOMPANY - Respondent
Decided On : 03/06/1996
LEASE VS. LICENSE - Exclusive possession of premises - Intention of parties - Substance over form - Relevant factors - Interpretation of agreement.
Fact of the Case:
Plaintiff, a partnership firm, leased a plot from the President of India and constructed a building on it. Defendant, a company, approached the plaintiff to grant a license in respect of a part of the building. A license deed was executed, allowing the defendant to use the basement, mezzanine floor, and a portion of the ground floor. The license fee was Rs. 500 per day, subject to a minimum of Rs. 3,500 per week. The defendant paid the license fee for a long time but later created a dispute regarding the electric connection. The plaintiff filed a suit for recovery of possession, license fee, and damages.
Finding of the Court:
The court held that the agreement between the parties created a lease and not a license. The court considered the following factors in reaching its decision: * The defendant had exclusive possession of the premises. * The license fee was paid on a monthly basis, not a daily basis. * The defendant was responsible for carrying out repairs to the premises. * The parties had always considered the agreement to be a lease. * The plaintiff had always demanded rent, not a license fee, from the defendant.
Issues: 1. Whether the agreement between the parties created a lease or a license? 2. Whether the defendant was entitled to exclusive possession of the premises?
Ratio Decidendi: The court held that the substance of the agreement between the parties was to create a lease, not a license. The court considered the following factors in reaching its decision: * The defendant had exclusive possession of the premises. * The license fee was paid on a monthly basis, not a daily basis. * The defendant was responsible for carrying out repairs to the premises. * The parties had always considered the agreement to be a lease. * The plaintiff had always demanded rent, not a license fee, from the defendant.
Final Decision: The court dismissed the appeal and directed the defendant to vacate the premises forthwith.
( 1 ). This appeal is directes against the judgment and a decree dated 25th February, 1993 passed by the learned Single Judge in Suit No. 746181. "the plaintiff M/s Hind Trading and Manufacturing Company has filed a suit for recovery of the possession of the premises in ques- tion and for the recovery of licence fee and damages. In the plaint, the case set up by the plaintiff is that the plaintiff firm is a Joint Hindu. Family partnership firm registered under the Indian partnership Act. The appellant company was the defendant in the suit, attorned to the partnership firm by paying licence fee. The plaintiff firm had taken a plot B-243, Phase 1. New Industrial Area, New Delhi from the President of India on a perpetual lease under the deed dated 18-6-1973 and as such the plaintiff firm is a perpetual lessee of the said plot. After taking the said plot on lease the plaintiff firm constructed the building to run the industry for the purpose of sanitary fittings and castings. The plaintiff is the owner of the building constructed on the plot.
( 2 ) DEFENDANT No. 2 requested the partners of the plaintiff firm to grant a licence in its favour in respect of the part of the building constructed. on this plot. The firm acceded to the request and granted licence in favour of defendant No. 2 who acted as the Director of defedant No. I at that time. A regular deed of licence was executed on 25th June, 1975 by the licensee and licensor.
( 3 ) ACCORDING to the terms of licence deed, the licensor allowed the licensee to use the basement, mezzanine floor and, portion of the ground floor of-the building B-243, Phase I, New Okhia Industrial Estate, New Delhi. The other terms and conditions mentioned in the licence deed were that the licence fee was Rs. 500 per day which included the electricity charges for one day subject to the minimum of Rs. 3,500 per week commencing from the 25th June, 1975. The licence fee was payable in advance everyday and, in case the licensee failed to pay in advance the licence fee, the licensor was entitled to terminate the licence without any further notice. It was provided in the licence deed that the licence had no right, title or interest to possess the said portion except to use the same as the licensee. Defendant No. 2 continued to pay licence fee at the rate of Rs. 500 per day for a long time but during the year 1978, he created a dispute regarding the electric connection which was provided in the building. Because the defendant wanted a separate electric connection in the building, a separate, electric connection was taken in the building and out of the amount of licence fee, the charges of electricity were deducted, the amount for a period of 30 days. the defendant started complaining that there was electric disconnection with effect from 19-5-1978 and he wanted to get a separate electric connection in the building.
( 4 ) THE plaintiff filed a suit in the Court of Senior Sub-Judge against the defendant for a permanent injunction restraining the defendant from installing a new electric meter in the building. The suit was dismissed for non prosecution. The defendant also filed an application under Section 45 of the Delhi Rent Control Act, before the Rent Controller for restoration of the electric supply. The defendant claimed tenancy rights over the suit property. The Rent Controller passed the interim order, restoring the electric connection to the licenses after holding that a prima facie relationship of a landlord and tenant has been established. The said observation was made by the Rent Controller while deciding the interim application. It may be relevant to mention that no Court has finally adjudicated on the issue relating to the relationship of the parties.
( 5 ) THE case-of the plaintiff is clear that the intention of the parties was only to create licence and not a lease. There was no transfer of interest or title in favour of the defendant and in fact, the plaintiff was and is p
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