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Judges : PARIPOORNAN,G.VISWANATHA IYER
AYURVEDIC OUSHADA NIRMANA VYAVASAYA CO.OP.LTD. - Appellant
Versus
ABRAHAM - Respondent
Case No : A.S. No. 411 of 1986
Decided On : 03/17/1987
Advocates Appeared :
M. Krishnan Nair; N.A. Augustine; For Appellant
licence - landlord and tenant relationship - Kerala Buildings (Lease and Rent Control) Act - Ext. A2 - Saheeda v. Hemalatha - Kalyani Amma v. Kunhambu Nair - Errington v. Errington - Abbeyfield (Harpender) Society Ltd. v. Woods - S.43 of the Kerala Court Fees and Suits Valuation Act (X of 1960)
Fact of the Case:
The first defendant appealed against a decree for removal of goods and machinery from a building and shed, claiming the transaction was a lease under the Kerala Buildings (Lease and Rent Control) Act, while the lower court found it to be a licence and decreed the suit.
Finding of the Court:
The court analyzed the terms of the agreement and previous case law to determine the nature of the transaction, ultimately finding it to be a licence and dismissing the appeal.
Issues: The main issue was whether the transaction was a lease or a licence, as it determined the legal rights and remedies available to the parties.
Ratio Decidendi: The court emphasized that the intention of the parties, as evidenced by the terms of the agreement, is crucial in determining the nature of the transaction. It also highlighted the distinction between a lease and a licence, focusing on the limited right of user and possession.
Final Decision: The court dismissed the appeal, affirming the lower court's finding that the transaction was a licence, not a lease, and therefore the decree for removal of goods and machinery was valid.
Certainly. Based on the provided legal document, the key points are as follows:
The primary legal issue in this case was whether the transaction evidenced by the agreement was a lease or a licence. The court emphasized that the intention of the parties, as reflected in the terms of the agreement, is the decisive factor in determining the nature of the transaction (!) (!) (!) (!) (!) .
The agreement was explicitly styled as a licence, with the use of terms such as "licence fee" and "permitted to use," indicating a relationship of licensor and licensee rather than landlord and tenant (!) (!) (!) .
The agreement clearly stated that all ownership and possessory rights remained with the plaintiff, and the defendant had only a limited right of user for specific purposes, such as manufacturing Ayurvedic medicines. The defendant was permitted to remove installed equipment at the expiry of the licence period, further supporting the nature of a licence rather than a lease (!) .
The terms of the agreement included provisions allowing for termination upon breach without the need for notice, and the agreement explicitly stated that it did not create any tenancy relationship (!) (!) .
The court considered the actual substance of the transaction and the intentions of the parties, rather than merely the description or labels used in the agreement. The consistent use of language indicating permission and limited rights pointed towards a licence relationship (!) (!) .
Although the building was found to be in the exclusive possession of the defendant, possession alone is not conclusive of a lease. The court clarified that possession in a licence can be exclusive without creating a tenancy, and the overall agreement's terms are more significant in determining the nature of the relationship (!) (!) .
The court concluded that the transaction was only a licence, and therefore, the decree for removal of goods and machinery was valid. The fact that the plaintiff filed the suit under a provision typically used for landlord-tenant disputes does not alter the true nature of the agreement (!) (!) .
The court dismissed the appeal, affirming the lower court's finding that the relationship was that of licensor and licensee, and not landlord and tenant, and upheld the validity of the decree for removal of goods and machinery (!) (!) .
In summary, the court's key reasoning centered on the explicit terms of the agreement, the language used, and the intentions of the parties, all of which indicated that the transaction was a licence rather than a lease.
Viswanatha Iyer, J.-
The first defendant has filed this appeal against a decree for removal of the goods, equipments and machinery belonging to it from the plaint schedule building and shed, and to give vacant possession of the same to the plaintiff. The question involved in this appeal is whether the transaction evidenced by Ext. A2 dated November 18,1975 is a licence, or whether it creates the relationship of landlord and tenant between the parties.
2. The building and the shed belong so the plaintiff. The first defendant had been permitted to use the same for its purposes during the period 1-7-1973 to 31-7-1973 on a licence fee of Rs 300/- per month. The parties agreed that after 1-8-1975, the first defendant may use the permises on an enhanced licence fee of Rs 400/-, and set forth the terms and conditions of the user in the agreement Ext. A2.
3. By and under the agreement the plaintiff permitted the first defendant to use the building and the shed as a licensee for a period of one year from 1-8-1975 to 31-7-1976 on a licence fee of Rs. 400/-, If the first defendant required the user of the building and the shed thereafter, it was agreed that they may do so for a further period of two years on licence fee to be fixed afresh. If however, the licence fee was not
so fixed, and agreement entered into between the parties, the licence was to stand terminated on 31-7-1976, on which date the first defendant was to vacate and surrender the premises to the plaintiff. All the indicia of ownership were to vest in the plaintiff, but the first defendant was permitted to use the premises for purposes of manufacture of Ayurvedic medicine. Plaintiff should not obstruct such user in any manner whatsoever. The first defendant was also permitted to instal a disintegrator and 15 H. P. motor in the shed, which they should remove without causing damage to the shed at the expiry of the period of the licence. Clause 4 of the agreement expressly stated that the first defendant had only a limited right of user of the premises for the manufacture of Ayurvedic medicines and that the ownership and possessory rights continued to vest in the plaintiff. The said clause is extracted below:
If there was any breach of the terms and conditions of the licence by the first defendant the plaintiff was entitled to evict the first defendant without notice and without waiting for the expiry period of tae permit of the licence.
3. The first defendant had filed a suit O. S. No. 303 of 1980 in the Munsiff's Court, Quilon for an injunction restraining the plaintiff from interfering with their business in the plaint schedule building. Tae said suit was transferred to the Sub Court and triad along with me suit, against the decree in which this appeal is filed.
4. The first defendant-appellant's contention was that the transaction Ext. A2 evidenced a lease and not a licence and that therefore, she plaintiff must seek his remedies under the Kerala Buildings (Lease and Rent Control) Act. The lower court found that the transaction was a licence and decreed the suit as prayed for.
5. The question that arise for consideration therefore is whether Ext. A2 evidences a lease or a licence. A perusal of the document Ext. A2 discloses the following salient features:
(a) The first defendant has been permitted to use the premises. Ext. A2 was executed for the purpose of reducing to writing the terms and conditions subject to which the first defendant was to use the premises. The term employed by the parties is:
(b) The document is styled as a licence agreement.
(c) The periodical payment is termed licence fee.
(d) The first defendant is allowed to use the premises only as a licensee
(e) All rights of ownership and possession vest only in the plaintiff. Exclusive possession is nowhere stated to be given to the first defendant. Clasue A of the document expressly states that the first defendant's right is limited to user of the premises for manufacture of Ayurvedic medicines and that all
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