The main legal point established is that the intention of the parties, as evidenced by the language of the agreement, is crucial in determining whether a transaction constitutes a lease or a licence. Additionally, the option regarding improvements on the property lies with the owner of the land, not the transferee.

Viswanatha Iyer, J

This appeal is filed by the defendant in O.S. No. 20 of 1981 on the file of the Subordinate Judge's Court of Tirur. The suit was one for recovery of possession of the property scheduled to the plaint with arrears of rent, after removing, at the defendant's expense, the structures and sawmill erected by the defendant on the property, and restoring the same to its previous condition; and if that were not permissible for any reason, to ascertain the value of the improvements made by the defendant and to direct surrender of possession to the plaintiff on depositing the a mount for payment to the defendant.

2. The plaintiff is the owner of the plaint schedule property. It was entrusted to the defendant on 1-12-1970 on a monthly rent of Rs. 100/-. The entrustment was for the purpose of the defendant's business of establishing and running a saw mill in the premises. The term of the lease was three years. At the end of the said period, the defendant was to vacate and surrender possession after removing the structures and saw mill at his expense or after being paid the value of the improvements as determined by mediators, without any demur or objection. If, however, the defendant continued in possession of the property after the term fixed, the continuance shall be on the same terms and conditions as before. The plaintiff was however, allowed to take the usufructs from the trees in the property. The terms of the agreement were reduced to writing as per rent deed Ext. A2 dated 19-5-71 executed by the defendant in favour of the plaintiff, and got registered. The defendant defaulted in payment of the rent subsequent to November. 1979. The plaintiff issued notice Ext. A3 through his lawyer terminating the tenancy with effect from 1st January 19s1 or with the expiry of such other date, as according to the defendant, was the expiry of the month of tenancy. The defendant sent reply Ext, A4 through lawyer in which he did not controvert that he was holding under a lease transaction. On the other hand, be admitted that be was in possession and had put up the saw mill by virtue of the entrustment to him under the lease deed. He contended that he had filed and levelled up the property and that was entitled to fixity of tenure. He also said that the arrears of rent was being sent by Money Order and that Ext. A3 notice was not sufficient to terminate the tenancy ("). in view of these contentions raised by the defendant and his refusal to vacate the plaintiff filed the suit for the reliefs mentioned herein earlier.

3. The defendant contested the suit. He filed a written statement in the first instance under date 19th May, 19s1 wherein he contended that he was a tenant in respect of the property with fixity of tenure as under Ss.6C and 7 of the Kerala Land Reforms Act. He also contended that be had filled and levelled up the property and put op two tiled sheds spending about Rs. 50,000/-where he was running a saw mill. He also contended that he had sent about Rs. s lakhs for the building and the machinery and that the plaintiff had no right to evict him from the property.

4. The original written statement was thus categoric and clear in the plea that the defendant was a tenant in respect of the property entitled to fixity of tenure.

5. Subsequently, and for the obvious reason that his plea of tenancy and fixity of tenure under the Land Reforms Act was untenable, the defendant filed additional written statement pleading that the transaction in question was a licence and that, acting upon the licence, he had executed works of permanent character and incurred expenses in their execution rendering the licence irrevocable.

6. The lower court has inter alia found that the transaction Ext. A2 between the parties was a lease, and not a licence, and that the defendant was liable to remove all the structures erected by him in the property at his own cost and to surrender vacant possession to the plaintiff. The defendant was granted one