The main legal point established in the judgment is the determination of whether an agreement creates a lease or licence, considering the intention of the parties, the nature of exclusive possession, and the interpretation of relevant legal provisions.

1. A time-worn question - whether a document is a lease or a licence - arises in this second appeal also. The courts below have concurred to construe Ext. Al dated 7-9-1959 as a licence. In so doing they have been considerably if not entirely, influenced by the decision of this Court reported in Velayudhan Kesava Panicker v. Ibrahim Ismail Sait,1963 (1) KLR 453. The courts below could not be found fault with in adopting such a course, when a binding decision interpreting a document with essentially similar provisions had been rendered by this Court. The correctness of the decision was doubted by one of us (Balakrishna Menon J.), and that led to the case being placed before a Bench of this Court.

2. The document Ext. Al is termed as a 'Vadaka Cheettu', and relates to 1200 Sq. ft. The rent stipulated is Rs. 20 per month and the period is one year. There are provisions in the document which enable forfeiture of the arrangement in the event of consecutive defaults in the payment of rent for 3 months. There is a provision enabling the grantee to put up temporary sheds at his expense and remove the shed at the time of the surrender of the building. The grantee agreed not to put up a residential building in the plot or to store easily inflammable materials. Violation of the provisions of the deed would entitle the owner of the property to evict the the grantee from the property. The grantee also has the right to surrender the building at any time and to have the accounts settled. Property taxes, licence fees and other levies imposed by the municipality in respect of the sheds put up or the materials stored therein have to be borne by the grantee.

3. The courts below have not chosen to analyse the provisions of the document and to independently apply the legal principles; for, as noted earlier, they felt bound by the decision of this Court in 1963(1) KLR 453. The decision has, no doubt, referred to the leading decision in Associated Hotels of India Ltd. v. R.N. Kapoor, AIR 1959 SC 1262. Two important decisions of the Supreme Court, rendered subsequently are to be noted in this connection namely Qudrat Ullah v. Bareilly Municipality, AIR 1974 SC 396 and Revenue Board v. A.M. Ansari, AIR 1976 SC 1813. The tests as formulated by the Supreme Court itself are:

1. PRINCIPLES FOR DETERMINING WHETHER AGREEMENT CREATES LEASE OR LICENCE. In determining whether an agreement creates between the parties the relationship of landlord and tenant or merely that of licenser or licensee the decisive consideration is the intention of the parties. The parties to an agreement cannot, however, turn a lease into a licence merely by stating that the document is to be deemed a licence or describing it as such; the relationship of the parties is determined by law on a consideration of all relevant provisions of the agreement; nor will the employment of words appropriate to a lease prevent the agreement from conferring a licence only if from the whole document it appears that it was intended merely to confer a licence. In the absence of any formal document the intention of the parties must be inferred from the circumstances and the conduct of the parties.

2. NATURE OF GRANT OF EXCLUSIVE POSSESSION. The fact that the agreement grants a right of exclusive possession is not in itself conclusive evidence of the existence of a tenancy, but it is a consideration of the first importance.

In deciding whether a grantee is entitled to exclusive possession regard must be had to the substance of the agreement. To give exclusive possession there need not be express words to that effect; it is sufficient if the nature of the acts to be done by the grantee requires that he should have exclusive possession.

The grant of an exclusive right to a benefit can, however, be inferred only from language which is clear and explicit. If an exclusive right of possession is subject to certain reservations or to a restriction of the purposes for which the premises may be used, the res