Determination of lease vs licence hinges on the parties' intent and statutory interpretations concerning commercial properties, affirming precedent.

1 This is an appeal by the first defendant. Suit was one for mandatory injunction and for damages. The court below has given elaborately with all details the facts of the case and the rival contentions of the parties. Nevertheless, for the purpose of disposing this appeal, I shall give a small resume of the facts.

2The plaint property, is an extent of 90 cents of land and the sheds thereon, except the temporary sheds belonged to Kanattuputhenveettil George alias Vakkachan, who died on 23-10-1971. Plaintiffs are the legal representatives of Vakkachan. There is no dispute in this case that plaintiffs have got title to the suit property. 1st defendant T. K. Jacob executed a document in favour of Vakkachan, which according to the plaintiffs, is a document of licence and according to the first defendant, is a document, evidencing a commercial lease. Being a commercial lease for 90 cents of property wherein the first defendant has constructed buildings before the crucial date, viz. 20-5-1967, it was contended that though the first defendant cannot claim fixity of tenure, plaintiffs are not entitled to recover the property and so they are not entitled to any relief in the suit.

3From the facts I have narrated above, it is clear that the chief question that has to be considered in the case is whether the document evidences a lease or licence. In cases when the court is called upon to decide or to construe a document to determine the legal character and incidence of a disputed document as to whether it is a lease or licence, courts are naturally resort to rely on and depend upon the precedents on the subject. There are several decisions of the Supreme Court and other High Courts including this Court dealing with the salient features which have to be looked into for the purpose of deciding the question whether the document evidences a lease or licence. The court below accepted the finding of the land Tribunal which, after considering certain precedents on the point raised construed the document as one evidencing a licence. This finding is seriously challenged by the appellant. Certainly I am also bound to consider the precedents of the Supreme Court and of this Court, keeping in mind the chief features to be looked into for a correct decision on the question whether the document evidences a lease or licence.

4The recent decision of the Supreme Court on the subject is reported in AIR 1988 SC 1845 (Rajbir Kaur v. M/s. Chokosiri and Co.). Venkatachaliah, J. speaking for the Bench consisting of Chief Justice and himself has articulately and lucidly considered the question referring to the fundamental principles, in the decisions of the Supreme Court. The Supreme Court said (at page 1850 of AIR 1988 SC):
"Exclusive possession itself is not decisive in favour of a lease and against a mere licence, for, even the grant of exclusive possession might turn out to be only a licence and not a lease where the grantor himself has no power to grant the lease. In the last analysis the question whether a transaction is a lease or a licence "turns on the operative intention of the parties" and that there is no single, simple litmus test to distinguish one from the other."

5The property in question is an extent of 90 cents. It is within the Municipal Corporation limits. The document shows that in the property, there were trees and the executant reserved his rights to take the yield of the trees. The document is Ext. B1. It is dt. 31-3-1967. As per the document, defendant obtained certain rights stated in the document and for that, he has agreed to pay a remuneration (rent) of Rs. 350/- per mensum for the first five years and thereafter, for the next five years Rs. 375/-. Thus the period fixed in Ext. B1 is ten years. Of course, there is a clause that after ten years, if the first defendant wants, the period can be extended on a rent to be fixed on mutual agreement of the parties. In the document, it is stated that the property is taken for a commercial purpose