Mohd. Shamim, J.:— These are two petitions bearing Nos. 133/96 and 386/9. They are being taken up together as the parties in the two petitions are the same and the properties which have been subjected to the property tax are also the same. Furthermore, common questions of law and facts are likely to arise while disposing of the said petitions.

2. The petitioner through the present writ petitions have sought and injunction from this Court restraining the respondent from giving any effect to the demand bill Nos. 3 and 6 both dated July 14, 1995 raised on account of the property tax pertaining to the properties bearing Nos. WZ-5 and WZ-11, Shakur Basti, Delhi respectively. They further want through the present writ petitions quashment of the assessment order pertaining to the year 1995-96 with a direction to the respondent not to raise any demand account of the property tax in respect of the abovesaid properties.

3. Learned counsel for the parties made a statement before the Court on August 27, 1996 that they confine themselves of the point as to whether the petitioner are liable to pay property tax in view of the provisions of Section 119 of the DMC Act and Art. 285 of the Constitution of India? They further stated vide their statements that they are not pressing any other point for determination by this Court in the present two writ petitions. In the abovestated circumstances this Court need not dewell upon any other point except the issue adverted to above raised by them during the course of their lengthy arguments.

4. Learned counsel for the petitioner Mr. Vikramjit Sen has agrued with all the vehemence at his command that the petitioner are a Corporation. It deals in oil and petroleum products. It was permitted by Government of India, Ministry of Railways, to use a plot of land during the course of their business vide the licence agreements dated October 29, 1958 and March 20, 1962 (Annexure ‘A’). The underlying idea while permitting the use of the abovesaid plot of land through the afore-mentioned agreement was the expeditious decanting of the petroleum products from the railways wagons. Most of the land which is the subject-matter of the said licence agreements consists of siding on which the goods trains are parked. The licence fee as per the said agreements was Rs. 21,000 per annum. Thus the said land merely by the permission to use it does not become the land of the petitioner. It continues to remain the property tax under Art. 285 of the Constitution of India and Section 19 of the Delhi Municipal corporation Act (‘DMC Act’ for a short).

5. Learned counsel for the respondent Mrs. Madhu Tewatia. On the other hand, has urged that the petitioner are not a licensee under the said agreement adverted to above. In fact, they are a lessee and as such they are liable to pay property tax like any other tenant. Hence the case of the petitioner does not fall with in the domain of Art. 285 of the Constitution of India and Section 119 of the DMC Act.

6. It is abundantly clear from above that the bone of contention in between the parties is as to whether the petitioner are a ‘licensee’ within the meaning of Section 52 of the Indian Easement Act, 1882 or a ‘lessee’ as defined in Section 105 of the Transfer of Property Act?

7. Since we are concerned with the construction of Section 105 of the Transfer of Property Act and Section 52 of the Easement Act it would be in the fitness of things to examine the provisions of the said Sections before embarking upon a detailed. discussion of law and facts. Section 105 of the Transfer of Property Act is in the following words:

“A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.”

8. Section 52 of the Indian Easement Act deals with a license. It reads as under:

“Whether one person grants to another, or to a definite number of other persons, a right to do or continue to do, in or upon the immovable property of the grantor, some thing which would, in the absence of such right, be unlawful, and such right does not amount to an easement or an interest in the property, the right is called a license.”

9. A close scrutiny of Section 105 of the T.P Act reveals that

(i) It is transfer of an interest in an immovable property whereby the lessee becomes entitled to the enjoyment of such immovable property.

(ii) It carries alongwith it a right to the excusive possession thereof.

(iii) The abovesaid transfer is for a consideration.

(iv) It is either for a limited period or it may be in perpetuity.

(v) The existence of the said movable property is a condition precedent for the creation of a lease.

(a) A licence on the other hand, is simply a permission to do or continue to do something over the immovable property which in the absence of such a licenee would be a trespass.

(b) A licence is personal to the licensee who consequently has got no power to sub-let.

(c) Unlike a lease a licence comes to an end alongwith the death of the licensee.

(d) The licensee has no legal status in land.

10. The mere fact that in an agreement the parties have been referred to as ‘licensor’ and ‘licensee’ would not ipso facto turn the said document by virtue of the said references into a licence deed. The Court while interpreting the said document would look to the intention of the parties as to whether they wanted to create a lease or a licence. The Court in such a situation would tear the veil and would try to ascertain the intention of the parties while determining the nature of the said document. I am tempted here to cite para 6 from Halsbury's Laws of England, 4th Edn. Vol. 27(1)

In determining whether an agreement create between the parties the relationship of landlord and tenant or merely that of licensor and 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 parties' of relationship is determined by law on a consideration of all relevant provisions of the agreement; and an agreement labeled by the parties to it as a ‘licence’ will still be held to create a tenancy if the substance of the agreement conflicts with that label. Similarly, the use of operative words (‘let’, ‘lessor’ etc.) which are appropriate to a lease will not prevent the agreement from conferring only a licence if from the whole document it appears that it was intended merely to confer a licence. Primarily the court is concerned to see whether the parties to the agreement intend to create an arrangement personal in its nature or not, so that the assignability of the grantee's interest, the nature of the land and the grantor's capacity to grant a lease will all be relevant considerations in assessing what is the nature of the interest created by the transaction. In the absence of any formal document the parties' intention must be inferred from the circumstances and the parties' conduct.”

11. With the above background let us now examine the terms and conditions of the agreements dated October 29, 1958 and March 20, 1962 which were entered into in between the parties in order to ascertain the nature of the said documents (Annexure ‘A’). Admittedly the petitioner are in occupation of the above-said plot of land since the year 1958. They were permitted to raise the construction on the said plots of land given to them by Ministry of Railways vide agreement dated March 20, 1962 (Annexure ‘A’). They have raised an Administrative Block on the said land alongwith tanks for storing the petroleum. They have also built a boundary wall around the said installations and the Administrative Block. The petitioner are in exclusive possession over the said plots of land alongwith the constructions thereon without any let and hindrance from Government of India. They have been continuously carrying on their business from the said property since the year 1962 without any interference from any quarter, whatsoever. Thus admittedly as is amply clear from the above discussion one of the factors which would weigh with the Court in order to arrive at a correct conclusion as to whether a particular agreement is a lease or licence is the test of exclusive possession. Thus the fact that the petitioner are in exclusive possession over the said property is a pointer to the fact that it is a lease.

12. The above view was given went to by the Hon'ble Supreme Court as reported in Capt. B.V D'Souza v. Antonio Fausto Fernandes, AIR 1989 S.C 1816, (2) (para 5)…….” “Mr. Dholakia, learned counsel for the respondent, strenuously contended that the test of exclusive possession is an outdated one which should not now be taken into account for the purpose of deciding the nature of possession. Reliance was placed on the observations of Lord Denning MR in Shell-Mex and B.P Ltd. v. Manchester Garages Ltd. (1971) 1 All ER 841. (3) We do not agree that exclusive possession of a party is irrelevant as is suggested; but at the same time as has been observed in the earlier cases of this Court, referred to above, it is not conclusive. The other tests, namely, intention of the parties and whether the document creates any interest in the property or not, are important considerations. The observations in the English case, relied upon by the learned counsel for the respondent cannot be understood to suggest that the test of exclusive possession has been now rendered irrelevant and redundant as they are immediately followed by the statement:

“As I have said many times, exclusive possession is no longer decisive.”

The position stands further clarified by the following statement in the concurring judgment of Buckley, L.J:

“The only clause which points one way or the other, I think is cl. 19 in Sch. 1 which Lord Denning MR has already read, which clearly recognizes that not withstanding the bargain between the parties, the plaintiffs retained rights of possession and control over the property in question. That seems to me to be consistent only with the fact that this transaction was in truth a licence transaction and not a tenancy under which the defendants would obtain an exclusive right to possession of the property during the term of the tenancy, subject, to course, to any rights reserved by the plaintiffs.”

13. The parties by executing the said agreements created an interest in land in favour of the petitioner inasmuch as they were allowed to raise constructions thereon and to run their business therefrom since the year 1962 and they have been doing so without any obstruction from the Ministry of Railways. This is not the case of the petitioner that any sort of hindrance or obstruction was ever caused in the conduct of their business by the Ministry of Railways.

14. I am fortified in my above view by the observations of their Lordships of the Supreme Court as reported in Puran Singh Sahni v. Sundari Bhagwandas Kripalani, (1991) 2 SCC 180, (4) ….. “Sohan Lal Naraindas v. Laxmidas Raghunath Gadit† ., we reiterate that the intention of the parties to an agreement has to be gathered from the terms of the agreement consequent circumstances. The crucial test would be what the parties intended. If in fact it was intended to create an interest in the property, it would be lease, if it did not, it would be a licence. In detemining whether the agreement was a lease or licence, the test of exclusive possession, though of significance, is not decisive. Interest for this purpose means a right to have the advantage accruing from the premises or a right in the nature of property in the premises but less than title.

Para 6 of the licence agreement dated October 29, 1958 grants the power to the petitioner to sub-let mortgage, assign or transfer the privileges granted to them vide para 1 with the permission in writing of the Railway Administration. Admittedly a licensee does not have any power to transfer or sub-let a property to any person. Only a lessee/tenants has got this power. This is again a clear indication which shows that the intention of the parties was to create a lease and not a licence.

15. The above view was expressed by the Hon'ble Supreme Court while determining the question as to whether a particular document was a lease or licence? I am tempted here to cite a few lines from para 4 of the said judgment as reported in B.V D'Souza's case(supra) “……..By Clause 5 it was agreed that the appellant” shall not sub-let, under-let or part possession of the premises to any stranger nor shall he keep the premises vacant for more than three months without the consent of the licensor”, i.e the respondent. The question of executing a sub-lease or sub-letting can arise only by a tenant if a licensee inducts any person in the property as his tenant, it cannot be described as sub-letting. In Clause 15 it is stated that on the expiry of the period, the deed “shall be renewable thereafter at the will of the licensees”; and in the event of the licensee not desiring to renew, “shall give one month's notice in writing.” These terms are not consistent with the respondent's case of licence, and indicate that an interest in the property was created in favour of the appellant in pursuance of which he was put in possession with a right of renewal.”

16. Clause 5 of the agreement dated March 20, 1962 envisages that the licensee shall pay all rates, cesses and taxes leviable on the said land and on all works and buildings, situated thereon whether originally on the land or subsequently erected by them and whether payble by owner or occupier. Clause 6 of the agreement made the licence terminable by either party at any time by previous notice of three months in writing sent to the other party. The above terms and conditions again go a long way to show that the intention of the parties was to create a lease inasmuch as exclusive possession over the impugned property was transferred to the petitioner and they were made even to pay all rates, cess and taxes leviable on the said land and on the construction raised thereon irrespective of the fact that they were payableby the owner. It was observed by Lord Denning L.J in Cobb v. Lane, (1952) 1 All E.R 1199 (5) while called upon to determine as to whether a particular document was a lease or licence. “Did the circumstances and the conduct of the parties show that all that was intended was that the occupier should have a personal privilege with no interest in land?”

17. Learned counsel for the petitioner Mr. Sen has urged and wanted this Court to construe the impugned two documents as licence deeds and not lease deeds. According to the learned counsel if a particular document is to be construed then the intention of the parties must be gathered from the document itself. If the words used there in are clear, un-ambiguous and un-equivocal, as is the case in the instant case, then there is no reason whatsoever as to why the said document should be construed otherwise. It should be read as it is.

18. Learned counsel in support of his argument has led me through para 19 of the judgment reported in Municipal Corporation of Delhi v. M/s. Pradeep Oil Corporation, 1986 (II)M.C.C.127,(6) “…..I do not think that in case of a document executed by the President of India such a question should arise as the intention would be made clear by the president acting through his agent and the document can be taken to be what it is stated to be …..”

19. The contention of the learned counsel no doubt is an ingenious one but can be brushed aside within an anon without much difficulty in view of the legal position set out above. It is now a well −settled principle of law, as is fully evident from the authorities referred to above, that while determining the nature of a deed as to whether the same is lease or licence, the intention of the parties would play a vital role in coming to a right conclusion and the same would try to be gathered from the previous and subsequent conduct of the parties. The Court in such cases would lift the veil and would try to find out as to what was the intention behind the said terms and conditions and the words used in the particular document. It was observed in B.V.D' Souza's case (supra) “…….If the approach adopted by the courts below in interpreting the document is accepted, it shall defeat the object of the Rent Acts, by permitting the parties to camouflage and real nature of the transaction by resorting to skilful drafting.”

20. In view of the above I would beg to differ from the said view.

21. Learned counsel for the petitioner Mr. Sen has then contended that the facts of the present case and that of the case reported in Pradeep Oil Corporation's case (supra) are identical. Hence the ratio decidendi of the said case should be followed and it should be held in the facts and circumstances of the present case also that the impugned agreement executed in between the parties, adverted to above, was a licence. Hence the petitioner are not liable to be taxed.

22. I am sorry I am unable to agree with the contention of the learned counsel. I have enumerated above the facts and circumstances which have led me to hold that the impugned agreement was a lease deed. Hence I feel the petitioner are liable to pay tax under section 120(2) of the dmc act, which provides as under:

“If any land has been let for a term exceeding one year to a tenant and such tenant has built upon the land, the property taxes assessed in respect of that land and the building erected thereon shall be primarily leviable upon the said tenant whether the land and building are in the occupation of such tenant or sub-tenant.”

23. Admittedly two plots of land were given to the petitioner on lease vide the impugned agreements. The petitioner raised construction thereon vide agreement dated March 20, 1962. The petitioner have been in occupation of the said land and building for more than a year as a tenant. They have been running their. business therefrom. Hence they are liable to pay tax thereon in view of Section 120(2) of the DMC Act.

24. There is another aspect of the matter. It is wrong to contend that the terms and conditions of the agreement dated January 3, 1978 executed in between the Municipal Corporation of Delhi and M/s. Pradeep Oil and others (a copy where of has been filed) and the terms and conditions of the agreement in the present case are similar and identical. A close scrutiny of the two agreements i.e the one in the abovesaid case and in the present case reveals that M/s. Pradeep Oil and others were not required to pay tax on the land (vide para 14 of the said agreement). It was stipulated that the mill would pay all taxes in respect of the said petrol pump, stores, buildings, under the control of the licensee, whereas the petitioner herein (vide Annexure ‘A’) are required to pay all taxes on the land and buildings which may be levied thereon (vide para 5 of the lease agreement dated March 20, 1962). Thus as per the agreement dated January 3, 1978 M/s. Pradeep Oil were not required to pay taxes which may be levied on the land whereas this is not the case in the instant case. Hence it cannot be said by any strech of imagination that the terms and conditions of the two agreements i.e the agreement in Pradeep Oil Mills' case and the agreement in the present case are analogous and similar. Thus the petitioner cannot draw any inspiration from the judgment in the said case.

25. It has next been urged for and on behalf of the petitioner that admittedly the land in the instant case belongs to the Government of India, and the properties belonging to the Government of India are exempt from tax under Section 119 of the DMC Act and Act 285 of the Constitution of India. Thus in case it is held that the respondent are liable to pay tax then it would be tantamount to taxing the land belonging to the Government. Mrs. Madhu Tewatia, learned counsel for the respondent, has countervailed the said argument by urging that what is being taxed in the instant case is the interest in land which has passed on to the petitioner by virtue of the abovesaid lease agreement. According to the learned counsel Municipal Corporation is not levying any tax on the land belonging to the Government. Learned counsel in DMC Act. It lays down “ ‘land’ includes benefits to arise out of land, thing attached to the earth or permanently fastened to any thing attached to the earth and right created by law over any street”

26. She has then referred to the provisions of section 123 of the dmc act which envisages: “Property taxes due under this Act in respect of any land or building shall, subject to the prior payment of the land revenue, if any, due to the Government thereon, be a first charge—

(a) in the case of any land or building held immediately from the government, upon the interest in such land or building of the person liable for such taxes and upon the goods and other movable properties, if any, found within or upon such land or building and belonging to such person.

(b) ………………….”.

The learned counsel on the basis of the above has argued that when the respondent are levying tax it is not being levied on the land but on the interest which has passed on to the lessee. I find myself in perfect agreement with the learned counsel.

27. A close scrutiny of the definition the ‘land’, alluded to above shows that the land within the meaning of section 2(24)of the DMC Act does not mean a piece of land pure and simple. It is wider enough to embrace within its fold all the benefits arising out of the land and things attached and fastened to the earth. Admittedly in the instant case interest in land has been transferred to the petitioner inasmuch as they have been permitted to raise structures on the said land, in the from of oil storage tanks, administrative blocks. They are doing business from the said property and are earning profits therefrom. Thus what is being taxed is the interest in land and the arising there from. The above view is fully substantiated with the help of Section 123(a)which provides in unequivocal terms that in the case of any land or building which has been transferred from the government, the tax due would be recovered from the interest in such land or building of the person liable for such taxes and the goods and other movable properties found within or upon such land or building.

28. The above view was also reiterated by a single judge of this count in M/s. Vishal Builders Pvt. Ltd. v. Delhi Municipal Corporation and another, (Civil Writ No. 17 of 1977; (7) decided on August 3, 1977). I am tempted to reproduce here a few lines from the said judgment. “This definition shows that, when say, only a lease is granted to a person by the Union, i.e a person becomes a lessee of the Union Government, the property treated as Ownership right remains with the Union but a lesser interest i.e lease hold right is transferred to the transferee. That person is thereafter to pay property tax not on the value of the land but only the value of the leasehold right, the taxability on the Ownership right is exempt under section 119 of the Act and Art. 285 of the constitution. But the lesser right or subordinate right which are transferred either by lease or otherwise to somebody else are not benefits or right in land belonging to the Union, but belong to a different person ……….”

29. A Division bench of this court also agreed with the above view and observed as under in India Habitat Centre. v. Municipal Corporation Of Delhi & Ors.)247.(8) “……..The interest of a lessee of the Government can be subject matter of property tax and when such interest is being taxed, it cannot be said that the residuary interest of the landlord (Union of India) is being taxed. The unit of taxation are distinct in each case………”

30. It would not be out of place over here to make a reference to the observation of a Division Bench of Andhra Pradesh High Court as reported in Electronics Corporation of India Ltd. v. The Secretary, revenue department, AIR 1983 A.P 239.(9)It was observe in para 8 of the said judgment “ The expression ‘Owner’ occurring in Section 3(1) must be understood in the light of its definition in cl. (j) of Section 2 and if so understood, it would follow that in case of lands owned by the Central Government the levy is upon the lessees' interest, provided the land has been leased out by the Central Government for any commercial, industrial or other non-agricultural purpose and to the extent it is used for any of those purposes. Looked at from this angle, the tax or assessment as the case may be, is not levied upon the property owned by the Central Government but upon the interest of the lessee in such land. The two Privy Council decisions, which we shall presently refer to deal, with almost a similar situation and as we shall point out presently, the principle of those decisions clearly governs the present case.”

31. Furthermore, the agreement dated October 29, 1958 provides (vide para 6) “The licensee (s) shall not assign, mortgage, sub-let, or transfer the privileges in clause I hereof mentioned without the consent in writing of the Administration.” Thus the petitioner were bestowed upon the power of transfer, though, of course, they could not have done so without the prior approval in writing of the lessor i.e Government of India. If this is so, the case of the petitioner would also fall within the domain of section 120(1) of the dmc act which deals with incidence of property taxes. It lays down “ The property taxes shall be primarily leviable as follows:

(a) …………………………….

(b) …………………………….

(c) If the land or building is un-let, upon the person in whom the right to let the same vest.”

32. The petitioner thus would be liable to pay tax under the above provision of law also.

33. A situation very much akin to the situation in had arose before a Divisions Bench of this Court in Industrial Finance Corporation of India Ltd. v. Municipal Corporation of Delhi, 1996 I AD (Delhi) 535. (10) The Bench was called upon to interpret Clause 6A of the lease deed in the said case which is similar to Clause 6 in the lease deed dated October 29, 1958 in the present case. It was observed….. “The right to let the building is unfettered. Therefore, the position is that the petitioner can undoubtedly rent the building when completed. As seen earlier, if a person has a right to let either the land or the building which has so far not been let, the incidence of tax fell on him under section 120 (1) (c). As the petitioner has undisputed right to sub let the building, the incidence of property tax whether in regard to land or building on its completion will fall on it.”

34. In the circumstances stated above, this Court is of the view that the petitioner are liable to pay property tax and cannot take the shelter of Section 119 of the DMC Act and Article 285 of the Constitution of India. Both the writ petitions are accordingly dismissed. However, the parties are left to bear own costs.

D.V Petition dismissed.

IN THE HIGH COURT OF DELHI

Civil Writ petition No. 386 of 1986

DATE OF DECISION: September 11, 1996

Bharat Petroleum Corporation Ltd. Through: Mr. Vikramjit Sen With Mrs. Anisha Banerjee & Mr. Prosenjeet Banerjee, Advocates

Versus

Municipal Corpration of Delhi, Through: Mrs. Madhu Tewatia, Advocate.

CORAM : The Hon'ble Mr. Justice MOHD. SHAMIM

1. Whether reporters of local papers may be allowed to see the judgment?

2. To be referred to the Reporter or not?

MOHD. SHAMIM, J.- For orders see Civil Writ Petition No. 133/96

D.V