Translate
Text Highlighter

Bookmark

PDF

Share

Report a problem
AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
Judges
Acts
  • provisions of Section 111(g) of the Transfer of Property Act. Section 111(g)
  • Section 111(g) of the Transfer of Property Act.16.
  • Section 111(g) of the Transfer of Property Act,
  • SECTION 105 TRANSFER OF PROPERTY ACT
  • 52, Indian Easements Act (5 of 1882)
Are you a practicing lawyer?
Enhance your digital presence and reach by creating a Casemine profile.
Upload pleading to use the new AI search
Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
Judges
Acts
  • provisions of Section 111(g) of the Transfer of Property Act. Section 111(g)
  • Section 111(g) of the Transfer of Property Act.16.
  • Section 111(g) of the Transfer of Property Act,
  • SECTION 105 TRANSFER OF PROPERTY ACT
  • 52, Indian Easements Act (5 of 1882)
Smart Summary

Judgment Summary — Sarjoo Prosad, J. (with Das, J. concurring)

Factual and Procedural Background

The plaintiff originally took a lease from the City Municipality (registered 29 March 1941) for five years with an option to renew for a further five years, to install a petrol pump and erect a shop at Mohalla Sabzibagh, Patna. The plaintiff installed a petrol pump and operated the business as "Ali & Sons." On 28 August 1945 the plaintiff entered into an agreement with the defendant whereby management of the shop/petrol pump was transferred to the defendant; in return the plaintiff was to receive a monthly premium of Rs. 20 from September 1945. The defendant was let into occupation and possession under that agreement and subsequently obtained transfer of the petrol pump lease from the Standard Vacuum Oil Company.

The municipal lease in favour of the plaintiff expired in March 1946. The defendant applied to the Municipality for grant of the lease in his own name and changed the business name. The plaintiff purported to terminate the agreement by notice (recitals in the opinion refer to a notice dated 9 September 1947 asking the defendant to quit by 30 September 1947; other passages refer to events in 1946). The defendant did not vacate.

The plaintiff sued in the Small Causes Court (S.C.C. Suit No. 109/99 of 1947) for recovery of arrears of premium from May 1946 to September 1947; the defendant in that suit challenged the plaintiff's title after the expiry of the municipal lease. The Small Causes Court decreed in favour of the plaintiff on 16 September 1948; that decision was affirmed by this Court on 24 March 1949 on revision.

Separately, on 27 February 1948 the plaintiff filed the present suit seeking a permanent injunction restraining the defendant from approaching the site or operating the petrol pump (claiming forfeiture of the defendant's right under the 28 August 1945 agreement), and also seeking accounts and a decree for any sums found payable to him.

Legal Issues Presented

  1. Whether the plaintiff's claim for ejectment/forfeiture of the defendant's right under the 28-8-1945 agreement was barred by Order 2, Rule 2 of the Civil Procedure Code (i.e., whether the plaintiff omitted a relief in the earlier S.C.C. suit and is precluded from suing later).
  2. Whether the 28-8-1945 agreement amounted to a mere management agreement or created a subsisting lease/sub-lease (i.e., whether the defendant's status was that of a sub-lessee or merely a licensee), and the legal consequences of that classification.
  3. If the defendant had in the Small Cause Court suit disclaimed the plaintiff's title (or otherwise renounced his character as lessee), whether the plaintiff was required to give a fresh notice in writing under Section 111(g) of the Transfer of Property Act to determine the lease before claiming forfeiture/ejectment.

Arguments of the Parties

Appellant (defendant) — principal contentions

  • The agreement dated 28-8-1945 created a sub-lease in the defendant's favour (i.e., the defendant was a sub-leasee), not merely a transfer of management.
  • The plaintiff's municipal lease had expired and no fresh lease was granted to the plaintiff; therefore the plaintiff lacked title to maintain the present suit.
  • No forfeiture of the defendant's rights was made out.
  • The present suit was barred by Order 2, Rule 2 of the CPC because the plaintiff could and should have sought all reliefs (including ejectment) in the earlier S.C.C. suit.

Respondent (plaintiff) — principal contentions (as engaged by the Court)

  • The lease in favour of the plaintiff continued to operate and the defendant's repudiation of the plaintiff's title amounted to forfeiture of the defendant's right under the 28-8-1945 agreement.
  • The plaintiff relied on a notice to quit and on the defendant's conduct in the S.C.C. suit (including an alleged disclaimer in the defendant's written statement) as grounds for forfeiture.
  • It was argued (by respondent's counsel before the High Court) that the defendant was a mere licensee, in which case determination of the licence would not require the formal notice required by Section 111(g) of the Transfer of Property Act.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Sagir Hassan v. Tayab Hassan, A.I.R (27) 1940 ALL. 524 Where a person is wrongfully kept out of possession of immovable property he is entitled to sue for possession and for mesne profits, and under O.2, R.2(3) such claims arising out of the same cause of action must be included in one suit. The Court relied on this authority to support the conclusion that the plaintiff, having sued only for arrears in the S.C.C. suit and omitted ejectment/possession, could not later maintain a separate suit for possession or forfeiture based on the same cause of action.
Kamakhya Narain Singh v. Ramraj Singh, 14 P.L.T. 663 O.2, R.2 makes no reference to the jurisdiction of the court trying the claims; choosing a forum that could not grant certain reliefs may amount to relinquishment of those reliefs under O.2, R.2. Applied to reject the plaintiff's contention that ejectment could not have been claimed in the S.C.C.; the Court held that by choosing the S.C.C. the plaintiff effectively omitted to sue for ejectment and is barred from raising it later.
Naba Kumar v. Radhashyam Mahish, A.I.R (18) 1931 P.C. 229 Relief arising out of the same cause of action and omitted in an earlier suit cannot be claimed in a subsequent suit. The Court cited this decision to show that the plaintiff's failure to include certain reliefs earlier prevents pursuing them later.
Glenwood Lumber Co. Ltd. v. Phillips, (1904) A.C. 405 If the effect of an instrument is to give the holder an exclusive right of occupation of the land it is in law a demise of the land (i.e., a lease) even if subject to reservations. The Court used this principle in analysing the 28-8-1945 agreement and the parties' conduct to determine whether the agreement created a lease (sub-lease) rather than a mere licence.
Sharif Dadumiyaji v. Emperor, A.I.R (17) 1930 Bom. 165 The main test for lease vs. licence is exclusive possession: exclusive possession indicates a lease; mere use while the owner retains control indicates a licence. Relied upon as authority for the exclusive-possession test when evaluating the agreement and surrounding conduct.
Behari Lal v. Chhote, A.I.R (20) 1933 ALL. 911; Secretary of State v. Bhupal Chandra Ray, 57 Cal. 655 : A.I.R (17) 1930 Cal. 739 Illustrative decisions following the exclusive-possession/demise principles to distinguish leases from licences. Referenced as supporting authorities for construing the nature of the document and the effect of exclusive possession and management responsibilities on characterising the grant as a lease.

Court's Reasoning and Analysis

The Court's analysis proceeds in two main strands: (A) whether the plaintiff's claim for forfeiture/ejectment was barred by O.2, R.2 of the CPC because the plaintiff had previously sued in the Small Causes Court only for arrears; and (B) whether the 28-8-1945 agreement created a lease/sub-lease or merely a licence (with the attendant requirement under Section 111(g) of the Transfer of Property Act to give written notice to determine a lease where the lessee renounces his character as such).

(A) Bar under Order 2, Rule 2 CPC

  • The Court accepted the reasoning of the two Courts below that the cause of action comprises the whole bundle of facts giving rise to all reliefs. Under O.2, R.2 a person entitled to more than one relief in respect of the same cause of action must sue for all such reliefs in one suit; omission (except with leave) precludes subsequent suit for omitted reliefs.
  • The Court held that by instituting the Small Causes Court suit solely for recovery of arrears (mesne profits/premium) and omitting ejectment/possession, the plaintiff relinquished his right to claim ejectment in a subsequent suit; authorities (Sagir Hassan; Naba Kumar) support that position.
  • The plaintiff's argument that ejectment could not have been claimed in the S.C.C. because of forum limitations was rejected. The Court applied Kamakhya Narain Singh to hold that a plaintiff cannot defeat the Code by choosing a forum where some reliefs could not be obtained; such choice amounts to omitting those reliefs under O.2, R.2.

(B) Nature of the 28-8-1945 Agreement — Lease or Licence?

  • The Court examined the instrument primarily on its terms, and where necessary, resorted to surrounding circumstances and the conduct of the parties (consistent with the settled approach that conduct under the document aids construction).
  • The Court reviewed definitions: a licence (Indian Easements Act) does not create an interest in immovable property; a lease (Section 105, Transfer of Property Act) creates an interest and thus ordinarily requires notice under Section 111(g) to determine by forfeiture when the lessee renounces his character as such.
  • Applying the exclusive-possession test (Glenwood; Sharif Dadumiyaji), and considering the agreement's terms plus surrounding facts — duration tied to the existence of the petrol pump on the site; defendant's undertaking to pay municipal taxes, petrol taxes, electricity, income-tax, management and repair expenses; defendant's construction of a new brick-and-wood shed; change of business name by the defendant; the transfer of the petrol-pump lease in defendant's favour — the Court concluded the agreement in substance conveyed the exclusive use and enjoyment of the premises and thus operated as a demise/sub-lease.
  • That factual conclusion (sub-lease) was supported by findings of the trial Court and the appellate Court, which the High Court accepted as not seriously questioned.

(C) Forfeiture and Notice under Section 111(g)

  • Section 111(g) of the Transfer of Property Act provides that a lease determines by forfeiture where the lessee renounces his character as such by claiming title; but in such cases the lessor must give written notice of intention to determine the lease.
  • The Court found no evidence of a fresh written notice given after the alleged disclaimer in the S.C.C. suit; the written statement in the S.C.C. suit was found inadmissible in evidence by the trial Court, and the appellate Court treated the recital in the plaint of the present suit as vague and not weighty.
  • Because the instrument created a sub-lease (i.e., the defendant was a lessee/sub-lessee), a formal written notice under Section 111(g) was required to determine the lease. The Lower Subordinate Judge erred in holding that no fresh notice was necessary or that earlier notice sufficed, particularly where the plaintiff had relinquished that relief in the earlier suit.
  • Consequently, the plaintiff's claim for ejectment/forfeiture in the present suit could not succeed for lack of the required notice; the appellate Court's holding of forfeiture was therefore unsustainable.

Holding and Implications

Holding: The appeal is allowed. The decree of the learned Subordinate Judge (which had allowed the plaintiff's suit on the basis of forfeiture) is set aside, and the decree of the learned Munsif (which dismissed the plaintiff's suit) is restored, with costs throughout.

Implications:

  • Direct effect on the parties: The plaintiff's suit for injunction/ejectment/forfeiture is dismissed (the Munsif's dismissal is restored); the Subordinate Judge's decree in favour of the plaintiff is set aside. The appellant (defendant) succeeds on the issue of absence of valid forfeiture and the procedural bar under O.2, R.2 CPC.
  • The Court applied established principles — the O.2, R.2 rule on multiplicity of suits and the requirement of written notice under Section 111(g) T.P. Act — rather than laying down a new precedent. The decision resolves the disputes here by applying cited authorities and legislative provisions to the record facts; it does not purport to create novel law beyond those applications.

Disposition recorded in the opinion: "Appeal allowed."

    Jai Narain v. Syed Ali Murtaza .

    Sarjoo Prosad, J.:— The defendant is the appellant in this appeal which relates to a suit for injunction and accounts. The plaintiff in the action took in lease a piece of land in Mohalla Sabzibagh of the Patna town from the City Municipality for the purpose of installing a petrol pump and erecting a shop for motor accessories. The lease was under a registered document dated 29th March 1941, for a term of five years with, option for renewal for a further period of five years. After obtaining the lease, the plaintiff put up a temporary shed on the site and got a petrol pump installed, and he ran the business under the name and style of Ali & Sons. Finding some difficulties in carrying on the business, the plaintiff on 28th August 1945, entered into an agreement with the defendant. The terms of the agreement have assumed some importance in the case and may have to be referred to in some detail at a later stage in the judgment. For the present it may be sufficient to observe that the purport of the agreement was to transfer the entire management of the shop to the defendant, and the plaintiff in consideration thereof was entitled to the payment of a monthly premium of Rs. 20 only with effect from September 1945. The defendant in his turn undertook to run the business in its old name with the option to get the petrol pump transferred to his own name. By virtue of the agreement the defendant was duly let into occupation and possession of the land, and in course of the year it appears that the Standard Vacuum Oil Company transferred the lease of the petrol pump to the defendant. The lease granted by the Municipality to the plaintiff expired in March 1946, and thereafter the defendant applied to the Municipality for grant of the lease to him and changed the original name of the business. The plaintiff states that in view of this conduct of the defendant he served a notice on 9th September 1947, terminating the agreement and asking the defendant to quit the land and the business by 30th September 1947. The defendant, however, did not vacate the premises. The plaintiff then instituted a suit in the Court of Small Causes at Patna being S.C.C Suit no. 109/99 of 1947 for recovery of arrears of premium from May 1946 to September 1947. In that suit, it is alleged, the defendant pleaded, inter alia, that the plaintiff had no title to the lease given by the Municipality after the expiry of the term of five years mentioned therein. The S.C.C suit was decreed on 16-9-1948, and in revision the decision of the learned Judge was affirmed by this Court on 24-3-1949. The plaintiff in the meantime had filed the present suit on 27-2-1948, urging that the lease in favour of the plaintiff granted by the Municipality continued to operate and the defendant having repudiated the plaintiff's title had forfeited his right under the agreement dated 28-8-1945, to remain on the land. The plaintiff accordingly prayed for permanent injunction restraining the defendant from going near the site or working the petrol pump or having any concern with the premises. There was a further prayer for accounting and for a decree in favour of the plaintiff in respect of any sum found payable to him from the defendant.

    2. The defence to the action substantially was that the defendant had been inducted on the site by the plaintiff as a sub-leasee subject to the payment of Rs. 20 only to the latter, and that the agreement in question was not merely to transfer the right of management with respect to the concern. It was further urged that the plaintiff's lease having expired and no fresh lease having been granted to him, the suit at the instance of the plaintiff was not maintainable he having no title to the property and that no case of forfeiture had at all been made out. The defendant further averred that the present suit was barred under O. 2, R. 2 of the CPC.

    3. The learned Munsif who tried the suit found that the plaintiff continued to be a lessee in respect of the premises but that he had failed to make out a case of forfeiture. He further held that the claim for accounts was not maintainable and that the suit was barred by O. 2, R. 2 of the CPC. In regard to the defendant's case that the agreement constituted a sub-lease in his favour, the learned Munsif accepted the defendant's plea on a consideration of the terms of the agreement as also the surrounding circumstances and evidence in the case. On these findings he dismissed the suit. The lower appellate Court also held that the learned Munsif was justified in coming to the conclusion that the plaintiff's lease had not come to an end and the plaintiff was entitled to sue. On the question whether under the terms of the agreement dated 28-8-1945, only the right to manage the business had been transferred, the learned Subordinate Judge observed that the appellant had accepted the position that the document created a sub-lease, and that, therefore, it was unnecessary to enter into a further discussion of the matter. He, however, appears to have also found in concurrence with the learned Munsif that

    “It is clear from the evidence and the surrounding circumstances that the intention of the parties was to create a sub-lease in respect of the premises. Plaintiff no doubt purported to transfer the management of the petrol pump and the shop but what was in fact transferred was the lease-hold itself.”

    He accordingly held that the defendant's status was that of a sub-lessee. He, however, came to the conclusion that the lease in favour of the defendant had come to an end by forfeiture though there was no liability to render accounts. He accordingly allowed the appeal and decreed the suit of the plaintiff.

    4. It is contended on behalf of the appellant that the decision of the learned Subordinate Judge on the question of forfeiture was not maintainable at all. In my opinion there is much force in this contention. The claim of the plaintiff is based on two grounds. It is based, firstly, on the ground that when the plaintiff's lease expired on 29-3-1946, in April following the defendant repudiated the plaintiff's title and stopped paying rent. This was followed by a notice to quit given by the plaintiff asking the defendant to vacate the premises by the end of September 1946. When the defendant failed to comply with the demand in the notice, the plaintiff instituted the Small Cause Court suit to which I have already referred claiming recovery of premium due from May 1946, up to the date of the institution of the suit. The next ground on which the claim of forfeiture rests is that there was a fresh disclaimer of the plaintiffs title in the written statement which the defendant filed in the Small Cause Court suit, and the manner in which the suit was contested by the defendant. It may be stated at the outset that this written statement was found inadmissible in evidence by the learned Munsif. The learned Subordinate Judge appears to rely upon the allegation made in para. 9 of the plaint of this suit in regard to the recital in the written statement. But the learned Subordinate Judge himself characterises the allegation therein as quite vague and not worthy of any weight being attached to it. It is doubtful whether the mere recital in the plaint in the absence of the written statement in the Small Cause Court suit itself would be enough to prove the disclaimer in question. There can be, however, no dobut that one of the principal questions raised in the Small Cause Court suit was the attack on the title of the plaintiff. The Small Cause Court suit of course ended in favour of the plaintiff, but having regard to the manner in which the case was contested, there was certainly a disclaimer of the plaintiff's title. I will examine both these grounds in their order.

    5. In so far as the first ground is concerned, both the Courts below have come to the conclusion that the relief as to forfeiture claimed in the present suit should have been included in the plaint of the previous suit, and this not having been done, the relief as to forfeiture is barred under O. 2, R. 2 of the CPC. The lower appellate Court in dealing with the point (though I must say that he has mixed up the consideration of the two aspects of forfeiture) says thus:

    “Plaintiff's suit for rent for the period following the first disclaimer in April 1946 amounted to waiver of forfeiture. Plaintiff had a cause of action for ejectment or injunction on the date the S.C.C suit was filed. He chose not to include a relief by way of ejectment at in junction in that suit. His relief as regards the arrears due and the relief by way of ejectment or injunction arose out of defendant's refusal to pay the premium on the ground of plaintiff's want of title. In other words he was entitled to two reliefs out of one and the same cause of action. Having relinquished one of the two reliefs it was not open to the plaintiff to ask for that relief in another suit. If the present suit were based on the cause of action, plaintiff's claim would manifestly have been barred under O. 2, R. 2 of the CPC and to that extent I entirely agree with the contention put forward on behalf of the respondent.”

    The decision of the two Courts below on the point appears to me to be correct. The cause of action consists of the whole bundle of facts which entitles the plaintiff to certain reliefs. It may be that a particular set of facts may be co-related Page: 193to a certain kind of relief but that will not mean that those sets of facts constitute different causes of action. They all form the occasion or foundation of a suit, and with a view to avoid multiplicity of litigations the Code provides under O. 2, R. 2 that

    “a person entitle to more than one relief in respect of the same cause of action may sue for all or any such reliefs; but if he omits, except with the leave of the Court, to sue for all such reliefs, he shall not afterwards sue for any relief so omitted.”

    It is not, therefore, open to the plaintiff to cut up the different sets of facts all relating to the same cause of action but connected with a particular kind of relief in order to make the different sets the foundation for different suits. He must sue for all these reliefs together and his omission to do so disentitles him to seek the relief in a subsequent suit. The plaintiff in this case, as observed above, was entitled to sue for ejectment of the defendant on the ground of forfeiture by the time he instituted the Small Cause Court suit. He did not, however, choose to do so. Therefore his claim now on this ground evidently comes under O. 2. R. 2(3) of the CPC. It was held in Sagir Hassan v. Tayab Hassan, A.I.R (27) 1940 ALL. 524 that if a person is wrongfully kept out of possession of immovable property he is entitled to sue for possession and for mesne profits and under the provisions of O. 2, R. 2(3) he is bound to include both claims in one suit. If he sues only for mesne profits he cannot in a subsequent suit sue separately for possession. In the present case, the plaintiff sued only for the premium due when he instituted the Small Cause Court suit but not for possession. Therefore, he cannot now on that account claim recovery of possession.

    6. It is next argued on behalf of the plaintiff that in the Small Cause Court suit there could have been no claim for recovery of possession. Now it was open to the plaintiff to chose a proper forum and he cannot by his own choice defeat the provisions of the Code. There was nothing to prevent the plaintiff from instituting the suit before another Court of competent jurisdiction where he could have claimed all the reliefs to which he was entitled under the same cause of action. As observed in Kamakhya Narain Singh v. Ramraj Singh, 14 P.L.T 663, there is no reference in O. 2, R. 2 of the Code to the jurisdiction of the Court trying the claims, and if the plaintiff chose the Curt of the Additional Subordinate Judge in the exercise of his powers as Munsif, he merely relinquished a part of his claim within the meaning of the second part of R. 2 to O. 2 of the Code. Here, as he chose a Court where the relief as to ejectment or injunction could not be granted to him, he would be deemed to have omitted to sue for these reliefs. The case relied upon on behalf of the plaintiff viz. Naba Kumar v. Radhashyam Mahish, A.I.R (18) 1931 P.C 229 does not help his contention at all. On the contrary, it lends support to the conclusion at which I have arrived. Their Lordships observed in that case that the relief for rent and profits which could have been prayed for in a previous suit for conveyance of properties and arising out of the same cause of action cannot be prayed for in a subsequent suit.

    7. The question then is whether the right for forfeiture could be claimed on the fresh disclaimer in the Small Cause Court suit itself. The learned Subordinate Judge thinks that the present suit is founded on the forfeiture caused by the subsequent disclaimer made in the written statement filed by the defendant in the Small Cause Court suit (vide para. 14 of the plaint). He also observes that

    “the fact that the S.C.C suit was preceded by a notice is immaterial in this case. The notice must be deemed to have been waived since plaintiff claimed arrears only in the previous suit.”

    Therefore, on this finding the service of the previous notice to quit could not now be availed of by the plaintiff. The learned Subordinate Judge, however, thinks that any fresh notice was not necessary “inasmuch as it is a case of forfeiture caused by disclaimer”. This part of the decision of the learned Subordinate Judge has been very seriously questioned before us; and I think quite rightly, having regard to the provisions of Section 111(g) of the Transfer of Property Act. Section 111(g) says that a lease of immovable property determines by forfeiture in case the lessee renounces his character as such by setting up a title in third person or by claiming title in himself: but in all such cases it provides that the lessor or his transferee must give notice in writing to the lessee of his intention to determine the lease. Therefore, when there was a fresh disclaimer of title by the defendant it was the duty of the plaintiff to have given him a fresh notice in writing of his intention to determine the lease. There is no evidence in this case of any such notice having been given, and the learned Subordinate Judge was wrong in thinking that no such notice was necessary, he having himself found that the plaintiff could not take advantage of the previous notice to quit because that part of his claim was now closed by reason of the provisions of the Code stated above.

    8. Learned counsel for the respondent has, therefore, raised the most serious question that the defendant was not a lessee but a mere licensee, and therefore no notice for determining the lease was necessary. He contends that the question turns upon the interpretation of the indenture of agreement between the parties which is the document of title and is, therefore, a pure question of law. I have already stated that before the lower appellate Court it was conceded that the finding of the learned Munsif on the point that the deed of agreement created a sub-lease was correct. I have also shown that the finding of the Courts below on the point does not merely Page: 194rest upon the deed of agreement but also upon the surrounding facts and circumstances of the case. But the question being a mixed question of law and fact and the inference whether the status of the defendant was that of a sub-lessee or that of a licensee: being an inference of law arising on those findings, I am not prepared to hold, as at present advised, that the concession made on behalf of the plaintiff is conclusive. I have, therefore, to examine the question on merits. Primarily, we have to decide the question on the terms of the document itself and it is only where the terms are of an ambiguous character that we can look to other evidence and circumstances bearing on the question. It has been often said: Tell me what the parties have done under the document and I will tell you what the document means.” The conduct of the parties, therefore, as to how they themselves treated the agreement in question would be very material. The distinction between a lease and a license is well known. ‘License’ has been defined in B. 52, Indian Easements Act (5 of 1882) as

    “a right to do, or continue to do, in or upon the immoveable property of the grantor, something 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.”

    In other words, a license does not create any interest or property in the estate of the grantor, and, therefore, a licensee is not entitled to a notice to quit before eviction. On the other hand, a lease as defined in Section 105 of the Transfer of Property Act, creates an interest in immoveable property, and as I stated above, a notice of the intention to determine the lease is necessary before eviction. The distinction, therefore, in the two cases is one of substance and not of mere words. The only difficulty is to find out this distinction in a given case and sometimes the line of demarcation is very thin. The Judicial Committee of the Privy Council in Glenwood Lumber Co. Ltd. v. Phillips, (1904) A.C 405 made the following pertinent observation:

    “If the affect of the instrument is to give the holder an exclusive right of occupation of the land, though subject to certain reservations or to a restriction of the purpose for which it may be used, it is in law a demise of land itself.”

    That was a case where under the document a right had been given to cut timber on the land, and the argument was that there was no demise of the land itself but a mere license to cut timber; but this argument did not find favour with their Lordships. Similarly, the Bombay High Court following the above observations of the Judicial Committee, in Sharif Dadumiyaji v. Emperor, A.I.R (17) 1930 Bom. 165 said as follows:

    “The main test for deciding whether a person is a licensee of a property or a lessee is that of exclusive possession. If the effect of the agreement is to give ex-elusive possession to the holder though subject to certain reservations then it is a lease if the agreement is merely for the use of the property in a certain way and on certain terms while it remains in the possession and control of the owner, it is a license.”

    These decisions have been followed in various other cases, for instance, Behari Lal v. Chhote, A.I.R (20) 1933 ALL. 911 and Secretary of State v. Bhupal Chandra Ray, 57 Cal. 655 : A.I.R (17) 1930 Cal. 739. In the Allahabad cases the document recited that so long as the donee or his sons or heirs continue to carry on the business of the said shop and the sale of goods and merchandise therein, till then the donor or his heirs would allow it to be carried on therein, but whenever the donee or his heirs close the said business and the shop becomes vacant, then the donor or his heirs would re-enter into the possession of the said shop. It also appeared in the facts of that case that the donee had exclusive-possession and control of the shop so long as he carried on business thereof. He had also been made responsible for the repairs and it was quite obvious that he had the right to exclude from possession every one else including even the lawful owner, and under these circumstances their Lordships held that it was a demise of the shop itself and not merely a license to carry on the business of the said shop. In the Calcutta case a plot of land which was used as a that or market was let out for a fixed period and for a fixed sum. The person to whom it was let out had the right to collect tolls in the market and had covenanted to keep the that clean and not to interfere with the rent of any permanent shop, and not to make alterations without the leave of the person who let it out and the former was bound to deliver possession at the end of the term. In spite of the restrictions aforesaid, it was held that the person to whom the land had been let out had sufficient control of the land and the settlement was in the circumstances construed as a lease and not as a license. The cases must of course be of an illustrative character, but keeping the above principles in view, we have to see what the document amounts to in the present case A copy of the deed of agreement in question has been placed before us. It is termed as an indenture of agreement and the document recites at various places that the first party (plaintiff) had agreed to transfer the management of the oil pump and the shop existing on the land to the second party (defendant). It is therefore, argued that prima facie it was a mere transfer of management and was not a transfer of interest in immoveable property. But the document shows that the agreement was to endure indefinitely till the petrol pump existed on the present site. The petrol pump belonged to the Standard Vacuum Oil Co. and not to the plaintiff and the stipulation was that even if the Company transferred the lease of the pump to the second party, even then the second party was liable to pay the first party the monthly premium payable under the agreement till the time the pump continued to exist Page: 195on the present site. The first party even undertook to render assistance to the second party in obtaining a transfer of the lease of the pump. So far as the shop is concerned it has been found that the plaintiff had removed the materials of the previous shop constructed by him before he let out the land to the defendant. The previous shed was made of tin only and the defendant after he had entered into occupation under the agreement constructed the shed at present standing on the land which is made of bricks and wood. Therefore the premium was in respect of the shop and the land both. Then again under the deed of agreement between the plaintiff and the defendant it is mentioned that all the municipal taxes, petrol taxes, electric charges, income-tax, all the expenses of the management and repairs of the road etc. shall be exclusively paid by the second party with effect from September 1945. The first party appears to have no other interest left except for the payment of the monthly premium of Rs. 20 and otherwise the second party was entitled to the exclusive use and enjoyment of the land. In fact, it has been found that he even changed the name of the business shortly after this agreement and the plaintiff did not object to the same but rather acquiesced in this act of the defendant and continued to get the rent of Rs. 20 per month only. It has been also found that with the express consent of the plaintiff, the defendant got his name registered with the Standard Vacuum Oil Company as a dealer and within a week of the agreement in his favour he began to carry on his business in the name of Mohan and Sons. These findings have been arrived at in detail by the trial Court and the appellate Court has also affirmed these findings which were not seriously questioned and in fact accepted before him. The appellate Court says:

    “The subject-matter of the agreement is described at the foot of the agreement as a piece of land and then follows full particulars of that land. It is undisputed that the plaintiff ceased to have all concern with the business with effect from the date of agreement. It is conceded that plaintiff did not invest any capital in the business which was run by the defendant. The entire capital was invested by the defendant himself. Further plaintiff was not to have any concern with the profit or lots is what he described in his evidence in Court as defendant's business. Defendant was certainly not the agent of the plaintiff or an employee under him. The agreement between the parties provided that if defendant so liked he could get the petrol pump itself transferred to his name. This in fact was done soon after the close of the agreement. Even the name of the business was changed by the defendant a week after the agreement. Plaintiff has admitted that he never got the license for selling petrol renewed in his name after the close of the agreement. The original lease in favour of the plaintiff was also made over to the defendant. Plaintiff's allegation in the plaint that defendant was merely a manager cannot therefore be accepted. It is manifest that he has no manner of concern with the business and that the monthly premium payable to him was nothing but rent payable for the premises.”

    The conduct of the parties itself indicates that the intention was to treat the agreement not as a mere license but as a document creating a lease in favour of the defendant a demise in property because the defendant was entitled to the enjoyment of the property even to the exclusion of the plaintiff so long as the petrol pump stood on the land and the only right which the plaintiff had was to get the monthly premium. In my opinion, the document, therefore, created a demise in property, and the finding of the two Courts below that there was a sub-lease in favour of the defendant is entirely correct. Whatever doubts there may have been on the construction of the document are more than dispelled by the surrounding circumstances-of the case and the conduct of the parties. I have, therefore, no hesitation in holding that the decision of the Courts below on the point is justified. That being so, the conclusion is that the defendant was entitled to a notice determining the lease as provided by Section 111(g) of the Transfer of Property Act, and that not having been done, the plaintiff's suit in ejectment cannot succeed.

    9. I would accordingly allow the appeal, set aside the decree of the learned Subordinate Judge and restore that of the learned Munsif with costs throughout.

    10. Das, J.:— I must admit that I have been of a divided mind as to the true construction of the indenture of agreement dated 28-8-1945.

    11. The document is described as an indenture of agreement, it does not expressly say anything about transference of any interest in the leasehold, though it talks of management of the shop, transfer of the petrol pump etc., at the foot, it describes the land, as though the description were not that of a property demised but rather of a property over which the right of holding the shop would be exercised. These are circumstances in favour of the view that it is a mere license.

    12. On the other hand, there are the circumstances pointed out by my learned brother; exclusive right of possession, building of a new shop, starting of the business under a new name etc. These are circumstances in favour of the view taken by the Courts below and accepted by my learned brother.

    13. I would myself prefer the test ‘whether any interest in the property has been given or not’, rather than the test of ‘possession’; because a licensee may also possess the property for exercising the right given to him by the grantor. But an exclusive right to possess, as distinguished from mere permissive possession would, I think, turn the scale in favour of a lease, that is, a transfer of interest in the property itself. The power to exclude others including the grantor is hardly consistent with permissive possession, and would indicate a transfer of interest rather than a mere permission to exercise a right.

    14. Therefore, I would now yield to the view that on a proper construction the indenture of agreement is a lease rather than a license.

    15. I agree with my learned brother in his conclusions on the bar of O. 2, R. 2 of the CPC and the necessity of a notice under Section 111(g) of the Transfer of Property Act.

    16. The appeal must, therefore, be allowed with costs, as directed by him.

    K.S

    17. Appeal allowed.

    Use AI to get other relevant cases.

    Comments

    Jai Narain v. Syed Ali Murtaza .
    (May 16, 1951)