- Bookmark
- Share
- CaseIQ
Om Parkash v. Dr. Ravinder Kumar Sharma .
Factual and Procedural Background
The appeal concerns a series of transactions evidenced by Exhibits P-4, 3, 2, 8, 7, 6 and 5 dated between 1 May 1969 and 16 April 1979. The appellant claimed that these transactions created a leasehold interest in Shop No. 2, whereas the respondent maintained they were mere licences. The High Court had held the arrangements to be licences. Dissatisfied, the appellant filed the present appeal, challenging that conclusion.
Legal Issues Presented
- Whether the transactions recorded in the deeds executed on 1-5-1969, 9-9-1974, 1-11-1975, 1-1-1976, 1-4-1977, 22-3-1978 and 16-4-1979 constitute a lease or a licence.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Associated Hotels of India Ltd. v. R.N. Kapoor, AIR 1959 SC 1262; ILR 1959 Punj 1897 | Set out four tests for distinguishing a lease from a licence: substance over form, intention of parties, creation of interest in property, and exclusive possession. | The court employed these tests as the analytical framework to examine the impugned transactions. |
| Capt. B.V. D'Souza v. Antonio Fausto Fernandes, (1989) 3 SCC 574 | Reaffirmed that absence of exclusive possession is a key indicator of a licence. | The court relied on this case to emphasise that the appellant’s lack of exclusive possession supported the conclusion that only a licence was granted. |
Court's Reasoning and Analysis
The court applied the four tests in Associated Hotels and the guidance in Capt. B.V. D'Souza to the facts:
- Nomenclature not decisive: Although the documents use the term “licence,” the court examined their substance rather than their form.
- Intention of the parties: Clause 10, common to all deeds, expressly states that the “licensee shall not have any right or interest in the shop” and that “possession shall vest with the licensor,” signalling an intent to grant only a licence.
- No interest created: Because the deeds deny any proprietary interest to the appellant, they fail the test for creation of a leasehold estate.
- Absence of exclusive possession: Evidence showed (a) the appellant collected the key each morning and returned it each evening, and (b) goods belonging to the respondent and his mother remained in part of the shop. These facts negated exclusive possession, a hallmark of tenancy.
- Periodic execution of deeds: The appellant repeatedly executed fresh documents, consistent with a series of licences rather than a continuing lease.
On cumulatively applying these factors, the court affirmed the High Court’s view that the arrangements amounted to licences.
Holding and Implications
Appeal Dismissed. The court held that the appellant was granted only a licence, not a lease. The interim injunction previously in force was vacated, and no order for costs was made.
Implications: The decision affirms existing jurisprudence distinguishing licences from leases, leaving the appellant without the protections afforded to tenants. No new legal principle was created; the ruling applies established tests to the specific facts.
Order
1. The short question which arises for consideration in this appeal is whether the following transactions covered by Exhibits P-4, 3, 2, 8, 7, 6 and 5 dated 1-5-1969, 9-9-1974, 1-11-1975, 1-1-1976, 1-4-1977, 22-3-1978 and 16-4-1979 respectively amount to licence or lease. We may refer to Associated Hotels of India Ltd. v. R.N Kapoor AIR 1959 SC 1262, ILR 1959 Punj 1897 wherein the distinction between lease and licence has been set out. The following tests are applied to distinguish between the two—
(1) to ascertain whether a document creates a licence or lease, the substance of the document must be preferred to the form;
(2) the real test is the intention of the parties whether they intended to create a lease or a licence;
(3) if the document creates an interest in the property, it is a lease; but, if it only permits another to make use of the property, of which the legal possession continues with the owner, it is a licence; and
(4) if under the document a party gets exclusive possession of the property, prima facie, he is considered to be a tenant; but circumstances which negative the intention to create a lease.”
2. The same principle has been adopted in Capt. B.V D'Souza v. Antonio Fausto Fernandes (1989) 3 SCC 574. On these tests, we will try to find out whether these transactions would amount to lease or licence:
(1) Nomenclature is not conclusive though it may be one of the guiding factors.
(2) The intention of the parties will have to be ascertained notwithstanding the various terms of the deed. However, that does not mean that the terms of the deed are to be ignored altogether. In this particular case, we want to focus attention on clause (10) of the deed which reads as under:
“The licensee shall not have any right or interest in the shop No. 2 except as licensee in accordance with the terms and conditions of this agreement. The possession of the shop shall vest with the licensor and the licensor shall have the right to enter at any time to inspect the same.”
3. We may also add that similar clause occurs in each of the documents referred to above. Therefore, as per this clause the licensee does not have any interest in the immovable property which is a distinctive badge of a lease. That has to be given due weight and credit.
4. In this case, the evidence discloses two important factors: (1) the licensee taking the key in the morning from the licensor and returning in the evening and (2) the existence of goods of the plaintiff and his mother in a portion of the shop in dispute. These two clearly will go to establish that the appellant-licensee was not in exclusive possession which test is emphasised in Capt. B.V D'Souza case (1989) 3 SCC 574. Besides the above, the appellant-licensee has been executing periodical deeds as seen from the above. Consequently, we hold that the High Court is right in its conclusion that what was granted in favour of the appellant was only a licence and not a lease. The appeal is dismissed accordingly. No costs. The interim injunction granted will stand vacated.
Alert