ACHINTY A KUMAR SAHA v.

M/S. NANEE PRINTERS AND ORS.

JANUARY 30, 2004

[P. VENKATARAMA REDD! AND S.H. KAPADIA, JJ.]

Rent Control and Eviction:

C West Bengal Premises Tenancy Act, 1956; Ss. 13(/) & /3(6)(g)!Code of Civil Procedure, 1908; Ss. 2(h), JOO & 103: Execution of an agreement of licence of the suit property-Widow having life estate transferring it in favour of alleged licensee-Subsequent sale thereof by her son-Vendee filing a title suit for eviction and possession-Dismissed by Trial Court holding that the D agreement was an agreement of licence and the licence was irrevocab/e- Reversed by the first Appellate Court-On appeal, reversed by the High Court holding the agreement as agreement <?f tenancy and not licence-On appeal, Held: Exclusive possession of the premises given for monetary consideration with a clause for renewal of the licence,· and respondent making payment of municipal taxes and also made improvement on the properties-Son of the E landlady/vendor consented to the agreement-Landlady issuing rent receipts- Hence, intention, conduct and surrow1ding circumstances go to show that the agreement was for tenancy in disguise of a licence.

Agreement-Nature of-Substantial question of law-Not adjudicated upon-Power of the High Court-Held, since plea of tenancy raised before the first Appellate Court but not adjud.icated upon, High Court rightly ivoked provisions under Section 103 CPC and gave its finding against the Vendee- Appel/ant/Vendee failed to make any ground uls I 3(1) of the Act nor gave notice under Section J3(6)(g) of the Act-Hence, title suit falls.

Father of respondent No.4, owner of the suit premises, executed a G Will bequeathing all his properties to his widow during. her life time but with no right to alienate the property and thereafter to his son (resp?ndent No.4). Later, mother of respondent No.4 executed an agreement of licence for JI years in favour of a firm (respondent Nos. 1 and 2). Thereafter, respondent No.4 sold the entire properties including the suit premises to H 28

A.K. SAHA v. NANEE PRINTERS 29 ~

I' appcllant/Vendee. Vendee filed a Title Suit for eviction against respondent A Nos. I and 2. Trial Court dismissed the suit holding that respondent Nos. t and 2 were licensees and not tenants; that there was a renewal clause in the agreement; that respondent No.4 was fully aware of the said agreement and in fact consented to it; and that the licence was irrevocable as the respondents had raised a permanent construction thereon with the consent B of the landlady (mother of respondent No.4). Aggrieved, Vendee filed an appeal. Appellate Court allowed the appeal holding that the mother of respondent No.4 had a limited right of ownership and therefore could not create any right in the property to transfer the same to the respondents, and passed decree of eviction in favour of the Vendee. The Court did not adjudicate upon the question of tenancy. c

On appeal, High Court found that the agreement was of tenancy and not of licence and that the agreement was given the nomenclature of licence with a view to avoid application of the provisions of West Bengal Premises and Tenancy Act. Hence, suit of eviction against the respondents was not D maintainable; and that in the absence of notice u/s 13(6)(g) and without any ground for eviction under Section 13(1) of the Act, the impugned decree was a nullity. Hence the present appeal.

It was contended for. the appellant that the second appeal did not involve substantial question of law nor the question was formulated by E ,... the High 'Court. In the circumstances, High Court was not justified in entertaining the second appeal; that the High Court entertained a new plea of tenancy without following the mandatory provisions of Law; and that the High Court erred in invoking Section 103 CPC to the facts of the case.

Dismissing the appeal, the Court F

HELD: 1.1. In order to ascertain the substance of a transaction, the purpose and substance of the agreement require to be ascertained and intention of the parties is the deciding factor. To ascertain the intention, the surrounding circumstances including the conduct of the parties need G to be examined. In the present case, the High Court was right in examining the terms of the agreement coupled with the circumstances surrounding

~ the agreement in question like exclusive possession of the premises being - given to respondent Nos. l and 2 for monetary consideration for t t years with a clause of renewal of the licence for a further period; payment of .. municipal taxes by respondent Nos. t and 2, the rent receipts issued by H

A the land lady, the premises being let out for business purposes in a residential locality and conduct 'of the plaintiffs in not examinin"g respondent No.4 who had given consent to the agreement in question. All these circumstances taken togetler show that respondent Nos.' I apd 2 were not trespassers. They show that the agreement was a tenancy 'in the B disguiseof a licence. (34-G-H; 35-A-BI

1.2. The main issue before the '.frial Court was whether , the agreement dated 5.7.1976 was a licence or a tenancy. The Trial Court .held it to be a licence. The issue was there before. the lower AppelJateCourt also but it was not adjudicated upon. When the core issue is not C adjudicated upon, it results in a substantial question of law under Section

100 CPC. In the circumstances, the High Court was right in invoking Section 103 CPC. Moreover, the plea of tenancy was allowed to be argued before the-first Appellate Court but the said point was also not adjudicated upon. Lastly, in se.cond appeal before the High Court, this poit was argued by both sides whereupon the High Court gave its finding to the D effect that respondent Nos. I and 2 were tenants and their tenancy cannot /

be terminated without notice under Section 13(6) of the Act and the failure of appellant making out any of the grounds under Section 13(1) of the said Act 1956. (36-D-E; 37-~-BI

Santosh Hazari v. Purushottam Tiward (Dead) by Lrs., AIR (2001) SC E 965 and V. Dhanapal Chettiar '' Yesodai Ammal, AIR (1979) SC 1745, relied on.

Kshitish Chandra Purkait v. Santosh Kumar Purkait and Ors., (19971.5 sec 434, held inapplicable.

F 1.3. The fact that petition for amendment of written statement raising the plea of statutory tenancy was rejected during the pndency of Second Appeal cannot be considered to be fatal to the respondnts' case. The issue whether the respondents were tenants or not, was very muc_h alive throughout the proceedings, though the Appellate Cou~ did not deal with G that aspect. The High Court, therefore, assumed its powers ner Section

103 .or the Act and found that issue against the appellant. (37-G-H; 38-AI

1.4. The Title Suit filed by the appellant was on the basis that the agreement dted Sth July, 1976 was a licence which stood revoked and on revocation respondent Nos. I and 2 became trespassers. However,; in H view of the rinding of the High Court that the said agreement was a

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A.K. SAHA v. NANEE PRINTERS [KAPADIA, J.] 31 contract or tenancy and that the respondents were tenants, the entire A substratum or the original. Title Suit falls. 137-E-FI

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6203 of 1999.

From the Judgment and Order dated 16.9.98 of the Calcutta High Court B in S.A. No. 510 of 1996.

S.B. Sanyal, Ranjit Kumar, Pijush K. Roy, G. Ramakrishna Prasad for the Appellant.

Jaideep Gupta, Rana Mukherjee, Siddharth Gautam, Goodwill lndeevar c for the Respondent.

The Judgment of the Court was delivered by

KAPADIA, J. Ashok Kumar Bose (since deceased) was the owner of the premises No. I 1911A, Harish Mukherjee Road, Bhowanipore, Calcutta- D 700 026. He died leaving behind him his wife Smt. Madhuri Bose, (since deceased), Shri Ajoy Kumar Bose (son) and a daughter. Ashok Kumar Bose left a Will dated 1st March, 1974 bequeathing all his properties to his widow Smt. Madhuri Bose for the period of her natural life, but with no right to alienate the property and thereafter to his son Ajoy Kumar Bose (respondent E No. 4 herein). On 5th July, 1976 Smt. Madhuri Bose executed an agreement of licence for 11 years in favour of Mis Nanee Printers, a proprietary firm carried on by one Ranaji Ganguly (respondent Nos. I and 2 herein). On 10th October, 1980, the appellant herein bought the entire property No. 119/IA

including the suit premises consisting of a Printing Press in a Katcha shed from Ajoy Kumar Bose (respondent No.4) to which the deceased Smt. Madhuri F Bose was a confirming party~ On 7th July, 1981, the present appellant filed a Title Suit for eviction against respondent Nos. 1 and 2 herein and sought possession of the suit premises. In the Title Suit, a declaration was sought to the effect that Mis Nanee Printers were in unauthorised occupation of the suit premises as trespassers on revocation of the leave and liCence agreement G dated 5th July, 1976. Mis Nanee Printers contested the Title Suit In the written statement, they alleged that they were monthly tenants in the suit > premises; that the purported agreement dated 5th July 1976 was a tenancy in ---- disguise of a licence; that Shri Ajoy Kumar Bose (respondent No. 4 herein) was a consenting party to the agreement dated 5th July, 1976 and since respondent No. 2 herein was in need of accommodation, he had no option but H

A to sign the agreement dated 5th July, 1976. By the written statenient, Mis Nanee Printers denid that Smt. Madhuri Bose (since deceased) had no right to let out the suit premises on rent. It was further alleged by M/s Nanee Printers that under the agreement dated 5th July 1976, Mis Nanee Printers were permitted to install electricity and telephone in the premises and under the circumstances they were tenants in respect of the premises. In the alternative B it was alleged that even if they were held to be licensees, the said licence was irrevocable and therefore, the suit was liable to be dismissed with costs.

In the said suit, the following issues were framed by the trial court:

"I. Is this suit maintainable?

Has the suit been properly valued?

Has the Court fees been paid sufficient?

Has this Court jurisdiction to try the suit?

'5.

Are the defendant Nos. 2 and 3 thika tenants in respect of the suit premises?

Is there any relation of landlord and tenant between the patties?

Are the defendants tenants or licensees in respect of the suit premises?

If the defendants nos. 2 to 3 are found to be licensees, whether the said License is revocable or not?

Is the plaintiff entitled to get a decree as prayed for?

10. To what other reliefs, the plaintiff is entit.Jed?"

By judgment and order dated 29th August 1992, the trial Court came tothe conclusion that respondent Nos. I and 2 herein were licensees and not tenants; that the 1icence was for 11 years for running a Printing Press with libe11y to the licensor to renew the licence for further 11 years and therefore, G respondent Nos. 1 and 2were not trespassers as alleged by the appellant

(plaintiff) herein. The trial Court further found that Shri Ajoy Kumar Bose (respondent-No.4) was fully a..yare of the agreement dated 5th July, 1976 between his-mother Smt. Madhuri Bose on one hand and respondent Nos: I and 2 herein on the other hand and that he had consented to the agreement dated 5th July, 1976 by his conduct. However, the trial court found that H respondent Nos. I and 2 have failed to prove monthly tenancy. The trial

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"' ,-7 A.K. SAHA v. NANEE PRINTERS [KAPADIA, J.) 33

court further found that the licence was irrevocable as respondent Nos. I and A 2 had raised a permanent construction and extension over the existing structure by 50 feet with the consent of Smt. Madhuri Bose and her son respondent No.4. The trial court further found that Shri Ajoy Kumar Bose (respondent No. 4) was an important witness and yet he was not examined by the appellant herein. In the circumstances, the trial court dismissed the Title Suit filed by B the appellant.

Being aggrieved by the judgment and order of the trial court, the appellant herein filed an appeal before the 9th Additional District Judge, Alipore vide Title Appeal No. 132 of 1993. By judgment and order dated

I 0th May 1996, the Appellate Court allowed the appeal holding that Smt. c Madhuri Bose had a limited ownership right and she was not competent to create any right in property and transfer the same in favour of respondent Nos. I and 2. The first Appellate Court further found that there was no evidence of a irrevocable licence in favour of respondent Nos. I and 2 and, therefore, the judgment of the trial court was reversed and a decree of eviction was passed in favour of the appellant herein and against respondent 'Nos. I D and 2 herein. Although the first Appellate Court allowed respondent Nos. I and 2 to argue on the question of tenancy, the Court did not adjudicate upon that question.

; Being aggrieved by the judgment and order of the first Appellate Court dated I 0th May 1996, respondent Nos. I and 2 herein preferred an appeal E before the High Court being Second Appeal No. 510 of 1996 inter a/; a on the ground that the first Appellate Cou11 had failed to adjudicate the question of tenancy; that the first Appellate Court had failed to appreciate that the licence in question was tenancy in disguise. At this stage, it may be noted that in the Second Appeal preferred by respondent Nos. I and 2 before the F High Court, the plea of irrevocable licence was given up. At this stage, it may be pointed out that during the pendency of the appeal before the High Court, respondent Nos. I and 2 herein had moved an application under Section

107 Civil Procedure Code (C.P.C.) and under Order XLI Rule 23 C.P.C. for amendment of the written statement filed by respondent Nos. I and 2 in the trial com1. By judgment and order dated 31st January 1997, the application G for amendment of the written statement was dismissed by the High Court > pending the hearing and final disposal of_ the Second Appeal.

By judgment and order dated 16th September, 1998 passed by the High Court in Second Appeal No. 510 of 1996, the High Court came to the conclusion that since exclusive possession of the suit premises was given for H

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34 SUPREME COURT RErORTS

[2004) 2 S.C.R.

"""' A business purposes in a residential area for consideration to respondent Nos.

I and 2 with a right to make further construction, the agreement dated 5th July, 1976 was a tenancy and not a licence. The High Cou~ further found that under the agreement dated 5th July 1976, respondent Nos. I and 2 were entitled to bring in electricity and telephone connection which also indicated

B that the object of the agreement was to create a tenancy. The High Court further found that the purported licence was for 11 years with authority given to the licensor Smt. Madhuri Bose to renew the licence for further 11 years also indicated that the agreement was that of a tenancy and not a licence. The High Court came to the conclusion that the agreement was given a nomenclature of leave and licence in order to avoid the provisions of West ... c Bengal Premises Tenancy Act, 1956 (hereinafter referred to as "the said Act

1956"). In the circumstances, the High Court came to the conclusion that the suit instituted by the appellants for eviction of respondent Nos. 1 and 2 as trespassers was not maintainable. That in this case, respondent No. 4 was an important witness and yet he was not examined by the appellant and in the

D circumstances, the First Appellate Court ought to have drawn an adverse inferen.ce aglinst the appellant. The High Court further observed that even municipal taxes were payable and paid by respondent Nos. I and 2 which circumstance supported the case of tenancy in favour of respondent Nos. I and 2. While allowing the appeal, the High Court further observed that the tenancy for 11 years came within the purview of the said Act 1956 and in ' E the absence of notice under Section 13(6)(g) of the said Act 1956 and in the absence of any of the grounds of eviction under Section 13( I) of the said Act

1956; the impugned decree was a nullity. Accordingly, the High Court.allowed the Second Appeal No. 510 of 1996 tiled by respondent Nos. I and 2 and set

aside the judgment and order passed by the First Appellate Court and dismissed

F the suit tiled by the appellant herein. Being aggrieved by the judgment and order passed by the High Court, the appellant has come to this Court by way of special leave.

Before coming to the arguments, we may point out that in cases where courts are required to consider the nature of transactions and th~ status of

G parties thereto, one cannot go by mere nomenclatures such as, licence, licensee, licensor, licence fee etc. In order to ascertain the substance of the transaction, we have to ascertain the purpose and the substance of the agreement. In such " cases, intention of the parties is the deciding factor. In order to ascertain the intention, we have to examine the surrounding circumstances including the conduct of the parties. In the present case, the High Court was right in H examining the terms of agreement coupled with the circumstances surrounding

A.K. SAHA v. NANEE PRINTERS [KAPADIA, J.] 35

the agreement in question like exclusive possession of the premises being A given to respondent Nos. I and 2 for monetary consideration for 11 years with a clause of renewal of the licence for further 11 years; payment of municipal taxes by respondent Nos. I and 2, the rent receipts issued by Smt.

Madhuri Bose, the premises being let out for business purposes in a residential locality add conduct of the plaintiffs in not examining Ajoy Kumar Bose (respondent No.4) who is held to have consented to the agreement in question. B All the above circumstances taken together show that respondent Nos. I and 2 were not trespassers. They show that the agreement was a tenancy in

disg~ of a licence.

Mr. Sanyal, learned senior counsel for the appellant contended that a C bare look at Section 100 C.P.C. shows that the jurisdiction of the High Court to entertain the second appeal is confined to appeals which involve substantial question of law specifically set out in the Memo of Appeal and formulated

by the High Court. He contended that in the present case no such question has been set out in the Memo of Appeal and nor is the question so formulated and the High Court was, therefore, not justified in entertaining the Second D Appeal. He further contended that in second appeal, the High Court proceeded to entertain a new plea of tenancy under the West Bengal Premises Tenancy Act, I 956 and e.ven rendered its decision on the said point without following I the mandatory provisions of Section 100 C.P.C. He submitted that tenancy under the said Act 1956 was never in issue. He submitted that the judgment E of the High Court was illegal and in excess of its jurisdiction for deciding a new point taken up for the first time in second appeal and, therefore, not sustainable and deserves to be set aside. In this connection, reliance was placed by him on the judgment of this Court in the case of Kshitish Chandra Purkail v. Santosh Kumar Purkait and Ors., reported in (1997] 5 SCC 438.

Mr. Sanyal further contended that on 6th April J 992 an application was F moved by respondent Nos. 1 and 2 to amend the written statement pending the hearing and final disposal of second appeal before the High Court which was expressly rejected by the High Court vide its order dated 3 lst January

1997. In this connection, i~ was pointed out that respondent Nos. I and 2 had applied for amendment of the written statement vide application dated 6.4.1992 G in the Title Suit of198 l and by that application they attempted to raise a new ;.. plea of statutory tenancy under the said Act 1956 which was rejected by the High Court in second appeal, and yet by the impugned judgment, the High • Court has hetd that respondent Nos. t and 2 were the tenants under the said Act 1956. Mr. Sanyal, therefore, contended that the High Court had erred in entertaining a new plea for the first time in second appeal and that it had H

A erred in rendering a decision 01,1 a riew point without even prior notice thereof

to the appellan_ts which was not permissible under Section I 00 C.P.C. and consequently, the impugned judgn1ent deserves to be set aside,. Learned counsel for the appellant further contended that the High Court had erred in invoking 'section 103 C.P.C. in.this case. He contended that section 103 C.P.C. had no

application to the facts of this case as respondent Nos. I and 2 had given up .B the plea of tenancy (isue No. 6) before the trial Court. He further contended that the trial court in the Title Suit had categorically come to the conclusion that respondent Nos. I and 2 were not the tenants of the suit premises and despite that declaration n~ cross objection was filed before the First ellate Court. He further pointed out that even the plea of irrevocable licencv was C given up by responden~ Nos. I and 2 in second appeal before the High Court.

Mr. Sanyal, learned senior counsel for the appellant contended that in order to attract section I 03 C.P.C., the appellate Cou11 must be satisfied that an .issue necessary for. the disposal of the appeal had arisen before the lower

appellae court which has not been decided by the lower appellate court or which has been wrongly decided by the said Court. In _the circumstances, he submitted that the High Court had erred in invoking section 103 C.P.C. in this case.

We do not tina any merit in the arguments advanced on behalf of the appellant. The main issue around which the entire cse evolves is : whether E the agreement dated 5.7.1976 was a license or a tenancy. This issue was there before the trial court and the agreement was held to be a license. It was there also before the lower Appellate Court but it was not adjudicated upon. When the core issue is not adjudicated upo11, it results in a substantial question of law under "section 100 C.P.C. In the case of Santosh Hazari v. Purushouam Tiward (Dead) by lrs., reported in AIR (200 I) SC 965, it has been held that F whether a question of law. is a substantial question of law in a case will

depend on facts and circumstances Of each case, the paramount consideration being the need to strike a balance betwen obligation to do justice and necessity to avoid prolongation of any dispute. In that matter, this Court found that an important issue had arisen for determination before the first appellate court: whether dependent.had made out the case of adverse possession and whether G the suit filed by the plaintiff was liable to be dismissed as barred by time under Article 65 ofthe Limitation Act 1963, which issue was decided by a cryptic order passed by the first appellate court and in the circumstances this Court took the view that failure to decide the core issue gives rise to a substantial question of law. In our view, the judgment of this Court in the H case of Santosh Hazari, (supra) applies to the facts of this case. Although the

A.K. SAHAv. NANEE PRINTERS [KAPADIA, J.] 37

core issue of tenancy arose before the first appellte co'urt the same \vasnot A adjudicated upon and in the cirCunlStances the High court w3s right in irlVoking Section 103 C.P.C. Moreover as can be seen from the record, the plea of tenancy w;,. allowed to be rgued before the first appllat~ court but the said : - '

' J .. ,, - ' • ' - , • . point was not adjudicated upon. Lastly, in the High Court i~ second appeal, this point was argued by both sides whereupon the High ·court gave its B finding to the effect that respondent Nos. I and 2 were tenants and their tenancy cannot be terminated without notice under Section 13(6) and the failur,• of appellant making out ariy of the grounds under Section -13(1) of the <"-saifAct 1956. Hence, the judgment of this Court in the case of Kshitish . . - . .

Chandra, (supra) has no application. It is now settled by the judgment of this Court in the case of V. Dhanapal Chettiar v. Yesodai Ammal, reported in AIR C

(1979) SC 1745 that in order to get a decree of eviction against the tenancy under any State Rent Control Act, determination of a lease in accordance with the T.P. Act is unnecessary and surplusage as the landlord cannot get the eviction of the tenant even after such determination and the tenant continues to be the tenant even thereafter till the landlord makes out a case under the . D Rent Act: This position is also indicated by the definition of the word 'tenant' under section 2(h) of the said At 1956. ' . f Lastly it has been contended on behalf of the appellant that agreement dated 5th July 1976 has since expired by afflux of time during the pendency of proceedings and in view of subsequent event the High Court should have E moulded the relief and granted decree for eviction on that ground alone. We do not find any merit in this argument. The Title Suit filed by the appellant was on the basis that the agreement dated 5th July; 1.976 was a licence which stood revoked and on revocation the said respondent Nos. I and 2 became trespassers. However, in view of the above finding of the High Court that the said agreement dated 5th July, 1976 was a contract of tenancy and that the F said respondents were tenants, the entire substratum of the original Title Suit falls. Hence, we do not find any merit in the above argument

The contention of the appellant's counsel that Issue No. 6 having not been pressed before the trial Court, the plea°i>f tenancy could not have been raised by the respondents is equally untenable. Issue No. 7 is comprehensive G enough to cover that point. The fact that petition for amendment of written statement raising the plea of statutory tenancy was rejected during the pendency of Second Appeal cannot also be considered to be fatal to the respondents' case. The issue whether the respondents were tenants or not was very much alive throughout the proceedings, though the appellate Court did not deal H

A with that aspect. The High Court, therefore, assumed its powers under Section

I 03 and found that issue against the appellant.

For the foregoing reasons, this civil appeal fails. We, accordingly, dismiss the same, but in the facts and circumstances of the case, direct the parties to bear their own cots throughout.

S.K.S.

Appeal dismissed.