Source: https://www.lawweb.in/2017/07/whether-licence-is-created-even-if.html
Timestamp: 2019-04-18 21:07:06+00:00

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Law Web: Whether licence is created even if document mentions payment of rent?
Whether licence is created even if document mentions payment of rent?
From the above materials on record it is evident that the plaintiff company itself is a tenant in the suit premises and that being so, it has been rightly argued by Mr. Choudhuri, on behalf of the plaintiff company, that a tenant has got no power to transfer such right or interest to any other person. Sub-tenancy, even if there be any, can only be created by the tenant with prior consent of the landlord. It is nobody's case that such subtenancy was at all created by the appellant in favour of the respondent with prior permission or consent of the landlord or the lessor, as the case may be. A grant of exclusive possession can only be a licence and not a lease where the grantor has no power to grant a lease. An intention to enter into the legal relation of landlord and tenant cannot be imputed by law where circumstances and conduct negative such intention. It appears that both the learned first Appellate Court and learned Trial Court laid emphasis on the word 'rent' as used in Exts. C and D. It has been specifically laid down by the Supreme Court in CM. Beena and Anr. v. P.N. Ramachandra Rao, (2004)3 Supreme Court Cases 595 at page 599 (para 9) that user of the terms like 'lease' or licence', lessor' or licensor', 'rent' or licence fee' is not by itself decisive of the nature of the right created by the document and an effort should be made to find out whether the deed confers a right to possess exclusively coupled with transfer of a right to enjoy the property or what has been parted with is merely a right to use the property while the possession is retained by the owner. It has been further held that the conduct of the parties before and after the creation of relationship is of relevance for finding out their intention. In its wider sense rent means any payment made for the use of land or buildings and thus includes the payment by a licensee in respect of the use and occupation of any land or building. It has been so held by the Supreme Court in State of Punjab v. Brtish India Corporation Ltd,, reported in AIR 1963 Supreme Court 1459 at page 1463 para 15. If the parties intend to bring into existence merely a licence and not a lease, the word 'rent' used in such case is in fact loosely used for 'fee'. It is settled law that the intention of the parties is the decisive consideration to judge whether an agreement creates between the parties the relationship of landlord and tenant or merely that of licensor and licensee and in absence of any formal document of the intention of the parties must be inferred from the circumstances and conduct of the parties.
1. This appeal at the instance of the appellant arises out of the Judgment and decree dated 11th May, 1991 passed by Shri A.K. Chatterjee, learned Additional District Judge, 12th Court, Alipore in Title Appeal No. 47 of 1989 affirming the Judgment and decree dated 20th December, 1988 passed by Shri T. Maity, learned Munsif, (now designated as Civil Judge, Junior Division), 3rd Additional Court, Alipore, in Title Suit No. 238 of 1986 which was previously numbered as Title Suit No. 14 of 1984.
2. The factual matrix leading to the instant appeal may briefly be narrated thus.
3. The plaintiff has instituted the suit claiming decree for eviction of the defendant from the suit premises and recovery of possession thereof and also decree for mesne profits. As per the plaint case the plaintiff company is a tenant in respect of the suit premises being Flat No. 5 on the second floor of the building known as "Paul Mansions" at premises No. 6, Bishop Lefroy Road, P.S. Bhowanipore. The plaintiff granted licence to the defendant to occupy the said flat for his residential purpose for which the defendant had to pay licence fee of Rs. 375/- per month payable according to English calendar month to the plaintiff. The said licence to occupy the flat was revoked by the plaintiff. The defendant was asked to vacate the said flat and deliver possession thereof on expiry of 30th June, 1981. In spite of repeated requests the defendant did not deliver possession of the said flat to the plaintiff. By the letter dated 28th July, 1983 issued by the plaintiff through its advocate to the defendant the licence to occupy the said flat was determined on expiry of 7 days from the date of receipt of the said letter by the defendant. In spite of receipt of the same the defendant did not care to make over possession of the said flat to the plaintiff.
4. In the written statement the defendant has denied the allegations contained in the plaint. The plea as raised in the written statement is that the defendant is a monthly tenant at monthly rent of Rs. 375/- per month payable according to English calendar month. It is the specific case of the defendant was never granted licence to occupy the said flat and as such the alleged revocation of licence by the plaintiff does not arise.
5. On consideration of the materials on record the learned trial Court has arrived at the finding that the suit flat was let to the defendant for use as residence by reason of his being in the service of complaint of the plaintiff company and as such Section 13(10(g) of the West Bengal Premises Tenancy Act is attracted in such case. The learned Trial Court is of the view that the defendant is a tenant under the plaintiff and not a licensee and so the suit is not maintainable in its present form. Consequently the learned Trial Court dismissed the suit.
6. Aggrieved, the plaintiff preferred appeal being Title Appeal No. 47 of 1989 and on appeal the learned Additional District Judge, 12th Court, Alipore has arrived at the finding that the defendant/respondent cannot but be treated a tenant in respect of the suit flat under the plaintiff/appellant and he cannot be treated as tenant in respect of the suit flat under the plaintiff appellant and he can not be treated as licensee. Such finding ultimately resulted in dismissal of the appeal.
7. Being aggrieved by and dissatisfied with the Judgment and decree passed by the learned first Appellate Court affirming the Judgment and decree passed by the learned trial Court the plaintiff/appellant has preferred the instant appeal alleging inter alia that both the learned Courts below erred in law in dismissing the suit, that while considering whether the defendant was a licensee or a tenant under the plaintiff company, both the learned Courts below failed to take into consideration the intention of the parties, that the learned Courts below failed to consider that the defendant was not inducted as tenant and that there was no intention to create tenancy in favour of the defendant, that the learned Courts below should have held that the defendant was not a tenant and had no tenancy right in the suit premises and that the learned Courts below should have held that the defendant was a licensee under the plaintiff company and his licence to use and occupy the suit premises had been revoked.
9. Whether, keeping in view the nature of transaction between the plaintiff and the defendant, defendant/respondent may be held to be a licensee under the plaintiff, as while considering such matter, all relevant factors should be taken into consideration, as the word 'rent' is not decisive.
10. It appears that the learned trial Court referred to the document marked Ext. C which is the letter dated 12th June, 1979 addressed by the Assistant Personnel Manager of the plaintiff company to the defendant wherefrom it appears that the defendant was requested to inform the plaintiff company as to whether he was willing to occupy the company's quarters on payment of 10% of his salary as rent to be realised through salary bill. Relying on this document the learned Trial Court has held that the defendant was allowed to occupy the residential accommodation at the disposal of the plaintiff company owing to his employment under the plaintiff company. The learned Trial Court has placed reliance on another document marked Ext.D which is a pay slip of the defendant for the month of March, 1981 showing that Rs. 275/- per month was paid to the defendant as house rent allowance and Rs. 100/- out of the total rent of Rs. 375/- had been deducted from the salary of the defendant. Primarily relying on the aforesaid two documents marked Exts. C and D the learned trial Court has held that the suit premises had been let to the defendant by the plaintiff company for use as residence by reason of his being in the service or employment of the plaintiff company and the case comes within the purview of section 13(l)(g) of the West Bengal Premises Tenancy Act.
11. The learned first Appellate Court has mainly relied on the document marked Ext. D which shows that Rs. 100/- was paid by the respondent to the appellant company for occupation of the premises in excess of what had been given by the appellant to the respondent as house rent allowance. As observed by the learned first Appellate Court, the very conduct of the appellant company towards the respondent would clearly show that the respondent had been given occupation of the disputed premises separately from the contract of service by and between the parties and in such circumstances the respondent can only by treated as tenant in respect of the suit premises under the appellant and not as a licensee. The learned first Appellate Court has ultimately held that the notice of ejectment Ext. 2 cannot be treated to be legally valid, just and proper nor on the strength of such notice the plaintiff/appellant can ask for eviction of the respondent from the suit premises.
12. Mr. Amitava Choudhuri, the learned advocate for the appellant, has contended that there were no terms and conditions in the letter of appointment of the respondent (Ext. 12) to show the respondent would be provided with the residential accommodation and there was no written agreement between the appellant and the respondent regarding the respondent's residential accommodation in the suit premises. It has been further urged by Mr. Choudhuri that no rent receipt was granted to the respondent and although the appellant allowed the respondent to use and occupy the suit premises, there was no transfer or assignment of the appellant's right or interest in the suit premises which was rented accommodation of the plaintiff company. It has been argued by Mr. Choudhuri that the appellant company being itself a tenant in the suit premises had no power to transfer such right or interest to any person. He has drawn my attention to the evidence on record to show that the respondent was not in exclusive control or possession of the suit premises and the evidence of the defendant/respondent reveals that he admitted in cross-examination that an employee of the plaintiff company stayed in the servant's room and another employee of the plaintiff company stayed in the garage of which a duplicate key was given by the employee to him. From the evidence on record he has further pointed out that there is clear admission of the defendant/respondent in his cross-examination that the electric bill of the suit premises stands in the name of the plaintiff company. As contended by Mr. Choudhuri, the defendant was not in exclusive control of the suit premises and the word 'rent' appears to have been loosely or carelessly used in the documents marked Exts. C and D. It has been urged by him that no relationship of landlord and tenant was created between the appellant and the respondent because there was no intention to create any such tenancy in favour of the respondent. It is the contention of Mr. Choudhuri that the nature of occupation of the suit premises by the defendant/respondent was permissive in nature which created relationship of licensor and licensee between the appellant and the respondent.
13. Mr. Saibal Acharyya, the learned advocate for the respondent, on the other hand, has contended that the materials on record and especially use of the word 'rent' in Exts. C and D clearly reveal existence of relationship of landlord and tenant between the appellant and the respondent and since the plaintiff/appellant has sought eviction of the defendant from the suit premises treating the latter as licensee and not as tenant, both the learned Courts below have arrived at justifiable finding that the suit as framed is not maintainable. It has been further urged by him that there is no material on record to indicate that the defendant/respondent was a licensee under the plaintiff company in respect of the suit premises.
14. I have carefully gone through the materials on record and considered the rival contentions raised by Mr. Choudhuri on behalf of the appellant and Mr. Acharyya on behalf of the respondent. The admitted fact emerging from the materials on record is that the plaintiff company is not the owner but the tenant in respect of the suit premises. It has been specifically admitted b the defendant/respondent (DW 1) in his evidence that the house where he lives does not belong to the plaintiff, but the plaintiff is a tenant of that flat and pays rent at the rate of Rs. 375/- per month. In cross-examination he has specifically stated that in course of his employment with the plaintiff company he came to know that the plaintiff is a tenant of the suit flat, garage and the servant's quarters. It further transpires from his evidence that an employee of the plaintiff company was in occupation of the servant's quarters and another employee of the plaintiff company stays in the garage. His cross-examination further reveals that Rs. 375/- per month was deducted from his salary for the occupation of the flat. He has categorically stted in cross-examination that the occupational charge was deduced from his salary.
15. From the above materials on record it is evident that the plaintiff company itself is a tenant in the suit premises and that being so, it has been rightly argued by Mr. Choudhuri, on behalf of the plaintiff company, that a tenant has got no power to transfer such right or interest to any other person. Sub-tenancy, even if there be any, can only be created by the tenant with prior consent of the landlord. It is nobody's case that such subtenancy was at all created by the appellant in favour of the respondent with prior permission or consent of the landlord or the lessor, as the case may be. A grant of exclusive possession can only be a licence and not a lease where the grantor has no power to grant a lease. An intention to enter into the legal relation of landlord and tenant cannot be imputed by law where circumstances and conduct negative such intention. It appears that both the learned first Appellate Court and learned Trial Court laid emphasis on the word 'rent' as used in Exts. C and D. It has been specifically laid down by the Supreme Court in CM. Beena and Anr. v. P.N. Ramachandra Rao, (2004)3 Supreme Court Cases 595 at page 599 (para 9) that user of the terms like 'lease' or licence', lessor' or licensor', 'rent' or licence fee' is not by itself decisive of the nature of the right created by the document and an effort should be made to find out whether the deed confers a right to possess exclusively coupled with transfer of a right to enjoy the property or what has been parted with is merely a right to use the property while the possession is retained by the owner. It has been further held that the conduct of the parties before and after the creation of relationship is of relevance for finding out their intention. In its wider sense rent means any payment made for the use of land or buildings and thus includes the payment by a licensee in respect of the use and occupation of any land or building. It has been so held by the Supreme Court in State of Punjab v. Brtish India Corporation Ltd,, reported in AIR 1963 Supreme Court 1459 at page 1463 para 15. If the parties intend to bring into existence merely a licence and not a lease, the word 'rent' used in such case is in fact loosely used for 'fee'. It is settled law that the intention of the parties is the decisive consideration to judge whether an agreement creates between the parties the relationship of landlord and tenant or merely that of licensor and licensee and in absence of any formal document of the intention of the parties must be inferred from the circumstances and conduct of the parties. Reference can be made in this context to Mrs. M.N. Clubwala and Anr. v. Fida Hussain Saheb and Ors., .
16. The ratio of the decision in the case of Mrs. M.N. Clubwala (supra) was followed in Konchada Ramamurty Subudhi (dead) by his Legal Representatives v. Gopinath Naik and Ors., .
"The question is whether the occupier under this agreement is a tenant or a licensee. The distinction between a lease and a license is well known. Section 105 of the Transfer of Property Act defines a lease. Section 52 of the Indian Easements Act defines a license. A lease is the transfer of a right to enjoy the premises; whereas a license is a privilege to do something on the premises which otherwise would be unlawful. If the agreement is in writing it is a question of construction of the agreement having regard to its terms and where its language is ambiguous, having regard to its object, and the circumstances under which it was executed whether the rights of the occupier are those of a lessee or a licensee. There transaction is a lease if it grants an interest in the land; it is a license if it gives a personal privilege with no interest in the land. The question is not of words but of substance and the label which the parties choose to put upon the transaction, though relevant is not decisive. The test of exclusive possession is not conclusive, see Errington v. Errington and Works, (1952) 1 KB 290 (298) Associated Hotels of India Ltd. v. R.N. Kapoor, though it is a very important indication in favour of tenancy. See Addiscombe Garden Estates Ltd. v. Crabbe, 1958-1 QB 513 at p. 525. A servant in occupation of premises belonging to his master may be a tenant or a licensee, see Halsbury's Laws of England, Third Edition, Vol.23, Article 990, p. 411. A service occupation is a particular kind of license whereby a servant is required to live in the premises for the better performance of his duties. Formerly, the occupation of the servant was regarded as a tenancy unless it was a service occupation, see Nippon Menkwa Kalmshiki v. F. Portlock AIR 1922 Bom 70. Now it is settled law that a servant may be a licensee though he may not be in service occupation...."
18. Applying the ratio of the decisions of the Supreme Court as mentioned hereinbefore to the facts and circumstances of the present case I am clearly of the view that the appellant allowed the respondent to use and occupy the suit premises as licensee and not as tenant and there was no transfer or assignment of the appellant's right or interest in the suit premises which was a rented accommodation of the appellant company. The circumstances emerging from the above materials on record drive me to hold unhesitatingly that in the instant case intention of the parties was to bring into existence merely a licence and not a lease and the word 'rent' was loosely used in Exts. C and D for 'fee'. In my view, both the learned first Appellate Court and the learned Trial Court have judged the matter from wrong angle and have come to erroneous findings which are contrary to the evidence on record and circumstances emerging there from. The vital aspect of the matter as pointed out above have escaped the notice of the learned first Appellate Court and the learned Trial Court. The curious feature noticeable from the materials on record is that by the letter dated 22nd May, 1981 marked Ext. 6 the appellant company terminated the services of the respondent who was allowed to make use of the company's quarters for residential purpose till 30th June, 1981. In spite of repeated requests possession of the company's quarters was not handed over by the respondent to the appellant whereupon the licence was revoked by the appellant by serving the notice dated 28th July, 1983 copy of which is marked Ext. 2.
19. From all that has been stated above the inescapable conclusion is that the defendant/respondent was a licensee and not a tenant as claimed in respect of the suit premises and since the licence was duly determined by the notice, he is liable to be evicted from the suit premises. In the present case the findings of fact arrived at by the learned trial Court and affirmed by the learned first Appellate Court are contrary to the evidence on record and therefore perverse. That being so, there is justifiable ground for setting aside the said findings resulting in the appeal being allowed and the suit being decreed.
20. The appeal is accordingly allowed. The judgment and decree passed by the learned Additional District Judge, 12th Court, Alipore on 11th May, 1991 in Title Appeal No. 47 of 1989 affirming the judgment and decree dated 20th December, 1988 passed by the learned Munsif, 3rd Additional Court, Alipore Title Suit No. 238 of 1986 are set aside. The suit be decreed. The plaintiff/appellant will get decree for eviction of the defendant/respondent from the suit premises and recovery of possession thereof. The plaintiff company will get decree for mesne profits @ Rs. 20/- per diem from the institution of the suit till the delivery of possession against the defendant which will be assessed by the learned trial Court in a separate proceeding under Order 20 Rule 12 of the Code of Civil Procedure on payment of the required Court fees. Decree be drawn up expeditiously.
Let copy of this judgment along with LCR be sent down to the learned Courts below for necessary action.

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