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PETITIONER: CAPT. B.V.D SOUZA

       Vs.

RESPONDENT: ANTONIO FAUSTO FERNANDES

DATE OF JUDGMENT01/08/1989

BENCH: SHARMA, L.M. (J) BENCH: SHARMA, L.M. (J) VERMA, JAGDISH SARAN (J)

CITATION:  1989 AIR 1816            1989 SCR  (3) 626  1989 SCC  (3) 574        JT 1989 (3)   265  1989 SCALE  (2)197

ACT:     Goa, Daman and Diu Buildings, (Lease, Rent and Eviction) Control Act, 1968: Section 56--Bar of Court’s Jurisdiction.     Rent  Control--Deed--Lease or Licence--Determination  of Intention  of  parties--The  real  test--Test  of  exclusive possession-Whether relevant.     Civil procedure Code, 1908:Section 100 Document--Whether lease  or  licence--Concurrent findings by Trial  Court  and First  Appellate Court--Binding effect of in  second  appeal before High Court.

HEADNOTE:     The respondent-landlord inducted the appellant into  the suit  premises pursuant to an agreement. The  agreement  was described as agreement of leave and licence, the parties  as licensor  and licensee and the rent as compensation for  use and  occupation, and it was provided that the appellant  (i) shall pay monthly rent regularly on or before the 5th day of each consecutive month; (ii) shall not sub-let, under-let or part with possession nor shall keep the premises vacant  for more than three months without the consent of the  licensor; (iii)  that on the expiry of the deed, it shah be  renewable at the will of the licensee.     Several  years after the expiry of the  above  agreement the  respondent  instituted  a civil suit for  a  decree  of eviction  of the appellant on the ground that the  appellant was in occupation as a licensee and has illegally refused to vacate.  Rejecting the plea of the appellant that he  was  a month  to month tenant protected by the provisions  of,  the Goa,  Daman  and Diu Buildings (Lease,  Rent  and  Eviction) Control Act, 1968 and that the suit was barred by section 56 the  Trial  Court  passed a decree for  eviction  which  was confirmed in appeal by the District Judge.      The  second  appeal  filed by the  appellant  was  also dismissed by the High Court holding that it was concluded by concurrent findings of fact. Hence this appeal.      Allowing  the appeal, and setting aside the  decree  of the Courts below, 627     HELD: 1. The findings of the Courts below were not those of fact so as to be binding on the High Court under  section

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100 of the Civil Procedure Code. The case has to be  decided on  the nature of possession of the appellant which  is  de- pendent on a correct interpretation of the document. [628G]     2. It is well settled that the main purpose of  enacting the Rent statutes is to protect the tenant from the  exploi- tation of the landlord, who being in the dominating position is  capable of dictating his terms at the inception  of  the tenancy; and, the Rent Acts must receive that interpretation which  may advance the object and suppress the mischief.  By adopting a different approach the Rent laws are likely to be defeated altogether. [630H, 631A]     3. For ascertaining whether a document creates a licence or lease, the substance of the document must be preferred to the   form.   The  real  test  is  the  intention   of   the parties--whether they intended to create a lease or licence. If an interest in the property is created by the deed it  is a  lease but if the document only permits another person  to make  use  of  the property of which  the  legal  possession continues  with  the  owner, it is a licence.  The  test  of exclusive possession is not irrelevant but at the same  time it  is  not  conclusive. If the party in  whose  favour  the document  is  executed  gets  exclusive  possession  of  the property, prima facie he must he considered to he a  tenant; although  this  factor  by  itself  will  not  be  decisive. [629A-B-C, 630B-C]      Associated Hotels of India Ltd. v. R.N. Kapoor,  [1960] 1 S.C.R. 368;  Sohanlal  Naraindas  v.  Laxmidas  Raghunath, [1971]  3 S.C.R. 319; applied.      Shell-Mex  and  BP  Ltd. v.  Manchester  Garages  Ltd., [1971] 1 All E.R. 841; explained-      4.  In the instant case, the terms of the deed are  not consistent with the respondent’s case of licence, and  indi- cate that an interest in the property was created in  favour of the appellant in pursuance of which he was put in posses- sion with a right of renewal- The surrounding  circumstances are  also consistent with the deed being one of  lease.  The notice  to vacate the premises was served on  the  appellant after several years of expiry of the agreement. There was no relationship or friendship between the parties, which  would have induced the respondent to allow the appellant to occupy the  building. Realisation of rent was the  sole  considera- tion. The description of the parties as licensor and 628 licensee or the rent as compensation does not carry too much weight.  The agreement was in reality a document  of  lease, and the appellant has been enjoying the exclusive possession in the capacity of month to month tenant. The suit filed  by the respondent was, therefore, not maintainable. [629F,  631 B-C, D-E]

JUDGMENT:     CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6 184  of 1983.     From  the  Judgment  and Order dated  28.7.1983  of  the Bombay High Court in S.C.A. No. 5/B/1982.     S.K. Mehta, Dhruv Mehta, Aman Vachher and Atul Nanda for the Appellant. S.K. Dholakia and Praveen Kumar for the Respondents. The Judgment of the Court was delivered by     SHARMA,  J.  The only point involved in this  appeal  is whether  the document (Ext. 20) executed by the  parties  at the time the appellant was inducted in the disputed premises is an agreement of leave and licence or a deed of lease. The

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building belongs to the respondent, and the appellant claims to  be  in its occupation as a month to  month  tenant.  The respondent  instituted the suit in the civil court,  out  of which this appeal by special leave arises, for a decree  for eviction  of  the  appellant alleging that he  has  been  in occupation  of the building as a licensee and has  illegally refused to vacate in spite of service of notice. The  appel- lant’s  defence  is  that he is a tenant  protected  by  the provisions of the Goa, Daman and Diu Buildings (Lease,  Rent and Eviction) Control Act, 1968, and in view of s. 56 there- of the suit in the civil court is not maintainable. Agreeing with  the  plaintiff-respondent, the trial  court  passed  a decree which was confirmed on appeal by the District  Judge. The  High  Court dismissed the second appeal  filed  by  the appellant  observing  that it was  concluded  by  concurrent findings of fact.     2. We do not agree with the High Court that the findings of  the courts below were those of fact so as to be  binding on  the High Court under s. 100 of the Code of Civil  Proce- dure. The case has to be decided on the nature of possession of appellant which is dependent on a correct  interpretation of the document Ext. 20. 3.  The document Ext. 20 has been described as an  agreement of 629 leave  and licence and the parties as the Licensor  and  the Licensee.  But  it is significant to note that in  the  very first  sentence of the document the respondent is  described as "Landlord hereinafter called the Licensor". However, this cannot answer the disputed issue as it is firmly established that  for ascertaining whether a document creates a  licence or lease, the substance of the document must be preferred to the form. As was observed by this Court in Associated Hotels of  India  Ltd. v .R.N. Kapoor, [1960] 1 SCR 368,  the  real test is the intention of the parties--whether they  intended to create a lease or licence. If an interest in the property is  created  by the deed it is a lease but if  the  document only permits another person to make use of the property  "of which the legal possession continues with the owner", it  is a  licence.  If the party in whose favour  the  document  is executed  gets exclusive possession of the  property,  prima facie  he must be considered to be a tenant;  although  this factor  by  it  self will not be decisive.  Judged  in  this light, there does not appear to be any scope for  interpret- ing Ext. 20 as an agreement of leave and licence.     4. The document has been placed before us by the learned counsel  for the appellant. Although as stated  earlier,  it has been described as an agreement of leave and licence  and the parties as the "Licensor" and the "Licensee", its provi- sions unmistakably indicate that the,appellant was being let in  as  a tenant on the monthly rental  of  Rs.350  (besides water  and electricity charges) to be paid regularly  on  or before  the 5th day of each consecutive month. By clause  5, it was agreed that the appellant "shall not sub-let,  under- let  or part possession of the premises to any stranger  nor shall  he  keep the premises vacant for more than  3  months without the consent of the Licensor", that is, the  respond- ent. The question of executing a sub-lease or subletting can arise only by a tenant. If a licensee inducts any person  in the  property as his tenant, it cannot be described as  sub- letting. In clause 15 it is stated that on the expiry of the period, the deed "shall be renewable thereafter at the  will of  the  licensee";  and in the event of  the  licensee  not desiring  to renew, "shall give one month’s notice in  writ- ing".  These terms are not consistent with the  respondent’s

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case  of  licence,  and indicate that  an  interest  in  the property was created in favour of the appellant in pursuance of  which he was put in possession with a right of  renewal. When compared with the terms of the documents set out in the judgments in Associated Hotels of India Ltd. v. R.N. Kapoor, [1960] 1 SCR 368 and Sohan Lal Naraindas v. Laxmidas  Raghu- nath  Gadit,  [1971] 3 SCR 319, relied upon by  the  learned counsel  for  the appellant, which were  construed  by  this Court  as  creating lease inspite of  their  description  as licence deeds, the appellant’s 630 case stands out as stronger. If the approach adopted by  the courts  below in interpreting the document is  accepted,  it shall defeat the object of the Rent Acts, by permitting  the parties to camouflage the real nature of the transaction  by resorting to skilful drafting.     5.  Mr.  Dholakia, learned counsel for  the  respondent, streneously, contended that the test of exclusive possession is  an  out  dated one which should not now  be  taken  into account  for the purpose of deciding the nature  of  posses- sion.  Reliance was placed on the observations of Lord  Den- ning MR in Shell-Mex and BP Ltd. v. Manchester Garages Ltd., [1971]  1 All E.R. 841. We do not agree that exclusive  pos- session of a party is irrelevant as is suggested; but at the same time as has been observed in the earlier cases of  this Court,  referred to above, it is not conclusive.  The  other tests,  namely,  intention of the parties  and  whether  the document  creates any interest in the property or  not,  are important  considerations. The observations in  the  English case, relied upon by the learned counsel for the  respondent cannot  be understood to suggest that the test of  exclusive possession has been now rendered irrelevant and redundant as they are immediately followed by the statement;               "As  I have said manytimes, exclusive  posses-               sion is no longer decisive."               The  position stands further clarified by  the               following statement in the concurring judgment               of Buckley, L J,;               "The  only clause which points one way or  the               other, I think, is cl. 19 in Sch. 1 which Lord               Denning  MR  has already read,  which  clearly               recognises  that notwithstanding  the  bargain               between  the parties, the plaintiffs  retained               rights  of  possession and  control  over  the               property  in question. That seems to me to  be               consistent only with the fact that this trans-               action was in truth a licence transaction  and               not a tenancy under which the defendants would               obtain an exclusive right to possession of the               property  during  the  term  of  the  tenancy,               subject, of course, to any rights reserved  by               the plaintiffs." We  are  also not in a position to agree with  Mr.  Dholakia when  he says that if the parties themselves have chosen  to describe the transaction as a licence, we cannot make out  a different  case for them. It is well settled that  the  main purpose of enacting the Rent statutes is to protect 631 the tenant from the exploitation of the landlord, who  being in the dominating position is capable of dictating his terms at  the  inception of the tenancy; and, the Rent  Acts  must receive that interpretation which may advance the object and suppress the mischief. By adopting a different approach  the Rent laws are likely to be defeated altogether.     6.  The  surrounding circumstances are  also  consistent

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with  the deed being one of lease. The notice to vacate  the premises was served on the appellant after several years  of expiry of the term of the agreement. It is not suggested  on behalf  of  the respondent that there  is  any  relationship between the parties or that they were friends which  induced him to allow the appellant to occupy the building.  Realisa- tion of rent which has been described in the document  (Ext. 20)  as "compensation reserved for use and  occupation"  was the  sole  consideration of the transaction. In  this  back- ground  the description of the parties as lessor and  lessee or the rent as compensation does not carry much weight.     7. For the reasons mentioned above, we hold that Ext. 20 was  in  reality a document of lease and the  appellant  has been enjoying the exclusive possession thereof in the capac- ity  of month to month tenant. As a result the suit was,  in view  of the provisions of the Goa, Daman and Diu  Buildings (Lease,  Rent and Eviction) Control Act,  not  maintainable. The  appeal  is accordingly allowed but without  costs,  the decree passed by the courts below is set aside and the  suit is dismissed. T.N.A.                                                Appeal allowed. 632