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CASE NO.: Appeal (civil)  123 of 2000

PETITIONER: Chandy Varghese & Ors                                    

RESPONDENT: K. Abdul Khader & Ors.                                   

DATE OF JUDGMENT: 08/08/2003

BENCH: Shivaraj V.Patil &  D.M. Dharmadhikari.          

JUDGMENT:

J U D G M E N T

Dharmadhikari J.

       This appeal under Article 136 of the Constitution of India has  been preferred by the successors-in-interest of contesting Defendant  No. 1 â\200\223 Chandy against the judgment dated 07.12.1998 passed by  the High Court of Kerala confirming the decree of injunction and  recovery of possession passed by the courts below in favour of the  respondents who are the Legal Representatives of the original  plaintiff â\200\223 Kochunni.  

       The principal question which falls for consideration in this  appeal is whether the contesting defendants are entitled to protection  against  eviction from the suit property under Section 106 of the  Kerala Land Reforms Act, 1963 [for short ’the Act’]. Section 106 of  the Act protects the lessee against eviction from a land obtained by  him for commercial or industrial purposes and over which he has  constructed a building for commercial and industrial purposes before  20.5.1967.  

       The relevant sub-section (1) of Section 106 of the Act with  explanation therein reads thus :-  

"106. Special provisions relating to leases for commercial or  industrial purposes. â\200\223 (1) Notwithstanding anything contained in this  Act, or in any other law, or in any contract, or in any order or decree  of court, where on any land leased for commercial or industrial  purpose, the lessee has constructed buildings for such commercial or  industrial purpose before the 20th May, 1967, he shall not be liable to  be evicted from such land, but shall be liable to pay rent under the  contract or tenancy, and such rent shall be liable to be varied every  twelve years.  

Explanation :- For the purpose of this section, -  

(a)     ’lessee’ includes a legal representative or an assignee of the  lessee; and  

(b)     "Building" means a permanent or a temporary building and includes  a shed.  

       Before stating the facts and the findings of the courts below, it  may be stated that the provisions of Section 106 of the Act were  considered by the High Court of Kerala in Abdul Rahiman vs. Type  [1965 K.L.T. 247].  The law laid down by the Division Bench in that  case has held the field in application of the provisions to cases arising  under the Act. Placing interpretation on section 106 read with section

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3 (1) (iii) of the Act, the Division Bench held that within the purview  of the section, are covered only ’leases relating to lands on which  after grant of lease, building for industrial  or commercial purposes  was constructed by the lessee before 20.5.1967’. It is held that the  other two types of leases viz., ’leases of building’ and ’leases of  building together with land’ are not entitled to protection against  eviction under section 106 of the Act. The legal result was that unless  it is shown that the subject matter of lease for commercial or  industrial purposes was the land alone, section 106 of the Act would  have no application.  

       On the principle of stare decisis, this interpretation of the  provisions of Section 106 of the Act which has held the field in Kerala  for the last more than 35 years, the question raised before us has to  be decided on the facts found.  

       It is not disputed that the suit land to the extent of 32 cents  was owned by the predecessors-in-title of the plaintiffs by name  Kochunni. The documents produced in the court showed that one K.S.  Sankara Narayana Iyyer was running a Saw Mill in a shed standing on  the suit land. None of the documents including additional documents  produced establish that K.S. Sankara Narayana Iyyer had been  granted the lease of land by Kochunni for a commercial or industrial  purpose and lessee had put up a building on it before 20.5.1967 as to  be entitled to seek protection of Section 106 of the Act. Some  additional documents were filed in the High Court by the appellant to  show that the Sankara Narayana Iyyer had transferred his rights to  his brother Janardana Iyyer and the latter on 30.12.1958 gifted  back  his rights in the property to Sankara Narayana Iyyer. Thereafter  Sankara Narayana Iyyer sold the super-structures  and machineries  but not any right over the land to Sainaba - wife of Kochunni and  their children. The document of that sale deed dated 29.8.1960 is  marked in trial court as Ex.A-15 and is included in the paper-book as  Annexure-P.3.  The plaintiff filed the suit pleading inter alia that the  contesting defendants acquired only rights of a licensee from their  predecessors-in-interest and they are liable to be evicted on  revocation of licence in their favour.   

       The suit was contested on the ground that appellant’s  predecessors-in-interest had obtained a lease of the land and having  constructed a shed for running Saw Mill on the same prior to  appointed day i.e. 20.5.1967,  they were entitled to protection   against eviction under Section 106 of the Act. The case of the  defendants rests on document [Ex.A-3] dated 03.7.1965  [Annexure.P-10 in the paper-book].  It is an agreement entered into  with Kochuvareed, who, it is pleaded, obtained leasehold right to land  with shed and machineries of the Saw Mill from Sainaba and others.  

       Without going into the question  whether document [Ex.A-3]  dated 03.7.1965 executed by Kochuvareed in favour of first  defendant Chandy is bad for want of registration, as has been held by  the High Court, we have examined the said document to ascertain  the correctness of the concurrent findings of the courts below that  the document is ineffectual to create a  leasehold right on the land in  favour of the contesting defendant so to sustain claim of protection  under Section 106 of the Act. It cannot be disputed in law that  contesting defendant-Chandy could not have acquired better rights  than what  his transferor - Kochuvareed possessed.  If Kochuvareed  is held to be only a licensee on the land, the contesting defendant -  Chandy cannot claim leasehold right under the document of transfer  of rights made in in his favour by the former.

       Learned senior counsel Shri Rajinder Sachar appearing for the  successors-in-interest of the defendant as appellants before us took  pains to take us through the various documents and transactions

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entered between the parties.  He has strenuously urged that there  was a transfer of leasehold rights of the original lessee of the land in  favour of contesting defendant and the courts were wrong in not  extending  benefit of protection under Section 106 of the Act. The  appellants trace title in favour of their predecessor as lessee of the  land from transferor - Kochuvareed. Kochuvareed had himself  obtained title to the suit property from Sainaba and others, who are  legal representatives of Kochunni, under sale deed dated 05.2.1964  [Ex.A-2]. The relevant recitals of the sale deed read thus :-  

"Where as the above mentioned parties named 1 & 2 has purchased  M/s Allied Saw Mill machineries such as 154 H.P. Electric Motor,  Circular Saw etc., belonging to the establishment installed in a shed in  the property in Ward No. 17, Alwaye Municipal Town, belonging to  Thandanaparambil Abdul Rehiman Kochunni from Subramonian  Sankara Narayana Iyyerâ\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦..

And where as after apportioning the profits among partners, it is  decided to sell 15 H.P. Electric Motor, Circular Saw, new installed Re- Saw machine, Counter Shafts and fittings, other accessories and  electric fittings, installed in the above mentioned land including the  shed for a consideration of Rs.4,000/- and the sale consideration is  received in the presence of Sub-Registrar by Smt. Sainaba."  

       From the above recitals, it is not possible to infer that there  was any transfer of interest in the land granted to Kochuvareed on  which the shed and machinery of  Saw-Mill were installed.  

       The other document described as Rent Deed is alleged to have  been executed on the same day i.e., 05.2.1964.   Under the said  Rent Deed,  Kochuvareed took possession of the land in Ward No. 17  from Kochunni on a monthly rent of Rs. 150/- for carrying on  business of M/s Allied Saw Mill which was earlier run by Smt. Sainaba  and others.   

       The above Rent Deed thus, shows that Kochuvareed obtained  possession of the land with the Saw-Mill and its machineries installed  on it but in the absence of clear words of granting any leasehold right  in the land, it cannot be inferred that the parties intended by the said  document  to create a  lease of land.  Further  recitals in the Rent  Deed indicate that Kochunni had merely granted permission or  licence to Kochuvareed to use part of his land for the purpose of  carrying on the Saw-Mill business :-  "I have taken the land to do timber business and to conduct Saw Mill  Industry. I do not have right to enter into other properties within  the boundaries of your properties, except in the schedule property.  

I will not claim compensation in the event of voluntary vacating or  eviction. I am not entitled to transfer this right or to part with  possession. If any loss is sustained to you on account of my acts,  I will be responsible for the same. Contrary to this agreement, at  the time of surrendering/vacating the property or being evicted if  arrears of rent is outstanding, I am not entitled to remove the  sheds etc., from the land before the entire arrears with interest  are paid."                                                [Emphasis added]

       In the schedule of the document,  the description of property is  as under :-  

"Description of Property :- The entire land comprised in  SY.No.256/2B, 50 cents except the building and 6 feet courtyard in  front of the building which is located in the Western side and  constructed in North-South direction extended towards east from

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north."  

       The contesting defendant Chandy claims to have derived  leasehold rights to the land in suit under agreement dated 03.7.1965  executed by Kochuvareed in his favour. The agreement is dated  03.7.1965 and the relevant recitals read thus :-  

"Whereas it is mutually agreed between the parties that the first  party shall purchase and the second party shall convey his absolute  rights over the buildings constructed at his expense in the land  situated in Ward No. 17, Alwaye Municipality belonging to  Thandanaparambil Kochunni S/o Abdul Rehiman and in the Saw Mill  and other machineries installed in the building and rental rights for a  consideration of Rs. 43,000/- and this deed is executed and signed."  

       The further relevant recital reads as under :-  

"The second party hereby undertake to pay the rent for the land to  Kochunni out of the amounts given by the first party.  

       Sub-section (3) of  section 125 of the Act requires that if in any  suit or proceeding, a question arises regarding rights of a tenant, the  civil court shall refer such question to the Land Tribunal having  jurisdiction over the area in which the land  or part thereof is situate,  for the decision of that question. Sub-section (4) of the said section  requires that the Land Tribunal shall decide the said question and  return its findings to the civil court whereupon the civil court shall  decide the suit by accepting the decision of the Land Tribunal on the  question referred. Under sub-section (6) of section 125, the decision  of the Land Tribunal on the question referred to it, shall be deemed to  be part of the findings of the civil court for the purpose of the appeal.  The relevant sub-sections (1) to (6) of section 125 read thus :-  

"125. Bar of jurisdiction of civil courts.-(1) No. civil court shall  have jurisdiction to settle, decide or deal with any question or to  determine any matter which is by or under this Act required to be  settled, decided or dealt with or to be determined by the Land  Tribunal or the appellate authority or the Land Board [or the Taluk  Land Board] or the Government or an officer of the Government :

Provided that nothing contained in this sub-section shall apply to  proceedings pending in any court at the commencement of the Kerala  Land Reforms (Amendment) Act, 1969.  

(2) No order  of the Land Tribunal or the appellate authority or the  Land Board [or the Taluk Land Board] or the Government or an  officer of the Government made under this Act shall be questioned in  any civil court, except as provided in this Act.  

(3) If in any suit or other proceeding any question regarding rights  of a tenant or of a kudikidappukaran [including a question as to  whether a person is a tenant or a kudikidappukaran] arises, the civil  court shall stay the suit or other proceeding and refer such question  to the Land Tribunal having jurisdiction over the area in which the  land or part thereof is situate together with the relevant records for  the decision of that question only.  

(4) The Land Tribunal shall decide the question referred to it under  sub-section (3) and return the records together with its decision to  the civil court.  

(5) The civil court shall then proceed to decide the suit or other  proceedings accepting the decision of Land Tribunal on the question  on the question referred to it.

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(6) The decision of the Land Tribunal on the question referred to it  shall, for the purposes of appeal be deemed to be part of the finding  of the civil court.  (7) â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦

       The above provisions of section 125 of the Act show that the  finding of the Land Tribunal on the claim of tenancy over land-in-suit  is entitled to great weight being a subject matter in its exclusive  jurisdiction. It has binding effect on the civil court. Such finding is  deemed to be finding of the civil court under sub-section (6)  fictionally for the purposes of appeal. The finding of the Land Tribunal  which has exclusive jurisdiction over the subject can be scrutinized in  appeal but can be held liable to be upset only on strong and cogent  grounds.  

       The Land Tribunal in its order dated 28.12.1988, came to the  following conclusions after scrutiny of documents and other evidence  of the parties :-  "From this citation the Vendors have purchased the Mill and  machineries of  M/s Allied Saw Mill from Sankara Narayana Iyer and  these things were sold to Kochvareed. Moreover, there is no reason  to believe that the land was taken on lease from Kochunni as the  three partners of  the Allied Saw Mill were the children of Kochunni  and the three others were subsequently inducted in the business.  Therefore, I can come to a conclusion that Sainaba and others have  not taken the Land on lease from Kochunny."  

       The Land Tribunal also considered the document conveying  rights in favour of the contesting defendant-Chandy and came to the  following conclusions :-  

"Here in the document, Kochuvareed has taken shed and premises for  conducting a Timber business and Saw Mill on rent with a condition to  conduct the business only for a period of 3 years and after 3 years,   he has to vacate the land and shed if any, constructed by him.  Moreover, if the owner of the land demands the possession of the  land, the rentee has to vacate the land without any compensation  and also he has no authority to give possession of the plaint  schedule property to a third person. These conditions will not  confer a lease arrangement. The interest of the grantee is limited.  Therefore, he cannot be treated as a lessee but only a licensee.  Moreover, the AW-1 is his cross-examination has stated that his  father Chandy and C.P. Kochuvareed were conducting the business on  licence.  

"His deposition is given below :-  

My father and Kochuvareed were conducting the industry as per the  licence.  

Therefore, I find that C.P. Kochuvareed is not lessee on the property.  The issue is found accordingly."   [Underlining to add emphasis]

       The first appellate court confirmed the finding of the Land  Tribunal which was accepted by the trial court that none of the  documents is sufficient to conclusively indicate that there was any  transfer of any right over the land in favour of the contesting  defendant. The concurrent finding is that the contesting defendant  only obtained an assignment of the super-structure and machineries  standing on the land. It is held that Kochuvareed and thereafter the  contesting defendant were only licensees in the land. In any case, it  was not the case of grant of a lease of land for commercial and

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industrial purposes whereon any building or super-structure was  constructed before the appointed date i.e. 20.5.1967. The High Court  confirmed these findings after re-examining the documents and  interpreting them for itself.  

       We have heard in reply learned senior counsel Shri K.  Parasaran appearing for the respondents [plaintiffs’ successors-in- interest]. On behalf of the respondents, the concurrent findings of the  courts below are supported and it is contended that there is no  ground for this Court to interfere under Article 136 of the Constitution  of India in the concurrent findings of all courts below.           Whether a particular document or transaction creates a ’lease’  or ’licence’ is not an easy task for the court to decide but the well  established test laid down by the decision of this Court and as has  been followed consistently, beginning from the decision of  Associated Hotels of India Ltd., vs. R.N. Kapoor [AIR 1959 SC  1264] is that ’it is not the form but  substance of the document has  to be seen to gather the intention of the parties for determining  whether the document/transaction is a lease or licence’. It is further  held as under:-     

"The following propositions may be taken as well established :- (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 may be established which negative the  intention to create a lease."  

       Section 105 of the Transfer of Property Act defines a lease of  immovable property as ’transfer of a right to enjoy such property  made for a certain time in consideration for price paid or promised’.  Under section 108 of this Act, the lessee is entitled to be put in  possession of the property. A ’lease’ is, therefore, ’a transfer of   interest in land’. Whereas section 52 of the Easement Act defines a  ’licence’ to mean ’a right granted to another person over immovable  property to do or continue to do some act which would in the absence  of such right be unlawful’. When such right does not amount to an  easement or creates any interest in the property, the right is called a  ’licence’.  In all cases where the dispute is about the nature of the  document to be a lease or licence, the question that has to be  addressed by the Court to itself is what is the intention disclosed by  the parties from the terms of the document or the transaction. Where  the conclusion is that circumstance or conduct of the parties shows  that all that was intended was that the occupier should have a  personal privilege with no interest in the land, the transaction would  be licence and not a lease. In Board of Revenue vs. A.M. Ansari  [1976 (3) SCC 512], this Court observes :-  

"It is the creation of an interest in immovable property or a right to  possess it that distinguishes a lease from a licence. A licence does not  create an interest in the property to which it relates while a lease  does. There is, in other words, transfer of a right to enjoy the  property in case of a lease. As to whether a particular transaction  creates a lease or a licence is always a question of intention of the  parties which is to be inferred from the circumstances of each case.  For the purpose of deciding whether a particular grant amounts to a  lease or a licence, it is essential therefore, to look to the substance  and essence of the agreement and not to its form.

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In order that an agreement can be said to partake of the character  of lease, it is necessary that the grantee should have obtained an  interest in and possession of land. If the contract does not create an  interest in land then the land would be considered as a mere  warehouse of the thing sold and the contract would be a contract  for goods."  [Emphasis added]          

       In the case in hand, all the courts including the High Court after  examining the documents and the terms mentioned therein, came to  the conclusion that the transferee of the shed and the machineries  had only a licence to maintain them in the land and no right in land  was intended to be created by the parties.  

       The concurrent finding of all the courts is that original owner  viz., Kuchunni,  never intended to transfer any interest in land to  Shankara Narayan Iyyer. The above named transferee was found to  be merely licensee for running Saw-Mill in the shed erected on the  land. The said transferee being himself a licensee could not and was  not found to have transferred any right in the land to original owner’s  wife â\200\223 Sainaba and her children. Kuchvareed from whom the  contesting defendant â\200\223 Chandy is said to have acquired title, obtained  right to the shed and Saw-Mill from Sainaba and her children.  Kochuvareed acquired only right to shed and Saw-Mill  as a licensee  and he could not have, therefore, conferred any leasehold rights in  the land to contesting defendant â\200\223 Chandy. He was rightly held to  have acquired only right to the shed and machineries of the Saw-Mill  with a licence to enter upon the land for use of shed and the  machineries.  

       The concurrent finding reached by the Land Tribunal and the  courts below is supported by cogent reasons based on proper  interpretation of the documents made in the light of oral evidence on  record. The inference in law thus derived by the courts from the oral  and documentary evidence, does not appear to be erroneous to  justify interference by this Court in its discretionary jurisdiction under  Article 136 of the Constitution of India.  

       In addition, the consistent legal position which held the field in  Kerala for more than 35 years is that for seeking protection against  eviction under section 106 of the Act, a person in occupation of the  land has to prove that he had been granted lease of the land for  commercial or industrial purposes and after grant of such lease, he  had raised a building or structure thereon for industrial or commercial  purpose prior to the appointed date i.e. 20.5.1967. We do not find  from any of the documents on record that the necessary ingredients  to invoke provisions of section 106 of the Act have been proved  by  the contesting defendant. The object of the section is to protect  tenants, who have constructed building before the appointed day, on  other’s land to carry on their trade or business, from being dislocated  and disturbed.  

       For the aforesaid reasons, we find no merit in this appeal and it  is, accordingly, dismissed.  

       In the circumstances, the respondents (plaintiff’s successors)  will be entitled to costs as incurred in this Court.