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PETITIONER:

PURAN SINGH SAHNI

Vs.

RESPONDENT:

SMT. SUNDARI BHAGWANDAS KRIPALANI AND OTHERS

DATE OF JUDGMENT20/02/1991

BENCH:

SAIKIA, K.N. (J)

BENCH:

SAIKIA, K.N. (J)

PUNCHHI, M.M.

CITATION:

1991 SCR (1) 592 1991 SCC (2) 180

JT 1991 (2) 24 1991 SCALE (1)303

ACT:

Bombay Rents, Hotel and Lodging House Rates (Control )

Act, 1947] Transfer of Property Act, 1882: Ss.5(4A),

5(11)(bb), 15A/s. 105- Agreement giving temporarily for a

fixed period, use of Premises with furniture and fittings on

compensation for use and occupation without creating any

interest in the grantee-Whether a leave and licence or a

lease-Licence terminated w.e.f. 10.3.1972-Status of the

occupant thereafter-Whether entitled to Protection as a

deemed tenant under s. 15-A `Leave and licence' and `Lease'-

Distinction between.

Constitution of India: Art. 14: S. 91, Maharashtra Co-

operative "Societies Act, 1960-Whether ultra vires.

Maharashtra Co-operative Societies Act, 1960: S. 91-

Eviction of a nominal member by a tenant copartner member of

a tenant copartnership Co-operative Housing Society-Whether

a dispute touching `business of a society'-Whether the

society and tenant co-partner member can raise a dispute

under-Jurisdiction of Co-operative Courts-Whether bared by

s. 28(1) of Bombay Rents, Hotel and Lodging House rates

(Control) Act, 1947.

HEADNOTE:

The second respondent was a tenant copartnership co-

operative Housing Society and father of the first respondent

was its tenant co-partner member. By an application dated

10.6.1969 he sought permission of the society to temporarily

induct the appellant into his flat. On the same date the

appellant applied to the said Society for its nominal

membership stating that he intended to take the flat for

temporary use and occupation, that he would not claim any

right of permanent nature and that on receipt of notice he

would vacate the flat. By an agreement of leave and licence

dated 11.6.1969, the father of respondent no. 1

(licensor)gave use of the flat with its furniture and

fittings to the appellant (licensee) on Rs. 1,000 per month

as compensation for use and occupation for a period of 11

months with a facility of renewal of the agreement for two

such further periods. The Managing Committee of the

Society, by its Resolution dated 13.6.1969. I granted the

permission.

593

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The licensor by letter dated 22.1.1972 purported to

terminate the licence w.e.f. 10.3.1972, and asked the

appellant to vacate the flat, but the latter declined to do

so. On receiving intimation from the licensor, the Society,

by its letter dated 22.2.1972, required the appellant to

vacate the flat and deliver its possession to the licenser

before the stipulated date, but in vain. Instead, the

appellant on 13.3.1972 applied to the Court of Small Causes,

Bombay for fixation of standard rent of flat.

In April 1972 the licensor and the Society raised a

dispute under s. 91 of the Maharashtra Co-operative

Societies Act, 1960 to recover possession from the

appellant,who in turn filed a suit in the Court of Small

Causes, Bombay for declaration that he was tenant of the

flat. He also filed an interim application for stay of the

dispute proceeding till disposal of his application for

fixation of standard rent, which was rejected and his writ

petition against the said order was also dismissed by the

High Court on 7.9.1977.

The Co-operative Court, Bombay dismissed the dispute

proceeding holding that the appellant was a licensee and not

a tenant but the society was an idle party which acted in

collusion with the licensor to evict the appellant.

On appeal by the licenser and the Society, the

Maharashtra State Co-operative Appellate Court set aside the

order of the Co-operative Court, against which the appellant

filed a writ petition before the High Court contending that

the agreement, though style as a leave and licence, was a

lease; that s. 91 of the Maharashtra Co-operative Societies

Act was not attracted and could not have been invoked by the

respondents; and that s. 91 itself was ultra vires Art. 14

of the Constitution to the extent it tried to reach non-

members of co-operative societies. The High Court dismissed

the writ petition. Hence the present appeal by special

leave.

By Maharashtra Act 17 of 1973, ss. 5(4A), and 15-A were

introduced in the Bombay Rents, Hotel and Lodging House

Rates (Control) Act, 1947,to confer the status and

protection of a tenant on a licensee, who, on the first day

of Feb. 1973, had a subsisting agreement and was on that

date in occupation of any premises or part thereof, which

was not less than a room, as a licensee.

On the question whether:(1) the agreement dated

11.6.1969 was one of leave and licence or if lease, and if

it was so, whether the

594

occupant was entitled to benefit of s. 15-A of the Rent Act;

and (2) the matter was one touching the business of the

society so as to attract s.19 of the Maharashtra co-

operative Societies Act within the jurisdiction of Co-

operative Courts.

Dismissing the appeal, this Court

HELD: 1.1 By mere use of the word lease or licence the

correct categorisation of an instrument under law cannot be

affected. Whether a particular grant amounts to lease or a

licence, depends on its substance. If a document gives

only a right to use the property in a particular way or

under certain terms while it remains in possession and

control of the owner thereof, it will be a licence. If

there is a transfer of interest in law and exclusive

possession is given to the grantee or where the ingredients

of a lease are present and the licensee is, according to

law, a tenant, then it is a lease and he ought to be given

benefit of the Rent Act. [602B-E]

1.2 In determining whether the agreement was a lease or

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licence, the test of exclusive possession, though of

significance, is not decisive and exclusive possession

itself will not amount to creation of interest nor would it

militate against the concept of a licence, if the

circumstances negative any intention to create a tenancy.

[602G, E-F]

1.3 The intention of the parties in making the

agreement is determinative of the question whether it was a

lease or licence. The intention has to be gathered from the

terms of the agreement construed in the context of the

surrounding, antecedent and consequent circumstances. The

crucial test would be what the parties intended. If in fact

it was intended to create an interest in the property it

would be a lease, if it did not, it would be a licence

Interest for this purpose means a right to have the

advantage accruing from the premises or a right in the

nature of property in the premises but less than title.

[603H, 602F-H]

2. In the instant case, it is clear from the tenor of

the agreement that the intention of the parties was to

create only a licence and not a lease. Positively it speaks

of a licence for the use of the flat and negatively that the

licensee would not-claim any tenancy or subtenancy. What

was given to the licensee was the use of the flat with

furniture, fittings etc., which could not be said to have

created any interest in the flat though in effect the use

continued for a stipulated period of time. [602A-C]

595

Board of Revenue etc. v. A.M. Ansari etc.,[1976] (3)

SCR 661; Tarkeshwar Sio Thakur Jiu v. Dar Dass Dey & Co. &

Ors., [1979] 3 SCC 106, relied on; Sohan Lal Naraindas v.

Laxmidas, Raghunath Gadit (1971) 1 SCC 276, followed.

Antoniades v. Villiers and Anr., [1988] (3) All. E.R.

1058; N.E. Railway v. Hastings, [1900] A.C. 260, Isaac v.

Hotel De Paris, Ltd. [1960] (1) All E.R. 348, Booker v.

Palmer [1942] 2 All E.R. 674 referred to.

3.1 Section 15A read with s. 5(11)(bb) of the Bombay

Rents, Hotel and Lodging House Rates (Control) Act, 1947,

makes the tenant one of status rather than of contract.

Intention to create a licence as defined in the Act if the

other requirements fulfilled, would, therefore, be enough to

confer that status from the specified date. Section 15A

required that the occupant must be in occupation of the

premises as a licensee as defined in s.5(4A) on the first

day of Feb. 1973. If he be such a licensee, the non-

obstante clause of s.15A(1) gives him the status and

protection of a tenant in spite of there being anything to

the contrary in any other law or in any contract. Even as

against the express terms of the subsisting contract

licence, a person in occupation of any premises or part

thereof, which is not less than a room, as a licensee,

shall, in view of these provision, be deemed to have become

a tenant on the first day of Feb. 1973, and would enjoy the

benefits of s. 15A. But if he was not a licensee under a

subsisting agreement on the 1st of Feb. 1973, then he did

not get the advantage of the amending provision of the Rent

Act. [608E-F, 610AB]

3.2 The sine qua non for the applicability of s. 15A of

the Rent Act was that a licensee must be in occupation as

on Feb.1, 1973, under a subsisting licence. A person

continuing in possession after termination, withdrawal or

revocation of the licence is a trespasser or a person who

has no semblance of any right to continue in occupation of

the premises. Such a person by no stretch of imagination

could be called a licensee. [612B-C, 610C]

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4. The appellant would, otherwise, be included in the

definition of licensee under s. 5(4A) of the Rent Act, but

as he had no subsisting licence, the same having stood

terminated by notice on 10.3.1972, the licence as defined by

the Rent Act itself would not apply to appellant's case, and

he was nothing but a rank trespasser not entitled to the

protection of s. 15A of the Rent Act and could not,

therefore, plead the bar of s. 28(1) thereof.[608A, 609A,

612C-D]

596

D.H. Maniar and Ors. v. Waman Laxman Kudav, [1976] 4

SCC 118, O.N. Bhatnagar v. Smt. Rukibai Narsindas & Others,

[1982] 3 SCR 681, relied on. Chandavarkar Sita Ratna Rao v.

Ashalata S. Guram, [1986] 4 SCC 447, referred to.

Hindustan Petroleum Corporation Ltd. & Anr. v. Shyam

Cooperative Housing Society & Ors, [1988] 4 SCC 747,

distinguished.

5. The matter of eviction of the appellant was a

dispute touching the business of the society as envisaged by

s.91 of the Maharashtra Co-operative Societies Act and the

Co-operative Courts rightly exercised jurisdiction.[611B;

613B]

Smt. Krishna Rajpal Bhatia and Ors. v. Miss Leela H.

Advani & Ors., [1989] 1 SCC 52, relied on. Deccan Merchants

Cooperative Bank Ltd. v. M/S Dalichand Jugraj Jain & Ors.,

[1969] 1 SCR 887 referred to.

6. Since the appellant was involved in a dispute

touching the business of the society of which he was a

nominal member, his contention that s. 91 of the Maharashtra

Co-operative Societies Act to the extent it tries to reach

persons who are not members is ultra vires Art. 14 of the

Constitution, was not tenable. [613C-D]

JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2846 of

1989.

From the Judgment and Order dated 24.4.1989 of the

Bombay High Court in W.P.No. 4118 of 1986.

H.S. Guru Raja Rao, S. Markandeya and Ms. C.

Markandeya, for the Appellant.

L.A. Kriplani and S.K. Jain for the Respondents.

The Judgment of the Court was delivered by

K.N. SAIKIA, J. This appeal by special leave is from

the Judgment and Order of the High Court of Bombay dated

24.4.1989 in Writ Petition No. 4118 of 1986 dismissing the

petition.

The second respondent Shyam Cooperative Housing Society

Ltd. was a tenant co-partnership cooperative society (for

short, `the

597

Society') and Panjumal H. Advani late father of the first

respondent (for short, `Advani') was its tenant co-partner

member. By an application dated 10.6.1969, Advani obtained

permission of the Society to induct the appellant

temporarily into his flat and accordingly, the appellant

took on rent from Advani flat No. 24, Block No. 1,second

floor, Nanik Niwas, situate at Bhulabhai Desai Road, Bombay

(for short, `the flat') on a monthly rent of Rs. 1,000

(Rupees one thousand) on 10.6.1969. On the same date the

appellant, under the Society's rules, applied for its

nominal membership stating, inter alia, that he intended to

take the flat for temporary use and occupation; that he

would not claim any right of permanent nature; and that he

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would vacate the flat on receipt of notice thereof. By an

agreement of leave and licence dated 11.6.1969 entered into

between the appellant and Advani, the appellant took

exclusive possession of the flat. The agreement was for a

period of 11 months and was renewable for 2 further periods

of 11 months each. Vide Resolution No. 208 dated 13.6.1969,

the Managing Committee of the Society granted the

permission.

By letter dated 22.1.1972 Advani purported to terminate

the licence with effect from 10.3.1972 and asked the

appellant to vacate the flat and the appellant having not

acceded to the request, Advani informed the Society, which,

vide letter dated 22.2.1972 required the appellant to vacate

the flat and to deliver possession thereof to Advani on or

before the 10th March, 1972. The appellant instead of

vacating the flat filed an application in the Court of Small

Causes, Bombay on 13.3.1972 for fixation of its standard

rent. In April 1972, Advani and the Society raised a

dispute under section 91 of the Maharashtra Cooperative

Societies Act to recover possession from the appellant who

in turn filed declaratory suit No. 989/5305 of 1972 in the

Court of Small Causes, Bombay on 10.11.1972 seeking a

declaration that he was the tenant of the flat, with an

interim application for stay of the proceeding till the

disposal of his application for fixation of standard rent;

but that application was rejected and the appellant was

thereafter unsuccessful in the High Court which was

dismissed on 7.9.1977. The learned Judge of the IInd

Cooperative Court, Greater Bombay by his Judgment dated

6.3.1985 dismissed the suit holding that the appellant was a

licensee and not a tenant, but the Society was an idle party

and had acted in collusion with Advani to vacate the

appellant.

Advani and Society appealed therefrom to the

Maharashtra State Cooperative Appellate Court, Bombay in

Appeal No. 397 of 1985 which was allowed and the impugned

Judgment of the IInd

598

Cooperative Court was set aside on 31.7.1986.

The appellant impugned the appellate order in Writ

petition No. 4118 of 1986 in the High Court of Judicature at

Bombay, contending, inter alia, that the agreement between

the appellant and Advani, though styled as a leave and

licence, was a lease; that section 91 of the Maharashtra

Cooperative Societies Act, 1960 was not attracted and could

not have been invoked by Advani and the Society; and that

section 91 itself was ultra vires the Article 14 of the

Constitution of India to the extent it tried to reach

persons who were not members of cooperative societies.

The High Court, while dismissing the writ petition,

inter alia, held that the agreement was of temporary nature

and no interest in the flat having been created in favour of

the appellant, even though he had exclusive possession, it

could not have been a lease; that the alleged collusion

between Advani and the Society to evict the appellant was

based on conjectures and could not take the matter out of

the purview of section 91 of the Cooperative Societies Act

which was not ultra vires.

Mr. S.S. Gururaja Rao, the learned counsel for the

appellant submits, inter alia, that the agreement dated

11.6.1969 between Advani and the appellant was one of lease

with all its ingredients and not one of leave and licence;

that the agreement having been a lease the cooperative Court

had no jurisdiction in respect thereof and it was the Civil

Court envisaged under the Bombay Rents, Hotel and Lodging

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House Rates (Control) Act, 1947 that would have jurisdiction

in the matter; and that even assuming that the Cooperative

Court had jurisdiction in respect of a leave and licence

created under the provisions of the Act, that Court would

not have jurisdiction in this matter, the appellant being

only a nominal member and not a tenant member of the

Society.

Mr. L.A. Kripalani, the learned counsel for the

respondents, submits that the agreement was one of leave and

licence and not of lease; that in the matter of the

agreement the Cooperative Court alone has jurisdiction and

no other court; and that being a nominal member of the

Society in view of his application for such a membership the

appellant would come within the jurisdiction of the

Cooperative Court.

The first question to be decided in this appeal,

therefore, is

599

whether the agreement dated 11.6.1969 was one of lease or of

leave and licence.

In the agreement dated 11.6.1969 the Party of the First

part has been called the `licensor' and the Party of the

Second part has been called the `licensees'. The licensor

is stated to be a shareholder and member of the Society.

Its recitals said:

"AND WHEREAS the Licensor is the absolute owner of

the said flat and whereas the party of the Second

part has approached the Party of the First part to

allow them the use of the said flat with, fittings,

fixtures and furniture lying therein.

AND WHEREAS the Party of the First part has agreed

to allow the party of the Second part to use the

said flat along with fittings, furniture, fixtures

etc.

The following were the relevant terms of the agreement:

"1. The `licensor' has given the use of his flat

No.24, 2nd floor, Nanik Niwas, Block No. 1,

Bhulabhai Desai Road on Leave and Licence basis.

2. The licence in the initial stage is for the

period of 11 months to be renewed by another period

of 11 months and a second option of 11 months also,

to make up the period of 33 months.

3. The Licensees shall pay compensation of Rs.

1,000 (Rupees one thousand only) per month to the

`licensor' the use of the said flat along with

fittings, fixtures and furniture lying therein more

fully described in the schedule herewith attached;

This compensation payable by the said `Licensees'

to the said `Licensor' shall include all the

charges and taxes leviable either by the Shyam

Cooperative Housing Society Ltd., Bombay -26 or by

the Bombay Municipal Corporation or by any local

or State authorities except the changes which are

specially mentioned hereunder.

xxx xxx xxx xxx xxx xxx xxx xxx xxx

xxx xxx xxx xxx xxx xxx xxx xxx xxx

600

9. It is agreed by this agreement that only

`Licensee' is intended to be given to the

`Licensees' to use the flat and fixtures, fittings,

furniture etc. more fully described in the

schedule attached herewith and the `Licensees' will

at no time claim tenancy or sub-tenancy of the

premises. The premises are in Nanik Niwas, Block

No.1, Second Floor, Flat No.24, of the Shyam

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Cooperative Housing Society Ltd., and the rules

regulations and bye-laws of the said Society do not

permit any tenancy or sub-tenancy being created in

respect of the premises.

xxx xxx xxx xxx xxx xxx xxx

xxx xxx xxx xxx xxx xxx xxx

22. That the `Licensee' will not surrender their

rights under this agreement in favour of anyone

else except the `Licensors'. That the `Licensees'

shall observe all rules, regulations, and by-laws

of the Shyam Cooperative Society as nominal members

during the period of this licence.

From the above recitals and the terms and conditions

there is no doubt that ex facie it is one of leave and

licence for use of the flat and fixtures, fittings,

furniture etc. and that the licensee would at no time claim

tenancy or sub-tenancy in respect of the flat. There is

also no doubt that in his application for nominal

membership, the appellant stated that he intended to take

the flat for temporary use and occupation and that he would

not claim any right of permanent nature. In the Managing

Committee Resolution No.208 dated 13.6.1969, the appellant

was admitted as a nominal member of the Society and was

permitted to temporarily occupy the flat. Thus, there

appears to be no room for contending, contrary to the terms

of the agreement, that the agreement was a lease and the

appellant was a tenant of Advani, as such the Bombay Rents,

Hotel and Lodging House Rates Control Act, 1947,

hereinafter referred to as `the Rent Act', was applicable

to him.

However, relying on Antoniades v. Villiers and Anr.,

reported in 1988 (3) All E.R. 1058, it is submitted for the

appellant that he having been given exclusive possession of

the flat for a time, the agreement must be construed as a

lease and him as a tenant. In that case the respondent

let a flat to the appellants, a young unmarried couple,

under separate but identical agreements termed `licenses',

which were executed contemporaneously and stipulated with

reiterated emphasis that the appellants were not to have

exclusive possession. In particular,

601

by clause 16, that agreement stated that the licensor shall

be entitled at any time to use the rooms together with the

licensee and permit other persons to use all of the rooms

together with the licensee and further stated that the real

intention of the parties in all the circumstances was to

create a licence which did not come under the Rent Acts.

The rental payable was 87 pounds per month by each occupant

and the agreements were determinable by one month's notice

by either party. The respondent never attempted to use any

of the rooms or authorised any other persons to use the

rooms. In July 1986 the respondent gave the appellants a

notice to quit and applied to the court for an order for

possession, but his claim was dismissed on the ground that

the appellants were tenants who were entitled to the

protection of the Rent Acts. The respondent appealed to the

Court of Appeal, which allowed his appeal. The appellants

having appealed to the House of Lords it was held that the

agreements were interdependent on one another and were

therefore to be read together as constituting one single

transaction. Since it was the intention of the two

appellants to occupy the flat as man and wife and since that

intention was known to the respondent, the true nature of

the arrangement was to create a joint tenancy and the

purported retention by the respondent of the right to share

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the occupation of the small flat with the appellants or to

introduce an indefinite number of third parties to do so was

clearly a pretence to deprive them of the protection of the

Rent Acts. It followed that the agreements created a joint

tenancy and not a licence, and the appeal would therefore be

allowed. It may be noted that in the above case there was

no obligation of or relation to any cooperative society and

laws governing members thereof, whereas in the instant case

admittedly Advanai was a tenant co-partner member of the

Society and the appellant by virtue of the agreement of

licence was also admitted to nominal membership accepting

his statement in his application. While interpreting the

agreement we have also to see what transpired before and

after the agreement. Ex praecedentibus et consequentibus

optima bit interpretation. The best interpretation is made

from the context. "It is a true rule of construction that

the sense and meaning of the parties in any particular part

of an instrument may be collected ex antecedentibus et

consequentibus; every part of it may be brought into action

in order to collect from the whole one uniform and

consistent sense, if that may be done." As was said in N.E.

Railway v. Hastings, [1900] A.C. 260(267):

"The deed must be read as a whole in order to

ascertain the true meaning of its several clauses,

and the words of each clause should be so

interpreted as to bring them into

602

harmony with the other provisions of the deed if

that interpretation does no violence to the meaning

of which they are naturally susceptible.

In the agreement the intention to create a licence is

clear. Positively it speaks of a licence for the use of the

flat and negatively that the licensee would not claim any

tenancy or sub-tenancy. That the intention of the parties

was to create only a licence and not a lease is clear from

the tenor of the agreement. True, by mere use of the word

lease or licence the correct categorisation of an instrument

under law cannot be affected. What was given to the

licensee was to use of the flat with furniture, fittings

etc., which could not be said to have created any interest

in the flat though in effect the use continued for a

stipulated period of time. It is true, where the

ingredients of a lease are present and the licensee is

according to law, a tenant, he ought to be given the benefit

of the Rent Act.

As was held in Board of Revenue etc. v. A.M. Ansari

etc., AIR 1976 SC 1813: 1976 (3) SCR 661, it is the

substance of the agreement between the parties which is a

decisive consideration on the question whether a particular

grant amounts to a lease or a licence. In Tarkeshwar Sio

Thakur Jiu v. Dar Dass Dey & Co. & Ors., AIR 1979 SC 1669:

(1979) 3 SCC 106, the document though named as licence was

construed as a lease. If a document gives only a right to

use the property in a particular way or under certain terms

while it remains in possession and control of the owner

thereof it will be a licence. If there is a transfer of

interest in law and exclusive possession is given to the

grantee then it is a lease. Thus, exclusive possession by

itself will not amount to creation of interest. Exclusive

possession by itself would not militate against the concept

of a licence, if the circumstances negative any intention to

create a tenancy.

Following Sohan Lal Naraindas v. Laxmidas Raghunath

Gadit, [1971] 1 SCC 276, we reiterate that the intention of

the parties to an agreement has to be gathered from the

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terms of the agreement construed in the context of the

surrounding, antecedent and consequent circumstances. The

crucial test would be what the parties intended. If infact

it was intended to create an interest in the property, it

would be a lease, if it did not, it would be a licence. In

determining whether the agreement was a lease or licence,

the test of exclusive possession, though of significance, is

not decisive. Interest for this purpose means a right to

have the advantage accruing from the premises or a right in

the nature of property in the premises but less than title.

603

Lease has been defined in section 105 of the Transfer

of Property Act as under:

"A lease of immovable property is a transfer of a

right to enjoy such property, made for a certain

time, express or implied, or in perpetuity, in

consideration of a price paid or promised, or of

money, a share of crops, service or any other thing

of value, to be rendered periodically or on

specified occasions to the transferor by the

transferee, who accepts the transfer on such

terms."

The essential elements of a lease are:

1. the parties

2. the subject matter, or immovable property

3. the demise, or partial transfer

4. the term, or period

5. the consideration, or rent.

The relationship of lessor and lessee is one of

contract. In Bacon's Abridgement, a lease is defined as "a

contract between the lessor and the lessee for the

possession and profits of land, etc., on the one side and

recompense by rent or other consideration on the other."

Hence it has been held that "a mere demand for rent is not

sufficient to create the relationship of landlord and tenant

which is a matter of contract assented to by both parties."

When the agreement vests in the lessee a right of possession

for a certain time it operates as a conveyance or transfer

and is a lease. The section defines a lease as a partial

transfer, i.e., a transfer of a right of enjoyment for a

certain time.

This Court has held that a renewal of a lease is

really grant of a fresh lease though it is called a renewal

because it postulates the existence of a prior lease. Where

the initial term was, say one year, it could not co-exist

with a renewal of that very lease within one year. Renewal

could take place only on the expiry of the initial lease,

and not before.

The intention of the parties in making the agreement is

determinative of the question whether it was a lease or

licence. In Halsbury's Laws of England, 4th Edn. Vol. 27,

at paragraph 6, on General Principles

604

for determining whether agreement creates lease or a licence

we read:

"In determining whether an agreement creates

between the parties the relationship of landlord

and tenant or merely that of licensor and licensee

the decisive considerations is the intention of the

parties. The parties to an agreement cannot,

however, turn a lease into a licence merely by

stating that the document is to be deemed a licence

or describing it as such. The parties'

relationship is determined by law on a

consideration of all relevant provisions of the

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agreement; and an agreement labelled by the parties

to it as a `licence' will still be held to create a

tenancy if the substance of the agreement

conflicts with that label. Similarly, the use of

operative words (`let', `lessor' etc.) which are

appropriate to a lease will not prevent the

agreement from conferring only a licence if from

the whole document it appears that it was intended

merely to confer a licence. Primarily the court is

concerned to see whether the parties to the

agreement intend to create an arrangement personal

in its nature or not, so that the assignability of

the grantee's interest, the nature of the land and

the grantor's capacity to grant a lease will all be

relevant considerations in assessing what is the

nature of the interest created by the transaction.

In the absence of any formal document the parties'

intention must be inferred from the circumstances

and the parties' conduct."

It has been submitted for the appellant that the very

fact of exclusive possession of the flat being given to the

appellant was sufficient to make him lessee and Advani his

landlord. We do not agree with the submission in an

unqualified form. There have been cases where exclusive

possession has been given outside the Rent Act. In Isaac

v. Hotel De Paris, Ltd., [1960] (1) All E.R.348, the

respondent company owning the hotel de Paris where the

lessees of another building called the P.Hotel, it was held

that the respondent company were entitled to an order for

possession because the relationships between the parties

was not that of landlord and tenant but of licensor and

licensee, even though there was exclusive possession by the

appellant and the acceptance of the amount of the rent by

the respondent company, the circumstances and the conduct of

the parties showing that all that was intended was that the

appellant should have a personal privilege of running a

night bar at the P.Hotel with no interest

605

in the land at all, and this privilege came to an end with

the notice of May, 1956 and that after the notice the

appellant remained in occupation at sufferance, and, in the

circumstances, the acceptance of rent by the respondent

company did not waive their right to immediate possession.

It was observed that there were many cases in the books

where exclusive possession had been given of premises

outside the Rent Restriction Acts and yet there had been

held to be no tenancy. Lord Denning quoted from Booker

v.Palmer, [1942] 2 All E.R. 674 (677):

"There is one golden rule which is of very general

application, namely, that the law does not impute

intention to enter into legal relationship where

the circumstances and the conduct of the parties

negative any intention of the kind.'

The following passaged was also cited with approval:

"It is clear from the authorities that the

intention of the parties is the paramount

consideration and while the fact of exclusive

possession together with the payment of rent is of

the first importance, the circumstances in which

exclusive possession has been given and the

character in which money paid as rent has been

received are also matters to be considered."

On the question of nature and effect of the grant of

exclusive possession in paragraph 7 of Halsbury's Laws of

England, 4th Edn., Vol.27, we read:

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"The fact that the agreement grants a right of

exclusive possession is not in itself conclusive

evidence of the existence of a tenancy, but it is a

consideration of the first importance, although of

lesser significance than the intention of the

parties.

In deciding whether a grantee is entitled to

exclusive posession regard must be had to the

substance of the agreement. In order to give

exclusive possession there need not be express

words to that effect; it is sufficient if the

nature of the acts to be done by the grantee

requires that he should have exclusive possession.

However, the grant of an exclusive right to a

benefit can be inferred only from language

606

which is clear and explicit. If an exclusive

right of possession is subject to certain

reservations or to a restriction of the purposes

for which the premises may be used, the

reservations or restriction will not necessarily

prevent the grant operating as a lease."

We may now examine the position of the appellant under

the Rent Act. The Rent Act has not defined a `lease'. As

defined in section 5(11) `tenant' means any person by whom

or on whose account rent is payable for any premises and

includes-

(a) such sub-tenants and other persons as have derived

title under a tenant before the 1st day of February,

1973;

(aa) any person to whom interest in premises has been

assigned or transferred as permitted or deemed to be

permitted, under section 15;

(b) any person remaining, after the determination of

the lease, in possession, with or without the assent of the

landlord, of the premises leased to such person or his

predecessor who has derived title before the 1st day of

February, 1973;

(bb) such licensees as are deemed to be tenants for the

purpose of this Act by section 15A;

(c) xxx xxx xxx xxx xxx xxx"

Thus the above sub-section (bb) read with section 15A of the

Rent Act makes the `tenant' one of status and not of

contract. the licensee has been conferred the status of a

tenat. This reminds us of what Sir Henry Maine observed in

Ancient Law. "The movement of progressive societies had

been from status to contract". But Lord Simmonds pointed

out in Johnson v. Merston, [1978] 8 All E.R. 37, that since

the days of Maine, the movement of the progressive societies

in various fields, has been almost the reverse, that is,

from contract to status. With acute dearth of accommodation

and dire need for it people may agree to a pretence or

unreasonable term from which law alone can protect them and

render justice to the parties.

As defined in the section 5(4A) of the Rent Act

`licensee', in respect of any premises or any part thereof

means:

607

"The person who is in occupation of the premises or

such part as the case may be under a subsisting

agreement for licence given for a licence fee or

charge; and includes any person in such occupation

of any premises or part thereof in a building

vesting in or leased to a co-operative housing

society registered or deemed to be registered

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under the Maharashtra Cooperative Societies Act,

1960; but does not include a paying guest, a member

of a family residing together, a person in the

service or employment of the licensor, or a person

conducting a running business belonging to the

licensor or a person having any accommodation for

rendering or carrying on medical or para-medical

services or activities in or near a nursing home,

hospital or sanatorium, or a person having any

accommodation in a hotel, lodging house, hostel,

guest house, club, nursing home, sanatorium,

dharamshala, home for widows, orphans or like

premises, marriage or public hall or like

premises, or in a place of amusement or

entertainment or like institution, or in any

premises belonging to or held by an employee or his

spouse who on account of the exigencies of service

or provision of a residence attached to his or her

post or office is temporarily not occupying the

premises, provided that he or she charges licence

fee or charge for such premises of the employee or

spouse not exceeding the standard rent and

permitted increases for such premises, and any

additional sum for services supplied with such

premises, or person having accommodation in any

premises or part thereof for conducting a canteen,

creche,dispensary or other services as amenities

by any undertaking or institution; and the

expressions `licence', `licensor' and `premises

given on licence' shall be construed accordingly."

The above definition is comprehensive one. A licence

is a power or authority to do some act which, without such

authority, could not lawfully be done. In the context of an

immovable property a licence is an authority to do an act

which would otherwise be a trespass. It passes no interest,

and does not amount to a demise, nor does it give the

licensee an exclusive right to the use of the property. The

definition in the Rent Act includes any person in occupation

under a subsisting agreement for licence given for a licence

fee or charge of any premises or part thereof in a building

vesting in or lease to a cooperative housing society

registered or deemed to be registered under the

608

Maharashtra Cooperative Societies Act, 1960. The appellant

would, otherwise, be included within this definition. But

he has no subsisting licence, the same having been cancelled

on 10.3.72.

Section 15A of the Rent Act which was inserted by

Maharashtra Act 17 of 1973 provides:

"Certain licensee in occupation on 1st February

1973 to become tenants.

(1) Notwithstanding anything contained elsewhere in

this Act or anything contrary in any other law for

the time being in force, or in any contract, where

any person is on the 1st day of February 1973 in

occupation of any premises, or any part thereof

which is not less than a room, as a licensee he

shall on that date be deemed to have become, for

the purposes of this Act, the tenant of the

landlord, in respect of the premises or part

thereof, in his occupation .

(2) The provisions of sub-section (1) shall not

affect in any manner the operation of sub-section

(1) of section 15 after the date aforesaid."

Thus, section 15A read with section 5(11) (bb) of the

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Rent Act makes the tenant one of status rather than of

contract. Intention to create a licence as defined in that

Act if the other requirements fulfilled would, therefore, be

enough to confer that status from the specified date. The

above provisions applies to person in occupation of any

premises or part thereof which is not less than a room, as a

licensee he shall on the date be deemed to have become a

tenant on the first day of February 1973. The licence of

the appellant was cancelled on 10.3.72. Again, in the

instant agreement what has been given is only the use of the

flat and the furnitures and fittings.

`Licence' had earlier been defined in section 52 of

the Indian Easements Act, 1882:

"Where one person grants to another, or to a

definite number of other persons, a right to do, or

continue to do, in or upon the immovable property

of the grantor, something which would, in the

absence of such right, be unlawful and such right

does not amount to an easement or

609

an interest in the property, the right is called a

license."

In view of licence of the appellant having been

cancelled on 10.3.72, licence as defined by the Rent Act

itself, would not apply, to the appellant's case. He would,

therefore, not be protected under s. 15A of the Rent Act.

The learned counsel for the appellant submits that due

to scarcity of accommodation, the appellant had to accept

the terms that he would not, by virtue of the agreement of

leave and licence, claim any right of tenancy or sub tenancy

and that should not be a bar to his being given the benefit

under the Rent Act. However, considering the facts and

circumstances of this case we are not inclined to hold that

the appellant should not be bound by the expressed intention

in the agreement.

In Chandavarkar Sita Ratna Rao v. Ashalata S.Guram,

[1986] 4 SCC 447, this Court held that licence was a

privilege and not an interest in property. A tenant, whose

interest in the tenancy is determined for any reason but who

is protected by the statute, was entitled to create a

licence in favour of another person until a decree of

eviction has been passed against him. A statutory tenant

was in the same position as a contractual tenant until a

decree for eviction is passed against him and the rights of

contractual tenant including the right to create licence

even if he was transferor of an interest which was not in

fact the transfer of interest. If the licence have been

created before February 1, 1973, the licensee must, by the

express terms of section 15A of the Rent Act be deemed to be

a tenant and he should, subject to provisions of the said

Act be deemed tenant of the landlord on the terms and

conditions of the agreement consistent with the provisions

of the Act. At paragraph 58 of the report it was observed

that there was no reason and there was nothing in the Rent

Act or the Statement of Objects and Reasons to indicate

that restricted meaning to the expression "licence" should

be given. As the amended section said that whoever was in

possession as a licensee should be deemed to have become for

the purpose of the Act the tenant of the landlord and there

was no warrant to restrict the ordinary meaning of that

expression. If the restricted meaning was given then the

apparent scheme or the purpose for introduction of the

amendment would be defeated at least to a large section of

licensees who were contemplated to be protected, as the

objects of the Act sought to do.

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The Rent Act was amended by Maharashtra Act 17 of 1973.

By

610

the Amending Act section 5(4A) and section 15A were

introduced in the parent Act to confer on the licensee, who

had a subsisting agreement of February 1, 1973 the status

and protection of a tenant under the Rent Act. Section 15A

required that the occupant must be in occupation of the

premises as a licensee as defined in section 5(4A) on the

1st of February, 1973. If he be such a licensee, the non-

obstinate clause of section 15A (1) gives him the status and

protection of a tenant in spite of there being anything to

the contrary in any other law or in any contract. In other

words, even as against the express terms of the subsisting

contract of licence,the licensee would enjoy the benefits of

section 15A. But if he was not a licensee under a

subsisting agreement on the 1st of February, 1973, then he

did not get the advantage of the amending provision of the

Rent Act. A person continuing in possession of the premises

after termination, withdrawal or revocation of the licence

continued to occupy it as a trespasser or as a person who

has no semblance of any right to continue in occupation of

the premises. Such a person by no stretch of imagination

could be called a licensee. In D.H. Maniar and Ors. v.

Waman Laxman Kudav, [1976] 4 SCC 118, this position was made

clear. The appellant in the instant case was not in

possession as a licensee on 1st of February, 1973, the

licence having been terminated prior to that date. This

takes us to the next question, namely, whether the

Cooperative Court had jurisdiction over the matter.

Section 91(1) of the Maharashtra Cooperative Societies

Act which deals with disputes, provides:

"(1) Notwithstanding anything contained in any

other law for the time being in force any dispute

touching the constitution, elections of the

committee or its officers other than the elections

of committees of the specified societies including

its officers, conduct of general meetings,

management of business of a society shall be

referred by any of the parties to the dispute, or

by a federal society to which the society is

affiliated or by a creditor of the society, to a

cooperative Court if both the parties thereto are

one or other of the following:-

(a) a society its committee, any past committee,

any past or present officer, any past or present

agent, any past or present servant or nominee, heir

or legal representative of any deceased officer,

deceased agent or deceased servant of the society,

or the Liquidator of the society;

611

(b) a member, past member or a person claiming

through a member, past member or a deceased member

of a society, or a society which is a member of the

society or a person who claims to be a member of

the society.

xxx xxx xxx xxx xxx xxx

Under the above provision the matter of eviction of the

appellant by the tenant co-partner member of the society

can be said to be touching the business of the society.

In Deccan Merchants Cooperative Bank Ltd. v. M/s

Dalichand Jugraj Jain & Ors., [1969] (1) SCR 887, it has

been held that the word "business" in the expression

`touching the business of a society' in section 91 (1) does

not mean affairs of the society. It has been used here in a

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narrower sense and means the actual trading or commercial or

other similar business activity of the society which the

society is authorised to enter into under the Act and the

Rules and its bye-laws. It was, however, held that section

91 of the Maharashtra Cooperative Societies Act did not

affect the provisions of section 26 of the Bombay Rents,

Hotel & Lodging House Rates Control Act, 1947. Although

both these provisions start by excluding "anything

contained in any other law", two Acts could be harmonized

best by holding that in matters covered by the Rent Act, its

provisions rather than the provisions of the Maharashtra

Cooperative Societies Act, should apply. The latter Act was

passed in the main, to shorten litigation, lessen its cost

and to provide a summary procedure for the determination of

the disputes relating to internal management of the society.

But under the Rent Act a different social objective was

intended to be achieved and for achieving that social

objective it was necessary that the dispute between the

landlord and the tenant should be dealt with by the courts

set up under the Rent Act and in accordance with the special

provisions of that Act and this social objective did not

impinge on the objective underlying the Maharashtra

Cooperative Societies Act.

In O.N.Bhatnagar v. Smt. Rukibai Narsindas & Ors.,

[1982] 3 SCR 681, which was also case of Shyam Cooperative

Housing Society Limited, it was held that the claim of the

society together with such member for ejectment of a person

who was permitted to occupy having become a nominal member

thereof, upon revocation of licence was a dispute falling

within the purview of section 1 of the Maharashtra

Cooperative Societies Act, 1960 and that the proceeding

under section 91(1) of the Maharashtra Cooperative Societies

Act, 1960 were

612

not barred by the provisions of section 28 of the Bombay

Rents, Hotel and Lodging House Rates Control Act, 1947. The

two Acts, could be best harmonized by holding that the

matters covered by the Rent Acts, its provisions, rather

than the provisions of the Cooperative Societies Act should

apply. But where the parties admittedly did not stand in

the jural relationship of landlord and tenant, as their

dispute would be governed by section 91(1) of the Societies

Act and that the appellant by virtue of his being a nominal

member, acquired a right to occupy the flat as a licensee,

but his rights were inchoate,. In the facts of the instant

case upon the terms of sections 5(4A) and 15A of the Rent

Act, it is clear that the appellant was not entitled to the

protection of section 15A. The sine qua non for the

applicability of s. 15A of the Rent Act was that a licensee

must be in occupation as on February 1, 1973 under a

subsisting licence. It is not disputed that the appellant

did not answer that description since the agreement of leave

and licence in his favour admittedly stood terminated by the

notice of the respondent No. 1 on 10.3.1972. That being so,

the appellant was nothing but a rank trespasser and was not

entitled to the protection of section 15A of the Rent Act

and could not, therefore, plead the bar of section 28(1)

thereof.

In Hindustan Petroleum Corporation Ltd. & Anr. v. Shyam

Cooperative Housing Society & Ors., [1988] 4 SCC 747, at

paragraph 14 it was held under the facts of that case that

the petitioner Hindustan Petroleum Corporation Ltd. was

clearly protected under section 15A of the Rent Act and in

that view of the matter the jurisdiction of the Registrar

under Section 91(1) of the Cooperative Societies Act would

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be as laid down in O.N. Bhatnagar's case (supra). The

proceedings initiated under section 91 were accordingly

quashed. This case is, therefore, distinguishable on facts.

Following Bhatnagar's case in Smt. Krishna Rajpal

Bhatia and Ors. v. Miss Leela H. Advani & Ors., [1989] 1 SCC

52, where a tenant co-partner member of a registered co-

partnership type cooperative housing society inducting

another person into her flat for a term of eleven months

subject to renewal of the term from time to time after

obtaining society's permission and after the person so

inducted becoming a nominal member of the society and the

agreement between the parties embodied in usual standard

form of leave and licence, it was held that the tenant co-

partner member only created a licence and not a lease and

that the Maharashtra Cooperative Societies Act, 1960 was

applicable. There also the nominal membership of the

society was obtained in terms of the society's bye-laws and

the licence was

613

terminated by notice after expiry of the term, but the

occupant was not vacating. Claim made by the co-partner

under section 91 of the Maharashtra Cooperative Societies

Act, 1960 for ejectment of the occupant was held to

constitute a `dispute touching the business of a society'

within the meaning of section 91 and hence the Registrar's

jurisdiction to entertain the claim was held not to have

been barred under section 28 of the Rent Act.

Applying the law laid down in the above decisions we

are of the view that the instant dispute is one envisaged in

section 91 of the Maharashtra Cooperative Societies Act and

the Cooperative Courts rightly exercised jurisdiction.

The next question, namely, section 91 is ultra vires

the Article 14 of the Constitution of India to the extent

it tries to reach persons who are not members is not

tenable, inasmuch as the appellant is involved in a dispute

touching the business of the Society and he was a nominal

member of the Society by dint of his agreement of leave and

licence and he was made so on his application.

Result is that this appeal fails and it is dismissed,

but under the facts and circumstances of the case without

any order as to costs. Interim orders stand vacated.

R.P. Appeal dismissed.

614