S.P. Thirumaniya Pillai vs M.V. Nallamuthu Pillai

Ramachandra Iyer, J.—The only question that arises for determination in this petition is whether the petitioner, who is a tenant of premises

No. 6 Muthu Pillai Pudu Road, Madurai, has sublet it, so as to entitle the respondent-landlord to an order for eviction- The lease in favour of the

petitioner was for non-residential purpose, namely, to run a rice mill. The property demised included two godowns. According to the landlord, the

godowns, were sublet to (1) the Madurai-Ramnad Co-operative Wholesale Stores, and (2) Karuppiah. The Rent Controller, and the appellate as

well as the revisional authority found that there has been a sub-letting of one of the godowns to the Co-operative Stores. But there has been no

finding by the lower Court as to whether there was any subletting of a portion of the premises to Karuppiah. All the Courts agreed that, as there

was an unauthorised sublease of one godown in favour of the former, the petitioner should be evicted. The petitioner had entered into a contract

with the Cooperative Stores, under which he was to take paddy from the godown of the Stores to his mills, hull the paddy and deliver the rice to

whomsoever he was directed to do. For the due performance of the contract, it was necessary that the paddy received by the petitioner should be

retained in his godown for sometime. There was then no payment of any rent by the Co-operative Stores for the paddy thus stored in the premises

of'' the petitioner. Later, however, under the directions of the Collector the petitioner, instead of hulling the paddy and delivering the rice was

directed to deliver paddy bags without being hulled to the nominees of the Stores. Certain charges were, however, paid for storing the paddy in the

godown of the petitioner. It is not clear whether the entire paddy, taken delivery of by the petitioner from the stores, was to be distributed to the

various nominees of the Stores, or whether only some portion of it alone was to be distributed and the balance hulled by the petitioner in his mills,

converted into rice and delivered over as such. The charges paid for storing the paddy in the mill premises which had to be delivered over to the

nominees of the Stores as paddy was calculated on the number of bags, and on the average the Co-operative Stores paid the petitioner a sum of

Rs. 125 per month on this account. The documents filed in the case show that the payment was described as rent. R.W. 2, a retired Deputy

Registrar of Co-operative Stores who was Secretary of the Stores on the material date, stated that what was paid was not rent for the premises,

but merely charges for keeping the paddy bags therein. This evidence was, however, not accepted by the Tribunals. They were of the view that, as

the evidence showed that the payment made by the Stores to the petitioner was described as rent, it should be held that there was a sublease of

the godown where the paddy was stored in favour of the Co-operative Stores by the tenant, According to R. W. 1, the stock of paddy, belonging

to the stores and kept in the mill godown, would be under the double lock system, one key being with the miller and another with the Stores; the

godown itself was locked with two locks. It is evident that neither the petitioner nor the Stores could open the godown without the concurrence or

co-operation of each other. The question is, whether, under these circumstances it could be said that there has been a sublease of the godown in

favour of the Stores.

There is no document evidencing the terms of the arrangement between them. The lower Courts rest their conclusion that there had been a

sublease of a portion of the premises only on the use of the word ""rent"" in the records of the Stores in respect of the amounts paid to the petitioner.

According to the petitioner, the transaction was nothing more than a licence granted by him to the Stores to keep their paddy for a time in the

godown. Whether a transaction amounts to a lease or is merely a licence can be decided only by having regard to the substance of the transaction.

A mere use of the word lease even with reference to the transaction by the parties cannot always be decisive of the matter.

In the present case, there has been not even any occasion in which the transaction between the petitioner and the Stores was described as a

lease; the payment made by the occupier was no doubt described as rent. But that by itself could not show that the transaction should necessarily

be construed a lease. In Wilson v. Tayenes (1901) 1 Ch. 578, there was a contract allowing a Person to erect a boarding for a bill posting station

in front of a cottage, and that was staled to be ""at a rent of � 10 par annum payable quarterly on the four usual quarter days."" It was held that the

transaction was a licence revocable on reasonable notice.

A lease of immoveable property involves a transfer of right to enjoy the property, whereas a licence is merely a right to do or continue to do in

or upon immoveable property of the grantor something that would in the absence of such right be unlawful, such right not amounting to either an

interest in the immoveable property or an easement. Thus, the distinguishing feature between a lease and licence is that, in the latter, there is no

transfer of property. The essential characteristic of the former (i.e., lease) Is the grant of right to exclusive possession of the property for a

determinate term. In Wood fall on Landlord and Tenant 25th Edn. the distinction between a lease and licence is stated thus at page 8:

It has been seen above that there is a demise where a right is granted to the exclusive possession of lands or tenements fur a determinate term. A

grant of such exclusive possession is a lease although there may be certain reservations of a restriction of the purpose for which the possession may

be used, and although it may be described as a licence. Nor is an instrument a lease, although it contains the usual words of demise if us contents

show that such was not the intention of the parties- Thus where A agreed with B to let him have the use of certain premises for four days at �

100 per day, for the purpose of giving a series of concerts and fetes, but from the terms of the contract it was evident that A was not to part with

the possession of the premises during those four days, it was held that there was no demise. So where A, an owner of lace machines, paid 12 sh. a

week to B for permission to place the machines in a room in B''s factory, and for free ingress and egress to the room for himself and workmen for

the purpose of working and inspecting the machines, B supplied the necessary steam power for working the machines payment for which was

included in the above sum, it was hold that there was no demise to A of any part of the room, and no relation of landlord and tenant created

between him and B.

The same subject is discussed in Hill and Redman''s Law of Landlord and Tenant, at p. 7 :

It is essential to the creation of a tenancy of a corporeal hereditament that the tenant should have the right to the exclusive possession of the

premises. A grant under which the grantee takes only the right to use the premises without exclusive possession operates as a licence and not as a

lease. In deciding whether a grant amounts to a lease or is only a licence, regard must be had to the substance of the agreement, for the law will not

impute an intention to enter the legal relation of landlord and tenant where circumstances and conduct negative that intention. If the effect of the

instrument is to give the holder the exclusive right of occupation of the land, though subject to certain reservations, or to a restriction of the

purposes for which it may be used, it is a lease.

In Sheriff Dadumiyaji v. Emperor AIR 1930 Bom. 165, it was held that the main test for deciding whether a person is a licenced of a property

or lessee is that of exclusive possession, If the effect of the agreement were to give exclusive possession to the holder, though subject to certain

reservations, it should be held to be a lease. If, on the contrary, the agreement were merely for the use of the property in certain way and on

certain terms, the possession of the property remaining with the owner, it should be held to be only a licence.

Could it be said in the instant case that the petitioner granted a right of exclusive possession of the godown to the Co-operative Stores? The

petitioner had control over the property as he was allowed to put his own lock and retain the key therefore. There could, thus, be no exclusive

possession, which is an essential element in a lease. In this connection, reference may be made to the decision of the Bombay High Court in Indian

Hotels Co. v. Phiroz Sorabji 88 I C. 316. In that case, the plaintiffs, who were the owners of certain mews, provided accommodation (amongst

others) for motor cars in certain cubicles. The keys of the larger cubicles were kept by the supervisor employed by the plaintiffs, though in regard

to smaller cubicles the keys were allowed to be kept by chauffeurs. Evidence showed that the plaintiffs exercised general control over the premises

and carried out necessary repairs. It was held that the right acquired by the defendant for the use of the property was in the nature of a licence. In

the instant case the alleged sub-tenant was not granted exclusive possession; it was allowed only to keep the paddy bags in the premises which

were under the control of the petitioner. It would therefore follow that there had been no sub-lease of the premises by the petitioner to the Co-

operative Stores.

As I said earlier, the complaint of the respondent was that there had been sub-letting by the petitioner of a portion of the premises to one

Karuppiah as well. The appellate authority accepted the respondent''s case, and held that there was such sub-letting, though the Rent Controller

did not give any finding on that question. The learned District Judge did not consider that aspect of the matter at all. Before there could be a proper

disposal of the case, the question whether there has been sub-letting in favour of Karuppiah has to be considered by the learned District Judge and

appropriate orders passed. The order of the learned District Judge is set aside, and the case is remanded to him for fresh disposal in the light of the

observations contained herein. There will be no order as to costs.