Ramakrishnan, J.
1. The mainpoint on which the fate of the case rests is theconstruction of an agreement between theappellant-defendant and respondent-plaintiffand marked as Ext. A1 in the suit. The trialcourt construed it as a licence. The saidfinding has been challenged in this appeal bythe defendant.
2. The plaintiff the owner of a building with municipal No. 9/207 permitted the defendant to use a portion of the building and its premises subject to the terms and conditions contained in Ext, A1 agreement. The portion of the building and premises thus permitted to be used by the defendant is described in the schedule to Ext A1 as follows:
'The open yard measuring 10'x 17' in front of the office room together with the said office room measuing 17' x 7'6' and the godown measuring 46'6' x 15'9' to the south of the office and Pandikasala of the licensors in premises No. 9/207 abutting Beach Road in Nagaram Amsom and Desom, Calicut City.'
In Ext. A1 the plaintiff and defendant are respectively referred to as licensor and licensee. The agreement was dated 1-11-1972 and was for a period of 11 months. The monthly remuneration or fee agreed to be paid by the licensee was Rs. 375/-. The licensee continued the user of the premises even after the expiry of the period fixed in Ext. A1 and the respondent terminated the licence only with effect from 1-8-1980. Thereafter the present, suit was institute in October, 1980, for injunction restraining the defendant from entering the schedule premises or in the alternative for recovery of possession awarding damages for use and occupation. The short defence was that the appellant is a tenant and not a licensee and as such the suit is liable to be dismissed.
3. The important provisions in the agreement may be summarised thus : The agreement recited that the buildings and open yards mentioned in the schedule to the agreement and which are in the possession of the licensor, are allowed to be used by the licensee 'for sorting, bagging, storing etc., of coconutsand for sorting, drying and storing of copra,other hill produces, grains, oil and oilseedstraded by the licensees for the purposes oftheir business, the office room as office for thestaff supervising the sorting, bagging, storingetc., of coconuts and for sorting, drying andstoring of copra, other hill produces, grains,oil and oilseeds traded by the licensees for thepurpose of their business and the godown forstoring the bagged and unbagged poconuts,copra other hill produces, grains, oil andoilseeds traded by the licensees for the purpose of their business without causingdamage to the godown'. The agreementfurther provided that the licensee shall use thepremises only for the purpose mentionedtherein. It was further provided that on theexpiry of the term 30-9-1973 the licenseewould completely cease to use the scheduledpremises and the permission given shall riot beoperative and valid on and after 30-9-1973.There is a prohibition in the agreement against erecting or putting up any shed in theopen, yard or effecting any improvement or alteration whatsoever to the office room and godown. A right to put an end to and determine the term agreed upon is reserved infavour of the licensor and particularly in casethe licensee commits default in complying with any of the conditions. The agreementalso contained a clause that the licensor shall have and always be deemed to have possession and control over the open yard, office room, and godown described in the schedule hereunder subject to the permission grantedas per the agreement.
4.The evidence adduced in the case showed that even before the execution of Ex. A1 agreement the self same building and premises were allowed to be used by the defendant as per four earlier written agreement successively entered into by the plaintiff and defendant and containing exactly similar terms and conditions. The said four documents are marked as Exts. B1 to B4 dated 1-2-1969, 1-1-1970, 1-12-1970 and 1-12-1971 respectively. The manager of the firm examined as P.W. 1 has admitted that from1-2-1969, the date of Ext. B1 onwards the defendant was continuously using the premises as per Exts. B1 to B4 and Ext. A1 agreements for the purposes mentioned in the said agreements till the permission granted was terminated with effect from 1-8-1980. He has further stated that the defendant was using the premises as his godown and was taking licences also for storage of goods in the suit premises, D.W. 1 the manager and power of attorney holder of the defendant firm has staged that the defendant firm is in exclusive possession of the property and that the key of the godown is with the firm. The firm has shown the plaint schedule property as the firm's godown in the sales tax returns submitted by the firm. He has stated that the monthly payment made by the firm is by way of rent arid that it is as lessees the defendant is possessing the schedule premises. In the cross-examination D.W. 1 has admitted that there is only a common gate for access to the whole building and premises used by the firm and others and that they have to passs through the premises belonging to the plaintiff to enter the premises used by them. He has deposed that it is not true that the office is a verandah temporarily enclosed and has further stated that there are masonry construction on all the four sides of the office. He admitted that the entire building has only one Municipal number. In the re-examination he stated that the plaintiff cannot enter the premises in the possession of the defendant, without their permission. In the further cross-examination he asserted and stated that the plaintiff had never entered the premises in their possession after they were permitted to use the premises for first time on 1-2-1969.
5. Even though the defendant had raised a contention in the written statement that after the expiry of the term fixed in Ex. A1 there was an oral agreement whereby the defendant was allowed to continue as a tenant the same was given up even during the evidence stage and the only 1 point pressed seriously before the lower court and before ms in appeal was that Ext. A1 created in law, a relationship of landlord and tenant and not merely that of a licensor and licensee and as such the suit is liable to be dismissed.
6. Since the point involvled in the appeal is, as has already been indicated, one relating to the construction of Ext. A1 argeement it is necessary to refer to the legal principles relevant for the purpose. The distinction between the concepts of lease and licence and the legal principles relevant for deciding the question whether a particular transaction is a lease or licence has been laid down by the Supreme Court in a number of well known decisions starting from the oft quoted decision in Associated Hotel's case, AIR 1959 SC 1262. One of the latest in the series of decisions on the subject is Rajbir Kaur v. S. Chokosiri and Co. reported in AIR 1988 SC 1845. Analysing the principles laid down by the decisions of the English and Indian Courts on the subject his Lordship Justice Venkatachaliah has stated thus :
'One of the twin principal tests by which a lease is distinguishable from the relationship created under a licence is the element of the right to exclusive possession involving the transfer of an interest in the property; the other being the 'rent' stipulated for the grant.'
Making the point further clear it was observed thus:
'In the last analysis the question whether a transaction is a lease or a licence 'turns on the operative intention of the parties' and that there is no single, simple litmus-test to distinguish one form the other.'
While observing so his Lordship was only adopting the principles laid down by an earlier Larger Bench of the Supreme Court reported in Qudrat Ullah v. Bareilly Municipality AIR 1974 SC 396 where Justice Krishna Iyer speaking for the Bench has in his own inimitable style enunciated the principle thus:
'There is no simple litmus test to distinguish a lease as defined in Section 105, T. P. Act from a license as defined in Section 52 Easements Act, but the character of the transaction turns on the operative intent of the parties. To put it pithily, if an interest in immovable property, entitling the transferors to enjoyment, is created, it is a lease; ifpermission to use land without right to exclusive possession is alone granted, a license is the legal result.'
7. Further, in the same judgment Justice Venkatachaliah while dealing with the question of construction of documents and ascertainment of the operative intent of the parties to the document for the purpose of determining whether a document creates a lease or licence, has stated thus :
'In deciding whether a grant amounts to a lease or only a licence, regard must be had more to the substance than the form of the transaction. It is determined by the law and not by the label the parties choose to put on it. To give exclusive possession, there need not be express words to that effect; it is sufficient if the nature of the acts done by the grantee shows that he has and was intended to have the right of exclusive possession. The fact that the agreement contains a clause that no tenancy is to be created will not, of itself, preclude the instrument from creating a lease.'
The passage extracted above clearly points out the important principles which should be borne in mind, while construing documents and deciding the question whether a document creates a lease or licence. Incidentally it also shows how far and for what purposes subsequent acts of the parties can be looked into or relied upon, apart from the provisions in the document itself; for ascertaining the real intention of the parties to the document. In this connection it has to be pointed out that the above observations were made by the court after quoting the well known principle laid down by the Supreme Court itself in the oft quoted decision in Culbwala's case AIR 1965 SC 610 which is to the following effect:--
'Whether an agreement creates between the parties the relationship of landlord and tenant or merely that of licensor and licensee the decisive consideration is the intention of the parties. This intention has to be ascertained on a consideration of all the relevant provisions in the agreement.'
The passage quoted above from Rajbir Kaur's case, AIR 1988 SC 1845, would also show that apart from the provisions of the agreement subsequent conduct of the parties can also be relied upon for ascertaining the intention of the parties.
8. The learned counsel for the appellant has strongly relied upon the principles laid down by the Supreme Court in Rajbir Kaur's case, AIR 1988 SC 1845, and contended that the agreement in question really represents a transaction of lease and not a mere licence. Apart from relying upon some of the decisions of the Supreme Court referred to in the latest decision of the Supreme Court he had relied upon the decision of the House of Lords reported in A. G. Securities v. Vaughan, (1988) 3 All ER 1058, also. The learned, counsel for the respondent on the other hand has strongly relied upon the decision reported in Khalil Ahmed Bashir Ahmed v. Tufelhussein Samasbhai Sarangpurvvala, AIR 1988 SC 184. The learned counsel has argued that the terms and conditions contained in the document which was construed by the court in that decision as a licence are similar to the terms and conditions contained in Ext. A1 agreement in this case and as such the finding of the lower court that Ext. A1 created only a licensor-licensee relationship is perfectly legal and justifiable.
9. We may here usefully refer to the decision of the House of Lords referred to by the counsel for the appellants, as we find that the law on the point is not different in England and India. We say so because, the Supreme Court has, in almost all its decisions on the topic, referred to with approval and adopted the relevant principles regarding construction of documents laid down in various decisions of the English Courts as principles applicable in India also. The point considered by the House of Lords was similar to the one before us, except that the accommodation in that case was residential whereas in the case before us it is non-residential. Whether certain agreements were leases or licences and whether as lessees the occupiers were entitled to the protection of the Rent Act in force were the questions considered by theHouse of Lords. Lord Templeman wrote the leading judgment which contained a detailed. discussion of the facts of the case and the law on the point. The agreement which was construed as a lease by the House of Lords was described as a licence and specifically recited that the licensor is not willing to grant the licensee exclusive possession of any part of the rooms allowed to be used as licesee as his intention in all surrounding circumstances is to create a licence not coming under the Rent Act. The licensor reserved in his favour a right to use the rooms together with the licesee at any time he wanted. The agreement contained a specific clause whereby the licesee declared that he had understood the transaction as licence. It was such an agreement styled as licence and containing all possible recitals excluding the element of transfer of exclusive possession and enjoyment of the accommodation, that was construed as a lease by the House of Lords unanimously. While construing the agreement as creating a tenancy Lord Templeman relied upon the decision in Street v. Mount Ford, (1985) 2 All ER 289, a decision rendered by himself for the House wherein it was held that 'an express statement of intention is not decisive and that the court must pay attention to the facts and surrounding circumstance's and to what people do as well as to what people say.' It was found that the true nature of the agreement was to create a tenancy and the purported retention by the owner of the right to share the occupation of the flat with the occupier or to introduce an indefinite number of third parties along with the occupiers was clearly a pretence to deprive the occupiers the protection of the Rent Acts. In the judgment of Lord Templeman the Low Lord has discussed elaborately the reason why and the justification for the courts going against the expressed intention of the parties while construing agreements entered into by the owners of residential accommodation in the background of the Rent Acts. The following passages are note-worthy:
'Parties to an agreement cannot contract out of the Rent Acts; if they were able to do so the Acts would be a dead letter because in a state of housing shortage a person seekingresidential accommodation may agree to anything to obtain shelter. The Rent Acts protect a tenant but they do not protect a licensee. Since parties to an agreement cannot cantract out of the Rent Acts, a document which expresses the intention, genuine or bogus, of both parties or of one party to create a licence will nevertheless create tenancy if the rights and obligations enjoyed and imposed satisfy the legal requirements of a tenancy.'
xxxxx In considering one or more documents for the purpose of deciding whether a tenancy has been created, the court must consider the surrounding circumstances, including any relationship between the prospective occupiers, the course of negotiations and the nature and extent of the accommodation and the intended and actual mode of occupation of the accommodation.'
10. Before taking up the question of construction of Ext. A1 agreement we may dispose of one of the arguments of the learned counsel for the respondent based upon the decision reported in Khalil Ahmed v. Tufel-hussein Samasbhai, AIR 1988 SC 184. The argument is that the recitals in the document considered in the said case is identical with the recitals in Ext. A1 and as such following the reasoning and conclusion contained in the Supreme Court decision, Ext. A1 agreement should also be construed as a licence. On a careful examination of the provisions in the document considered in the said case, we find that the recitals therein are neither identical nor substantially similar to the recitals in Ext. A1 and as such the said decision is clearly distinguishable on facts and cannot be applied to the facts of this case. The following observation from the judgment of the Supreme Court itself would make the matter clear :
'In the document in question the expression 'licence' was introduced and Clause (2) said that it was only for the business purposes. The licence fee was fixed. It permitted user only for 20 hours. Restriction in the hours of work negates the case for a lease. Clause (12) is significant which gave to the licensor the rightto enter upon the premises and inspect the same at any time. In our opinion the background of the facts of this case and the background of the entire document negate the contention of the appellant that it was a lease and not a licence.'
We find no provision either similar or having similar effect as the provisions pointed out by the Supreme Court in the above passage as significant, in Ext. A1. In the circumstance we hold that there is no merit in the above contention.
11. Discovering the operative intent of the parties to Ext. A1 agreement in the light of the provisions contained therein and other relevant facts and circumstances brought out in evidence we are convinced that the true character of the transaction entered into by the parties as evidenced by Ext. A1 agreement, is a lease and not a licence. The nature of the i purpose for which the premises were obtained and used by the occupier required in the normal course exclusive possession. The defendants were conducting business in very valuable goods such as copra, oil and other hill products and were sales tax assessees. It is in evidence that the premises were taken by the defendant for the first time on 1-2-1969 and from that date onwards the defendant is in continuous occupation of the same. There is no case for the plaintiff that during the whole of the said period the plaintiff had ever exercised any acts of possession, or interfered in any other manner with the defendant's possession of the plaint schedule premises. In fact DW-1 had categorically asserted that the defendant was in exclusive possession of the premises and that without defendant's per-mission plaintiff could not have entered the premises in the possession of the defendant. Further it is in evidence that the defendant firm had taken licences with reference to the premises for the purpose of the business carried by them. The nature of the premises involved was also such that it permitted exclusive user. Nobody else was entitled to share the user or possession of the premises along with the defendant. The office room had separate masonry walls on all sides to separate it from the rest of the building. Thegodown was also having separate existence. The yard permitted to be used was having definite measurements to separate it from the rest of the yard. It is difficult to believe that merely on the basis of a personal permission to use the premises without any right of exclusive enjoyment of the premises; a business like the one carried on by the defendant in the plaint schedule premises; would have been carried on continuously for such a long period by the defendant or anybody else. Only because the entry to the premises is through a common gate or that the yard leased out formed part of a bigger yard it may not be possible to say that the defendant was not in exclusive possession of the premises. Similarly the wording and recitals in the document as if the transaction entered into is only a licence may not also stand in the way of understanding the true nature of the transaction as a lease. The recitals to the effect that the 'licensor shall have and always be deemed to have possession and control over the open yard office room and godown described in the schedule hereunder' can be considered only as deliberate attempt or pretence to mask the true nature of the transaction. Thus taking into consideration the provisions of Ext. A1 agreement and all other relevant facts and circumstances into consideration and bearing in mind the legal principles applicable we hold that exclusive possession was transferred under Ext. A1 to the defendant the so-called licensee for a fixed payment. Consequently it has to be held that the owner (licensor) had parted with his right to enjoy the premises during the term of the agreement and that the occupier (licensee) got that right to possession to the exclusion of the owner and thereby constituting the occupier a lessee of the plaint schedule premises. In the result, we hold that Ext. A1 agreement entered between the plaintiff and defendant represents a lease transaction and the defendant is a tenant of the plaint schedule premises and as such the suit for eviction filed without terminating the tenancy in accordance with law is not maintainable in law and has only to be dismissed.
12. We allow the appeal and set aside the decree and judgment passed by the courtbelow and dismiss the suit. In the circumstances of the case, the parties are directed to bear their respective costs.