Allowed

Vasala v. Shaik Salim Pasha

Kerala HC31 Jul 2012RSA/50/2012

Case brief

AI extract

What is this about?

Appealed against the first appellate court's holding that an agreement styled as a licence was a lease. The High Court of Kerala held that the document was a licence, restored the lower decree dismissing the counter-claim for eviction, and directed adjustment of security money against damages for use and occupation.

What did the court decide?

The judgment and decree of the first appellate court were set aside. The trial court's decree was restored. The appellant must adjust the security deposit against damages for use and occupation.

Vasala Vs Shaik Salim Pasha — Property and Title | Kerala HC (2012)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE THOMAS P.JOSEPH

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TUESDAY, THE 31ST DAY OF JULY 2012/9TH SRAVANA 1934

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RSA.NO. 50 OF 2012 ()

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AS.109/2006 OF THIRD ADDITIONAL SUB COURT, KOZHIKODE OS.413/2005 OF ADDITIONAL MUNSIFF'S COURT, KOZHIKODE-I

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APPELLANT(S)/APPELLANT/RESPONDENT:

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VASALA AGED 51 YEARS, W/O.LATE SUGUNA RAJ PADINJAREKKATT PARAMBIL, R.C ROAD, KOZHIKODE.

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BY ADV. SRI.K.A.SALIL NARAYANAN

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RESPONDENT(S)/APPELLANT/PLAINTIFF:

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SHAIK SALIM PASHA 44 YEARS, S/O.SHAIKE MAKSOOL SAHIB KOODATHUMKUZHIYIL MEETHAL, MAVOOR AMSOM CHEROOPPA DESOM, KOZHIKODE TALUK-673 001.

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BY ADV. SRI.K.M.FIROZ BY ADV. SMT.M.SHAJNA

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THIS REGULAR SECOND APPEAL HAVING BEEN FINALLY HEARD ON 31.7.2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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THOMAS P.JOSEPH, J.

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==================================== R.S.A. No.50 of 2012

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==================================== Dated this the 31^st day of July, 2012

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J U D G M E N T

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This Second Appeal arises from the judgment and decree in A.S. No.109 of 2006 of learned Third Additional Sub Judge, Kozhikode reversing the judgment and decree of learned First Additional Munsiff, Kozhikode in O.S. No.413 of 2005.

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Respondent-plaintiff, it is not disputed is engaged in business in the shop room described in the plaint schedule and belonging to the appellant-defendant. Respondent claimed that he took that shop room on rent on 01.12.2004, the monthly rent being Rs.1,500/- and his having paid Rs.30,000/- by way of advance. He claimed that he is a tenant of the shop room entitled to the protection of the Kerala Buildings (Lease and Rent Control) Act, 1965 (for short, “Act 2 of 1965), but the appellant is attempting to forcibly evict him from the shop room. Hence he prayed for a decree against forcible eviction.

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Appellant while admitting that respondent is doing business in the shop room claimed that there is no rental arrangement between them. Instead by Ext.B1, agreement of licence dated 01.11.2004 respondent was permitted to occupy and

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use the shop room as a licensee for doing business subject to the terms and conditions provided in Ext.B1. Permission was granted for 11 months the licence fee being Rs.16,500/-. As requested by the respondent, he was allowed to pay that amount at the rate of Rs.1,500/- per month. Rs.30,000/- was received as security for due performance of the terms and conditions of the agreement. According to the appellant, respondent has paid the licence fee only upto June, 2005 and defaulted payment thereafter. Thus appellant got the right to evict the respondent from the shop room. Appellant also made a counter claim for a decree for mandatory injunction to direct the respondent vacate the shop room and pay damages for use and occupation at the rate of Rs.1,500/- from 01.11.2005. Respondent answered the counter claim by repeating his assertion that he is a tenant of the shop room.

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The trial court understood Ext.B1 as creating only a licensor-licensee relationship between the appellant and the respondent. Accordingly the suit was dismissed and the counter claim was decreed directing the respondent to vacate the shop room with his articles and allowing the appellant to recover Rs.1,500/- per month from 01.11.2005 being damages for use and

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occupation.

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Respondent challenged dismissal of the suit and the decree on the counter claim in A.S. No.109 of 2006. The first appellate court after referring to the various circumstances came to the conclusion that though Ext.B1 is executed by the respondent in favour of the appellant, the transaction is one of lease, respondent is entitled to the protection of Act 2 of 1965 and consequently is entitled to a decree for injunction against forcible eviction. Accordingly, the suit was decreed and the counter claim was dismissed. That judgment and decree are under challenge in this Second Appeal on the following substantial questions of law:

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(i) Is not the intention of the parties to an agreement to be gathered from the recitals in the agreement?

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(ii) Did not the first appellate court commit a grievous error by ascertaining the nature of the document by looking into the size and texture of the flooring tiles used?

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(iii) Did not the first appellate court commit a

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grave error by ordering the appellant herein to put back the respondent in possession when once possession was already surrendered by him after the dismissal of the appeal?

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(iv) Does the judgment of the first appellate court run contra to Sec.91 of the Indian Evidence Act (for short, “the Act”)?

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The learned counsel for the appellant has contended that the first appellate court has not adverted to the relevant clauses in Ext.B1 before arriving at the conclusion that the transaction is a lease. When the terms and conditions of Ext.B1, agreement are clear and unambiguous the question of going behind that document to understand the intention of the parties does not arise. According to the learned counsel, the court need to ascertain intention of the parties only when the terms and conditions of the document are ambiguous. Though the respondent has a contention that he is not conversant with Malayalam, the plaint and other documents are all written in Malayalam, there is no mention in the plaint or other documents that the statements in Malayalam were interpreted to the

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respondent in any other language. Instead, without any such endorsement he has signed the plaint and other documents. Moreover, respondent has given evidence in Malayalam in the trial court. In the circumstances contention of the respondent that he is not familiar with Malayalam and hence was not aware of contents of Ext.B1 while signing that document cannot be accepted. The learned counsel contended that on a reading of Ext.A1 as also Exts.A2 to A8 the irresistible conclusion is that the transaction is a licence. The learned counsel further contended that first appellate court has found in favour of lease merely for the reason of the difference in the tiles and false ceiling in the shop room from the adjacent room belonging to and in the possession of the appellant which according to the learned counsel, is not the criteria for deciding whether the transaction is a licence or lease.

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The learned counsel for the respondent would contend that though Ext.B1, agreement is executed as if it is a licence arrangement, the real transaction between the parties must be understood by the court. The learned counsel pointed out that the question whether the transaction is a lease or licence arrangement should be understood from the intention of parties

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and the various circumstances surrounding the execution of the agreement. The learned counsel, placing reliance on the decision in M/s. Hyco Products (P) Ltd v. Smt. Shashija (AIR 2009 Delhi 96) has argued that the first appellate court was right in concluding that Ext.B1 did not create a licensor-licensee relationship but is only a camouflage to cover up the real transaction between the parties - a lease arrangement. The learned counsel also invited my attention to the evidence of the appellant as D.W.1.

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Though the appellant has a contention that in view of Sec.91 of the Act the respondent is not entitled to plead and prove that Ext.B1 is a lease, I am unable to accept that contention. Section 91 of the Act does not stand in the way of the parties or any of them showing the real nature of the transaction between them.

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The question whether the transaction is a lease or licence is to be ascertained from the intention of the parties gathered from relevant circumstances. But the intention of the parties to a document is to be ascertained from the words used in that document. The question is not what the parties may have intended but what the document states. Reference to extrinsic

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circumstances is required only when the words of the document

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are ambiguous. In Narayani Amma v. Narayanan

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Namboothiri (1985 KLJ 49) it is held that in interpreting a document the question is not what the parties to the document may have intended by the document but what is the true intent of the document (See also Raj Kumar Rajindra Singh v. State of Himachal Pradesh, AIR 1990 SC 1833 and Hathika v. Padmanabhan, 1994 [1] KLT 345 ).

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Exhibit B1 is the agreement relied on by the respondent. That, Ext.B1 was executed by the respondent is not very much in dispute. His contention is only that since he is not familiar with Malayalam, he was unaware of the terms and conditions of Ext.B1. That contention is difficult to be accepted for the reason that respondent has signed Ext.B1 and apart from that, it is seen that the plaint is written in Malayalam. I have gone through the plaint and find that nowhere in the plaint it is stated that the statements in Malayalam were interpreted to the respondent in the language known to him, he understood the contents as thus interpreted and thereafter he signed it. Moreover it is seen that his proof affidavit is in Malayalam. He was cross-examined in Malayalam and has given answers in

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Malayalam. The learned counsel for the respondent contends that respondent is able to speak Malayalam but is unable to read it. I find myself unable to accept that contention. Respondent has signed Ext.B1 with eyes wide open, knowing the terms and conditions mentioned therein.

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Exhibit B1 is styled as a licence agreement and the parties thereto - the appellant and the respondent are described as licensor-licensee, respectively. Exhibit B1 states that the respondent is only allowed to occupy the shop room for 11 months as a licensee subject to the terms and conditions stated therein. It is specifically stated in Ext.B1 that the transaction is not to be interpreted as a lease arrangement and that the respondent is not to get the protection of Act 2 of 1965. The licence fee for the period of the agreement (11 months) is stated as Rs.16,500/-. Exhibit B1 further states that as requested by the respondent, he was allowed to pay the said amount in monthly installments of Rs.1,500/- (for 11 months). On failure of the respondent to pay licence fee for three months, the licence agreement was to automatically stand terminated. The security for due performance of the licence agreement is stated as Rs.30,000/- and received by the appellant on condition that the

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said amount is to be repaid to the respondent on the latter vacating the premises. Exhibit B1 states that respondent was not to effect repairs and alterations in the shop room all of which were to be done by the appellant. It is also stated in Ext.B1 that on the expiry of the period of licence (11 months) the respondent was to vacate the shop room.

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Exhibit A1 is the money order coupon for sending Rs.1,500/- to the appellant. Exhibits A2 to A8 are printed receipts admittedly issued by the appellant to the respondent for payment of the fee as per Ext.B1. In Ext.A2 to A8, nature of the amount received by the appellant is described as “licence fee”. It is relevant to note that without any objection respondent was paying the amount and getting the receipts, Ext.A2 to A8 describing the amount as licence fee.

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The learned counsel for the respondent has invited my attention to the evidence of the appellant as D.W.1. She stated that she does not know about the provisions of Act 2 of 1965, what is meant by security deposit or the distinction between a licence and a lease. She also stated that there is a shutter in front of the shop room, it is opened at 8.00 a.m and closed at 10.00 p.m by the respondent.

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The first appellate court noticed that as distinguished from the adjacent room belonging to and in the possession of the appellant, the schedule room has different flooring and false ceiling. The schedule room was found at different level from the adjacent room belonging to and in the possession of the appellant. When questioned about the difference in the flooring and roof ceiling, appellant claimed that it was done by her through her son aged 16 years. The learned counsel for the respondent points out from the counter claim that according to the appellant on the death of her husband, her son (who according to the appellant has done the flooring and false ceiling of the roof) had some mental shock and for treatment of the son it became necessary to raise funds and hence the appellant allowed the respondent to occupy the schedule room as a licensee as per Ext.B1.

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I am unable to understand from the above statement in the counter claim that son of the appellant was either afflicted with insanity or other such disease so that he was not able to carry out alterations to the floor and roof of the shop room. I must also notice that whatever that was done in the shop room was only after Ext.B1. A further fact I must notice is that though respondent claimed that those works were done by

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him, apart from his interested version as P.W.1 no other evidence is let in. On the other hand, Ext.B1 restrains him from doing any such alterations or repairs and all such works were to be done by the appellant. Hence it must be taken that those works were done by the appellant.

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A further argument learned counsel for the respondent advanced is that at the relevant time appellant was in a financially difficult situation so that, she could not do the above work. But having regard to the circumstances which I have stated including the conditions in Ext.B1 I find myself unable to accept the argument of learned counsel that change of floor and roof of the shop room were effected by the respondent.

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It is seen from the judgment of the first appellate court that it is based on the difference in the nature and quality of the floor and roof of the shop room from the adjacent room belonging to the appellant that the first appellate court mainly came to the conclusion that the transaction is a lease. It would appear that the first appellate court was under the impression that exclusive possession of the shop room if any with the respondent would decide the issue whether the transaction is a lease or licence.

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Though at one stage exclusive possession with the licensee was considered as an indica of the nature of the transaction as lease, the position has changed as seen from the later decisions. In Rajappan v. Veeraraghava Iyer (1968 KLT 811) this Court held that the right to exclusive possession in the person permitted to occupy (the licensed premised) is not a decisive test to rule out a licence. In V.Mahammadkutty v. Illikkal Moosakutty (AIR 1996 SC 3288) the Supreme Court has also pointed out that exclusive possession is not a conclusive test, though is not irrelevant, in deciding whether a transaction is a lease or licence. That is because even for the limited purpose of enjoyment of the licence granted (here, as per Ext.B1), it is necessary that the licensee should have some sort of possession of the premises. But that does not mean that the licensee is in de jure possession of the shop room to the exclusion of the licensor so that such possession could be taken as an indica of the nature of the transaction. The possession of the licensee if any, is only under the licensor and subject to the terms and conditions of the licence. Hence it is idle to contend that the respondent has possession of the shop room and hence is a lessee. Moreover, Ext.B1 specifically states that respondent was

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allowed to occupy and use the shop room for conducting the business.

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In a lease transaction an interest in immovable property is created in favour of the lessee. In a licence, only a permission is granted to the licensee to do something in or upon the land of another which, but for such permission would be unlawful. No transfer of interest in immovable property is involved. In deciding whether the document creates a lease or licence, the pith and substance of the document is to be considered (See V.Mahammadkutty v. Illikkal Moosakutty , supra).

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It is not as if in an area to which the provisions of Act 2 of 1965 is extended, the parties are precluded or prohibited from entering into a licence arrangement. Primarily it is for the parties to decide what should be the relationship between them, whether it should be a licence or lease. So far as the law does not prohibit the parties from choosing the relationship they should have, there is no bar in creating a licence arrangement. It is only that the parties cannot by creating a document cover up the real transaction.

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Exhibit B1 shows that the parties understood and

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agreed the relationship between them to be of licensor-licensee. The terms and conditions referred to therein would also show that it is not a case where exclusive possession and much less legal possession was given to the respondent. On the other hand, the respondent, subject to the terms and conditions prescribed in Ext.B1 was permitted to occupy and use the shop room for his business. That in my view does not convert the transaction into a lease.

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The various terms and conditions referred to in Ext.B1 is consistent with and support the contention of the appellant that the transaction is a licence. Exhibit B1 or the evidence in the case do not show that the respondent got exclusive possession of the shop room. Exhibits A2 to A8, receipts produced by the respondent also show that he was paying the licence fee as per the condition prescribed in Ext.B1.

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True that in M/s. Hyco Products (P) Ltd v. Smt. Shashija (supra) it is held that nature of the transaction has to be decided from the intention of the parties and the attending circumstances. But I stated that the court need refer to the intention of the parties only when terms and conditions are ambiguous. I do not find any ambiguity in the terms and

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conditions of Ext.B1.

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In the light of what I have stated above the conclusion irresistible is that Ext.B1 created only a licensorlicensee relationship between the appellant and the respondent. The first appellate court was wrong in concluding that the relationship between the appellant and respondent is one of lessor-lessee. In that view of the matter the first appellate court was not right in reversing the judgment and decree of the trial court in the suit and counter claim.

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It is seen from the judgment and decree of the trial court that there is no reference to the sum of Rs.30,000/admittedly received by the appellant as security for due performance of the terms and conditions in Ext.B1. Respondent is entitled to get back the said amount. Appellant has to adjust the said sum of Rs.30,000/- in the amount due to her by way of damages for use and occupation as decreed by the trial court and after such adjustment if any further amount is due to the respondent/appellant as the case may be, the appellant/respondent is entitled to realize the said amount if any. If further amount is due to the respondent on such deposit, he shall deposit in the trial court the court fee payable on such

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further amount, if any.

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The substantial questions of law framed are answered

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as above.

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The Second Appeal is allowed as under:

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(a) The judgment and decree of the III Additional Sub Court, Kozhikode in A.S. No.109 of 2006 are set aside.

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(b) The judgment and decree of the Additional Munsiff Court, Kozhikode-I in O.S. No.413 of 2005 are restored with the modification stated as under:

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(i) Appellant shall adjust the sum of Rs.30,000/- (Rupees Thirty thousand only) received as security from the respondent in the amount payable to her by the respondent by way of damages for use and occupation as decreed by the trial court.

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(ii) On such adjustment if any

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amount is found due to the

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appellant/respondent as the case may be, such amount could be realized by the appellant/respondent as the case may be.

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(iii) If amount is found due to the respondent he shall before, realization of the amount deposit in the trial court the court fee payable on such amount.

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(iv) Parties shall suffer their costs

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in this appeal.

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All pending Interlocutory Applications will stand dismissed.

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THOMAS P. JOSEPH, JUDGE.

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vsv

Vasala v. Shaik Salim Pasha

Case brief

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Vasala v. Shaik Salim Pasha

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