# MRS. M. N. CLUBW ALA AND ANR v. FIDA HUSSAIN SAHEB AND ORS - **Citation:** [1964] 6 S.C.R. 642 - **Court:** Supreme Court of India - **Decided:** 1964-02-03 - **Case number:** Civil Appeal No. 151 . It. N. C""-J. of 1963 - **Bench:** K. SuBBA RAo, J. R. MunHoLKAR - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mrs-m-n-clubw-ala-and-anr-v-fida-hussain-saheb-and-ors-3210 - **Pages:** 13 ## Headnote Licence or Lease-Provision requiring notice to vacate-If inconsistent with licence-Intention of parties-To be ascertained from Agree· ment-lnference from circumstance.! and conduct, if formdl document absent-Exclusive possession if conclusive evidence of lease. In disputes regarding extra fees in respect of meet-stalls in a private market owned by the appellants, the respondents-~tall-holders filed a sujt alleging that the relationship between them and the appellants was that of lessees and lessors; while according to the appellants, the respondents 6 S.C.R. SUPREME COURT REPORTS were only their licensees. The stall-holders have been executing agreements, signed by the stall-holders alone, in which the payment is styled as rent. Though the building in which the market is located is owned by the appellants it could not be used as a market for the sale of meat or comestibles without the permission of the municipal council, and a number of duties have been imposed upon the owners including that of closing the market and tha.t market functioned only \Vi thin ~he stated hours. The City Civil Court Judge finding that the respondents were bare licensees dismissed their suit. His decision was affirmed in appeal. On a further appt:JI the High Court reversed the findings of the c:ourts below holding that from the general tenor of the document the terms created onJy a tenancy in respect of the stalls and not a mere licence or permissive occupation saying that if the occupation of the stall-holders was only permissive the condition as to the payment of rent, eviction for default in payment of rent for more than 3 days, the provision for annual repairs being carried out by the landlord, the further provision that repaii" that might be occasioned by the carelessness of the respondents should be carried out at their expense and the adequate provision for 30 days notice for vacating the stalls if they were required by the landlord would all seem to be inconsistent and irrelevant. On appeal by ! between the parties. Indeed, the City Civil Court has gone into the surrounding circumstances and it is largely on the view it took of them that it found in favour of the appellants. The High Court, however, has based itself upon the agreements themselves. To starit with if pointed out-and in our opinion rightly-that the use of the word 'rent' in - Ex, A-1 did not carry the respondents' case far. The reasons. 196f M. N. Cl"""""- v. Fida Hu.aaia Saireb Mudlwllcar 1- 1964 · M. N. Clubwala v. Fida Huuain Saheb Mudholluir J. SUPREME COURT REPORTS [r964] given by it for coming to the conclusion that the transaction was a lease, are briefly as follows : ( 1) Notice was required to be given to the stallholder before he could be asked to vacate even on the ground of non-payment of rent; (2) the annual repairs were to be carried out by the landlord only in the month of June; (3) the stall-holder was liable to carry out the repairs at his own expense when they are occasioned by his carelessness; ( 4) even if the landlord wanted the stalls for his own pul'pose he could obtain possession not immediately but only after giving 30 days' notice to the stall-holder; ( 5) the possession of the stalls by the responde.'lts had been continuous and unbroken by virtue of the terms of the agreement and that the terms of the original agreement were not shown to have been substituted by fresh agreements executed by the respondents. The High Court, therefore, held that from the general tenor of the documents it is fairly clear that as between the appellants and the r~spondents the terms created only a tenancy in respect of the stalls and not a mere licence or permissive occupation. After saying that if the occupation of the stall-holders was only ipermissive the condition as to payment of rent, eviction for default in payment of rent for more than 3 days, the provision for annual repairs being carried out by the landlord, the further provision that repairs that might be occasioned by the carelessness of the respondents should be carried out at their expense and the adequate provision for 30 days' notice for vacating the stalls if they were required by the landlord would all seem to be inconsistent and irrelevant, it observed : "As a matter of fact, there is no evidence whatsoever to show that any of these plaintiffs were at any time turned out of their possession of their 6 S.C.R. SUPREME COURT REPORTS stalls at the will of the landlords or for default of any of the terms and conditions stipulated in the agreements. The specific provision for 30 days' notice for vacating and delivering . possession seems to be conclusive 0f the fact that the plaintiffs were to occupy the stalls as permanent tenants and not as mere licensees. The terms of the agreements further disclose that the plaintiffs were to be in exclusive possession of these stalls for the purpose of their trade as long as they comply with the terms and until there was a notice of termination of their tenancy in res;>ect of the shops held by them. The very tenor of the agreements, the intention behind the terms contained in the agreements and the measure of control established by the terms of the agreements, all point only to the fact that the plaintiffs were to be in undisturbed and exclusive possession of the st:ills as long as they paid the rent and until there was a valid termination of their right to hold the stalls as such tenants." While it is true that the essence of a licence is that it is revocable at the will of the grantor the provision in the licence that the licensee would be entitled to a notice before being required to vacate is not inconsistent with a licence. In England it has been held that a contractual licence may be revocable or irrevocable according to the express or implied terms of the contract between the parties. It has further been held that if the licensee under a revocable licence has brought property on to the land. he is entitled to notice of revocation and to a reasonable time for removing his pro;ierty, and in which to make arrangements to carry on his business elsewhere. (See Halsbury's Laws of England 3rd edn. vol. 23, p. 431). Thus the mere necessity of giving a notice to a licensee requiring him to vacate the licensed premises would not indicate that the transaction was a lease. Indeed, s. 62 ( c) of the Indian Easements Act. I 882 itself provides that a licence is deemed to be revoked 'Vhere it has been either granted for a limited period, or 1964 M. N. Clubwai. v. Fida II Ul!ain Sahtb SUPREME COURT REPORTS 1964 acquired on · condition that it shall become void on the M. N.Chuiwa/a performance or non-performance of a specified act, and the Fida liuualn period . expires •. or the con.dition is fulfille~. !n the a~r.eeSIJMb ments lil question ¢he reqwrement of a notice 1s a condition and if that condition is fulfilled the licence will be deemed Mudliolkar J. to be revoked under s. 62. It would seem that it is this iparticular requirement in the agreements which has gone a long way to influence the High Court's finding that the transaction was a lease. 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. In the absence, however, of a formal document the intention of the parties must be inferred from .the circumstances and conduct of the parties. (Ibid p. 427). Here the terms of the document evidencing the agreement between the parties are not clear and so the surrounding circumstances and the conduct of the parties hnve also to be borne in mind for ascertaining the real relationship between the parties. Again, as already stated, the documents relied upon being merely agreements executed unilaterally by the stall-holders in favour of the landlords they. cannot be said to be formal agreements between the parties. We must, therefore, look at the surrounding circumstances. One of those circumstances is whether actual possession of the stalls can be said to have cop.tinued with the landlords or whether it had passed on to the stall-holders. Even if it had passed to a person, his right to exclusive possession would not be conclusive evidence of the existence of a tenancy though that would be a consideration of first importance. That is what was held in Errington v. Errington and Woods( 1 ) and Cobb v. Lane(2 ). These decisions reiterate. the view which was taken in two earlier decisions: Clore v. Theatrical Properties Ltd. and Westby & Co. Ltd., (3 ) and Smith & Son v. The Assessment Committee for the Parish of Lambeth('). Mr. S. T. Desai appearing for the appellants also relied on the decision of the High Court of (I) [1957) I K.B. 290. (2) [1952) I All. E.R. 1190. (3) [1936] 3 All. E.R. 483. (4) (1882-83) 10 Q.B.D. 327 at 330. 6 S.C.R. SUPREME COURT REPORTS 653 Andhra Pradesh in Vurum Subba Rao v. The Eluru Municipal Council ( 1) as laying down the same proposition. That was a case in which the High Court held that stallholders in the municipal market who were liable to pay what was called rent to the municipality were not lessees but merely licensees. The fact, therefore, that a stall-holder has exclusive possession of the stall is not conclusive eVidence of his being a lessee. If, however, exclusive possession to which a person is entitled under an agreement with a landlord is coupled with an interest in the r;>roperty, the agreement would be construed not as a mere licence but as a lease. (See Associated Hotels of India Ltd. v. R. N. Kapoor('). In the case before us, however, while it is true that each stall-holder is entitled to the exclusive use of his stall from day to day it is Clear that he has no right to use it as and when he chooses to do so or to sleep in the stall during the night after closure of the market or enter the stall during the night after 11-00 P .M. at his pleasure. He can use it only during a stated period every day and subject to several conditions. These circumstances, coupled with the fact that the responsibility for cleaning the stalls, disinfecting them and of closing the market in which the stalls are situate is placed by the Act, the regulations made thereunder and the licence issued to the landlords, is on the landlords, would indicate that the legal possession of the stalls must also be deemed to have been with the landlords and not with the stall-holders. The right which the stallholders had was to the exclusive use of the stalls during stated hours and nothing more. Looking at the matter in a slightly different way it would seem that it could never have been the intention of the parties to grant anything more than a licence to the stall-holders. The duties cast on the landlord by the Act are onerous and for performing those duties they were entitled to free and easy access to the stalls. They are also required to see to it that the market functioned only within the stated hours and not beyond them and also that the q:iremises were used for no purpose other than of vending comestibles. A further duty which lay upon the landlords was to guard the entrance to the market. These duties (I) I.L.R. [1956] A.P. 515 at pp. 520-4. (2) [1960) I S.C.R. 368. 1964 M. N. Clu,,.,.,. v. Fida HuSNirt sa. .. b Mudl10lkar I. 1964 M. N. Cl11bwala v. Fida Hussain Salieb Mudholkar I. 1964 Ft!bruary, 4 654 SUPREME COURT REPORTS could not be effectively carried out by the landlord by parting with possession in favour of the stail-holders by reason of which the performance by the landlords of their duties and obligations could easily be rendered impossible if the stall-hoiders adopted an unreasonable attitude. If the landlords failed to perform their obligations they would be exposed to penalties under the Act and also >too