P. N. Ramachandra Rao v. M/S Liberty Textiles

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.SASIDHARAN NAMBIAR TUESDAY, THE 11TH MARCH 2008 / 21ST PHALGUNA 1929 SA.No. 839 of 1995(G) --------------------AS.62/1994 of III ADDL. DISTRICT COURT, ERNAKULAM OS.1294/1995 of PRL.M.C.,ERNAKULAM .................... APPELLANT/RESPONDENT/PLAINTIFF: ----------P.N.RAMACHANDRA RAO, PARTNER, NEW WOODLANDS, WOODLANDS JUNCTION, M.G.ROAD, ERNAKULAM. BY ADV. SRI.S.VINOD BHAT RESPONDENT/APPELLANT/DEFENDANT: ------------- M/S.LIBERTY TEXTILES, PICE GOODS BUSINESS, C.C. 36/369, WOODLANDS BUILDING, M.G.ROAD, ERNAKULAM, COCHIN - 11 REPRESENTED BY PARTNER NIRANJAN KUMAR BHAVANJI. BY ADV. SRI.P.R.VENKETESH THIS SECOND APPEAL HAVING BEEN FINALLY HEARD ON 11/03/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## **M.SASIDHARAN NAMBIAR,J.** -----------------------------------------S.A.NO. 839 OF 1995 -----------------------------------------Dated 11[th] March 2008 ## **J U D G M E N T** Plaintiff in O.S.1294/1989 on the file of Munsiff court, Ernakulam is the appellant. Defendant is the respondent. Plaint schedule property is one of the rooms bearing door No.C.C.36/369 on the western side of Woodlands, a multi storied building on the side of M.G.Road belonging to the appellant. Respondent is in possession of the room. According to the appellant respondent obtained the building on executing Ext.A4 licence agreement dated 1/4/1981 for the purpose of trading in piece goods and it was informed to the respondent that the appellant needed the space for car park and shall vacate the same. The period of licence expired on 31/3/1992, but he continued to use the premises on the same terms and conditions. As per notice dated 17/7/1989 appellant terminated the licence and demanded vacant possession of the room on the expiry of one month and on the failure of the respondent to vacate, the suit was SA 839/95 2 filed for mandatory injunction directing appellant to vacate the premises and for future damages for use and occupation at the rate of Rs.1,000/- per month. Respondent resisted the suit contending that he is not a licensee but lessee. It was contended that Pradeep Bhai obtained exclusive possession of the building on 4/3/1974 and by investing money he made a show room in the premises and was conducting textile business in the name Teena Textiles. It was contended that furniture and fixtures were purchased and installed by Pradeep Bhai and by paying Rs.37,500/- with the knowledge and consent of the appellant they were purchased by respondent and thereafter respondent paid Rs.10,000/towards advance and building continued to be in the possession as a lessee and the original rent was Rs.700/- was later enhanced to Rs.1,000/- and he is a tenant entitled to the benefit of Kerala Buildings (Lease and Rent Control) Act and suit is to be dismissed. 2. Learned Munsiff on the evidence of PW1, DW1, Exts.A1 to A7, B1 to B12 found that Ext.A4 is only a licence and respondent is the licensee and granted a decree. Respondent challenged the judgment before SA 839/95 3 District court, Ernakulam in A.S.62/1994. Learned Additional District Judge on re-appreciation of evidence found that Ext.A4 is not a license but a lease and respondent is a lessee. It was found that right from the time of Ext.A2 in 1974 the room was in the exclusive possession of the respondent and as he is a lessee and not a licensee, appellant is not entitled to the decree sought for. Judgment of the trial court was set aside and suit was dismissed. It is challenged in the second appeal. 3. Appeal was admitted formulating following substantial questions of law. 1) When the terms of Ext.A4 disclose that it is only a license arrangement, is it open to the defendant to contend that the defendant is not bound by the terms, without any evidence, that they are not the terms actually agreed to between the parties. 2) When a document of license is voluntarily executed between the parties and the defendant was allowed to use the premises on the basis of SA 839/95 4 that document, is court justified in holding that it is not a license but a lease. 3) Was the court justified in ignoring the circumstances in which Ext.A4 was executed, especially in view of the express recitals therein on which defendant was allowed to use the building. 4. Learned counsel appearing for appellant and respondent were heard. 5. Argument of learned counsel appearing for appellant is that though a similar agreement entered into by the appellant and one Beena was considered by the Apex court in **Beena v. Ramachandra Rao (2004 (2)** **KLT 336)** and it was held that it is not a licence but a lease, the facts are entirely different. It was argued that in Beena’s case (supra) trial court found that the appellant before Apex court was inducted as the tenant in the premises in the month of April 1972 and she continued the possession of the building and though the disputed licence agreement was executed on 1/4/1981, the lessee was in exclusive possession of the premises and as distinct from the said case respondent SA 839/95 5 herein has no case that he was inducted as a tenant and so decision of the Apex court has no application. It was argued that though under Exts.A2 and A3, earlier licence agreements, respondent has been in possession of the building he was not in exclusive possession and Ext.A4 agreement specifically provide that in case the appellant needed the premises for providing a car park, respondent has to vacate the premises and in such circumstance, first appellate court was not justified in holding that relationship created under Ext.A4 is not that of a licensor and licensee but a landlord and lessee. It was argued that Corporation has directed appellant to provide car park and document produced along with I.A.730/2004, an application filed under Order XLI Rule 27 of Code of Civil Procedure to receive additional documents as evidence establish that fact and so a direction is to be issued to the Corporation to demolish the plaint schedule premises to provide car park as has been done by this court in S.A.846/1995 which was set aside by the Apex court in Beena’s case (supra). Learned counsel appearing for respondent argued that terms of Ext.A4 are exactly identical to the disputed agreement SA 839/95 6 considered by the Apex court in Beena’s case and in such circumstance, it can only be held that Ext.A4 does not create a licence but a lease and respondent is only a lessee and appeal is only to be dismissed. 6. It is admitted case that the premises sought to be recovered by filing O.S.1294/1989 on the file of Munsiff court, Ernakulam, which was the suit decided by the Apex court in Beena’s case (supra) was in respect of the adjacent premises. That suit was instituted based on a licence agreement executed on 1/4/1981. Ext.A4 was also executed on the same day. Judgment of the Apex court establish that the terms of agreement considered by the Apex court was exactly identical even clause wise to the terms in Ext.A4 herein. The only difference in facts was that the tenant in that case was inducted into possession of the room in 1972 and that too as a tenant. The plaint schedule premises herein was obtained under Ext.A2 agreement dated 28/2/1974. Though the period provided in Ext.A1 was one year, possession of the premises was not claimed back by the appellant after the expiry of the period. Ext.A3 agreement was then executed on 1/12/1976. It was also for a period of one year. When SA 839/95 7 under Ext.A2 the premises was obtained by the Umedalal.P.Shah as partner of Liberty Silks House, Ext.A3 was executed by its partners. It is admitted case that even after the expiry of the period provided under Ext.A3 in 1977, possession continued with Liberty Textiles. It was on 1/4/1981 Ext.A4 agreement was executed, the same day on which the agreement considered by the Apex court in Beena’s case was also executed. Though Ext.A4 shows that premises was put in possession of the firm M/s.Liberty Textiles on 1/4/1981, it is admitted case that possession continued with them right from 1974. Though terms of Ext.A4 shows that nomenclature is license agreement and parties are described as licensor and licensee and monthly rent payable is license fee, it is absolutely clear from Exts.A2 to A4 and the evidence of appellant as PW1 that respondent has been in exclusive possession of the premises right from 1974. Apex court analysed similar facts in Beena’s case in paragraph 12 as follows. “12. On the facts found by the two Courts below which findings have not been reversed by the High court it is SA 839/95 8 clear that the nature of the premises is of a shop and not a garage meant and designed exclusively for parking a car. The premises are located in a busy commercial market. The appellant has exclusive possession over the premises and the owner neither can nor does interfere therein. A full fledged stationery shop and allied business activities have been carried on by the appellant in the premises ever since 1972. The appellant was in possession of the premises for about 20 years before the date of the deed of license and in spite of the ‘deed of license’ of 1981 having been executed continued to possess, use and enjoy the occupation of premises as before. Though the socalled license expired in 1982 the respondent did not insist on the appellant putting back the respondent in possession of the premises but allowed him to remain in occupation and to continue to do so for a period of about seven years till the date of the institution of the suit. It is thus clear that the present one is not a case where the possession or control of the premises was retained by the respondent while the appellant was SA 839/95 9 only permitted to make such use of the premises as would have been unlawful but for the permission given. Agreeing with the Courts below and disagreeing with the High Court we hold the relationship between the parties to be of landlord and tenant and the possession of the appellant over the premises as that of a tenant.” Apex court held that the agreement is not a license agreement but a lease. That finding is applicable to the present case also. Though learned counsel appearing for appellant argued that there is a material difference that in that case the tenant was inducted as lessee and subsequently licence agreement was executed, Apex court did not consider that fact to hold that the agreement is a lease. On the other hand, circumstances relied on are in paragraph 12, which squarely apply to the present case. In view of the findings of the Apex court, it can only be found that Ext.A4 does not create a licence arrangement and instead respondent is only a lessee. Therefore, as rightly found by the first appellate court appellant is not entitled to the decree sought for as he is a building tenant. Documents sought to be received as SA 839/95 10 additional evidence by filing I.A.730/2004 are not necessary to decide, as the direction given by the Corporation is not a matter to be considered in the appeal. I.A.713/2004 is therefore dismissed. Appeal is dismissed. M.SASIDHARAN NAMBIAR, JUDGE. uj. SA 839/95 11 ============================= M.SASIDHARAN NAMBIAR,J. **JUDGMENT** S.A.NO.839 OF 1995 11[th] March 2008 ============================