M.N. CLUBWALA V. FIDA HUSSAIN SAHEB (1964) 6 SCR 642, 651
FACTS
The appellants are the owners of a private market situate in Madras known as Zam Bazar Market. There are about 500 old stalls in that market and meat, fish, vegetables etc. are sold in that market. Defendants 1 to 3 to the suit were the contractors appointed by the appellants for collecting rent at the time of the institution of the suit.
The suit out of which this appeal arises came to be filed because disputes arose between the plaintiffs and the Defendants 1 to 3 who became the contractors for collection of rent as from February 9, 1956. These disputes were with regard to extra carcass fees and extra fees for Sunday Gutha which were claimed by the contractors. The respondents further alleged that the relationship between them and the appellants was, as already stated, that of lessees and lessors while according to the appellants, the respondents were only their licensees. The respondents further challenged the extra levies made by the contractors.
The reliefs sought by the respondents were for an injunction against the appellants and the Defendants 1 to 3 restraining them from realising the extra levies and for further restraining them from interfering with their possession over their respective stalls as long as they continued to pay their dues.
ISSUE
Whether the plaintiffs-respondents are the lessees of the appellants or only their licensees?
PROCEDURAL HISTORY
The First Additional City Civil Court Judge: Held in the respondents’ favour that the extra fees sought to be levied by the contractor were sanctioned neither by the provisions of the Municipal Act nor by usage but upon the finding that the respondents were bare licensees, dismissed their suit.
The appellate bench of the City Civil Court: Affirmed the lower court’s decision.
The High Court: Reversed the decision of the courts below and in the decree passed by it pursuant to its judgment granted a number of reliefs to the respondents.
JUDGEMENT
The Court observed,
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.
However, in the present case, the documents relied upon being merely agreements executed unilaterally by the stallholders in favour of the landlords, cannot be said to be formal agreements between the parties. Therefore, surrounding circumstances were looked upon.
One of those circumstances is whether actual possession of the stalls can be said to have continued 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 and Cobb v. Lane.
In Vurum Subba Rao v. Eluru Municipal Council, it was held that stallholders in the municipal market were liable to pay what was called rent to the municipality, were not lessees but merely licensees.
In the case before us, however, while it is true that each stallholder 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. 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 there under 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.
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.
Therefore, it was held that the intention of the parties was to bring into existence merely a licence and not a lease and the word “rent” was used loosely for “fee”.
Upon this view the court allowed the appeal and set aside the decree of the High Court.