C.M. Beena v. P.N. Ramchandra Rao, AIR 2004 SC 2103

C.M. Beena v. P.N. Ramchandra Rao, AIR 2004 || C.M. Beena Case Summary

This case interpretation/summary of C.M. Beena v. P.N. Ramchandra Rao (2004) is written by Mr Sonu Choudhary, a student at the Faculty of Law (Delhi University). If you also want to publish your articles or case interpretations/summaries, send your work to niyamskanoon09@gmail.com.

Case Details

Appeal (civil) 1548 of 1999

PETITIONER: C.M. BEENA AND ANR.

v. 

RESPONDENT: P.N. RAMACHANDRA RAO

DATE OF JUDGMENT: 22/03/2004

BENCH: R.C. LAHOTI & DR. AR. LAKSHMANAN

Facts of the Case

In a double-storey building owned by the respondent (Ramchandra Rao), the appellant-tenant (C.M. Beena) used a room on the ground floor as a stationary shop in consideration of the monthly rent of Rs 300. Almost 6 years later, a deed of licence for 1 year was executed by the respondent-landlord in the favour of the appellant-tenant. After the expiry of the license deed, no further agreement or action was taken. But almost 7 years after the expiry of the license, the respondent-landlord instituted a suit for an injunction order against the appellant to vacate the premises on the grounds of the expiry of the licence to use the said premise. 

Case History

1. The Trial Court dismissed the suit by holding that the respondent had occupied the disputed room on rent. And the said deed of licence was void.
2. The first appellate Court also upheld the findings of the Trial Court.
3. The High Court reversed the earlier orders and held that the appellant was a licensee. And since the license period had expired, the appellant had to vacate the said premise.
4. Therefore the appellant came before the Supreme Court.

Issue

1. Whether the appellant-tenant (C.M. Beena) was a lessee or licensee of the respondent-landlord (Ramchandra Rao)?

Supreme Court Observations

1. A lessee has exclusive possession with an interest in the property whereas the licensee has only the permission to use that property for a particular purpose and period. 
2. Even after the execution of a licence deed, it is open for the parties to show that they intended to be in a relation of lease and the said deed was executed to prevent the application of the Rent Control Act.
3. Usage of terms like “lease” or “licence”, “lessor” or “licensor”, “rent” or “licence fee” are not by themselves concluding the relation. The Court shall consider the parties' conduct to find out the intention which ultimately decides the relation.
4. To determine the true relation between the parties, the Court shall find the real intentions of the parties by diving into the written agreement and surrounding circumstances.
5. Exclusive possession over the property with an estate in land, as opposed to personal permission to occupy, is a lease.
6. It is not required to expressly mention, in the agreement, that there is a transfer of exclusive possession of the property. The conduct of the transferee showing this is sufficient.
7. Mere mentioning a clause in a deed that they are not entering into a lease agreement, by itself doesn't conclude that the said agreement is a license agreement.

Decision and Reasoning

1. The parties were in a relation of landlord and tenant because -
1. The appellant was in possession of the said premises for about 20 years before the execution of the licence deed. And even after the execution and expiry of the license deed the exclusive possession was enjoyed by the appellant-tenant without any interference of the respondent-landlord. 
2. Also, the nature of the premises is of a shop which is located in a busy commercial place. Hence it can't be contested that the use of the premises as a shop by the appellant was unlawful.
2. Appeal allowed.
3. Set aside the judgement and decree of the High Court.

Conclusion

In an appeal by special leave against the order of HC, the Supreme Court observed that the mere creation of a licence deed doesn't conclude the relation between the parties as licensor and licensee. The conduct of the parties and the effect of the agreement must have to be referred to find the intention of the parties which ultimately determines the true relationship between the parties. In this case, the parties executed a license deed but they failed to show that they were actually intended to create this relation. Therefore the SC allowed the appeal and held that the appellant was a tenant of the respondent.