Case Note & Summary
The dispute pertains to a suit property, a shed admeasuring 7 x 17 feet, owned by the respondent/landlord. The respondent claimed that by an agreement dated 1st December, 1975, he gave the suit property to the petitioner/licensee for conducting business for 11 months on payment of Rs.110/- per month as compensation/royalty and a security deposit of Rs.1500/-. The petitioner failed to pay from 1st February 1976, leading the respondent to issue a notice terminating the leave and licence. The petitioner contended that the agreement was a colourable document and that the premises were given on tenancy basis. The respondent filed suits for possession, which were decreed by the trial court (Small Causes Court) in favour of the respondent, holding that the agreement was a leave and licence. The petitioner appealed, and the Appellate Bench of the Small Causes Court reversed the trial court's finding, holding that the agreement was a colourable document and that the relationship was that of landlord and tenant, thereby dismissing the suits. The respondent then filed writ petitions under Article 227 of the Constitution of India challenging the appellate order. The High Court, after hearing both sides, held that the Appellate Bench's findings were based on evidence and were not perverse. The court noted that the agreement was for a fixed monthly compensation, the premises were given for a specific purpose, and the petitioner had exclusive possession. The court also observed that the respondent failed to prove that the agreement was a licence. The High Court dismissed the writ petitions, upholding the Appellate Bench's decision that the agreement was a colourable document and that the petitioner was a tenant protected under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947.
Headnote
A) Rent Control - Leave and Licence vs. Tenancy - Colourable Document - Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, Section 5(4)(c) - The court examined whether an agreement styled as 'conducting business' was a colourable device to avoid the Rent Act. Held that the true test is the intention of the parties and the substance of the transaction, not the label. The Appellate Bench correctly found that the agreement was a colourable document and that the relationship was that of landlord and tenant, as the premises were given for a fixed monthly compensation and the licensee had exclusive possession. (Paras 3-8)
B) Rent Control - Burden of Proof - Tenancy - Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 - The burden to prove that the agreement was a colourable document lies on the party asserting tenancy. In this case, the respondent/landlord failed to prove that the agreement was a licence, and the petitioner/licensee succeeded in showing that the agreement was not intended to be acted upon. (Paras 5-7)
C) Constitutional Law - Writ Jurisdiction - Article 227 of Constitution of India - The High Court's power under Article 227 is supervisory and not appellate. The court will not interfere with findings of fact unless they are perverse or based on no evidence. In this case, the findings of the Appellate Bench were based on evidence and not perverse, hence no interference was warranted. (Para 9)
Issue of Consideration
Whether the agreement dated 1st December, 1975 styled as 'conducting business' created a leave and licence or a tenancy, and whether the Appellate Bench of the Small Causes Court erred in reversing the trial court's finding of licence.
Final Decision
The High Court dismissed both writ petitions, upholding the common judgment and order dated 20th November, 1999 passed by the Appellate Bench of the Court of Small Causes, Mumbai.
Law Points
- Leave and licence vs. tenancy
- colourable document
- burden of proof
- intention of parties
- Section 5(4)(c) Bombay Rents
- Hotel and Lodging House Rates Control Act
- 1947
- Article 227 of Constitution of India
Case Details
2020 LawText (BOM) (06) 15
Writ Petition No. 1654 of 2000 with Writ Petition No. 1655 of 2000
Mr. Pradeep J. Thorat a/w Ms. Aditi Naikare i/by Smt. Anupama B. Shah for the Petitioners, Mr. C.G. Gavnekar a/w Mr. Hiranandani for the Respondent
Shri Raghuvir Prasad Kalicharan Kaithwar (since deceased, through his LRs: Kamala Raghuvir Kaithwas, Ajay Raghuvir Kaithwas, Vijay Raghuvir Kaithwas, Smt. Archana Dinesh Ujgare)
Hridainarain Rampakhan Pande
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Nature of Litigation
Writ petitions under Article 227 of the Constitution of India challenging the common judgment and order of the Appellate Bench of the Court of Small Causes, Mumbai, which reversed the trial court's decree of possession in favour of the landlord.
Remedy Sought
The petitioners (legal representatives of the original licensee) sought to quash the appellate order and restore the trial court's decree of possession.
Filing Reason
The petitioners challenged the appellate order on the ground that the Appellate Bench erred in holding that the agreement dated 1st December, 1975 was a colourable document and that the relationship was that of landlord and tenant.
Previous Decisions
The trial court (Small Causes Court) decreed the suits in favour of the respondent/landlord, holding that the agreement was a leave and licence. The Appellate Bench reversed this finding, holding that the agreement was a colourable document and that the petitioner was a tenant.
Issues
Whether the agreement dated 1st December, 1975 was a leave and licence or a tenancy?
Whether the Appellate Bench of the Small Causes Court erred in reversing the trial court's finding?
Whether the High Court should interfere under Article 227 of the Constitution of India?
Submissions/Arguments
The petitioners argued that the agreement was a genuine leave and licence and that the Appellate Bench erred in holding it to be a colourable document.
The respondent argued that the agreement was a colourable device to avoid the Rent Act and that the Appellate Bench correctly found the relationship to be that of landlord and tenant.
Ratio Decidendi
The true test to determine whether an agreement is a leave and licence or a tenancy is the intention of the parties and the substance of the transaction, not the label. An agreement styled as 'conducting business' can be a colourable document if it creates a landlord-tenant relationship. The burden of proof lies on the party asserting tenancy, and if the landlord fails to prove that the agreement is a licence, the court may infer a tenancy. The High Court under Article 227 will not interfere with findings of fact unless they are perverse or based on no evidence.
Judgment Excerpts
The Petitioner has taken exception to the common Judgment and Order dated 20th November, 1999 passed in Appeal No. 427 of 1996 in L.E. Suit No.251/579 of 1976 and Appeal No.480 of 1995 in R.A.D. Suit No.6041 of 1979, by the Appellate Bench of the Court of Small Causes, Mumbai, by present Petitions filed under Article 227 of the Constitution of India.
The Appellate Bench has rightly held that the agreement dated 1st December, 1975 was a colourable document and that the relationship between the parties was that of landlord and tenant.
Procedural History
The respondent/landlord filed L.E. Suit No.251/579 of 1976 and R.A.D. Suit No.6041 of 1979 in the Court of Small Causes, Mumbai, seeking possession of the suit property. The trial court decreed the suits in favour of the landlord. The petitioner/licensee filed Appeal No.427 of 1996 and Appeal No.480 of 1995 before the Appellate Bench of the Small Causes Court, which reversed the trial court's decree and dismissed the suits. The landlord then filed Writ Petition No.1654 of 2000 and Writ Petition No.1655 of 2000 before the Bombay High Court under Article 227 of the Constitution of India.
Acts & Sections
- Bombay Rents, Hotel and Lodging House Rates Control Act, 1947: Section 5(4)(c)
- Constitution of India: Article 227
