MEHERSINGH SETHI Vs. KHURSHED NADIRSHAW SATARAWALLA

JUDGEMENT

(1.) THE plaintiff seeks a declaration and enforcement of a charge on certain property belonging to the defendant and known as The Orient Hotel situated in Bombay. The suit is before me for the trial of certain preliminary issues affecting the jurisdiction of this Court.

(2.) THE plaintiff is the son of Nadirshaw Satarawala who died in April 1952. The decased was the owner of certain leasehold premises situated at Mahableshwar in which he carried on business as a hotelier under the name of Rippon and Connaught Hotel. By a writing described as a 'Lease' and made between the deceased and the defendant on May 8, 1948, the deceased demised in favour of the defendant those premises together with the furniture, fixtures and other articles lying in that hotel for a period of 3 years from May 1, 1948, to be used as a hotel under the name of Rippon and Connaught Hotel. By that writing the defendant further agreed that in the event of any instalment of rent remaining unpaid for one month after the due date thereof, the same would constitute a charge on the assets and income of two hotels owned by the defendant situated in Bombay arid known as Orient Hotel and Metropolitan Hotel and that the same would remain as security for the payment to the plaintiff of the unpaid instalments of rent. The plaintiff's case is that the defendant failed and neglected to pay rent after the middle of the 2nd year of the agreement. The arrears of rent amounted, according to the plaintiff to Rs. 40,000. The plaintiff further says that the defendant failed and neglected to pay Municipal taxes aggregating to Rs. 8,229 -7 -0 and this amount also he seeks to recover from the defendant. I may at this stage observe that neither the learn -,ed counsel for the plaintiff nor the learned Counsel for the defendant made any reference in the course of the arguments to this claim of Rs. 3,229 -7 -0 relating to Municipal taxes. Although the agreement of May 3, 1948, in terms states that it is one between a lessor and a lessee and the terms therein are such as are to be found in an agreement of demise of immoveable property by way of lease, it is the plaintiff's case that the writing created really a licence in favour of the defendant, and that the only rights that the defendant secured thereunder were those of a licensee and no rights of a tenant. According to the plaintiff, what was given to the defendant was merely the right or privilege of conducting the business of the Rippon and Connaught Hotel in the owner's premises and no interest in the property was created by the writing. The transaction, so it is alleged in the plaint, confers on the defendant no exclusive right to occupy the premises but merely an exclusive right to do the business of the hotel. The plaintiff in his plaint goes on to state that though the word 'rent' is used in the agreement, the amount payable by the defendant to the plaintiff was really in the nature of royalty. Of the two hotels belonging to the defendant, he had sold the Metropolitan Hotel prior to the date of the suit. Relying on these facts, the plaintiff seeks in the first instance a declaration of a charge in his favour on the Orient Hotel in respect of the amount of arrears of royalty and further seeks enforcement of that charge.

(3.) IN determining whether a particular agreement creates a tenancy or a mere licence, the Court must have regard to the real relation created by it. The question is not of form but of substance. The true nature of the agreement is not altered by the mere use of the word 'tenant' or 'licensee' and 'rent' or 'compensation' either in the writing itself or in the pleadings. The determination of this often affects the jurisdiction of the Court and is at times a matter of some difficulty. In such a case, the Court will not be influenced merely by the ostensible nature of the agreement. Neither skill in drafting nor legal ingenuity should be permitted to alter the nature of the agreement. The question is not merely of applying any formal test; regard must be had to the substance of the agreement. Whether a tenancy does or does not exist must depend on the real intention and agreement of the parties as appearing from the whole facts of the case. Grantor and Grantee may in a written agreement have described themselves as 'landlord' and 'tenant' and yet have been held to be licensor and licensee; or they may have stated that they are licensor and licensee and have been held not to be so, but to be landlord and tenant. The Court will examine all the incidents of the legal relation between the parties and from those deduce their real intention and agreement. The Court has to consider all the facts and circumstances of the case and draw an inference from them without attributing undue weight to any one of them. Existence of any written or verbal agreement between the parties, the solemnity attaching to execution of the agreement, the mode or manner in which the parties have acted and dealt with one another, possession and right to control the property are all indicia which may help the Court in finding whether a tenancy was created or not. The leading case on the subject is Glenwood Lumler Company v. Phillips [1904] A.C. 405, Another leading case is Wells v. Kingston -upon -Hull (1875) L.R. 10 C.P. 402. The principles underlying these and other decisions of Courts in England have been applied by our Courts and I do not deem it necessary to discuss the same in any detail. The authorities clearly establish one leading principle that it is essential for creation of a tenancy of any premises that the tenant should have exclusive possession of the premises. I am far from saying that exclusive possession of the premises in question is a conclusive test, but it must be regarded as of dominant importance and due weight has to be given to it while considering it as one of the totality of facts.