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Udai Pratap Singh vs Collector, Varanasi And Others

High Court Of Judicature at Allahabad|28 August, 1990

JUDGMENT / ORDER

ORDER R.B. Mehrotra, J.
1. In these two writ petitions filed under Art. 226 of the Constitution of India, a common question of law and fact arises for decision as to whether the agreement executed between the petitioners and the U.P. State Road Transport Corporation can be termed as a lease or the said agreement can be treated only as a licence. Petitioners in both the cases are aggrieved by the orders of the Collectors of their respective district issuing recovery certificates for recovery of the balance of the stamp duty on the basis that the agreement executed between the petitioners and U.P. State Road Transport Corporation is a lease and the petitioners are liable to pay the stamp duty required to be paid for executing the lease deed. Petitioners challenged the recovery certificates mainly on the ground that the agreement executed between the petitioners and the U.P. State Road Transport Corporation is only a licence on which no stamp duty is required to be paid. Petitioners had executed the licence on a stamped paper of Rs. 5/ - which is the requirement for execution of licence under the Stamp Act.
2. Brief facts in respect of both the aforesaid writ petitions are being stated for appreciating the controversy involved in these cases. In Writ Petition No. 7348 of 1979, petitioner Udai Pratap Singh participated in an auction for running a refreshment stall inside U.P. State Road Transport Corporation, Varanasi Depot. Petitioner's bid stood highest at Rs. 1,10,000/-. Petitioner executed an agreement termed as licence on 28-11-1977 on a stamped paper of Rs. 5/- for a period of three years. The said agreement was signed between the petitioner and the authorities of the U.P. State Road Transport Corporation, Varanasi (hereinafter referred to as the Corporation). The terms of the agreement as annexed in the writ petition are being reproduced hereinbelow :--
"This agreement made on the November 28, 1977 between the U.P. S.R.T.C. through Assistant Regional Manager hereinafter called the Corporation on the one part and Sri Udai Pratap Singh, son of Sri Babu Nandan Singh, resident of village Gaur, Pargana Kaswar district Varanasi, hereinafter called the caterer which expression shall include his heirs, personal representative and permitted assignment of the other part.
Whereas the Regional Manager, U.P. S.R.T.C. Varanasi Region has on behalf of Corporation accepted the bid of the caterer for opening a Refreshment Stall at U.P. S.R.T.C. Bus station, Varanasi from the 2-12-1977 on three yearly licence fee of Rupees 1,10,000./- (Rupees one lakh ten thousand only) on the terms and conditions hereinafter appearing.
Now these presents witness as follows (sic) :
1. That the contract shall commence from the 2-12-77 and shall remain in force for a period of three years subject to the condition that it shall be terminable by the corporation at its option in one months notice should the . service by the Caterer is (sic) found unsatisfactory, the decision in this behalf of the Regional Manager aforesaid shall be final and binding.
2. That the caterer shall provide good and wholesome vegetarian and non-vegetarian meals in Indian style in the shedule hereto. For members of the corporation on staff the said rates shall be subject to a discount of 12 1/2%, for articles for which the rates were not prescribed hereunder, the caterer shall have to get the same fixed by the said Regional Manager whose decision shall be final and binding on the caterer.
3. That the caterer shall funish the betel refreshment stall shop with necessary furniture, provide attractive show case and make arrangement to sell the goods, under hygenic condition at his own cost and subject to the approval of the Regional Manager, the caterer shall take all reasonable precaution that the servants and all other persons employed by him to do any work in the betel refreshment stall shop shall be courteous, civil, sober and honest and free from contagious diseases. Such servants or persons as are found in the opinion of the Regional Manager (which shall be final and binding), guilty of any misconduct or suffering from any contagious iseases shall be removed by the caterer.
4. That the caterer shall pay municipal taxes, electric charges and any other taxes imposed by the Government or the local bodies on the betelshop, refreshment stall shop or the land allotted to him.
5. That the caterer shall not except with the consent in writing of the said Regional Manager, make sub contract of any description for the catering hereby contracted for or any part thereof, not with such consent or aforesaid assign underlet (sic) or otherwise point with this contract or any part thereof or any inlerest therein.
6. That the contractor and his servants or agents shall maintain in proper condition, the corporation building, land and other properties allotted to him for the purposes aforesaid.
7. That the caterer shall pay to the corporation at the office of the said Regional Manager the aforesaid fee in the monthly instalment of Rs. 3055.56 paise (Rs. three thousand fifty five and fifty six paise) only each payable in advance on the 10th day of the months to which the instalment will relate.
8. That the caterers shall deposit with the said Regional Manager in cash security of Rs.9168/- only, representing three months licences fee for the efficient and proper running of catering service etc. and this amount will not be refunded to the caterer until such lime by which all the liabilities outstanding against him are cleared on the expiry of determination of the contract. Failing discharge of full liabilities by the caterer the corporation shall have full right to recover from the said security deposit all the sum of money payable by the caterer to the corporation. If during the period of the contract the caterer shall commit a breach of any of the conditions the said corporation may without any prejudice to any other right or remedy in law forfeit the security deposit or any part thereof and determine the agreement forthwith. The decision of the Regional Manager in this behalf shall be final and binding on the parties hereto.
9. That the corporation does not undertake any responsibility in the matter of realisation of charges from any of the customers of the caterer whether the member of the corporation staff or others.
10. That the caterer may terminate this agreement by giving three months notice to the corporation in this behalf.
11. That except as to the matter for the decision of which provision has been made above, all disputes, differences arising here-under or touching, arising in relation to this agreement shall be referred to the arbitration of a nominee of the General Manager, U.P.S.R.T.C. and his decision thereon shall be final and binding on the parties thereto.
12. That the caterer shall abide by all the rules of the Health Department and the stall will be open for, inspection by the officer of the Health Department.
In witness where of for and on behalf of the corporation and the caterer have signed this deed on the day and year first above witness signed by in the presence of."
3. The contract of the licence was to be effected on 2-12-1977 for a period of three years but due to unavoidable circumstances, the petitioner by his letter, dated 5-7-1978 informed the corporation that he is unable to run the refreshment stall and he will surrender his licence after lapse of three months in accordance with clause '10' of the agreement. The Corporation, By its letter, dated 28-8-1978 informed the petitioner that licence of the petitioner in respect of the refreshment stall shall come to an end with effect from 11-10-1978. Accordingly, the petitioner stopped running of the refreshment stall after 11-10-1978. However, sometime in the month of September, 1979, the petitioner learnt that the employees of the State Government of Tehsil Sadar, Varanasi are in search of the petitioner to recover Rs. 11,000/- from the petitioner either by arrest of the petitioner or by auction of his property. The petitioner enquired regarding the nature of recovery for which he was required to deposit Rs. 11,000/-, petitioner was informed that the said amount is being required to be recovered from the petitioner towards deficiency of the stamp duty and penalty on the agreement executed by him for running a refreshment stall in the Corporation.
4. The petitioner has challenged the aforesaid recovery certificate contending that the agreement was only a licence on which the requisite stamp duty was paid and deficiency on the said document treating it to be a lease is wholly illegal and uncalled for. The facts of the case have not been disputed in this Court. The only contention raised in the counter affidavit is that the document is to be treated as a lease under the U.P. Stamp Act and the petitioner is under obligation to pay the deficiency of stamp duty and penalty as the document executed between the petitioner and corporation is a lease agreement.
5. In Civil Misc. Writ No. 6279 of 1979, petitioner Babu Lal was granted a licence for running a canteen, betel and fruit shop for a period of three years from 19-4-1978 and in accordance with the earlier practice, a licence was executed on a stamped paper of Rs. 5/-. This agreement is almost in similar terms as was executed in the case of Udai Pratap Singh referred to above. As such the said agreement need not be reproduced.
6. However, after executing the aforesaid agreement on 19-4-1978, the petitioner came to know in the month of July, 1978 that a recovery certificate was issued against the petitioner, in respect of the licence granted to the petitioner for running the refreshment shop in the Depot of the Corporation for an amount of Rs. 11,075/-. The petitioner was informed that the aforesaid recovery certificate is in respect of deficiency of stamp duty and penalty imposed thereon for executing the agreement between the petitoner and the Corporation as the said agreement has been impounded treating it to be a lease by the Inspector of Stamps and Registration, Varanasi. The petitioner by means of the present writ petition challenged the aforesaid recovery certificate contending that the agreement, dated 19-4-1978 is only a licence which has been rightly executed on a stamp paper of Rs. 5/- and no stamp duty can be levied on the said document treating it to be a lease agreement.
7. There is no factual controversy in this case also. The writ petition is being contested on behalf of the Collector and Tahsildar, Azamgarh that the agreement executed between the petitioner and the corporation is a lease and the Inspector of Stamp and Registration has rightly impounded the document and the demand against the petitioner for paying the deficient stamp duty and penalty thereon is in accordance with law.
8. The question as to whether the document executed between the petitioner and the corporation can be termed as a lease or licence is to be determined by ascertaining the real intentions of the parties, whether they intended to create a lease or a licence? If an interest in the property is created by the deed, it is a lease, but if the document only permits another person to make use of the property of which the legal possession continues with the owner, it is a licence.
9. In the present case, the terms of the agreement, not only described the document as a licence but the licencee has been required to pay the licence fee. Besides it, the very tenor of the document clearly shows that the licencee had no execlusive control over the refreshment stall given to him for running the same.
10. The preamble of the agreement in Udai Pratap Singh's agreement contemplates the demand of three yearly licence fees of Rs. 1,10,000/- by the licensee to the lessor. Para '1' of the agreement contemplates that in case the service of the caterer is found unsatisfactory, it will be open to the Regional Manager of the Corporation to terminate the licence and decision of the Regional Manager shall be final in this regard. Para '2' of the agreement provides that for members of the Corporation staff, there will be a discount of 12 1/2 on the rates of the canteen for the articles sold in the refreshment stall. Para '3' of the agreement provided a condition that the goods sold in the refreshment stall shall be sold under the hygenic conditions and the licensee shall take all reasonable precautions that servants and all other persons employed by him to do any work in the betel refreshment stall shall be courteous, civil sober and honest and free from contagious diseases. It is further provided that such servants or persons as are found in the opinion of the Regional Manager guilty of any misconduct or found to be suffering from any contagious disease, shall be removed by the Regional Manager and the decision of the Regional Manager shall be final. Para '11' of the agreement provided that if there is any dispute or difference between the parties in respect of the agreement, the same shall be referred to the arbitration of a nominee of the General Manager, U.P.S.R.T.C. (U.P. State Road Transport Corporation) and his decision thereon shall be final and binding on the parties. Para '12' of the agreement provided that the licencee shall abide by all the rules of the Health Department and the stall shall be open for inspection by the officers of the Health Department. These terms of the document make the intention of the parties very clear. The lessor or the corporation did not give exclusive right to the licensee to run the stall in his own manner. The running of the stall was controlled by the terms of the licence. The Corporation had all the supervisory powers to regulate the running of the refreshment stall. No exclusive right was created in favour of the caterer to run the refreshment stall in the manner the caterer chose to do so. The document is only a licence, as the Corporation have kept itself in the control of the refreshment stall and have permitted the licencee to run the stall on the conditions imposed by the Corporation. There is no transfer of interest in the stall itself to the caterer. By very nature of the document and the terms of the agreement, the document cannot be termed as a lease.
11. The controversy regarding drawing a line for treating the document as a lease or licence has cropped up time and again and this controversy has been subject matter of several judicial decisions. Recently the Hon'ble Supreme Couttin the case of Capt. N. V. D. 'Souza v. Antonio Fausto Fernades reported in Judgment Today, 1989 (3) SC 265, had the occasion to consider the said question. In this decision, the Supreme Court has reiterated the law laid down in its earlier decisions in the cases of Associated Hotels of India Ltd. v. R. N. Kapoor, AIR 1959 SC 1262 and Sohan Lal Narain Das v. Lakshmi Das Raghunath Gadit, reported in (1972) 3 SCR 319. In Capt. B. V. D'Souza's case (supra), the Court held as under :--
"If an interest in the property is created by the deed, it is a lease but if the document only permits another person to make use of the property" of which the legal possession continues with the owner", it is a licence. If the party in whose favour the document is executed gets exclusive possession of the property, prima facie, he must be considered to be a tenant; although this factor by itself will not be decisive. Judged in this light, there does not appear to be any scope for interpreting Ext. 20 as an agreement of lease and licence."
12. In the case of Associated Hotels of India Ltd. (supra), the Hon'ble Supreme Court laid down following four principles for determining the question as to whether the document concerned is a lease or licence. The Supreme Court held at page 1263 :
"The following propositions may, therefore be taken as well established : (1) To ascertain whether a document creates a licence or lease, the substance of the document must be preferred to the form; (2) the real test is the intention of the parties -- whether they intended to create a lease or a licence; (3) if the document creates an interest in the property, it is a lease; but, if it only permits another to make use of the property, of which the legal possession continues with the owner, it is a licence; and (4) if under the document a party gets exclusive possession of the property, 'prima facie', he is considered to be a tenant; but circumstances may be established which negative the intention to create a lease."
Following the aforesaid tests in the present case, it is clear that the parties did not intend to create a lease. The only right that was given to the caterer was to run a refreshment stall. The terms of the document clearly show that the running of the stall was fully controlled by the Corporation which have been referred to above.
13. Learned counsel for the petitioners have realied on the following cases :--
1. AIR 1965 SC 610 -- Mrs. M. N. Clubwala and another v. Fida Husain Saheb and others,
2. AIR 1969, Allahabad 248, Shanti Sarup v. Radhaswami Satsang Sabha and others,
3. 1984 ALJ 331, Board of Revenue v. Mulakh Raj and another, and
4. AIR 1976 SC 1813, Board of Revenue etc. v. A. M. Ansari etc. In the case of Mrs. M. N. Clubwala and another (supra), the Hon'ble Supreme Court considered a situation where the appellants owned a market consisting of stalls which were occupied by stall-holders. The appellants had been granted a licence by the municipal corporation under which they were required to discharge certain duties like cleaning the stalls, disinfecting them and 'of opening and closing the market at specified time. Further the stall holders were not allowed to remain in occupation of the stalls beyond the closing hour and were required to pay certain rent for each day of occupation. On these facts, the Court held that the stall-holders were licensees and also held at page 614 :
'Thus the mere necessity of giving a notice to a licensee requiring him to vacate the licensed premises would not indicate that the transaction was lease."
14. That the facts of the aforesaid case are nearer to the controversy involved in the present case and the Hon'ble Supreme Court in the aforesaid case taking into account the surrounding circumstances held that the appellants were licensees of the Municipal Board. The Court also held that for judging the relationship of a landlord and a tenant or that of licensor and licensee, the decisive consideration is the intention of the parties which should be ascertained on the basis of surrounding circumstances.
15. The other decisions relied upon by the learned counsel for the petitioners are not directly on the point. However, the same principles are culled out from the other decisions also which have been referred to above.
16. The Standing Counsel appearing on behalf of the respondents has contended that under the U.P. Stamp Act, the document is to be termed as a lease. The definition of the lease as given under the U.P. Stamp Act is being reproduced hereinbelow:--
"(16) Lease -- "Lease" means a lease of immovable property, and includes also -
(a) a patta;
(b) a quabuliyat or other undertaking in writing, not being a counterpart of a lease, to cultivate, occupy, or pay or deliver rent for, immovable property;
(c) any instrument by which tolls of any description are let;
(d) any writing on an application for a lease intended to signify that the application is granted."
S. 105 of the Transfer of property Act defines the lease as under:--
"A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms......"
17. Even on the extended meaning given to the word 'lease' under the U.P. Stamp Act, the present document cannot be termed as a lease. The definition given in the Transfer of Property Act read along with the definition given under the U.P. Stamp Act, the document in question cannot be termed as a lease. The principles for determining the document to be a lease or licence as laid down in the decisions of the Hon'ble Supreme Court, quoted above, are equally attracted in the present case.
18. In both the writ petitions, we are of the view that the Corporation kept the legal possession of the stalls with itself and have only permitted the petitioners to make use of the property as a licensee and as such the document executed between the petitioners and the Corporation can be termed only as a licence. The recovery certificates issued against the petitioners in both the cases are wholly illegal and not sustainable in law as the authorities concerned have wrongly treated the documents as lease.
19. We accordingly, issue a writ of certiorari quashing the the impugned recovery certificate No. 333278, dated 25-6-1979 filed as Annexure '4' to writ petition No. 7348 of 1979 Udai Pratap Singh v. Collector, Varanasi and others and direct respondent No. 2 not to recover the disputed amount of Rs. 11,000/- and the recovery certificate, dated 14-7-1979 for an amount of Rupees 11,075/- filed as Annexure '2' to writ petition No. 6279 of 1979 Babu Lal v. U.P. Road Transport Corporation, Azamgarh and others and direct the respondents not to recover the said amount from the petitioner. We accordingly, allow both the writ petition with costs.
20. Petition allowed.
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Title

Udai Pratap Singh vs Collector, Varanasi And Others

Court

High Court Of Judicature at Allahabad

JudgmentDate
28 August, 1990
Judges
  • S Agarwal
  • R Mehrotra