Holding

The agreement was a licence, the licence had terminated before 1 February 1973 so section 15A did not apply, the dispute touched the society’s business and fell within s.91 which is not ultra‑vires, therefore the appeal fails.

Summary

P.S. Sahni occupied a flat in Shyam Cooperative Housing Society under a written agreement dated 11 June 1969 that was labeled a "leave and licence" and expressly stated that the licensee would not claim tenancy. The Society and the licensor terminated the licence on 10 March 1972, after which Sahni refused to vacate and sought protection under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947. The Supreme Court held that the agreement was a licence, not a lease, and because the licence had been terminated before 1 February 1973 Sahni was not a licencee within the meaning of section 15A and thus could not claim tenant status. The dispute was deemed to touch the business of the cooperative society, falling within section 91 of the Maharashtra Co‑operative Societies Act, 1960, which was not ultra‑vires Article 14. Consequently, the cooperative court had jurisdiction and the appeal was dismissed.

Issues considered

Whether the 11 June 1969 agreement constituted a lease or a leave and licence.
Whether the appellant was entitled to the protection of section 15A of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947.
Whether the dispute fell within the ambit of section 91 of the Maharashtra Co‑operative Societies Act, 1960 (i.e., touched the business of the society).
Whether section 91 is ultra‑vires Article 14 of the Constitution insofar as it reaches non‑members.
Whether the appellant could invoke the bar of section 28(1) of the Rent Act.

Legislation cited

Bombay Rents, Hotel and Lodging House Rates Control Act, 1947s. 15A, s. 28(1), s. 5(11)(bb), s. 5(4A)
Indian Easements Act, 1882s. 52
Maharashtra Act 17 of 1973 (amending the Rent Act)
Maharashtra Co-operative Societies Act, 1960s. 91
Transfer of Property Act, 1882s. 105

Subjects

lease vs licenceexclusive possessionBombay Rents Actsection 15Acooperative societysection 91ultra viresArticle 14evictionnominal member

Judgment

PURAN SINGH SAHNI
A v
SMT. SUNDARI BHAGWANOAS KRIPALANI AND ·OTHER~
--r
I

FEBRUARY 20, 1991

[K.N. SAIKIA AND M.M. PUNCHHI, JJ.]
B
Bombay Rents, Hotel and Lodging House Rates (Control) Act,
1947/ Transfer of Property Act, 1882: Ss.5(4A), 5(1l)(bb), 15A/
s. 105-Agreement giving temporarily for a fixed period, use of Premi-
~es with furniture a~td fittings on compensation for use and occupation
without creating any interest in the grantee-Whether a leave and licence
c or a lease-Licence terminated w.e.f 10.3.1972-Status of the occupant
.thereafter-Whether entitled to Protection as a deemed tenant under ',_
s. 15-A. 'Leave and licence' and 'Lease'-Distinction between.

Constitution of India: Art. 14: S.91, Maharashtra Co-operative Y
Societies Act, 1960--Whether ultra vires. ·
D
Maharashtra Co-operative Societies Act, 1960: S.91-Eviction
of a nominal member by a tenant copartner member of a tenant copart-
nership Co-operative Housing Society-Whether a dispute touching
'business of a society'-Whether the society and tenant co-partner-
member - can raise a dispute under-Jurisdiction of Co-operative ~
E Courts-Whether barred by s. 28(1) of Bombay Rents, Hotel and
Lodging House Rates (Control) Act, 1947.

The second re~pondent was a te~~l!t copartnership Co-opera.-
tive Housing Society and father of the first respondent was its tenant
co-partner member._ By an application dated 10.6.1969 he sought
- ,_

F permission of the society to temporarily induct the appellant into his
flat. On the same date the appellant applied to the said Society for its
nominal membership stating -that he intended to take the flat for
temporary use and occupation, that he would not claim any right of
permanent nature and that on receipt of notice he would vacate the flat.
By an agreement of leave and licence dated 11.6."1969, the father of
G respondent no.1 (licensor) gave use of the flat with its furniture and
fittings to the appellant (licensee) on Rs.1,000 per month as compensa-
tion for use and occupation for a period of 11 months with a facility of
renewal of the agreement for two such further periods. The Managing
Committee of the Society, by its Resolution dated 13.6-.1969. I grailted
H., the permission.

592
- P.S. SAHNI v. SMT. S.B. KRIPALANI 593

The licensor by letter dated 22.1.1972 purported to terminate the
licence w.e.f. 10.3.1972, and asked the appellant to vacate the Oat, but
A
the latter declined to do so. On receiving intimation from the licensor,
the Society, by its letter dated 22.2.1972, required the appellant to
vacate the flat and deliver its possession to the licensor before the
stipulated date, but in vain. Instead, the appellant on 13.3.1972 applied
to the Court of Small Causes, Bombay for fixation of standard rent of B
the flat.

In April 1972 the licensor and the Society raised a dispute under ·
s. 91 of the Maharashtra Co-operative Societies Act, 1960 to recover
possession from the appellant, who in tum r.Ied a suit in the Court of
Small Causes, Bombay for declaration that he was tenant of the flat. He
also filed an interim application for stay of the dispute proceeding till C
disposal of his application for fixation of standard rent, which was
rejected and his writ petitiQD against the said order was also dismissed
by the High Court on 7.9.1977.

The Co-operative Court, Bombay dismissed the dispute proceed- D
ing holding that the appellant was a licensee and not a tenant but the
society was an idle party which acted in collusion with the licensor to
evict the appellant.

On appeal by the licensor and the Society, the Maharashtra State
Co-operative Appellate Court set aside the order of the Co-operative E,

-- Court, against which the appellant f"lled a writ _petition before the High
Court contending that the agreement, though styled as a leave and
licence, was a lease; that s.91 of the Maharashtra Co-operative Societies
Act was not attracted and could not have been invoked by the respon-
dents; and that s.91 itself was ultra vires Art. 14 of the Constitution to
the extent it tried to reach non-members of ~o-operative societies_. The p
---+-- High Court dismissed the writ petition. Hence the present appeal by
special leave.

B_y Maharashtra Act 17 of 1973, ss.5(4A)! and 15-A were intro-
duced in the Bombay Rents, Hotel and Lodging House Rates (Control)
Act, 1947} to confer the status and protection of a tenant on a licensee, G
who, on the first day of Feb. 1973, had a subsisting agreement and was
on that date in occupation of any premises or part thereof, which was
not less than a room, as a licensee.

On the questions whether: (1) the agreement dated 11.6.1969 was
one of leave and licence or of lease, and if it was so, whether the H
L
594 SUPREME COURT REPORTS [1991]· 1 S.C.R.

-A occupant was entitled to benefit of s. 15-A of the Rent Act; and (2) the ~
matter was one touching the business of the society so as to attract s. 91
of the Maharashtra Co~operative Societies Act within the jurisdiction of
the Co-operative Courts.

Dismissing the appeal, this Court
B
HELD: 1.1 By mere use of ttie word lease or licence the correct
categorisation of an instrument under law cannot be affected. Whether
a particular grant amounts to lease or a licence, depends on its subst-
ance. If a document gives only a right to use the property in a particular
way or under certain terms while it remains in possession and control of
c the owner thereof, it will be a licence. If there. is a transfer of interest
in law and exclusive possession is given to the grantee or where the
ingredients of a lease are present and the licensee is, according to law,
a tenant, then it is a lease and he ought to be given benefit of the Rent
Act. (6028-EJ
D 1.2 In determining whether the agreement was a lease or licence,
the test of exclusive possession, though of significance, is not decisive
and exclusive possession itself will not amount to creation of interest nor
would it militate against the concept of a Iicencet if the circumstances
negative any intention to create a tenancy. [602G, E-F]
E 1.3 The intention of the parties in making the agreement is
determinative of the question whether it was a lease or ·licence. The
intention has to be gathered from the terms of the agreement construed
in the context of the surrounding, antecedent and consequent circum-
stances. The crucial test would be what the parties intended. If in fact it
-
was intended to create an interest in the property it would be a lease, if
F it did not, it would be a licence Interest for this purpose means a right to
have the advantage accruing from the premises or a right in the nature
of property in the premises but less than title. [603H, 602F-H]

2. In the instant case, it is clear from the tenor of the agreement
that the intention of the parties was to create only a licence and not a·
G lease. Positively it speaks of a licence for the use of the flat and
negatively that the licensee would not claim any tenancy or sub-
tenancy. What was given to the licensee was the use of the flat with
furniture, fittings etc., which could not be said to have created any
interest in the flat though in effect the use continued for a stipulated
H period of time. [602A-CJ
P.S. SAHNI v. SMT. S.B. KRIPALANI 595I

Board of Revenue etc. v. A.M. Ansari etc., [1976] (3) SCR 661; A
Tarkeshwar Sio Thakur Jiu v. ·Dar Dass Dey & Co. & Ors., [1979] ~
SCC 106, relied on; Sohan Lal Naraindas v. Laxmidas, Raghunath
Gadit (I971) I SCC 276, followed. .

Antoniades v. Villiers andAnr., [1988] (3) All. E.R. 1058; NE.
Railway v. Hastings, [I900] A.C. 260, Isaac v. Hotel De Paris, Ltd.,
[1960] (I) All E.R. 348, Booker v. Palmer [1942] 2 All E.R. 674
referred to.

3.I Section ISA read with s. S(ll)(bb) of the Bombay Rents,
Hotel and Lodging House Rates (Control) Act, 1947, makes the tenant
one of status rather than of contract. Intention to create a licence as: C
defined in the Act if the other requirements fulfilled, would, therefore,
be enough to confer that status from the specified date. Section ISA
required that the occupant must be in occupation of the premises as a
licensee as diflned ins. S(4A) on the first day of Feb. 1973. lfhe be such
a licensee, the non-obstante clause of s. 15A(l) gives him the status and'
protection of a tenant in spite of there being anything to the contrary in b
any other law or in any contract. Even as against the express te~ of
the subsisting contract licence, a person in occupation of any premises '
or part thereof, which is not less than a room, as a licensee, shall, in
view of these provisions, be deemed to have become a tenant on the first 1

day of Feb. I973, and would enjoy ibe benefits of s. ISA. But if he was not a. E
licensee under a subsisting agreement on the 1st of Feb. 1973, then he did not
get the advantage of the amending provision ofthe Rent Act. [608E-F, 610AB]

3.2 The sine qua non for the applicability of s. ISA of the Rent Act ,
was that a licensee must be in occupation as on Feb. 1, 1973, under a
subsisting licence. A person continuing in possession after termination, F
withdrawal or revocation of the licence is a trespasser or a person
who has no semblance of any right to continue in occupation of tile
premises. Such a person by no stretch of imagination could be called a
licensee. [6I2B-C, 610C]

4. The appellant would, otherwise, be included in the defmition of G
licensee under s. S(4A) of the Rent Act, but as he had no subsisting
licence, the same having stood terminated by notice on 10.3.1972, the
licence as defined by the Rent Act itself would not apply to appellant's
case, and he was nothing but a rank trespasser not entitled to the
protection of s. ISA of the Rent Act and could not, therefore, plead the ,
bar of s. 28(1) thereof. [608A, 609A, 6I2C-D]
596 SUPREME COURT REPORTS [1991] 1 S.C.R. I

D.H. Maniar and Ors. v. Waman Laxman Kudav, [1976] 4 SCC ~
A 118, O.N. Bhatnagar v. Smt. Rukibai Narsindas & Others, [1982] 3 r
SCR 681, relied on. Chandavarkar Sita Ratna Rao v. Ashalata S.
Guram, [1986] 4 SCC 447, referred to.

Hindustan Petroleum Corporation Ltd. & Anr. v. Sh yam Co-
B operative Housing Society & Ors, [1988] 4 SCC 747, distinguished.

5. The matter of eviction of the appellant was a dispute touching
the business Of the society as envisaged by s. 91 of the Maharashtra
Co-operative Societies Act and the Co-operative Courts rightly exer-

c
cised jurisdiction. [611B; 613B]

Smt. Krishna Rajpal Bhatia and Ors. v. Miss Leela H. Advani &
Ors., [1989] 1 SCC 52, relied on. Deccan Merchants Cooperative Bank
.Ltd. v. M/S Dalichand Jugraj Jain & Ors., [1969] 1 SCR 887 referred
-
to.

D 6. Since the appellant was involved in a dispute touching the
business of the society of which he was a nominal member, his conten-
tion that s. 91 of the Maharashtra Co-operative Societies Act to the
extent it tries to reach persons who are not members is ultra vires
Art. 14 of the Constitution, was not tenable. [613C-D]

E CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2846
of 1989. ·

From the Judgment and Order dated 24.4.1989 of the Bombay
High Court in W.P. No. 4118of1986.

p H.S. Guru Ra1·a Rao, S. Markandeya and Ms. C. Markandeya,
for the Appellant. ~__::_

L.A. Kriplani and S.K. Jain for the Respondents.

The Judgment of the Court was delivered by
G
K.N. SAIKIA, J. This appeal by special leave is from the
Judgment and Order of the High Court of Bombay dated 24.4.1989 in
Writ Petition No. 4118of1986 dismissing the petition.

The second respondent Shyam Cooperative Housing Society
H Ltd. was a tenant co-partnership cooperative society (for short, 'the
P.S. SAHNI v. SMT. S.B. K...'ll!PALANI [SAIKIA, J.] 597
r'

Society') and Panjumaf H. Adva.ni late father of the first respondent
~ (for short,'Advani') was its tenant co-partner member. By an applica- A
tion dated 10.6.1969, Advani obtained permission of the Society to
induct the appellant temporarily into his flat and accordingly, the ap-
pellant took on rent from Advani flat No. 24, Block No. 1, second
floor, Nanik Niwas, situate at Bhulabhai Desai Road, Bombay (for
short, 'the flat') on a monthly rent of Rs. 1,000 (Rupees one thousand) B
on 10.6.1969. On the same date the appellant, under the Society's
-1-- rules, applied for its nominal membership stating, inter alia, that he
intended to take the flat for temporary use and occupation; that he
would not claim any right of permanent nature; and that he- would
,_ vacate the flat on receipt of notice thereof. By an agreement of leave
~
and licence dated 11.6.1969 entered into between the appellant and
c
Advani, the appellant took exclusive possession of the flat. The agree-
ment was for a period of 11 months and was renewable for 2 further
-
periods of 11 months each. Vide Resolution No. 208 dated 13.6.1969,
~
the Managing Committee of the Society granted the permission.

By letter dated 22.1.1972 Advani purported to terminate the D
licence with effect from 10.3.1972 and asked the appellant to vacate
the flat and the appellant having not acceded to the request, Advani
informed the Society, which, vide letter dated 22.2.1972 required the
appellant to vacate the flat and to deliver possession thereof to Advani
-;>--- on or before the 10th March, 1972. The appellant instead of vacating
the flat filed an application in the Court of Small Causes, Bombay on E
13.3.1972 for fixation of its standard rent. In April 1972, Advani and
the Society raised a dispute under section 91 of the Maharashtra
Cooperative Societies Act to recover possession from the appellant
who in turn filed declaratory suit No. 989/5305 of 1972 in the Court of

-
Small Causes, Bombay on 10.11.1972 seeking a declaration that he was
the tenant of the flat, with an interim application for stay of the pro- F
~ ceeding till the disposal of his application for fixation of standard rent;
but that application was rejected and the appellant was thereafter
unsuccessful in his writ petition in the High Court which was dismissed
on 7.9.1977. The learned Judge of the !Ind Cooperative Court, Grea-
ter Bombay by his Judgment dated 6.3.1985 dismissed the suit holding
that the appellant was a licensee and not a tenant, but the Society was G
an idle party and had acted in collusion with Advani to vacate the
~/ appellant.

Advani and the Society appealed therefrom to the Maharashtra
State Cooperative Appellate Court, Bombay in Appeal No. 397 of
1985 which was allowed and the impugned Judgment of the Ilnd H
598 SUPREME COURT REPORTS (1991] 1 S.C.R.

Cooperative Court was set aside on 31.7.1986.
A
The appellant impugned the appellate order in Writ petition
No. 4118of1986 in the High Court of Judicature at Bombay, contend-
ing, inter a/ia, that the agreement between the appellant and Advani,
though styled as a leave and licence, was a lease; that-section 91 of the
B Maharashtra Cooperative Societies Act, 1960 was not attracted and
could not have been invoked by Advani and the Society; and that
section 91 itself was ultra vires the Article 14 of the Constitution of (

India to the extent it tried to reach persons who were not members of
cooperative societies.
~ -
The High Court, while dismissing the writ petition, inter alia,
c held that the agreement was of temporary nature and no interest in the
I
----
flat having been created in favour of the appellant, even though he had
exclusive possession, it could not have been ·a lease; that the alleged
collusion between Advani and the Society to evict the appellant was·
based on conjectures and could not take the matter out of the purview
D of section 91 of the Cooperative Societies Act which was not ultra
vires.

Mr. S.S. Gururaja Rao, the learned counsel for the appellant
submits, inter alia, that the agreement dated 11.6.1969 between Ad-
vani and the appellant was one of lease with all its ingredients and not
E one of leave and licence; that the agreement having been a lease the
cooperative Court had no jurisdiction in respect thereof and it was the
Civil Court envisaged under the Bombay Rents, Hotel and Lodging
House Rates (Control) Act, 1947 that would have jurisdiction in the
matter; and that even assuming that the Cooperative Court had jurisd-
--
iction in respect of a leave and licence created under the provisions of
F the Act, that Court would not have jurisdiction in this matter, the
appellant being only a nominal member and not a tenant member of
the Society.

Mr. L.A. Kripalani, the learned counsel f()r the respondents,
submits that the agreement was one of leave and licence and not of
G lease; that in the matter of the agreement the Cooperative Court alone
has jurisdiction and no other court; and that being a nominal member
of the Society in view of his application for such a membership the
appellant would come within the jurisdiction of the Cooperative
Court. ·

H The first question to be decided in this appeal, therefore, is
P.S. SAHNI v. SMT. S.B. KRIPALANI [SAIKIA, J.] 599

whether the agreement dated 11.6. 1969 was one of lease or of leave
and licence. A

In the agreement dated 11.6.1969 the Party of the First part has
been called the 'licensor' and the Party of the Second part has been
called the 'licensees'. The licensor is stated to be a shareholder and
member of the Society. Its recitals said: B

"AND WHEREAS the Licensor is the absolute owner of
the said flat and whereas the Party of the Second part has
approached the Party of the First part to allow them the use
of the said flat with, fittings, fixtures and furniture lying
therein.
c
AND WHEREAS the Party of the First part has agreed to
allow the party of the Second part to use the said flat along
with fittings, furniture, fixtures etc.

D
The following were the relevant terms of the agreement:

"1. The 'licensor' has given the use of his flat No.24, 2nd
floor, Nanik Niwas, Block No.1, Bhulabhai Desai Road on
Leave and Licence basis.
E
2. The licence in the initial stage is for the period of 11
months to be renewed by another period of 11 months and
a second option of 11 months also, to make up the period of
33 months.

3. The Licensees shall pay compensation of Rs. 1,000 F
(Rupees one thousand only) per month to the 'licensor' the
use of the said flat along with fittings, fixtures and furniture
lying therein more fully described in the schedule herewith
attached; This compensation payable by the said 'Licen-
sees' to th.e said 'Licensor' shall include all the charges and
taxes leviable either by the Shyam Cooperative Housing .G
Society Ltd., Bombay-26 or by the Bombay Municipal
Corporation or by any local or State authorities except the
changes which are specially mentioned hereunder.

xxx xxx xxx xxx xxx xxx xxx xxx
xxx xxx xxx xxx xxx xxx xxx xxx H
600 SUPREME COURT REPORTS [1991] 1 S.C.R.

9. It is agreed by this agreement that only 'Licensee' is
A intended to be given to the 'Licensees' to use the flat and
fixtures, fittings, furniture etc. more fully described in the
schedule attached herewith and the 'Licensees' will at no
time claim tenancy or sub-tenancy of the premises. The
premises are in Nanik Niwas, Block No.1, Second Floor,
B Flat No.24, of the Shyarn Cooperative Housing Society
Ltd., and the rules regulations and bye-laws of the said
Society do not permit any tenancy or sub-tenancy being
created in respect of the premises.

xxx xxx xxx xxx xxx xxx xxx
c xxx xxx xxx xxx xxx xxx xxx
I
22. That the 'Licensee' will not surrender their rights under
this agreement in favour of anyone else except the
'Licensors'. That the 'Licensees' shall observe all rules,
regulations, and by-laws of the Shyam Cooperative Society
D as nominal members during the period of this licence.

From the above recitals and the terms and conditions there is no
doubt that ex facie it is one of leave and licence for use of the flat and
fixtures, fittings, furniture etc. and that the licensee would at no time
claim tenancy or sub-tenancy in respect of the flat. There is also no
E doubt that in his application for nominal membership, the appellant
stated that he intended to take the flat for temporary use and occupa-
tion and that he would not claim any right of permanent nature. In the
Managing Committee Resolution No.208 dated 13.6.1969, the appel-
lant was admitted as a nominal member of the Society and was permit-
ted to temporarily occupy the flat. Thus, there appears to be no room
F for contending, contrary to the terms of the agreement, that the agree-
ment was a lease and the appellant was a tenant of Advani, as such the
Bombay Rents, Hotel and Lodging House Rates Control Act, 1947,
hereinafter referred to as 'the Rent Act', was applicable to him.

However, relying on A ntoniades v. Villiers and Anr. , reported in
G 1988 (3) All E.R. 1058, it is submitted for the appellant that he having
been given exclusive possession of the flat for a time, the agreement
must be construed as a lease and him as a tenant. In that case the
y-
respondent let a flat to the appellants, a young unmarried couple,
under separate but identical agreements termed 'licences', which were
executed contemporaneously and stipulated with reiterated emphasis
H that the appellants were not to have exclusive possession. In particu-
P.S. SAHNI v. SMT. S.B. KRIPALANI [SAIKIA, J.] 601

lar, by clause 16, that agreement stated that the licensor shall be enti-
tled at any time to use the rooms together with the licensee and permit A
other persons to use all of the rooms together with the licensee and
further stated that the real intention of the parties in all the circumc
stances was to create a licence which did not come under the Rent
Acts. The rental payable was 87 pounds per month by each occupant
and the agreements were determinable by one month's notice by either B
-1. party. The respondent never attempted to use any of the rooms or
authorised any other persons to use the rooms. In July 1986 the
respondent gave the appellants. a notice to quit and applied to the
court for an order for possession, but his claim was dismissed on the
ground that the appellants were tenants who wei:e entitled to the pro-
tection of the Rent Acts. The respondent appealed to the Court of
Appeal, which allowed his appeal. The appellants having appealed to c
the House of Lords it was held that the agreements were interdepen-
dent on one another and were therefore to be read together as con-
stituting one single transaction. Since it was the intention of the two
apellants to occupy the flat as man and wife and since that intention
was known to the respondent, the true nature of the arrangement was D
to create a joint tenancy and the purported retention by the respon-
dent of the right to share the occupation of the small flat with the
appellants or to introduce an indefinite number of third parties to do
so was clearly a pretence to deprive them of the protection of the Rent
Acts. It followed that the agreements created a joint tenancy and not a
licence, and the appeal would therefore be allowec'. It niay be noted · E
that in the above case there was no obligation of or relation to any
·cooperative society and laws governing members thereof, whereas in
the instant case admittedly Advani was a tenant co-partner member of
the Society and the appellant by virtue of the agreement of licence was
also admitted to nominal membership accepting his statement in his
application. While interpreting the agreement we have also to see F
what transpired before and after the agreement. Ex praecedentibus et
consequentibus optima bit interpretatio. The best interpretation is
made from the context. "It is a true rule of construction that the sense
and meaning of the parties in any particular part of an instrument may
be collected ex antecedentibus et consequentibus; every part of it may
be brought into action in order to collect from the whole one uniform G
and consistent sense, if that may be done." As was said in N.E. Rail-
way v. Hastings, [1900] A.C. 260 (267):

"The deed must be read as a whole in order to ascertain the
true meaning of its several clauses, and the words of each
clause should be so interpreted as to bring them into H
602 SUPREME COURT REPORTS [1991] 1 S.C.R.

harmony with the other provisions of the deed if that in-
A
terpretation does no violence to the meaning of which they
are naturally susceptible.

In the agreement the intention to create a licence is clear. Posi-
tively it speaks of a licence for the use of the flat and negatively t~at
B the licensee would not claim any tenancy or sub-tenancy. That the
intention of the parties was to create only a licence and not a lease is
clear from the tenor of the agreement. True, by mere use of the word
lease or licence the correct categorisation of an instrument under law
cannot be affected. What was given to the licensee was to use of the
flat with furniture, fittings etc., which could not be said to have created
any interest in the flat though in effect the use continued for a
c stipulated period of time. It is true, where the ingredients of a lease are
present and the licensee is according to law, a tenant, he ought to be
given the benefit of the Rent Act.

As was held in Board of Revenue etc. v. A.M. Ansari etc., AIR "
D 1976 SC 1813: 1976 (3) SCR 661, it is the substance of the agreement
between the parties which is a decisive consideration on ·the question
whether a particular grant amounts to a lease or a licence. In Tarkesh-
war Sio Thakur Jiu v. Dar Dass Dey & Co. & Ors., AIR 1979 SC 1669:
( 1979) 3 sec 106, the document though named ps licence was con-
strued as a lease. If a document gives only a right to use the property in
E a particular way or under certain terms while it remains in possession
and control of the owner thereof it will be a licence. If there is a
transfer of interest in law and exclusive possession is given to the ,..
grantee then it is a lease. Thus, exclusive possession by itself will not
amount to creation of interest. Exclusive possession by itself would not
militate againstthe concept of a licence; if the circumstances negative
F any 'intention to create a tenancy.

Following Sohan Lal Naraindas v. Laxmidas Raghunath Gadit,
[ 1971] 1 sec 276, we reiterate that the intention of the parties to an
agreement has to be gathered from the terms of the agreement con-
strued in the context of the surrounding, antecedent and consequent
G circumstances. The crucial test would be what the parties intended. If
in fact it was intended to create an interest in the property, it would be
a lease, if it did not, it would be a licence. In determining whether the
agreement was a lease or licence, the test of exclusive possession,
though of significance, is not decisive. Interest for this purpose means
a right to have the advantage accruing from the premises or a right in
H the nature of property in the premises but less than title.
P.S. SAHNI v. SMT. S.B. KRIPALANI [SAIKIA, J.] 603

Lease has been defined in section 105 of the Transfer of Property
-~ A
Act 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 considration of a price paid or
promised, or of money, a share of crops, service or any B
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."

_....._. The essential elements of a lease are:
1. the parties c
2. the subject matter, or immovable property
~ 3. the demise, or partial transfer
4. the term, or period
D
5. the consideration, or rent.

The relationship of lessor and lessee is one of contract. In
Bacon's Abridgement, a lease is difined as "a contract between the
lessor and the lessee for the possession and profits of land, etc., on the
.. one side and recompense by rent or other ci>nsideration on the other."
Hence it has been held that "a mere demand for rent is not sufficient to
E
create the relationship of landlord and tenant which is a matter of
contract assented to by both parties." When the agreement vests in the
lessee a right of possession for a certain time it operates as a con-
veyance or transfer and is a lease. The section defines a lease as a
partial transfer, i.e., a transfer of a rjght of enjoyment for a certain p'
time.

This Court has held that a renewal of a lease is really grant of a
fresh lease though it is called a renewal because it postulates the exis-
tence of a prior lease. Where the initial term was, say one year, it
could not co-exist with a renewal of that very lease within one year.
Renewal could take place only on the expiry of the initial lease, and
not before.

The intention of the parties in making the agreement is determi-
native of the question. whether it was a lease or lice~ce. In Halsbury's
Laws of England, 4th Edn. Vol. 27, at paragraph 6, on General Princi- H
604 SUPREME COURT REPORTS [1991] 1 S.C.R.

pies for determining whether agreement creates lease or a licence we
A
read:

"In determining whether an agreement creates between
the parties the relationship of landlord and tenant or
merely that of licensor and licensee the decisive considera-
B tion is the intention of the parties. The parties to an agree-
ment cannot, however, turn a lease into a licence merely by
stating that the document is to be deemed a licence or
desctlbing it as such. The parties' relationship is determined
by law on a consideration of all relevant provisions of the
agreement; and an agreement labelled by the parties to it
as a 'licence' will still be held to create a tenancy if the
·c substance of the agreement conflicts with that label. Simi-
larly, the use of operative words ('let', 'lessor' etc.) which
are appropriate to a lease will not prevent the agreement
from conferring only a licence if from the whole document
it appears that it was intended merely to confer a licence.
D Primarily the court is concerned to see whether the parties
to the agreement intend to create an arrangement personal
in its nature or not, so that the assignability of the grantee's
interest, the nature of the land and the grantor's capacity to
grant a lease will all be relevant considerations in assessing
what is the nature of the interest created by the transaction .
E . In the absence of any formal document the parties' inten-
tion must be inferred from the circumstances and the
parties' conduct."

It has been submitted for the ·appellant that the very fact of
exclusive possession of the flat being given to the appellant was suffi-
F cient to make him lessee and Advani his landlord. We do not agree '
with the submission in an unqualified form. There have been cases ,...,.-~
where exclusive possession has been given outside the Rent Act. In
Isaac v. Hotel De Paris, Ltd., [1960] (1) All E.R. 348, the respondent
company owning the hotel de Paris where the lessees of another build-
ing called the P .Hotel, it was held that the respondent company were
G entitled to an order for possession because the relationship between
the parties was not that of landlord and tenant but of licensor and
licensee, even though there was exclusive possession by the appellant y·
and the acceptance of the amount of the rent by the respondent
company, the circumstances and the conduct of the parties showing ·
that all that was intended was that the appellant should have a
H personal privilege of running a night bar at the P. Hotel with no in-
P.S. SAHNI v. SMT. S.B. KRIPALANI [SAIKIA, J.] 605

-~ terest in the land at all, and this privilege came to an end with the
notice of May, 1956 and that after the notice the appellant remained in A
occupation at sufferance, and, in the circumstances, the acceptance of
rent by the respondent company did not waive their right to immediate
possession. It was observed that there were many cases in the books
where exclusive possession had been given of premises outside the
Rent Restriction Acts and yet there had been held to be no tenancy. B
~-.Lord Denning quoted from Booker v. Palmer, [1942] 2 All E.R. 674
(677):

"There is one golden rule which is of very general applica-
tion, namely, that the law does not impute intention to
enter into legal relationship where the circumstances and
the conduct of the parties negative any intention of the c
kind.'

The following passage was also cited with approval:

"It is clear from the authorities that the intention of the D
parties is the paramount consideration and while the fact of
exclusive possession together with the payment of rent is of
the first importance, the circumstances in which exclusive
possession has been given and the character in which
money paid as rent has been received are also ·matters to be
considered." E

On the question of nature and effect of the grant of exclusive
possession in paragraph 7 of Halsbury's Laws of England, 4th Edn.,
Vol. 27, we read:

"The fact that the agreement grants a right of exclusive F
possession is not in itself conclusive evidence of the exis-
tence of a tenancy, but it is a consideration of the first
importance, although of lesser significance than the inten-
tion of the parties.

In deciding whether a grantee is entitled to exclusive pos- G .,
session regard must be had to the substance of the agree-
ment. In order to give exclusive possession there need not
be express words to that effect; it is sufficient if the nature
of the acts to be done by the grantee requires that he should
have exclusive possession. However, the grant of an exclu-
sive right to a benefit can be inferred only from language H
606 SUPREME COURT REPORTS (1991] 1 S.C.R.

A which is clear and explicit. If an.exclusive right of posses-~
sion is subject to certain reservations or to a restriction of '
the purposes for which the premises may be used, the reser-
vations or restriction will not necessarily prevent the grant
operating as a lease." ·
B
We may now examine the position of the appellant under the
Rent Act. The Rent Act has not defined a 'lease'. As defined in ,J..._~
section 5(11) 'tenant' means any person by whom or on whose account
rent is payable for any premises and includes-

(a) such sub-tenants and other persons as have derived title ~
c under a tenant before the 1st day of February, 1973;

(aa) any person to whom interest in premises has been assigned
or transferred as permitted or deemed to be permitted, under ' y
section 15;
D
(b) any person remaining, after the determination of the lease, in
possession, with or without the assent of the landlord, of the
premises leased to such person or his predecessor who has
0

derived title before the 1st day of February, 1973;

E
(bb) such licensees as are deemed to be tenants for the purpose k
of this Act by section 15A;

(c) xxx xxx xxx xxx xxx"

Thus the above sub-section (bb) read with section 15A of the Rent Act
makes the 'tenant' one of status and not of contract. The licensee has
F
been conferred the status of a tenant. This reminds us of what Sir~
Henry Maine observed in Ancient Law. "The movement of progres-
sive societies had been from status to contract". But Lord Simmonds
pointed out in Johnson v. Merston, (1978] 8 All E.R. 37, that since the
days of Maine, the movement of the progressive societies in various
fields, has been almost the reverse, that is, from contract to status.
0 With acute dearth of accommodation and dire heed for it people may
agree to a pretence or unreasonable term from which law alone can
protect them and render justice to the parties. A. Y
As defined in the section 5(4A) of the Rent Act 'licensee', in
respect of any premises or any part thereof means:
P.S. SAHNI v. SMT. S.B. KRIPALANI [SAIKIA, J.] 607

"The person who is in occupation of the premises or such
part as the case may be under a subsisting agreement for A
licence given for a licence fee or charge; and includes any
person in such occupation of any premises or part thereof
in a building vesting in or leased to a co-operative housing
society registered or deemed to be registered under the
Maharashtra Cooperative Societies Act, 1960; but does not B
include a paying guest, a member of a family residing
~-- together, a person in the service or employment of the
licensor, or a person conducting a running business belong-
ing to the licensor or a person having any accommodation
for rendering or carrying on medical or para-medical

- services or activities in or near a nursing home, hospital or
sanatorium, or a person having any accommodation in a
hotel, lodging house, hostel, guest house, club, nursing
c
home, sanatorium, dharamshala, home for widows, orphans
or like premises, marriage or public hall or like premises,
or in a place of amusement or entertainment or like institu-
tion, or in any premises belonging to or held by an emp- 0
loyee or his spouse who on account of the exigencies of
service or provision of a residence attached to his or her
post or office is temporarily not occupying the premises,
provided that he or she charges licence fee or charge for
such premises of the employee· or spouse not exceeding the
standard rent and permitted increases for such premises, E
and any additional sum for services supplied with such
premises, or a person having accommodation in any pre-
mises or part thereof for conducting a canteen, creche,
dispensary or other services as amenities by any under-
taking or institution; and the expressions 'licence',
'licensor' and 'premises given on licence' shall be construed F
·-11s-, accordingly."

The above definition is comprehensive one. A licence is a power
or authority to do some act which, without such authority, could not
. lawfully be done. In the context of an immovable property a licence is
an authority to do an act which would otherwise be a trespass. It passes G
no interest, and does not amount to a demise, nor does it give the
~icensee an exclusive right to the use of the property. The definition in
the Rent Act includes any person in occupatior. under a subsisting
agreement for licence given for a licence fee or charge of any premises
or part thereof in a building vesting in or lease to a cooperative hous-
ing society registered or deemed to be registered under the H
608 SUPREME COURT REPORTS [1991] 1 S.C.R.

Maharashtra Coope.rative Societies Act, 1960. The appellant would,-...('-
A
otherwise, be included within this definition. But he has no subsisting .
licence, the same having been cancelled on 10.3.72.

Section 15A of the Rent Act which was inserted by Maharashtra
Act 17 of 1973 provides:
B
"Certain licensee in occupation on 1st February 1973 to
become tenants. ,-A

( 1) Notwithstanding anything contained elsewhere in this
~ct or anything contrary in any other law for the time being
c in force, or in any contract, where any person is on the 1st
day of February 1973 in occupation of any premises, or any
part thereof which is not less than a room, as a licensee he
shall on that date be deemed to have become, for the
purposes of this Act, the tenant of the landlord, in respect
D of the premises or part thereof, in his occupation.

(2) The provisions of sub-section (1) shall not affect in any
manner the operation of sub-section (1) of section 15 after
the date aforesaid."
~
E Thus, section 15A read with section 5( 11) (bb) of the Rent Act
makes the tenant one of status rather than of contract. Intention to
create a licence as defined in that Act if the other requirements ful- _·
filled would, therefore, be enough to confer that status from the
specified date. The above provisions applies to person in occupation of
-
any premises or part thereof which is not less than a room, as a licensee
F he shall on the date be deemed to have become a tenant on the first ,
day of February 1973. The licence of the appellant was cancelled on,~
10.3.72. Again, in the instant agreement what has been given is only ',_;
the use qf the flat and the furnitures and fittings.

'Licence' had earlier been defined in section 52 of the Indian
_G Easements Act, 1882:

"Where one person grants to another, or to a definite T
number of other persons, a right to do, or continue to do,
in or upon the immovable property of the grantor, some-
thing which would, in the absence of such right, be
H unlawful and such right does not amount to an easement or
P.S. SAHNI v. SMT. S.B. KRIPALANI [SAIKIA, J.] 609

an interest in the property, the right is called a license."
A
In view of licence of the appellant having been cancelled on
10.3.72, licence as defined by the Rent Act itself, would not apply, to
the ::tppellant's case. He would, therefore,· not be protected under
s. 15A of the Rent Act.
B
The learned counsel for the appellant submits that due to scarcity
A~of accommodation, the appellant had to accept the terms that he
would not, by virtue of the agreement of leave and licence, claim any
right of tenancy or sub tenancy and that should not be a bar to his
being given the benefit under the Rent Act. However, considering the
~~
facts and circumstances of this case we are not inclined to hold that the
appellant should not be bound by the expressed intention in the c
agreement.

In Chandavarkar Sita Ratna Rao v. Ashalata S. Guram, (1986] 4
SCC 447, this Court held that licence was a privilege and not an
interest in property. A tenant, whose interest in the tenancy is D
determined for any reason but who is protected by the statute, was
entitled to create a licence in favour of another person until a decree of
eviction has been passed against him. A statutory tenant was in the
same position as a contractual tenant until a decree for eviction is
--~ passed against him and the rights of contractual tenant including the
right to create licence even if he was transferor of an illterest which E
was not in fact the transfer of interest. If the licence have been created

- before February 1, 1973, the licensee must, by the express terms of
section 15A of the Rent Act be deemed to be a tenant and he should,
subject to provisions of the said Act be deemed tenant of the landlord
on the terms and conditions of the agreement consistent with the pro-
visions of the Act. At paragraph 58 of the report it was observed that F
+"' there was no reason and there was nothing in the Rent Act or the
Statement of Objects and Reasons to indicate that restricted meaning
to the expression "licence" should be given. As the amended section
said that whoever was in possession as a licensee should be deemed to
have become for the purpose of the Act the tenant of the landlord and
there was no warrant to restrict the ordinary meaning of that expres- G
sion. If the restricted meaning was given then the apparent scheme or
-y the purpose for introduction of the amendment would be defeated at
least to a large section of licensees who were contemplated to be
protected, as the objects of the Act sought to do.

The Rent Act was amended by Maharashtra Act 17 of 1973. By H
610 SUPREME COURT REPORTS [1991] 1 S.C.R.

the Amending Act section 5(4A) and section 15A were introduced in ~
A the parent Act to confer on the licensee, who had a subsisting agree- '
ment of February 1, 1973 the status and protection of a tenant under
the Rent Act. Section 15A required that the occupant must be in
occupation of the premises as a licensee as defined in section 5(4A) on
the 1st of February, 1973. If he be such a licensee, the non-obstante
B clause of section 15A (1) gives him the status and protection of a
tenant in spite of there being anything to the contrary in any other law 1
or in any contract. In other words, even as against the express terms of ____....._,__
the subsisting contract of licence, the licensee would enjoy the benefits
of section 15A. But if he was not a licensee under a subsisting agree-
ment on the 1st of Februray, 1973, then he did not get the advantage of
J the amending provision of the Rent Act. A person continuing in
c possession of the premises after termination, withdrawal or revocation
of the licence continued to occupy it as a trespasser or as a person who
-
has no semblance of any right to continue in occupation of the pre-
mises. Such a person by no stretch of imagination could .be called a .
r-/
licensee. In D.H. Maniar and Ors. v. Waman Laxman Kudav, [1976] 4
D SCC 118, this position was made clear. The appellant in the instant
case was not in possession as a licensee on 1st of February, 1973, the
licence having been terminated prior to that date. This takes us to the
next question, namely, whether the Cooperative Court had jurisdic-
tion over the matter.

E Section 91(1) of the Maharashtra Cooperative Societies Act
which deals with disputes, provides:

"(1) Notwithstanding anything contained in any other law
for the time being in force any dispute touching the con-
-
stitution, elections of the committee or its officers other
F than the elections of committees of the specified societies
including its officers, conduct of general meetings, manage-
ment of business of a society shall be referred by any of the
. parties to the dispute, or by a federal society to which the
society is affiliated or by a creditor of the society, to a
cooperative Court if both the parties thereto are one or
G other of the following:-

(a) a society its committee, any past committee, any past or ~
,i
present officer, any past or present agent, any past or pre-
sent servant or nominee, l!efr or legaJfepresentative of any
deceased officer, deceased agent or deceased servant of the
H society, or the Liquidator of the society;
P.S. SAHNI v. SMT. S.B. KRIPALANI [SAIKIA, J.] 611

(b) a member, past member or a person claiming through a
A
member, past member or a deceased member of a society,
or a society which is a member of the society or a person
who claims to be a member of the society.

xxx xxx xxx xxx xxx xxx
B
~_ Under the above provision the matter of ~viction of the appellant
by the tenant co-partner member of the society can be said to be
touching the business of the society.

- In Deccan Merchants Cooperative Bank Ltd. v. M/s. Dalichand
Jugraj Jain & Ors., [1969] (1) SCR 887, it has been held that the word
"business'/ in the expression 'touching the business of a society' in
section 91 (1) does not mean affairs of the society. It has been used
C

here in a narrower sense and means the actual trading or commercial
or other similar business activity of the society which the society is
authorised to enter into under the Act and the Rules and its bye-laws.
It was, however, held that section 91 of the Maharashtra Cooperative D
Societies Act did not affect the provisions of section 26 of the Bombay
Rents, Hotel & Lodging House Rates Control Act, 1947. Although
both these provisions start by excluding "anything contained in any
other law", two Acts could be harmonized b~st by holding that in
matters covered by the Rent Act, its provisions rather than the provi-
sions of the Maharashtra Cooperative Societies Act, should apply. The E
latter Act was passed in the main, to shorten litigation, lessen its cost
and to provide a summary procedure for the determination of the
disputes relating to internal management of the society. But under the
Rent Act a different social objective was intended to be achieved and
for achieving that social objective it was necessary that the dispute
between the landlord and the tenant should be dealt with by the courts F
set up under the Rent Act and in accordance with the special pro-vi-
;.
sions of that Act and this social objective did not impinge on the objec-
tive underlying the Maharashtra Cooperative Societies Act.

In O.N. Bhatnagar v. Smt. Rukibai Narsindas & Ors., [1982] 3
SCR 681, which was also case of Shyam Cooperative Housing Society G
~ Limited, it was held that the claim of the society together with such
· member for ejectment of a person who was permitted to occupy having
become a nominal member thereof, upon revocation of licence was a
dispute falling within the purview of section 1 of the Maharashtra
Cooperative Societies Act, 1960 and that the proceedings under
section 91( 1) of the Maharashtra Cooperative Societies Act, 1960 were H ,
• 612 SUPREME COURT REPORTS [1991] 1 S.C.R .

not barred by the provisions of section 28 of the Bombay Rents, Hotel~
A
and Lodging House Rates Control Act, 1947. The two Acts could be ·
best harmonized by holding that the matters covered by the Rent Acts,
its provisions, rather than the provisions of the Cooperative Societies
Act should apply. But where the parties admittedly did not stand in the
jural relationship of landlord and tenant, as their dispute would be
B governed by section 91(1) of the Socieities Act and that the appelllant
by virtue of his being a nominal member, acquired a right to occupy~
the flat as a licensee, but his rights were inchoate. In the facts of the ·
instant case upon the terms of sections 5( 4A) and 15A of the Rent Act,
it is clear that the appellant was not entitled to the protection of
section 15A. The sine qua n'on for the applicability of s. 15A of the ~ -
Rent Act was that a licensee must be in occupation as on February 1,
C 1973 under a subsisting licence. It is not disputed that the appellant did
-
not answer that description since the agreement of leave and licence in.
his favour admittedly stood terminated by the notice of the respondent'(
No. 1 on 10.3.1972. That being so, the appellant was nothing but a ·
rank trespasser and was not entitled to the protection of section 15A of
D the Rent Act and could not, therefore, plead the bar of section 28(1)
thereof.

In Hindustan Petroleum Corporation Ltd. & Anr. v. Shyam
Cooperative Housing Society & Ors., [1988] 4 SCC 747, at paragraph~
14 it was held under the facts of that case that the petitioner Hindustan
E Petroleum Corporation Ltd. was clearly protected under section 15A
of the Rent Act and in that view of the matter the jurisdiction of the
Registrar under Section 91(1) of the Cooperative Societies Act would.
be as laid down in O.N. Bhatnagar's ·casi;; (supra). The proceedings
initated under section 91 were accordingly guashed. This case is, there-
fore, distinguishable on facts.
F
Following Bhatnagar's case in Smt. Krishna Rajpal Bhatia and~
+
Ors. v. Miss Leela H. Advani & Ors., [1989] 1SCC54, where a tenant
co-partner member of a registered co-partnership type cooperative
housing society inducting another person into her flat for a term of
eleven months subject to renewal of the term from time to time after
G obtaining society's permission and after the person so inducted becom-
ing a nominal member of the society and the agreement between the
parties embodied in usual standard form of leave and licence, it was Y
held that the tenant co-partner member only created a licence and not
a lease and that the Maharashtra Cooperative Societies Act, 1960 was
applicable. There also the nominal membership of the society was .J
H obtained in terms of the society's bye-laws and the licence was
- .
P.S. SAHNI v. SMT. S.B. KRIPALANI [SAIKIA, J.) 613

-'~- terminated by notice after expiry of the term, but the occupant was not A
vacating. Claim made by the co-partner under section 91 of the
Maharashtra Cooperative Societies Act, 1960 for ejectment of the
occupant was held to constitute a 'dispute touching
I
the business of a
-$0<;:iety' within the meaning of section 91 and hence the Registrar's
.jprisdiction to entertain the claim was held not to have been barred B
under section 28 of the Rent Act.
____...___
i Applying the law laid down in the above decisions we are of the
view that the instant dispute is one envisaged in section 91 of the
Maharashtra Cooperative Societies Act and the Cooperative Courts ·
rightly exercised jurisdiction.
c
The next question, namely, section 91 is ultra vires the Article 14
of the Constitution of India to the extent it tries to reach persons who
~ are not members is not tenable, inasmuch as the appellant is involved
in a dispute touching the business of the Society and he was a nominal
member of the Society by dint of his agreement of leave and licence
and he was made so on his application. 0

Result is that this appeal fails and it is dismissed, but under the
facts and circumstances of the case without any order as to costs.
-,.k Interim orqers stand vacated.

R.P. Appeal dismissed.