AGREEMENT WITH [ ] IS ONLY CONDUCTING AGREEMENT.
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Rasiklal Kumbha Gala v. Manilal Ravji, 2006 (1) Bom CR 425: Manu/MH/0650/2005
Indicative Facts
The petitioner here was aggrieved by the order of the Small Causes Court allowing Ejectment Application filed by the alleged Licensor against the alleged Licensee, who had in fact entered into a Conducting Agreement. The petitioner was the conductor, and the respondent was the owner.
The alleged licensee had sought protection under the Bombay Rent Act, 1947. The same was held to be not applicable in view of the specific exception excluding conducting agreements.
Key Observations/Ratio
“Whatever may be the reason for occupying the premises in question, but if it based on the foundation of conducting business, I am of the view that the occupant or such person is not entitled for protection as available under the Bombay Rent Act, either as a licensee or sub-tenant. The exclusion of the word ‘conducting agreement’ makes provisions amply clear.”
The long and exclusive possession is the basic foundation to claim the protection of lease or license. But if the possession of the premises has a foundation of the conducting business, it is difficult to accept that in each and every case, the intention was to create license or lease. The agreement as referred above, made the conditions very clear which were well within the knowledge of the parties. The parties, having once accepted these terms and conditions, cannot turn around to say later on that the intention was to create lease. (para. 7)
Knowing fully well, the effect and operation of the law, including the definition of ‘license’, still if a party agrees to enter into such agreement to conduct business, there remains further no doubt that the intention was always to carry on business on the basis of such conducting agreement and there was no intention to create lease or license. (para. 8)
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Paradigm Franchising Pvt Ltd v. Krishna Continental, Manu/DE/0762/2008
Indicative Facts: Arbitration dispute arising out of conducting agreement.
Key Observation/Ratio
Arbitration Dispute – conducting agreement. Section 9 considered by the court, and not rejected as non-arbitrable.
(Note: No tenancy issue raised specifically)
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Jayant L. Shah v. Naranji Lalji Khona, 2006 (4) Bom CR 653
Indicative Facts:
Suit for declaration that the Defendant has no right, title or interest to carry on the business in the suit premises.
On facts (not enumerated at length), the court found that the agreement was actually leave and license, and not a mere conducting agreement.
Clause 7 of the agreement under consideration provided for “leave and license”
Key Observations/Ratio:
It is now settled law that in case of the leave and license agreement or conducting agreement what is required to be seen by the Court is the true and correct intention of the parties at the time of executing the said agreements.
Held on facts that the agreement was a leave and license agreement, distinct from conducting agreement.
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Frank Warr & Co. Ltd. v. London County Council, (1904) 1 KB 713
Indicative Facts
The Agreement provided: “The landlord hereby grant and let, and the tenant hereby take for the term…. The free and exclusive right to sell refreshments at the [theatre] , with the necessary use of the refreshment rooms and bars and cloak rooms and wine cellars of the said theatre…
The theatre acquired by State and compensation payable only if there is “interest” in the theatre. Held License
Similarities with [ ]’s Case
The tenant shall provide and maintain a proper and efficient staff…
The keys were given to the tenants who kept the cellars locked, and used them for the purpose of storing the wines and spirits which were to be sold…
Key Observations/Ratio
Instead of letting the refreshment rooms or the cellars, the agreement provides merely for the use of them by the plaintiffs so far as necessary for its purposes. (@page 719)
License for pleasure – personal.
License for profit – extends to servants, agents etc.
It cannot in law be the case, in my opinion, that if a man gave a license to persons to come on to his field to play cricket, and to other persons a license to come there for the purpose of supplying to those engaged in the game with refreshments for profit, the one license would not confer an interest in the land but the other would. @ page 723
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Vidya Securities v. Comfort Hotels, AIR 2003 DEL 214
Indicative Facts:
Arbitration petition under Section 9 of the Arbitration & Conciliation Act for interim injunction from parting with possession.
The question whether there is lease or a mere license came up because it would affect the procedure for dispossession.
Aspects considered
· Before the conducting agreement was entered into, the restaurant was being run by the owner.
· The keys of the premises were always with the respondent;
· The staff earlier employed by the respondent continued to work in the restaurant although salaries were being paid by the petitioner;
· The raw material for use in the restaurant was being supplied by the respondent, and the petitioner could bring in raw material only with the approval of the respondent.
· The electricity matters and air conditioner remained under the control of the respondent;
· The licenses were in the name of the respondent;
· Even the sales being made in the restaurant were not directly going to the pocket of the petitioner but were being credited to its account;
· Clause (xiii) on page 8 of the agreement dated 26.11.2001 provided that in case of breach of any terms and conditions of the management agreement the respondent could cancel the agreement or impose any penalty upon the petitioner if within 10 days of the service of the notice remedial measures were not taken by the petitioner. Such a condition could never be a part of a lease agreement and could be only in a leave and license agreement.
· The respondent always remained in physical possession of the premises in question and had full control not only over the premises but upon the staff and stuff also as catering was to not only the restaurant and the bar but to the respondent's rooms also in the Hotel.
The mere use of word “rent” in the agreement between the parties is meaningless and does not establish that a lease had been created in favour of the petitioner
Key Observations/Ratio/Finding:
On facts, held the agreement was only to run the restaurant and not a lease agreement (para 8).
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Nariman Nassarwanji Dubash v. Clover Co-operative Housing Society Limited, 2004 MhLJ (4) 717
Indicative Facts:
Paying Guest as Licensee
Similarity with [ ]’s Case
(It appears that [ ] has overall control on the entire premises, and can restrict the entry of any person by virtue of its control on the main gates)
Key Observations/Findings/Ratio
Paying Guest is not tenant. Licensor was staying in rest of premises not let out to paying guest and what paying guest was paying was consideration as a paying guest. … Mere possession of a part of residence, may be in a distinct portion having independent access, kitchen and toilet by itself cannot result in sub-lease and appellants are not entitled to protection…(@ para 13/14)
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Md Salim v. Md. Ali, (1987) 4 SCC 270
Indicative Facts
An eviction decree was passed against the tenant. A person claimed to be sub-tenant and argued that he was not bound by the eviction decree as he was not a party in the eviction proceedings. If he were decided as a licensee, he would be bound by the eviction decree.
Similarities
The court considered the agreement, which provided, inter alia:
Recital – clearly setting out the inconvenience to look after and manage the [shop].
..manage the affairs of the said business under his personal supervision for two years with effect from [●] to [●] and will restore the business along with the said articles in good condition with the expiry of the terms of this contract;
The second party will be entitled to appropriate the entire issues and profits arising out of the business in its entirety subject to the aforesaid payment to be made to the first party and the costs of license fee.
The second party shall also bear all incidental costs for carrying out business properly
Key Observations/Findings/Ratio
There was no exclusive possession with the Respondent. There was no parting of possession of the premises, there was only a right to manage the business, looking after the existing business with fixed monthly payments and this cannot be construed as an agreement of sub-tenancy.
Held License.
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Anusuyabai Narayanrao Ghate v. Maktumbi S. Nadaf, 1999 (2) Bom CR 374
Indicative Facts: Eviction application filed against the Petitioner by the Respondent, after Respondent terminated the conducting agreement with petitioner for conducting tailoring business.
Key Observations/Ratio/Findings
This Court has interpreted the agreement and found that what was agreed between the parties is for conducting the business of tailoring. Therefore, possession of the room has become a consequential act.
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Isaac v. Hotel De Paris Ltd., [1980] 1 All ER 348
Indicative Facts:
[Complex facts / Not discussed here]
Short point: Depending upon whether the petitioner is a licensee or a tenant, different statutory protection was to apply.
Key Observations/Findings:
The intention of the parties is the paramount consideration and while 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. (@page 352E)
(Note: [ ]’s paid Rs. 3.5 crores as conducting fees for the first year, but in the second year alleged tenancy and offered to pay standard rent)
