Model Tenancy Act 2020 does not contain definition of Leave and License, why? This question crops up in layman’s mind.
The definition of Leave and License is found in Section 52 of Indian Easement Act,1882. It defines term License as under:
“License” defined. -Where one person grants to another, or to a definite number of other persons, a right to do, or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful, and such right does not amount to an easement or an interest in the property, the right is called a license.
Maharashtra Rent Control Act,2000 defines term Licensee as under
7 (5) “Licensee”, in respect of any premises or any part thereof, means the person who is in occupation of the premises or such part, as the case may be, under a subsisting agreement for 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 Co-operative Societies Act, 1960; but does not include a paying guest, a member of a family residing together, a person in the service or employment of the licenser, or a person conducting a running business belonging to the licenser 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 sanitarium or a person having any accommodation in a hotel, lodging house, hostel, guest house, club, nursing home, hospital, sanitarium, dharmashala, home for widows, orphans or like premises, marriage or public hall or like premises, or in a place of amusement or entertainment or like institution, or in any premises belonging to or held by an employee or his spouse who on account of exigencies of service or provisions of 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 increase for such premises, and any additional sum for service supplied with such premises or a person having accommodation in any premises or part thereof for conducting a canteen, creche, dispensary or other services as amenities by any undertaking or institution; and the expressions “licence”, “licenser” and “premises given on licence” shall be construed accordingly;
Delhi Rent Control Act,1995 defines term is Section 2(n) (ii) any person to whom a licence as defined in section 52 of the Indian Easements Act, 1882 (5 of 1882 .) has been granted;
I did not find more such provision in different states rent laws except this two.
Under the English law the terms “tenant”, “licence” and “licensee” are not defined and so in every case where the English Courts are called upon to consider whether the relationship between the parties before them is that of landlord and tenant or licensor and licensee, they have always to decide the question by drawing a proper inference from the facts proved before them, it is also true that whereas in England a licence coupled with a contractual right, which is sometimes described as a possessory licence, would be irrevocable, in India it may not be so. Section 60, Easements Act makes licences revocable by the grantor except in two cases, and the case of a licence to which is added a contractual right may not fall under the said two exceptions.
How to determine difference between License and Tenancy
The apex Court in Inderjeet Singh Sial & Anr, v. Karam Chand Thapar and Ors., The construction of a document would depend upon its pith and substance and not upon the labels that the parties may put upon it. This principle was laid down by this Court in the decisions of 6 SCC 166 at p. 173 and Vayallakath Muhammedkuty v. lllikkal Moosakutty,  9 SCC 32 at p. 387. It was reiterated in Delta International Ltd vs Shyam Sunder Ganeriwalla And Anr on 9 April, 1999
The paramount test is `the intention of the parties’ as stated in the case of Capt, B.V. D’Souza v. Antonio Fansto Fernandes,  3 SCC 574 at p. 577 and  9 SCC 382 at p. 387(supra).
Exclusive possession of the premises being granted, although an important factor, does not preclude the Court from holding that the document is in fact a license as decided in the case of Sohari Lal Naraindas v. Lasmidas RaghvnathGadit,  I SCC 276 at p. 279 and Rajbir Kaur and Anr, v, M/s S. Chokesiri & `Co.,  1 SCC I9 at p. 3l.33.
In the case of Rajbir Kaur and Another v. M/s. S, Chokesiri and Co.,  1 SCO 19, this Court considered and held that ultimately the question whether a transaction is a lease or licence “turns on the operative intention of the parties and there is no single, simple litmus test to distinguish one from the other.”
The relevant discussion in paragraph 22 is as under : –
“22. It is essential to the creation of a tenancy that the tenant be granted the right to the enjoyment of the property and that, further, the grant be for consideration. While the definition of `lease’ in Section 105 of the Transfer of Property Act, 1882, envisages the transfer of a right to enjoy the property, on the other hand the definition of a `licence’ under section 52 of the Indian Easements Act, 1882, consistently with the above, excludes from its pale any transaction which otherwise, amounts of an “easement” or involves a transfer of an interest in the property, which is usually involved in the case of a transfer of right to enjoy it. These two rights viz. Easements and lease in their very nature, are appurtenant to the property. Oh the other hand, the grant only for the right to use the premises without being entitled to the exclusive possession thereof operates merely as a licence. But the converse implications of this proposition need not necessarily and always be true. Wherever there is exclusive possession, the idea of a licence is not necessarily ruled out. English law contemplates what are called `Possessory Licences’ which confer a right of exclusive possession, marking them off from the more usual type of licences which serve to authorise acts which would otherwise be trespassers. Thus exclusive possession itself is not decisive in favour of a lease and against a mere licence, for, even the grant of exclusive possession might turn out to be only a licence and not a lease `where the grantor himself has no power to grant the lease. In the last analysis the question whether a transaction is a lease or a licence “turns on the operative intention of the parties” and that there is no single, simple litmus test to distinguish one from the other. The “solution that would seem to have been found is as one would expect, that it must depend on the intention of the parties. ”
In determining whether the agreement creates a lease or a licence the test of exclusive possession, though not decisive, is of significance,” (Emphasis added) From the aforesaid discussion what emerges is :-
(1) To find Out whether the document creates lease or license real test is to find out `the intention of the parties’; keeping in mind that in cases where exclusive possession is given, the line between lease and licence is very thin.
(2) The intention of the parties is to be gathered from the document itself; Mainly, intention is to be gathered from the meaning and the words used in the document except where it is alleged and proved that document is a camouflage. If the terms of the document evidencing the agreement between the parties are not clear, the surrounding circumstances and the conduct of the parties have also to be borne in mind for ascertaining the real relationship between the parties.
(3) In the absence of a written document and when somebody is in exclusive possession with no special evidence how he got in, the intention is to be gathered from the other evidence which may be available on record, and in such cases exclusive possession of the property would be most relevant circumstance to arrive at the conclusion that the intention of the parties was to create a lease.
(4) If the dispute arises between the very parties to the written instrument, the intention is to be gathered from the document read as a whole. But in cases where me landlord alleges that the tenant has sublet the premises and where the tenant in support of his own defence sets up the plea of a mere licensee and relies upon a deed enter into inter se, between himself and the alleged licensee, the landlord who is not a party to the deed is not bound by what emanates from the construction of the deed; the tenant and the sub-tenant may jointly set up the plea of a license against the landlord which is a camouflage. In such cases, the mask is to be removed or veil is to be lifted and the true intention behind a facade of a self-serving conveniently drafted instrument is to be gathered from all the relevant circumstances. Same would be the position where the owner of the premises and the person in need of the premises executes a deed labelling it as a licence deed to avoid the operation of rent legislation.
(5) Prima facie, in absence of a sufficient title or interest to carve out or to create a sim i lar tenancy by the sitting tenant, in favour of a third person, the person in possession to whom the possession is handed over cannot claim that the sub-tenancy was created in his favour; because a person having no right cannot confer any title of tenancy or sub-tenancy. A tenant protected under statutory provisions with regard to occupation of the premises having no right to sublet Or transfer the premises, cannot confer any better title. But, this question is not required to be finally determined in this matter.
(6) Further lease or licence is a matter of contract between the parties. Section 107 of the Transfer of Property Act inter alia provides that leases of immoveable property may be made either by registered instrument or by oral agreement accompanied by delivery of possession; if it is a registered instrument, it shall be executed by both the lessee and the lessor. This contract between the parties is to be Interpreted or construed on the well laid principles for construction of contractual terms, viz, for the purpose of construction of contracts, the intention of the parties is the meaning of the words they have used and there can be no intention independent of that meaning; when the terms of the contract are vague or haying double intendmcnt one which is lawful should be preferred; and the construction may be put on the instrument perfectly consistent with his doing only what he had a right to do.
Edward Coke Co. [42a] expressed the proposition as under :
“It is a general rule, that whosoever the words of a deed, or of one of the parties without deed, may have a double intendment and the one stand with law and right, and the other is wrongful and against law the intendment that stand with law shall be taken.”
In more modern times that statement was approved by the Privy Council in Rodger v. Comptoir D `Escomple de Paris, (1869) L.R.. 2 P.C. 393, in which Sir JosephNapier delivering the advice of the Board said :
“The rule that words shall be construed most strongly against him how uses them gives place to a higher rule; higher because it has a moral dementi that the construction shall not be such as to work a wrong.” Similarly, in Fausset v. Carpenter (1831)2 Dow. & CI. 232, the House of Lords accepted the submission of counsel that the Court : “… in judging of the design and object of a deed, will not presume that a party executing the deed, meant to do and did what he was wrong in doing, when a construction may be put on the instrument perfectly consistent with his doing only what he had a right to do,’ However, the question of construction should hot be approached with a leaning in one direction or another. Thus although the law frowns upon covenants in restraint of trade, nevertheless such a covenant should not be approached on the basis that it is prima facie illegal. “You are to construe the contract, and then see whether it is legal. ”
Action of parties and Compromise determines agreement, how ?
If the tenant is certain of his rights under the Rent Restriction Act, it is very unlikely that he would be prepared to enter into any compromise which would restrict or materially affect his rights. On the other hand, even if the landlord feels reasonably certain of succeeding against his tenant, he might, in spite of the bitterness created in his mind by the provisions of the Act, still feel sympathetic or compassionate to his tenant. It would, therefore, not be unreasonable to assume that in a large majority of cases where a landlord agrees to allow the tenant to remain in possession of the property in suit for some time and the parties obtain a consent decree in terms of such agreement, the agreement is the result of the sympathy or the compassion which the landlord feels for the tenant who might be otherwise thrown on the streets. Ramjibhai Virpal Shah vs Gordhandas Maganlal Bhagat on 6 January, 1954 (Bom HC)
‘Janardan v. Ramchandra’, AIR 1927 Bom 240 , and —‘Sherif Dadumiyaji v. Emperor’, AIR 1930 Bom 165 , also lay down that exclusive possession is an important ingredient of leasehold rights. It would, however, be necessary to add that I feel some hesitation in holding that these decisions lay down the categorical proposition that a licence of any kind can never import the notion of exclusive possession by agreement between the parties. That may probably be the consequence of the definition of a licence contained, in Section 52, Easements Act; but this aspect of the matter does not appear to have been considered and decided in these decisions.
It is the settled position of law that, while interpreting a document, the real intention of parties to be deciphered, from complete reading of document and the surrounding circumstances thereof. Nomenclature of the document is hardly conclusive and much importance cannot be attached to the nomenclature alone since it is the real intention which requires to be gathered. The Model Rent Act does not contain definition or provision for Leave and License Agreements because its a type of easement and not tenancy. Bombay High Court in Madhusudan A. Mahale vs P.M. Gidh & Ors. on 20 September, 1977 held that, License is fiction created by law .