LexTHE NEW BUS STAND SHOP OWNERS ASSOCIATION versus CORPORATION OF KOZHIKODE & ANR.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
[2009] 14 (ADDL.) S.C.R. 793
THE NEW BUS STAND SHOP OWNERS ASSOCIATION
A
v.
'!
CORPORATION OF KOZHIKODE & ANR.
(Civil Appeal No. 6391 of 2009)
SEPTEMBER 18, 2009
B
. [MARKANDEY KATJU AND ASOK KUMAR
GANGULY, JJ.]
Kera/a Municipality Act, 1994 - s. 215 - Power of c
municipality to acquire and dispose of property - Corporation
letting out shop rooms and executing agreement with the
occupants-shop holders - Nature of agreement - Held:
Agreement between the Corporation and the shop holders is
an agreement for licence - Amount paid by shop holders is
described as fees and not as rent either in s. 215 or in the
D
conditions of licence - Intention of the parties is to create a
~
l
licence and not a lease - Licensee was. never given the
exclusive possession - Corporation retained the exclusive
possession of the shops which is clear from the conditions of
the licence. - Stamp duty on licence agreement is governed E
by Entry 5(c) and not Entry 33-Kerala Stamp Act- Schedule
Entry 5(c), 33.
....
Appellant-Association of shop owners are occupying
..
various shops and offices in the Municipality Bus Stand
Building which is owned by the respondent-Corporation
F
-r
in the State of Kerala. Appellants were issued licenses in
terms of s. 215 of the Kerala Municipalities Act, 1994 for
the use of the shops constructed by the first respondent
'
Thereafter, licence agreements have been entered into
......
with individual shop owners.
G
The question which arose for consideration in this
appeal is whether the agreement under which the
member of appellant-Association were granted shops, is
793
H
794 SUPREME COURT REPORTS (2009] 14 (ADDL.) S.C.R.
A an agreement for lease or it is a licence.
Allowing the appeal, the Court
·~
':
HELD: 1.1. From a perusal of s. 215 of the Kerala
8
Municipalities Act, 1994, it appears that the charges which
a licensee has to pay has been described as fees in ss.
-
I
215(2){a), (3), (7) and (8) of the Act. The right of
construction is solely that of the Municipality as it
appears from s. 215(2)(a). Licence shall be granted by
public auction or tender. The licensee has been
c specifically prohibited u/s.215(5) from letting out to any
other person the space given to him. In the event of such
letting out, the Secretary by an order may cancel the
licence and in that event licensee will have to vacate the
premises. [Para 12] [801-E-F]
D
1.2. The conditions of licence are very important
apart_ from the s.tatutory provision u/s 215 of the Act. It is
...,
..
made clear that the same is granted for a period of three
years and it has been specifically stipulated th.at the
......
E amount the licensee has to pay is licence fee. [Para 13]
[801-G]
1.3. In order to determine whether a document is a
lease or licence, it is most important to consider the
...
intention of the parties. Keeping in mind the terms and
F conditions of licence, to ascertain whether the agreement
between the appellant-Association and the Corporation
'
is a lease or licence, within the meaning of lease as
defined u/s. 2(1) of the Kerala Stamp Act, the definition of
lease u/s. s. 2(1) is to be considered. From the definition
~
G of lease under Act, one thing is clear that it must be an
. .(-
agreement in writing to cultivate, occupy,· or pay or
deliver rent for immovable property. [Paras 17 and 18}
...
[803-C-D; 804-8]
H
1.4. To ascertain whether a document creates a
NEW BUS STAND SHOP OWNERS ASSOCIATION v.
795
CORPRN. OF KOZHIKODE
l
licence or lease, the substance of the document must be
A
preferred to the form; the real test is the intention of the
parties .. whether they intended to create a lease or a
licence; 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
B
continues with the owner, it is a licence; and 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. [Para 26] [806-E-F]
c
Associated Hotels of India Ltd. vs. R.N. Kapoor 1960 (1)
S.C.R. 368, relied on.
.,
1.5. In the instant, case, the amount which the shop
,..
holders are paying has. not' been described as rent either D
in s. 215 of the Act or in the conditions of licence. The
said amount has been described as fees wExcerpt shown. Read the full judgment & AI analysis in Lexace.