P L D 1964 Supreme Court 106 (PLP)

B. Z. KAIRAUS, J.‑In April 1955, Abdullah Bhai and others, appellants in this appeal by special leave, let out the shop, which is the subject‑matter of the suit out of which this appeal arises, to one Muhammad Siddiq. Muhammad Siddiq carried on business in this shop in the name of "Kashmir Palace". On the 16th June 1956, the appellants submitted an application to the Rent Controller of Karachi for a certificate under section 10 of the Karachi Rent Restriction Act on two grounds: (i) that Muhammad Siddiq had sublet the premises without their knowledge and permission ; and (ii) that the shop was required by the appellants for their own use. In accordance with the provisions of the Karachi Rent Res triction Act a suit for ejectment of a tenant could not except on the ground of non‑payment of rent, be filed without a certificate under section 10 of the Act with respect to the existence of circumstances detailed in that section entitling a landlord to an order of ejectment. Ahmad Din who is the respondent in this appeal and who is the person to whom according to the appel lants the premises had been sublet by Muhammad Siddiq was impleaded as a party in the proceeding for certificate on his own application his claim being that he and Muhammad Siddiq were running business in partnership in the shop in dispute. On the 20th April 1957, a compromise was arrived at between the parties in accordance with which Muhammad Siddiq surrendered possession to the appellants, but the respondent was to remain in occupation of the premises till 31st December 1959, and had thereafter to hand over possession of the shop to the appellants. A sum of Rs. 70 per month was to be paid by the respondent as compensation for the use of the shop to the appellants. If default was made in the payment of Rs. 70 per month the respondent was liable to pay an additional sum of Rs. 10 per day. These terms were incorporated in a compromise deed which was signed by the appellants, the respondent and Muhammad Siddiq. The compromise deed stated that the respondent was a licensee, anti not a tenant. The respondent committed default in the payment of Rs. 70 per month. On the 1st of November 1957, the appellants called upon the respondent to pay compensation at the rate of Rs. 70 per month as well as the additional sum of Rs. 10 per day. The respondent sent a sum of Rs. 280 by money order, but the appellants refused to accept this sum because it fell short of their demand. On the 17th January 1958, the appellants filed the suit out of which the present appeal arises, for ejectment of the respondent from the shop in dispute, for Rs. 840 as compensation at the rate of Rs. 70 per month, and for an additional sum of Rs. 470 as penalty for default at the rate of Rs. 10 per day. According to the plaint the respondent was only a licensee who on account of his default had forfeited the privilege granted to him and had become liable to eviction. The respondent claimed in his written statement that the deed of compromise created not a licence but a tenancy and that he was entitled to all the rights which the law conferred on a tenant. The rent of the shop according to the respondent was only Rs. 70, the provision as to payment of Rs. 10 being a penal clause which could not legally be enforced. So far as the payment of Rs. 70 is concerned the respondent had according to his allegations tendered the amount to the appellants, but they had refused to accept it. On a consideration of the terms of the deed of compromise the trial Court came to the conclusion that it was a lease and not a licence. The trial Court did not refer to the provisions of the Karachi Rent Restriction Act, but said that the tenancy had to be determined by a legal notice and it had not yet been deter mined. On these findings the suit was dismissed. Even a decree for rent or compensation at the rate of Rs. 70 was not granted. On appeal the Additional District Judge held that the com promise deed created only a licence. He passed a decree for ejectment of the respondent as also a decree for compensation at the rate of Rs. 70 per month. He did not hold the default clause to be altogether illegal, but reduced the amount payable from Rs. 10 to Rs. 3 per day. In Second Appeal a Division Bench of the High Court of West Pakistan after a review of decided cases came to the conclusion that the respondents had acquired the status of a lessee by the deed of compromise. The decree for possession was accordingly set aside but the decree for compensation was maintained to the extent of Rs. 70 per month without any additional compensation for default. In this appeal by the plaintiffs the sole question for determination is whether the compromise deed confers upon the respondent the status of a tenant. If the respondent be a tenant he could be evicted only in accordance with the provisions of the Karachi Rent Restriction Act and it is not denied that in the present suit the respondent would not, in accordance with the provisions of that Act, be liable to ejectment. The compromise deed is not a lengthy one and may be reproduced verbatim: "

1. That the opponent Mohammad Siddiq son of Abdul Salam has surrendered possession of the shop premises in Blenkin Street on Plot No. S. B. 4‑6/3P to the applicants as and from 1‑3‑1956, putting intervenor Ahmad Din in possession of the said premises.

2. That the applicants have after prolong litigation agreed and do hereby agree to treat the said Ahmad Din son of Ghulam Mohammad intervenor as licensee and not as tenant of the applicants as and from 1‑3‑1956 in respect of the said shop premises whose possession has been sur rendered to the applicants by the opponent Mohammad Siddiq Abdul Salam.

3. That the said Ahmaddin does hereby agree to pay to the applicants compensation for use and occupation of the said shop premises at the rate of Rs. 70 per month regularly without fail and in case of default of payment of the said compensation at the aforesaid rate the said Ahmeddin does hereby agree to pay compensation at the rate of Rs. 10 per day.

4. That the said Ahmeddin undertakes to keep the shop premises in good and tenantable condition reasonable wear and tear are accepted.

5. That the said Ahmeddin undertakes not to harass the applicants in any way either by making any additions and alterations without the knowledge and permission of the appli cants in writing.

6. That the said Ahmeddin undertakes not to sublet the said shop premises or take any one in partnership with him without the knowledge and permission of the applicants in writing.

7. That the licence period shall be for the period up to and inclusive of 31‑12‑1959.

8. That after the expiry of the period, i.e., after 31‑12‑1959, the said Ahmeddin undertakes to give to the applicants vacant and peaceful possession of the shop pre mises in his occupation without any objection or hindrance.

9. That in case of the said Ahmeddin commits breach of any of the foregoing conditions he shall be liable to pay to the applicants compensation at the rate of Rs. 10 per day.

10. That the said Ahmeddin further agrees and undertakes not to disturb the existing arrangement of the doors of the neighbouring tenants and not to quarrel with the neigh bouring tenants or the landlords the applicants on account of the doors opening on the side of the said shop and on account of show‑case attached to and hanging from the door. (Sd.) Mohd. Siddiq, Opponent. (Sd.) Ahmeddin, Intervenor. 1. (Sd.) Abdullah Bhai Badruddin. 2. (Sd.) Ghulamabbas Badruddin. 3. (Sd.) Abdul Rahim Badruddin. Applicants. The line of demarcation between a lease and a licence will sometimes be a very thin though there is no doubt as to the principle applicable. A lease as will appear from section 105 of the Transfer of Property Act is a transfer of an interest in immovable property. Ownership of physical property consists of a number of rights and the owner of such property when he creates a lease, transfers to the lessee a part of the rights of ownership, i.e., the right of enjoyment of the property, for a period, for consideration. During the continuance of the lease the right of enjoyment of the property belongs to the tenant and not to the landlord. The right of ownership as well as the rights of which it is composed are rights in rem and not in personem and by the lease a right in rem is transferred to the lessee. On the other hand a "licence" as will appear from its definition in section 52 of the Easements Act is merely a com petence to do something which except for this permission would be unlawful. It does not confer any rights in physical property. There is in the case of a licence only a personal agreement between the licensor and the licensee whereby the licensor agrees not to interfere with the doing of particular acts on property which is in his possession. No right in rem passes to the licensee. Examples of a licence are a permission to cut grass from the land of another or to hold fares or run stalls on land in the possession of another. The right to cut grass from land belongs to the owner of land, being a part of the right of owner ship. When the owner grants to another person a licence to cut grass, it does not even mean that the right to cut grass in so .far as it is a right in the land (a right in rem) passes to the licensee. If a right in the land itself passed an interest in the land would pass and it would not be a licence. When the owner of land grants licence to another to cut grass there is a simple personal contract that the owner will not interfere with the cutting of grass by the licensee. This contract may be specifically enforced, but it grants only a right in personem. As will appear from what is stated above the criterion for distinguishing between a lease and a licence is simple, i.e., whether any right in immovable property itself, a right in rem, has passed to the person concerned, but the determination of this question may be difficult in the circumstances of a particular case. It will be a matter of an inference from all the attendant circum stances. Where there is a document, of course, the evidence will have to be considered with due regard to the provisions of sections 91 and 92 of the Evidence Act. A large number of cases bearing on the question under consideration were cited before us. While we have stated the criterion applicable to such cases we do not feel the need of reviewing those cases for a simple reason. The deed of compromise in this case is not a registered one. There are two provisions of law which stand in the way of its transferring an interest in immovable property or creating a tenancy in favour of the respondent. These provisions are section 49 of the Registration Act and section 107 of the Transfer of Property Act. According to section 49 of the Registration Act no document which is required by section 17 of the Registration Act to be registered can either create a right in immovable property or be received as evidence of such right. According to section 107 of the Transfer of Property Act, a lease for a period of more than one year can be created only by a registered instrument and a lease even for a period of one year can be created either by registered instrument or by an oral agreement coupled with delivery of possession. The document with which we are dealing is hit by both these provisions. The Transfer of Property Act is applicable to the area with which we are dealing and the lease relied upon is for a period of about three years so that a lease could not have come into existence at all by means of this document. According to section 17 of the Registration Act a document evidencing a lease for more than one year is compul sorily registerable. The only reply of learned counsel for the respondent to the contention that lack of registration renders this deed ineffective is section 53‑A of the Transfer of Property Act. This section runs "53A. Where any person contracts to transfer for con sideration any immovable property by writing signed by him or on his behalf from which the terms necessary to con stitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has, performed or is willing to perform his part of the contract, then, notwithstanding that the contract, though required to be registered, has not been registered, or, where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefore by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract: Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof." According to this section when the transferee takes possession of or continues in possession of property which has been transferred to him by an unregistered deed the transferor cannot enforce a right against the transferee in respect of that property except a right provided for in the deed. Property means not the, physical property but the right in property which is transferred and the remedy of the transferor is barred only with respect to the right that stands transferred. The only effect of this section. In is that when the person in whose favour the unregistered deed has been executed is a defendant in the suit the plaintiff cannot enforce against him a right which is inconsistent with the rights conferred upon the defendant by the deed. Till the 31st December 1959, the defendant‑respondent could have used this deed as a shield against his ejectment, but that is all the protec tion that the defendant receives. The deed is of no avail to the defendant after 31st December 1959. It is not the effect of section 53‑A that any right or interest stands transferred in viola tion of section 107 of the Transfer of Property Act or section 17 of the Registration Act. No title is transferred to the person who holds the deed although he can base a defence on it. Section 107 of the Transfer of Property Act remains unaffected by section 53‑A. A tenancy can, in spite of section 53‑A, come into existence only in accordance with section

107. When in 1929 section 53‑A was added to the Transfer of Property Act there was no corresponding amendment in section 107 so as to say that a person will become a tenant if conditions exist for invoking section 53‑A in his favour though the deed in his favour is not registered. We have stated above that a tenant cannot be ejected except in accordance with the provisions of the Karachi Rent Restric tion Act and we are holding that the respondent is not entitled to the protection of the Rent Restriction Act. The assumption is that in order to be a tenant under the Karachi Rent Restric tion Act a person has to be a lessee. A consideration of the provisions of the Karachi Rent Restriction Act, justifies this assumption. In this Act "tenant" is defined thus: "tenant" means any person by whom or on whose account rent is payable for any premises and includes every person from time to time deriving title under a tenant and also every person remaining in possession of the premises leased to him after the determination of the lease with or without the consent of the landlord." "Premises" are defined thus: "premises" means any building or part of a building let for any purpose and includes‑ (i) the garden, grounds and out‑houses, if any, appur tenant to such building or part of a building ; and (ii) any furniture supplied by the landlord for use in such building or part of a building ; but shall not include a room in a hotel or a lodging house. It will be observed that premises means a building which has been let out so that the use of this word in the definition of tenant implies that the premises have been let out to the person who is liable to pay rent. The word "rent" has not been defined and would itself mean something payable by a tenant to the landlord. The reference to "leased premises" in the definition of "tenant" also shows that the existence of a lease is implied. The inten tion of the Karachi Rent Restriction Act appears to have been to give additional protection to those who according to the law as it stood were tenants and not to confer tenancy rights on persons who in accordance with law were never tenants. Accord ing to the ordinary law only a person who bas in his favour a lease is a tenant. An argument had been addressed to us that the suit was premature and should have been dismissed on that ground. The suit had been filed on 17‑1‑1958 that is long before 31‑12‑1959 on which date the period of the licence was to terminate. The trial Court had dismissed the suit. The Additional District Judge on appeal had decreed it on a date when the period of the licence had expired and the appellants had a right to posses sion. It was open to the appellate Court to have decreed a suit which was premature when it was filed but the cause of action respecting which had arisen during the pendency of the suit. We would not be prepared at this stage to dismiss the suit on this technical ground and to direct the appellants to file a fresh suit. It is also urged that even in respect of a licence there should be a notice of its termination. We are unable to entertain this plea for two reasons. In the first place even the filing of a suit was sufficient termination of a licence and in the second place this plea had not been raised by the respondent though the suit was based on a licence. In view of what is stated above this appeal is allowed and the plaintiffs‑appellants are granted a decree for possession of the property in dispute as prayed for. The parties will, however, bear their own costs throughout. K. B. A. Appeal accepted.