P L D 1999 Karachi 181 (PLP)

These are nine suits filed by various plaintiffs against Civil Aviation Authority ("C.A.A.") and Airport Manager, Karachi Airport ("Manager") for declaration that the plaintiffs are Tenants/Lessees of defendants in respect of various shops situated in the International Transit Lounge, Jinnah Terminal,, Karachi Airport, for permanent injunction restraining the defendants from dispossessing them from or interfering with their rights to occupy and use the said shops and/or disposing of or alienating or transferring the said shops to any other person and for declaration that the Notices issued by C.A.A. to hand over possession of these shops are invalid and mala fide. On Application for temporary injunction filed by the plaintiffs to restrain the defendants from dispossessing them from their shops, the Court passed status quo orders in favour of the plaintiffs. All these applications for temporary injunction are pending disposal. In one suit, namely, Suit No.940 of 1995 the additional facts are that the plaintiff was running a shop in the old Terminal No. l (International Transit Lounge) of Karachi Airport at the time C.A.A. decided to close down the said Terminal. When C.A.A. declined to accommodate the plaintiff in the new Jinnah Terminal, he filed Suit No.217 of 1989 and obtained a Temporary Injunction against C.A.A. Ultimately on 26-3-1992 the suit was compromised whereby C.A.A. was required to offer the plaintiff an opportunity to match the highest bid in respect of a shop of his choice which the plaintiff did and occupied Shop No.10 under Licence Agreement, dated 25-10-1992 which is Annexure "B" to the Plaint. After plaintiffs' Entry Passes issued by Airport Security Force expired, they requested the defendants to forward their applications for renewal of such passes by the relevant Authority. On the refusal of the defendants to do so, all the plaintiffs filed further applications under Order 39, C.P.C. for Temporary Injunction requiring the defendants to forward their applications to Airport Security force for renewal of their passes. The defendants filed counter-affidavits attacking the maintainability of the suit and also stated, inter alia, that the licences of the plaintiffs having expired they had no right to occupy the premises and accordingly their applications cannot be forwarded to Airport Security Force which is not a party to the proceedings. Plaintiffs did not file any Rejoinder to these counter affidavits. Consequently the following Interlocutory applications are pending in:- (1)?????????? Suit No.321/94????????????????? CMA No.2338/94 and CMA No.1774/97 (2)?????????? Suit No.917/95????????????????? CMA No.6674/95 and CMA No.1776/97 (3)?????????? Suit No.918/95????????????????? CMA No.6676/95 and CMA No.1770/97 (4)?????????? Suit No.940/95????????????????? CMA No.6796/95 and CMA No.1748/97 (5)?????????? Suit No.944/95????????????????? CMA No.6806/95 and CMA No.1772/97 (6)?????????? Suit No.945/95????????????????? ,CMA No.6809/95 and CMA No.746/97 (7)?????????? Suit No.946/95????????????????? CMA No.6811/95 and CMA No.6811/95 (8)?????????? Suit No.954/95????????????????? CMA No.6838/95 and CMA No.1806/97 (9)?????????? Suit No.955/95????????????????? CMA No.6842/95 and CMA No.744/97 Learned counsels for the plaintiffs argued the following points in support of their applications for Temporary Injunction: (1) That the alleged Licence agreement which has been annexed with the plaint is in fact a lease between the parties as reflected from various clauses included in the agreement. As they are in exclusive possession of the premises, they are tenants of the defendants (PLD 1982 Kar. 532; PLD 1964 SC 106). Further, as the agreement was drafted by the defendants it must be interpreted in favour of the plaintiffs and against the defendants (PLD 1969 Kar. 363). (2)?????????? The investments in the shops were made on the assurance of the defendants that if the plaintiffs continued to pay rent regularly, the lease would be extended. therefore, the defendants are estopped from changing their position. (3) . There is a renewal clause in the agreement. If power to renew is discretionary with the statutory authority, it must exercise such discretion fairly, honestly, justly and equitably (PLD 1991 SC 14). (4)?????????? Alternatively, if it is a licence, it is coupled with interest, and therefore, cannot be terminated. (PLD 1987 Kar. 112; American Jurisprudence 1941 Edn., Vol. 33, Licences, Sections 101 to 103; Halbury's Laws of England, 3rd Edn., Vol. 23; Landlord Tenant, page 432, para. 1027). The learned counsel for the defendants referred to several clauses of the licence agreement to show that it is a licence and not a lease. He cited PLD 1963 Lahore 418, PLD 1959 Kar. 24, 1988 CLC 1261 and PLD 1965 SC 83, in support of his contention. I have heard the arguments of the learned counsel of all the parties and my conclusions are as follows. The whole controversy revolves around the point whether the relationship between the plaintiffs and C.A.A. is that of Landlord and Tenant or Licensor and licensee. It would, therefore, be advantageous to reproduce the salient clauses of the Licence Agreement which have been highlighted and relied upon by both sides in support of their contentions. The title, preamble and the clauses of the agreement are: "LICENCE AGREEMENT" "Whereas the licensee has applied to the Licensor for grant of licence to establish and run Shop No. 10 in International Departure Transit Area at Jinnah Terminal QIAP, Karachi for Cotton Garments (hereinafter called the said premises) on monthly licence fee of Rs.18,500 (Rupees Eighteen Thousand Five Hundred only) during the period of licence (for year only effective from 30-12-1992). 1.???????????? DURATION This licence in respect of the said premises shall remain in force for a period of three years commencing from 30-12-1992 to 29-12-1995 provided that the Licensor reserves to himself the right to terminate it at any time without notice and without any cause being assigned and without any compensation. 2.???????????? STATUS OF THE LICENSEE It is clearly understood by the parties to this agreement that the contents of this licence agreement or any part thereof shall not be construed or interpreted in a manner as to amount to creation of an easement, lease or any other interest except what is explicitly stated in this agreement in favour of the licensee in respect of the said premises. It is also clearly understood that the licensee shall have the status of an independent contractor and shall not considered to be a servant or agent of the licensor. 3.???????????? LICENCE FEE The Licensee shall pay to the Airport Manager on 30-12-1992 as licence fee in advance for the current month i.e. on the day the possession thereof is handed over to the licencee. Thereafter, the monthly fee shall be paid in advance before the 10th of each month to which it relates, whether the licensee receives any bill or not. If the said Licence Fee or any part therefor shall be in arrears for one month or more after the same shall have become due (whether demanded or not), the Airport Manager may terminate the Licence Agreement and Licensor or his authorized representative may upon such termination by the Airport Manager enter into or upon the premises and take over the same without any right or remedy to the Licensee or any obligation to the Licensor or charge a fine not exceeding Rs.500 for each day of such default which shall be paid/realised as mentioned in paragraph 29. 4-A. ENHANCEMENT OF FEE / CHARGE The Licensor shall have the right during the currency of the Licence Agreement to revise/enhance the amount of the licence fee/charges with prior notice and Licensee shall be bound to pay the revised Licence Fee from such day as may be specified prospectively by the Licensor. 6.-?????????? MAINTENANCE OF PREMISES The licensee shall, at his own cost, maintain the said premises in good tenantable condition and maintain the said premises as well as the premises impound in a proper state of cleanliness and sanitation at all times to the satisfaction of the Airport Manager and shall also obey all orders and instructions of the airport Manager or Health or other official of a competent authority in respect of sanitation or orderly running of the business.

9. No permanent structure or tampering with the Premises.--The Licensee shall not raise any permanent structure or alter the said premises and make any addition or alteration to the electrical circuit, gas or water connection without previous permission in writing of the Airport Manager and make good any damage to the fixture and fittings of the said premises resulting from such addition/erections/alteration or cause by or resulting from any default or accordance with the assessment of the Airport Manager, provided by him at the expiration or sooner determination of the licence and the said premises shall be restored to their former conditions, unless otherwise directed in writing by the Airport Manager. And provided also that Licensee's legal status under this Agreement shall continue to remain the same, any permission or raising of any permanent structure under this clause notwithstanding.

11. Premises to remain fully equipped and stocked --The Licensee shall maintain the said premises fully equipped and stocked for licensed business and shall keep it open at all reasonable hours. If the Licensee keeps the premises unreasonably closed or does not open within a month's time from the date of taking over its possession the licence shall stand cancelled, and the licensor shall be entitled to take over the said premises forthwith without any notice.

12. Advertisements etc.--The Licensee shall not put up or permit on the said premises any Play card, Poster, sign or advertisement without previous written permission of the Airport Manager.

13. Assignment subletting.--The said premises or the rights of the Licensee which are of personal nature under the licence or any part thereof shall not be assigned, transferred, sublet, parted with or shared in any manner.

18. Particulars of employees and security clearance-The Licensee shall provide names and details of employees to the Airport Manager at the time of commencement of business at the said premises and thereafter, notify immediately, if any one or more employees are hired or fired or any other charges in this respect whatsoever. The Licensee and all its employees who are to work in the Terminal Building of Airport or in other sensitive areas will be required to obtain security clearance from the Agencies concerned as directed, by the Airport Manager.

20. Price list.--The Licensee shall display at the said premises Price List of the items respecting the business duly approved by the Airport Manager. No item exceeding the approved price shall be . sold by the Licensee.

21. Vacation.--Unless extended in writing by the Licensor immediately upon the expiry or sooner determination of the licence, the licensee shall remove his belongs/articles/goods of business from the said premises and hand over the same to the Licensor together with fixtures and fittings therein in good order and condition reasonable wear and tear excepted.

22. Free access.--Nothing herein contained shall prevent the free use of the said premises by the Licensor/Airport Manager/or his authorised representative who shall be at liberty to inspect or use the said premises any time and the Licensee shall not do or permit to be done anything which may cause inconvenience or annoyance to such person or the Licensor. SPECIAL CONDITIONS - APPENDIX "A" 1.???????????? This licence may be renewed/extended for such period and on such conditions as may be determined by the Licensor. However, any request by the Licensee in this regard shall not be considered unless the Licensee has cleared all dues for the expired period payable to licensor under the current Licence and attaches with his request a No-Objection Certificate signed personally by the Airport Manager concerned that no C.A.A, dues are outstanding against the Licensee on any account. Such a request shall be made not later than two months before the expiry of the current licence. 3?????????????? The Licensee shall not claim any further right in the premises after expiry or determination of the Licence Agreement and will not have any objection in any manner whatsoever, if the Licensor retender the said premises as per policy at the appropriate time. ?4 .The Licencee shall instal his own modules for the shop at his own ????????????? expense as per approved structural plans of C.A.A. and which? module/structure shall become the property of the Licensor after expiry? of the period of this Licence Agreement or sooner determination thereof as the case may be. ?

5. The place of business is to remain always open round the clock for ?????????? providing uninterrupted services to passenger, public and staff during the period of this Licence Agreement." ????????????????? In order to decide the issue of maintainability of the suits and the pending Miscellaneous Applications, we have. to determine whether the agreement, several clauses of which have been reproduced above, is a lease or a? licence. The line of demarcation between a lease and licence is some times very thin and one will have to look at the actual wordings and the spirit of the A agreement rather than the terminology used therein to find out the real nature of? the relationship between the parties (PLD 1982 Karachi 532 and PLD 1963 Lahore 418). In Ahmed Din v. Abdullah Bhai and others PLD 1962 Karachi 663 at page 676 the learned Division Bench observed as follows:- "The most distinctive feature between a lease and a licence is that, in the former there is a transfer of interest in immovable property whereas in the latter that element is expressly excluded. The transfer of interest in a case of a lease consists of the grant to the lessee the exclusive right of possession of the demised premises. This right, in the first instance, vests in the lessor and is one of the most important incidents of ownership. In granting a lease the lessor transfers this important right to the lessee. The right of exclusive possession involves an element of ouster and when the lessor grants this right to the lessee he totally excludes himself from that right, though it may be only for a certain time. This right is assignable and heritable and constitutes property. On the other hand, in the case of licence there is a total absence of transfer of interest in the immovable property. A licence is a personal right granted to an individual or to an ascertained number of individuals, to do or continue to do something in or upon the immovable property of the grantor which in its absence would be unlawful. It is purely a permissive right and is neither assignable nor heritable. Notwithstanding the permission the grantor retains control over the property. The fact that a licensee occupies the property, that occupation does not confer upon him the right of exclusive possession as understood in law." The principles enunciated above were confirmed by the Hon'ble Supreme Court of Pakistan in PLD 1964 SC

106. In Sajid Ali Khan and another v. Muhammad Ahmed Farooqui PLD 1959 Karachi 24, another learned Division Bench of this High Court observed that the test of exclusive possession is very important in determining whether a person is a lessee of the property or a mere licensee. According to PLD 1963 Lahore 418 "a licence is normally created where a person is granted a right to use premises without becoming entitled to exclusive possession thereof or the circumstances and conduct of the parties show that all that was intended was that the grantee should be granted a personal privilege with no interest in the land. If the agreement is for the use of property in a certain way and on certain terms, while the property remains in the possession and control of the owner, the agreement will operate as a licence even though the agreement may employ words appropriate to a lease". In light of this principle the Lahore High Court where air agreement was entered into between Punjab Road Transport Board and Muhammad Hashim, proprietor of Madina Hotel, Lahore relating to the working of a canteen at the railway station suboffice of the Lahore Minibus Service held that it was a licence and not a lease as under the terms of the agreement Muhammad Hashim was not permitted to construct Pucca type of building and the use of the premises was limited to sell refreshments etc. at the rates to be fixed and intimated to him by the Lahore Minibus Service. Similarly in Sajid Ali Khan v. Muhammad Ahmed Farooqui, PLD 1959 Karachi 24 (DB), where the respondent had been given a catering contract and allowed the use of three rooms and a kitchen situated on the first floor of the Customs House, Karachi for running a canteen he was held to be a licensee on the ground that the use of the premises was allowed to him so that he could cater for the staff of the Customs Department and that the respondent could not use the premises for any purpose he liked, nor could he carry on the business for general public. In M.A. Naser v. Chairman, Pakistan Eastern Railways, PLD 1965 SC 83, by agreement, dated 12th December, 1953 between Eastern Bengal Railways and M.A. Naser, proprietor of Gulistan Restaurant, Dhaka, the Railways granted to the appellant (M.A. Naser) for a period of three years the right to sell refreshments both solid and liquid of the best quality to the upper class passengers at the Refreshment Rooms at Chittagong, Laksam, Sylhet and Dacca etc., and on Buffet Cars on the trains. The said agreement was terminable on 17-12-1956 on not less than six months' notice in writing by either party and if it was not so determined the agreement was to continue subject to termination at any time in any subsequent year on not less than six months' notice in writing given by either party -desiring to cancel it. In consideration of the grant of-the contract, the contractor agreed to pay to the Railways a licence fee of Rs.2,740 each year in advance, and deposit a sum of Rs.11,000 as security. In 1962 when the contract was terminated on alleged breach of contract, without giving the specified notice, the appellant filed a suit for a declaration that the contract was still subsisting and for an injunction restraining the Railways from interfering with his right of catering in terms of the agreement. The appellant was granted special leave to appeal mainly to consider "whether the contract of this kind is one for which protection in law by method of injunction could be claimed against termination otherwise than in accordance with the terms of the contract". After discussing the law of easements and specially section 60 of the Easements Act the Hon'ble Supreme Court observed as follows:- "From the above provisions it is clear that this agreement merely conferred a right to carry on business of catering in the Refreshment Rooms and on the Buffet Cars. They were not given any general right of occupation but only a right to use the Refreshment Room allotted to them for the exclusive purpose of catering refreshments. Such a right does not amount to easement as defined in section 4 of the Easements Act or an interest in the property. Nor can it be suggested that the contractor was required to execute any work of permanent character in connection with the business. No doubt his business may involve complex arrangements for continued supply of refreshments both solid and liquid but this cannot be regarded as 'execution of a work of permanent character'." In conclusion the Court held that the agreement was a revocable licence, the revocation of which could not be prevented by an injunction. It further held that in a case like the one under consideration the licensee was entitled to a reasonable notice in accordance with the provisions of section 63 of the Easements Act. If, however, the licence was revoked without reasonable notice, the remedy of the licensee was by way of damages and not by way of an injunction. In light of the above discussion, the salient features of a lease and licence may be summarized as follows: (a)?????????? In a lease there is transfer of interest in property whereas in a licence ????????????????? this element is expressly excluded; (b)?????????? in a lease exclusive right of possession is granted to the lessee and the ????????????????? lessor totally excludes himself from this right; (c)?????????? the right granted to the lessee is assignable and transferable while in a ????????????????? licence it is not so; (d)?????????? a licence is a personal right. It is purely a permissible right. There is no right of exclusive possession. Notwithstanding the permission, the grantor retains control over the property. If we read the provisions of Licence Agreement', copies of which have been filed and relied upon by all the parties, the following position emerges: (i)??????????? The Agreement is titled "Licence Agreement" and starts with the Preamble. "This Licence Agreement made on 25th October, 1992 between Civil Aviation Authority ... ... of the one part (hereinafter called the "Licensor") ... ... and ... ...(hereinafter called the "licencee") of the Other Part". Both parties have used the term "Licence" and its derivatives intentionally with full knowledge of its meaning and its remification as evidenced below. (ii)?????????? The second part of Preamble clearly states that the licensee has applied to the Licensor for grant of a license to establish and run a shop in the International departure transit area at Jinnah Terminal for cotton garments. Every individual Licence Agreement specifies the nature of the business to be done by the Licensee at the shop for which the licence is granted; (iii)???????? Clause (2) states that, "It is clearly understood by the parties to this agreement that the contents of this Licence Agreement or any part thereof shall not be construed or interpreted in any manner as to amount to creation of easement, lease or any other interest except what is explicitly stated in this agreement in favour of Licensee in respect of the said premises". (Emphasis added). The parties, having clearly expressed their intention they would not now be permitted to take a stand contrary to the intention expressed by them in writing. (iv)???????? Clause (13) relating to Assignment, subletting, states that " ... ...rights of licensee which are of personal nature under the licence ... ... shall not be assigned transferred sublet parted with or shared in any manner" (Emphasis added). (v)?????????? Clause (22) of the Agreement provides that "nothing herein contained shall prevent the free use of the said premises by the Licensor/Airport Manager or his authorised representative to use the said premises any time and licensee shall not do or permit to be done anything which may cause inconvenience to such person or the Licensor. (vi)???????? Under clause (9) of the Agreement the plaintiff is not permitted to raise any permanent structure or make any kind of alteration including electrical circuit, gas or water without previous permission in writing of the Airport Manager. Under condition (4) of the Special Conditions of the Agreement, if the plaintiff were to install his own module the same shall become the property of C.A.A. on the expiry of the Agreement or sooner determination thereof. The clause takes care of the possibility of creation of interest in property as envisaged by section 60 of the Easement Act, 1882 and confirms that the plaintiff would not acquire any right or interest in property even if he raises any module structure on the licensed shop. (vii) Under clauses (7) and (11) of the Agreement the Licensee is not permitted to use the premises for any purpose other than for which the licence has been granted and is required to keep the premises fully stocked for the licensed business. Such a condition is contrary to the very concept of a lease. (viii) Clause (12) forbids the plaintiff to put up any Play cards, Poster, sign or advertisement without the permission of Airport Manager and under clause (20) he is required to get the prices of all items approved by C.A.A. The entire conduct of the plaintiff in the licensed shop is, thus, controlled by C.A.A. All these terms of the Licence Agreement clearly establish that the C.A.A. has not transferred any interest or right in property and has retained complete control over the same. No exclusive possession has been given by C.A.A. to the plaintiffs. The permission to occupy the premises is personal in nature and is not assignable or transferable. The permission to occupy the premises has been given for a specified business and for no other business which PAGE MISEED 193-195 WHICH WILL BE PASTE HERE