With the passage of time, the system of giving properties on leave and license basis in Maharashtra is taking its roots, but still a good number of the property owners are apprehensive because they are not sure that they would get back possession of the properties on the expiry of the term. However, in view of the following judicial pronouncement, such fear seems unfounded, provided legal requirements are complied with.
One Shri Mohd. Hussain Furniture Walla, (Licensor) as the owner of Flat No. 51, in Victoria Apartments, St. Alexius Road, Bandra, Mumbai, gave his premises on leave and license basis, as per the Agreement dated 25.03.2003, for a period of 22 months to one Ms. Pari-neeta Choudhary on a monthly license fee of Rs.18,000. In addition, an additional agreement was also executed between the parties for payment of charges at Rs.10,000 per month in respect of furniture and fixtures in the said premises. The term of the license expired in January 2005 and the licensee continued to occupy the said premises even thereafter and licensor accepted the monthly license fee and the additional charges. Only on 10th December 2005, he moved a petition before the Competent Authority, who, besides ordering eviction of the licensee, also directed her to pay the damages at Rs. 56,000/- per month from 16th January 2005 till handing over possession of the licenced pre-mises to the lessor.
This decis-ion was challen-ged by way of revision u/s 44 of the Maharashtra Rent Control Act by the licensee but the same was dismissed and the order of the Competent Authority was upheld.
Aggrieved by this order the licensee filed a Writ Petition No.2276 of 2008 before the Hon' ble Bombay High Court under Article 227 of the Constitution of India. The matter came up for hearing before Hon'ble Mr. Justice A. M. Khanwilkar on the 9th September 2008, when the licensee pleaded that not issuing legal notice to her and continuing to accept the monthly license fee, was indicative of the fact that the licensee has become the tenant in respect of the licensed premises. But this argument was not accepted by the Hon'ble High Court which observed that the fact of acceptance of the monthly compensation by itself would not be sufficient to positively hold that the relationship of the parties that of licensor and licensee was converted into one of landlord and tenant and the fact that licensee instituted the proceedings before the Competent Authority, almost after 11 months from expiry of the license period, would again not by itself indicate that he has waived his statutory right of eviction of the petitioner from the suit premises because there is legal presumption u/s 24 of the Act about conclusive- ness of the contents of the leave and license agreement. It would merely indicate that the licensor allowed the licensee to overstay the license period and nothing more and the relationship would still remain of licensor and licensee.
The Hon'ble High Court has, therefore, held that the arrangement between the parties was purely one of the leave and license and the relationship created between them on account of the said transaction was that of the licensor and licensee and in view of the legal presump-tion u/s 24 of the Act, it would necessarily follow that the licensee is obliged to vacate the premises on the expiry of the license period in January, 2005.
On the question of payment of damages from 16th January 2005, the Hon'ble High Court did not agree with the order of the Competent Authority, as upheld in the revision.
The Hon'ble High Court observed that the licensor did not call upon the licensee to vacate the suit premises nor informed her that she would be liable to pay damages for continuing possession and he filed the eviction proceedings only 16th December 2005. Therefore, the licensor would be entitled for the damages from the licensee at double the rate of license fee fixed in the Agreement of License only from 16th December 2005, when he initiated the proceedings.
As regards the quantum of the damages, again the Hon'ble High Court did not agree with the order of the Competent Authority, as upheld in revision and observed that the license agreement provided for the monthly licensee fee @ Rs. 18,000/- only and the additional agreement to pay charges @ Rs. 10,000/- in respect of furniture and fixtures provided threin cannot be reckoned for purposes of computing damages u/s 24(2) of the said Act. Therefore, the Hon'ble High Court held that licensee would be liable to pay license fees @ Rs. 18,000/- from 16-12-2005 till handing over the possession to the suit premises.
In another case relating to a flat at Carmichaell Road in Bhagawati Bhavan at Mumbai given on leave and license by the owner Manju Singh to Janki Ammanraj, Hon'ble Mr. Justice Anoop Mohta held in January, 2009 that when the licensee, in spite of expiry of the leave and license agreement in November 2006 and issuance of notice did not deliver possession of the premises to the land-lord and continued to be in possession of the licensed premises, the licensee should pay damages at double the rate of license fee with all the arrears till the time the flat is vacated.
Thus, the overstay by a licensee in the licensed premises and acceptance of the monthly licensee fee by the licensor would not mean that the relationship of licensor and licensee has been converted into that of land lord and tenant and the licensee would be liable to pay the damages at double the rate of the license fee fixed in the agreement till it is vacated.
It has been observed that in a good number of cases leave and license agreements are not adequately stamped and registered and two agreements are drawn one towards the license fee for the premises and another towards furniture, fixtures and services etc. as a matter of temptation to save expenses and taxes. But it needs to be kept in view that where a document is required to be necessarily registered (section 55 of the said Act) and if it is not registered, it can not be taken as an evidence and such a situation may create the problem in as much as the relationship may be construed as of land-lord and the tenant and splitting of the agreement may not entitle the licensor to recover the damages at double the rate of the charges fixed in both agreements.
It would, therefore, be advisable that the leave and license agreement should be adequately stamped and registered as per the provisions of law and a notice should be served by the licensor to the licensee in advance before the expiry of the agreement to vacate the premises and in case of failure, besides eviction, the licensee would be liable for the damages at double the rate of monthly com- pensation fixed in the agreement.
A land-lord should also have the police verification of the licensee and obtain NOC from the Society before giving the final shape to this arrangement. If all these legal requirements are taken care of, there need not be any apprehension in mind to give the flats on leave and license basis, if not required for self-occupation.
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