Lease versus licence turns on substance and exclusive possession, with municipal property tax following for oil storage installations.

An instrument styled as a licence was construed by its substance, not its label, and the Court found that exclusive possession, long-term use, rent-like payment and the right to maintain substantial installations showed a transfer of a right to enjoy the land; the principal grants were therefore leases, not mere licences. Oil storage tanks and related constructions were treated as buildings for municipal taxation, and because the structures belonged to the grantee rather than the Union of India, the statutory exemption for Union property did not apply. The municipal authority was accordingly entitled to levy property tax on the lands and buildings in question.

---

---

Issues: (i) Whether the agreement for erection and maintenance of oil storage installations conferred a lease or merely a licence; (ii) whether the structures were chargeable to property tax under the Delhi Municipal Corporation Act and whether the statutory exemption for Union property applied.

Issue (i): Whether the agreement for erection and maintenance of oil storage installations conferred a lease or merely a licence.

Analysis: The document had to be read as a whole and its substance, not its label, determined the legal character of the transaction. The relevant tests were whether any interest in immovable property was created, whether legal possession remained with the grantor, and whether exclusive possession was conferred on the grantee. The presence of annual payment described as rent, a three months' notice clause for termination, permission to use the land for a long duration, and the grantee's exclusive possession and user of the site for substantial constructions indicated transfer of a right to enjoy the property rather than a mere permissive occupation. The clause describing the arrangement as a licence was not conclusive, and the Government Grants Act did not displace the need to construe the grant according to its real effect.

Conclusion: The grant, in the principal appeals, was held to be a lease and not a mere licence.

Issue (ii): Whether the structures were chargeable to property tax under the Delhi Municipal Corporation Act and whether the statutory exemption for Union property applied.

Analysis: The definitions of "building" and "land" under the Delhi Municipal Corporation Act were construed purposively. Oil storage tanks and the associated constructions were treated as buildings for municipal taxation purposes. Since the constructions belonged to the grantee and not to the Union of India, the exemption for Union property under Section 119 was not attracted. Once the arrangement was held to be a lease, the tax liability under the Act followed, and the municipal authorities were entitled to levy property tax on the lands and buildings in question.

Conclusion: The structures were held taxable and the Union-property exemption was held inapplicable in the principal appeals.

Final Conclusion: The batch of appeals was substantially accepted in favour of the municipal authority, with the Court holding that the principal grants created leases and that the relevant constructions were subject to municipal property tax, while one connected matter on its distinct tenure was treated as a licence.

Ratio Decidendi: In determining whether an instrument creates a lease or a licence, the Court must look to the substance of the grant, the intention of the parties, and the conferral of exclusive possession and proprietary interest; where the arrangement effectively transfers a right to enjoy land and structures for a term, the municipal tax consequences follow accordingly.

---