Exclusive possession clause and conduct of parties confirmed agency, not tenancy, with incidental restorative relief upheld.

A document acted upon by both sides cannot be treated as a sham inter se where business records, invoices, vouchers and statutory returns were maintained under its terms, although surrounding clauses may still be examined to determine the true legal relationship. On construction, express language showing exclusive possession and control with the other party not deemed in possession pointed to agency, not tenancy, and the document's substance prevailed over its label. Relief directing removal of goods and related articles could also be granted in the same proceedings where it was incidental to the plaintiff's claim and arose from the same transaction.

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Issues: (i) whether the appellant was precluded from contending that the agreement was a sham and that the relationship was not one of tenancy; (ii) whether the agreement, on its true construction, was in substance a lease rather than an agency arrangement; (iii) whether the defendant could obtain an order directing the appellant to remove its goods, furniture and decorative material in the same proceedings.

Issue (i): whether the appellant was precluded from contending that the agreement was a sham and that the relationship was not one of tenancy.

Analysis: The document was acted upon by both sides in the conduct of business, with accounts, invoices, vouchers and statutory returns maintained in accordance with its terms. The arrangement could not be treated as a sham inter se when the parties had in fact implemented it in their dealings. The appellant could still contend that the document was really a tenancy if the surrounding clauses supported that inference, but it could not simultaneously assert that the agreement was unreal between the parties and operative only against outsiders.

Conclusion: The appellant was precluded from treating the agreement as a sham document and this contention failed.

Issue (ii): whether the agreement, on its true construction, was in substance a lease rather than an agency arrangement.

Analysis: The clauses showed supply of goods by the principal, sale by the agent on fixed terms, remittance of sale proceeds after deduction of commission, allocation of expenses, maintenance of accounts, and other incidents consistent with agency. Most importantly, the agreement expressly stated that the agents would remain in exclusive possession and control of the premises and that the principals would not be deemed to be in possession. That express clause displaced any contrary inference from isolated clauses such as inspection rights or reimbursement of expenses. The nomenclature of the document was not decisive, but its substance and the express possession clause established agency, not tenancy.

Conclusion: The agreement was held to be an agency agreement and not a lease or tenancy, against the appellant.

Issue (iii): whether the defendant could obtain an order directing the appellant to remove its goods, furniture and decorative material in the same proceedings.

Analysis: The defendant's request arose out of the same contract on which the appellant had sued and was incidental to the refusal of the appellant's claim for injunction. The earlier interim arrangements had not conferred a lasting right on the appellant, and the later order was treated as restitutionary in character under the inherent powers of the court. Relief against a plaintiff may be granted to a defendant in the same action where it is connected with or incidental to the plaintiff's cause of action and no separate counter-claim is necessary in such a situation.

Conclusion: The order directing removal of the appellant's goods and related articles was upheld, against the appellant.

Final Conclusion: The appellate court affirmed the finding that the arrangement was one of agency, rejected the claim of tenancy, upheld the consequential directions for removal of goods and dismissed the appeal.

Ratio Decidendi: Where a contract expressly provides that one party shall remain in exclusive possession and control and the other shall not be deemed to be in possession, the document must be construed according to its substantive agency terms, and incidental restorative relief may be granted in the same proceedings when it arises from the same transaction.

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