Ayurvedic Oushada Nirmana Vyavasaya Company Op. Ltd. vs Abraham

K.S. Paripoornan, J.—In the interpretation of a document of this nature, to ascertain whether it creates the relationship of landlord and tenant or that of licensor and licensee, the decisive consideration is the intention of the parties, to be gathered on a true construction of the agreement and not merely from the description given by the parties. This is a matter of substance and not merely of words. The description given is a good indication of the intention of the parties. The parties can certainly be presumed to have reduced to writing what they had in their mind, in other words their intention. It is open to the parties to enter into a transaction of licensee or to create a relationship of lessor and lessees. The parties are well aware now-a-days of the distinction between lease and license and the consequences that follow the creation of a license in contra distinction to a lease, especially after the advent of the Rent Control Legislations. When therefore it is the express term of the grant that the grantee was only permitted to use the property as licensee for a specific purpose and that only that limited right was being granted to him, it requires cogent and convincing material to the contra by way of circumstances of the case or conduct of parties to hold that the transaction was nevertheless a lease. The indicia mentioned by Us herein earlier are all indicative of the transaction being only a license and not a lease.

It is true that the building has been found by the lower court to be in the exclusive possession of the first defendant. That is not however conclusive of the matter. As stated by one of us (Paripoornan, J.) in the decision in Kalyani Amma v. Kunhambu Nair 1984 KLT (SN) 62 Case No. 105 possession that is given to the licensee is only such as is necessary to effectively use the premises for the purposes for which the license was given. Even in cases where transfer of possession is exclusive, it need not necessarily be an indication of the creation of a lease for even in a license there should be some transfer of possession. Possession is necessary even for a licensee to do such acts in the land as he is permitted to do. As held in Errington v. Errington, 1952 (1) aelr 149, exclusive possession is by no means decisive of lease. Again as held in Abbeyfield (Harpender) Society Ltd. v. Woods, 1968 (1) All. ER 352 a man be a licensee, even though he has exclusive possession. It is the substance of the agreement that governs the matter. The court must look at the agreement as a whole and see whether a tenancy really was intended.