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Lease And Licence
by N.S. Bindra *
Cite as : (1972) 2 SCC (Jour) 15

(A comment on (1972) 2 SCC, pp. 1-8: Journal Section)

I was glad to read the article on the above topic by Mr C.F. Alvares, Advocate, Margao, Goa. To comment on the decision of the highest Court in the country, which lays down the law, requires courage, which is one of the sterling qualities, an Advocate must possess. Mr Alvares has criticised the crucial passage in Sohanlal v. Laxmidas.1 He has divided the passage into three parts.

Re. 1st Part:

An instrument in writing is the repository of the intention of those who execute it. How is that intention to be gathered. If the instrument is capable of only one meaning: that interpretation thereof will disclose the real intention of the parties. In that event, Section 92 of the Evidence Act would not be contravened. If the instrument read as a whole (for no part thereof can be ignored) is capable of two or more interpretations then the internal aids to its interpretation and surrounding circumstances must be called in aid to find out the real intention of the parties. Section 92 aforementioned shuts out oral agreement or statement for the purpose of contradicting, varying, adding to, or subtracting from its terms. Internal aids to interpretation (e.g., the document to be read as a whole, same word to have same meaning throughout unless context belies it, draftsman's obvious errors, doctrine of noscitur a sociis, etc.) assist in interpreting the document as to what are really the terms of the document. Even Section 92 has six provisos (exceptions) to the main section. The sixth proviso (any fact may be proved which shows in what the language of a document is related to existing facts) alone is very telling in this behalf.

Section 92 of the Evidence Act merely prescribes a rule of evidence. It does not fetter the Court's power to arrive at the true meaning and effect of a transaction in the light of surrounding circumstances. This has been the law in England for several centuries and for about a century in India . Parties no doubt get an opportunity to twist the meaning of a document to suit their respective purposes, but that is the feature in all litigation. As Lord Wright once observed (when a Counsel submitted that it was an arguable case, when he was asking for special leave to appeal to the Privy Council):

"I have never come across a case which is not arguable."

But that does not mean that law is uncertain. Hence the rationale adopted by the Chief Justice Shah in Sohanlal case, based as it was, on Clubwala case2 is not at all unsatisfactory.

Re. 2nd Part:

Just as a mortgage is a transfer of an interest in property, and a usufructuary mortgage is a transfer of the interest along with the right to appropriate the usufruct thereof (with the added condition of securing the loan itself) similarly a lease is a transfer of a right to enjoy such property. It is not merely a contract. Hence it is not appropriate to suggest that:

"the fact that the definition of the licence states that it does not create an interest in the property, has to be understood in its proper context, viz. put in contrast to an easement and not when it is put in contract with a lease."

For centuries in England and ever since the British Rule in India, a lease always has connoted a transfer of an interest in property. We need not consult the definition of 'licence' in Easements Act, in order to arrive at the meaning of the word 'lease' in the Transfer of Property Act. The definition of the word 'lease' therein does not contain the word 'possession'. Can it be argued that possession of the property in question is not to be transferred in the case of a 'lease', on the ground that it forms no part of the definition of the term 'lease' in Section 105 of the Transfer of Property Act?

Mr Alvares has also in the earlier part of his 'article' (viz. A Departure) criticised the note in Mulla's Commentary on the Transfer of Property Act and has observed:

"Can he (a licensee) not maintain a suit based on his possessory right? Surely he can. How can we then accept the statement as given in Mulla?"

Again the law in India also has throughout negatived the right of a mere licensee to file a suit for possession under Section 9 of the Specific Relief Act (now Section 6 of 1963 Act). Why? Because he never had possession of the property wherefrom he has been ousted. He had only 'permissive occupation' thereof. (Vide: Nrittolal Mitter v. Rajendro Narain Deb,3 Shoba v. Ramlal.4 See also Magunlal Radia v. State of Maharashtra,5 Vimadalal, J., etc.)

Re. 3rd Part:

According to Mr Alvares, exclusive possession is no test at all in determining whether a transaction is a licence or a lease. In his opinion if he gives his rooms on a licence to someone, the latter's privacy cannot be invaded. In his opinion if in a lease agreement, the landlord stipulates a clause to enter and inspect the premises at any time, it abridges the exclusive possession of the tenant.

Now a lessee has juridical possession of the object of the lease. A licensee has merely a 'permissive occupation' thereof. By juridicial possession, we understand, that a person stands in such relation to a particular thing that he has in fact dominion over it. If you go with your family to a cinema show leaving a guest in the house allowing him to rest in your house for, say, two hours, and if you return to the house before the show is over and find the house locked from inside by the guest who refuses to open the entrance door, you need not go to Court to get access to your house. You all along had dominion over the house and you can break open the door itself and enter and turn out such a guest from the house. Again, if you go to a hill-station during summer and allow someone to occupy your house for two months, say on a caretaker basis — getting compensation from him in the bargain — and on your return after two months, he refuses to let you enter your own house, you can forcibly enter and turn out the licensee, provided you have not 'leased' the house to him. And if your licensee dies, say a month after your departure, his legal representatives cannot claim to occupy the house for the remaining period of two months.

If there is a stipulation in the lease-agreement that the landlord can enter and inspect the premises at any time, and the tenent does not allow the landlord to so enter, the breach of such a condition can only sound in damages or forfeiture of the lease if there is a stipulation to that effect in such a circumstance. The landlord cannot enter the premises without the consent of the tenant, who has exclusive possession thereof. The supply of sofa or furniture or electric fittings do not affect the exclusive possession of the tenant. On the other hand the infringement of the privacy of a licensee may lead to the exchange of some hot words between the parties, but, it does not preclude the licenser from entering into any part of the premises.

Finally, the crucial test promulgated by Mr Alvares, in case of a dubious or ambiguous document is susceptible of the greatest mischief. We do not have expert draftsmen who can bring out the intention of the parties in clear unambiguous language and our subordinate judiciary is recruited from young graduates in law, who have had no experience, worth the name, at the Bar and whose vagaries in the interpretation of such documents will promote litigation. Justice will be crucified at the alter of speculation. Law may be said to be an ass, but it is we who make it so.

In my opinion the judgments of the Supreme Court of India, in this behalf are unexceptional and lay down, with respect, the law.

* Senior Advocate, 15-G, Nizamuddin West, New Delhi. Return to Text

  1. (1971) 1 SCC 276 (a judgment by Shah, C. J.). Return to Text
  2. (1964) 6 SCR 642. Return to Text
  3. ILR (1895) 22 Cal 562. Return to Text
  4. AIR 1957 All 394. Return to Text
  5. 1971 Mah LJ 57. Return to Text
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