Holding

The 1970 agreement is a deed of leave and licence, not a lease, as the parties’ expressed intention and statutory constraints outweigh the fact of exclusive possession.

Summary

Delta International Ltd., the successor to Dewar's Garage, entered into a 1970 leave‑and‑license deed with ESSO allowing Shyam Sunder Ganeriwalla to operate a petrol station on premises it leased from Mallika Investment Co. The deed expressly stated it was a licence and not a lease, and any sub‑lease required the landlord's consent, which was never obtained. The Calcutta High Court initially held the deed to be a licence, but a Division Bench reversed, deeming it a lease based on the grant of exclusive possession. On appeal, the Supreme Court examined the intention of the parties, the express terms of the deed, and the statutory framework, concluding that the clear language and lack of power to grant a sub‑lease indicated a licence, not a lease. Consequently, the Supreme Court restored the original decree in favour of Delta International.

Issues considered

The nature of the 1970 agreement: whether it creates a lease or a licence.
Whether exclusive possession alone determines a lease despite express terms stating otherwise.
Whether the deed is a camouflage to evade the West Bengal Premises Tenancy Act, 1956.
The effect of the clause requiring landlord consent for a sub‑lease on the character of the agreement.

Legislation cited

Indian Easements Act, 1882s. 52
Transfer of Property Act, 1882s. 105, s. 107
West Bengal Premises Tenancy Act, 1956s. 14(1)

Subjects

leaselicenceintention of partiesexclusive possessionTransfer of Property ActWest Bengal Premises Tenancy Actrent controlsub‑leasecontract constructioncamouflage

Judgment

DELTA INTERNATIONAL LTD. A
v.
SHY AM SUNDER GANERIWALLA AND ANR.

APRIL 9, 1999

[G.B. PATTANAIK AND M.B. SHAH, JJ.] B

Transfer of Property Act, 1882-Sections 105 and 107- Lease or
,,, .:Jnce---Test to determine-Intention of the parties under the agreement-
A.1·i.:ertainment of such intention-Where camouflage is alleged or is apparent
the intention has to be gathered from the terms of such agreement-In case C
of camouflage or attempt to avoid the rigours of any legislation, the mask
is to be removed or veil lifted from the self-serving instrument and true
intention to be gathered from the relevant circumstances-In cases ofcpntracts
expressly for licence with exclusive possession of the property, then there
remains a very narrow distinction between licence and lease-In such cases, D
terms of the agreement be read literally without any inference whether the
parties intended to cause a landlord-tenant relationship-In cases where
tenant himself having no right, title or interest to create sub-tenancy hands
over possession of property fo third person, such third person. cannot claim
to be a sub-tenant-A person having no right cannot confer any title of
tenancy or sub-tenancy-Having regard to the terms and of the agreement E
. as a whole, the agreement held to be one of leave and licence and not of
lease-W.B. Premises Tenancy Act, 1956, Section 14(1).

Deeds and Documents-Construction ofagreement-Intention ofparties
to the agreement-In case the terms of the agreement having two meanings, F
the lawful meaning should be preferred-In case of parties capable of
understanding their rights fully and having agreed that the document to be
construed in a particular way-No .inference should be drawn so as to
construe it in a· different way.

Words and Phrases-Words "demise" and "demised premises"- G
Meaning of-In the context of lease and licence-Easements Act, 1882.

The original owner of the suit premises created a tenancy iii favour of
M, a private limited Co. Appellant-pl1intitr, was inducted into the suit premises
as monthly tenant under M. Appellant was maintaining and running a petrol
service station for sale of motor spares and components at .the tenanted H
541
-542 SUPREME COURT REPORTS (1999] 2 S.C.R.

·A premises and had erected. certain structures on the said premises. Appellant
was subsequently amalgamated. By an agreement, appellant executed a leave
--
and licence agreement in favour of ESSO, which -in turn permitted the
respondent to run the petrol service station. In clause 12 of the agreement
it ~as mentioned that it was only a licence and that the agreement should
not be tr.eated or used or dealt with or construed by the parties in any way
B as lease or to confer any relationship as landlord and tenants between the
parties. Clause 18 of the agreement provided for the "licence fee" for the
demised premises and the same was payable for the said demised premises
.as provided therein, i.e. a sum totalling to six months' fee for this premises
to be paid in advance and to be adjusted per month. Specific provision was
C made in the deed that after obtaining the consent of the landlord, the licensor
would grant a sub-lease in respect of the said premises for a perio~ of at least
. ten years and the licem1or would. . endeavour. .
to obtain
'
a lease on the terms
which would not be inconsistent with . the standard
. terms on which a. sub-
lease was obtained by the licensee and the standard form of the ·lease was
also attached with the deed; Jn the agreement it was provided that the licensee
D was not obliged to pay any part of the outgoings in respect C)f the premises
which indicates that the charges attendant upon occupation of the plant and
machinery at the said premises in good repair and was required to obtain
necessary insurance policies for the business. The licensee was permitted
to carry on the business in the name of the licensor. It was also specifically
E provided in Clause 9 of the agreement that the licensor should be at liberty
to withdraw and/or revoke the leave and licence in ~ase there was any default
of the terms mentioned in the document. Clause 16 of the deed further
provided that.if the sub-lease was to be granted, then the license~ would be
required to purchase the equipment, fittings and fixtures as mentiOned in the
Second Schedule a(a price menti6ned therein Within a period of one year
F from the date thereof. Admittedly, the sub-lease was not granted and the
amount as agreed was also not paid by anyone. .

The appellant filed a suit in the High Court for a perpetual injunction
restraining the respondent-defendants from using any of the fixtures, fittings
G and accessories lying at the suit premises; for damages and for wrongful use
and occupation of the premises from the date of determination of leave and .
· licence as claimed in the plaint and for a decree of possession of the suit
premises. Single Judge passed a decree in favour of the appellant by holding
that the agreement in question was only a licence and was not a sub-lease.
.In appeal, the decree was reversed by a Division Bench of the High Court
H holding that the agreement in question constituted lease on the basis of
DELTA INTERNATIONAL LTD. v. S.S. GANERIWALLA 543
exclusive possession. Hence this appeal by the appellant-plaintiff. A
Allowing the appeal, this Court

HELD : 1.1. To find out whether the document creates a lease or a

--
licence the real test is to find out "the intention of the parties", keeping in
mind that in cases where a contract for licence is executed by handing over B
exclusive possession of the premises, the distinguishing line between the
lease and the licence is absolutely thin. In such cases, the terms of the
documents are to be read as they are and it would be unreasonable to draw
an inference that the parties intended to create a relationship of landlord and
tenant despite express contrary terms in the deeds which are binding between C
the parties. Though exclusive possession is one of the most relevant factors
for deciding whether it is a lease or a licence, but at the same time, when
the terms of the document are clear leaving no doubt that the parties never
intended to execute a lease deed, in that set .of circumstances, exclusive
. possession would lose its importance. [557..,H; 566-B)
D
Associated Hotels of India Ltd. v. R.N. Kapoor, [1960) 1 SCR 368 and
Rajbir Kaur v. S. Chokesiri, [1989) 1 SCC 19, relied on.

1.2. The intention of the parties is to be gathered from the documen~s
itself. Mainly, the intension is to be gathered from the meaning and the
words used in the documents except where it is alleged that the document E
is a camouflage. If the terms of the documents evidencing the agreement
between the parties are not clear, the surrounding circumstances and the
conduct of the parties have also to be borne in mind for ascertaining the real
relationship between the parties. Thus ifthe document is .a camouflage, the
mask or veil is required to be removed for determining the true intent and p
purpose of the document. [S.58-B)
..
MN. Clubwala v. Fida Hussain Saheb, (19641 6 SCR 642, referred to.

Errington v. Errington, (1952) 1 All ER 149 and Cobb and Anr v. lane,
(1952) 1 All ER 1199, referred to. .G

--- 2.1. Jn the absence of a written document and when somebody is in
exclusive possession with no special evidence how he got it, the intention is
to be gathered from the other evidence which may be available. on record, and
in such cases exclusive possession of the property would be the most relevant
circumstance to arrive at the conclusion that the intention of the parties was H
544 SUPREME COURT REPORTS [1999) 2 S.C.R.

A to create a lease. [558-C)

2.2. If the dispute arises between the very parties to the written
instrument, the intention is to be gathered from the document read as a
whole. But in cases where the landlord alleges that the tenant has sub-let
the premises and relies upon a deed entered into, inter se, between himself
B and the alleged licensee, the landlord who is not a party to the deed is not
bound by what emanates from the construction of the deed, the tenant and
the sub-tenant may jointly set-up the plea of a licence against the landlord
which is camouflage ; in such cases, the mask is to be removed or the veil
is to be lifted and a true intention behind a facade of a self-serving conveniently
C drafted instrument is to be gathered from all the relevant circumstances.
Same would be the position where the owner of the premises and the person
in need of the premises execute a deed labelling it as ~ licence deed to avoid
the operation of rent legislation. [558-D-F)

2.3. Primafacie, in the absence of a sufficient title or interest to carve
D out or to create a similar tenancy by the sitting tenant in favour of a third
person, the person in possession to whom the possession is handed over
cannot claim that the sub-tenancy was created in his favour; because a
person having no right cannot confer any title to tenancy or subtenancy. A
tenant protected under statutory provisions with regard to occupation of the
premises having no right to sub-le~ or transfer the premises, cannot confer
E any better title. But, this question is not required to be finally determined
in this matter. (558-G-H)

2.4. Further, lease or licence is a matter of contract between the
parties. Section 107 of the Transfer of Property Act, 1882 inter alia provides
that leases of immovable property may be ma'de either by a registered
F instrument or by an oral agreement accompanied by delivery of possession;
if it is a registered instrument; it shall be executed by both the lessee and
the lessor. This contract between the parties is to be interpreted or construed
on a well-laid principle for construction of contractual terms, viz., for the
purpose of construction of contracts, the intention of the parties is the
G meaning of the words they have used and there can be no intention independent
of that meaning; when the terms of the contract are vague or having double
intendment, one which is lawful should be preferred; and the construction
may be put on the instrument perfectly consistent with his doing what he has
a right to do. (559-A-C)

H Rodger v. Comptoir D' Escomple de Paris, (1869) LR 2 PC 393;
DELTA INTERNATIONAL LTD. v. S.S. GANERIWALLA 545
Fausset v. Carpenter, [183112 Dow & Cl.; Harrington v. Kloprogge, [1785) A
2 B&B 678 n.(a) and Cantor Art Services Ltd. v. Kenneth Bieber Photography
Ltd., [196911 WLR 1226, C.A., referred to.

Kim Lewison, Q. C. : The Inerpretation of Contracts, referred to.

3.1. In the present case it is nowhere pleaded that the deed executed B
between the parties is a camouflage to evade the rigours of provisions of the
Rent Act nor is it stated that a sham document is executed for achieving
some other purpose. In these set of circumstances, the intention of parties
is required to be gathered from the express words of various terms provided
by them in the deed. i560-G)
c
3.2. The document contemplates three types of agreements, the first of
which is leave and licence. Clause 12 of the agreement was not provided by
a illiterate layman or poor person in need of some premises for his residence
or business, but was executed by two companies where it can be presumed
that it was mentioned after full understanding and to avoid any wrong inference D
of intention. When the parties which are capable of understanding their
rights fully, expressly agreed and declared that the documents should not be
construed in any manner as creating any relationship as landlord and tenant
between them, it would be impermissible to conjecture or infer that their
relationship should be construed as that of landlord and tenant because
certain terms mentioned in the deed can have a double intendment. This E
clause stares in his face is construing it as a lease deed. [561-B-D)

3.3. Secondly, the parties to the document were fully aware that lease
or sub-lease could not be granted and a lawful lease deed could be executed
only after obtaining the consent of the landlord and the document if treated
as a sub-lease, would be illegal. [561-E-F) F.

- 3.4. In the present case, exclusive possession of the property was
handed over to the defendant coupled with the fact that in clause 18, the
parties have used the phrase "demised premises" which means, that the
intention of the parties was to create relationship of landlord and tenant G
between the parties. It is true that the word 'demise' indicates either lease
I·
or conveyance depending upon the terms of the documents. But, at the same
time the said word is to be construed by finding out what is sought to be
conveyed or transferred in the context of all the terms of the documents. If
the privilege of occupying the premises exclusively is granted on certain
terms and conditions specifically as a licensee or what is agreed to be H
546 SUPREME .COURT REPORTS [1999] 2 S.C.R.

,,/' A granted, is exclusive possession of the premises on certain terms and· ·
. /.
conditions as a licensee, then there is no question of h.oldi!lg to the contrary•
:rhis would be clear from various meanings, which could be assigned to the
word "demis~~'.. Hence for determining whether th~ phrase "demised
premises" should be construed llS a lease or a licence as expressly stated
in the agreement, the phrase or word is to be construed in the context in
B which it is used. In the present case, the phrase "demised premises" was
used for recovering the licence fee. If the intention of the parties was to
create a lease, then the word "rent" would have been easily used at all the
places. "Demised premises", in the present case, included not only the
· premises but fittings, fixtures and the petrol service station also. Licence
C was granted .specifically to run the petrol service station on the terms and
conditions specified therein. There are a number of other terms and conditions
in the document which indicate.that it was a licenc~ deed. It is true that there
are c.er.tain other clauses which may indicate. the different intentfon if they
are construed in isolation such as a term to the effect that the licensee was
entitled to grant a sub-licence to operate the petrol station or that they were ·
D entiOed to instal other machinery. But, at the same time, these clauses are
to .be read in the context of the fact that the ticensor had decided not to run
the business of petrol service station and that by the impugned deed, right
to run the said business along with .th~ pre~ises was given to the licensee.
. [562-H; 563-A-C; 564.::D-F; 565~A-B]
... '· .

E Hind v. Gray, 9 LJCP 253; Taylor v. Caldwell, 32 L.J.Q.B 164; Line
v. Stephenson, [1~38] 5 Bing NC 186 and Young& Co. v. Liverpool Assessment
Committee, (1911) 2 KB 195 DC, referred to.·

Stroud's Judicial Dictionary of Works and Phrases; Butterworths'
Works and Phrases; Halsbury's Laws (4th Edn), referred to.
p.
. 3.4.On facts, the disputed document contemplates thr~e types of
agreements, one, that of a leave and licence; secondly, in case a consent is
obtaiped from the landlord, for· execution of sub-lease which would create an
interest in the property as a sub-tenant and thirdly, for purchase of equipment,
G fitti~g a~d. fixtures. The sec;ond and third parts of the agreement never came
into operation. Hence in the circumstances of the case it must be held that
the agreement is a deed of "leave and licence" and not a "lease". [567-C]
MN. C/ubwala v. Fida Hussain Saheb, (1964) 6 SCR 642, relied on.

Capt. B.V.D. Souza v. Antonio Fausto Fernandes, (1989) 3 SCC 574,
H distinguished.
1 ; DELTA INTERNATIONAL LTU. v. S.S. GANERIWALLA [SHAH, J.) 547

Inderjeet Singh Sia/ v. Karam Chand Thapar, [1995) 6 SCC 166; A
Vayallakath Mahameddkutty v. lllikkal Mossakutty, [1996) 9 SCC 382;
Sohan Lal Naraindas v. Laxmidas Raghunath Gadit, [1971 I 1 SCC 276;
Waman Srinivas Kini v; Ratilal Bhagwandas & Co., [1959) Supp. 2 SCR
217; Uttamchand v. S.M Lalwani, AIR (1965) SC 716; Tutsi v. Paro, [1997)
·2 SCC 706 and K. Achyuta Bhat v. Veeramaneni Manga Devi, [1989) l SCC B
9, referred to.

CIVIL APPELLATE JURISDICTION : :Civil Appeal Nos. 2198-99 of
1999.

From the Judgment and Order dated 2.12.97 of the Calcutta High Court C
in A.F.O.D. No. 148 and 165of1992.

Gopal Subramanium, D.P. Gupta, Baskar P. Gupta, Ranjan Dev, U. Banerjee,
Surendra Dube, Sanjay Sen, Pratik Jalay~n, Suehit Mohanty, Mrs. Indra
Sawhney, K.V. Vishwanathan, Anil Aggarwala, K.V. Vijaya Kumar, A.K. Raina,
R.D. Upadhyay, Ajit M. Singh and Girdhar G. Upadhyay for the appearing D
parties.

The Judgment of the Court was delivered by

SHAH, J. Leave granted.
E
These appeals are filed against the Judgment and Decree dated 2nd
December, 1997 passed by the Division Bench of the High Court of Calcutta
in Appeal from Original Decree Nos. 148 of 1992 and 165 of 1992. Undisputed
facts of the matter are· that original owner of the premises was Abhiram
Mullick (Since deceased) who created tenancy of the premises; namely, No.
4D, Council House Street, Calcutta in favour of Mallika Investment Company F
Privated Limited. Dewars'Garage India Private Limited was inducted into the
' . premises· as the monthly tenant under Mallika Investment Company Private
Limited. Dewar's Garage (India) Private Ltd. (in short 'Dewar') was maintaining
and running a petrol service station for sale of motor spares and components
at the tenanted premises. Dewar had erected and built certain structures on G
the said premises. Dewar was subsequently amalgamated into Delta
International Limited (appellant-plaintiff)., By an agreement dated 18th July,
1970, they were executed leave and license agreement in favour of ESSO
Standard Eastern fnc. (in short ESSO). The ESSO in turn permitted Shyam
Sunder Ganeriwalla, respondent no. I, to run a petrol-service station. By an
Order passed in Company Petition No. 331 /91, Dewar was amalgamated with H
548 SUPREME COURT REPORTS [1999] 2 S.C.R.

A plaintiff (Delta International Limited). Further, the business undertakings and
the estates of ESSO also had been taken over by the Act of Parliament and
has been transferred and assigned by the Central Government in favour of
Mis. Hindustan Petroleum Corporation Limited. In 1985, Delta International
Limited filed Civil Suit No. 491/85 in the High Court of Calcutta for a perpetual·
injunction restraining the Defendants and/or their servants, agents and assigns
B · from using any of the fixtures, fittings and assessories lyfr1g at suit premises;
for damages, for wrongful use and occupation of the premis.es at the rate of
Rs. 20,000 p.m. from lst May, 1985, that is, the date of termination of leave
and license as claimed in the plaint and for decree for possession of the said
premises and other reliefs. The learned Single Judge passed the decree in
C favour of the plaintiff by holding that the agreement .in question was only a
license agreement and it was not a sub-lease. In appeal, the said Judgment
was reversed by holding that the agreement in question constitutes a lease
mainly on the basis of exclusive possession and the Division Bench observed
that "to put is pithily, if an interest in immovable property entitling the
transferees to enjoyment is created, it is a lease, if permission to use land
D without right to exclusive possession is alone granted, a licence is the legal
result."

At the time of hearing of this appeal, learned Counsel for the parties
exhaustively referred to the material terms and conditions of the agreement
E in which the term 'leave and license' is used. In support of their contentions,
they also referred to various decisions which have laid down tests to find out
in which set of circumstances even though the document is termed as a leave
and license could be construed as a lease.

Learned counsel for the appellant submitted that : -
F I. Learned Single Judge of the High Court was right in holding that
the document does not create any lease because intention of the
parties was quite manifest from the document as well as clause
12 which stared in the face.

2. Appellant its~lf was a monthly tenant of the premises and could
G not create a sub-tenancy without the prior written consent of the ·
landlord in view of the provisions of Section 14(1) of the West
Bengal Premises Tenancy Act, 1956. It is nobody's case that
such consent was obtained. [para I of the deed]
/

3. The !icerise was for the purpose of running the petrol station
H which had been set up by the appellant and which the appellant
DELTA INTERNATIONAL LTD. v. S.S. GANERIWALLA [SHAH, J,] 549

no longer wished to operate. [paras 2 and 3 of the .deed] A
4. The possible grant of sub-lease was specifically reserved for
future in the event that the appellant was able to obtain a
consent from its landlord Mallika Investment Company Private
Limited. [paras 4, 5 and 6 of the Deed]

5. The license is stated to be for the benefit of the respondent to B
"use, occupy, enjoy, run and work" the petrol station. [clause I]

6. The respondent was not obliged to pay any portion of the
outgoings in respect of the premises despite the fact that fifty
per cent of municipal rates, taxes etc. were normally payable by
the occupier of the premise; thus even the charges attendant c
upon occupation of the premises were to be paid by the appellant.
(clauses 3 and 4]
7. The respondent was obliged to keep the plant and machinery at
the said premises in good repair. [clause 5]
D
8. The respondent was obliged to take out necessary insurance
policies for the business. [clause 8]
9. The appellant was entitled to revoke the license in the event of
any breach or default on the part of the respondent. [clause 9]
IO. Clause I I specifically permits the respondent to carry out E
business in the name of the appellant which normally would not
be permitted if it is not a license to run the business.
11. Clause 12 manifests the intention of the parties that the document
was executed only for the purpose of creating license and not
lease. F
12. Clauses 13 to 17 specifically make provision for the possible
future grant of sub-lease by the appellant to the respondent in
the event that the appellant obtains a consent from the tenant.
These clauses also contemplate various terms which would be
provided in the prospective sub-lease. G
13. Clause 18 provides for the payment of advance license fees by
the respondent and the term ~demised premises' used thrice in
the clause must be read in conformity with other clauses of the
document and the intention of the parties.

14. The right given to the respondent to give it on sub-license was H
550 SUPREME COURT REPORTS [1999] 2 S.C.R.

.A given, as respondent .was only to operate. petrol station.·.
[clause 19] .... · ..
On the basis of the aforesaid terms of the document, Mr. Ashok D~;~i,
learned Senior counsel for the appellant submitted that the construction of
the document would depend upon its pith and substance and not upon the
B labels that the parties may put upon it. Paramount test for determining whether
it is lease or license is 'the intention of the parties'. He'submitted that
exclusive possession of the premises being granted, although an important
factor, does not preclude the court from holding that the document is in fact ·
a license, particularly in cases where if the granter did not have the power
C to grant a lease or is forbidden by the provisions of the Rent Control legislations.
He emphasised that dominant intention is to be found out in such cases from
the document itself. He referred to the following principles stated in· the ·-'
decisions of this Court to advance his contention : ·, '·' ·

(a) The construction of a document would depend upon .its pith and
D substance and not upon the labels that the parties may put upon it.
This principal was laid down b{this Court in the decisions of Inderjeet
Singh Sia/ & Anr. v. Karam Chand Thapar and Ors., [1995] 6 SCC
166 at p. 173 and Vayallakath Muhammedkuty v. lllikkal Moosakutty,
[1996] 9 sec 382 at p. 387.

E (b) The paramount test is 'the intention of the parties' as stated in the
case of Capt. B. V. D 'Souza v. Antonio Fansto Fernandes, [1989] 3
stc 574 at p. 577 and [1996! 9_SCC 382 at p. ,387(sup.;,). ·
--·
(c) Exclusive possession of the premises being granted, although an ... .
.-..• .- important factor, does not preclude the Court from holding -that the ... .
F· document is in fact a license as d~cided in the case or Saha~· {af/·.'·
Naraindas v. Laxmidas Raghunath Gadit, [1971] I SCC 276 at P• 279
and Rajbir Kaur and Anr. v. Mis S. Chokesiri & Co:: [1989] I SCC'.
19atp.31-33. .-. ,.• . •

a
(d) Even where exclusive possession is granted, only license will be
G created if the granter did not have the power to grant a lease. This
. principal was laid down in the case of[l989] I sec 19(supra).

(e) The appellant, as a monthly tenant, was forbidden by Section 14(1)
of the Act to sublet the premises without the prior written consent of
the landlord. It is nobody's case that the prior written consent of the
H landlord was in fact obtained in the present case. It is, therefore, not
. DELTA INTERNATIONAL LTD. v. S.S. GANERIWALLA [SHAH, J.) 5Sl

possible to contend that any sub-lease was granted and any such A
· purported disposition would be unenforceable and void. (Decided in
the case of Waman Shriniwas Kini v. Ratilal Bhagwandas & po.
(1959) Suppl. 2 SCR 217 at 221.
(f) Where the dominant intention is to use the premises with fittings
and fixtures for the purpose of running a business, the same does not B
tantamount to a lease of immoveable property as decided in the case
of Uttam Chandv. S.N La/wani, AIR (1965) SC 716, paras 11 and 12.

As against this, Mr. D.P. Gupta, learned senipr counsel for the respondent
no. 1 submitted that for resolving the dispute that the document is a lease
or a license, the legal principles have been laid down in a Jong line of C
decisions which inter alia are as under : -

(a) The Court looks at the substance of the· transaction and not the
label which the parties may have agreed to put on the transaction. The
Court is entitled to decide whether or not the agreement between the D
parties is a mere camouflage to get round the rigours of rent control
legislations.
(b) Irrespective of the label that may have been put upon the
transaction by the parties, the Court would gather the true intention
of the parties as to whether an interest in land or premises was sought E
to be created or not.
(c) Exclusive possession is a most significant indicator to hold that
the document creates lease.

In support of his contentions, learned counsel for the respondent referred
to the decisions of this Court in the cases of As~ociated. Hotels (P) Ltd v. F
R.N. Kapoor, (1960) 1 SCR 368, Sohonlal Naranidas v·.. Laxmidas Raghunath
Oadit, [1971] 1SCC276, Capt. B. V. De'Souza v. Antonio Fansto Fernandes,
[·1989] 3 sec 574, Tulsiv~ Paro (dead), [1997] 2.See 706 and K Achuta Bhat
v. Veeramaneni Man~a Devi & Anr.. [1989] 1 sec 9.
G
Further, the learned counsel for the respondent referred to various
.clauses of the Deed for finding out the intention of the parties and referred
to certain terms such as :-

(a) The licensee is described iri the agreement so as to include its
successors and assigns as per the Memorandum of Agreement. H
552 SUPREME COURT REPORTS . [1999) 2 S.C.R.

A (b) The expression "demised premises" has been used three times in.
clause 18 which leaves no doubt that interest in the property is
created.

(c) The operative clause is in the language of a formal lease. What is
granted and given to use, occupy, enjoy, run and work is the premises
B described in the First Schedule together with the plant and machinery,
fixtures and fittings set out in the Second Schedule.

(d) ESSO was to pay for electricity, was liable to repair the fittings and
fixtures and to keep them in proper running and usable condition, was
entitled to bring in and instal other machinery, was to take out necessary
C licenses and insurance policies, could continue the business either in
its own name or in the name of Dewar (subject to indemnity) and
would not assume any liability or responsibility for taking over the
existing employees. [clauses 5,6, 7, 8 and I I]

(e) ESSO would have the right to grant leave and license to a third
D party during the continuance of the agreement. [clause I3]

(f) It was contemplated that if the Dewar is able to obtain a lease of
the said premises on terms which would not be inconsistent with
ESSO's standard form, then Dewar will grant a sub-lease to ESSO for
at least a period of IO years with three renewal options. [clause I5 (a)]
E From the aforesaid submissions it is apparent that the common contention
of the learned counsel for both the parties is that the Court has to gather and
find out the true 'intention of the parties' as to whether the document creates
a lease or license; the dominant intention of the parties is to be gathered from
the terms of the document irrespective of the labels that the parties may put
F upon it. It is to be stated that even though it is the common contention of
the learned counsel for the parties that dominant intention of the parties is
to be gathered from the document, yet all throughout the question had
remained a vexed one, having no easy solution and precise mathematical
tests. Because ultimately 'intention of the parties' is to be inferred. For this
G purpose, we would first refer to the tests laid down by this Cl'>Urt in the case
of Associated Hotels of India Ltd v. R.N. Kapoor, [I 960] I SCR 368 which
are relied upon in subsequent decisions. In minority judgment rendered by
Subba Rao, J. the Court held that there is a clear distinction between lease
and license: the dividing line is clear, though sometimes it becomes very thin·
or even blurred and observed that for such determination following
H propositions may be taken as well established :
,!>-..

D.ELTA INTERNATIONAL LID. v. S.S. GANERIWALLA [SHAH, J.} 553
(1) To ascertain whether a document creates a licence or lease, the A
substance of the document must be preferred to the form;

(2) The real test is the intention of the parties-Whether they intended
to create a Ie~se or a licence;

(3} HJ6e document creates an interest in the property, it is a lease; but B
if it only permits another to make use of the property, of which the legal
possession continues with ~he owner, it is a licence; and

(4) If under the document a party gets exclusive possession of the
property, prima facie, he is considered to be a tenant; but circumstances may C
be established which negatived the intention to create a lease."

Before laying down the aforesaid proposition, the Court held as under:-

"At one time it was thought that the test of exclusive possession was
infallible and if a person was given exclusive possession of a premises, D
it would conclusively establish that he was a lessee. But there was
a change and recent trend of judicial opinion is reflected in Errington
v. Errington, wherein Lord Denying reviewing the case law on the
subject summarizes the result of his discussion thus at p. 155;

"The result of all these cases is that, although a person who is E
let into exclusive possession is, prima facie, to be considered to be
tenant, nevertheless he will not be held to be so if the circumstances
negative any intention to create a tenancy."

The Court of Appeal again in Cobb v. Lane considered the legal
position and laid down that the intention of the parties was the real F
test for ascertaining the character of a document. At p. 1201, Somervell,
L. J., stated :

" ... the solution that would seem to have been found is, as one
would expect, that it must depend on the intention of the parties."
G
Denning, L.J., said much to the same effect at p. 1202.

"The question in all these cases is one of intention : Did the
circumstances and the conduct of the parties show that all that was
intended was that the occupier should have a personal privilege with
no interest in the land?" H
554 SUPREME COURT REPORTS .[1999] 2 S.C.R,

A At this stage, it would be worthwhile to quote some more instructive
discussion from the case of Cobb and Another V. Lane; (1952) I All. E.R. I 199
rendered by three learned Judges in theirjudgments given separatf'ly :-

. Somervell, L.J: observed :

B "Certainly under the old cases (and I doubt if this has been· affected
by the modern authorities),, if all one finds is that somebody has been
in occupation for an indefinite period with no special evidence of how
he got there or of any arrangement being made when he went into
occupation, it may be that .the court will find a tenancy at will. I am
assuming that there is no document, or clear evidence as to terms. The
c modern cases establish that, it there is evidence of the circumstances
in which the person claiming to be. a tenant at will went into
occupation those circumstances ·must be considered in deciding what
the intention of the parties was. "
The learned judge further obsel"Ved :
D
"No doubt, in former days, except for the question of the statute, the
distinction between a tenancy, whether at will or for a per,iod, ·and a
licence was not so important as it has become since the Rent
Restrictions Acts came into operation. In many cases under· those
Acts it has a special importance. That fact has led to an examination
E of the distinction, and the solution that would seem to have been
found is, as one would expect, that it must depend on the intention
of the parties. "
Denning, L.J. further observed to the same effect as under :

F "Under the old cases there would have been some colour for
saying that the brother was a tenant at will, but the old cases can no
longer be relied on. Owing to the impact of the Rent Acts, the courts
have had to define more precisely the difference between a tenant and
a licensee." .... The question in all these cases is one of intention : Did
the circumstances .and the conduct of the parties show that all that
G was intended was that the occupier should have a personal privilege
with no interest in the land?"

Delivering concurring judgment, Romer. L.J, further considered the facts
and observed :

H "She was not a tenant at will, and unless she was, she could not
DELTA INTERNATIONAL LTD. v. S.S. GANERIWALLA [SHAH, J.] 555
create the tenancy on which the defendant relies. In the absence of A
. a sufficient title or interest in her to carve out or to create a similar
tenancy in the defendant, his claim. I say, fails in limine. "

Further, in his judgment, Lord Denning, J. referred to an earlier decision
in the case of Errington V. Errington, (1952)'1 Ail.E.R. 149 wherein the Court
held that the test of exclusive possession is by no means decisive. For B
detennining what was the intention of the parties the Court relied upon
following observations from the decision in the case of Booker v. Palmer,
(1942) All England Law reporter 677 wherein Lord Greene, M.R. held :

"To suggest there is an intention there to create a relationship of
landlord and tenant appears to me to be quite impossible. There is one C
golden rule which is of very general application, namely, that the
law does not impute intention to enter into legal relationship where
the circumstances and the conduct of the parties negative any
intention of the kind. "

Alongwith other cases, the aforesaid case was referred to and relied D
upon in the case of Rajbir Kaur and Another v. Mis. S. Chokesiri and Co.,
[1989] 1SCC19, this Court considered and held that ultimately the question
whether a transaction is a lease or licence "turns on the operative intention
of the parties and there is no single, simple litmus test to distinguish one from
the other." E
The relevant discussion in paragraph 22 is as under : -

"22. It is essential to the creation of a tenancy that the tenant be
granted the right to the enjoyment of the property and that, fmther,
the grant be for consideration. While the definition of 'lease' in F
Section 105 of the Transfer of Property Act, 1882, envisages the
transfer of a right to enjoy the property, on the other hand the
definition of a 'licence' under section 52 of the Indian Easements Act,
1882, consistently with the above, excludes from its pale any
transaction which otherwise, amounts of an "easement" or involves G
a transfer of an interest in the property, which is usually involved in
the case of a transfer of right to enjoy it. These two rights viz.
Easements and lease in their very nature, are appurtenant to the
property. On the other hand, the grant only for the right to use the
premises without being entitled to the exclusive possession thereof
operates merely as a licence. But the converse implications of this H
556 SUPREME COURT REPORTS [1999) 2 S.CR.
. .
' • ' ' ' I • •

A proposition need not necessarily and always be true, Wherever there
is exclusive possession, the idea of a licence is not necessarily ruled
out. English law contemplates what are called 'Possessory Licences'
which confer a right of exclusive possession, marking them off from .
the more usual type of licences which serv~ tq a~thorise acts w(lich .
would otherwise be trespassess. Thus eXclusive possession itself is
B not decisive in favour of a lease and against a mere licence, for, even
the grant of exclusive possession might tum out to be only a licence
and not a lease where the grantor himself has no power to grant the
lease. In the last analysis the question whether a transaction is a
lease or a licence "turns on the operative intention of the parties"
c and that there is no single, simple litmus test to distinguish 'one from
the other. The "solution that would seem to have been found is as
one would expect, that it must depend on the intention of the parties. "
(Emphasis added)

Dealing with the contention that intention of the parties is to be
D determined upon a proper construction of the deed entered into between
the parties, and that alone is a decisive matter, the Court dealt with
the said contention in paragraph 32 and observed as under : -

"Indeed learned counsel placed strong reliance on the following
observations by this Court in Mrs. MN Clubwala v. Fida Hussain
E Saheb, [1964] 6 SCR 642: -

"Whether an agreement creates between the parties the relationship -·
of landlord and tenant or merely that of licensor and licensee the
decisive consideration is the intention of the parties. This intention
has to be ascertained on a consideration of all the relevant provisions
F in the agreement. " (Emphasis supplied)

The proposition of Dr. Chitale as to the conclusiveness of what
emanates from the construction of the documents has, in this case,
its own limitations. The import, significance and conclusiveness,.,.. of
such documents making, or evidencing, the grants fall to be examfried
G
in two distinct contexts. The dispute may arise between the very
parties to the· written instrument, where on the construction of the
deed one party contends that the transaction is a 'licence' and the
other that it is a 'lease'. The intention to be gathered from the )
)
document read as a whole has, quite obviously, a direct bearing.
H But in cases where, as here, the landlord alleges that the tenant has
DELTA INTERNATIONAL LTD. v. S.S. GANERIWALLA [SHAH, J.] 557
sublet the premises and where the tenant, in support of his own A
defence sets up the plea of a mere licensee and relies upon a deed
. entered into, inter se, between himself and the alleged licensee, the
landlord who is not a party to the deed is not bount by emanates
from the construction of the deed At best, it is a piece of evidence,
the weight to be accorded to which will necessarily depend upon all B
the other circumstances of the case. The tenant and the subtenant,
who jointly set up a plea of licence against the landlord may choose
to camouflage the truth and substance of the transaction behind a
facade of a self-serving and conveniently drafted instrument."

Learned Counsel for the respondent had also relied upon the decision C
of this Court in the case of Sohan Lal Naraindas v. Laxmidas Raghunath
Gadit, [197 I] 1 SCC 276, (paras 6 & 9) wherein the Court has observed as
under : -

"6. An attempt was deliberately made to camouflage the true nature
of the agreement, by reciting in several clauses that the agreement D
was for lease and licence and it emphasise the pretence, it was also
recited that the defendant was not to have any right as tenant or sub-
tenant in respect of the loft.

9. Intention of the parties to an instrument must be gathered from the
terms of the agreement examined in the light of the surrounding E
circumstances. The description given by the parties may be evidence
of the intention but is not decisive. Mere use of the words appropriate
to the creation of a lease will not preclude the agreement operates
as a licence. A recital that the agreement does not create a tenancy
is also not decisive. The crucial test in each case is whether the F
instrument is intended to create or not to create an interest in the
property the subject-matter of the agreement. If it is in fact intended
to create an interest in the property it is a lease, if it does not, it is
a licence. In detennining whether the agreement creates a lease or a
licence the test of exclusive possession, though not decisive, is of
significance." (Emphasis added) G

- From the aforesaid discussion what emerges is :-

(\)To find out whether the document creates lease or license real test
is to find out 'the intention of the parties'; keeping in mind that in cases
where exclusive possession is given, the line between lease and licence is H
558 SUPREME COURT REPORTS [1999] 2 S.C:.R.

A very thin.
(2) The intention of the parties is to be gathered from the document
itself. Mainly, intention is to be gathered from the meaning and the words
used in tpe document except where it is alleged and proved that document
is a cam~uflage. If the terms of the document evidencing the agreement
B between the parties are not clear, the surrounding circumstances and the
conduct of the parties have also to be borne in mind for ascertaining the real
relationship between the parties.

(3) In the absence of a written document and when somebody is in
C exclusive possession with no special evidence how he got in, the intention
is to be gathered from the other evidence which may be available on record,
and in such cases exclusive possession of the property would be most
relevant circumstance to arrive at the conclusion that the intention of the
parties was to create a lease.

D (4) If the dispute arises between the very parties to the written instrument,
the intention is to be gathered from the document read as a whole. But in
cases where the landlord alleges that the tenant has sublet the premises and
where the tenant in support of his own defence sets up the plea of a mere
licensee and relies upon a deed enter into inter se, between himself and the
E alleged licensee, the landlord who is not a party to the deed is not bound by
what emanates from the construction of the deed; the tenant and the sub-
tenant may jointly set up the plea of a license against the landlord which is
a camouflage. In such cases, the mask is to be removed or veil is to be lifted
and the true intention behind a facade of a self-serving conveniently drafted
instrument is to be gathered from all the relevant circumstances. Same would
F be the position where the owner of the premises and the person in need of
the premises executes a deed labelling it as a licence deed to avoid the
operation of rent legislation.

(5) Prima facie, in ~bsence of a sufficient title or interest to carve out
G or to create a similar tenancy by the sitting tenant, in favo1.w of a third person,
the person in possession to whom the possession is handed over cannot
claim that the sub-tenancy was created in his favour; bec.ause a person
having no right cannot confer any title of tenancy or sub-ten~ncy. A tenant
protected under statutory provisions with regard to occupation of the premises
-
having no right to sublet or transfer the premises, cannot confer any better
H title. But, this question is not required to be finally determined in this matter.
,,;-..,

DELTA INTERNATIONAL LTD. v. S.S. GANERIWALLA [,SHAH, J.] 559
(6) Further lease or licence is a matter of contract between the parties. A
. Sedion ·107 of the Transfer of Property Act inter alia provides that leases
of immoveable property may be made either by registered instrument or by
oral agreement accompanied by delivery of possession; if it is a registered.
instrument, it shall be executed by both the lessee and the lessor. This
contract between the parties is to be interpreted or construed on the well laid B
prinCiples for construction of contractual terms, viz. for the purpose of
construction of contracts, the intention of the parties is the meaning of the
words they have used and there can be no intention independent of that
meaning; when the tenns of the contract are vague or having double intendment
one which is lawful should be preferred; and the construction may be put on
the instrument perfectly consistent with his doing only what he had a right C
to do.

For construction of contracts between the parties and for the
interpretation of such document learned Senior Counsel, Mr. Desai, has rightly
relied upon some paragraphs from "The Interpretation of the Contracts" by
Kim Lewison, Q. C. as under : D
1.03 For the purpose of the construction of contracts; the intention''.
of the parties is the meaning of the words they have used There is
no intention independent of that meaning.
6.09 Where the words ofa contract are capable of two meanings, one E

.... of which is lawful and the other unlawful, the former construction
should be preferred .
Sir Edward Coke [Co. Litt 42a) expressed the proposition thus :
"It is a general rule, that whosoever the words of a deed, or of one
-- of the parties without deed, may have a double intendment and the
one standeth with law and right, and the other is wrongful and against
law the intendment that standeth with law shall be taken."
F

In more modem times that statement was approved by the Privy
Council in Rodger v. Comptoir D'Escomple de Paris, (1869) L.R. 2
P.C. 393, in which Sir Joseph Napier delivering the advice of the Board G
said :
"The rule that words shall be construed most strongly against him
how uses them gives place to a higher rule; higher because it has a
moral element, that the construction shall not be such as to work a
wrong." H
560 SUPREME COURT REPORTS [1999] 2 S.C.R.

A Similarly, in Faussetv. Carpenter. (1831) 2 Dow. & Cl. 232, the House
of -Lords accepted the submission of cou.nsel that the Court :

" ... in judging of the design and object of a deed, will not presume
that a party executing the deed, meant to do and did what he was
wrong in doing, when a construction may be put on the instrument
B perfectly consistent with his.doing only what he had a right to do."

However, the question of'construction should not be approached with
a leaning in one direction or another. Thus although the law frowns
upon covenants in restraint of trade, nevertheless such a covenant
should not be approached on the basis that it is prima facie illegal.
C "You are to construe the contract, and then see whether it is legal."

Illustrations

l. A bond was conditioned to assign all-offices. It was held that it
should be construed as limited to those offices which it was lawful
D to assign. Harrington v. Kloprogge, (1785) 28 & B 678 n.(a).

2. A contract for the assignment of a lease provided that if licence to
assign was delayed beyond a certain date, the purchaser would pay
the purchase price to the vendor and the ·vendor would "thereupon
allow the purchaser to enter into occupation pending completion"
E and the purchaser would pay the rent and other outgoings. It was
held that "allow," menat, "lawfully'', and consequently did not cover
entry into occupation in breach of covenant. Cantor Art Services ltd.
v. Kenneth Bieber Photography Ltd., (1969) 1 W.L.R. 1226, C.A."

F
In our view, the submission of the learned counsel for the appellant
requires to be accepted because as stated above, it is nowhere pleaded that
the deed executed between the parties is a camouflage to evade the rigours
of the provisions of the Rent Act nor is it stated that a sham document is
--
execute for achieving some other purpose. In these set of circumstances, the
intention of the parties is required to be gathered from the express words of
G various terms provided by them in the deed. For this purpose, clause 12 of
the document is to be taken into consideration and due weight is required to
be given to what parties have stated. It provides as under : -

"12. It is hereby expressly agreed upon and declared by and between
the parties that these presents shall not be treated or used or dealt
H with or construed by the parties in any way as a tenancy or lease or
DELTA INTERNATIONAL LTD. v. S.S. GANERIWALLA [SHAH, J.] 561
as a document within the preview of the West Bengal Premises Tenancy A
Act or any modification or amendment thereof or to confer any
relationship as landlord and tenant between the parties hereto."
The aforesaid term of the document is not provided by an illiterate
layman or poor person in need of some premises for his residence or business,
but is executed by two companies where it can be presumed that it is mentioned B
after full understanding and to avoid any wrong inference of intention. It
specifically mentions that only a license was created and not a lease. The said
clause is in positive as well as negative form providing that the agreement
was a licence and should not be treated or used or dealt with or construed
by the parties in any way as lease or to confer any relationship as landlord C
and tenants between the parties. When the parties which are capable of
understanding their rights fully, expressly agreed and declared that document
should not be construed in any manner as creating any relationship, as
landlord and tenant between them, it would be impermissible to conjecture or
infer that their relations should be construed as that of landlord and tenant
because of certain terms mentioned in the deed can have double intendment. D
As stated above, intention of the parties is the meaning of the words they
have used and there could be no intention independent of that meaning. The
learned Single Judge of the High Court rightly, therefore, held that this clause
stares in his face in construing it as a lease deed.
Secondly, parties to the document were fully aware that lease or sub- E
lease could not be granted and therefore, specific provision is made in the
deed that if the consent of the tenant is obtained for creation of sub-lease,
deed for the same would be executed on the terms and conditions which were
set out in the document; detailed provisions are made in various clauses of
the deed for obtaining permission and execution of leaso deed. Parties were F
conscious that a lawful lease deed could be executed only after obtaining
consent of the landlord and the document if treated as sub-lease, would be
illegal. Paragraphs 4, 5 and 6 of the deed specifically provide that after
obtaining the consent of the landlord, licensor would grant a sub-lease in
respect of the said premises for a period of atleast ten years and the licensor
would endeavour to obtain a lease on the terms which would not be G
inconsistent with the standard terms on which a sub-lease is obtained by the
licensee for the purpose of selling his products through the Petrol Service
Station and a copy of the standard form of the lease was also attached with
the deed.

Thirdly, no contention was raised by the defendants to the effect that H
562 SUPREME COURT REPORTS [1999] 2 S:C.R.

A license deed is a camouflage to circumvent the provisions of law or to defeat
the rights of owner or tenant who granted the licence and inducted the
--
licensee in possession. Further, In cases where contract for license is executed
by handing over exclusive possession of the premises, the distinguishing line
between the lease and license is absolutely thin. In such cases, their terms
of the document are to be read as they are and it would be unreasonable to
B draw inference that parties intended _to create relationship of landlord and
tenant despite express contrary terms in the deed which are binding between
the parties.

However, Mr. D.P. Gupta, learned Senior Counsel for the respondent
C vehemently relied upon various terms of the document in support of his
submission that the document should be construed as a lease deed. He
submitted that construe the document as it is and disregard what would be
the legal consequences of construing it one way or the other way. For that.
purpose, he referred to the following observations of Buckley J. from the
D paragraphs which are sought to be relied upon from the Interpretation of
Contn1cts by Kim Lewison, Q.C. :

"My first duty is to construe the contract, and for the purpose
of arriving at the true construction of the contract, I must disregard
what would be the legal consequences of construing it one way or

-
E the other way."

For this proposition there cannot be any dispute. The contract is to be
construed on the basis of the terms of the document disregarding the legal
consequences. However, when terms of the document are ambiguous and are
holding double intendment then the meaning which Is lawful is to be preferred.
F As stated above, in the license deed, the parties have specifically made it
clear that they were not executing lease deed, but only a license deed and
it should not be construed as a lease deed or a deed creating relationship of
landlord and tenant between them. It was known to them that without prior
consent, creation of sub-tenancy would be illegal. Hence, it would not be
G correct to arrive at a conclusion which is contrary to the law and the express
tenns of the agreements. Learned counsel for the respondents further submitted
that in the present case, exclusive possession of the property was handed
over to the defendant coupled with the fact that in clause 18, the parties have
used the phrase 'demised premises' which means that the intention of the
parties was to create relationship of landlord and tenant. In our view, this
H submission of the learned counsel cannot be accepted. Exclusive possession
DELTA INTERNATIONAL LTD. v. S.S. GANERIWALLA [SHAH, J.] 563

as discussed above is not the sole inditia to establish the relationship of A
landlord and tenant between parties. It is true that the word 'demise' Indicates
either lease or conveyance depending upon the terms of the document. But,
at the same time said word is to be construed by finding out what is sought
to be conveyed or transferred in the context of all the terms of the document.
If privilege of occupying the premises exclusively is granted on certain terms B
and conditions specifically as a licensee or what is agreed to be granted is
exclusive possession of the premises on certain terms and conditions as a
licencee, then there is no question of holding to the contrary. This would be
clear from various meanings which could be assigned to the word 'demise'.
In Stroud's Judicial Dictionary of Words and Phrase', the word 'demise' is
given different meaning and it is stated that it is to be interpreted in context C
of other terms. This would be clear from the meaning given to the said word:
''On the demise of a brewery, with the exclusive privilege of
supplying ale, it would seem that no covenant can be implied with
respect to such a privilege from the word 'demise' (Hind v. Gray 9
L.J.C.P. 2S3). D
An instrument is not a demise or lease, although it contain the usual
words of demise, if its contents show that such was not the intention
of the parties Taylor v. Caldwell, 32 L.J.Q.B. 164; and, on the other
hand, an agreement only may sometimes be a lease. "
E
In Butterworths 'Words and Phrases' the word 'demise' has been
explained as under : •

"The relationship of landlord and tenant is one of contract, but
...
a lease also operates as a conveyance. The usual word for this
purpose is 'demise', but neither this word nor any formal words of F
conveyance are necessary. Provided the Instrument shows the parties'
intent that the one is to divest himself of the possession and the other
is to come into the possession for a determinate time, either immediately
or in the future, it operates as a lease. This is so whether it is in the
ordinary form of a demise, or in the form of a covenant or agreement, G
or in the form of an offer to let or take on certain terms and an
acceptance appearing on correspondence. (27 Halsbury's Laws (4th
Edn) para 107)

'It is true that the word dem!se [in a lease] does imply a covenant
for title, but only when there is no express covenant inconsistent with H
564 SUPREME COURT REPORTS [1999] 2 S.C.R.

A such a construction'. Line.v. Stephenson, (1838) 5 Bing NC 183 at 186,
per Lord Denman CJ.

'The terms of the lease, in my opinion establish an exclusive
occupation. The word "demise" primafacie alone would be sufficient
to establish that. I do not go so far as to say that where the word
B "demise" is used in a lease or agreement no evidence would be
admissible to displace the presumption arising from its use, but the
word primafacie would establish an exclusive occupation." Young &
Co. v. Liverpool Assessment Committee, (1911) 2KB 195 at 215, DC,
per Avory J."
c Hence for determining whether the phrase 'demised premises' should be
construed as a lease or a license as expressly stated in the agreement, the
phrase or the word is to be construed in context in which it is used. In the
present case the said phrase is used in clause 18 three times along with the
tenn 'license fee' which was to be paid by the licensee and the manner of its
D payment. It provides that 'license fee' for the demised premises was Rs. 3950
per month and the license fee was payable for the said demised premises as
provided therein, that is to say Rs.23,700 for six months in advance and that
the said license fee is to be adjusted in respect of the demised premises per
month. The phrase 'demised premises' is used for recovering the license fee.
E If the intention of the parties was to create lease, then the word 'rent' would
have been easily used at all the places. 'Demised premises', in the present
case, includes not only the premises, but fittings, fixtures and the petrol
service station also. License was granted specifically to run the petrol service
-
station on the terms and conditions specified therein. There are number of
other terms and conditions in the document which indicate that it was a
F license deed. Firstly, the license was for the purpose of running the petrol
service station which was set up by the licensor. The possible grant of sub-
lease was reserved for the future in the event of Delta obtaining consent from
its landlord Mallika Investments Company. The licensee was not obliged to
pay any part of the outgoings in respect of the premises which indicate that
G the charges attendant upon occupation of the premises were to be paid and
borne by the licensor. He was also required to keep the plant and machinery
at the said premise in good repair and was required to obtain necessary
insurance policies for the business. A further clause to the effect that licensee
was permitted to carry on business in the name of the licensor indicates that
the premises were not let out othe~ise there was no question of permitting
H the use of the licensor's name. It is true that there are certain other clauses
DELTA INTERNATIONAL LTD. v. S.S. GANERIWALLA [SHAH, J.] 565
which may indicate a different intention if they are construed in isolation such A
as a term to the effect that licensee was entitled to grant sub-licence to
operate the petrol station or that they were entitled to instal other machinery.
But, at the same time, these clauses are to be read in the context of the fact
that the licensor had decided not to run the business of petrol service station
and that by the impugned deed, right to run the said business along with the
premises was given to the licensee. Further, clause 9 specifically provides that B
licensor shall be at liberty to withdraw and or revoke the leave and licence
in case there is any default of the terms mentioned in the document. Clause
16 provides that if the sub-lease is granted then licensee was required to
purchase the equipments, fittings and fixtures as mentioned in the Second
Schedule at a price of Rs.2,50,000 within a period of one year from the date C
thereof. Admittedly, sub-lease is not granted and the .amount of Rs.2,50,000
as agreed is also not paid by anyone.

Hence, even though it is not necessary to discuss, however, we would
briefly refer to other decisions upon which learned Counsel for the parties
relied upon. Learned Counsel for the respondent relied upon the decision in D
the case of Capt. B. V. D'Souza v. Antonio Fausto Fernades, [1989] 3 SCC 574
and submitted that the main purpose of enhancing the rent statutes is to
protect the tenant from the exploitation of the landlord, who being in dominating
position is capable of dictating his terms at the inception of the tenancy and
the Rent Acts must receive that interpretation which may advance the object E
and suppress the mischief. He, therefore, submitted that using of the words
leave and licence or some other terms in the document should be construed
in a way so as to advance the object of the Rent Act. In our view, in the
present case, there is no question of such exploitation by the landlord.
'Dewar' itself was inducted by a tenant in the premises and at the time of
executing the leave and licence document, parties were under the impression F
that they would obtain the consent of the landlord for granting sub-lease.
That contemplation was not achieved. Hence, the said judgment has no
bearing in interpreting the tenns of the document which is executed between
two Companies knowing full welJ their rights and the legal implications of the
tenns provided in the document. He also referred to the decision in the case G
of Tulsi V. Paro (Dead), [1997] .2 SCC 706 where in this Court after considering

- the revenue records for the period from 1951-52 to 1971-72 mentioning the
appellant was not in a possession as the "tenant at will", held that .the theory
of licence was untenable and in that context observed that a licensee has no
right in property and not to speak of any right to exclusive possession of the
property and animus of possession always remains with the licensor and the H
566 SUPREME COURT REPORTS [1999] 2 S.C.R.

A licensee gets the possession only with the consent of licensor and is liable
to vacate when so asked. In the said case, there was no written document
between the parties and considering the facts of the case particularly exclusive
possession for a period of 20 years and the revenue records, the Court held
that it was unthinkable to conclude that appellant of that case was licensee.
As stated above, exclusive possession is one of the most relevant factor for
B deciding whether it is a lease or licence. But, at the same time, when the tenns
of the document are clear leaving no doubt that parties never intended to
execute lease deed, in that set of circumstances,. exclusive pos.session would
lose its importance. Dealing with the similar question in the case of M.N.
Clubwala v. Fida Hussain Saheb, (1964) 6 S.C.R. 642, this Court observed
C as under :-
"While it is true that the essence of a licence is that it ls revocable
at the will of the grantor the provision in the licence that the licensee
would be entitled to a notice before being required to vacate is not
inconsistent wi* the licence. In England it has been held that a
D contractual luc~nce may be revocable or irrevocable according to the
express of implied terms of the contract between the parties. It has
further been held that if the licensee under revocable licence has
brought the property on to the land, he is entitle to notice of revocation
and to a reasonable time of removing his property, and in which to
make arrangements to carry on his business elsewhere. Thus the mere
E
necessity of giving a notice to a licensee requiring him to vacate the
licensed premises would not indicate that transaction was a lease.
Indeed, section 62(c) of the Indian Easements Act, 1882 itself provides
that a licence is deemed to be revoked where it has been efther
granted for a limited period, or acquired on condition that it shall
F become void on the performance or non-performance of a specified
act, and the period expires, or the condition is /ulfllled. In the
agreements in question the requirement of a notice is a condition and
if that condition is fulfilled the licence will be deemed to be revoked
under section 62. It would seem that it is this particular requirement
in the agreements which has gone a long way to influence the High
G Court's finding that the transaction was a lease. Whether an agreement
creates between the parties the relationship of landlord and tenant or
merely that of licensor and licensee the decisive consideration is the
intention of the parties. This intention has to be ascertained on a
consideration of all the relevant provisions in the agreement. In the
H absence, however, of a formal document the intention of the parties
DELTA INTERNATIONAL LTD. v. S.S. GANERIWALLA [SHAH, J.] 567

much be inferred from the circumstances and conduct of the parties." A
Lastly, it is to be noted that if the document is a camouflage as-stated
earlier, the mask or veil is required to be removed for determining the true
intent and purpose of the document. In the present case, there is no pleading
by the defendants that the document was a camouflage so as to defeat the
rights of a tenant who had inducted the appellant or that of the owner of the B
.premises. As stated earlier, the document contemplates three types of
agreements, one, that of a leave and licence; secondly, in case a consent is
obtained from the tenant, for execution of sub-lease which would create
interest in the property as sub-tenant and thirdly, in case of sub-lease, for
purchase of equipment, fitting and fixtures at a price of Rs.2,50,000. Second C
and third part of the Agreement never came into operation. Hence, for the
reasons discussed above, we hold that the agreement dated 18th July, 1970
is a deed of 'leave and licence' and .not a 'lease'.

In the result, the appeals are allowed, the judgment of the Division
Bench dt. 2.12. 1997 is set aside and the order passed by the learned Single D
Judge in Suit No. 491 of 1985 is restored. In the circumstances of the case,
there shall be no order as to costs.

R.K.S. Appeals allowed.