Bombay High Court
BHASME
Mohan Sons (Bombay) - Appellant
Versus
Lady Sonoo Jamsetji Jejeebhoy - Respondent
Decided On : 10/24/1974
CONTRACT - Lease or Licence - Agreement styled as leave and licence - Whether a lease or licence - Principles for determining the nature of the agreement - Exclusive possession - Intention of the parties - Surrounding circumstances - Held, the agreement was a lease and not a licence.
Fact of the Case:
The plaintiffs, trustees of a charity, filed a suit against the defendants for possession of the suit premises on the ground that defendant No. 1, the tenant, had sublet a portion of the suit premises in their occupation to defendant No. 2 after May 1959. The defendants resisted the plaintiffs' suit claim. The trial court decreed the plaintiffs' claim for possession. The appellate court dismissed the appeal filed by the defendants. The defendants preferred a second appeal to the High Court.
Finding of the Court:
The High Court held that the agreement between defendants 1 and 2 under which defendant No. 2 came to occupy a major portion of the suit premises was one of sub-tenancy and not an agreement of leave and licence. The court found that the tenancy of defendant No. 1 was validly terminated. The court also held that the agreement between the parties was a lease and not a licence, considering the exclusive possession given to the licensee, the surrounding circumstances, and the various clauses of the agreement.
Issues: 1. Whether the agreement between defendants 1 and 2 was a lease or a licence? 2. Whether the tenancy of defendant No. 1 was validly terminated?
Ratio Decidendi: 1. In determining whether an agreement creates a lease or a licence, the court must consider the intention of the parties, the exclusive possession given to the licensee, the surrounding circumstances, and the various clauses of the agreement. 2. A lease is created when an interest in immovable property, entitling the transferee to enjoyment, is created. A licence is created when permission to use land without the right to exclusive possession is granted.
Final Decision: The High Court dismissed the second appeal filed by the defendants and confirmed the decree passed by the courts below. The court directed that the decree for possession will not be executed for a period of three months from the date of the order, subject to the undertaking given by the petitioners to maintain the status quo during this period.
2. As the point was allowed to be raised during the course of the trial, the Secretary was recalled and further examined. The plaintiffs relied upon a document which is marked Ex. M. Ex. M consisted of two parts. The first part was the memorandum submitted by the Secretary to the trustees in which a mention is made of the alleged breach of the terms of the tenancy agreement under which the 1st defendant was in occupation. The Secretary had sought directions of the trustees regarding the breach committed by the 1st defendant. At the foot of the Memorandum there was an endorsement purporting to be in the hand of one of the trustees. Below the endorsement, the trustees i. e. the plaintiffs had signed. The plaintiffs have relied upon this document for establishing their case that the plaintiffs trustees had authorised the Secretary, their Power of Attorney holder, to instruct the lawyer and the lawyer acting on such instructions
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