Summary
The Supreme Court held that an agreement of 16.08.1967 by which the first defendant gave her hotel business to the plaintiff 'on conducting basis' was, on its plain terms, an agreement for conducting the business and not a leave and licence of the premises, so the plaintiff could not claim to be a deemed tenant under Section 15A of the Bombay Rent Act. Oral evidence to vary the written agreement was barred by Sections 91 and 92 of the Evidence Act, and the Court also deprecated prolix pleadings and urged trial courts to use Order 6 Rule 16 CPC.
Issues
- Whether the agreement dated 16.08.1967, styled as an agreement for conducting a hotel business, was in substance a leave and licence of the premises making the plaintiff a deemed tenant under Section 15A of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947.
- Whether oral and documentary evidence (sales tax registration, royalty receipts) could be received to contradict or vary the terms of the written agreement in view of Sections 91 and 92 of the Evidence Act, 1872.
- What principles govern the construction of a deed whose nomenclature is said not to reflect the real relationship between the parties.
Provisions considered
- Section 15A, Bombay Rents, Hotel and Lodging House Rates Control Act, 1947The plaintiff claimed the status of deemed tenant/protected licensee under Section 15A (in force from 01.02.1973) on the footing that the 1967 arrangement was a leave and licence of the premises; the Court held the arrangement was an entrustment of the hotel business, not of the first defendant's tenancy or occupancy right, so Section 15A was not attracted. (¶¶ 2, 5, 11, 22, 23)
- Sections 91 and 92, Indian Evidence Act, 1872Section 91 makes the document the primary evidence of its terms and Section 92 bars oral evidence to contradict, vary, add to or subtract from them unless one of the six provisos applies; since no exception was attracted, the Court excluded the oral evidence from consideration and construed the deed alone, treating these as substantive provisions. (¶¶ 7, 13, 13.1, 18, 18.1, 18.2, 22, 23)
- Section 108, Transfer of Property Act, 1882A lease reflects a rightful separation of ownership and possession, and under Section 108 the lessor is bound to put the lessee in possession; the conducting agreement contained no clause dealing with the possession the first defendant held from the owner, which the Court treated as a vital circumstance showing that only the business, not occupancy of the premises, was entrusted. (¶ 23)
- Order 6 Rule 16, Code of Civil Procedure, 1908Deprecating lengthy and meandering pleadings, including AI- or computer-generated statements, the Court observed that trial courts should invoke their power to strike out unnecessary or frivolous pleadings and regulate pleadings and evidence at the right stage. (¶ 3)
Held
- Following Provash Chandra Dalui, a court must look at the words of a contract and, if they are clear, give effect to them; surrounding circumstances and subject matter may be looked at only where the words are doubtful. Construction proceeds first on the literal rule, then the golden rule where literal reading produces absurdity, and lastly, cautiously, a purposive construction in light of the object and context. (¶¶ 16, 17, 17.1, 17.2, 17.3)
- Construction of a deed is generally a matter of law and, where the deed is ambiguous, a mixed question of fact and law; under Sections 91 and 92 of the Evidence Act evidence to vary the terms of a written agreement is inadmissible, though evidence to show there was no agreement at all may be given, and oral evidence is barred unless the case falls within the provisos read with the illustrations to Section 92. (¶¶ 18, 18.1, 18.2)
- On its plain terms the agreement of 16.08.1967 (owner and conductor as parties, the owner's existing hotel business given on conducting basis, consideration described as royalty, the conductor bound to run only the owner's business, not to entrust it to others, to return the furniture and hand over complete charge of the business on termination, and the owner free to inspect) is an agreement for conducting the first defendant's business and not a leave and licence of the premises; the plaintiff cannot rely on nomenclature to assert a different status, and oral evidence was excluded as no exception applied. (¶¶ 19, 20, 21, 22)
- A photocopy of the plaintiff's sales tax registration certificate and the receipts for royalty do not alter his status: a conductor who assumes the incidents of running the business, including payment of sales tax, does not thereby become a sub-tenant or deemed tenant, and royalty receipts militate against the deemed tenancy claimed. (¶ 23)
- Because the agreement contains no clause transferring to the plaintiff the possession that the first defendant enjoyed from the owner, unlike a lease under Section 108 of the Transfer of Property Act, what was entrusted was the running of the business in the premises and not their occupation under leave and licence; the appellate bench and the High Court were right in so holding. (¶¶ 23, 24)
- Pleadings and evidence should be concise; lengthy and meandering pleadings burden appellate and revisional courts, and trial courts should invoke Order 6 Rule 16 CPC at the right stage to strike out unnecessary or frivolous pleadings. Contentions of respondent no. 3, a subsequent purchaser from the owner who did not participate in the courts below, were left open. (¶¶ 3, 14)
Result
Appeal dismissed with costs of Rs. 1,00,000 payable to defendant no. 1; the judgment of the appellate bench and the High Court's order confirming it affirmed; pending applications disposed of.