CASE LIST

Associated Hotels of India Ltd. vs. R.N. Kapoor, [1960] 1 SCR 368 (Supreme Court, 1959)
o A lease is a transfer of an interest in land. The interest transferred is called the leasehold
interest. The Lesser parts with his right to enjoy the property during the term of the lease
and the lessee gets that right to the exclusion of the Lesser.
o In case of license, the legal possession continues to be with the owner of the property, but
the licensee is permitted to make use of the premises for a particular purpose. But for the
permission his occupation would be unlawful. It does not create in his favour any estate or
interest in the property.
Mrs. M.N. Clubwala v. Fida Hussain Saheb, [1964] 6 SCR 642 (Supreme Court, 1964)
o 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.
Chandu Lal vs. Municipal Corporation of Delhi, AIR 1978 Delhi 174 (Delhi High Court, 1978)
o The intention of the parties is the real test for ascertaining the character of a document.
o If a document gives only a right to use the property in a particular way but its possession
and control remains with the owner thereof, it will be a license. In such a case the legal
possession remains with the owner of the property, the licensee being permitted to make
use of the property for a particular purpose.
o Exclusive possession does not militate against the concept of a license, if the
circumstances negative any intention to create a tenancy.
o A license only makes an action lawful which without it would be unlawful, but does not
transfer any interest in favor of the licensee in respect of the property.
o In the case of a license there is something less than a right to enjoy the property in the
licensee, while on the other hand, in the case of a lease, there is a transfer of a right to
enjoy the property.
o A bare licensee having no interest in the property cannot maintain an action for its
possession.
Rajbir Kaur and Anr. vs. S. Chokesiri and Co. AIR 1988 SC 1845
o 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.
o The grant only for the right to use the premises without being entitled to the exclusive
possession thereof operates merely as a licence.
o Exclusive possession itself is not decisive in favour of a lease and against a mere licence,
for, even the grant of exclusive possession might turn out to be only a licence and not a
lease where the grantor himself has no power to grant the lease.
Delta International Limited vs. Shyam Sundar Ganeriwalla & Another, AIR 1999 SC 2607
o 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 very thin.
Municipal Corporation of Delhi vs. Pradip Oil Corporation and Anr., 100 (2002) DLT 442 (Delhi
High Court, 2002)
o A mere license does not create interest in the property to which it relates. Lease on the
other hand, would amount to transfer of property.

License may be personal or contractual.

A licensee without the grant creates a right in the licensor to enter into a land and enjoy it.
By reason of a license, no estate or interest in the property is created.
A license, inter alia, (a) is not assignable; (b) does not entitle the licensee to sue the
stranger in his own name; (c) it is revocable and (d) it is determined when the grantor
makes subsequent assignment.
Madhu Behal and Anr. vs. Rishi Kumar and Anr., (2009) 3 PLR 628 (Punjab & Haryana High
Court, 2009)
o It is never a nomenclature in the document that governs the decision as to whether a
document as a lease or a licence.
o The essential feature that distinguishes a lease from licence is always a transfer of interest
in the demised property in a transaction of lease while a licensee does not involve any
such transfer of interest.
o The lease is heritable while license is personal to the grantee.
o The legal possession of the property is inevitably transferred to a tenant under lease while
in a transaction of license the legal possession continues with the licensee and the licensee
has a mere right of user of the premises in a particular fashion mentioned under the
document.
o
o
o
o

o In Booker v. Palmer[xxix], Lord Green stated thato There is one golden rule to be followed is that law does not impute an intention to enter
into contractual relationships where the circumstances and the conduct of the parties
negative any intention of the kind.
o In Cubb v. Lane[xxx], Lord Denning said thato The question in all these cases is one of intention: Did the circumstances and 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.
In the case of Bhaurao vs. Geetabai 2013(4) Mh.L.J. 196. Easements act Section 60(b)
Irresvocable licence Proof of merely because there is a work of permanent character executed
by incurring expenses, would not by itself be enough to establish that the licence was
irrevocable.
In the case of Himmatrao Marutorao Dhobale vs. Arun Gulrao Jichkar, 2015 (2) Mh.L.J.
560. Easements Act Section 60(b) and Evidence Act Section 115 Appellant proved that
respondent is licensee on suit plot Respondent constructed house on the suit plot and occupied
and resided in it Respondent cannot be denied benefit of provisions of section 60(b) merely
because respondent had denied that he is a licensee.
IMPORTANT CLAUSES IN LEAVE AND LICENSE AGREEMENT AND THEIR VALIDITY
Most of the leave and license agreement that I have come across have following under
mentioned clauses in the leave and license agreement. Now let us examine the validity, legality
and enforceability of these clauses.

1. Possession: Most of the leave and license agreement suggest that possession during the entire
term of this agreement shall remain with Licensor. This is perfect with the nature and spirit of the
agreement since exclusive possession is key element to determine as whether the transaction is in
the nature of license or a lease. However two points needs to be noted that agreement should also
clearly specify that there is no intention to transfer any right or interest in the property per se.
Further from the licensee perspective, it is important to mention that the license being granted to
licensee is an exclusive license or else it may be construed as bare license.
2. Lock in period: Most of the leave and license agreement suggest that both licensor and
licensee shall be locked in for a certain term of license agreement. As noted above, license is
always terminable at will. Any form of lock being imposed in the agreement may not hold water
in the court since it goes against the very logic of license. Further by granting a license, Licensor
is merely granting a permissive right to licensee and is not intending to create an interest in the
property. Even if such lock in clause is held to be valid, licensor can still revoke the license and
be liable for damages. Further in such an event since the possession is always with Licensor,
there cannot be any claims on part of licensee as to illegal eviction. In my opinion, such lock in
clauses may not hold water in the court and can be held illegal and void ab initio. In such an
event, there can be two possibilities:
If such clause is held to be legal and perfectly valid within the realms of law, licensee shall be
entitled to merely damages for illegal revocation / termination of license;
If such clause is held to be illegal and invalid, doctrine of severability shall come into play and
court shall read the entire document as if the lock in clause was incorporated in the agreement. In
such an event, there can be no question of damages as well.
3. Improvement of permanent character: Let us exemplify this situation for the sale of clarity. If a
mall owner gives a property to a retailer vide a leave and license agreement, wherein a retailer is
permitted to carry out its fit out activities in the premises so as to enjoy the permission granted to
a retailer. In course of such fit outs, retailer carries out improvements which are of permanent in
nature (such as erection of false ceiling, installation of lifts / escalators etc.), what shall be the
effect of such improvement on the overall nature of transaction i.e. leave and license agreement.
Since Section 60 of the Act clearly states that where licensee acting upon the license, has
executed a work of permanent character and incurred expenses in the execution, license become
irrevocable. In my opinion, even in such cases the license is terminable at will and the only
remedy available to Licensee for such improper revocation shall be claim for damages and
compensation for the improvements so made.
4. Exclusive Possession: Most of the leave and license agreements fail on this count. It is
imperative for the retailer that agreement clearly and unequivocally states that licensor is
granting and licensee is entitled to exclusive license for the property. It must be noted that there

is clear cut distinction between exclusive license and exclusive possession. There may be an
exclusive license being granted to licensee, but the fact remain that the exclusive possession is
always with the Licensor and for want of which it shall be very strong indicator of the instrument
being lease with nomenclature being used as license.
5. Notice: As noted above, though there is not statutory requirement for a licensor to give notice
to licensee while revoking the license, but the principles of natural justice demands that such
notice should be given by the licensor. Further there is no bar in law wherein both licensee and
licensor agrees to certain form notice to be given by licensor to licensee before any kind of
revocation of license by the licensee. In the event such provision of notice is agreed, it shall be
contractual obligation of Licensor to provide such notice to licensee.
6. Keys and Locks with the Licensor: It is often written in the leave and license agreement that
keys and locks of the premises shall for all purposes will be with licensor. This just reinforces the
fact that the possession at all times is with licensor and licensor has granted merely permissive
rights to the licensee. But from the licensee perspective it is important to have sufficient
protection in the agreement that in the event there is any theft or loss or damage of the chattels
belonging to licensee during the access made by licensor in the absence of licensee, licensor shall
be liable for the same and licensee shall duly indemnified in this regard.
7. Assignment to licensees group / associate companies: Often Licensees insist for a clause
where they are entitled to assign the leave and license rights to their group / associate / sister
companies. More often than not such a clause is merely copied in ditto from the lease formats
and pasted in the leave and license agreement. However in view of express provisions under the
law relating to non-transferability of license rights and license rights being personal in nature,
such a clause shall not hold valid in court of law. In fact licensee is suggested to incorporate a
suitable clause wherein licensor is under an obligation to execute a fresh license in favour of
group / associate / sister companies if and when desired by the licensee. In such a way, it is not
the licensee who is transferring and licensor shall be the one who shall be creating a fresh
license.