Kiran Raj

The Supreme Court of India Division Bench of Justice Pankaj Mithal and Justice S.V.N. Bhatti dismissed a civil appeal challenging the concurrent findings of the Bombay High Court and the first appellate court. The Court held that the agreement dated 16.08.1967 was for conducting business and not for creating tenancy or license rights. Consequently, it ruled that the appellant could not claim the status of a deemed tenant under Section 15A of the Bombay Rent Act. The Court found the reasoning of the lower courts sound and affirmed the conclusion that the plaintiff was not entitled to tenancy protections. The appeal was dismissed with costs, and all pending applications were disposed of accordingly.

The civil appeal arose from a dispute relating to possession and legal rights over two shops forming part of “Shri Samarthashraya Vishranti Graha,” located at Hindmata Junction, Dadar, Mumbai. The original tenant of the premises was the husband of the first defendant. After his demise, she continued as lessee and operated a hotel therein.

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On 16.08.1967, the first defendant entered into an agreement with the plaintiff titled “Agreement for Conducting the Business,” whereby the plaintiff was granted the right to run the hotel business, use the premises, and operate using existing fittings and fixtures. The document referred to the parties as “owner” and “conductor,” and the compensation was styled as “royalty” to be paid monthly.

This arrangement lasted for several decades. On 28.02.1997, the first defendant issued a notice directing the plaintiff to vacate and return possession. The plaintiff responded by filing R.A.D. Suit No. 1860 of 1997 before the Small Causes Court at Mumbai, seeking a declaration of deemed tenancy under Section 15A of the Bombay Rent Act and an injunction against dispossession.

The trial court ruled in favour of the plaintiff, holding that the agreement, although styled as a conducting agreement, was effectively one of leave and license. The trial court found the plaintiff had exclusive possession and control over the premises and bore expenses typically associated with tenancy, such as taxes, wages, and utility bills. It held that the continuous occupation from 1967 until the date of suit, along with oral evidence and rent-like payments, substantiated a claim for deemed tenancy.

However, the appellate bench of the Small Causes Court reversed the trial court’s findings, holding that the agreement was strictly one for conducting a business and that there was no license or lease in favour of the plaintiff. It placed emphasis on the nature of payments described as "royalty," the restrictions in the agreement, and the legal bar under Sections 91 and 92 of the Evidence Act which prohibit oral evidence contradicting a written contract.

The High Court of Bombay, in Civil Revision Application No. 247 of 2016, upheld the appellate bench’s reasoning and refused to interfere with the findings. The High Court observed that the 1967 agreement, read in its entirety, did not confer possession or any right equivalent to tenancy.

During the Supreme Court proceedings, the Court was presented with extensive pleadings. It noted that the plaint ran into eight pages, the written statement into sixteen, and that voluminous oral and documentary evidence had been introduced. The resulting judgments in all courts were correspondingly lengthy. The Court specifically commented on the quality and style of modern pleadings:

“Lately, this Court has been experiencing meandering pleadings irrespective of the nature of the dispute… Long and drawn-out pleadings will run the risk of having a cascading effect on the appellate and revisional courts.”

“Courts are also confronted with AI-generated or computer-generated statements. While technology is useful in enhancing efficiency and efficacy, the placid pleadings will disorient the cause in a case.”

Despite this, the Court appreciated that the learned counsel distilled the controversy succinctly for the Supreme Court’s consideration.

The Court examined the 1967 agreement and held:

“By looking at the deed, we have no hesitation in holding that the agreement is one for conducting the business of the first defendant.”

The Court emphasized that the nature of the agreement was commercial, not one that created any right of possession:

“The plaintiff, contrary to the clauses under which the plaintiff has taken over the Hotel run in the Plaint Schedule, pleads the relationship of tenant/subtenant as having been given under leave and license.”

On the interpretation of the contract, the Court stated:

“The contract is first constructed in its plain, ordinary and literal meaning… If there is an absurdity created by literally reading the contract, a shift from literal rule may be allowed.”

The Bench recorded that no clause in the agreement transferred possession or granted license over the premises:

“The absence of such a crucial clause in the agreement dated 16.08.1967 is a vital circumstance… what has been entrusted is to run the business in the plaint schedule but not occupying the plaint schedule under leave and licence.”

On the role of the Evidence Act, the Court held:

“Sections 91 and 92 are substantive provisions under the Evidence Act, 1872. Unless and until the case falls under one or the other exceptions enabling receipt of oral evidence on a written document, the court is precluded from entertaining oral evidence.”

The Court also addressed the use of oral and documentary evidence attempting to show exclusive possession:

“The plaintiff, as conductor of the business, has assumed the responsibility for the incidences of running the business. This includes payment of sales tax as well. Including the subject business in the dealership of the plaintiff would not materially alter the position under the agreement.”

It concluded that none of the documentary evidence, including sales tax certificates or receipts, could override the clear wording of the agreement:

“We are convinced that, in the facts and circumstances of the case, the said photocopy of the registration certificate will not change the status of the plaintiff from the conductor of the business to a sub-tenant and, by operation of law, a deemed tenant.”

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Finally, the Court upheld the concurrent findings:

“We are in agreement with the view taken by the first appellate court and the Impugned Order of the High Court.”

The Supreme Court issued its conclusive directive as follows:

“From the above perspective and for the reasons stated supra, we are in agreement with the view taken by the first appellate court and the Impugned Order of the High Court. The Civil Appeal fails and is accordingly dismissed with costs quantified at Rs. 1,00,000/- payable to defendant no. 1. Pending applications, if any, shall stand disposed of.”

Advocates Representing the Parties

For the Petitioners: Shri B.H. Marlapalle, Senior Advocate
For the Respondents: Mr. Chinmoy Khaladkar, Advocate; Shri Vinay Navare, Senior Advocate

Case Title: Annaya Kocha Shetty (Dead) Through LRs v. Laxmibai Narayan Satose (Since Deceased) Through LRs & Others
Neutral Citation: 2025 INSC 466
Case Number: Civil Appeal No. 84 of 2019
Bench: Justice Pankaj Mithal, Justice S.V.N. Bhatti

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