Delta International Ltd vs Shyam Sunder Ganeriwalla And Anr on 9 April, 1999 – Case Summary
In the case of Delta International Ltd vs Shyam Sunder Ganeriwalla And Anr on 9 April, 1999, the Supreme Court of India was tasked with determining the nature of a legal agreement between the parties involved. The case was presided over by a bench consisting of G.B. Pattanaik and M.B. Shah.
Facts of the Case
The original owner of the premises in question was Abhiram Mullick, who had created a tenancy for the premises in favour of Mallika Investment Company Private Limited. Dewars’ Garage India Private Limited was subsequently inducted into the premises as a monthly tenant under Mallika Investment Company Private Limited. Dewar’s Garage (India) Private Ltd. (referred to as ‘Dewar’) was maintaining and running a petrol service station for the sale of motor spares and components at the tenanted premises. Dewar had erected and built certain structures on the said premises. Dewar was later amalgamated into Delta International Limited (the appellant-plaintiff).
By an agreement dated 18th July, 1970, they executed a leave and license agreement in favour of ESSO Standard Eastern Inc. (referred to as ESSO). ESSO, in turn, permitted Shyam Sunder Ganeriwalla, respondent no. 1, to run a petrol service station. By an Order passed in Company Petition No. 331 /91, Dewar was amalgamated with 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 M/s. Hindustan Petroleum Corporation Limited.
Issues in the Case
The main issue in the case was whether the agreement between Delta International Ltd and Shyam Sunder Ganeriwalla constituted a lease or a license. This distinction was crucial as it would determine the rights and obligations of the parties involved. The learned Single Judge of the High Court had initially held that the agreement was a license agreement and not a sub-lease. However, this judgment was reversed on appeal, with the Division Bench holding that the agreement constituted a lease, primarily on the basis of exclusive possession.
Court’s Observations
The Supreme Court observed that the intention of the parties was the most important factor in determining whether an agreement constituted a lease or a license. The Court noted that while exclusive possession of the premises was an important factor, it did not preclude the Court from holding that the document was in fact a license, particularly in cases where the grantor did not have the power to grant a lease or was forbidden by the provisions of the Rent Control legislations.
The Court 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. The Court also considered the terms and conditions of the agreement in question, including the use of the term ‘leave and license’, the obligations of the parties, and the provisions for the possible future grant of a sub-lease.
In conclusion, the Supreme Court held that the determination of whether a document is a lease or a license would depend upon its pith and substance and not upon the labels that the parties may put upon it. The paramount test for determining this is the intention of the parties.