Moideekutty Haji vs Muhammedali

Licence is defined in Section 52 of the Easements Act, 1882, as a right to door continue to do in or upon the immovable property of the grantor something which would in the absence of such right be unlawful. ''Lease'' is defined in Section 105 of the Transfer of Property Act as the transfer of a right to enjoy immovable property made for a certain time, express or implied or in perpetuity; in consideration of a price paid or promised of money, share, crops, service or any other thing of value to be rendered periodically or on specified occasions to the transferor by the transferee who accepts the transfer on such terms. The money, share, service or other thing to be rendered is called ''rent''.

''Licence'' is a personal privilege to do something on the premises which otherwise would not be lawful. It does not create any interest or estate in the immovable property dealt with. On the other hand, ''lease'' creates such an interest in the immovable property.

In Board of Revenue and Others Vs. A.M. Ansari and Others, the Supreme Court observed as follows in dealing with the distinction between lease and licence''.

A close study of the above definitions shows that it is the creation of an interest in immovable property or a right to possession it that distinguishes a lease from a licence. A licence does not create an interest in the property to which it relates while a lease does. There is in other words transfer of a right to enjoy the property in case of a lease. As to whether a particular transaction creates a lease or a licence is always a question of intention of the parties which is to be inferred from the circumstances of each case. For the purpose of deciding whether a particular grant amounts to a lease or a licence, it is essential therefore, to took to the substance and essence of the agreement and not to its form.

The following propositions may, therefore, be taken as well-established: (1) to ascertain whether a document creates a licence or lease, the substance of the document must be preferred to the form; (2) the real test is the intention of the parties-whether they intended to create a lease; but, if it only permits another to make use of the property, of which the legal possession continues with the owner, it is a licence; and (4) if under the document a party gets exclusive possession of the property, ''prima facie'' he is considered to be a tenant, but circumstances may be established which negative the intention to create a lease.

In determining 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. Though the grant of exclusive possession to the grantee may not in itself be conclusive of the existence of the tenancy, it is nevertheless a consideration of sufficient importance and prima facie the grantee can be considered to be a tenant unless circumstances establish the contrary. The fact the exclusive possession is subject to certain reservations or restrictions as to the mode or purpose of enjoyment may not derogate from the grant operating as a lease.

The intention of the parties has necessarily to be gathered primarily or in the first instance from the language used by them in the agreement the substance of it, as opposed to the form. That is the first and manifest expression of their intent and what they intended to achieve under the transaction. It is a general principle that the intention which the framer of a document had in his mind when he brings it into existence is not the material factor, but what is incorporated in the document. The question is not what the writer of the document intended or meant (in his mind), but what a reasonable man reading the document as a whole would understand it to mean. The intention has thus to be gathered from the language of the document, explained if necessary by the circumstances and the conduct of the parties.