Annaya Kocha Shetty v. Laxmibai Narayan Satose

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Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 – Section 15A – Deemed Tenancy – Agreement for Conducting Business vs. Leave and License – Evidence Act, 1872 – Sections 91, 92 – Admissibility of Oral Evidence – Contract Interpretation – Pleadings – Need for Brevity.

Held

An agreement dated 16.08.1967 styled as an “agreement of conducting” a hotel business was not a leave and license arrangement but an entrustment to conduct the defendant’s business. The plaintiff, as conductor, was not a deemed tenant under Section 15A of the Bombay Rent Act, as the agreement did not confer possession or tenancy rights. Oral evidence to contradict the written agreement was inadmissible under Sections 91 and 92 of the Evidence Act, absent applicable exceptions. The Court emphasized interpreting contracts by their plain terms and criticized lengthy pleadings, urging trial courts to regulate unnecessary pleadings under Order 6 Rule 16, CPC. The appellate court and High Court’s findings were upheld, dismissing the plaintiff’s claim.

Appeal dismissed with costs of Rs. 1,00,000/-.

Cases Referred:

  1. Shakuntala Shukla v. State of Uttar Pradesh, (2021) 20 SCC 818
  2. Mangala Vaman Karandikar v. Prakash Damodar Ranadeon, (2021) 6 SCC 139
  3. TN Electricity Board v. N. Raju Reddiar, AIR 1996 SC 2025
  4. Varisalli Mohd. Ilias v. Abdul Sattar Gulam Hussain, (1991) Mah LJ 1523
  5. Provash Chandra Dalui v. Biswanath Banerjee; (1989) Suppl 1 SCC 487
  6. Chandavarka Sita Ratna Rao v. Ashalata S. Guaram, (1986) 4 SCC 447
  7. Tyagaraja Mudaliyar and another v. Vedathanni, AIR 1936 PC 70

Citation : 2025 (4) KLR (SC) 45 : 2025 INSC 466
Court : Supreme Court of India, Civil Appellate Jurisdiction
Judges : Pankaj Mithal, J.; S.V.N. Bhatti, J.
Case Number : Civil Appeal No. 84 of 2019; April 8, 2025

    Procedural History

    1. Trial Court: Small Causes Court, Mumbai, in R.A.D. Suit No. 1860 of 1997, decreed in favor of the plaintiff on 20/22.03.2004, declaring the plaintiff a deemed tenant under Section 15A of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (“Bombay Rent Act”).
    2. Appellate Court: Appellate Bench reversed the trial court’s judgment on 17.08.2015 in Appeal No. 547 of 2004, holding the agreement was for conducting business, not a leave and license.
    3. High Court: Bombay High Court, in Civil Revision Application No. 247 of 2016, confirmed the appellate court’s order on 16.07.2018.
    4. Supreme Court: Civil Appeal filed by the plaintiff’s legal representatives challenging the High Court’s order.

    Facts

    • The plaintiff, Annaya Kocha Shetty, filed a suit seeking a declaration as a deemed tenant/protected licensee under Section 15A of the Bombay Rent Act for shop nos. 5 and 6 (“Plaint Schedule”) in Mumbai, leased by Defendant No. 1 (Laxmibai Narayan Satose) from Defendant No. 2 (M.S. Nanabhoy, the owner).
    • Laxmibai ran a hotel business (“Shri Samarthashraya Vishranti Graha”) in the Plaint Schedule after her husband’s death but later allowed her brother to manage it, which was unsuccessful.
    • On 16.08.1967, the plaintiff and Laxmibai entered into an agreement styled as an “agreement of conducting” the hotel business, which was extended periodically.
    • In 1997, Laxmibai served a notice to the plaintiff to vacate and hand over the business, prompting the plaintiff to file the suit.
    • The plaintiff claimed the agreement was a leave and license arrangement, making him a deemed tenant under Section 15A. Laxmibai contended it was an agreement to conduct her hotel business, not a tenancy.

    Issues

    1. Whether the agreement dated 16.08.1967 was a leave and license agreement or an agreement for conducting the hotel business.
    2. Whether the plaintiff was a deemed tenant under Section 15A of the Bombay Rent Act.
    3. Whether oral evidence could be admitted to contradict the terms of the written agreement under Sections 91 and 92 of the Evidence Act, 1872.

    Holdings

    1. Nature of Agreement: The Supreme Court held that the agreement dated 16.08.1967 was for conducting the hotel business, not a leave and license agreement. The agreement’s clauses, including references to “owner” and “conductor,” payment of “royalty,” and obligations to run the hotel business, supported this interpretation.
    2. Deemed Tenancy: The plaintiff was not a deemed tenant under Section 15A of the Bombay Rent Act, as the agreement did not grant tenancy or possession rights but only the right to conduct the business.
    3. Evidence Act: Oral evidence to contradict the written agreement was inadmissible under Sections 91 and 92 of the Evidence Act, as none of the exceptions (e.g., fraud, illegality) applied. Documentary evidence, like the sales tax certificate, did not alter the plaintiff’s status as a conductor.

    Reasoning

    • Agreement Interpretation: The Court applied the literal rule of contract construction, finding the agreement’s terms clear in designating the plaintiff as a conductor of the hotel business, not a licensee. Clauses specified the plaintiff’s responsibility for business operations, payment of royalty, and return of business assets upon termination, indicating no transfer of tenancy rights.
    • Evidence Act Application: Sections 91 and 92 barred oral evidence to vary the agreement’s terms, as the document was unambiguous and no exceptions applied. The plaintiff’s reliance on oral evidence and a sales tax certificate was rejected, as these did not change the agreement’s nature.
    • Deemed Tenancy: Section 15A protects licensees as deemed tenants, but the plaintiff’s role was limited to conducting the business, not occupying the premises as a tenant. The absence of a clause transferring possession from Laxmibai to the plaintiff further negated tenancy claims.
    • Judicial Criticism of Pleadings: The Court criticized lengthy and meandering pleadings, urging trial courts to regulate unnecessary pleadings under Order 6 Rule 16 of the Code of Civil Procedure, 1908, to streamline litigation.

    Disposition

    • The Supreme Court dismissed the Civil Appeal, upholding the High Court’s order.
    • Costs of Rs. 1,00,000/- were awarded to Defendant No. 1.

    Key Legal Principles

    • Contract Construction: Courts must interpret contracts based on their plain meaning unless ambiguity exists, per Provash Chandra Dalui v. Biswanath Banerjee.
    • Evidence Act: Sections 91 and 92 preclude oral evidence to contradict written agreements unless exceptions apply, as reinforced by Mangala Vaman Karandikar v. Prakash Damodar Ranadeon.
    • Bombay Rent Act: Section 15A grants deemed tenancy to licensees, but only if the agreement confers possession rights, not merely business operation rights.

    Significance

    This case clarifies the distinction between agreements for conducting business and leave and license agreements under the Bombay Rent Act. It emphasizes strict adherence to written contract terms and restricts the use of oral evidence to alter such terms, reinforcing the importance of precise pleadings in litigation.

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