Transfer of Property - Litigating Hand

Associated Hotels of India Ltd. v. R.N. Kapoor [AIR 1959 SC 1262]

Test to determine whether a document creates a licence or lease

28. 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 or a licence;

(3) if the document creates an interest in the property, it is 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.

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