07 May 2121

The language of the document should be interpreted by the court to understand the intention of the parties and terms and conditions of the contract - Supreme Court of India

Case : Mangala Waman Karandikar (D) Tr. Lrs v. Prakash Damodar Ranade Civil appeal no 10827 of 2010

Court : Supreme Court of India

Bench : Chief Justice of India N. V. Ramana, Justice Surya Kant and Justice Aniruddha Bose

Decided on : 07 May 2121

Relevant Statutes

Section 15 A of the Bombay Rent Act, 1947

Section 92(6) and 95 of the Indian Evidence Act 1872

Brief Facts and Procedural History

1. A Contract was entered between the appellant and respondent on 7.02.1963. The Appellant’s husband was running a stationery business named “Karandikar Brothers'' before his demise in 1962. After his death, his wife continued his business, but she was unable to continue and further decided to continue the business by the respondent.

2. The Agreement was entered for a period of two years i.e. 1st February 1963 to 31st January 1965. After some time, the appellant issued a notice on 20.12.1980 and requested the respondent to vacate the premises by 31.01.1981 but the respondent replied and said the contract was a rent agreement not for the sale of the business.

3. The Appellant filed a suit in Trial Court against the respondent in respect of the agreement and on 30.08.1988 the Court held in favour of the appellant that the agreement was to create a transaction for the sale of business not to rent the premises. The Respondent filed an appeal before the Court of Additional District Judge and the court dismissed the appeal then further the Respondent filed a second appeal before the High court of Bombay. Later, The High Court allowed the appeal under Section 15A of the Bombay Rent Act, 1947 and set aside the Trial court order. The Appellant filed an appeal against the judgment of the High Court in the Supreme Court.

The Issue of the Case

Whether the contract was a rent agreement or for the continuation of the existing business?

The Observation of the Court:

1. The Honourable Supreme Court observed some principles on contractual interpretation. It was specified in the contract that the agreement was not meant for a lease instead it was intended to transfer the business from appellant to respondent during the contractual period. The High Court referred the Section 92 and 95 of the Indian Evidence Act, 1872 for interpreting the agreement and taking evidence, but this section shall not apply in the case where any agreements do not leave a question of doubt.

2. As it is clear from the contract “It is for the continuation of the business by paying royalties of Rs. 90 per month as she has also excluded the word rent” The evidence also stated that the agreement was created for the continuation of the existing business, not for the lease of the shop which results, the Bombay Rent Act, 1947 also not apply here. The defendant fails to prove that premises were given to him on a license basis. 

The Decision Held by the Court

The Honourable Supreme Court set aside the Judgment of the High Court of Bombay and allowed the appeal.

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