Licence versus lease dispute resolved against sub-tenancy; oral evidence allowed in principle, but enhanced damages were upheld.

The written arrangement of 15.5.1975 was held to be a licence and not a lease because the parties acted on it, accounts and commission payments matched its terms, no fixed rent was provided, and possession remained with the grantors; the plea of sub-tenancy failed for want of the original landlord's consent. Sections 91 and 92 of the Evidence Act allow oral evidence to show that a written document was never intended to operate as the real bargain, but that plea was rejected on the facts because the agreement was genuinely acted upon. The High Court's enhancement of damages and consequential relief under Order 41 CPC was upheld, and the decree was maintained.

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Issues: (i) whether the agreement dated 15.5.1975 created a licence or a lease and whether the occupant was a sub-tenant; (ii) whether Sections 91 and 92 of the Indian Evidence Act, 1872 permitted oral evidence to show that the written agreement was sham or not intended to be acted upon; (iii) whether the High Court could enhance damages and grant consequential relief in exercise of powers under Order 41 of the Code of Civil Procedure, 1908.

Issue (i): whether the agreement dated 15.5.1975 created a licence or a lease and whether the occupant was a sub-tenant.

Analysis: The written arrangement was acted upon by the parties, accounts were rendered under its terms, and commission payments corresponded to the agreed percentages. The document did not stipulate any fixed monthly rent, and the surrounding circumstances supported the conclusion that possession was retained by the grantors and that the occupant held only a licence. In the absence of consent of the original landlord, a plea of sub-tenancy could not be sustained under the rent control law.

Conclusion: The arrangement was a licence and not a lease, and the plea of sub-tenancy failed.

Issue (ii): whether Sections 91 and 92 of the Indian Evidence Act, 1872 permitted oral evidence to show that the written agreement was sham or not intended to be acted upon.

Analysis: Section 91 embodies the rule that the contents of a written contract must be proved by the writing itself, while Section 92 excludes oral evidence for varying its terms. At the same time, oral evidence is admissible to establish that a document, though executed, was never intended to operate as the real bargain. On the facts, the conduct of the parties, the commission statements, and the cheque payments demonstrated that the agreement was genuinely acted upon, and the plea that it was a sham device was not accepted.

Conclusion: Oral evidence was legally admissible in principle, but the factual plea that the agreement was sham was rejected.

Issue (iii): whether the High Court could enhance damages and grant consequential relief in exercise of powers under Order 41 of the Code of Civil Procedure, 1908.

Analysis: The High Court acted with the consent of the parties to decide the matter on the existing record and exercised its appellate powers to mould relief. It found that the market position justified a higher rate for use and occupation, and the enhancement was supported by the evidence and circumstances.

Conclusion: The enhancement of damages and the consequential relief were upheld.

Final Conclusion: The appeal disclosed no error warranting interference, and the decree in favour of the respondent was sustained in full.

Ratio Decidendi: Where a written arrangement is shown by conduct and contemporaneous payments to have been acted upon, its true character must be determined from the document and surrounding circumstances, oral evidence may be used only to prove that the document was not intended to operate as the real bargain, and sub-tenancy cannot be claimed in the absence of the landlord's consent where the statute prohibits it.

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