Lease or licence turns on parties' real intention; exclusive possession is not conclusive where the document shows permission only.

The controlling test for distinguishing a lease from a licence is the real intention of the parties as gathered from the instrument as a whole and, where necessary, the surrounding circumstances; exclusive possession is relevant but not isive. Where the grantor lacked power to create a lease without prior written consent, a sub-lease could not be inferred contrary to the deed and the statutory constraint. Reading the agreement with the relevant tenancy and property law provisions, the Court treated the express exclusion of tenancy language, the conditional reference to a future sub-lease, and the permissive terms for running the petrol station as consistent with a licence. The agreement was therefore held to be a licence, not a lease.

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Issues: Whether the agreement dated 18 July 1970 created a lease or only a licence.

Analysis: The decisive test is the real intention of the parties, as gathered from the document as a whole and, where necessary, the surrounding circumstances. Exclusive possession is an important factor, but it is not conclusive. Where the grantor has no power to create a lease without the landlord's prior written consent, a purported sub-lease cannot be inferred contrary to the express terms of the deed and the legal disability under section 14(1) of the West Bengal Premises Tenancy Act, 1956. The document here expressly stated that it was not to be treated as a tenancy or lease, contemplated a future sub-lease only if consent was obtained, and contained several clauses consistent with a permissive arrangement for running the petrol station. The references to demised premises and other lease-like expressions did not override the clear contractual language, and the agreement was construed in the context of section 107 of the Transfer of Property Act, 1882 and the settled distinction between lease and licence under section 52 of the Indian Easements Act, 1882.

Conclusion: The agreement was a licence and not a lease; the finding of the Division Bench was incorrect and the appellant succeeded.

Ratio Decidendi: In determining whether a document creates a lease or a licence, the controlling test is the operative intention of the parties as expressed in the instrument read as a whole, and exclusive possession is not decisive where the document and surrounding legal constraints indicate a permissive arrangement only.

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