Supreme Court Declares 99-Year Lease Valid and Sets Aside High Court Finding of Licence

A Bench of Justices S.V.N. Bhatti and Pankaj Mithal heard an appeal against the Orissa High Court’s decision which had treated a 1998 instrument as a licence and upheld a subsequent sale of the property. The civil appeal concerned whether the document dated 23.03.1998 created a lease for 99 years in favour of a socio‑religious organisation and whether a later unilateral cancellation and sale could defeat the lessee’s rights.

The Court allowed the appeal, set aside the impugned High Court judgment and held that the 1998 instrument was a lease and not a licence; the unilateral cancellation was illegal and the plaintiff’s leasehold rights survived. The Court relied on established principles distinguishing lease and licence and on canons of construction to ascertain the parties’ intention. The Court, in its reasoning, observed: “Thus, in the case at hand, the reason for ignoring literal construction is not convincing to us. We note that interpreting intention through purposive construction or through ex‑post facto circumstances is unnecessary when the intention is understood from the plain and ordinary meaning of the text. There is no doubt that the nomenclature alone of the document is not the decisive factor of the nature of a document; it is the text and the context that point to the obligations undertaken by the parties to a written document. In the case at hand, the document’s nomenclature, text and context lead to only one conclusion: that Defendant No. 1 entered into a 99‑year lease deed. Thus, the unilateral cancellation, in the facts and circumstances of this case, is illegal, and it should be understood as having interfered with the right of the Plaintiff to remain in possession of the Plaint Schedule Property for 99 years. Therefore, the prayers, as made, are available and are rightly granted by the Trial and First Appellate Courts.”

Background: The dispute arose from a registered instrument dated 23.03.1998 by which the owner purported to “demise” a plot to a branch of a socio‑religious organisation for “the purpose of having the office of Vivekananda Kendra … and for carrying out the very aims and objectives of the said Kendra” for 99 years at a nominal rent. The owner issued a cancellation deed on 03.12.2003 and served a termination notice on 14.12.2003. The organisation alleged forcible dispossession on 09.05.2005; a power of attorney in favour of a relative was executed on 03.05.2005 and a sale deed in favour of two purchasers was registered on 17.01.2006. The organisation sued for a declaration of leasehold right, possession and injunction. The Trial Court decreed the suit on 27.02.2018 and the First Appellate Court confirmed on 05.10.2021. The High Court allowed the appeal in RSA No. 123 of 2021, held the 1998 instrument did not create a lease, treated it as a licence and sustained the subsequent sale.

Before the Supreme Court, the appellant argued that the document’s language — including that the “Lessor hereby demises to the Lessee” and the grant “to hold … to the lessee from the 1st day of March, 1998 for 99 years” — manifested an intention to create a lease and that the unilateral cancellation was ineffective. The respondents argued that the owner retained possession of the first floor and that the instrument should be construed as a licence permitting use without transfer of interest; they also relied on the bona fide purchase contention. The Supreme Court reviewed precedents including Associated Hotels of India v. R.N. Kapoor on the distinction between lease and licence, and earlier authorities on contractual construction, held that the text, context and covenants pointed to a lease, and concluded the High Court erred in relying on post‑execution conduct to override the deed’s plain meaning. The Court restored the Trial and First Appellate Courts’ findings, declared the cancellation void insofar as it affected the lessee’s rights, allowed the civil appeal and made no order as to costs. The judgment noted that nomenclature was not decisive but that here the instrument’s terms were unequivocal.

Case Details: Case No.: 2026 INSC 199 (Civil Appeal @ SLP (C) No. 9558 of 2023) Case Title: The General Secretary, Vivekananda Kendra v. Pradeep Kumar Agarwalla & Others Appearances: For the Petitioner(s): Mr. Rutwik Panda, Advocate For the Respondent(s): Mr. Ashok Panigrahi, Senior Counsel