INTRODUCTION
In The General Secretary, Vivekananda Kendra v. Pradeep Kumar Agarwalla & Others, reported as 2026 INSC 199, decided on 26 February 2026, the Supreme Court of India, comprising Justice Pankaj Mithal and Justice S.V.N. Bhatti, set aside the Judgment of the Orissa High Court and restored the concurrent findings of the Trial Court and First Appellate Court.
The core issue before the Court was whether a registered 99-year document styled as a “lease deed” created a lease or merely a licence. Answering decisively in favour of the Appellant, the Court held that the document satisfied all the essential attributes of a lease under Section 105 of the Transfer of Property Act, 1882 and that unilateral cancellation by the lessor was illegal.
BRIEF FACTS
The dispute concerned a parcel of land situated at Baripada Town, Odisha. The property was owned by Late Anima Bose, who, on 23 March 1998, executed a registered document (Ext. 1) in favour of Vivekananda Kendra for a term of 99 years at an annual rent of ₹1,000. The document recorded that the property was being demised for establishing and running a centre of the Kendra to carry out its aims and objects.
In December 2003, Anima Bose executed a unilateral Deed of Cancellation of the lease and issued Notice to the Kendra to surrender possession. Subsequently, in 2006, through a Power of Attorney, the property was sold to third parties.
The Kendra instituted a civil suit seeking declaration of its leasehold rights, recovery of possession and permanent injunction. The Trial Court decreed the Suit, holding that the unilateral cancellation was illegal and that the subsequent Purchasers were bound by the Lease. The First Appellate Court affirmed the decree.
However, the Orissa High Court, in Second Appeal under Section 100 of the Code of Civil Procedure, reversed the concurrent findings, holding that Ext. 1 was not a lease but a licence. Aggrieved, the Kendra approached the Supreme Court.
ISSUES OF LAW
The principal question before the Supreme Court was whether Ext. 1 constituted a lease or a licence in law.
Flowing from this was the consequential issue: whether, during the subsistence of the alleged leasehold right, the lessor could validly cancel the document unilaterally and convey the property to third-party purchasers.
ANALYSIS OF THE JUDGMENT
The Court began by revisiting the classical distinction between a lease and a licence. Drawing from the authoritative principles laid down in Associated Hotels of India Ltd. v. R.N. Kapoor, the Court reiterated that the decisive test is the intention of the parties as gathered from the substance of the document, and not merely its nomenclature.
The Judgment carefully examined the contents of Ext. 1. The document expressly used the words “demise,” fixed a definite term of 99 years, prescribed annual rent and conferred the right upon the Lessee to make alterations and constructions to carry out its activities. It further clarified that the rights would bind successors and assigns, reflecting transfer of an interest in immovable property.
Applying established principles of interpretation, the Court emphasised that where the language of a document is clear and unambiguous, courts must adopt a plain and literal construction. Departure from literal interpretation is justified only when ambiguity or absurdity arises. In the present case, the document’s text and structure left no scope for ambiguity.
The High Court had relied upon subsequent conduct and surrounding circumstances, including the fact that the Lessor retained occupation of a portion of the building. The Supreme Court rejected this reasoning, observing that exclusive possession must be assessed in relation to the demised portion. Retention of a portion by the Lessor does not automatically negate creation of a lease.
The Court also cautioned against excessive reliance on ex-post facto conduct to determine intention where the written instrument itself is clear. Once parties have crystallised their obligations through a registered conveyance, the document must be interpreted primarily through its own terms.
Having held that Ext. 1 was a valid 99-year lease, the Court concluded that unilateral cancellation was impermissible. There was neither a clause authorising termination at will nor proof of circumstances under Section 111 of the Transfer of Property Act justifying determination of lease. Consequently, the subsequent sale to third parties could not defeat the subsisting leasehold interest.
The Purchasers, having acquired title from the Lessor, stepped into her shoes and were bound by the existing encumbrance. The doctrine of lis pendens and the principle that transferees cannot acquire better title than their transferor further fortified the Appellant’s case.
CONCLUSION
This Judgment reaffirms foundational principles of property law that a registered lease creating a clear interest in immovable property cannot be undone by unilateral cancellation and that courts must respect the sanctity of written instruments.
By restoring the concurrent findings of the Trial Court and First Appellate Court, the Supreme Court underscored the discipline required in second appeals under Section 100 CPC, where interference is confined to substantial questions of law.
More significantly, the ruling reiterates that the distinction between lease and licence hinges on intention discerned from the document’s substance. Where a deed unequivocally transfers an interest for a fixed term in consideration of rent, courts cannot dilute it into a mere licence on speculative inferences.
In safeguarding the lessee’s 99-year tenure, the Court has reinforced certainty in property transactions and reaffirmed that unilateral revocation cannot defeat vested leasehold rights grounded in registered conveyances.
SARTHAK KALRA
Senior Legal Associate
The Indian Lawyer & Allied Services
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