Quadrat Ullah Vs Municipal Board Bareilly, AIR 1974 SC 396

Hon'ble Supreme Court of India observed, “There is no simple litmus test to distinguish a lease as defined in Section 105 Transfer of Property Act from a licence as defined in Section 52, Easements Act, but the character of the transaction turns on the operative intent of the parties. To put it pithily, if an interest in immovable property, entitling the transferees to enjoyment, is created, it is a lease; if permission to use land without right to exclusive possession is alone granted, a licence is the legal result. Marginal variations to this broad statement are possible and Ex. '1' and '4' fall in the grey area of unclear recitals. The law on the point has been stated by this Court in the Associated Hotels' case….
In determining whether an agreement creates between the parties the relationship of landlord and tenant or merely that of licenser and licensee the decisive consideration is the intention of the parties. The parties to an agreement cannot, however, turn a lease into a licence merely by stating that the document is to be deemed a licence or describing it as such; the relationship of the parties is determined by law on a consideration of all relevant provisions of the agreement; nor will the employment of words appropriate to a lease prevent the agreement from conferring a licence only if from the whole document it appears that it was intended merely to confer a licence. In the absence of any formal document the intention of the parties must be inferred from the circumstances and the conduct of the parties….
The fact that the agreement grants a right of exclusive possession is not in itself conclusive evidence of the existence of a tenancy, but it is a consideration of the first importance….
A licence is normally created where a person is granted the right to use premises without becoming entitled to exclusive possession thereof, or the circumstances and conduct of the parties show that all that was intended was that the grantee should be granted a personal privilege with no interest in the land. If the agreement is merely for the use of the property in a certain way and on certain terms while the property remains in the possession and control of the owner, the agreement will operate as a licence, even though the agreement may employ words appropriate to a lease….”

ASSOCIATED HOTELS OF INDIA LTD. v. R. N. KAPOOR AIR 1959 SC 1262

The respondent, R. N. Kapoor, since deceased, was in occupation of two rooms described as ladies' and gentlemen's cloak rooms, and carried on his business as a hairdresser.
The document no doubt uses phraseology appropriate to a licence. But it is the substance of the agreement that matters and not the form, for otherwise clever drafting can camouflage the real intention of the parties.
There is a marked distinction between a lease and a licence. Section 105 of the Transfer of Property Act defines a lease of immovable property as a transfer of a right to enjoy such property made for a certain time in consideration for a price paid or promised. Under sec 108 of the said Act, the lessee is entitled to be put in possession of the property. A lease is therefore a transfer of an interest in land.
The lessee gets that right to the exclusion of the lessor. Whereas S. 52 of the Indian Easements Act defines a licence thus: ‘Where one person grants to another, or to a definite number of other persons, a right to do or continue to do in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful, and such right does not amount to an easement or an interest in the property, the right is called a licence.’
The following propositions may, therefore, be taken as well-established: (1) To ascertain whether a document creates a licence or lease, the substance of the document must be preferred to the form; (2) the real test is the intention of the parties - whether they intended to create a lease or a licence; (3) if the document creates an interest in the property, it is a lease; but, if it only permits another to make use of the property, of which the legal possession continues with the owner, it is a licence; and (4) if under the document a party gets exclusive possession of the property, prima facie, he is considered to be a tenant; but circumstances may be established which negative the intention to create a lease.
The solitary circumstance that the rooms let out in the present case are situated in a building wherein a hotel is run cannot make any difference in the character of the holding. The intention of the parties is clearly manifest, and the clever phraseology used or the ingenuity of the document writer hardly conceals the real intent. I, therefore, hold that under the document there was transfer of a right to enjoy the two rooms, and, therefore, it created a tenancy in favour of the respondent.

Kishori Lal v. Chaltibai, 1959 AIR (SC) 504 From a reading of the provisions of Section 52 of the Transfer of Property Act, it is clear that any right in a suit or proceeding with regard to immovable property, which is directly and specifically in question, cannot be transferred in any manner whatsoever by either party to the suit inasmuch as it would affect the right of any other party. However, such transfer can be made with prior sanction of the Court, subject to terms as it may impose, and the same would be subject to the conclusion of the suit. From a perusal of the plaint, it is clear that the plaintiff has pleaded his readiness and willingness to perform his part of contract. However, thirty days time sought for by the plaintiff is as per clause (6) of Ex. A1 and as per the clause (1) of Ex. A1, the defendant No. 1 has to obtain Income Tax Clearance Certificate and other permissions from the authorities concerned.