In Ram Sarup Gupta v. Bishun Narain Inter College (1987) 2 SCC 555, the Supreme Court held that Section 60 of the Easements Act, 1882 in not exhaustive and the parties can stipulate a licence to be revocable. The relevant para is as under:-
―9. … Section 60 provides that a licence may be revoked by the grantor unless: (a) it is coupled with a transfer of property and such transfer is in force; (b) the Licensee, acting upon the licence, has executed a work of permanent character and incurred expenses in the execution. Revocation of licence may be express or implied. Section 62 enumerates circumstances on the existence of which the licence is deemed to be revoked. One of such conditions contemplates that where licence is granted for a specific purpose and the purpose is attained, or abandoned, or if it becomes impracticable, the licence shall be deemed to be revoked. Sections 63 and 64 deal with Licensee’s right on revocation of the licence to have a reasonable time to leave the property and remove the goods which he may have placed on the property and the Licensee is further entitled to compensation if the licence was granted for consideration and the licence was terminated without any fault of his own. These provisions indicate that a licence is revocable at the will of the grantor and the revocation may be expressed or implied. Section 60 enumerates the conditions under which a licence is irrevocable. Firstly, the licence is irrevocable if it is coupled with the transfer of property and such right is enforced and secondly, if the Licensee acting upon the licence executes work of permanent character and incurs expenses in execution.
Section 60 is not exhaustive. There may be a case where the grantor of the licence may enter into agreement with the Licensee making the licence irrevocable, even though, neither of the two clauses as specified under Section 60 are fulfilled. Similarly, even if the two clauses of Section 60 are fulfilled to render the licence irrevocable yet it may not be so if the parties agree to the contrary. In Muhammad Ziaul Haque v. Standard Vacuum Oil Co. [55 CWN 232] the Calcutta High Court held that where a licence is prima facie irrevocable either because it is coupled with a grant or interest or because the Licensee erected the work of permanent nature there is nothing to prevent the parties from agreeing expressly or by necessary implication that licence nevertheless shall be revocable. On the same reasoning there is nothing to prevent the parties agreeing expressly or impliedly that the licence which may not prima facie fall within either of the two categories of licence (as contemplated by Section 60) should nevertheless be irrevocable. The same view was taken by Das, J. (as he then was) in Dominion of India v. Sohan Lal [AIR 1955 EP 40]. Bombay High Court has also taken the same view in M.F De Souza v. Childrens Education Uplift Society [AIR 1959 Bom 533]. The parties may agree expressly or impliedly that a licence which is prima facie revocable not falling within either of the two categories of licence as contemplated by Section 60 of the Act shall be irrevocable. Such agreement may be in writing or otherwise and its terms or conditions may be express or implied. A licence may be oral also in that case, terms, conditions and the nature of the licence, can be gathered from the purpose for which the licence is granted coupled with the conduct of the parties and the circumstances which may have led to the grant of the licence.‖ (Emphasis supplied) 13.2.2. In Corporation of Calicut v. K Sreenivasan, AIR 2002 SC 2051, the Supreme Court explained the right of a Licensee to occupy the premises in respect of which the Licence is granted, in as under:
―16. It is true that a Licensee does not acquire any interest in the property by virtue of grant of Licence in his favour in relation to any immovable property, but once the authority to occupy and use the same is granted in his favour by way of Licence, he continues to exercise that right so long the authority has not expired or has not been determined for any reason whatsoever, meaning thereby so long the period of Licence has not expired or the same has not been determined on the grounds permissible under the contract or law. Occupation of the Licensee is permissive by virtue of the grant of Licence in his favour, though he does not acquire any right in the property and the property remains in possession and control of the grantor, but by virtue of such a grant, he acquires a right to remain in occupation so long the Licence is not revoked and/or he is not evicted from its occupation either in accordance with law or otherwise.
…….. So far as the case of lease of a public building is concerned, upon expiry of the period limited thereby or its determination in accordance with law, the special procedure prescribed under the Act providing speedy remedy for eviction would apply even though some interest in the immovable property is created in favour of the lessee by virtue of creation of lease in his favour. But in a case of Licence, no interest in the property is created by virtue of the grant, but a person acquires a right to continue his occupation by virtue of the authority granted in his favour under the Licence unless the period of Licence has expired or the same has been determined or Licence has been revoked and/or the Licensee is evicted by the grantor.‖ 13.2.3. In Mumbai International Airport Private Limited v. Golden Chariot Airport, (2010) 10 SCC 422, the Supreme Court considered the terms of the licence of the Licensee and held the same to be revocable. The Supreme Court rejected the argument of the Licensee that the licence was irrevocable on the ground that the Licensee had made construction in the premises. The Supreme Court further observed that the provisions of Public Premises (Eviction of Unauthorised Occupants) Act, 1971 and the rules framed thereunder have been made applicable to the licence agreement. Relevant portion of the said judgment is reproduced hereunder:
“3. Some of the clauses of the said licence agreement are relevant as one of the arguments advanced by the contesting respondent, before the Estate Officer, the High Court and this Court is that the licence is irrevocable. It has also been urged by the contesting respondent, that apart from the licence agreement, there has been an oral extension of the licence and the contesting respondent was assured that it is irrevocable, and on the basis of such assurance, it has invested considerable money in building the restaurant.
It is clear from what is extracted above that the licence is not irrevocable. Apart from that it is clear that the provisions of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 and the Rules framed thereunder have been made applicable to the licence agreement.‖ ―39. The very idea of a licence being irrevocable is a bit of a contradiction in terms. From the clauses of the licence referred to above, it is clear that by its terms the licence is revocable. It is well known that a mere licence does not create any estate or interest in the property with which it is concerned. Normally a licence confers legality to an act, which would otherwise be unlawful. A licence can be purely personal, gratuitous or contractual. Whether a contractual licence is revocable or not, would obviously depend on the express terms of the contract. A contractual licence is normally revocable, except in certain circumstances that are expressly provided for in the Easements Act, 1882.
40. A Licence has been defined in Section 52 of the Easements Act, 1882 as a right to do or continue to do in or upon the immovable property of the grantor something, which, in the absence of such right, could be unlawful, but such right does not amount to an easement or an interest in the property. (See Muskett v. Hill1, Bing p. 707 and Heap v. Hartley, Ch D p. 468.)‖ (Emphasis supplied) 13.2.4. In B.K. Bhagat v. New Delhi Municipal Council, 2015 SCC OnLine Del 9629, this Court held the licence to be revocable in view of Clause 24 which expressly recorded the licence to be revocable. This Court further held that the scope of judicial review of decisions in commercial matters is very limited, unless it is shown that the decision is so arbitrary or irrational that no responsible person could have arrived at such decision, the Courts would not interfere. When no public interest is involved and dispute is, clearly, a commercial dispute and the respondent is not fettered in any manner to maximise its gains from its property, no interference under Article 226 of the Constitution of India is called for in such matters. Relevant portion is reproduced as under:-
―33. However, it is difficult to accept that licence granted to the petitioner was irrevocable; Clause 24 of the Licence Deed expressly records that the Licence is revocable. Admittedly, the initial term of the licence has elapsed and the respondent has – whether rightly or otherwise – unequivocally declined to renew the licence except in terms of its offer, which has admittedly not been accepted.
xxx xxx xxx
51. … It is well established that the quantum of the licence fee to be charged by the respondent for use of its premises is a matter of commercial perception and courts would normally not interfere in the commercial discretion exercised by the State. According to the petitioner, the respondent had arrived at the said rate based on the fees payable by five star hotels in the vicinity and this was arbitrary. In my view, the respondent is entitled to take a decision with regard to the potential of the said premises and the courts cannot supplant their opinion over that of the executive.”
In State of Madhya Pradesh v. Abdul Rahim Khan 1974 MPLJ 7767 (8), the Madhya Pradesh High Court held that generally when the Licensee acting under the terms of licence had made a permanent structure the licence was irrevocable, but parties might contract otherwise and if the contract conferring licence provided that the licence could be terminated under certain circumstances even though the Licensee had made a permanent structure, Section 60(b) would not be a bar for the licensor to terminate the licence in accordance with the contract.
In Bhagwauna v. Sheikh Anwaruzzaman 1980 ALL L.J. 368 the Allahabad High Court held that a Licensee who has agreed in expressed terms to vacate the land whenever asked by the owner is precluded from raising the plea that his construction is protected under Section 60(b) of the Easements Act.
“Applying the principles laid down in the judgments discussed above, I hold that the licence deed dated 16th July, 1982 is revocable. The Licensee’s contention that the licence is irrevocable under section 60(b) of the Indian Easements Act, 1882 on the ground of having made permanent construction, is contrary to the well settled law and is rejected. The contention of the Licensee that the terms of the licence constitute an irrevocable licence in favour of the Licensee is also misconceived and is rejected”.