Mangala Waman Karandikar (D) Tr.Lrs. v. Prakash Damodar Ranade
Background
After her husband's death, a woman who had been running a stationery business, "Karandikar Brothers," in Pune let the respondent run the shop under a written 1963 agreement in exchange for monthly royalty payments. A dispute later arose over whether this was a licence to continue running the existing business or effectively a lease/tenancy of the shop premises, with the respondent's side pointing to a receipt describing a payment as "rent received." The Bombay High Court, in a second appeal, ruled in the respondent's favour by relying on such extrinsic material to interpret the agreement, reversing the trial court's decree for the appellant.
Decision Breakdown
The Supreme Court held that once the written agreement's terms are clear and unambiguous, courts cannot use external evidence like later receipts or conduct to contradict or reinterpret what the document actually says: that would violate Section 92 of the Evidence Act, which generally bars such contrary oral/extrinsic evidence once a contract is reduced to writing. Reading the 1963 agreement itself, the Court found it unambiguously created a licence for the respondent to continue running the existing "Karandikar Brothers" business, not a tenancy, so the Bombay Rent Act had no application. The High Court's reliance on the word "rent" in a receipt to reinterpret the whole arrangement was therefore an error, and the Supreme Court set aside the High Court's judgment and restored the trial court's decree.
Lesson Learnt
If a written agreement's terms are clear, you generally cannot later rely on stray words in receipts or informal conduct to argue it meant something different: write contracts precisely, because courts will normally hold parties to the plain written terms.