Tenancy may be established without a written agreement through cumulative oral, documentary, and circumstantial evidence.

The Appellants instituted a suit for possession, mesne profits and permanent injunction concerning the rear portion of Shop No. 70, Sarojini Nagar, New Delhi, asserting that the Respondent had been permitted to use the premises as a licensee on payment of licence fee of ₹1,000 per day.

The Respondent denied the licence arrangement and claimed that he had been inducted as a tenant from 1 October 1996 at a monthly rent of ₹1,000, contending that the suit was barred by the Delhi Rent Control Act, 1958.

The Trial Court rejected the Appellants’ plea of licence and held that the Respondent was a tenant, principally relying on the evidence regarding rent payments, Income Tax Returns, exclusive possession and alterations made to the premises.

The Appellants confined the first appeal under Section 96 CPC to the findings on Issue Nos. 6 and 11.

Whether the Appellants proved that the Respondent had been permitted to occupy the suit premises as a licensee on payment of ₹1,000 per day.

Whether the Respondent established that he had been inducted into the suit premises as a tenant at a monthly rent of ₹1,000.

Whether the Trial Court’s findings on Issue Nos. 6 and 11 were perverse, illegal, or based on material misappreciation of evidence so as to warrant interference under Section 96 CPC.

The Court applied Section 96 CPC, under which a first appeal ordinarily entails a rehearing on questions of fact and law, together with Order XLI Rule 31 CPC, requiring the appellate court to identify the points for determination, decide them, and provide reasons.

Relying on Santosh Hazari v. Purushottam Tiwari, Madhukar v. Sangram, H.K.N. Swami v. Irshad Basith and Malluru Mallappa v. Kuruvathappa, the Court held that although the first appellate court must independently assess the evidence, interference with factual findings is warranted only where they are perverse, legally erroneous, or contrary to the evidence.

Sections 101–103 of the Indian Evidence Act, 1872 place the burden of proving an asserted fact on the party seeking a finding in its favour.

Illustration (g) to Section 114 permits an adverse inference where material evidence within a party’s power is withheld without satisfactory explanation, as explained in Gopal Krishnaji Ketkar v. Mohamed Haji Latif.

The Court further applied the civil standard of proof—preponderance of probabilities—and held that the nature of possession must be determined from the substance of the transaction, conduct of the parties and surrounding circumstances, rather than merely from the absence or presence of a written agreement.

The Appellants bore the initial burden of proving the alleged licence arrangement, but their case rested substantially on the oral testimony of Appellant No. 2.

The alleged daily payments of ₹1,000, including payments to three creditors, were unsupported by receipts, books of account, ledger entries or other contemporaneous records.

The non-examination of the alleged creditors, who were the best witnesses to corroborate the arrangement, justified an adverse inference under Section 114, Illustration (g) of the Evidence Act.

The evidence of PW-2 was also materially hearsay and did not establish that payments had been made in his presence.

The Partnership Deed dated 13 October 1996 did not conclusively establish a licence, particularly since the Appellants’ own evidence characterised it as a document prepared to satisfy Appellant No. 2 and not as a genuine partnership arrangement.

Conversely, the Respondent’s tenancy plea was supported cumulatively by his consistent assertion of tenancy, the Income Tax Returns showing rent payments, deposits into Appellant No. 2’s loan account, and his exclusive possession, possession of the keys and alterations made for conducting his jewellery business.

Applying the preponderance-of-probabilities standard, the Court held that the Trial Court had properly evaluated the competing versions and that its findings disclosed no perversity or material misappreciation warranting appellate interference.

The findings of the Trial Court on Issue Nos. 6 and 11 were affirmed as neither perverse nor illegal.

The Regular First Appeal and pending application(s) were dismissed, with no order as to costs.