Supreme Court Lays Down Clear Guidelines For Interpreting Deeds & Contracts, Dismisses False Tenancy Claim

The Supreme Court has laid down clear guidelines for interpreting legal deeds and contracts.

It emphasized a threefold approach: first, using the Literal Rule to interpret words in their plain, ordinary sense; second, applying the Golden Rule to avoid absurd results from literal meanings; and third, using the Purposive Rule when needed, to understand the intent behind the document.

In a case involving a hotel conducting agreement, the Court ruled that it did not create tenancy rights and highlighted that oral evidence cannot override written agreements, except in cases of fraud or mistake, as per the Indian Evidence Act.

The Court upheld the Bombay High Court’s decision, dismissed the appeal, and imposed ₹1 lakh in costs.