TRANSFER OF PROPERTY

1. Answering to Question 1

1.1.

1.2.

1.3.
 2. Answering to Question 4

2.1. Creation of a Lease.

A lease of immoveable property is a transfer of a right to enjoy such property, made for a
certain time, express or implied, or in perpetuity, in consideration of a price paid or promised,
or of money, a share of crops, service or any other thing of value, to be rendered periodically
or on specified occasions to the transferor by the transferee, who accepts the transfer on such
terms. As per section 105 of the Transfer of the Property Act (hereon the Act)

The essential elements of a lease are: —

(1) the parties

(2) the subject-matter i.e., immoveable property

(3) transfer (partial in nature)

(4) the term, or period of such transfer

(5) the consideration for the transfer.

(Parties) Competency to grant a lease depends upon competency to transfer under sec. 7 of
the Act. The lessor must therefore be competent to contract and have title or authority. A
lease is a contract where under the transferee accepts certain obligations. The transferee must
therefore be one who is capable of contracting. The subject-matter of a lease must be
immoveable property as defined in section 3 of the Act. The subject-matter is therefore not
only land and minerals and buildings, but also benefits to arise out of land. Also, the word
demise as stated in the statement in the question given, is not used in the Act, but it is a term
of English law commonly used by conveyancers in India to denote a transfer by lease.
Transfer under a lease is not covered under section 11 but under section 10 of the act as it is
a transfer of partial interest. A lease executed for more than a year (term), if executed
without registered document is not effective in law, and would not be called a transfer of
property creating any rights in favour of a third party. For example, contract of lease
providing that the tenant is to continue in possession as long as he paid rent, indicates a
tenancy for the lifetime of the tenant and not a permanent tenancy. Thus the essentials of a
lease are similar to that of essentials of contract under section 10 of the contract act.
 2.2. Determination of Associated Rights and Liabilities.

As per section 111 of the Act,

A lease of immoveable property determines—
(a) by the completion of the lease time; Where the lessee continues to remain in possession
of the leased property even after the determination of lease, he is not known as trespasser but
lessee at sufferance. He will have to pay compensation to the lessor for the use and
enjoyment of the property beyond the time-period of the lease. This was directed by the
supreme court in the case of Ramo Gowda v M Varadappa Naidu. Law respects possession
even if there is no title to support it. It will not permit any person to take the law into his own
hands and to dispossess a person in actual possession without having recourse to a court. No
person can be allowed to become a judge in his own cause. Though the leasee has the option
to exercise renewal, subject to approval from the lessor.
(b) On the happening of a future event so long as such event does not happen, the lessee
will be entitled to the possession of the leased property.
(c) where the interest of the lessor in the property terminates on, or his power to dispose of
the same extends only to, the happening of any event—by the happening of such event;
(d) in case the interests of the lessee and the lessor in the whole of the property become
vested at the same time in one person in the same right; this provision in general terms is
known as merger and this takes place when the leasee himself becomes the absolute owner of
the lease premises.
(e) by express surrender by the lessee; Delivery of possession is important unless there is
an
agreement to surrender at some future time. The lessor must agree to surrender and there
must be delivery of possession. Surrender need not be in writing. It can be done orally by
delivery of possession. It can be inferred from the acts of the parties.
(f) by implied surrender; The principle behind the implied surrender is that when a certain
relationship existed between two parties in respect of a subject-matter and a new relationship
has come into existence regarding the same subject, the two sets cannot co-exist being
incompatible and inconsistent with each other, the former is deemed to have terminated in
order to enable the latter to operate. The case of Shivram Ladu Nitardkar v Alex Fernandes in
the Bombay high court helps us in understanding an implied surrender. Where there was the
collapse of premises due to natural causes, it was held that the relationship of landlord and
tenant came to an end. The tenant could not insist that the owner should reconstruct the
premises and handover the same to him.
(g) by forfeiture; that is to say, (a) in case the lessee breaks an express condition which
provides that, on breach thereof, the lessor may re-enter; or (b) in case the lessee
renounces his character as such by setting up a title in a third person or by claiming
title in himself; or (c) the lessee is adjudicated an insolvent and the lease provides that
the lessor may re-enter on the happening of such event; and in any of these cases the
lessor or his transferee gives notice in writing to the lessee of his intention to determine
the lease;
(h) on the expiration of a notice to determine the lease, or to quit, or of intention to quit, the
property leased, duly given by one party to the other.

2.3. Lease and the right in rem.

A lease is not a mere contract, but is a transfer of an interest in land and creates a right in
rem. as was stated in the case of Kandasami v. Ramaswami. The statement signifies that a
lease is a transfer of a right to possess and enjoy the property, and can be created for a
specific number of years or even in perpetuity. However, rule against perpetuity is applicable
only in those cases where there is a transfer of property, and the vesting of it is postponed
beyond the period of perpetuity. It, therefore, does not apply in cases of lease.

2.4. Differentiating Lease and Licence

If interest in immovable property, entitling the transferee to its enjoyment, is created, it is a

lease; if permission to use the land without the right to exclusive possession is alone granted,
the transaction is a licence. The very definition of lease and licence indicates that the essence
of the distinction lies in the creation of an interest in the properly, as distinguished from a
mere permission to use the properly. Where the licensee, acting upon the licence, executes
permanent works and incurs expense, the licence cannot be revoked by the grantor if the
grantor stands by and allows the licensee to do such acts in the belief that he has a right to do
so.

It is the creation of an interest in immovable property or a right to possess it that distinguishes

a lease from a licence. For the purpose of deciding whether a particular transaction is a lease
or a licence, the question of intention of the parties is to be determined, and the intention has
to be inferred from the circumstances of each case. It is essential, therefore, to look to the
substance and essence of the agreement, and not merely to the form. Generally, exclusive
possession coupled with the transfer of a right to enjoy the property is the test. Also, merely
stating that a transaction is a licence and not a lease, its nature cannot be changed.

In the case of Chhotabhai Jethabhai Patel v. State of Madhya Pradesh it was held that
permission to cut or remove trees, or to tap coconut trees is only a licence however in another
case of Srirangam Municipality v. V. N Pillai the supreme court held that a document that
confers for 3 years a right to cut grass and grants exclusive possession, then it creates an
interest in land, and is a lease. These two cases help us in understanding the differences
between a lease and licence.

Lease Licence

A lease is a transfer of an interest in a specific A license is a bare permission, without any

immovable property transfer of an interest.
Both transferable and heritable Neither transferable nor heritable.

Lease continues even with the death of leaser
or leasee.
Unaffected by the transfer of the property by
sale in favour of a third party.
Right to possession exists in lease’s own
capacity.
Can come to an end only in accordance with
the contract agreed upon.
Ends with the death of grantor or grantee.
Licence comes to an end on an absolute
transfer of the property through sale.
A licensee enjoys possession of the property
in the name of the licensor.
Can be withdrawn any time at the pleasure of
the grantor.