LEASES

By
D V N Murty
 INTRODUCTION AND DEFINITION

• Partial transfer of certain rights in the property.

• Parties to the lease
• The subject matter of lease
• Transfer of rights
• Duration of lease
• Consideration of lease
• Acceptance of transfer by the lesssee
 PARTIES TO LEASE

• Two parties in lease i.e. lessor (transferor) and lessee (transferee)

• Arises in an agreement between the owner and another person who proposes to
take the property for a term on payment of consideration.
• Lease may be granted to one or more than one person jointly.
• May be expressly or jointly.
• Nathulal v. Union of India.
 SUBJECT MATTER OF LEASE

• Specific immovable property.

• Other properties that are so defined as immovable are the things that are there
on the property or fixed to that property.
• Annick Chayamotti Devyani v. Prem Mohini Mehra:
“ Leased premises is not only a building or part of building but also the land and
other things appertaining to it and also furniture and other fixtures provided by
the landlord. “
UOI v. Shivdayal Soin and Sons– Letting out house for non-residential use does
not contravene the restriction for the purposes other than house construction.
 TRANSFER OF RIGHTS

• It is a transfer of right of enjoyment of property.

• Limited transfer of right.
• Demise- limited estate or transfer
• Byramjee Jeejeebhoy (P) Ltd. v. State of Maharashtra.
The word demise was first used in this case.
• Shankar Prasad v. State of Madhya Pradesh, AIR, 2003 (NOC), 172 (MP)
Did not exercise his right under Sec-108(e) as the property damaged due to fire.
So held liable to pay the rent.
 DURATION OF THE LEASE

• Document must show the time period of operation of lease and when it is going
to commence.
• It is certain or can be made certain on the happening of an event which must
happen.
• Types of duration:
1. Certain time- to end at the end of the life of the lessee as per the contract.
2. Periodic leases- year to year or month to month
3. Leases in perpetuity- long term leases
 Agricultural

6 months notice
Year to year
in writing

Manufacturing
Periodic leases

Other purposes

Month to month
15 days notice
in writing
 PERIODIC LEASES CONT…

• Notice period mentioned in the section 106 commences from the date of receipt
of notice.
• Notice must be delivered:
1. Personally; or
2. To family members; or
3. Sent by post; or
4. By affixing on a conspicuous part of the house.
Tenancy at Will and Tenancy at sufferace.
 PERIODIC LEASES CONT…

• Sundar Kudwa by L.R’s v. Raviraj Shetty, 2003(1) RCR 222 (Kant.)

&
Ved Prakash v. Ram Bilas AIR 2009 (NOC) 2222(P&H)
15 days statutory period to end the lease is does not invalidate the agreement for
30 days notice period.
• Calcutta Dock Labour Board v. EIC Holdings Ltd. AIR 2009 (NOC) 584 (Cal.)
Single notice can be clubbed to all the tenants if there are more than one
tenancies.
 DISTINCTION BETWEEN LEASE AND
LICENSE

LEASE LICENSE
• Transfer of interest in the immovable • It is a bare permission over both movable
property. and immovable property.
• Accessions are entitled by both lessor and • But licensee does not acquire any such
lessee as the case may be. accessions.
• Lease is transferable and heritable. • License is neither transferable not
heritable.
• Lease does not terminate with the death
of the lessor or lessee. • License terminates on the death of the
licensee.
 CASES ON LICENSE AND LEASE

• Pradeep Oil Corporation v. Municipal Corp. Delhi, AIR 2011 SC 1869.

• Government granted license for construction of petroleum buildings on
government land. Construction was done and licensee was in the exclusive
possession of the buildings.
• Exclusive possession raises strong presumption in favour of lease and not
license even though the agreement was of license. Grantee was made liable to
pay the municipal taxes.
 CASES CONT…

• Johnsen Kanaden v. Patel Saw Mills, AIR 2008 (NOC) 842 (Ker).
Lease was granted for the purpose of running a saw mill. But the land was to
remain in the exclusive possession of the lessor. And the lessor can also enter the
lease premises and to take the usufruct from the trees and lessee would have no
right over them.
Court held that it is a license not a lease though agreement was of a lease.
 MODE OF LEASE CREATION

• Lease is a contract between the parties

• According to section 9 transfer have to be made either through registration or orally.
• Lease is also one of the same kind.
• Lease that require registration:
• Year to year leases
• Exceeding one year lease
• Reserving yearly rent
• Permanent leases.
 MODE OF LEASE CREATION CONT..

• Leases that does not require registration:

a) month to month leases
b) less than one year leases
Either orally or through registration.
Hardesh Ores Pvt. Ltd. v. Hede and Company (2007) 5 SCC 745
It was held that renewal requires execution of a document evidencing renewal. In
order to give effect to renewal of lease, a document has to be executed evidencing
renewal. Mere exercising the option of renewal does not stand renwed
automatically.
 MODE OF LEASE CREATION CONT..

• Pradeep Bahal v. Kanwaljit Kaur, AIR 2012 (NOC) 417 (P&H)

The tenant was inducted into premised on a monthly rent note of Rs. 5000/- and
Click toincreased
subsequently the landlord claimed add text rent of Rs. 9000/- on the basis of rent
note. That note was not signed neither registered nor signed.
The court held that such document could not be termed as a rent note or a lease
deed. Claim on the basis of rent note was not proper.
The tenant was allowed to recover back the amount of rent which he had to pay to
avoid eviction.
 LESSOR TRANSFEREE

• Transferee of the lessee will be entitled to all the rights after transfer.
• Liabilities of the transferee will be such as will determined by the transferee.
• Lessor does not automatically be absolved of the liability under the lease by
such transfer.
G. Kesarichand v. I.A. Sankuni
Lessee paid the advance amount to the lessor as a security for lease to be
refunded on the termination of the lease. Lessor liability can still be enforced by
the Lessee.
 LESSOR TRANSFEREE CONT..

• Sheikh Noor v. Sheikh G.S. Ibrahim

Assignee of the landlord can recover the rents that are due from the tenant to the
landlord.
Bhudeb v. Bhishakar
If there is an lessor, transferee and lessee have agreed for the apportion the rent
reserved for lease of the leased property then either the lessor or the transferee
can sur for the same without impleading the other party.
 DETERMINATION OF LEASE

• By efflux of time- Maheswar Singh v. R.J. Thakur

• By happening of an event
• By termination of lessor’s interest in the property
• By merger
• By express surrender- V. Muralidhar v. S. Annaih Goud
• By implied surrender
• By forfeiture- breaking express condition- setting title in third person-
insolvency
• By expiry of the notice to quit.- Vijay Kumar v. Harbhajan Kaur.
 WAIVER OF FORFEITURE

• Exception to Section 111(g)

• Waiver:
1. Accepts rent from the lessee after having knowledge of such forfeiture
2. Takes any goods or chattel from the possession of the lessee- Distress
3. Simply keeps silent even after having knowledge of the conditions
4. Accepts part rent and agrees to accept rest part of the rent latter.
Irrevocable and estoppel for lessee.
Acceptance of rent after the suit for eviction is not a waiver.
 WAIVER OF THE NOTICE TO QUIT

• After the notice to quit under Sec 111(h) it can be waived.

• Lessee has tendered the rent and lessor has accepted; or
• Lessor has given first notice and before its expiration has given second notice
with a different time to quit. First notice is waived.
UOI v. Sudarshan Lal Talwar, AIR, 2002 All 212
 EFFECT OF SURRENDER AND
FORFEITURE ON UNDER LESSEE

• By surrender the lease terminates but the sublease subsists on the same terms
and conditions as the original lease.
• Original lease surrendered for obtaining a new lease then the sublease also
terminates.
• Forfeiture of lease extinguishes all the under leases except under fraud or
coercion.
• Forfeiture of the lease would destroy the right of the sub-lessee except under
section114.
 EFFECT OF FORFEITURE CONTINUED…

• Urban Amenities (P) Ltd v. Mrityunjoy Seal, AIR 2011 Cal. 123
Agreeemnt was entered between the lessee and sub-lessee for maintenance and
management of the tenancy. There was no deed of lease executed between them.
An eviction decree was passed against the lessee.
An appeal was filed by the sub-lessee against such order of eviction. Can he do
so?
The court said the mere agreement for maintenance does not constitute a lease
and hence such a person had no right prefer an appeal against the decree of
eviction.
Thank you.