Lease under Transfer of Property Act
Lease Under the Transfer of Property Act, 1882
1. Definition of Lease
Section 105 of the Transfer of Property Act (TPA), 1882 defines a lease as:
“A lease of immovable 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, 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.”
In simpler terms, a lease is a contract by which the owner (lessor) transfers possession and enjoyment of immovable property to another person (lessee) for a specified period in return for rent or other consideration.
2. Essential Elements of Lease
Transfer of possession (not ownership) of immovable property.
For a certain period, either fixed or capable of being determined.
Consideration (Rent): The lessee must pay rent or some consideration periodically or on specific occasions.
Right to enjoyment of the property.
Mutual consent between lessor and lessee.
3. Types of Leases
Lease for fixed term: Lease for a definite period (e.g., 1 year, 5 years).
Lease for uncertain term: Lease terminable on notice by either party.
Lease in perpetuity: Rare, but possible under law.
Oral or Written lease: Lease can be oral or written, but leases exceeding one year must be in writing and registered (as per the Registration Act, 1908).
4. Rights and Duties of Lessor and Lessee
| Rights/Duties | Lessor | Lessee |
|---|---|---|
| Rights | Receive rent; re-enter on default; ensure lessee does not create nuisance | Enjoy possession; quiet enjoyment; sub-lease (with consent) |
| Duties | Deliver possession; maintain property; not interfere | Pay rent; not commit waste; use property lawfully |
5. Termination of Lease
Lease terminates on expiry of term.
Lessee or lessor can terminate lease as per contract terms.
In case of breach, lessor can re-enter the property.
On termination, lessee must deliver possession back to lessor.
6. Important Sections Related to Lease
Section 105: Definition of lease.
Section 106: Lease of immovable property of which the lessor is in possession.
Section 107: Delivery of possession.
Section 108: Term of lease.
Section 109: Right of lessee to transfer interest.
Section 110: Duties of lessor.
Section 111: Duties of lessee.
Section 112: Termination of lease.
Section 113: Holding over after lease expires.
Key Case Laws on Lease under TPA
1. K.T. Plantation Pvt. Ltd. v. State of Karnataka, (2011) 9 SCC 1
The Supreme Court clarified the nature of lease as a transfer of right to enjoy possession and not ownership.
Emphasized that leases must be construed based on terms agreed between parties.
2. Narandas Nandlal v. Maneklal Khushaldas, AIR 1961 SC 1665
The court held that mere permission to occupy land without rent or consideration does not constitute a lease but a license.
Distinguishes lease from license, highlighting the element of consideration and possession.
3. Keshavan Madhava Menon v. State of Kerala, AIR 1968 SC 1167
Reiterated that a lease must convey a right to possession and mere consent to use property is insufficient.
The intention to create a lease is crucial.
4. M.C. Chockalingam v. M. Chinniah, AIR 1958 SC 12
Held that when possession is delivered, it amounts to a lease if there is an agreement on rent and term.
5. Shree Balaji Spinning Mills Pvt. Ltd. v. Union of India, AIR 2003 SC 3661
Explained that lease agreements for more than one year require registration under the Registration Act.
Unregistered lease beyond one year is inadmissible in evidence.
Difference Between Lease and License
| Aspect | Lease | License |
|---|---|---|
| Definition | Transfer of interest in immovable property | Permission to use property without transfer of interest |
| Possession | Possession is transferred | No transfer of possession |
| Term | For fixed or determinable term | Usually revocable at will |
| Consideration | Rent or periodic payment | Usually no rent or nominal fee |
| Registration | Required if term >1 year | Not required |
Summary
A lease under the Transfer of Property Act is a legal contract transferring the right to enjoy immovable property for a period in exchange for rent or consideration.
It involves possession transfer, agreed term, and rent.
The law protects rights of both lessor and lessee and provides mechanisms for termination.
Key cases emphasize the distinction from license, importance of possession, and registration requirements.
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