Lease can be of a movable or an immovable property. It is a contractual arrangement calling for the lessee (user) to pay the lessor (owner) for use of an asset.
Under the
Transfer of Property Act, 1882 (in short T.P.Act) the subject of “Leases of
Immovable Property” is dealt with in Chapter 5.
Section 105
of the Transfer of Property Act, 1882 defines a lease of immovable properties
as 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.
Definition
of lessor, lessee, premium and rent: - The transferor is called the lessor; the
transferee is called the lessee; the price is called the premium; and the
money, share, service or other thing to be so rendered is called the rent.
Essential
elements of lease: -
(i) immovable property;
(ii) right to enjoy such immovable
property;
(iii) the ascertainable duration of the lease;
(iv) the parties that
is the transferor and the transferee who are competent to make contract;
(v) the
consideration that is premium or rent.
The lease
for more than one year cannot be created unless it is registered.
In Anthony
vs. K.C.Ittoop & Sons and Others, (2001) 1. M.L.J, 12, the Supreme Court
found that there are three interdictions to claim that an instrument can create
a valid lease in law.
The first inhibition is that it should be in accordance
with the provisions of Section 107 of the Transfer of Property Act. That
Section reads as under- A lease of immovable property from year to year, or for
any term exceeding one year or reserving a yearly rent, can be made only by a
registered instrument.
The second
inhibition, as pointed out by the Supreme Court, is Section 17(1)(d) of the
Registration Act, which states that where a lease of immovable property from
year to year or for any term exceeding one year or reserving an yearly rent,
such document should be compulsorily registered.
The third
inhibition, as noted by the Supreme Court, is Section 49 of the Registration
Act relating to the consequence of non-compliance of Section 17. Section 49(c)
contemplates that no document required by Section 17 or by any provision of the
Transfer of Property Act to be registered shall be received as evidence of any
transaction affecting such property of conferring such power, unless it has
been registered.
Nevertheless,
the Supreme Court, taking into consideration of the proviso to Section 49 of
the Registration Act, found that an unregistered lease deed may be taken as
evidence of any collateral transaction not required to be effected by
registered instrument.
It is well
settled proportion of law that in absence of a registered lease the tenancy at
best can be regarded as from month to month.
The Delhi High
Court in M/s MTZ Industries Ltd vs. Mr. K.C.Khosla, on 6.7.2010 observed that as
appellant having become a tenant on a month to month basis after 1.7.1992, the
only manner in which he could be evicted from the suit property was by serving
upon him a valid legal notice under Section 106 of the Transfer of Property
Act. The Court further observed that no particular form is necessary for a
notice under Section 106 of the T.P.Act.
If under the
document a party gets exclusive possession of the property, prima facie, he is
considered to be a tenant; but circumstances may be established which negative
the intention to create a lease. The Supreme Court in Associated Hotels of India
Ltd vs. R.N.Kapoor, 1960 SCR (1) 368 has observed that- the real test is the
intention of the parties- whether they intended to create a lease or license. If
an interest in the property is created by the deed it is a lease but if the document
only permits another person to make use of the property of which the legal
possession continues with the owner, it is a license.
Further, the appellant had been continuously
carrying on their business without any interference from any quarter whatsoever
since 1962. As in the instant case, exclusive possession has been granted,
there is a strong presumption in favor of tenancy. That being the case, it is
for the appellant to show that despite the right to possess the demised
premises exclusive, a right or interest in the property has not been created.
The Supreme Court also notice the undisputed fact that in the present case the
parties have agreed that for the purpose of determination of the agreement
three calendar months’ notice had to be given. Undoubtedly, such clause in the
document in question has a significant role to play in the matter of
construction of document. Clearly, if the parties to the agreement intended
that by reason of such agreement merely a license would be created such a term
could not have been inserted. It is well settled legal position that a license
can be revoked at any time at the pleasure of the licensor.
The brief
fact of the instant case is as follows: - The appellant had been granted under
the Government Grant Act separate and distinct licenses by the President of
India acting through Superintendent of Northern Railway, Delhi for the purpose
of maintain depot for storage of petroleum products at a yearly license fee of
Rs. 20,640/- and Rs. 31,000/- per annum respectively. Under the aforesaid
grant, the appellant had been given the right to erect/construct ‘petroleum
installation buildings’ consists of petroleum tanks, buildings and other
conveniences for receiving and storing therein petroleum in bulk and
consequently possession of land has been given.
Consequent
to the said agreement the administration granted ‘exclusive possession’ of the
said land to the appellant who entered the land for the purpose and the terms
mentioned therein in the aforesaid agreement/grant. Consequently, the appellant
submitted layout building plans for the construction of the Oil Depot and the
standing committee of the Municipal Corporation of Delhi (in short MCD)
approved the layout plan for the construction of 10 Oil Storage tanks of
petroleum products. Subsequent to that the appellant raised various
constructions comprising of an administration block etc. along with huge
petroleum storage tanks for storing petroleum products. A boundary wall around
the installations and the administrative block was also constructed.
The
respondent MCD vide its order dated 17.08.1984 passed an assessment order with
regard to the property tax qua the aforesaid property and confirmed the ratable
value proposed by it.
The said
assessment order was challenged by the appellant before the appellate Court/MCD
Tribunal which vide its order dated 17.07.1985 set aside the assessment order passed
by the respondent MCD and held that the appellant is only a licensee in the
property and is not a tenant, therefore, no property tax can be levied on the
appellate under Section 20(2) of the Delhi Municipal Corporation Act, 1957.
Aggrieved by
the aforesaid order of the appellate Court, the respondent MCD filed a writ petition.
However the said writ petition was dismissed by the Ld. Single Judge of the Delhi
High Court on 5.08.1986-held that the grant in favor of the petitioner was a license
and hence the petitioner is not liable for the payment of any property tax in
respect of the land or the petroleum storage tanks.
Challenging the
aforesaid order of Ld. Single Judge, an LPA was filed and subsequently the same
was referred to a Full Bench of High Court.
The Full
Bench of the High Court vide its impugned judgment and order dated 17.09.2002
held that the petroleum storage tanks are a building and the petitioner was a
lessee and not a licensee in the property in question.
The Apex Court upheld
the findings of the Full Bench of High Court and held that the documents in
question constitutes lease in favor of the appellant-grantee; and accordingly
liable to pay taxes.
Section 111
deals with the question of determination of a lease, and in various clauses (a)
to (h) methods of determination of a lease of immovable property are provided. In
the case of a landlord wishing to evict his tenant under the Rent Acts
determination of the lease in accordance with the Transfer of Property Act is
unnecessary (V.Dhanapal Chettiar vs. Yesodaiammal, AIR 1979 SC 1745).
Under the Rent Control Act, a tenant can be evicted only on specific grounds enumerated under the specific provisions of the Rent Control Act.
Under the Rent Control Act, a tenant can be evicted only on specific grounds enumerated under the specific provisions of the Rent Control Act.
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Great post.
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