TRANSFER OF PROPERTY ACT

SEMESTER V

I. INTRODUCTION:

The right to property and its enjoyment has been ingrained in human culture for as long as it
has existed1 While the Indian Constitution recognised this right as a fundamental right, it was
later amended to include it as a constitutional right rather than a fundamental right that could
be held accountable if violated. While

1
Sushanth Salian, History of the Removal of the Fundamental Right to Property, CENTRE FOR CIVIL SOCIETY p.
232. (2005).

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TRANSFER OF PROPERTY ACT

SEMESTER V

I. INTRODUCTION:

The right to property and its enjoyment has been ingrained in human culture for as long as it
has existed 1 While the Indian Constitution recognised this right as a fundamental right, it was
later amended to include it as a constitutional right rather than a fundamental right that could
be held accountable if violated. While everyone has the unassailable right to enjoy their own
property, everyone also has the right to temporarily grant that right to someone else in
exchange for something. This includes leases, mortgages, and licences, among other things.

According to Stickney and Weil, “A lease is a contractual arrangement calling for the
user(lessee) to pay the owner (lessor) for use of an asset”2

In India, there are two types of tenancy agreements: lease agreements and leave and licence
agreements. Rent control laws apply to lease agreements. The amount of rent is calculated by
taking into account the cost of building the property and the market price of the land.
Landlords follow the strict rent laws that apply to these agreements when renting out property
for a year.

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everyone has the unassailable right to enjoy their own property, everyone also has the right to
temporarily grant that right to someone else in exchange for something. This includes leases,
mortgages, and licences, among other things.

According to Stickney and Weil, “A lease is a contractual arrangement calling for the
user(lessee) to pay the owner (lessor) for use of an asset”2

In India, there are two types of tenancy agreements: lease agreements and leave and licence
agreements. Rent control laws apply to lease agreements. The amount of rent is calculated by
taking into account the cost of building the property and the market price of the land.
Landlords follow the strict rent laws that apply to these agreements when renting out property
for a year.

II. LITERATURE REVIEW:

All technical aspects of the study had to be covered in accordance with the law as quoted for
the following research, “Transfer of Property Act 1882” 3 by Dinshah Fardunji Mulla and
Solil Paul written by Dr Poonam Pradhan and “Textbook on the Transfer of Property Act” 4
2
2 Stickney and Weil 2007 p. 791 (Glossary of Financial Accounting: An Intro. To Concepts, Methods, and Use
12e)
3
dr poonam pradhan, “the transfer of property act” (ed. 13, lexisnexis, 2018)
4
dr avatar singh, textbook on “the transfer of property act” (ed. 5, lexisnexis, 2015)

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by DrAvatar Singh was referred to further comprehend the provisions of the laws. Because a
section's applicability is dependent on the qualified fulfilment of its essentials, the books
provided the researcher with a detailed understanding of those essentials.

Further reading of the texts also enables the researcher to identify gaps in the literature that
can be addressed in the future of this paper. Furthermore, to ensure better legal precedents for
supporting this write-up, “The Transfer of Property Act” 5 Prof (Dr) Harpreet Kaur's work was
also cited. In the context of the issues discussed, the text is especially useful as a guide in
legal precedents. Furthermore, the digest included information specific to the case under
discussion in this text.

Article published by renowned legal article website Academike, titled “Definition of License
and granting of licence”6 Ms. Yamini Rajora was referred to instil background information on
the specific nooks related to the licencing procedure and process, including the variability of
such contracts. C.F. Fernandes, a well-known lawyer, wrote a research paper on, titled “Lease
and Licence”.

Lastly, research article titled “Licence and its Revocation” 7 was referred to in order to more
vividly understand the concepts surrounding the concept of licence under the Indian
Easement Act through careful analysis of each and every provision of the licencing as
mentioned.

III. Research Objectives:

• To comprehend in depth the provisions of Section 105 of “the Transfer of Property Act”
(leasing) and their essential components.

• To comprehend in depth the provision under Section 52 of the Easement Act (licencing) and
its essential components.
5
3 prof (dr) harpreet kaur, “the transfer of property act”. (ed 6, lexisnexis, 2021)
6
yamini rajora, definition of “licence and granting of licence”, academike. (30th april 2015, last visited 20th
april 2021).
7

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•Know the distinction between “Lease” and “Licensing”

Research question:

• What is “lease” under the Transfer of Property Act and what are its essentials?

• What are the major differences between Leasing and Licensing?

• what is the Model Tenancy Act?

IV. Research Methodology:

For the current research, The method used in this paper would be doctrinal and descriptive
form of research. The authors in this paper mainly relied on primary source of data which
includes, statutory provisions, case studies and case laws.

V. LEASE AND LICENCE UNDER INDIAN LEGISLATIONS:

Lease under the transfer of property act, 1882 and licence under the easement act, 1882
definition –

The concept of lease of immovable property is addressed in Chapter V of “The Transfer of

Property Act” of 1882. To grasp the concept of lease, one must first grasp the concept of
immovable property. Immovable property is what it sounds like –

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“Immovable property shall include land, benefits to arise out of land, things attached to the
earth, or permanently fastened to anything attached to the earth”8.

According to the definition, everything that comes from land or benefits from it comes from
land9, Immovable Property is anything that is attached to the land and cannot be severed.
Although this definition suffices, it is also important to examine the definition provided by
The Transfer of Property Act.

A simple reading of the Transfer of Property Act definition reveals that it is, in fact, negative
in nature. This means that, with the exception of standing timber, growing crops, and grass,
everything included in the definition of immovable object is an immovable property.

“Lease” is defined under Section 105 of the Transfer of Property Act –

A simple reading of the section reveals that a lease transfers the mere right of enjoyment
associated with the immovable property in exchange for a consideration that is periodically
replenished. A leasing agreement's parties are known as the “Lessor” and “Lessee”. The
transferor is known as a “lessor”, and the transferee is known as a “lessee”.

In the case of “Byramjee Jeejeebhoy (P) Ltd. V. State of Maharashtra” 10, A lease, according
to the Supreme Court, is a transfer of a right to enjoy land for a term or in perpetuity in
exchange for a price paid or promised or service or other valuable things to be rendered on a
regular or stipulated basis by the transferor of the property.

“License” is defined under section 52 of the Easement Act, 1882 as –

A simple reading of the section reveals that the licence is nothing more than a permit to do
something related to the property. In contrast to a lease, there is no actual transfer of complete
enjoyments; instead, only a specific enjoyment associated with the property that would
otherwise constitute trespass is transferred.

VI. LEASE AGREEMENT:

A lease is defined as an agreement between two parties (the Lessor and the Lessee) to transfer
an interest in real estate. Leases are discussed in Section 105 of the Transfer of Property Act.

8
Article 3(26), THE GENERAL CLAUSES ACT, No. 10 of 1897, INDIA CODE
9
Shiv Dayal V. Pattu Lal, 140 Ind Cas 491 (1933)
10
AIR 1965 SC 590

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A lease of immovable property is a transfer of the right to enjoy such property for a specific
time, express or implied, or in perpetuity, in exchange for money, or any other valuable item
to be paid to the transferor on specific occasions by the transferee, who accepts the transfer
on such terms Because this is a contractual relationship between the Lessor and the Lessee,
the essential requirements of a valid contract under “The Indian Contract Act” of 1872 must
be met.

VII. Essential elements of lease11: -

 The subject matter of the lease, also known as the objective of the lease agreement,
must be specified in the contract in order to fulfil the requirements of the agreement.
It is needed that the objective of the transfer of the right of the immovable property,
the services and profit decided upon and any other relevant information be written
down in the lease contract.

11
N. Krishnamoorthy & Prasanth Kumar Singh – Transfer of property Act, 1882, Edition 2008

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 The existence of two or more parties is required for a lease agreement in order to
ensure that the rights to the immovable property are transferred in an appropriate
manner.
 A lease agreement can be established for immovable property or assets only. It is not
possible to do this with movable property. The immovable property will be used in
accordance with the terms of the leased space, and the rights to the property will be
traded between the lessor and the lessee.
 It is essential to have lawful consideration in order to fulfil the requirements of a
lease contract.
 The duration of a lease agreement is an essential component that indicates the
beginning of the contract as well as the length of time for which the services and
rights will be transferred.

VIII. RIGHTS AND LIABILITIES OF LESSOR AND LESSEE:

Section 108 of the Transfer of Property Act, 1882 expresses the rights and liabilities of both
lessor and lessee

Rights of the Lessor:

 The lessee has the right to recover the rent as stated in the lease agreement.

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 The lessor has the right to reclaim possession of his property if the lessee violates the
terms and conditions of the lease agreement.
 The lessor has the right to seek compensation from the lessee if his property is
damaged as a result of the lessee's actions.

Liabilities of the Lessor:

 Duty to disclose defects-

The Lessor has a duty to disclose the property's defects to the Lessee prior to entering
into the lease agreement.

 Obligation to deliver possession-

After signing the lease agreement, the Lessor should grant the Lessee possession of
his property.

 Make a pact for quiet enjoyment-

When the Lessee follows the terms and conditions of the lease agreement and pays the
rent on time, the Lessor should not terminate the lease agreement.

In the case of “Jaswant Singh Mathura Singh V. Ahmedabad Municipal

Corporation”12, The court ruled that the lease creates rights and interests in the
property and that the tenant is entitled to keep possession of the property until the lease
is fully terminated.

Rights of the Lessee:

• Right to repair property-

If the Lessor fails or is unable to repair the property, the Lessee may repair it himself.
That amount can later be deducted from the rent or recovered from the Lessor.

• Ability to remove fixtures-

12
AIR 1991 SC 2130

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If the Lessor fails or is unable to repair the property, the Lessee may repair it himself.
That amount can later be deducted from the rent or recovered from the Lessor.

• The right to reap crop benefits-

Lessor also has the right to enjoy the benefits of the property during the lease period
and to collect the benefits from the crops on the property as specified in the lease
agreement.

Liabilities of the Lessee:

• Duty to disclose facts-

The Lessee must disclose to the Lessor all true facts about the property.

• Rent payment obligation-

It is the Lessee's responsibility to pay the rent to the Lessor as specified in the lease
agreement.

• Obligation to maintain property-

The lessee is obligated to keep the property in good condition and return it to the
Lessor in the same condition that the Lessor handed over the property during the
agreement, and the lessee should also allow the Lessor or his agent to inspect the
property..

IX. MODES OF DETERMINATION OF LEASE:

Modes are defined in Section 111 of the Transfer of Property Act 1882 as A lease of
immovable property determines-
 As a result of the efflux of time.

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 where such time is conditionally limited on the occurrence of some event-by

the occurrence of such event.
 In the event that the lessee's and lessor's interests in the entire property become
vested in the same person at the same time.
 By implied surrender.

X. KINDS OF LEASE:

There are many kinds of leases are followed in India. Section – 105 of the Transfer of
Property Act, 1882 recognizes only three main kinds of leases namely

 Leases for a set period of time- Leases for a specific time period The word “certain”
in the section means that it is fixed or capable of being made certain at a later date. The

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deadline must be guaranteed. The lease term, terms, and conditions must be specified
or guaranteed.
 In the case of “Lord Kenyon in Goodright D Hall V. Richardson”13, According to the
court, the certainty did not have to be determined at the time. If, over time, a day
arrives that makes it certain, that is enough for such a lease.
 Periodic leases-Periodic leases are leases that are typically held for a fixed period of
time. This type of lease includes a lease for a set period of time, such as a month-to-
month or year-to-year lease.

In the case of “S.Rajeev Singh V. Punching Associates” 14, Periodic leases are defined
as leases with a term that is continuous from period to period.

 Leases in perpetuity- A lease in perpetuity is a type of lease that is held for an

extended period of time. It is also known as a long-term lease or a permanent lease.
The lease is passed down from generation to generation in this case.

In the case of “Commissioner of income tax , Assam V. Panbari Tea Co Ltd”15, When
the Lessor's interest was divided for a price, it was decided that the paid price is the
surcharge, but the periodic payment for the enjoyment of benefits is a rent; in this
case, the premium is a capital income and the rent is a revenue receipt.

XI. What is the doctrine of frustration under Section 56 of the ICA?

Section 56 of the ICA provides for two types of contractual impossibility:

(a) An agreement to do an impossible act is void from the start; and

13
1789 2 Term Rep462
14
AIR 2008 Del 56
15
AIR 1965 SC 1871

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(b) An agreement to perform an act that becomes impossible after the agreement is made due
to the intervention of some event that the promisor could not prevent becoming void at the
stage of such event's occurrence.

Using the frustration defence renders the agreement void, which means that the agreement
and the parties' obligations are terminated. Performance impossibility may imply physical
impossibility, i.e. the subject-matter of the agreement has been destroyed or is no longer in
existence, or performance of the contract has become impracticable or useless in light of the
contract's object and purpose when it was entered into. However, the supervening events
should be such that they take away the very basis of the contract. (Satyabrata Ghose v.
Mugneeram Bangur & Co.)

XII. Model Tenancy Act:

The draught Model Tenancy Act, written by the Ministry of Housing and Urban Affairs in
2020, was approved by the Union Cabinet in 2021. According to the 2011 Census, nearly one
crore residential properties are unrented or unoccupied in metropolitan regions. Among the

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concerns are different challenges in landlord-tenant relationships, fear of repossession,

nonpayment, late payment, damage towards the premises, delayed court procedures, and so
on. After two years of declaration and one year of drafting, the Union Cabinet hopes to
upgrade and improve the status of rent regulations with the Model Tenancy Act, 2021.

Because each state already has local rent laws, when the Model Tenancy Law takes effect,
state governments will have the option of enacting and adopting entirely new rent legislation
to replace the previous Rent Act, or amending their existing rent law to include the Model
Tenancy Law's provisions..

XIII. CONCLUSION AND SUGGESTION:

The lease is addressed in Chapter V, Sections 105-117 of the Transfer of Property Act of
1882. The lease is a crucial concept in real estate law. The majority of individuals around the

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world will own estate, either their own or by paying rent or a premium for a third-party's
property. As a direct consequence, understanding leases is critical not only for lawyers but
also for all citizens, because everybody will own estate at some point in their lives. If a
person enters into a lease agreement without knowing or understanding what a lease is, he or
she may be misled and fail to have a proper lease agreement. A lease is simply a contract for
a set period of time between a lessor and a lessee. The duration, term, amount to be paid,
when and how it is to be paid, and so on must all be specified. Violation of the rental
agreement's rules, regulations, provisions, and terms is illegal and punishable by law. If both
the lessor and lessee perform well, a rental agreement is a wise choice. As a result, we can
gain a basic understanding of what a lease is, who the lessor and lessee are, and what their
respective rights and liabilities are.

“Property exists by grace of the law. It is not a fact, but a legal fiction” -Max Stimer

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