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15 views3 pages

Mains Question Set X

Uploaded by

indhumathi.ghj
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Unacademy Judiciary

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Transfer of Property Act

Ques. Define lease and license. What is difference between them? Support your answer by
some Supreme Court decisions. Is the license irrevocable?

Answer:

Introduction:

The term ‘lease’ and ‘license’ are defined under Section 105 of the Transfer of Property Act and
Section 52 of the Indian Easements Act respectively.

Section 105 of Transfer of Property Act defines lease:

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, 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.”
The essential characteristic of a lease are:

i. Transfer of an interest:

ii. Parties to a lease;

iii. Subject matter of lease;

iv. Types of lease;

v. Duration of lease; and

vi. Consideration for lease

Section 52 of the Easements Act, 1882 defines license:

Where one person grants to another, or to a definite number of other persons, a right to do, or
continue to do, in or upon the immovable property of the grantor, something which would, in
the absence of such right, be unlawful, and such right does not amount to an easement or an
interest in the property, the right is called, a license.”

Difference between Lease and License


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1. A lease is a transfer of an interest in a specific immovable property, while licence is a bare


permission, without any transfer of an interest.

2. A lease creates an interest in favour of the leassee with respect of the property, but a licence
does not create such an interest.

3. A lease is both transferable and heritable, a sub tenancy can be created by the tenant and on
the death of the tenant, the tenancy can be inherited by his/her legal heir, whereas, licence is
neither transferable nor heritable.

4. A licence comes to an end with the death of either the grantor or the garantee, since it is a
personal contract, but a lease does not comes to an end on either the death of the grantor or
grantee.

5. A licence can be withdrawn at any time at the pleasure of the grantor but the lease can come
to an end only in accordance with the terms and condition stipulated in the contract of tenancy
agreement.

6. A lease is unaffected by the transfer of the property by sale in favour of a third party. It
continues and the purchaser has to wait till the time period for which the tenancy was created
is over before he can get the possession, whereas, in case of a licence, if the property is sold to
a third party, it comes to n end immediately.

7. A lessee has a right to protect the possession in his own right. Whereas, a licencee cannot
defend his possession in his own name as he does not have any proprietary right in the
property.

8. A lessee in possession of the property is entitled to any improvements or accessions made to


the property, while a licencee is not.

Supreme Court Cases:

Madhu Behal and Anr. vs. Rishi Kumar and Anr., (2009) 3 PLR 628 (Punjab & Haryana High
Court, 2009)

· It is never a nomenclature in the document that governs the decision as to whether a


document as a ‘lease’ or a ‘licence’.

· The essential feature that distinguishes a lease from licence is always a transfer of interest in
the demised property in a transaction of lease while a licensee does not involve any such
transfer of interest.
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· The lease is heritable while license is personal to the grantee.

· The legal possession of the property is inevitably transferred to a tenant under lease while in
a transaction of license the legal possession continues with the licensee and the licensee has a
mere right of user of the premises in a particular fashion mentioned under the document.

Municipal Corporation of Delhi vs. Pradip Oil Corporation and Anr., 100 (2002) DLT 442 (Delhi
High Court, 2002)

· A mere license does not create interest in the property to which it relates. Lease on the
other hand, would amount to transfer of property.

· License may be personal or contractual.

· A licensee without the grant creates a right in the licensor to enter into a land and enjoy it.

· By reason of a license, no estate or interest in the property is created.

· A license, inter alia, (a) is not assignable; (b) does not entitle the licensee to sue the stranger
in his own name; (c) it is revocable and (d) it is determined when the grantor makes subsequent
assignment.

In the case of Delta International Ltd v Syam Sundar Ganeriwalla, a dispute arose between the
parties as to whether the agreement between them was a lease or that of “leave and licence”.
Document nowhere mentioned any provision which can make it evaded from the provisions
mentioned under W.B. Premises Tenancy Act, 1956. It was held by the Supreme Court that
“where it was nowhere pleaded that the deed executed between the parties was a camouflage
to evade the rigours of the provisions of the Rent Act nor was it stated that a sham document
was executed for achieving some other purpose the intention of the parties would be required
to be gathered from the express words of various terms provided by them in the deed.” Court
held it to be an licence agreement.

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