GLS University

Faculty of Law, GLS Law College

Individual Assignment
On
Transfer of Property Act, 1882

TOPIC:- LEASE AND ITS KINDS

SUBMITTED BY:- SUBMITTED TO:-

Urvashi Sharma Ms. Sonal Raval

Roll No. 44 &
Semester:- 6th ‘A’ Dr. Grishma Bhavsar
Assistant professors

GLS University

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ABSTRACT

A key component of the "Law of Property" branch is the Transfer of Property Act of 1882.
Since the majority of Indians either own their own property or rent it from others, it is
crucial that everyone in the country understand the fundamentals of property law, not just
those enrolled in law schools or conducting independent research. In this area of law,
leasing is significant. The lease is covered in Chapter V of Sections 105–117 of the
Transfer of Property Act, 1882.
Key words:- Transfer of Property, Lease, Agreement, Certainty, Time period

INTRODUCTION

In this modern world, the life of a human beings are closely related with the Properties.
Humans and Properties have become interrelated and inseparable. Humans acquires,
enjoys and disposes the property their pleasure or for their needs and wants. Whatever it
may be, either acquiring a property or disposing a property, a valid transfer is needed.
Thus, the law that governs the property and its transfer is called the ‘Law of Property’.

A popular quote by Max Stimer – ‘Property exists by grace of the law. It is not a
fact, but a legal fiction’

Traditionally, the British Law rules applied to the transfer of immovable properties. The
Transfer of Property Act became operative in 1882. This relates to the guidelines that must
be adhered to when transferring property between live individuals. While both moveable
and immovable possessions are covered by this act, a majority of it predominantly
concerns immovable properties.
This act The Transfer of Property Act, 1882 discusses about different legal terms
regarding transfer of property which include Sale, Mortgage, Lease, Exchange, Gift,
Actionable claims Thus in this paper we are going to look about a detailed study on the
Lease and its kinds, which plays a vital role in the process of the transfer of property.

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LITERATURE REVIEW
Literature review is an important part of an extensive research regime. A researcher, in
the course of his research work accumulates a broad array of data which helps in providing
concrete legitimacy to the research as undertaken.
For this following research, the material is considered from different books such as
‘Transfer of Property Act 1882’1 by Dinshah Fardunji Mulla and Solil Paul written by Dr
Poonam Pradhan and ‘Textbook on the Transfer of Property Act’ 2 by Dr. Avatar Singh
was referred to understand the provision of the laws more elaborately. Since the
applicability of a section is dependent on the qualified fulfilment of its essentials, the
books helped the researcher with a detailed insight into those essentials and various cases
pertaining to those essentials. Further reading of the texts also allow the researcher to
realise the gap in the literature which can be addressed in due course of this paper. Further
to ensure better legal precedents for supporting through the course of this write up, ‘The
Transfer of Property Act’3 by Prof Dr. Harpreet Kaur was also referred.

RESEARCH METHEDOLOGY
A researcher can choose from two main categories of research methods: non-doctrinal and
doctrinal. Non-doctrinal research involves gathering "raw" data through a variety of
sampling techniques and using that field data to support a study, whereas doctrinal
research analyzes and uses pre-existing literature to draw conclusions that are
advantageous for the research being conducted.
Considering the time and financial constraints, the researcher adhered strictly to the
doctrinal research technique for this study. After evaluation, information from primary
and secondary sources will be used in the paper's contents.

DISCUSION
In this we are going to discuss different aspects of lease from the perspective of different
prominent personalities. Rights and liabilities of lessor and lessee, essential conditions for
lease and kinds of lease with the help of different case laws.

1
DR POONAM PRADHAN, THE TRANSFER OF PROPERTY ACT (ED. 13, LexisNexis, 2018)
2
DR AVATAR SINGH, TEXTBOOK ON THE TRANSFER OF PROPERTY ACT (ED. 5, LexisNexis,
2015)
3
PROF (DR) HARPREET KAUR, THE TRANSFER OF PROPERTY ACT. (Ed 6, LexisNexis, 2021)
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 I. LEASE AND ITS DEFINITION

In general, people in this world would always rather own their own homes than pay
rent on someone else's. Nonetheless, there are a number of advantages to leasing real
estate, like cheap upfront costs, lower taxes, minimal risk, etc. A lease is, in the
simplest terms, the arrangement that exists between a landlady or landlord and their
tenants. A type of agreement between these parties for a predetermined amount of time
is a lease. When an agreement is signed and the owner of the immovable property
lends it to someone else for a predetermined amount of time, a relationship between
them is created. Thus, this contract includes the terms like amount of the rent, rate at
which it is collected duration of the lease, purpose of the lease, etc.

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’4

According to Mulla, ‘a lease is a contract between the lessor and the lessee for the
possession and profits of land, etc., om one side and the recompense by rent or other
considerations on the others’ 5

Merriam-Webster defines lease as a contract by which one conveys real estate,

equipment, or facilities for a specified term and for a specified rent.6

From the definitions mentioned above, we can easily understand that a lease is nothing
but a contract between a lessor and a lessee for a specific period of time prescribed in
the contract.

Section 1057 of the Transfer of Property Act, 1882 gives the definitions for lease,
lessor, lessee, premium and rent. It defines that, ‘A lease of immoveable 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.’

4
Stickney and Weil 2007 p. 791 (Glossary of Financial Accounting: An Intro. To Concepts, Methods, and
Use 12e)
5
Smart Advocacy https://www.lawspice.com/WW/fullContent.html (last visited Jan. 19, 2024).
6
Merriam Webster https://www.merriam-webster.com/dictionary/lease (last visited Jan. 23, 2024).
7
The Transfer of Property Act, 1882, § 105, No.4, Acts of Parliament, 1882 (India).
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 For entering into a lease agreement, there should be a two person namely lessor and
lessee.

 LESSOR ‐ A person who leases or lets a property to another person and

transferor is a lessor. i.e. landlord.
 LESSEE ‐ A person who holds a lease of a property and the transferee is a
lessee. i.e. tenant
 PREMIUM ‐ It is an amount to be paid
 RENT ‐ It refers to a tenant’s regular payment to his landlord for using his
property or land

A lease is a legal arrangement in which the lessor and lessee agree to exchange rent in
exchange for the lessee's exclusive use of the immovable property for a predetermined
amount of time. There is also a clause pertaining to the creation of an interest in the
immovable property. It is the owner's transfer of the right to enjoy immovable property
to another person.
Any lease made in favor of someone else is void if it is made by someone who no
longer has any interest in the property or who has lost their claim to it.

The Transfer of Property Act, 1882, covers leases in sections 105 through 116 8;
however, it does not cover agricultural leases. Leases for agricultural purposes are
exempt under Section 1179 of the Act. This portion of the act does not apply to
agricultural leases, primarily because the majority of them are governed by local state
regulations. Since this chapter of the legislation is not applicable, agricultural leases
may be made orally under Section 10710 of the act. In this context, "agricultural
purposes" refers to tilling and cultivating land in order to raise crops.

The Supreme Court clarified in the case of Byramjee Jeejeebhoy (P) Ltd. v/s. State of
Maharashtra11 that a lease is a transfer of the right to use land for a term or forever in
exchange for a price paid or promised, or for the provision of a service or other
valuable goods to be provided on a regular basis or on certain occasions by the
transferor of the property.

8
The Transfer of Property Act, 1882, § 105- 116, No.4, Acts of Parliament, 1882 (India).
9
The Transfer of Property Act, 1882, § 117, No.4, Acts of Parliament, 1882 (India).
10
The Transfer of Property Act, 1882, § 107, No.4, Acts of Parliament, 1882 (India).
11
AIR 1965 SC 590
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 The requirement that the property be immovable is the primary topic of the lease. In
Union of India v/s. Shivdayak Soin Sons12, the court determined that, since the term
"house" only refers to residential usage, renting out the property for a non-residential
use would not be deemed to violate the restriction in the transfer deed.

Both rent and premiums are permitted in leases, despite potential conflicts in their
definitions. In the case of Fazl Ali, J. v/s. Visweshwar Singh13, the distinction was
noted between a one-time payment made upon property settlement and a periodic
payment made by the lessee while the property was being enjoyed.

A lease can be ended by providing a legitimate and reasonable proof that the landlord
had given the tenants permission to remain in the rental property after the termination.
A notice of termination of the leasing agreement, which is still in effect even after
something else is added, should be conditional and otherwise legitimate. Should a
notice of termination of lease include a threat of increased rent, there will be divergent
views regarding whether or not the notice is conditional.

II. RIGHTS AND LIABILITIES OF THE LESSOR AND LESSEE

Section 10814 of the Transfer of Property Act, 1882 deals with the rights and liabilities
of both lessor and lessee.

A. Right of the Lessor

 In accordance with the terms of the lease, the lessor is entitled to collect
the rent from the lessee.
 In the event that the lessee violates the terms and circumstances outlined
in the lease agreement, the lessor is entitled to reclaim control of his
property.
 In the event that the lessee causes harm to the lessor's property, the lessor
also has the right to sue for damages.
 Upon the expiration of the lease, the lessor may reclaim control of his
property.

12
AIR 2003 SC 1877
13
(1939) 7 ITR 536
14
The Transfer of Property Act, 1882, § 108, No.4, Acts of Parliament, 1882 (India).
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B. Liabilities of the Lessor

 Duty to disclose defects:- Prior to signing the lease agreement, the lessor
is obligated to notify the lessee of any property defects.
 Duty to deliver possession:- The Lessor shall grant the Lessee the right to
possession of his property upon the execution of the lease agreement.
 Covenant for a quiet enjoyment:- After the lease agreement was
established, the lessor shouldn't interfere as long as the lessee abides by its
terms and conditions and pays the rent according to schedule.

C. Right of the Lessee

 Right to repair property:- If the lessor is unable or neglects to make the

necessary repairs, the lessee may fix the property themselves. Afterwards,
the money may be recouped from the lessor or subtracted from the rent.
 Right to remove fixtures:- If the lessor is incapable or neglects to make
repairs, the lessee may fix the property themselves. That sum can
subsequently be recouped from the lessor or subtracted from the rent.
 Right to have benefits of crops:- Additionally, during the term of the lease
agreement, the lessor is entitled to use the property and reap the benefits of
the crops grown there, as specified by the terms of the lease.

D. Liabilities of the Lessee.

 Duty to disclose facts:- Lessee must disclose all the true facts about the
property to the Lessor.
 Duty to pay rent:- It is the duty of the Lessee to pay the rent to the Lessor
as expressed in the lease agreement.
 Duty to maintain property:- Lessee is duty bound to maintain the property
and return to the Lessor in the same condition that the Lessor handover the
property during the agreement, and the lessee should also allow the Lessor
or his agent to inspect the property.

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 III. ESSENTIAL CONDITIONS FOR A LEASE

There are certain important or the essential condition that are essential for a lease
1) There must be an availability of two parties since a single party cannot execute
a lease agreement.
2) Both parties entering into the lease agreement should be competent to
contract by fulfilling the essential conditions for a valid contract which are
expressed in section 1015 of the Indian Contract Act, 1872.
3) Duration of the lease should be expressed clearly in a lease agreement.
4) There should be a consideration from both parties that is lessor and lessee.
5) There should be an acceptance of transfer of property by a lessor and lessee.
6) There should be a certainty.

The court decided in Makali Engg. Works Pvt. Ltd. v/s. Dalhousie Properties Ltd.16
that, unless the lease is for perpetuity, one of the most crucial requirements for
establishing a legally valid lease agreement is that it must have a defined time.

In the Jaswant Singh Mathura Singh v/s. Ahmedabad Municipal Corporation17

case, the court determined that the tenant had the right to continue to hold the property
until the lease was completely terminated and that the lease created rights and interests
for enjoying the property.

The other necessary components of a valid lease were elucidated by the Supreme
Court in the case of B Arvind v/s. Government of India.18
These components included:
 A transfer of the right to enjoy an immovable property;
 Such a transfer must be for a specific term or in perpetuity;
 The transfer should be in consideration of a premium or rent;
 The transfer should be in a bilateral transaction and the terms of the transfer
must be accepted.

15
The Indian Contract Act, 1872, § 10, No.9, Acts of Parliament, 1872 (India).
16
2006(1) California HN 419
17
AIR 1991 SC 2130
18
AIR 2007 SC 1306
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 IV. KIND OF LEASE
There are many kinds of leases are followed in our country but section –
10519 of the Transfer of Property Act, 1882 recognizes only three main kinds
of leases named as:
 Leases for a certain time
 Periodic leases
 Leases in perpetuity

A. Lease for a certain time

In this section, the word "certain" denotes something that is either fixed or
capable of being made certain at a later time. There must be certainty about the
duration. The lease's duration, terms, and conditions need to be predetermined
or fixed. Although it is not required, this lease should have a certainty as it is
a requirement of a leasing agreement.

A lease that lacks clarity is deemed null and void. The court held in Lord
Kenyon's case in Goodright D Hall v. Richardson20 that it was not necessary
to determine the certainty at the time. For such a lease, it is sufficient if a day
occurs throughout the passage of time that will make it certain.

B. Periodic lease

One type of lease that is typically held for a specific amount of time is a
periodic lease. This kind of lease consists of a fixed-term lease, such as a
month-to-month or year-to-year lease. A monthly lease does not imply that a
new lease is automatically created for the following month on the first of each
month, ending on the last day of the month. It refers to an ambiguous lease that
either party may terminate with one month's notice. Since this form of lease
is for a brief length of time, registration is not required.

19
Supra 7
20
1789 2 Term Rep462
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 The definition of a periodic lease in the S. Rajeev Singh v/s. Punching
Associates21 case is a lease whose term is continuous from one period to the
next. In general, a lease that lasts indefinitely is regarded as a lease for life;
but, if rent is paid annually, the lease is interpreted as such from year to year.

According to the ruling in the Venkatachellam v/s. Audian22 case, a lease is

provided for a specific year with the stipulation that it remain in effect until a
new lease is approved.

C. Leases in perpetuity

One type of lease that is retained for a longer period of time is a lease in
perpetuity. It is also known as a long-term or permanent lease. In this case, the
lease is passed down through the generations. In this type of lease, the lessee
has the option to extend the lease upon the expiration of the first term.

In the case of Commissioner of Income Tax, Assam v. Panbari Tea Co Ltd,23

it was decided that, in this instance, rent is a revenue receipt and the premium
is a capital income when the lessor's interest was parted for a price. However,
the paid price is the premium when the benefits are enjoyed on a periodic basis.
It is required that you register for this perpetual lease.

V. OTHER KINDS OF LEASE

In addition to these three main kinds of lease mentioned in section 10524 of the
Transfer of Property Act, 1882, lease can further be classified into many kinds,
namely:
 Absolute Lease
 Derivative Lease
 Sales Aid Lease
 Domestic Lease
 International Lease

21
AIR 2008 Del 56
22
881 ILR 3 Mad 358
23
AIR 1965 SC 1871
24
Supra 7
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 A. Absolute Lease
Another name for an absolute lease is a primary lease. An individual
possessing absolute authority over the property may grant an absolute lease.
This lease may be awarded for any duration or for any number of years.

B. Derivative Lease
Another name for a derivative lease is a sub-lease. A person with a limited
interest in the property themselves grants this type of lease. It is never possible
to extend this type of lease past the time frame in which the Absolute lease was
signed.

It was decided in the Roop Kumar v/s. Mahan Thedani25 case that a tenant
who does not own full ownership of the property cannot legitimately sublease
it to another party.

In the Lov Raj Kumar v/s. Daya Shankar26 case, the court considered the fact
that an individual lacking legal title to the land cannot independently establish
a lease.

C. Sale Aid Lease

Under this type of lease, the lessor permits the lessee to advertise the goods on
his property in exchange for the lessee receiving commission payments.

D. Domestic Lease
A lease is referred to as domestic when every party to it is a citizen of the same
nation.

E. International Lease
A lease is referred to as international when one or more of the parties reside in
different nations.

25
2003 (1) RCR (Rent) 615 SC
26
AIR 1986 Del 364 (368)
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CONCLUSION

The Transfer of Property Act, 1882's Chapter V, Sections 105–11727, addresses leases. In
the law of properties, leases are crucial. In this universe, the majority of individuals will
either own their own property or will use someone else's property in exchange for a
premium or rent. Because everyone will own a property at some point, it is essential that
everyone, not just those who work in the legal profession, have an in-depth knowledge of
leases. If someone signs a lease without understanding it or without having a reasonable
understanding of leases, they may not have a valid lease and could be misled. The simplest
definition of a lease is an agreement between a lessor and a lessee for the time period
specified in the agreement. Lease duration, terms, amount due, when and how to pay, and
other details must all be made clear.

Laws are enforced for breaking any of the clauses, guidelines, norms, and agreements
specified in the leasing agreement. Until both the lessor and the lessee perform their duties
to a high standard, leasing is a sound idea. We may therefore gain a fundamental
understanding of leases from this paper, including what they are, who the lessor and lessee
are, their rights and obligations, and the variations.

27
The Transfer of Property Act, 1882, § 105- 117, No.4, Acts of Parliament, 1882 (India).
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