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Registration of leave and license agreemnt in mumbai vs notarised agreement for rent (Legal Documents)

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Author : PankajV

Posted On 15 August 2011 at 21:52

Dear Expert,

May I take your expert opinion as whether , IT IS MUST to get the Flat Rent agreement ( Leave and License) in Mumbai REGISTERED? Ref. Mahrashtra Rent Control Act, 1999 Sect 55.

Whether there is any provision that allows to use only Stamp paper based notarisation agreement only instead of REGISTERED AGREEMENT ?

My second question is whether after completion of 11 months of a Registered leave and license agreemnt in Mumbai, we again need to go for Regitered Agreement?

Thanks in advance for your valuable advice.

Regards
Pankaj




Expert : raj kumar makkad

Posted On 15 August 2011 at 22:45

There is no need of getting it registered and after 11 months, it needs to execute fresh agreement and if clauses of already executed agreement permit, then it may be got re-validated on mutual consent.



Expert : Thangapandian

Posted On 16 August 2011 at 06:37

The registration is based upon the period of your agreement.. If your agreement for 11 months means thats need not to be registered. Notary also not compulsory. Its more than 11 months mean for your safety you may register the same.



Expert : Shailesh Kr. Shah

Posted On 16 August 2011 at 12:06

According to Section 17(1)(d) of The Registration Act, 1908 that there is no requirement of registration in your case.



Expert : prabhakar singh

Posted On 16 August 2011 at 18:51

SURE I AM, IT DOES REQUIRE REGISTRATION PARTICULARLY IN MUMBAI.



Expert : prabhakar singh

Posted On 16 August 2011 at 18:55

THE RELEVANT LAW IS HERE FOR YOU DEARS:

UNDER Section 55 (1) of the Maharashtra Rent Control Act, 1999, any agreement for Leave and License or letting of any premises entered into between the landlord and the tenant or the licensee as the case may be should be in writing and should be registered under the Registration Act, 1908. Section 55 (2) imposes the responsibility of getting such agreement registered on the landlord.

It further provides that in the absence of a written registered agreement, contention of the tenant about the terms and conditions on which the premises have been given either on leave and license or even let out shall prevail. Under Section 55(1) it is clear that only the agreement of tenancy or leave and license executed between the landlord and tenant or the landlord and the licensee is required registration.

The word landlord has been defined under section 7(3) of the said Act for the purpose of all the chapters except chapter VIII, while the definition of landlord for the purpose of Chapter VIII includes the employer, a member of the Armed Forces and a person who has given premises on license for residence. Therefore, on plain reading of Section 55 (1) only the agreement between landlord and tenant ie either tenancy agreement or lease agreement requires registration; and an agreement executed between landlord and licensee which means an agreement of leave and license for residence which is governed by Chapter VIII of the said Act requires registration.

The premises which are given on license for commercial purposes are not governed under any provisions of the Maharashtra Rent Control Act, 1999. There is a non-obstante clause under Section 55(1) of the Maharashtra Rent Control Act, 1999. Therefore every agreement of leave and license whether given for residence or for comercial requires in writing and also requires registration.

A license is not defined under the Maharashtra Rent Control Act, 1999. The same is defined under Section 52 (Chapter VI) of the Indian Easement Act, 1882. The definition of license reads as follows:

"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."

The License is not a lease. The Lease and the License both are different. In a number of judgements various High Courts as well as the Apex Court have distinguished the lease and the licnese. In the matter of Milka Singh v/s Diana reported in AIR 1964 J & K at Page 99, the Bench of the Jammu and Kashmir High Court has held:

"A mere license does not create any estate or interest in the property to which it relates; it only makes an act lawful which without it would be unlawful. Thus the status of a licensee is essentially different from that of a trespasser or a tenant. In fact, the possession of a licensee is not a juridical possession but only an occupation with the premission of the licenser. While the actual occupation remains with the licensee, the control or possession of the property is with the licensor through his licensee. There is always an element of animus possidendi in the possession of a trespasser which is completely absent in the possessionof a licensee. In these circumstances therefore, it cannot be said that the moment the license is terminated, the licensee & rs quo's possession becomes that of a trespasser.

"A licensee is a licensee whether the license is for occupation of the premises or for casual visits or for any other purpose. The status of a licensee cannot change or vary according to the purpose of the license. The principle once a licensee always a licensee would apply to all kinds of licenses."

Similarly in the matter of Chandulal v/s Delhi Municipal Corporation, the Full Bench of the Delhi High Court in a Judgement reported in AIR 1978 Delhi Page 174 has inter alia held that:

"A lease is not a mere contract but envisages and transfers an interest in the demised property creating a right in favour of the lessee in rem. A license only makes an action lawful which without it would be unlawful but does not transfer any interest in favour of the licensee in respect of he property.

"In the case of a license there is something less than a right to enjoy the property in the licensee,; it cannot be exercised by sevants and agents and is terminable while on the other hand, in the case of a lease, there is a transfer of a right to enjoy the property or in other words the lessee is entitled to enjoy the property. A bare licensee having no interest in the property but is only a personal privilege to the licensee. After the termination of the license, the licensor is entitled to deal with the property as he likes. The right he gets as an owner in possession of his property. He need not secure a degree of the Court to obtain this right. He is entitled to resist in defence of his property the attempts of a trespasser to come upon his property by exerting the necessary and reasonable force to expel a trespassed.

"If however, the licensor uses excessive force, he may make himself liable to be punished under a prosecution, but he will infringe no right of the licensee. No doubt a person in exclusive possession of the property is prima facie to be considered to be a tenant, nevertheless he would not be held to be so if the circumstances negative any intention to create a tenancy. Case law relied. "

Likewise even the Apex Court in the matter of Rajbir Kaur & Anr V/ M/s S Chokesiri & Co reported in 1988 (2) RCJ Page 316, has held:

"License and Lease - Twin tests for determining whether an occupier is a licensee or a tenant:

(i) Right to exclusive possession.

(ii) The "rent stipulated for the grant; However, the exclusive possession itself is not decisive in favour of a lease and against a mere license;

"Operative intention of the parties is the determining factor – Regard must be had more to the substance than the form of the transaction – It is determined by the Law and not by the label the parties chose to put to it. (Transfer of Property Act, 1882 – Section 105; Indian Easements Act, 1882; Section 52)."

Even in the matter of Khalil Ahmed Bashir Ahmed v/s Tufelhussein Samasbhai Sarangpurwala reported in 1988 SCC Page 155, the Supreme Court has held:

"In order to determine whether a document created a licence or a lease the real test is to ascertain the intention of the parties ie whether they intended to create a license or a lease. If the document creates an interest in the property entitling the transferee to enjoyment, then it is a lease; but if it only permits another to make use of the property without exclusive possession, then it is a license. Substance of the document must be preferred to form."

From all the aforesaid judgements and the principles, it is crystal clear that the lease agreement and the agreement of Leave and License are not one and the same but different. Therefore under no circumstances, the agreement of Leave and License can be treated as Deed of Lease and does no required to be stamped under Article 36 of Schedule I of the Bombay Stamp Act, 1958. The said Article 36 prescribes the stamp duty payable on an agreement of lease or under-lease or sub-lease.

The Deed of Lease, under -lease or sub-lease creates an interest or transfer an interest in the property in favour of the Leasee during the period of lease; while license is only a permission to use or occupy or enjoy the premises and to do certain things or acts which otherwise will amount to trespass. Therefore an agreement of leave and license under no circumstances can be charged with stamp duty under Article 36 of Schedule I of the Bombay Stamp Act."

Likewise, such document (Agreement of Leave and License) also cannot be charged with Duty under Article 25 of Schedule I of Bombay Stamp Act, 1958 because Art.25 deals with the Conveyance where in there is a transfer of interest or creation of interest in favour of purchaser, while under the Leave and License there is no transfer of interest. There is no special classification of the agreement of leave and licence under the Bombay Stamp Act.

Therefore such agreement falls under Article 5 which charge the Duty on Agreement or its records or Memorandum of an agreement. The Article 5 deals with various types of agreements such as sale or purchase of various items and the stamp duty applicable thereon as mentioned under various sub-clauses. However, the agreement of leave and license is not specially classified under Article 5 and therefore such agreement of leave and license will attract the stamp duty under Article 5(h) of Schedule I of the Bombay Stamp Act, which speaks about "any agreement which is not otherwise provided for" under this article.

In Article 5 of Schedule I of the Bombay Rent Act, the Stamp Duty payable on such leave and license agreement is only Rs. 20/- and the registration charges will be the minimum registration charges payable under the provisions of the Indian Registration Act.

There is also no provision for any stamp duty on refundable deposit even under Article 36 of the Bombay Stamp Act, which deals with a document of lease. Under Art.36 stamp duty is not payable on any deposit which is refundable. Article 36 attracts the stamp duty only on the payment of premium, fine or advance payment of rent; but does not include the refundable deposit.

Therefore this provision (Sec. 55) applies to any agreement whether between individuals or in the Corporate Sector or Public Undertakings, and applies to the area where the Maharashtra Rent Control Act is applicable and not to other area.



Expert : girish shringi

Posted On 16 August 2011 at 19:13

I am agree with Prabhakarsingh.
In Bombayits compulsory.



Expert : Dr Anil Kumar Singh

Posted On 18 August 2011 at 17:37

I agree with Expert Prabhakar Singh, You must get agreement registered but put up a clause in the agreement that the agreement may be extended further for certain period between the parties on mutual mutual consent and that too in writing on stamp paper duly notirized.



Author : PankajV

Posted On 18 August 2011 at 23:02

Dear Prabhakar Sir - Thank You Very Much for throwing light on this act as aplicable in Maharashtra.
I thanks all others -Mr. Makkad , Mr. Tom, Mr. Shah and dr.Singh for their valuable time , inputs and attention.

Regards
Pankaj


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