Leave and license
Dineshkumar Gupta
(Querist) 19 February 2010
This query is : Resolved
I have shop which given on the rent basis for eleven months. We have made leave and license agreement as legal formalities but it is without a notary stamp.
So, in future whatever disput come it can be(leave &b license agreement)considered as legal proof?
B K Raghavendra Rao
(Expert) 19 February 2010
If your agreement is technically correct, and witnessed by two witnesses in accordance with legal requirement (signature, name of the witness, his address - all written by the witness himself), they it is a pucca agreement valid in the eyes of law.
Parveen Kr. Aggarwal
(Expert) 19 February 2010
Notarisation of a leave and licence agreement is not at all required. No legal provision makes it mandatory to get a leave and licence agreement notarised. If the leave and licence agreement is duly executed and stamped, it will be enforceable.
A V Vishal
(Expert) 20 February 2010
I differ on the experts advise. now under the registration act even a L & L agreement of 11 months needs to be compulsarily be registered. You cannot notarize the document and further non registration without paying the required stamp duty will make the document not admissible in evidence before any court of law in case of any dispute.
Parveen Kr. Aggarwal
(Expert) 20 February 2010
Mr. Vishal,
Under which provision of the Registration Act such an agreement has been made compulsorily registrable.
A V Vishal
(Expert) 20 February 2010
Yes, as per Section 55 of the Maharashtra Rent Act, 1999, registration of L & L agreement is compulsary, moreover in most of the states the state governments has amended the act to make even a 11 months agreement registrable, check it up in your town with the local registration office.
A V Vishal
(Expert) 20 February 2010
In AP - AP Amendment Act No;- 4 of 1999 wef 1-4-1999 - Sec 17 (d) is amended.
Parveen Kr. Aggarwal
(Expert) 21 February 2010
Mr. Vishal,
Section 17 of Registration Act, 1908 read with all the State Amendments is given hereunder:
"17. Documents of which registration is compulsory.-(I) The following documents shall be registered, if the property to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act XVI of 1864, or the Indian Registration Act, 1866, or the Indian Registration Act, 1871, or the Indian Registration Act, 1877, or this Act came or comes into force, namely,-
(a) Instruments of gift of immovable property;
(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property;
(c) non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest; and
(d) Leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent;
( e ) non-testamentary instruments transferring or assigning any decree or order of a Court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property:
Provided that the State Government may, by order published in the Official Gazette, exempt from the operation of this sub-section any leases executed in any district, or part of a district, the terms granted by which do not exceed five years and the annual rents reserved by which do not exceed fifty rupees.
(I-A) The documents containing contracts to transfer for consideration, any immovable property for the purpose of section 53-A of the Transfer of Property Act, 1882, shall be registered if they have been executed on or after the commencement of the Registration and Other Related Laws (Amendment) Act, 2001, and if such documents are not registered on or after such commencement then, they shall have no effect for the purposes of the said section 53-A.
(2) Nothing in clauses (b) and (c) of sub-section (1) applies to-
(i) any composition deed; or
(ii) any instrument relating to shares in a joint stock company, notwithstanding that the assets of such company consist in whole or in part of immovable property; or
(iii) any debenture issued by any such company and not creating, declaring, assigning, limiting or extinguishing any right, title or interest, to or in immovable property except insofar as it entitles the holder to the security afforded by a registered instrument whereby the company has mortgaged, conveyed or otherwise transferred the whole or part of its immovable property or any interest therein to trustees upon trust for the benefit of the holders of such debentures; or
(iv) any endorsement upon or transfer of any debenture issued by any such company; or
(v) any document other than the documents specified in sub-section (I-A) not itself creating, declaring, assigning, limiting or extinguishing any right, title or interest of the value of one hundred rupees and upwards to or in immovable property, but merely creating a right to obtain another document which will, when executed, create, declare, assign, limit or extinguish any such right, title or interest; or
(vi) any decree or order of a Court except a decree or order expressed to be made on a compromise and comprising immovable property other than that which is the subject-matter of the suit or proceeding; or
(vii) any grant of immovable property by the Government; or
(viii) any instrument of partition made by a Revenue Officer; or
(ix) any order granting a loan or instrument of collateral security granted under the Land Improvement Act, 1871, or the Land Improvement Loans Act, 1883; or
(x) any order granting a loan under the Agriculturists' Loans Act, 1884, or instrument for securing the repayment of a loan made under that Act; or
(x-a) any order made under the Charitable Endowments Act, 1890, vesting any. property in a Treasurer of Charitable Endowments or divesting any such Treasurer of any property; or
(xi) any endorsement on a mortgage-deed acknowledging the payment of the whole or any part of the mortgage-money, and any other receipt for payment of money due under a mortgage when the receipt does not purport to extinguish the mortgage; or
(xii) any certificate of sale granted to the purchaser of any property sold by public auction by a Civil or Revenue Officer.
Explanation.-A document purporting or operating to effect a contract for the sale of immovable property shall not be deemed to require or ever to have required registration by reason only of the fact that such document contains a recital of the payment of any earnest money or of the whole or any part of the purchase money.
(3) Authorities to adopt a son, executed after the first day of January, 1872, and not conferred by a will, shall also be registered.
STATE AMENDMENTS
-[Andhra Pradesh].-In its application to the State of Andhra Pradesh, in S. 17,- (a) In sub-S. (1),
(i) for Cl. (d), substitute the following clause, namely,- "(d) leases of immovable property;"
(ii) after Cl. (e) but before the proviso, insert the following clauses, namely:- "(f) any decree or order or award or a copy thereof passed by a civil Court, on consent of the defendants or on circumstantial evidence but not on the basis of any instrument which is admissible in evidence under section 35 of the Indian Stamp Act, 1899 (Central Act 2 of 1899) such as registered title deed produced by the plaintiff, where such decree or order or award purports or operate to create, declare, assign, limit, extinguish whether in present or in future copy right, title or interest whether vested or contingent of the value of one hundred rupees and upwards to or in immovable property; and (g) agreement of sale of immovable property of the value of one hundred rupees and upwards;â€
(b) In sub-S (2),
(i) In Cl. (v), for the words "any document not in itself creating", substitute "any document except an agreement of Sale as mentioned in clause (g) of sub-section (1) not in itself creating";
(ii) In Cl. (IV), for the words "any decree or order of a Court", substitute "any decree or order of a Court, not being a decree or order or award falling under clause (f) of sub-section (1)";
(iii) The Explanation shall be omitted.-Andhra Pradesh Act 4 of 1999, S. 2 (w.e.f. 1-4-1999).
[Gujarat].-(I) in its application to the State of Gujarat, in sub-Sec. (1), after Cl. (a), insert the following new clause, namely,- “"(aa) instruments which purport or operate to effect any contract for transfer of any immovable property";
(2) after sub-S (1), insert the following new sub-section, namely,- "(I-A) The provisions of section 23 shall apply to an instrument referred to in clause (aa) of sub-section (1) and executed before the commencement of the Registration (Gujarat Amendment) Act, 1982, as if in that section for the words "from the date of the execution", the words, figures and letters" from the first day of March, 1982" has been substituted."; and
(3) in sub-S (2), the Explanation shall be deleted.-Gujarat Act 7 of 1982, S. 2.
[Kerala].-In its application to the State of Kerala, in sub-S. (2) of S. 17, CIs. (ix) and (x) shall be omitted.-Kerala Act 7 of 1968.
[Maharashtra].-In its application to the State of Maharashtra, in Cl. (x) of sub-S (2) (1) after "Agriculturists Loans Act, 1884", insert "or under the Bombay Non-Agriculturists' Loans Act, 1928"; and (2) For "under that Act", substitute "under either of those Actsâ€.-Maharashtra Act 19 0f I960, S.2.
[Orissa].-In its application to the State of Orissa, in sub-S. (1), after Cl. (e), insert the following clauses, namely,- "(f) agreement to sell immovable property possession whereof has been or is handed over to the purported purchaser; (g) power-of-attorney relating to transfer of immovable property possession whereof has been or is handed over to the purported attorney holder".-Orissa Act 8 of 2002, S. 3 (w.e.f.24-5-2002).
[Pondicherry] -In sub-S. (3), for the words "the first day of January, 1872", substitute "the 9th day of January, 1969".-Pondicherry Act 17 of1970 (w.e.f. 1-11-1970).
[Rajasthan].-In its application to the State of Rajasthan,- (1) In sub-S. (2) of S. 17,- (a) for the full-stop at the end of Cl. (xii), a comma and the word "or" shall be substituted; and (b) after Cl. (xii), insert the following clause, namely:- “"(xiii) any instrument referred to in sub-section (5) of section 89." -Rajasthan Act 16 of 1976, S. 2 (w.e.f.13-2-1976).
(2) In S. 17,- (a) in sub-S (1), after CI. (e) and before the proviso, add the following clauses, namely:- (f) agreement to sell immovable property possession whereof has been or is handed over to the purported purchaser; (g) Irrevocable power of attorney relating to transfer of immovable property in any way"; and (b) in sub-S. (2), the existing Explanation shall be omitted.-Rajasthan Act 18 of 1989, S. 2.
[Tamil Nadu].-In its application to the State of Tamil Nadu, in S. 17, sub-S (1), after CL. (e), add the following clause, namely,- "(f) instruments of agreement relating to construction of multi-unit house or building on land held by several persons as referred to in clause (i) under article 5 of schedule I to the Indian Stamp Act, 1899 (Central Act II of 1899)." -Tamil Nadu Act 38 of 1987, S. 3.
[Uttar Pradesh].-In its application to the State of Uttar Pradesh, in S. 17,- (1) In sub-S (1),- (i) in CI. (b), the words "of the value of one hundred rupees and upwards" shall be omitted; (ii) in CI. (e), the words "of the value of one hundred rupees and upwards" shall be omitted; (iii) in CI. (e), insert the following clause, namely,- (f) any other instrument required by any law for the time being in force, to be registered"; (iv) the proviso shall be omitted. (2) In sub-S (2),- (i) in CI. (v), after the words "any document" occurring in the beginning, the words "other than contract for sale" shall be inserted, and the words "of the value of one hundred rupees and upwards", shall be omitted; (ii) the Explanation shall be omitted. (3) In sub-So (3), after the words "by will", insert "and an instrument recording adoption of a child executed after the first day of January, 197T'.-Uttar Pradesh Act 57 of 1976, S. 32 (w.e.f. 1-1-1977).
I have not found any other State Amendment in Section 17 of the Registration Act, 1908.
A V Vishal
(Expert) 21 February 2010
Mr Parveen
I am not expected to give such a detailed explanation, please have the patience to read thoroughly and carefully and understand the amendment
The relevant clause is reproduced from your own post (i) for Cl. (d)viz.Leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent;, substitute the following clause, namely,- "(d) leases of immovable property;" , it is clearly stated that the original clause d is substituted by "(d) leases of immovable property;" wherein there is no period mentioned which means even a 11 month agreement is registrable.
Parveen Kr. Aggarwal
(Expert) 22 February 2010
Thanks a lot, Mr. Vishal.
Would you please enlighten us whether a 'leave and licence agreement' and a 'lease agreement' are one and the same thing or is there any distinction between the two? If both are same, please quote some case law and if there is any distinction, please spell out the distinctions.
Thanks in anticipation.
A V Vishal
(Expert) 22 February 2010
Lease is defined under Section 105 of The Transfer of Property Act,1882 and a lease of immoveable property is a transfer of a right to enjoy such property for a certain time or in perpetuity on consideration to be rendered periodically or on specified occasions, while a licence is defined in Section 52 of the Indian Easement Act,1882 and it does not create any interest in the premises in favour of the licensee excepting a mere right to use and occupy the premises for a limited duration. Both documents have now to be registered. A lease deed is required to be stamped and registered. However the stamp duty payable on lease is more than on Leave and Licence for a period upto three years. For a period exceeding three years the stamp duty is same for both agreements.
Kumar Thadhani
(Expert) 22 February 2010
Mr Parveen like this expert has given sufficient information.
Parveen Kr. Aggarwal
(Expert) 22 February 2010
Thanks Mr. Vishal.
If lease and licence are different then how clause (d) of Section 17(1) of the Registration Act, which is with regard to leases, is applicable to a Leave and Licence Agreement.
This expert query pertained to a Leave & Licence Agreement and not to lease.
A V Vishal
(Expert) 22 February 2010
http://www.karigr.org/modeldeeds/licensed.htm
A V Vishal
(Expert) 23 February 2010
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.
