cpc

lease hold agreement


 

Can someone clearly explain in total clarity the difference between assignment vs sub -lease of a property tenancy

 
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Advocate

plz go through the following excerpt from a judgment of Guj  HC Shah Chatrabhuj Narshi And Anr. vs Nensibhai Shavanjibhai Gohil And ... on 17 August, 1979

"Two provisions of the Transfer of Property Act have material bearing on
the contentions which have been advanced on behalf of the petitioner-tenant.
These two relevant provisions are to be found in Section 108(j) and Section 5 of
the Transfer of Property Act, which will, in our opinion, set at rest the
controversy raised on behalf of the petitioner-tenant in the contentions set out
above. Section 108(j) empowers a lessee to transfer absolutely or by way of
mortgage or sublease the whole or any part of the interest in the property and
any transferee of such interest or part may again transfer it, and the lessee
shall not, by reason only of such transfer, cease to be subjected to any of the
liabilities attached to the lease. Clause (j) of Section 108, therefore,
expressly permits a lessee to transfer absolutely or by way of mortgage and
sublease the whole or part of any interest in the property. Clause (j),
therefore, refers to assignments that are absolute and to assignments by way of
mortgage and sublease (vide: Transfer of Property by Mulla, Sixth Edition, p.
704). The difference between absolute assignment and assignment of lesser
interest is well recognized. Absolute assignments are those assignments where
the whole interest of the lessee is transferred The effect of such assignment is
that it creates privity of estate between the lessor and the assignee, and the
assingee becomes liable to the lessor on covenants running with the land
including the covenant to pay rent. An assignment of a lesser interest can be
effected by way of a mortgage or sublease as provided in Clause (j). A sublease
is an assignment of a lesser term and accordingly there is no privity of estate
between the lessor and the sublessee vide: Timmappa v. Rama Venkanna (1897) ILR
21 Bom. 311 and Transfer of Property by Mulla, Sixth Edition, p. 706). Clause
(j) therefore permits a lessee to transfer his whole interest by way of absolute
assignment or part of it by way of sublease or mortgage. The contention urged on
behalf of the petitioner-tenant that in order to be a valid assignment, there
should be a transfer of the whole estate and consequent diverting thereof from
assignor is not well-founded. Similarly, the contention that there cannot be any
assignment to one's own self or for that matter there cannot be any sublease in
favour of one's own self is also not justified on the matter of principle."
 

 

 
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Advocate/ Senior Partner

Dear Mr. Kannan.

In case of assignment of tenancy by the existing tenant in favour of a third party, the assignee steps into the shoes of the existing tenant and the privity thereafter is between the landlord and the assignee tenant. The original tenant no longer continues to be one and is not bound by the terms of the tenancy agreement nor can he claim any right accruing to a tenant after the assignment is complete.

In the case of sub lease, the tenant sub leases the property to a third party while he continues to be a tenant. The privity with the land lord continues to subsist and he is bound by the terms of the agreement.

Thanks,

Ramakrishnan, ADV 

 

 
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