Boumitran K 03 October 2025

Registration of rental agreement

Hello, I have provided my commercial space to rental for a company to run their retail store. Company name is not highlighted to preserve professional discretion, but a very popular QSR brand in India. The property is under mortgage and hypothecated with bank. The store is operational for 3 months now. To register rental agreement, bank should provide NOC to register rental agreement. To provide NOC, bank is asking tenant to add a clause to the rental agreement stating that "Lessee would render their cooperation in case any recovery action is initiated by the Bank against the Borrower/Mortgagor in future including handing over the peaceful possession of the leased premises to the Bank, if demanded by the Bank. In such case, Lessee has no objection to deposit the rent directly with the Bank, if there is a written demand by the Bank to that effect and they shall not question the same". Lessee is not agreeing to add this in registration document. Now bank is not providing NOC and hence registration of rental agreement is pending. As per advise from a lawyer(he also acknowledged that bank's ask is valid one) I have sent a register post with delivery acknowledgement letter asking the company to agree and add the condition requested by bank in rental agreement for which they have not responded yet. Lessee over email confirms that they are not related with bank in any matter and I should work with bank to get NOC. They have invested for their business in the rented property and they respond as "Lessee will abide by whatever is as per law. Lessee will not be limited to act as per Law and lessee has all right to safeguard and protect their huge investment as per law." Now, I sit between 2 corporate companies standing in their own terms and I am helpless in the situation. Can anyone suggest how to go forward from here? What are the implications of delay in registering the rental agreement (for no fault of mine)? Is the demand from bank valid one? Is the hold by the lessee a valid one?

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Quick Summary

A property owner is facing difficulties registering a rental agreement for a commercial space. The bank, which holds a mortgage on the property, requires the tenant to agree to a clause allowing the bank to take possession if the owner defaults on the loan. The tenant refuses to add this clause, preventing the bank from issuing a No Objection Certificate (NOC) needed for registration. The owner is seeking advice on how to resolve this impasse and understand the implications of the delayed registration.

5 Replies

T. Kalaiselvan, Advocate (Advocate) 03 October 2025

In the given situation you may convert the lease agreement for eleven months renewable year after year to number of years.

It is not mandatory to register this eleven months lease agreement and you don't even need to obtain NOC from bank for this.

As a matter of fact the loan and the terms of loan is between the lender and the borrower, hence the tenant cannot be included into the loan issues/disputes between both. Neither you can force the tenant to give any such undertaking to the bank because the lease agreement is between the tenant and the landlord and not between the tenant and the bank, hence bank cannot dictate any terms to the tenant, moreover there is no rule in banking laws mandating the tenant to give any such undertaking to the bank nor there is any law that the bank can demand such unjustifiable and illegal agreements from the third party tenant.