Concept of Lease: 

Under the Transfer of Property Act, of 1882, Sections 105 to 116 deal with leases that do not apply to agricultural land.

Section 105 lays down the definition of a lease- 

A lease of immovable 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. 

In Undavilli Nagarthnam v. Reddi Satyanarayana Murti, The court observed that the transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent. 

In Giridhari Singh v. Megh Lal Pandey, the appellant, a zamindari proprietor, granted the respondent a lease “with all rights”. After some time, Minerals were discovered, and the respondent began to work them claiming that they were granted under the lease and the appellant resisted the claim. It was held that the lease was one of the surfaces only and that a permanent, heritable and transferable grant of lands did not carry with it a right to the minerals under the lands grunted. 

Elements of a lease agreement: 

  1. The parties to the lease i.e. lessor and lessee are necessary. However, the parties must be competent. 
  2. Demise: the right to enjoy the transfer of limited estate is called demise. 
  3. Duration of lease: The interest that is created in the property could be for a specified period or even in perpetuity. 
  4. Consideration should be valid. 

Section 106- Duration of lease in the absence of lease agreement

Section 106 lays down that in case of the absence of a contract or due to local usage, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable on the part of either party, by six months’ notice. In case of a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, terminable on the part of either party by 15 days of notice. 

Types of lease: 

  1. Tenancy at will: this type of tenancy can be terminated at the will of either of the parties.
  2. Periodic leases: These are the leases that are based on periodic type. They are mentioned in Section 108. However, they are not fixed. 
  3. Permanent leases: these types of leases are in perpetuity. In Afzal Un Nisa v. Abdul Karim, the appellant’s predecessors invited the respondent’s predecessors to occupy land for building purposes in 1859. There was no document showing the terms, but from 1859 onwards the rent was paid and some of the receipts used the word permanent. The tenants had also erected substantial buildings without objection by the landlord. The court held that it was justified in presuming that the tenure is permanent. 
  4. Tenancy on a yearly basis  

Registration of Lease: 

Registering means the recording of the contents of a document with a registering officer and the preservation of copies of the original document. The aim behind registration is the conservation of evidence, assurance of title, publicity of documents and preservation of fraud. 

Section 107 of the Transfer of Property Act, lays down that that the lease of immovable property for a term exceeding one year needs to be registered. 

According to Section 17(1)(d) of the Registration Act, 1908, the registration of a lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, is compulsory. 

Similarly, Section 18(c) leases immovable property for a term not exceeding one year, and leases exempted under Section 17, are optional to be registered. 

Hence, if the lease agreement which is beyond 12 months, is not registered, cannot be presented as proof in the law of court. 

Documents which are required for registration: 

  1. The original proof of ownership of the property 
  2. documents of the property to be leased 
  3. two photographs of each of the parties and one photograph of each of the witness 
  4. address a proof copy of the tenant, landlord and the witnesses. 
  5. The rental agreement printed on the stamp paper of the correct value. 

In Sevoke Properties Ltd v. West Bengal State Electricity Distribution Company Limited, it was held by the SC that the contents of an unregistered lease agreement were inadmissible in evidence. 

In M/S Paul Rubber Industries Private Limited v. Amit Chand Mitra & Anr, in this case, in 2003, a landlady and a tenant entered into a lease agreement that was unregistered for 5 years. After 5 years the tenancy agreement was not renewed but the tenant continued in possession without the payment of the rent. In 2008, the landlady sent a notice to the tenant directing him to vacate the premises within 15 days, which the latter did not comply with. 

The court held that an unregistered lease agreement cannot be used as evidence to determine the nature of possession of the leased premises. However, it was also held that an unregistered lease agreement can be admitted in evidence to show the nature and character of possession, only when the nature and character of possession is not the main term of the lease and not the primary issue in the dispute. 


A lease can be granted by a lessee which is known as Sub-lease. In Agarwal Automobiles v. Indian Oil Corpn Ltd, the lessee allowed a dealer to establish his sale outlet at the leased place. The dealer was not allowed to claim renewal of the lease after the expiry of its term, nor there was any binding obligation to permit him to continue his dealership. 

Section 116- Effect of holding over: 

This section states that if a lessee (or sublessee) remains in possession thereof after the determination of the lease granted to the lessee, and the lessor or his legal representatives accepts the rent from the lessee (or sublessee), or gives assent to his possession, and allows renewal from periodic basis. 

Rights and Liabilities of Lessor and Lessee: 

Section 108 lays down the rights and liabilities of the lessor and the lessee 

Rights of the lessee: 

  1. Any changes or alterations in the lease shall come into effect 
  2. The lease is voidable at the option of the lessee 
  3. Lessee has the right to deduct expenses from the rent 
  4. the lessor has the right to recover any payment which a lessor is bound by 
  5. after termination, the lessor has the right to remove all materials that may be attached to the land 
  6. When the duration of the lease is not specified in the lease agreement, all the profits will belong to the lessee 

Liabilities of the lessee: 

  1. Duty of the lessee to disclose all the material facts which is likely to increase the value of leased property 
  2. The lessee is under an obligation to pay rent or premium 
  3. Duty of the lessee to maintain and protect the property 
  4. The lessee is under an obligation to not erect any permanent structure, except for agricultural purposes.

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