Transfer of Property Act (TPA)
Leases under Sections 105 to 117: The Whole Chapter in Outline
A lease transfers a right to enjoy immoveable property for a term, in return for rent or a premium, while the lessor keeps the reversion. The chapter that follows the definition is the most heavily litigated in the Act, because it governs every tenancy not covered by a rent control statute. It divides naturally into five parts: what a lease is, how long it lasts and how it is made, what the parties must do, how the lease comes to an end, and what happens when a tenant stays on.
1. Section 105: The Definition
Section 105, TPA 'A lease of immoveable 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.' Lessor, lessee, premium and rent — the transferor is called the lessor, the transferee the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent. |
1.1 The essentials
- A transfer of a right to enjoy immoveable property — not of the ownership, and not merely a permission to use.
- For a certain time, express or implied, or in perpetuity. The term must be ascertainable, though it need not be stated in the deed if it can be implied.
- Consideration — a premium, or rent, or both. Rent may be money, a share of crops, service or anything else of value, rendered periodically or on specified occasions.
- Acceptance by the lessee on those terms; a lease is bilateral, which is why section 107 requires a registered lease to be executed by both parties.
- And the lessor retains the reversion, which is what he transfers under section 109 and recovers when the lease determines.
2. Lease Distinguished
2.1 Lease and licence
Point | Lease | Licence |
|---|---|---|
Nature | A transfer of an interest in the property | A permission to do something on the property which would otherwise be unlawful — section 52 of the Easements Act |
Possession | Exclusive possession passes to the lessee | The licensee has no possession; the licensor retains legal possession |
Transferability | Transferable and heritable, unless the contract says otherwise | Personal, and ordinarily neither transferable nor heritable |
Determination | Only as section 111 provides | Revocable, subject to the exceptions in the Easements Act |
The test | The intention of the parties, gathered from the substance of the document and the surrounding circumstances; exclusive possession is a strong indication but not conclusive, and the label the parties use does not decide | — |
2.2 Lease, sale and mortgage
Lease | Sale | Mortgage | |
|---|---|---|---|
What passes | A right to enjoy for a term | The ownership | An interest, by way of security |
What the transferor keeps | The reversion | Nothing | The equity of redemption |
Consideration | Rent or premium | A price | The mortgage money advanced |
Purpose | Enjoyment | Transfer for value | Security |
Ending | Determination under section 111 | — | Redemption, foreclosure or sale |
2.3 Lease and agreement to lease; premium and rent
- An agreement to lease is a contract that a lease shall be granted; it transfers no interest, and is enforceable by specific performance. A lease passes the right to enjoy at once.
- Premium is the price of the transfer, paid for the grant itself; rent is the consideration for the enjoyment, rendered periodically or on specified occasions. A premium is capital in nature, rent is recurring, and the distinction matters for stamp duty, for taxation and for the incidents of the tenancy.
3. Section 106: Duration and Notice
Section 106, TPA In the absence of a contract or local law or usage to the contrary, a lease of immoveable property for agricultural or manufacturing purposes is deemed to be a lease from year to year, terminable by six months' notice; and a lease of immoveable property for any other purpose is deemed to be a lease from month to month, terminable by fifteen days' notice. Every notice must be in writing, signed by or on behalf of the person giving it, and either sent by post to the party intended to be bound by it or tendered or delivered personally to him, or to one of his family or servants at his residence, or, if that cannot conveniently be done, affixed to a conspicuous part of the property. The period of notice is to be computed from the date of receipt of the notice; and a notice is not invalid merely because the period mentioned falls short of the period specified, where a suit or proceeding is filed after the expiry of the period mentioned in the section. |
Purpose of the lease | Deemed duration | Notice required |
|---|---|---|
Agricultural or manufacturing | From year to year | Six months |
Any other purpose | From month to month | Fifteen days |
- The section applies only in the absence of a contract, local law or usage to the contrary. A lease for a fixed term is not touched by it; the section supplies a duration where none was agreed.
- Computation. The period is computed from the date of receipt of the notice. Note the change made by the amendment of 2002: as the section originally stood, the notice had also to expire with the end of a year or month of the tenancy, and those words were deleted. A notice under the section as it now stands need not be made to expire with the end of a tenancy year or month.
- Defects. A notice is not invalid merely because the period it mentions falls short of the statutory period, where the suit or proceeding is filed after the expiry of the period specified in the section. This too was introduced by the 2002 amendment, and together with the deletion above it ended a long line of technical objections to notices to quit.
- Waiver of defects. A tenant may waive a defect in the notice, expressly or by conduct; and under section 113 a notice to quit is waived by any act showing an intention to treat the lease as subsisting, done with knowledge and with the consent of both parties.
4. Section 107: How a Lease Is Made
The lease | How it must be made |
|---|---|
From year to year, or for any term exceeding one year, or reserving a yearly rent | Only by a registered instrument |
All other leases | By a registered instrument, or by an oral agreement accompanied by delivery of possession |
Where a lease is made by a registered instrument | The instrument must be executed by both the lessor and the lessee |
The effect of an unregistered lease deed Where registration was compulsory and the deed is unregistered, it does not create the lease: by section 49 of the Registration Act it does not affect the immoveable property comprised in it. But the parties' conduct may still create a tenancy. Where the tenant has been let into possession and rent has been paid and accepted, a month-to-month tenancy governed by section 106 arises by implication, and the unregistered deed may be looked at for the collateral purpose of showing the nature and the terms of the possession, though not to prove the lease itself. |
5. Section 108: Rights and Liabilities of the Parties
5.1 The lessor's obligations
Clause | Obligation |
|---|---|
(a) | To disclose to the lessee any material defect in the property, with reference to its intended use, of which the lessor is and the lessee is not aware, and which the lessee could not with ordinary care discover |
(b) | On the lessee's request, to put him in possession of the property |
(c) | The covenant for quiet enjoyment — the lessee, paying the rent and performing the contracts binding on him, may hold the property during the term without interruption |
5.2 The lessee's rights
Clause | Right |
|---|---|
(d) | Accretions. If during the lease any accession is made to the property, it is deemed to be comprised in the lease |
(e) | Destruction by irresistible force. If by fire, tempest, flood, violence of an army or of a mob, or other irresistible force, any material part of the property is wholly destroyed or rendered substantially and permanently unfit for the purpose for which it was let, the lease is, at the option of the lessee, void — unless the injury was occasioned by his own wrong |
(f) | Repairs. If the lessor neglects to make, within a reasonable time after notice, a repair which he is bound to make, the lessee may make it himself and deduct the cost with interest from the rent, or otherwise recover it |
(g) | Payments. If the lessor neglects to make a payment which he is bound to make and which, if not made, is recoverable from the lessee or against the property, the lessee may make it himself and deduct it with interest from the rent |
Clause | Right |
|---|---|
(h) | Fixtures. The lessee may, at any time while in possession of the property let but not afterwards, remove all things which he has attached to the earth, provided he leaves the property in the state in which he received it |
(i) | Growing crops. Where a lease of uncertain duration determines otherwise than by the lessee's own fault, he or his legal representative is entitled to the crops planted or sown by him and growing on the property, and to free ingress and egress to gather and carry them |
(j) | Transfer. The lessee may transfer absolutely or by way of mortgage or sub-lease the whole or any part of his interest, and any transferee may again transfer it; but the lessee is not thereby relieved of any of his liabilities under the lease |
5.3 The lessee's obligations
Clause | Obligation |
|---|---|
(k) | To disclose to the lessor any fact as to the nature or extent of the lessor's interest which the lessee is aware of and the lessor is not, and which materially increases the value of that interest |
(l) | To pay the premium or rent at the proper time and place |
(m) | To keep the property in as good a condition as it was when he was put in possession, subject to changes caused by irresistible force, and to allow the lessor to enter and inspect |
(n) | To give notice to the lessor of any encroachment on the property or of any proceeding to recover it or any part of it |
(o) | To use the property as a person of ordinary prudence would use his own; not to fell trees, pull down buildings, work mines, or commit any act destructive or permanently injurious; and not to erect any permanent structure, except for agricultural purposes, without the lessor's consent |
(p) | Not to use the property for a purpose other than that for which it was leased |
(q) | On the determination of the lease, to put the lessor into possession of the property |
6. Sections 109 and 110
- Section 109 — the rights of the lessor's transferee. Where the lessor transfers the property leased, the transferee, in the absence of a contract to the contrary, possesses all the rights and is subject to all the liabilities of the lessor as to the property or the part transferred, from the date of the transfer. The lessee is not bound to pay rent to the transferee until he has notice of the transfer, and a payment made before that to the original lessor is a good discharge — which is the lease-chapter application of section 50. Attornment is the lessee's acknowledgment of the new lessor's title; the section does not make it a condition of the transferee's rights.
- Section 110 — exclusion of the day of commencement. Where the time limited by a lease is expressed as commencing from a particular day, that day is excluded in computing the term. Where no day of commencement is named, the time runs from the making of the lease. Where the lease is for a term and the lessee has an option to determine it, the option is, in the absence of a contract to the contrary, with the lessee and not with the lessor.
7. Section 111: Determination of a Lease
Clause | How the lease determines |
|---|---|
(a) | By efflux of the time limited by it |
(b) | Where the term is limited conditionally on the happening of some event, by the happening of that event |
(c) | Where the lessor's interest is to determine on the happening of an event, by the termination of the lessor's interest or his power to dispose of it |
(d) | By merger — where the interests of the lessee and the lessor in the whole of the property become vested at the same time in one person in the same right |
(e) | By express surrender — the lessee yields up his interest to the lessor by mutual agreement |
(f) | By implied surrender — as where the lessee accepts a new lease of the same property, or the lessor accepts possession |
(g) | By forfeiture — (1) breach of an express condition providing for re-entry; (2) where the lessee renounces his character as such by setting up a title in a third person or by claiming title in himself; (3) where the lessee is adjudicated insolvent and the lease provides for re-entry — in each case the lessor or his transferee must give notice in writing of his intention to determine the lease |
(h) | On the expiration of a notice to quit, or of a notice of intention to quit, duly given by one party to the other |
8. Sections 112 to 115: Waiver and Relief
Section | Provision |
|---|---|
112 | Waiver of forfeiture. A forfeiture under clause (g) of section 111 is waived by acceptance of rent which has become due since the forfeiture, or by distress for such rent, or by any other act on the lessor's part showing an intention to treat the lease as subsisting — provided the lessor knew of the forfeiture, and provided that where rent is accepted after the institution of a suit to eject the lessee, it does not operate as a waiver |
113 | Waiver of a notice to quit. A notice given under section 111(h) is waived, with the express or implied consent of the person to whom it is given, by any act on the part of the person giving it showing an intention to treat the lease as subsisting |
114 | Relief against forfeiture for non-payment of rent. Where a lease is determined by forfeiture for non-payment of rent, and the lessor sues to eject the lessee, if the lessee at the hearing pays or tenders the rent in arrear together with interest and full costs, or gives security for it, the court may in lieu of making a decree for ejectment pass an order relieving the lessee against the forfeiture, and he then holds the property as if the forfeiture had not occurred |
114A | Relief against forfeiture in other cases. Where a lease is determined by forfeiture for a breach of an express condition other than non-payment of rent, no suit for ejectment lies unless the lessor has served on the lessee a notice in writing specifying the breach, requiring him to remedy it if it is capable of remedy, and the lessee has failed within a reasonable time to remedy it. The section does not apply to a breach of a condition against assigning, sub-letting, parting with possession, or disposing of the property |
115 | Effect of surrender and forfeiture on under-leases. The surrender of a lease does not prejudice an under-lease of the property granted on terms which, in the circumstances, appear to the court to be reasonable; but on the determination of a lease by forfeiture, every under-lease also determines — save where the forfeiture has been obtained by collusion, or where the under-lessee is otherwise protected |
9. Sections 116 and 117
- Section 116 — holding over. Where a lessee or under-lessee remains in possession after the determination of the lease, and the lessor or his legal representative accepts rent or otherwise assents to his continuing in possession, the lease is, in the absence of an agreement to the contrary, renewed from year to year or from month to month according to the purpose for which the property is leased, as specified in section 106.
- Section 117 — agricultural leases. None of the provisions of the chapter applies to leases for agricultural purposes, except so far as the State Government may by notification declare all or any of them applicable, with or without modification. Agricultural tenancies are governed by the tenancy and land reform legislation of the State concerned.
10. Landmark Cases
📖 Associated Hotels of India Ltd. v. R.N. Kapoor, AIR 1959 SC 1262 Held: The Court laid down the test for distinguishing a lease from a licence. If a document gives only a right to use the property in a particular way, or on certain terms, while it remains in the possession and control of the owner, it is a licence; if an interest in the property is created and exclusive possession is given, it is a lease. The substance of the agreement, and not the form or the label the parties have used, determines its character; and although exclusive possession is not conclusive, it is of great significance. Ratio: Whether a transaction is a lease or a licence depends on the intention of the parties gathered from the substance of the document, exclusive possession being the most important indication. |
📖 Anthony v. K.C. Ittoop & Sons, (2000) 6 SCC 394 Held: An instrument of lease which required registration and was not registered cannot create a lease, and it cannot be received in evidence to prove the lease. But the conduct of the parties — delivery of possession and the payment and acceptance of rent — may bring into existence a tenancy by implication, which by operation of section 106 is a lease from month to month; and the unregistered document may be looked at for collateral purposes. Ratio: An unregistered lease deed creates no lease, but possession and rent may give rise to a month-to-month tenancy under section 106. |
11. Related Topics and Provisions
- Holding Over, Section 116 — treated separately, with the tenant at sufferance and the tenant at will
- Lease under the Act and Rent Control Legislation — where the general law gives way
- Section 52, Indian Easements Act, 1882 — the definition of a licence
- Sections 17 and 49, Registration Act, 1908 — compulsory registration of leases, and the effect of non-registration
- Section 50, TPA — rent paid in good faith, and its application to section 109
- Doctrine of Fixtures — read with section 108(h)