THIS ARTICLE HAS BEEN WRITTEN BY ANJALI PRAKASH FROM GOVERNMENT LAW COLLEGE THRISSUR

INTRODUCTION

In India, financial difficulties prevent some people from being able to transfer their property. While some consider the permanent or absolute transfer to be a luxury, every citizen now has the right to enjoy any property through a temporary transfer. Leases are one of the ways to transfer property for a certain amount of time. A lease transfers a party’s interest in real estate for a predetermined amount without changing who owns the property. Instead of transferring ownership, a lease transfers the right of occupancy. Here, the transferee, or the person using the property for a while, is referred to as the lessee, and the transferor is known as the lessor. The Transfer of Property Act, 1882 governs leases, which are granted under Sections 105 through 117.

The definition of a lease is given in Section 105 and indicates that it is a transfer of immovable property for a specific amount of time in exchange for the transferee accepting the terms of the agreement. When an express condition is broken that allows the lessor to re-enter the property, the lease of the immovable property is determined by forfeiture. The immovable property will be transferred by moving it from one owner to another. It is imperative that the transferee be competent to enter into contracts and that the transfer be allowed by law for it to be considered genuine. Sections 105 through 117 of the Transfer of Property Act of 1882 are related to leases. Only immovable property may be leased. The use of real estate for a set amount of time or forever is known as a lease. However, unlike in a sale, the transfer of immovable property is not complete under a lease. The right of ownership and the right of possession are two different things. The immovable property will be transferred by moving it from one owner to another. It is imperative that the transferee be competent to enter into contracts and that the transfer be allowed by law in order for it to be considered genuine. If the lessee violates any of the covenants outlined in the lease, the lessor may peacefully and legally retake ownership of the leased land or premises, therefore determining the terms of the lease.

Key components of a property lease

1. The parties (the lessor and the lessee): The lessor and the lessee are the two parties that are always needed in a lease; they are referred to as the parties in turn. A contract signed by two people who are legally able to enter into one is the foundation of a lease. A lessee may be a legal entity, such as a corporation, registered firm, etc. The firm, not the partner, is the lessee in a lease deed signed by one of the partners on the firm’s behalf. In the case of Raunak Ram v. Pishori Singh, the Supreme Court ruled that there was no subletting by a partner to the firm’s advantage following the retirement of that specific partner. The company is still the lessee.
2. The Demise: The transfer of restricted estate through a lease is the right to enjoy immovable property. The term “demise” refers to this restricted estate, or “right of enjoyment,” of property. Accordingly, the transferable subject matter under a lease is the demise. Thus, it was decided in Girdhari Singh v. Megh Lal Pandey that the fundamental feature of a lease is that the property is occupied and its corpus does not vanish due to the user’s actions.
3. The Duration of Lease: The duration of the lease is the length of time that the right to use the property is granted. The term need not be specified in the deed; it might be for any duration, greater or shorter, or even indefinitely. The Supreme Court determined in the Chapsibhai v. Puroshottam decision that a lease is perpetual due to the heritability of the lessee’s or tenant’s rights; these leases are not meant to be for the lessee’s lifetime only.
4. Premium or Rent: A lease may include rent or a premium as consideration. The premium is the amount paid all at once in consideration. However, the periodic consideration is referred to as rent.

DETERMINATION OF LEASE

Not every person in a nation like India can transfer their property due to financial difficulties. While some consider the permanent or absolute transfer to be a luxury, every citizen now has the right to enjoy any property through a temporary transfer. Leases are one of the ways to transfer property for a certain amount of time.

Through a lease, an interest in the property is transferred for a predetermined amount of time, but the ownership of the property is not changed. Instead of transferring ownership, a lease transfers the right of occupancy. Here, the person transferring is referred to as the lessor, and the person receiving the property for a certain amount of time is referred to as the lessee.

A procurement officer’s written record of a decision, including any factual findings needed to bolster the conclusion, is referred to as a determination. A decision is included in the procurement file that it concerns.

Simultaneously, it is critical to understand the conditional antecedents necessary to terminate the relationship between the lessor and lessee. This allows for the maintenance of an equity-based relationship and its repudiation when it is not. Such a repudiation may be made explicitly or implicitly, contingent upon the happening or non-occurring of an event. Determination of lease refers to the conclusion or termination of the lease agreement.

The legal relationship between them ended with the lease’s determination. Only immovable property may be leased. The use of real estate for a set amount of time or forever is known as a lease. However, unlike in a sale, the transfer of immovable property is not complete under a lease. The right of ownership and the right of possession are two different things.

An immovable property lease establishes:

1. by efflux of the time limited thereby;
2. where such time is limited conditionally on the happening of some event by the happening of such event;
3. where the interest of the lessor in the property terminates on, or his power to dispose of the same extends only to, the happening of any event by the happening of such event;
4. in case 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;
5. by express surrender; that is to say, in case the lessee yields up his interest under the lease to the lessor, by mutual agreement between them;
6. by implied surrender;
7. by forfeiture; that is to say,

(1) in case the lessee breaks an express condition which provides that, on breach thereof, the lessor may re-enter or

(2) in case the lessee renounces his character as such by setting up a title in a third person or by claiming the title in himself; [or

(3) the lessee is adjudicated an insolvent and the lease provides that the lessor may re-enter on the happening of such event]; and in [any of these cases] the lessor or his transferee[gives notice in writing to the lessee of] his intention to determine the lease;

1. on the expiration of a notice to determine the lease, or to quit, or of intention to quit, the property leased, duly given by one party to the other.

Section 111 specifies how a lease may be terminated.

Section 111 specifies how a lease may be ended. When a lease is in place, the lessee merely gains the right to enjoy the property; as a result, upon the lease’s expiration, the lessee must give the lessor possession of the property.

By Efflux of Time (S. 111 (a):

If the lease has a defined term, it automatically expires after the predetermined amount of time. When a lease has a set duration, there is no requirement to give notice of termination. The passage of time cannot be used to identify an unregistered lease deed. When tenancy is established by the passage of time, no notice of termination is required. When a lessee continues to use the leased property after the terms of the lease have been determined, they are no longer considered trespassers but rather lessees at sufferance. For any usage and enjoyment of the property that occurs after the lease’s expiration, he will have to reimburse the lessor. When a legitimate lease specifies the period of the lease, it is possible to determine the lease by the efflux of time. The passage of time cannot be used to identify an unregistered lease deed. When tenancy is established by the passage of time, no notice of termination is required. If the tenancy duration is specified in the agreement, no notice is needed before initiating an eviction lawsuit.

When a lessee stays on the rented land after the lease has been determined, he is referred to as a lessee at sufferance rather than a trespasser. For using and enjoying the property after the lease’s duration, he will have to reimburse the lessor. If the lease contains a covenant allowing for renewal, the lessee may request a renewal before being forced to vacate the leased property. It was decided that the tenant had become the tenant holding over the property and the tenancy from month to month when the written lease’s provisions called for a two-month notice of termination but the tenancy ended due to the passage of time. Consequently, it was decided that 15 days’ notice was adequate to end the tenancy.

Ashulosh v. Chandi Charan 40 CWN 52:

When the ejectment action is filed after the lease has ended and the tenancy has ended due to the passage of time, no notice to quit is required. Lessees are tenants under sufferance, with no better status than trespassers, and are subject to immediate eviction if it is not demonstrated that the lessors accepted rent after the lease terminated.

By Happening of Some Event (S. 111 (b):

According to clause (b), a lease on real estate establishes whether a time limit is set contingent upon the occurrence of a certain event. If a lease specifies that it will end when a certain event occurs, it will end when that event occurs. The lessee will be entitled to possession of the leased property as long as such an occurrence does not occur. Depending on the terms of the lease, the lessor has the option to file a lawsuit for ejectment or go back into the property.

Termination of Lessor’s Interest in Property (S. 111(c):

According to clause (c), a lease on real estate is established when the lessor’s interest in the property ceases or when his authority to dispose of it is limited to the occurrence of a certain event. The lease is deemed to have ended upon the lessor’s lack of interest in cases where their ability to grant a lease is restricted. For instance, upon her death, a Hindu widow’s lease, which only ends in a life estate, is determined. A lease that is granted beyond the mortgage’s term by a mortgagee who has the property determines redemption. It was decided that the lessee could not be forced to choose alternative land for a purpose where railway land that was granted to the lessee for commercial development was impeded by the government acquiring a section of the land for mental purposes. He was now entitled to get his leasing money back.

By Merger (S. 111 (d):

According to clause (d), a lease for immovable property establishes whether the lessee and the lessor have joint interests in the entire property at the same time, vesting one person in the same right. Two immediate estates must pass into the same hands simultaneously and about the entire property for a merger to occur. If an intermediate estate is outstanding with someone else at the relevant moment, a merger cannot occur. In this instance, the lessee bought a portion of the leasehold property from a co-owner landlord. When a leasehold and revision occur at the same time, the merger doctrine is drawn to them. The lease is given up if the lessee buys the lessor’s interest because one individual cannot be both a landlord and a tenant at the same time.

The unification of two competing interests that cannot be held by one person at the same time is the foundation of the merger doctrine. As a result, the appellants’ leasehold rights are nullified; Ramesh Kumar Jhambh v. Official Assignee, High Court Bombay, AIR 1993 Bom 374. When a tenant gains complete ownership of the leased property, a merger occurs. The first landlord had passed away. His ownership was partial. The sublessee acquired his stake in the leased property from his lawful heirs. The sublessee desired to kick his lessor out of the area of the property he had bought. That’s what was prohibited. A person cannot be both the owner and a subtenant at the same time. A limited interest crystallises into absolute ownership as a result of a merger. According to section 111(d) of the Transfer of Property Act, 1882, a merger only occurs when the lessee’s and the lessor’s interests in the entire property vest simultaneously in one person, in the same right.

By Express Surrender (S. 111 (e):

Clause (e) states that a lease on real estate ends by express surrender, or in the event that the lessor and lessee reach a substantial agreement whereby the lessee gives up his rights under the lease.

The act of surrendering entails giving up the lease’s duration and attending at a later date. The opposite of a merger is a capitulation. Whereas surrender results in the lease’s extinction and the landlord obtains the lease, merging results in the tenant’s acquisition of the reversion under the terms of the lease. In other words, by a meaningful agreement between them, the lessee cedes to the lessor his interest under the lease.

The opposite of merging is surrender. Whereas in a surrender the smaller interest joins forces with the greater interest, in a merger the larger interest merges with the smaller one. However, in both cases, the lease is decided because two interests come together.

But giving up the “right to enjoy” alone is insufficient; possession must also be delivered. Giving up control without delivering the possessions is useless. A written surrender is not required. Delivering possession orally is one way to accomplish it. No formalities are necessary when there is an express surrender; the lessee just needs to indicate his decision to give up. Possession must be delivered and the lessor must consent to surrender. A written surrender is not required. Delivering possession orally is one way to accomplish it. It can be deduced from the parties’ actions. It is not required to have a registered deed to prove surrender. However, a registered agreement would be necessary if the conditions of the lease were to change as a result of the surrender of a portion of the property.

By Implied Surrender (S. 111(f):

Either a new relationship between the lessor and the lessee or the lessee giving up ownership and the lessor taking it over constitutes an implied surrender. The former lease is presumed to be surrendered when a lessee accepts a new lease from the lessor for the same property that is already leased to him.

It is assumed that the previous lease was in place. Implied surrender occurs when a lessee accepts an office that isn’t in line with the lease. The implied surrender principle states that when two parties have a particular relationship regarding a subject matter and another relationship regarding the same subject matter emerges, the two sets cannot coexist because they are incompatible and inconsistent with one another. Accordingly, the former relationship was presumed to have ended to make room for the new one to flourish.

The lease terminates if the lessor buys the lessee’s interest since one person cannot be both a landlord and a tenant at the same time. Additionally, the lease transfer to a superior landlord does not constitute a surrender; instead, the surrender must be made to the immediate landlord.

The implied surrender principle states that when two parties have a particular relationship regarding a subject and another relationship regarding the same subject emerges, the two sets cannot coexist because they are incompatible and inconsistent. Accordingly, the former relationship was considered to have ended to make room for the new one to flourish.

In PMC Kunhiraman Nair v. CR Nagaratna Iyer AIR 1993 SC 307, it was decided that there could be an implied surrender if the lessor gave a new lease to a third party with the lessee’s consent and the lessee gave the person possession of the existing lease, or if the lessee told his subtenant to pay the lessor directly for rent.

By Forfeiture (Section 111(g):

This clause states that a lease terminates by forfeiture in the following situations: when the lessee violates an express condition that stipulates that the lessor may re-enter the property upon breach; when the lessee renounces his character as such by claiming title in himself or through the establishment of a third party; or when the lessee is declared insolvent and the lease stipulates that the lessor may re-enter upon the occurrence of such an event.

Violating an express condition

The lease expires when the lessee violates the specific clause, which states that the lessor may re-enter the leased property in the event of a lessee breach. Only when the condition is truly broken is the right of forfeiture used. The lease agreement clearly stated that the lessee would not alienate his leasehold in the case of Nil Madhabv. Narottam (1890) 17 Cal. 826; yet, the lessee did just that. It was decided that because there was no clause allowing for re-entry in the lease deed, the lessor could not forfeit any property. The lessee didn’t even start these kinds of things. The unit was not manufactured for a longer period than was specified. Rent payments were also behind due. According to the court, all of this demonstrated a blatant violation of the lease’s terms. The company was entitled to retake control of the property. The lessee’s duties as lessees to the lessors from whom they had leased the premises did not change just because they were now the owners of the premises.

• Refusal of Title

When the lessee establishes a title in himself or a third party and disputes the lessors’ claim, the second requirement for forfeiture occurs. In this instance, the lessee claims he or a third party is the real owner and disputes the title held by his lessors. In this situation, the lessor is entitled to reclaim the tenancy. Any rejection or repudiation of the title must be understandable and relevant to the lessor’s understanding. During the Rent Controllers’ hearings, the tenant contested the landowner’s title. The landlord sent out a notice of termination of tenancy as a result.

In a legal action, relinquishing title was a purposeful and conscientious act. As a result, the renter lost their tenancy. The landlord was now able to reclaim the property. During the rent controller proceedings, the tenant contested the landlord’s title. The landlord sent out a notice of termination of tenancy as a result. In a legal action, relinquishing title was a purposeful and conscientious act. Therefore, the tenant declared the tenancy forfeited. The landlord was now able to reclaim the property.

Bankruptcy

In cases where the lease document stipulates that the lessor will re-enter the property if the lessee is declared insolvent, and if the lessee is declared insolvent, the lessor will forfeit the lease. In such a situation, giving written notice is required to forfeit the lease.

In Chadrawati v. Surendra, 1979 A.C. ALL 406

Any property under the lease that is sold without the lease being determined by notice under section 111(g) is void because the landowner would not have the right to sell the property with vacant possession and free of the lease obligations, as the lease would still be in effect. As a result, the consideration paid was ineffective.

On Expiration of Notice to Quit (Section 111(h):

According to clause (h), the lease of immovable property may be determined upon the expiration of a properly given notice by one party to the other to decide the terms of the lease, to quit, or to indicate one’s intention to quit the leased property. (Air 2007 (NOC) 1636 BOM; Dwarka das Hiralallahoti v. Kazi Mumbarzuddin.) When the notice to vacate or determine expires, the lease is terminated. Periodic leases, such as those that run from month to month or year to year, are terminated by notice to quit under Section 106. When it comes to fixed-term leases, no notice is required. When it comes to fixed-term leases, no notice is required.

The rent document for a one-year lease said that the lessee would leave the hop whenever the landlord asked her to. It was decided that the section 11 notification was appropriate. She was now entitled to the eviction decree. She did not have to provide evidence that she needed the shop for personal purposes. Even after a significant amount of years, the lessee cannot get title to the property on the grounds of adverse possession if he remains in possession of the property after receiving the notice. The rent document for a one-year lease said that the lessee would leave the business whenever the landlord asked her to for her to use it. It was decided that the S. 111(h) notice was appropriate. She was now entitled to the eviction decree. She did not have to provide evidence that she needed the shop for personal purposes. (Air 2013 NOC 217 J&K; Vijay Kumar v. Harbhajan Kaur).

Rights and Responsibilities of Lessee and Lessor in a Property Lease

The Transfer of Property Act, 1882, specifies the obligations and rights of the lessor and lessee, respectively, under Section 108.

Rights of Lessor: The Transfer of Property Act, 1882, Section 108, does not specify any particular rights for the lessor. However, because duties and rights are related, the lessor’s rights would also be implied by the lessee’s liabilities.

Liabilities of Lessor:

1) Disclosure of latent material defect: Lessor is required to notify Lessee of any latent material defect in the property. If a property defect is known to the lessor but is not readily apparent, it is considered a latent defect. If a flaw is significant, it qualifies as material.

2) Duty to give possession: A lease transfers the ownership of the right to use or enjoy real estate. Enjoyment of property is impossible without possession. As a result, the lessor is responsible for giving the lessee ownership of the property so that he can use or enjoy it.

3) Covenant for quiet enjoyment: As a lease transfers the lessee’s right to enjoy an immovable property, the lessor is presumed to have an obligation to guarantee the lessee’s peaceful use of this right. As a result, the lessor is considered to have agreed that the lessee would enjoy unrestricted possession of the property for the duration of the lease provided he continues to pay the rent. “No interference or objection” with the lessee’s ownership of immovable property during the term of the lease is referred to as “quiet enjoyment.”

Lessee’s Rights and Liabilities: By the Transfer of Property Act of 1882, the lessee has the following rights:

1. The right to accretions: Accretions are additions to property that are made by humans or by the action of natural processes. It is assumed that any additions made to the property over the lease’s duration are considered a component of the original asset.
2. Right to terminate the lease on property destruction: The lessee is entitled to have the lease ended before the end of the term if a fire, flood, violent act, riot, or other uncontrollable circumstance renders the property materially and permanently unfit for use.
3. Right to deduct repair costs: The lessor is not required to fix the property. However, if there is a clear agreement, the lessor may assume responsibility for the tenanted property’s essential repairs.
4. Right to deduct outgoings: The lessor bears the responsibility of covering the outgoings. A lessee has the right to subtract the public fee that applies to leased property from his rent when it is paid.
5. Right to remove fixtures: Should the lease be terminated, the lessee is entitled to take down any fixtures he made while the lease was in effect. Even after the terms of the lease have been determined, the lessee may remove and relocate these fixtures.
6. Right to remove crops: The lessee has the right to remove the crops he sowed throughout the duration of the lease after it terminates.
7. Right to assign his Interest: A tenant can give away or assign his enjoyment rights to the land. A lessee’s property is their immovable property, which they are entitled to enjoy. If the lessor hasn’t put any restrictions on it, he is free to transfer it to anyone else.

Lessee’s obligations: According to the Transfer of Property Act of 1882, the lessee’s obligations are as follows:

1. Duty to disclose facts: In the same way that the lessee is required to notify the lessee of any latent material fault, the lessee is also required to inform the lessor of any information that he knows will raise the property’s worth.
2. Rent payment obligation: As specified in the lease contract, the lessee is required to pay the rent or premium. However, the renter’s obligation to pay rent doesn’t start on the day the landlord signs the deed—rather, it does from the moment the tenant moves in.
3. Tenant’s obligation to preserve the property: The tenant must preserve the property in the same state that it was provided to him. Thus, he must use reasonable caution to maintain the property’s condition.
4. Notice of encroachment obligation: It is the lessee’s responsibility to notify the lessor of any encroachment on the property under his control so that the latter can take appropriate action.
5. Renter’s obligation to use property sensibly: The tenant is obliged to use and enjoy the leased space in the same way that a prudent person would use their own.
6. Obligation not to build permanent structures: Without the lessor’s approval, the lessee is not permitted to build any permanent structures on the leased land. Lessees have the right to dismantle permanent constructions they have made without the lessor’s permission as long as they do not harm the tenanted property. When the lease expires, the landlord will own any permanent constructions on the leased property if the lessee does not remove them.
7. Responsibility to restore Possession: The lease must return possession to the lessor at the end of the term or sooner if conditions are met. After the term has expired, it is the lessee’s responsibility to return the possession to the lessor.

CONCLUSION

A lease is a crucial component of real life. Everyone has seen a lease agreement for the rental of a vehicle, home, etc. In addition, the Transfer of Property Act, 1882, Section 111, provides a wide range of topics related to lease determination, including everyday life difficulties.

It outlines several methods that can be used to calculate the lease. No matter the basis for a lease’s determination, the lessor or his legal agents cannot get rid of the person in possession of the property even after the lease has ended without following the legal procedures outlined in Section 111 of the Transfer of Property Act, 1882. A lease established by a will and agricultural leases excluded from its application by provision 117 of the Act are not covered by this provision.

Having said that, the lessee will never be regarded as a “trespasser” because they have legal possession of the property and cannot have it taken away from them unless the right legal procedures are followed. Therefore, in the case that a tenant refuses to give up possession of the property despite a lease being determined by the passage of time, the lessor has the right to reclaim possession by filing a complaint for ejectment against the lessee (tenant) in the appropriate court. However, a number of Rent Control Acts23 restrict ejectment suits, and instead offer an alternative method of tenant eviction. Consequently, in the event that the applicable Rent Control Act prohibits something, the lessor would not be entitled to file a suit for ejectment and would instead be required to follow the process that the applicable Rent Control Act specifies.

Upon reviewing the Act’s provisions and the opinions of several judges about the matter, one may conclude that the lessee is legally required to give over possession of the premises to the lessor after the lease expires. The lessee does not have the right to continue to be in possession of the premises after the lease’s expiration date, even in the event of a disagreement between the parties.

The lessor and the lessee are the two parties to a lease agreement. These parties have certain rights, and as responsibilities are related to rights, both the lessor and the lessee have obligations to one another. If these rights or liabilities are violated, the parties have the option to sue the other party or seek damages from them. As a result, the lessor has an obligation to provide the lessee with all relevant information and to prevent any hindrances to the lessee’s enjoyment of the property. On the other hand, the lessee is responsible for timely rent payments and must take care to protect the property that is leased to him.

But, if a lessee or tenant violates the terms of the lease and refuses to give the lessor possession of the property even after the lease’s expiration date, they will either become a “Tenant at Will/Holding Over” or a “Tenant at Sufferance,” depending on the lessor’s (implicit or explicit) consent.

REFERENCE

www.legalserviceindia.com/10294

https://lawbhoomi.com/lease