Prepared by: Mr. Amit Gaikwad Mr.Kunal Dhoke Mr.Ravi Rohda

Contents Introduction Differences Related Laws Stamp Duty requirements Registration Procedures Common Problems Solutions Case Laws Bibliography

Introduction A license which is a subject matter of our discussion is different from a license which is issued by any authority to conduct a business etc. The license referred to here is the permission to use any immovable property for residence or business or storage.

License: Indian Easement Act, 1882 Sec 52: Definition Where one person(Licensor) grants to another (licensee) Right to do or continue to do something in or upon an immovable property No transfer of interest or creation of interest in immovable property

Other provisions (Easement Act) Sec 53 – Who is Licensor? - Only person having a sufficient lawful interest in the property. Sec 54 – How a license is granted? - The grant of license may be expressed or implied.

Meaning of Lease As per Section 105 of The Transfer of Property Act, 1882: - Transfer of a right to enjoy such property - For a certain time, expressed or implied, or in perpetuity - For a consideration

Differences : TitleLeave and LicenseLease or Rent Legal Ownership & Possession Both Remains with Landlord Possession passes to the tenant. Eviction ProceduresEasier and covered by Easement Act. Tedious and Rent Control Act applies. SublettingNot allowed.Allowed (if provided). Advance paymentsPaid & adjusted against Rent payable. Prohibited as per Rent Control Act. Quantum of Stamp Duty Lower for first 5 years and for next period it is same. Higher for first 5 years.

Related Laws Indian Easement Act, 1882 Registration Act, 1908 Transfer of Property Act, 1882 Maharashtra Rent Control Act, 1999 Indian Contract Act, 1862 Bombay Stamp Act, 1958

Stamp Duty requirements As per the MRCA, 1999 stamp duty shall be payable as per Article 36A of Schedule – I of Bombay Stamp Act,1958 as given below: For the first five years: As prescribed For the period exceeding five years : Same as for lease agreement

Stamp duty requirements Major classes for Stamp duty: (Residential and Non- residential premises) 1. Mumbai city and Mumbai Suburban Area (Residential and Non- residential premises) 2. Municipal Corporation of cities Thane, Pune, Nagpur, Navi Mumbai etc. 3. Area other than above.

Mumbai City and Suburban Article 36A(a) of the Schedule I of the Bombay Stamp Act, 1958 Dura tion 12 Months24 Months36 Months48 Months60 Months AAR*Resi.Comm.Resi.Comm.Resi.Comm.Resi.Comm.Resi.Comm ,50, ,200 2,4001,8003,6002,4004,8003,0006, ,00,000 1,2002,400 4,8003,600 7,2004,800 9,6006,00012, ,00,000 2,5005,000 10,0007,50015,00010,00020,00012,50025,000 10,00,000 and above 5,00010,000 20,00015,00030,00020,00040,00025,00050,000 *Annual rent plus deposit or money advanced or to be advanced

Stamp Duty - Requirement Instruments / documents not properly stamped are not admitted as evidence by the court. Except transfer by will (or by original nomination in a cooperative housing society) all transfer instruments/documents have to be properly stamped before registration.

Stamp Duty - Requirement Stamp paper are to be purchased in the name of one of the parties to the instrument/ document. If the stamp paper is not in the name of the parties and if it is used for preparing the agreement, it will be as if no stamp paper was used.

Registration Procedure As per Section 55 of Maharashtra Rent Control Act, 1999 every Lease & License Agreement should be registered under Registration Act, Registration fees: (As per Circular issued) Property in Municipal corp. limits: Rs.1,000/- Other Areas: Rs.500/-

Registration - Procedure Which Documents - Notarized Instrument and plan of the area. With whom - Office of a Sub-Registrar within whose sub-district the whole or some portion of the property to which such document relates is situated. When – Within four months from the date of execution of instrument.

Responsibility of Registration As per the Maharashtra Rent Control Act, 1999 landlord is responsible for the registration. Consequences of non-compliance: Imprisonment of three months or with fine not exceeding Rs.5000/- or with both.

Exemptions from MRCA Act, 1999 Premises belonging to the Government or a local authority Premises let or sub-let to banks, or any PSU or any Corporation established by or any Central or State Act, foreign missions, international agencies, MNC’s and private or public limited companies having a share capital of more than rupee one crore.

Problems & Solutions: Drafting Problems: Leave and license provides protection to licensor. It is necessary to draft it properly. While facing court decisions court may rule that the same is lease agreement and not the leave and license agreement.

Problems & Solutions: (Conti.) 1. Possession: Shall remain with the licensor. Keys and locks with the licensor. 2. Transfer of Right and Interest: Explicitly state that no such transfer is made. 3. Transferability: It is personal in nature and cannot be transferred. 4. Period, purpose and Conditions: All these clauses to be mentioned in agreement.

Problems & Solutions: (Conti.) What if tenant does not pays rent as well not vacating the premises owned by you? A 90 days notice to the tenants for demand of the Standard Rent in the manner provided in Section 106 of the Transfer of Property Act, 1882 On expiry of 90 days if the tenant fails to pay rent for 90 days, a suit may be filed for eviction of the tenants under the Maharashtra Rent Control Act, 1999 and recover possession of the tenanted premises under Section 16 of the said Act.

Termination and Revocation (Easements Act) Sec 59: Transfer of property by grantor - Transferee not bound by the license Sec 60: Revocation by the grantor - Revocable at will of licensor - Exceptions : When license is coupled with a transfer of property or licensee acting upon the license, has executed work of permanent Character

Termination and Revocation (Easements Act) Sec 62: Deemed Revocation - Grantor ceases to have interest - release of license by licensee - end of period of license - completion of purpose for which license was granted etc.

Licensee’s Rights on Revocation Sec 63: Reasonable Time Reasonal time to be allowed for to leave the property and to remove goods. Sec 64: Compensation from the grantor Licensee entitled get compensation for early revocation, if not due to a fault of the licensee.

Case Law - I Carona Ltd Vs Parvathy Swaminathan & Sons. (SC) The appellant-tenant appealed against the eviction proceedings initiated by the landlord. The appellant company has paid up share capital more than 1 cr. on the date on which tenancy terminated. The appellant company afterwards reduced its capital by passing a resolution. As per the appellant company MRCA Act was applicable as capital was reduced below Rs. 1 Crore.

Case Law – I (Conti.) Decision – Held, since tenant public limited company had paid up share capital over Rs.1 cr. on the date when tenancy terminated hence, MRCA, 1999 was not applicable. [Sec 3(1)(b)] Unilateral act of the tenant cannot take away the landlord’s accrued right and the eviction procedures were maintainable even though the tenant company was sick unit.

Case Law 2 Delta International Ltd. vs Shyam Sundar Ganeriwalla (SC) - Question: - Whether the agreement is of ‘Leave and License’ or ‘Lease’ Facts: - Original owner Mr. Adhiram Mullick of the premises who created tenancy with Mallika Invt Co Pvt Ltd.

Case Law 2 (Conti.) Monthly tenant of the premises could not create a sub-tenancy without the prior written consent of the landlord License is stated to be for the benefit of the respondent to "use, occupy, enjoy, run and work“ Licensor was entitled to revoke the license in the event of any breach or default on the part of the respondent

Case Law 2(Cont.) Decision - that the agreement was a deed of 'leave and license' and not a 'lease'. Held that being a licensee Delta Int Ltd doesn’t have right to sublet the property and licensor can revoke the license.

Bibliography Deeds and documents WIRC Reference Manual

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