Senguttuvan K
(Manager Taxation)
(33 Points)
Replied 24 August 2008
This is an article to which I had an access from ACCOMMODATION TIMES (India's oldest knowledge based newspaper on Real Estate)
and it clarified most of my doubts in line with yours. The same is reproduced here. For further clarifications, you write back.
LEAVE AND LICENSE
Why Eleven Months only ?
By. S. R. Agarwal, Advocate
There is a practice prevalent in Bombay that Leave & Licence Agreement in respect of a residential premises is entered into and executed for a maximum period of 11 months. The question arise whether it can be for more than 11 months.
A licence has been defined in Section 62 of the Indian Easement Act, as a right to do or continue to do something in or upon an immovable property . It does not transfer the interest or create any interest in the immovable property , like a “ LEASE”, as defined in Section 105 of the Transfer of Property Act, as a right to enjoy property for a certain period in consideration of the price paid. Provisions of Section 62 of the Indian Easements Act do not prescribe , any minimum or maximum period for which a licence may be granted.
A lease of a immovable property in Bombay is governed by the provisions of Bombay Rents Hotel & Logging House Rates Control Act, 1947 ( Popularly known as Bombay Rent Act, ) which no where provided , prior to 1.2.1973 for giving a residential premises on Leave & Licence basis.
Still the practice was in vogue to give the residential premises on Leave & Licence basis . An instrument creating a lease of immovable property for a term of one year and above was required compulsorily to be registered by virtue of provisions of Section 17(d) of the Indian Registration Act. Therefore, such Leave & Licence Agreements were being executed for a period of 11 months with duel intention namely to avoid the stamping of such agreement and its registration and , secondly, to avoid interpreting such Leave & Licence Agreement as a lease of the immovable property to avoid protection against vacation of the occupier, as per the provisions of the said Bombay Rent Act.
In the year 1973 an amendment was carried out in the said Bombay Rent Act buy the State of Maharashtra, where section 15A was introduced therein providing that any person in occupation of any premises as a License on 1.2.1973 shall be deemed to have become a tenant in respect of the premises in his occupiers of residential premises as licensees as on 1.2.1973 , became the statutory tenants of the premises with the benefit of protection against vacation of the premises, except in accordance with the provisions of the said Bombay Rent Act.
Thought, the State Government of Maharashtra regularised an illegal practice of creating Leave & License in respect of residential premises, which was contrary to the provisions of the said Rent Act, yet the Landlords, who did not or do not require the premises for their own use, were not willing to give the premises to others which created imbalance in the Society in as much as on the one hand sufficient was available and on the other, people were starving of the accommodation, albeit for a temporary period. These were being held back by the owners because of the apprehension of not getting the premises vacated, when they needed in view of the protection provided to the tenants by said Bombay Rent Act. Therefore, it recognized the need of giving the premises on Leave & Licence basis as a practical solution, to this problem and, consequently, made a specific provisions by way of Section 13A2 for giving the residential premises on licence basis, which also provided that in case of the failure of the licencee to deliver the possession of the licensed premises on the expiry of the period of licence , the licencee could be summarily evicted from the premises by the Competent Authority as per the provisions of Section 31D of the said Bombay Rent Act. Again Section 13A2 does not provide for any specific period of a licence and further clarifies that an Agreement of Licence in writing shall be conclusive evidence of fact of the licence. By virtue of Sub-Clause (V) of Section 17(2) of the Indian Registration Act, and Instrument or Deed, which by it does not create any right, title or interest in an immovable property does not require registration. As stated above, a licence has been defined in Section 62 of the Indian Easements Act as an act, which does not create or transfer any interest in an immovable property.
When the concept of Leave and License has been recognised by the aforesaid Bombay Rent Act by Section 13A2, which does not provide for any specified period of licence and an agreement of Leave & Licence, which does not create any right title and interest in an immovable property does not require registration under the Indian Registration Act, the author is of the opinion that a Leave & Licence Agreement for more than 11 months is legally valid and can be entered into for a period for more than 11 months , and such an Agreement can simply be executed on a non-judicial stamp paper of Rs. 20/- as per Bombay.
CAclubindia
