Lease: Rights and Duties of Leasee and Lessor

By Dr Sanjay Chaturvedi, LLB, PhD

Section 105 of Transfer of Property Act defines lease, lessor, lessee, premium and rent. “105. 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 transfer or by the transferee, who accepts the transfer on such terms.

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 a case of lease, there is no transfer of property but only transfer of right to enjoy the said property. The ownership of the property continue with the Lessor.

Lessee has only right to enjoy, use and occupy the property. However, the lease for particular time which may be expressed or implied or in perpetuating. In case of lease, consideration could be price paid or promise to be paid of money, share of crop, service or any other thing or value to be rendered periodically or on specific occasion by the transferor to the transferee. In case of sale, the consideration has to be always in terms of money, but in case of lease it could be in terms of money, it could be in terms of sale of crops or service or any other thing of value. This is how Lease defers from Sale. It must be also borne in mind that in ordinary language what we call this as “tenancy” is a also lease and is covered by the said Act except in case where there are specific provisions under he Rent Control Act.

Section 106 provides for duration of certain leases in absence of certain contract or local usage. The said Section reads as under :- “106. In the absence of a contract or local law or usage to the contrary, 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 lessor or lessee, by six months’ notice expiring with the end of a year of the tenancy; and 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 lessor or lessee, by fifteen days’ notice expiring with the end of a month of the tenancy.

Every notice under this section must be in writing signed by or on behalf of the person giving it, and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such party, or to one of his family or servants at his residence, or (if such tender or delivery is not practicable) affixed to a conspicuous part of the property”.

This Section provides how lease can be determined or come to an end if there is no written contract or local usage to that effect.

Section 107 covers how leases can be made. Section 107 reads as under :

“107. A lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument. All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.

Where a lease of immovable property is made by a registered instrument, such instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee.

Provided that the State Government may, from time to time, by notification in the official Gazette, direct that leases of immovable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class or such leases, may be made by unregistered instrument or by oral agreement without delivery of possession.”

Any lease of immovable property from year to year or from any term exceeding one year or reserving yearly rent can be made only by registered instrument. There cannot be such lease by unregistered document or by oral contract. Other leases can be either by registered instrument or by oral agreement accompanied by delivery of possession. Such leases are required to be executed both by the lessor and the lessee.

Section 108 of the said Act covers rights and liabilities of the Lessor and the Lessee which reads as under :

“108. In the absence of a contract or local usage to the contrary, the lessor and the lessee of immovable property, as against one another, respectively, possess the rights and are subject to the liabilities mentioned in the rules next following, or such of them as are applicable to the property leased :-

A. – Rights and Liabilities of the Lessor

The lessor is bound to disclose to the lessee any material defect in the property, with reference to its intended use, of which the former is and the latter is not aware, and which the latter could not with ordinary care discover;
The lessor is bound, on the lessee’s request to put him in possession of the property;
The lessor shall be deemed to contract with the lessee that, if the latter pays the rent reserved by the lease and performs the contract binding on the lessee, he may hold the property during the time limited by the lease without

The benefit of such contract shall be annexed to and go with the lessee’s interest as such, and may be enforced by every person to whom that interest is for the whole or any part thereof from time to time vested.

B. – Rights and Liabilities of the Lessee.

If during the continuance of the lease any accession is made to the property, such accession (subject to the law relating to alluvion for the time being in force) shall be deemed to be comprised in the lease;
If by fire, tempest or flood, or violence of an army or of a mob or other irresistible force, any material part of the property be wholly destroyed or rendered substantially and permanently unfit for the purposes for which it was let, the lease shall, at the option of the lessee, be void: Provided that, if the injury be occasioned by the wrongful act or default of the lessee, he shall not be entitled to avail himself of the benefit of this provision;

If the lessor neglects to make, within a reasonable time after notice, any repairs which he is bound to make to the property, the lessee may make the same himself, and deduct the expense of such repairs with interest from the rent, or otherwise recover it from the lessor;
If the lessor neglects to make any payment which he is bound to make, and which, if not made by him, is recoverable from the lessee or against the property, the lessee may make such payment himself, and deduct it with interest from the rent, or otherwise recover it from the lessor;
The lessee may even after the determination of the lease remove, at any time whilst he is in possession of the property leased out but not afterwards all things which he has attached to the earth; provided he leaves the property in the state in which he received it;
When a lease of uncertain duration determines by any means except the fault of the lessee, he or his legal representative is entitled to all the crops planted or sown by the lessee and growing upon the property when the lease determines, and to free ingress and egress to gather and carry them;
The lessee may transfer absolutely or by way of mortgage or sublease the whole or any part of his interest in the property, and any transferee of such interest or part may again transfer it. The lessee shall not, by reason only of such transfer, cease to be subject to any of the liabilities attaching to the lease;

Nothing in this clause shall be deemed to authorize a tenant having an untransferable right of occupancy, the farmer of an estate in respect of which default has been made in paying revenue, or the lessee of an estate under the management of a Court of Wards, to assign his interest as such tenant, former or lessee;

the lessee is bound to disclose to the lessor any fact as to the nature or extent of the interest which the lessee is about to take, of which the lease is, and the lessor is not aware, and which materially increases the value of such interest;
the lessee is bound to pay or tender, at the proper time and place, the premium or rent to the lessor or his agent in this behalf;
the lessee is bound to keep, and on the termination of the lease to restore, the property in as good condition as it was in at the time when he was put in possession, subject only to the changes caused by reasonable wear and tear or irresistible force, and to allow the lessor and his agents, at all reasonable times during the term, to enter upon the property and inspect the condition thereof and give or leave notice of any defect in such condition; and, when such defect has been caused by any act or default on the part of the lessee, his servants or agents, he is bound to make it good within three months after such notice has been given or left;
if lessee becomes aware of any proceeding to recover the property or any part thereof, or of any encroachment made upon, or any interference with, the lessor’s rights concerning such property, he is bound to give, with reasonable diligence, notice thereof to the lessor;
the lessee may use the property and its products (if any) as a person of ordinary prudence would use them if they were his own; but he must not use or permit another to use the property for a purpose other than that for which it was leased, or fell or sell timber, pull down or damage buildings belonging to the lessor or work mines or quarries not open when the lease was granted, or commit any other act which is destructive or permanently injuries thereto;
he must not, without the lessor’s consent, erect on the property any permanent structure, except for agricultural purposes;
on the determination of the lease, the lessee is bound to put the lessor into possession of the

This provision is of great importance as it covers rights and obligation of the lessor and lessee among themselves. However, this is so provided there is no contract contrary or usages which are contrary to the same.

Section 111 provides how leases are to be determined. The said Section reads as under :-

“111. A lease of immovable property determines –

By afflux of the time limited
Where such time is limited conditionally on the happening of some event – by the happening of such
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
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
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
By implied
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 title in himself; or (3) the lessee is adjudicated as 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.