Lease and Licence Distinguished

legal1By: Mohan Rijhwani, Advocate

By Accommodation Times News Services

The history  of conflict  in the  distinction between lease and licence is as old as the history  of the concept of lease  itself . The relation of landlord and tenant was originally one of contract  only, but from  early times  the contract conferred  an estate in the land on the tenant without losing all its  contractual characteristics . The relation arise as a rule when one party confers on another the right to the exclusive possession of land, mines or buildings, for a time which is either subject to a definite limit originally , as in the case of a lease for term of years , or which, thought  originally indefinite  , can be made subject to a definite limit by either party, as in the case of tenancy from a year to year . The interest in the property which  remains in the landlord is called the reversion,  and, as rule, there is  incident to it the  right to receive from the tenant payment for the use of the property  in the shape of rent. In English  Law a lease creates a true encumbrance ( estate in land) for the tenant cannot be ejected from the  land so long as the conditions of the  lease are observed. If the  owner sells the land to a third party, the purchaser takes subject to the lease, whether he was aware of its existence or not. Hence if either the owner or a third party unlawfully ejects the tenant was ejected ,  he was confined to a claim in personam against  the landlord for breach of contract . Incidentally , a tenant did not acquire possessory rights, and so wan not as well protected as in English Law. Until entry the lessee had at common law no estate, but only entry  was know as an interesse  termini; upon  actual entry the lessee had an  estate in the  land, and the relationship of landlord and tenant was fully established . By the Law of property Act. 1925 , the doctrine of interesse termini  was abolished  and the lease takes effect as conferring  in estate in the land from the date fixed for commencement without entry . Under the Transfer of Property  Act 1882 , 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 delivered  of possession.

Section 105 of The Transfer of Property Act. 1882 defines nature of lease as follows : 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 propertuity , 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 .

This section embodies a comprehensive definition of lease and adopts clear and precise words to express the concept of lease. The words ‘ a transfer of a right to enjoy immovable property’ are more expressive than the common law concepts of ‘ estate in land’.

NATURE OF LICENCE : As opposed to the concept of lease, the concept of licence did no more than to grant a personal privilege to do something  upon, without conferring estate in the land. The classic definition of a licence was propounded by Vaughan  C. J. in the seventeenth century in Thomas V. Sorrell. A dispensation  or licence property passeth no interest  nor alters or transfer property in any thing, but  only makes an action lawful, which without  it had been unlawful . Section 52 of  Indian  Easements  Act 1882 was framed in the background  of the above  propositions of the  learned Chief  Justice and it was enacted  as follows : Where one  person grants to another  , or to a definite number of other persons, a right to do, or continue  to do,  or  upon the  immovable property   of the grantor, something which would, in the absence  of such right does not amount to an easement or an  interest in property , the right is called a licence.

INTRODUCTORY : A grant of lease necessarily pre-supposes  grant of exclusive  possession .But the converse is not always  true,  which means wherever  exclusive  possession  has been  granted that fact  does not conclusively  establish a grant of  lease.  At common law a tenancy ( a tenancy at will ) was ordinarily inferred  whenever  a person was granted  exclusive possession  under the circumstances when no other legal relationship  could be inferred . The fact  of exclusive possession  was considered wholly  inconsistent with the  concept of licence . Therefore , tenancy  at will was implied  in cases  of mere permissive occupation  without  payment  of rent as also  in cases  where a person  who entered  on land  with the  consent  of the owner  under contract which did not immediately  give him  a definite  interest  in the land pending the completion of the  purchase  , or under a lease which  should be , but  is not , under seal, or under an executory agreement providing for the grant of a lease at a future  date. In the above  mentioned circumstances it was advantageous  to claim tenancy  at will for two reasons namely (1)  the tenant  at will could not be evicted  until a demand  for possession  or other  determination  of tenancy was made (2) the status of limitation barred the ejectment  action  against  the tenant if 13 years had elapsed  from  the commencement of the tenancy . And  occasions  of such  please  seldom arose  for it was  always  in the hands  of the landlords  to take care beforehand to determine  the lease as well as  as to institute the proceedings  within 13 years of the excprss  or implied  grant of tenancy  at will. The advent of the  Rent Restriction  Acts which  brought  with them the right  of a tenant to retain  possession of leasehold property  after determination of his contractual tenancy increased the  importance of distinction between tenancy (even a tenancy at will ) and licence  and the older authorities came to be regarded with some caution .

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