LEAVE AND LICENSE : Why Eleven Months only ?

leaseBy. S. R. Agarwal, Advocate

By Accommodation Times News Services

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

 





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One thought on “LEAVE AND LICENSE : Why Eleven Months only ?

  1. I beg to differ with the Author on the amount of stamp duty mentioned in the article. As per the provisions of the Schedule of the Maharashtra Stamp Act, the stamp duty on the leave and license agreement is certainly more than Rs. 20. One will have to calculate the stamp duty based on Article 36A of the Schedule of the Maharashtra Stamp Act.

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