Distinction under the law between “Lease” and
“Licence”
By Sanjay Chaturvedi
Tenancy agreements to be compulsorily registered under new Maharashtra
rent control act.
By M.S. Khan, Advocate, (Ex.Competent Authority, Rent Act,
Konkan Division, Mumbai).
By M.S. Khan, Advocate, (Ex.Competent Authority, Rent Act,
Konkan Division, Mumbai).
Maharashtra rent control act
By B.P.Khona
Salient Features of the Maharashtra Rent Act, 1999
By Bharat Gupta, Advocate
The Maharashtra Rent Control Bill, 1999 (L.C.Bill No.VI of 1993) passed
with amendments by both the Legislative Council and the Legislative Assembly aims to unify
the three different Rent Control Laws, in operation in the State of Maharashtra. The Bill
has brought about several changes in the existing Bombay Rent Control Act which expires on
31-3-2000.
The new Act called the Maharashtra Rent Control Act, 1999 extends to the whole of the
State of Maharashtra and shall come into force on the date notified by the State
Government in the Official Gazette.
Exemptions (Sec.3):
The Act shall not apply to :
- any premises belonging to the Government or a local authority or against the Government
… but shall apply in respect of premises let out to the Government or a local
authority; - any premises let or sub-let to banks, Public Sector, Undertakings
(PSU),
foreign missions, international agencies, multinational companies, private and public
limited companies having paid-up share capital of Rs. 1 crore or more.
- Any premises let or sub-let to banks, Public Sector Undertakings (PSU), foreign
missions, international agencies, multinational companies, private and public limited
companies having paid-up share capital of Rs. 1 crore or more.
- The State Government may direct that all or any of the provisions of the Act shall,
subject to such conditions and terms as it may specify, not apply to premises held by
religious or charitable institutions administered by a local authority and to premises
held by an university…provided the tenancy rights of the existing tenants in such
premises are not adversely affected.
Act does not apply to the premises, which are let or given on license for less than 12
months.
Definations (Sec.7):
Standard Rent means standard rent fixed by the Court plus an increase of 5%; or the rent
at which the premises were first let on or after 1-10-1987.
Tenant includes deemed tenant, sub-tenant, heir, legal representative, assignee.
Transmission of tenancy shall not be restricted to the death of the original tenant, but
shall apply even on the death of any subsequent tenant …
Rent in excess of Standard Rent illegal; any contravention punishable with imprisonment
upto 3 months or fine upto Rs. 5000/- or with both.
Increase
in rent (Sec. 11) :
4% p.a. from the date of the commencement of the Act;
15% p.a. for improvements and alterations other than tenantable repairs which the landlord
is required to carry out, provided 70% pf the tenants consent in writing;
25% p.a. for special or structural repairs, exclusive of any repairs, exclusive of any
repairs carried out under the MHADA Act ;
Due to any increase in taxes; to the extent of increase.
Recovery of Possession :
No eviction suit can be filed on the ground of arrears until the expiration of 90 days
next after notice of demand served upon the tenant.
No decree for evicton shall be passed in an eviction suit on the ground of arrears, if the
tenants pays upwithin 90 days from the date of service of the summons of the suit the
arrears of rent with 15% interest and continues to pay the standard rent and permitted
increases till the suit is finally decided and also pays the costs of the suit.
Landlord entitled to recover possession from licensee :
On expiry of license; in default can apply to the Competent Authority. Such licensee
liable to pay damages at double the rate of the license fee – an arrangement of
license in writing shall be consclusive evidence of the fact stated therein.
Time Limit for disposal of suits/appeals :
For suits : 12 months from the date of service of summons
For appeals : 6 months
Pending
Suits :
Pending suits and proceedings not to be affected by the new Act and to be heard and
disposed of as if the new Act had not been passed.
Offences
(Sec.53)
- Charging rent in excess – non cognizable – imprisonment 3 months –
fine 5000/- or both (Sec.10);
- Failure to commence the work of repairs after the tenant has vacated by the date
specified in the decree or fails to comply with the Court’s Order of repossesion
after repairs – cognizable imprisonment 3 months – fine 1000/- or both (Sec.17);
- Failure to occupy the premises recovered on the ground of bonafide requirement –
cognizable – imprisonment 3 months – fine 5000/- or both (Sec.18) :
- Failure to carry out any undertaking given to Court or failure to comply with
Court’s Order under a decree obtained on the ground of bonafide requirement by the
landlord for the demolishing the premises for the immediate purpose of erecting new
building – cognizable – imprisonment 30 days – fine 5000/- or both
(Sec.19);
- Failure to intimate to tenant the date on which the erection of the erection of the new
building shall be completed – cognizable – imprisonment 3 months / fine 5000/-
or both (Sec. 21);
- To cut-off withhold essential supply or service – upto Rs. 100/- for each day
during which the default continues (Sec.29);
- Failure to restore any essential supply or service – imprisonment 3 months, fine
1000/- or both (Sec.29);
- Conversion of residential into commercial premises by landlord - imprisonment 6 mts
– fine 10000/- or both (Sec.30);
- Failure to issue the rent receipt – fine 100/- for each day of default (Sec.31);
- Failure to enter into a written agreement of tenancy or leave & license or have the
same registered – imprisonment 3 months – fine 5000/- or both (Sec.55).
Tenancy
agreement to be compulsorily registered (Sec.55) :
- agreement of tenancy or agreement of leave & license to be in writing and shall be
registered – responsibility of getting such agreement registered shall be on the
landlord and in the absence of the written registered agreement, the contention of the
tenant about the terms and conditions on which the premises were given shall prevail,
unless proved otherwise.
Stamp
duty on Tenancy Agreement (Art. 5 of Stamp Act)
- for non-residential premises = 1000/- per sq.metre;
- for residential premises = 100/- per sq.metre. (in Mumbai).
Right
of Tenant & Landlord to received lawful charges (Sec.56) (i.e.PUGDI) :
- It is lawful for the tenant to receive any pugdi as a condition of relinquishment,
transfer, assignment of his tenancy;
- It is lawful for the landlord to receive any pugdi for grant or renewal of a tenancy or
for giving his consent to transfer the tenancy to any other person.
Distinction under the law between
“Lease” and “Licence”
By Sanjay Chaturvedi
Under a lease an interest in property is created under the transfer of
Property Act and is required to be registered. The Bombay Rent Control Act, 1947 also made
a distinction between a Lease and Leave & Licence which is however a personal facility
given in accordance with the Easements act and does not amount to any interest in the
property and therefore need not be registered.
The principle of charging of any stamp duty on licence or security deposit by treating it
as a right or interest, compounded by the charging of stamp duty on a Supplementary
Security Deposit Agreement created in respect of the same premise is without any basis. It
should also be clarified that Security Deposit Agreement related to Leave & Licensee
Agreements should be outside the purview of stamp duty and such Security Deposit
agreements are of financial nature containing finance terms and are supplementary to Leave
and Licence Agreements.
Tenancy agreements to be
compulsorily registered under new Maharashtra rent control act.
By M.S. Khan, Advocate, (Ex.Competent Authority, Rent Act, Konkan
Division, Mumbai).
At
last, the new unified Maharashtra Rent Control Bill has been passed by the Maharashtra
Legislature. It is learnt that the bill is sent for the assent of the President. After the
signature of the President of India, it will become and Act and will come into force on
such date as may be notified by the Government in the Gazette.
Under Section 55, all tenancy agreements, including leave and licence agreements, must be
in writing and are to be compulsorily registered after the commencement of the Act. It
will be the responsibility of the landlord to get such written agreements registered. If
he fails to get the agreements registered, the contention of the tenant about its terms
and condition shall prevail, unless proved otherwise. Further, if the landlord fails to
register the agreement, he shall be punished with imprisonment which may extend to three
months or with fine upto five thousand rupees or with both, under Sub-Section (3) of the
said Section 55.
The Joint Committee on the Bill, in its Report dt. 20th April 1999, has also observed that
the Committee has unanimously decided to protect all the existing tenancy before the date
of commencement of this Act, but after the commencement of this Act, there should be no
tenancy without agreement. Every such tenancy agreement has to be registered and the
responsibility of getting such agreements registered should be on the landlord. If the
tenancy is created without registered agreement, there will be no protection of law and
the landlord contravening these provision on conviction be punished with imprisonment as
laid down in Section 55 (3) of the Act.
This appears to be a major departure from the previous provisions relating to the
agreements of tenancy and the leave and licence agreements. The prosecution and punishment
for non-registration of agreements by the landlords appear to be very harsh. No landlord
would be pleased to give his hard earned flat to the tenant/licensee and would like to go
to jail for non-registration of the agreement. He will rather be happy to keep the
premises vacant instead of giving it either on rent or on leave and licence basis. This
will cause acute shortage of the stock of houses available. There is every possibility
that if the landlord has given the premises without registration of agreement, he will try
to use force to get back the possession. The litigation in the Court may be minimised, but
lawlessness is likely to be increased which is not healthy a sign between the relationship
of landlords and tenants. Another difficulty in registration of such agreement would be
that so many leave and licence agreements are executed each day. The office of the
Sub-Registrar is already over burdened. The office takes sufficient long time for the
return of registered documents, and these agreements registration will be then additional
burden. No machinery is provided in the act for registration of such agreement with
penalty may adversely effect their relations. I think, other States have not made such
provision in their respective Rent Act legislations for the compulsory registration of
tenancy agreement with penalty. If any other state has enacted such provisions, it would
be useful to examine its result and consequences in relation between the landlord and the
tenant.
Maharashtra rent control act
By B.P.Khona
The
Maharashtra rent control act, 1999 (Mah. 18 of 2000) has received Presidents assent on the
10th March, 2000. One of the important provisions made under the said Act which was not
there in Bombay Rent Act, 1947 is section 55 of the New Act.
The Section 55 of the said Act read as under :-
“55 Tenancy agreement to be compulsorily registered.
(1) Notwithstanding anything contained in this Act or any other law for the time being in
force, any agreement for leave and licence or letting of any premises, entered into
between the landlord and the tenant or the licensees, as the cases may be, after
commencement of this Act, shall be in writing and shall be registered under the
Registration Act, 1908.
(2) The responsibility of getting such Agreement registered shall be on the landlord and
in the absence of the written registered agreement, the contention of the tenant about the
terms and conditions subject to which a premises have been given to him by the landlord on
leave and licence or have been let to him, shall prevail unless proved otherwise.
(3) Any landlord who contravention the provisions of this section shall, on conviction, be
punished with imprisonment which may extend to three months or with fine not exceeding
rupees five thousand or with both”.
Under the Transfer of Property Act or the Indian Registration Act only lease of immovable.
Property of one year or needs to be registered . The Agreement of monthly tenancy does not
require to be registered under the Transfer of the Property Act or Indian Registration
Act. Similarly, under the said two Acts or otherwise Leave & Licence Agreement does
not require to be registered. The Leave & Licence does not create any interest in the
premises in favour of a Licensee. The Licensee has only right to use and occupy the
premises. In view thereof the monthly tenancy Agreement, if any, or Leave and Licence were
not required to be registered with the Sub-Registrar of Assurances and were normally not
registered with the Sub-Registrar.
As far as the tenancy was concerned, earlier in most of the cases there never used to be
written Agreement. Only rent receipt for a month and three months deposit receipts were
being issued. In most of the cases there used to be these two receipts and not written
contract. However, in the case of Leave & Licence there has been always a written
contract.
First and foremost under new Act Landlords or the Licensors have to execute Agreement in
Writing incorporating terms agreed between them and its is required to be registered under
the Registration Act, 1908 with the Sub-0REgistrar in whose jurisdiction the said property
falls. There has been responsibility cast upon the landlord to get the said agreement
registered.
The said Section also makes provision as to the effect of non-registration of such tenancy
or Leave and Licence Agreement. The effect are tow fold.
Firstly under sub-section 3, the Landlord who fails to register the Agreement is
liable to be imprisoned which may to three months or with fine not exceeding Rs. 5000/- or
with both. There never was such a penal provision, in the earlier Act. This has been
introduced and provided under the said new Act.
Secondly the effect of non-registration of such an Agreement is in favour of the tenant.
In absence of such Registered Agreement, the contention of the tenant about the terms and
conditions subject to which premises has been given by landlord on leave and licence or
let out by him will prevail unless the landlord is able to prove otherwise. Therefore in
case if there is no registered Agreement, then it is open to the tenant to contend whether
the premises has been let to him or he is a Licensee. His contention will prevail unless
the landlord proves otherwise. So the burden of proof of the terms and conditions of the
grant of the premises shall be on the landlord. IT would be sufficient for tenant to
contend one way and Court will accept it unless the landlord provides otherwise. Looking
from the provisions of the Act it will be always in the interest of the person who claims
to be a tenant and not the Licenses. As a tenant he gets absolute protection under the Act
and he had better rights than the Licensee. Therefore, even if the premises are granted on
leave and licence basis, if there is no written registered agreement, then licensee can
contend to be a tenant and the burden of proof would like on the landlord to prove that
such person is licensee and not a tenant.
When we are talking of Leave & Licence Agreement it could be from either the Landlord
himself or form the monthly tenant who is authorised under a contract to grant leave &
licence of the premises or with a consent of the landlord such grants a leave and licence.
In our humble opinion the Leave & Licence Agreement between the Tenant and Licensee
may not fall within the provisions of Section 55 because Section 55 (1) refers to an
Agreement between the landlord and tenant or the Licensee. A person who is a tenant and
grants leave & licence is not a landlord. Therefore, such a Leave & Licence
Agreement may not fall within the provisions of Section 55 (1). The definition of landlord
under Section 7(3) of the said Act also does not include a tenant who grants leave &
Licence. In the circumstances licence granted by the tenant may not fall within the
provisions of Section 55 and may not require registration or for that matter not even in
writing.
New provision would increase the burden of Stamp Duty and payment of Registration fees of
the Licensee or the Tenant. The provisions as to stamp duty and registration charges of
such Agreement, we will deal with in the next Article.
Under section 53 of the said Act certain offences are made cognizable. The beach of the
provision of Section 55 is not made cognizable offence.
Cognizable offence.
Cognizable offence has been defined under section 2 (c) of the Code of Criminal Procedure,
1973 which reads as under :-
“(c) “cognizable offence” means and offence for which, and “cognizable
case” means a case in which a police office may, in accordance with the First
Schedule or under any other law for the time being in force, arrest without warrant.
Non-cognizable offence has been defined under section 2 (I) of the said Code of Criminal
Procedure which reads as under :-
“(I) “Non-cognizable offence” means an offence for which, and
“non-cognizable case” means a case in which, a police officer has no authority
to arrest without warrant;
Under section 53, section 55 is not mentioned as cognizable offence. Landlord cannot be
arrested by the Police Officer without a warrant.
