LEASE:

SECTION-105:

1. 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:
o (a) price paid or promised, or
o (b) money,
o (c) a share of crops,
o (d) service, or
o (e) any other thing of value
2. To be rendered periodically or on specified occasions to the transferor by the transferee, who accepts
the transfer on such terms.

A lease is a partial transfer of certain rights in the property. It is a transfer of the "right of enjoyment" of an
immovable property made for a certain period, in consideration of a price paid or promised to be paid, or
money, share of crops, service, or any other thing of value to be given periodically or on specified occasions to
the transferor by the transferee.

In a lease transaction, the transferor is called the lessor, the transferee is called the lessee, the price paid or
promised to be paid is called the premium, and the money, share, service, or other thing to be so rendered is
called the rent.

Essential Elements

The essential elements of a transaction of lease are:

1. The parties to lease—lessor and lessee

2. The subject-matter of lease—immovable property
3. There must be a transfer of a right
4. Duration of lease
5. Consideration of lease—premium
6. Acceptance of transfer by the lessee
7. Lease must be made in the mode under Section 107

Parties to a Lease:
A lease requires two parties: the lessor (transferor) and the lessee (transferee). The lessor transfers the right to
enjoy the property, and the lessee accepts it for a specific term in exchange for consideration. A person cannot
lease property to themselves.
Both parties must be competent to contract. Only an absolute owner can grant a lease for any period, while a
limited owner can only grant leases as permitted by law. A life tenant cannot lease property beyond their
lifetime unless explicitly empowered.
Unregistered lease deeds do not invalidate the lessor-lessee relationship if possession is transferred. However, a
lease granted by an incompetent authority is void, even if rent was paid. A lessee can sub-lease, but a tenant
without legal right cannot create valid sub-tenancies. Joint tenants act as a single entity, and when one dies, the
lease continues with the survivors.

Subject-Matter of Lease:
The subject-matter of a lease must be specific immovable property. Immovable property is defined in Section 3
of this Act and includes land, buildings, minerals, and benefits arising from land, such as fisheries and ferries.
Composite leases, such as leasing a building along with equipment or a factory with machinery, are also
possible. Leased premises include not only buildings or parts of buildings but also the land, other appurtenances,
furniture, and fixtures provided by the landlord.

Transfer of Right:
A lease involves the transfer of the right to enjoy the property, which is transferred only when possession is
transferred. Both lease and mortgage transfer only a partial interest, creating a limited estate, known as
"demise." The leasehold estate is separated from ownership and is a right in rem. The lessee holds the leasehold,
while the estate remaining with the lessor is called the reversion. If the lessor has no right in the property, the
lease is void.

Consideration:
A lease must always be supported by consideration, which may be either a premium or rent. When the entire
amount is paid upfront, it is called a premium. Periodic payments are considered rent, which must be certain or
reasonably ascertainable if variable. Rent can be paid not only in money but also as a share of crops, services, or
other valuable items. Premiums are capital income, while rent is a revenue receipt. Premium is the price paid for
obtaining the lease, while rent covers the payments for use and occupation of the property.

Acceptance:
Lessee, who is to get the interest in the property after lease, has to accept the lease agreement along with the
time period and terms & conditions imposed on the transfer.

Time Period:
Lease always takes place for a particular time period which is to be specified in the lease agreement. It can be
relaxed at the option of the lessor.

Agreement to Lease:
An agreement to lease is a contract where a person promises to grant a lease at a future date, without immediate
transfer of possession or the right to enjoy the property. It creates personal obligations and is executory in
nature, like a contract to sell. The lease becomes effective later, and the agreement can be enforced by a suit for
specific performance if it is in writing and accompanied by possession.

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DURATION OF LEASES (SECTION 106)

(1) A lease of immovable property for agricultural or manufacturing purposes shall be deemed to be—
(a) a lease from year to year,
(b) terminable on the part of either lessor or lessee,
(c) by six months' notice expiring with the end of a year of the tenancy.

(2) A lease of immovable property for any other purpose shall be deemed to be—
(a) a lease from month to month,
(b) terminable on the part of either lessor or lessee,
(c) by fifteen days' notice expiring with the end of a month of the tenancy.

However, such leases are subject to a contrary contract or local law or usage. Where the lease deed contained a
covenant about renewal but did not specify the terms and conditions of renewal, it was held that the right of
renewal was vague, and the lessee had no enforceable right of renewal. Where the period of the lease was only
for six months, it could not be deemed a tenancy from year to year under Section 106. A lease deed was for a
specified period, with a stipulation empowering the lessor to determine the lease and take back possession in the
event of non-payment of rent for a continuous period of three months.

Notice Requirements: A notice for terminating a lease should be in writing, served personally, by post, or
affixed to the property. The notice must be clear and unambiguous, typically requiring a 15-day notice for
month-to-month leases.

 Service of Notice: The notice must be served properly. A notice returned as "unclaimed" can be presumed
served. Failure of the tenant to deny receipt can be taken as acknowledgment of the notice.

 Validity of Notice: A notice longer than 15 days is not invalid, and any objection to its validity must be
raised promptly or is waived. Notices lacking specific termination dates may still be valid if statutory periods
are respected.
 Joint Tenancy: Notice to quit can be served to any one of the co-owners, and it’s assumed that co-owners
consent unless stated otherwise.

 Tenant's Response: The tenant's acceptance of rent post-notice does not invalidate the notice but may
indicate acquiescence to tenancy continuation.

 Parties Entitled to Terminate: Either the lessor or lessee can give notice of termination. This notice can also
be issued by heirs, trustees, executors, administrators, or authorized agents. If multiple tenants exist, notice to
any one of them suffices to terminate the tenancy.

 Defective Notice: Notices must comply with legal requirements (e.g., duration). Non-compliance may be
waived if accepted and acted upon by the recipient. Vague notices may be deemed defective, as seen in the case
of DDA's lease termination.

 Presumption of Duration:

 Leases for agricultural or manufacturing purposes are presumed to be annual unless specified
otherwise.
 For other purposes, leases are month-to-month.
 The Supreme Court ruled that not all processes are deemed manufacturing unless they transform
components into a commercially distinct product.

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MODE OF CREATION OF LEASE (SECTION 107)

1. Registered Instrument: According to Section 107(1), 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.

2. Other Leases: All other leases of immovable property can be made either by a registered instrument or
by oral agreement accompanied by delivery of possession.

3. Execution Requirement: Every registered instrument shall be executed by both the lessor and the
lessee.

4. State Government Notification: The State Government may, by notification in the Official Gazette,
direct that leases of immovable property, except certain leases, may be made by unregistered
instrument or by oral agreement without delivery of possession. This provision does not apply to leases
from year to year, or for any term exceeding one year or reserving yearly rent (exceptions).

Leases from Year to Year

 Such a lease is a continuous lease. Here, the lessor cannot terminate the lease without giving notice at
the end of a year.

Leases for a Term Exceeding One Year

 Where the term of lease exceeds one year, it must be registered.

Lease Reserving Yearly Rent

 Where the rent is reserved for the whole year, there is a presumption that it is a year-to-year lease and it
is registrable.

Permanent Lease

 A permanent lease is compulsorily registrable. Where no term is fixed in the lease or the instrument of
lease contains a provision for certain rights by the legal heirs of the lessor and lessee after their death,
there is a presumption of a permanent lease. Possession for a long period by itself does not constitute a
 permanent tenancy; there should be an indication in the terms and conditions of the lease that the tenant
will be entitled to continue in the premises as long as the business for which the premises were leased
subsisted.

Execution by Both Lessor and Lessee

 Where the lease is made by registered instrument, it is necessary that the instrument should be executed
by both the lessor and the lessee.

Effect of Non-registration

 Where a compulsorily registrable lease is not registered, the lease is considered to be invalid. When a
lease contains a covenant for renewal, it does not ipso facto extend the tenure of the lease. Even for the
renewed lease, registration is compulsory. The renewed lease must be registered; otherwise, it will not
be a valid lease. Even the renewal of a lease exceeding one year requires registration.

Successive Leases

 It has been held that the execution of a fresh lease during the currency of an earlier lease leads to
implied surrender of the earlier lease.

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RIGHTS AND LIABILITIES OF LESSOR AND LESSEE (SECTION 108)

Section 108 provides for the rights and liabilities of both the lessor and lessee. These rights and liabilities are
subject to a contrary contract, i.e., where the lessor and lessee make an agreement to be governed by their terms
and conditions during the subsistence of the lease, their respective rights and liabilities are determined by their
own agreement. Section 108 does not apply in such a case. Similarly, where there is any local custom or usage
governing their rights and liabilities, that usage or custom will govern their relationship during the subsistence
of the lease, and Section 108 will not apply there. Section 108 expressly permits contracts contrary to its
provisions.

Section 108 provide for the liabilities of the lessor. In this section no specific rights of the lessor are given but
the liabilities of the lessee given in the section are considered as identical rights of the lessor.

LIABILITIES OF LESSOR:

1) Duty to disclose material defect: Lessor must disclose any material defect in the property to the lessee of
which the lessor is aware but the lessee is not aware and which the lessee could not discover with ordinary care.
Defects are of two types—those which are apparent and those which are not apparently visible i.e., latent
defects. The lessor is bound to disclose latent defects only because such defects cannot be discovered with
ordinary care. The duty of disclosure is especially important where the defects affect the right of enjoyment or
use of the property. No defect as to title but only for quiet enjoyment of property.

2) Duty to give possession: Lease is transfer of the right to enjoy or use an immovable property. Without
possession, enjoyment of property is not possible. Lessor is therefore, liable to deliver the possession of
property to lessee so that he may use it or enjoy it. However, this duty of lessor to deliver possession arises only
when there is a request by the lessee in this respect. When a lessor fails to put the lessee in possession or the
possession is with 3rd person, the lessee may sue him along with 3 rd person for obtaining possession. In case the
lessee has already paid rent, he may sue for damages as well as for recovering back the amount paid as rent.
Where the lessee gets possession of only a part of the lease property, he may repudiate the lease.

3) Covenant for quiet enjoyment: Lease being transfer of the right of enjoyment in an immovable property, it
is implied duty of lessor to ensure the lessee a peaceful enjoyment of this right. Accordingly, the lessor is
deemed to have contracted that during the term of lease if lessee continues to pay the rent, he is entitled to
possess the property without any interference. ‘Quiet Enjoyment’ means ‘no interference or objection’ in the
lessee’s possession of immovable property during the period of lease.
RIGHTS AND LIABILITIES OF LESSEE:
The rights of lessee under the transfer of property act, 1882 are as follows:

1) Right to Accretions: Accretions can be defined as the additions made to the property either by human being
or by the operation of natural forces. If during the continuance of lease some accretion has been made to the
property, it is then presumed to be the part of the property. hey may be natural accretions or made by the lessee.
However, he cannot acquire title to such accessions adversely. On the termination of the lease, the lessee is
bound to surrender the accession in the same way as he surrenders the leased property.

2) Right to avoid lease on destruction of property: 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 is either wholly destroyed or rendered
substantially and permanently unfit for the purposes for which it was given on lease, the lease shall be void at
the option of the lessee. However, where the injury is occasioned by the wrongful act or default of the lessee, he
shall not be entitled to the benefit of this clause, i.e., he will not be entitled to avoid the lease.

3) Right to deduct cost of repairs: If the lessor neglects to make any repairs which he is bound to make to the
property after notice within a reasonable time, the lessee may make the repairs himself and deduct the expense
of such repairs with interest from the rent or otherwise recover it from the lessor. The lessor is not bound to
make repairs to the leased property. But where he agrees at the time of the lease with the lessee that he will
make the necessary repairs, then he becomes bound to make the repairs.

4) Right to deduct outgoings: It is the duty of the lessor to pay the outgoings. Where a lessee makes a payment
of the public charge in respect of tenanted property, he has the right to deduct the amount from the rents.

5) Right to remove fixtures: After termination of lease, the lessee has the right to remove the fixtures made by
him during the continuance of the lease. The lessee can remove and take out these fixtures even after the
determination of the lease. However, while removing such fixtures he must see that the property is left in the
same condition in which he had received it. If it caused any damage to leasehold property then lessee has to pay
the compensation.

6) Right to remove crops: Where a lease of uncertain duration is determined not due to the default of the
lessee, the latter is entitled to all the benefit of the crops growing, planted or sown by him. Lessee or his legal
representative has been given the right of free ingress and egress to visit the leased property to gather and carry
the grown crops.

7) Right to assign his Interest: A lessee has right to assign or transfer his right of enjoyment in the property.
the lessee may transfer absolutely, or by way of mortgage or sub-lease 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. On the termination of the lease,
the obligation of handing over the possession of the property is of the lessee and not of the sub-lessee because
only the original lessee is privy to the contract.

Liabilities of Lessee:

The liabilities of lessee under the transfer of property act, 1882 are as follows:

1) Duty to disclose facts: Just as the lessor has duty to disclose a latent material defect to lessee as to the nature
or extent of the interest which the lessee is about to take, of which the lessee is aware but the lessor is not aware.
Example, when a lessee comes to know of existence of a gold mine in the leased property, he must tell the\
lessee about the gold mine. Omission or failure of the lessee to inform the lessor about such facts is not a
fraudulent act and lessor cannot a terminate lease due to such omission. However, the lessor can sue the lessee
for damages.

2) Duty to pay rent: The lessee is bound to pay the rent or premium as stipulated in the lease deed. But, the
tenant’s liability to pay rent begins from the date on which he takes the possession and not from the date from
which the landlord signs the deed. Where the lessee could not get possession of the whole leased property, he
will have the right to claim reduction in the rent accordingly. Where the lessee fails to pay the rent according to
the lease-deed, the lessor may sue him for arrears of rent along with the interest or he may start ejectment
proceedings on the ground of non-payment of rent after giving proper notice.

3) Duty to maintain property: The lessee is bound to keep and maintain the property in the same condition in
which it was given to him. He has, therefore, to take reasonable care in keeping the property in good condition.
He is bound to allow the lessor and his agents at all the reasonable time during the continuance of the lease to
enter upon the property and inspect its condition and give notice of any defect in it

4) Duty to give notice of encroachment: If the lessee comes to know that an encroachment has been made on
the property in his possession, it is duty to inform the lessor so that he may take proper action.

5) Duty to use property reasonably: The lessee has a duty to use and enjoy the tenanted property as a person
of ordinary prudence would use his own property. He is under duty not to use himself or allow any other person
to use the property for a purpose other than that for which it was leased. If allowed for residential purposes then
he can’t sell readymade clothes.

6) Duty not to erect permanent structure: The lessee cannot erect any permanent structure on the leased
property without the consent of the lessor except for agricultural purposes. If a lessee makes permanent
constructions without the lessor’s consent, he is entitled to remove them without causing damage to the tenanted
property. If the permanent structures on the leased property are not removed by lessee, then on the expiry of
lease they belong to the landlord.

7) Duty to restore Possession: Upon the expiry of the term or determination of the lease before its expiry the
lease must re transfer the possession to the lessor. It is the duty of the lessee to vacate the possession and restore
it to the lessor after expiry of the term. If he continues in possession even after the expiry of the term his
possession becomes unauthorised possession. Where the tenant does not vacate the tenanted premises even after
the expiry of the notice he becomes liable to pay damages as well as mesne profits to the lessor.

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RIGHTS OF LESSOR'S TRANSFEREE (SECTION 109)

In the case of a lease of immovable property, the right of enjoyment of that property is transferred in favour of
the lessee. The remaining interest of the lessor in that property is known as reversion. Section 109 deals with the
rights of the lessor's transferee. It addresses a situation in which the leased property is transferred by the lessor.
After the lease of the property, the lessor may transfer the remaining interest to another person. In such a
transfer, the transferee too becomes entitled to all the rights and liabilities of the lessor which he had at that
time. However, such entitlement is subject to a contract to the contrary, i.e., the parties may agree on some other
terms.

The lessor is not, by reason of such transfer, to cease to be subject to any of the liabilities imposed upon him by
the lease, unless the lessee elects to treat the transferee as the person liable to him. The transferee is not entitled
to arrears of rent due before the transfer, but if the lessee, not having knowledge of such a transfer, pays the
rents to the lessor, he shall not be liable to pay such rent over again to the transferee.

When only part of a reversion (the remaining interest of the lessor) is transferred, the lessor, transferee, and
lessee may agree on how to divide the rent. If they can't agree, the court may decide. For the new owner to
recover past rent, an assignment in their favor is required; otherwise, they can’t claim it. The transferee can also
pursue eviction for non-payment if assigned those rights.

Section 109 states that, upon transferring the lessor’s rights, the right to recover arrears transfers to the new
owner. If rent recovery rights are assigned, tenants in arrears can be evicted. When tenancy exists between
tenant and original landlord, transferring ownership doesn’t end the tenancy. The new owner automatically
becomes the landlord without needing tenant acknowledgment.

Leases don’t limit the owner’s right to sell. Ownership rights, including lease control and property transfer, pass
to the buyer. The lessor’s rights to reclaim possession and end the lease remain valid.
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DATE OF COMMENCEMENT OF LEASE (SECTION 110)

Section 110 provides the rule for calculating the lease period. If a lease starts from a specific day, that day is
excluded from the lease term. If no start day is mentioned, the lease period begins from the date the lease is
signed.

In the absence of an express contract to the contrary, in the case of a lease for a year or a number of years, the
lease shall last during the whole anniversary of the day from which such time commences. Section 110 does not
apply to tenancy from month to month by holding over, it applies only to periodical tenancy with definite date
of commencement.

Where the lease is made to terminate before the expiry of the term but it is not specified at whose option it is to
terminate, then in such a case, the lessee shall have the option to terminate it, not the lessor.

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Determination of Lease (Section 111)

Section 111 lays down the modes in which a lease can be terminated. In the case of a lease, only the right of
enjoyment is transferred in favour of the lessee; therefore, after the termination of the lease, the lessee is bound
to deliver possession of the property to the lessor.

1) By lapse of time: Where the term of lease is fixed, the lease determines after the expiry of the time period
automatically. The lease terminates on the last-day of the time period of lease and the lessor becomes entitled to
take possession of the leased property. In case of lease for fixed period no notice to quit is necessary. Where the
lessee dies before the expiry of the period of lease, his rights regarding lease pass on to his heirs.

Where the lessee continues to remain in possession of the leased property even after the determination of lease,
he is not known as trespasser but lessee at sufferance. He will have to pay compensation to the lessor for the use
and enjoyment of the property beyond the time-period of the lease.

In the case of, Renuka Seal .V. Sabitri Dey[5], in this case, it was held that, the lessee could not be treated as a
tenant by way of holding over after expiry of the original lease period nor it was a monthly tenancy.

2) By happening of specified event: The term of the lease may be made subject to certain condition happening
of some specified event. If the term is limited conditionally on the happening of the future event, the lease
determines upon the happening of that event. So long as such event does not happen, the lessee will be entitled
to the possession of the leased property

3) Termination of lessor’s interest: Where the lessor’s own interest in the immovable property is limited, the
lease comes to an end upon the termination of lessor’s interest. For example, a lease by a Hindu widow who is
entitled only to a life-estate, determines on her death.

4) By Merger: Section 111(d) describes one way a lease can end: when the lessee (tenant) and the lessor
(landlord) both end up owning the entire property at the same time and in the same right. This is known as a
“merger.” For a merger to happen, two things must occur: the tenant and landlord’s rights in the entire property
must be combined, and there should be no middle owner. Partial Ownership by lessee doesn’t End a Lease

5) By express surrender: a lease of immovable property terminates by express surrender; that is, when the
lessee yields up his interest under the lease to the lessor, through a mutual agreement between them. This must
be accompanied by the delivery of possession which is essential unless there is an agreement to surrender at a
future date. In essence, surrender is the counterpart of merger; in merger, the tenant acquires the reversion, while
in surrender, the landlord acquires the lease. Surrender leads to the extinction of the lease, ending the
relationship between the parties.
In the case of an express surrender, no specific formality is required. The lessee must simply express the intent
to surrender, the lessor must agree, and delivery of possession must occur. Surrender does not need to be in
writing; it can be done orally through the delivery of possession and can be inferred from the parties' actions. A
registered deed is not required to document surrender.

6) By Implied Interest: Surrender is regarded as implied surrender if it takes place by operation of law. So,
according to the operation of law, there is surrender, when there is creation of a new lease or by a
relinquishment of possession. If the lessor purchases the interest of lessee, the lease extinguishes as the same
man cannot both be a landlord and a tenant at the same time. The principle behind the implied surrender is that
when a certain relationship existed between two parties in respect of a subject-matter and a new relationship has
come into existence regarding the same subject, the two sets cannot co-exist being incompatible and inconsistent
with each other, the former is deemed to have terminated in order to enable the latter to operate.

7) By Forfeiture: A lease terminates by forfeiture in the following circumstances:

I) Breach of express condition by lessee: When the lessor imposes on the lessee any express condition and
lessee fails to perform that condition, there is breach of condition by lessee.

II) Denial of landlord’s title: When the lessee renounces his role as lessee by claiming a title in a third person
or in himself, effectively denying the lessor's title. Here, the lessee either denies the lessor's title or asserts that
he or another person is the true owner. In such cases, the lessor is entitled to forfeit the tenancy. This repudiation
or denial of title must be clear and known to the lessor.

III) Insolvency of the lessee: Insolvency of the lessee by itself does not forfeit the lease. There must be a
stipulation between the parties the lessee’s right shall be lost in case of his solvency and lessor would be entitled
to resume possession. When the lessee is declared insolvent, and the lease provides that the lessor may re-enter
if this event occurs.

In any of these cases, the lessor or his transferee must give notice in writing to the lessee of their intention to
terminate the lease.

Waiver of Breach:
The lessor has the discretion to waive the right to re-enter in the three cases mentioned above: breach of
condition, denial of title, and insolvency.

Acceptance of Rent:
A monthly lease is considered terminated 30 days after the service of notice. After the notice is issued, the
tenancy continues for 30 days from the service date, and the lessee remains obligated to pay rent for this period.
Acceptance of this rent does not constitute a waiver of the notice to quit.

Notice of Forfeiture:
Clause (g) states that in the three conditions where the lessor may forfeit the lease, a notice of forfeiture is
essential. The lessor or his transferee must provide written notice to the lessee of their intention to terminate the
lease. For the applicability of Section 111(g) category (i), it is necessary that the lease be in writing. Sections
111(g) and 114 do not apply to oral leases.

8) On Expiration of Notice to Quit [Section 111(h)]

Clause (h) states that a lease of immovable property ends when the notice to terminate or quit the lease expires.
This applies to periodic leases (e.g., month-to-month or year-to-year) as outlined in Section 106. No notice is
needed for fixed-term leases.

 Case Example: In a one-year lease where the landlord could require the shop back, the notice to
terminate was deemed valid, and the landlord was entitled to eviction without needing to prove
personal use of the shop.
  Adverse Possession: If a lessee stays in possession after the notice expires, they cannot claim
ownership through adverse possession, even after many years. An eviction suit can be filed in such
cases.

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Waiver of Forfeiture (Section 112):

This section applies to those situations where the right of forfeiture has accrued to the lessor but he elects not to
forfeit the lease. A waiver takes place in the following conditions:

(i) When the lessor accepts the rent that has been incurred, or
(ii) by distress for such rent, i.e., lawful extrajudicial seizure of the chattels to enforce the payment of rent, or
(iii) by any other act on the part of the lessor showing an intention to treat the lease as subsisting.

The above-stated rule will become applicable only if the lessor is aware that the forfeiture has been incurred. If
the rent is accepted after the institution of the suit to eject the lessee on the ground of forfeiture, such acceptance
is not considered as a waiver.

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Waiver of Notice to Quit (Section 113)

The lessee has been given the right to determine the lease after the expiry of the notice to quit given by him to
the lessor under section 111(h). Section 113 provides that he may waive this right.

Waiver of notice to quit has to be established by two ingredients, namely:

(i) The express or implied consent of the person to whom the notice was given is necessary to say that the notice
is waived,
(ii) In so far as the person who gives notice, there must be an act showing the intention to treat the lease as
subsisting.

Where the landlord received rent after issuing notice, it will not tantamount to creating a fresh tenancy. To
establish waiver and subsistence of lease, there must be an intention to treat the lease as subsisting.

Where the landlord was actively prosecuting a suit for ejectment filed by him, the mere acceptance of rent after
the period of termination of tenancy by him does not amount to a waiver of notice to quit.

Such a notice can be waived with the mutual consent of the lessor and the lessee. Waiver may be express or
implied. Where the lessor accepts the rent after the expiry of the notice to quit, the notice is considered to be
waived. In case the lessee remains in possession even after the expiry of the notice to quit and the lessor gives
him a second notice, the first notice is held to be waived.

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Relief against Forfeiture for Non-payment of Rent (Section 114)

Where the lessee does not vacate the leased premises even after the expiry of the notice to quit and does not pay
the rent due, the lessor may file a suit for ejectment of the lessee from the leased property. In such a situation,
Section 114 comes into operation and provides that if, at the hearing of the suit, the lessee pays or tenders to pay
the arrears of rent together with compensation, the court may, instead of passing a decree for ejectment, pass an
order relieving the lessee from the forfeiture.
The court may order the lessee to continue in possession after making payment of arrears of rent, compensation,
and the cost of the suit, or by giving such security as the court thinks sufficient for making such payment within
15 days.

This section affords protection to the tenant against forfeiture. While the tenant enjoys immunity from eviction
for default in payment of rent, the landlord-lessor receives the corresponding benefit of recovering even such
arrears of rent which are not legally recoverable.

Under Section 114, if a tenant pays arrears of rent and compensation at the hearing of an ejectment suit, the
court may relieve the tenant from forfeiture, allowing them to retain possession. This relief can extend to
appellate courts, as appeals are considered rehearings. However, granting this relief is at the court’s discretion,
considering the tenant’s conduct.

If the notice to quit lacks a forfeiture clause or doesn't specify forfeiture as grounds for ejectment (per Sections
111(g) and 106), Section 114 is inapplicable, and relief against forfeiture is denied. Additionally, continuous
non-payment of rent can trigger forfeiture, but payment upon notice entitles the tenant to protection under
Section 114.

Payment not to be in Court:

The tenant cannot be permitted to deposit the arrears of rent in the court in order to avail relief under section 114
of the Act. Payment has to be made or tendered to the lessor. Where money was deposited in the court without
its leave and that too without filing any petition, the court held that the risk, if any, is to be borne by the tenant.
Such payment could not be legalised. The tenant was not entitled to relief against forfeiture.

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Relief against Forfeiture in Certain Other Cases (Section 114A)

Besides Section 114, Section 114A provides relief to lessees against forfeiture in certain other cases, such as
breach of an express condition that allows re-entry by the lessor. This section stipulates that when a lease of
immovable property is forfeited due to a breach of an express condition permitting re-entry, a suit for ejectment
cannot proceed unless the lessor serves the lessee a written notice:

1. specifying the particular breach complained of; and, and

2. That if the breach is remediable, the lessee must remedy it.

If the lessee does not remedy the breach within a reasonable time after receiving the notice, the lessor may
proceed with forfeiture.

This section applies only when forfeiture results from breaching an express condition allowing re-entry. It does
not apply to breaches involving:

 (a) Assignment,
 (b) Sub-letting,
 (c) Parting with possession, and
 (d) Disposing of the leased property.

When a remediable breach leads to forfeiture, the parties should be given an opportunity to resolve the breach
before forfeiture is enforced.

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Effect of Surrender and Forfeiture (Section 115)

Surrender
Surrender is a mode of determining a lease. By surrendering the lease, the lessee relinquishes their right to enjoy
the property before the lease term expires. Where the lessor does not prohibit the lessee by express terms, the
lessee may sub-let the leased property, which is called an under-lease. Section 115 provides that surrender of
lease by a lessee does not affect the under-lease of that property or any part of it that has been granted to a sub-
lessee on terms substantially the same as the original lease (except rent). This provision safeguards the interests
of the sub-lessee. However, if the lease is surrendered to obtain a new lease, the interest of the sub-lessee shall
cease.

Effect of Forfeiture
The forfeiture of a lease extinguishes all under-leases except where forfeiture has been procured by the lessor in
fraud of the under-lessees or where relief against forfeiture has been granted under Section 114. The rights or
interests of the under-lessee also end when the lessor forfeits the lease. However, if the forfeiture is a collusive
act between the lessor and the lessee, the rights of the under-lessee remain unaffected, as a party cannot benefit
from their own fraud.

Difference between Surrender and Forfeiture

1. Surrender is undertaken by the lessee, who relinquishes their right of enjoyment of the leased property
before the lease term expires. Forfeiture is initiated by the lessor, extinguishing the lessee's rights over
the leased property.
2. Surrender requires the mutual consent of both the lessor and the lessee, whereas forfeiture does not
require the lessee’s consent.
3. Surrender does not affect a sub-lease granted previously by the lessee on terms substantially the same
as the original lease (except rent). In contrast, forfeiture cancels all under-leases or sub-leases, except
where (i) the forfeiture has been procured by the lessor in fraud of the sub-lease, or (ii) relief against
forfeiture has been granted under Section 114.

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Holding Over (Section 116)

Section 116 deals with the effect of holding-over. The expression "holding-over" is used in the sense of
retaining possession. This section provides that if the lessee or under-lessee of property remains or continues in
possession after the determination of the lease and the lessor or his legal representative accepts rent from the
lessee or under-lessee, or otherwise assents to his continuing in possession, the lease is renewed from year to
year or month to month according to the purpose for which it was leased (under Section 106). There will be a
new tenancy by the tenant's holding over the property. This new tenancy is known as tenancy by holding-over
and sometimes it is also known as tenancy-at-will. However, for tenancy by holding-over, the assent of the
lessor is necessary because, without his assent, if the lessee remains in possession, he becomes a tenant at
sufferance.

For the application of Section 116, two conditions are necessary:

1. The tenant (lessee) must be in possession of the property after the determination of the lease.
2. The lessor or his representative must accept the rent or otherwise give his consent to the lessee's
continued possession.

This section is available for leases fixed originally from month to month or year to year. Where the original
lease is given for the life of the lessee, this section will not be applicable.

Therefore, acceptance of amounts equivalent to rent previously fixed or amounts fixed as standard rent would
not amount to acceptance of rent within the meaning of Section 116. To gain the benefit of this section, the
tenant must establish that the landlord accepted the rent from him as a legal tenant, not as a statutory tenant.

Where the lease period expired and further extension of lease was declined by the authority, it was held that the
tenant in such a case will be considered an unauthorized occupant, and acceptance of rent or demanding rent by
the authority would not confer any right on the tenant to continue in possession. The rent paid by the tenant
represents damages for use and occupation.
Tenant by Holding Over

After the determination of the lease, if the lessee remains in possession of the leased property with the consent
of the lessor, he is known as a tenant by holding over. Such possession given with the consent (express or
implied) of the lessor is deemed to be for the same purpose for which the original lease was given. A tenant by
holding over is a tenant-at-will because here the tenancy arises by implication of law in cases of permissive
occupation.

For instance, if the lease period of 20 years expired, and the lessee applied in writing to the lessor for an
extension for a further period of ten years, but no steps were taken to bring about the extension, and the lessee
continued in possession while the lessor continued to accept rent, then by virtue of Section 107, in the absence
of a registered instrument, the lease must be held to be a monthly lease and not a continuation of the earlier
expired lease. It automatically expired at the end of its period, making the lessee a tenant by holding over. An
eviction order in such a case would be proper.

In another scenario, if no document is produced showing acceptance of rent except a statement on oath by the
lessee to that effect, and the lessor denies any consent for holding over, holding over would not be made out.

The renewal clauses in the lease agreement may clearly fall within the expression "agreement to the contrary"
used in Section 116 of the Transfer of Property Act, 1882. Under those clauses, the option to seek renewal must
be exercised before the expiry of the lease and under specified conditions.

Holding Over on Court Order

For example, a lessee who is an embassy continues possession even after the lease expiry due to a court order.
The lessor was not entitled to increase the rent. Without an express contract or statutory provision for
enhancement, or any proof of an earlier enhancement, the rent remains unchanged.

Tenant-at-sufferance:
When the lease ends, and the tenant (lessee) remains in possession of the leased property without the lessor’s
consent, he is known as a tenant-at-sufferance. Tenancy-at-sufferance is a fiction to prevent possession from
being trespass. It arises only by implication of law when a person has been in possession of the leased property
under a lawful title and continues without the titleholder’s consent.

If a lease is not renewed after expiry of its term, the tenant may opt to be considered either a tenant at
sufferance or a month-to-month tenant. When possession by tenants is as tenants at sufferance, their
possession will be protected by law until eviction occurs by due process.

In another example, a tenancy is created for 5 years between an owner and a bank (tenant) by a registered deed.
The bank remains in possession even after the 5-year period, continuing to pay increased rent, which the owner
accepts. In a suit for eviction, the Supreme Court held that the owner’s assent could be inferred from the
acceptance of increased rent, creating a tenancy from month to month and protecting the bank tenant from
eviction on lease expiry.

When the original or head lease expires, any sub-lease also expires, and the sub-lessee is accountable to his
lessor. Both parties are liable to be evicted.

Agreement to the Contrary:

This section presumes holding-over, which may be excluded by an agreement to the contrary. An agreement
to the contrary is an agreement that sets the terms of holding over between the parties.

Difference between Tenant by Holding Over and Tenant-at-Sufferance

Holding over means retaining possession after the lease ends with the landlord’s consent, whereas without the
landlord’s consent, it becomes tenant-at-sufferance.
 1. A tenant by holding over remains in possession with the lessor’s assent and has some rights in the
property. A tenant-at-sufferance continues without consent and has no interest in the property.
2. There is some privity between a tenant holding over and the lessor. The tenant-at-sufferance, while not
a trespasser, has no privity with the landlord.
3. A tenant holding over can transfer interest in the property to another person. A tenant-at-sufferance
cannot transfer interest to others or to successors.
4. A tenant holding over cannot be ejected without notice to quit under Section 106. A tenant-at-
sufferance is not entitled to a notice to quit.

A tenant-at-sufferance has no estate or interest in the leasehold property. It is a term used to distinguish
rightful possession from a trespass. A co-owner can file suit for ejectment of a trespasser or tenant-at-sufferance.

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Exemption of Leases for Agricultural Purposes (Section 117)

Leases for agricultural purposes are exempted from the provisions of this chapter. The legislature likely
intended to retain the special provisions in the Rent Acts related to agricultural leases enacted before the
Transfer of Property Act, 1882. The purpose of this exemption is to preserve established usages that have
evolved over time.

An agricultural lease does not need to be in writing; it may be made orally. However, if it is in writing, it must
be registered. If the lease is year-to-year, for a term exceeding a year, or reserves a yearly rent, registration is
required under Section 17(i)(d) of the Registration Act.

The State Government may, by notification in the Official Gazette, apply all or some of these provisions to all or
some of such leases. Such application will be in conjunction with or subject to any local law in force. This
notification will take effect six months from its publication date.

DIFFERENCE BETWEEN LEASE AND LICENSE:

(i) A lease is a transfer of an interest in a specific immovable property, while a license is a bare permission,
without any transfer of an interest.
(ii) A lease creates an interest in favor of the lessee with respect to the property, whereas a license does not
create such an interest.
(iii) A lease is both transferable and heritable; a sub-tenancy can be created by the tenant, and upon the tenant's
death, the tenancy can be inherited by legal heirs, whereas a license is neither transferable nor heritable.
(iv) A license ends with the death of either the grantor or the grantee, as it is a personal contract, but a lease does
not end with the death of either party.
(v) A license can be withdrawn at any time at the grantor's pleasure, whereas a lease can end only in accordance
with the terms and conditions stipulated in the tenancy agreement.
(vi) A lease remains unaffected by the sale of the property to a third party and continues until the tenancy period
is over, but a license ends immediately upon the sale of the property to a third party.
(vii) A lessee has the right to protect possession in their own right and can file a suit in court if trespassers
threaten it, while a licensee cannot defend possession in their own name as they hold no proprietary rights; only
the property owner can do so.
(viii) A lessee in possession of the property is entitled to any improvements or accessions made to the property,
while a licensee is not.