Difference Between Lease and License

The term ‘lease’ and ‘license’ are defined under Section 105 of the Transfer of Property Act and Section 52 of the Indian Easements Act respectively.

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Section 105 of Transfer of Property Act:
“Lease Defined. 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 transferor by the transferee, who accepts the transfer on such terms.”

Section 52 of the Easements Act, 1882:
“License, Defined. Where one person grants to another, or to a definite number of other persons, a right to do, or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful, and such right does not amount to an easement or an interest in the property, the right is called, a license.”

“Lease” is a word which everyone is aware of, and hears it day in and day out while dealing the transactions related to immovable property. Lease can be defined as the right to enjoy an immovable property for a certain period of time, in consideration of a price paid by the person getting possession of the property.

Under Black’s Law dictionary, “Lease” can be defined as a conveyance of lands tenements to a person for life, for a term of years, or at will, in consideration of rent or some other recompense. Oxford Dictionary of Law defines it as “a contract under which an owner of property grants another person exclusive possession of the property for an agreed period, in return for rent and sometimes for a capital sum known as a premium.

Section 105 of Transfer of Property Act, 1882 defines lease and one would be easily able to derive some of the important characteristics of a lease such as transfer of an interest, parties to the lease, subject matter of lease etc. But, there is another provision or legal principle which at sometimes is confused with the concept of lease i.e. Licence.

Black’s Law Dictionary defines “Licence” in the context of property law as an authority to do a particular act or series of acts upon another’s land without possessing any estate therein. Oxford Dictionary of Law defines it as Permission to enter or occupy a person’s land for an agreed purpose.

Both the provisions look similar, then what make them different is a very important question, which has to be resolved, and it is abstruse to do so. Sometimes, there arise some situations, which abridge difference between them. In order to understand the difference between these two provisions and to know the situation, which they may conflict, it becomes very important to understand the basic features of both Lease and Licence.

Generally, a lease contemplates the following:
a) a demise or a transfer of a right to enjoy property;
b) for a term or in perpetuity;
c) in consideration of a price paid or promised, or of money, a share of crop or services or other things of value to be rendered periodically or on specified occasions to the transferor.

The essential characteristic of a lease are:
1. transfer of an interest;
2. parties to a lease;
3. subject matter of lease;
4. types of lease;
5. duration of lease; and

6. consideration for lease.
Transfer of Interest
A lease a transaction with respect to immovable property and creates a right to enjoy such property for a certain term and for consideration on the conditions mentioned in it. The right to possess and enjoy the property is transferred in favour of the lessee and he acquires this interest through the conveyance of the lease. After the creation of such an interest, a tenant or a sub-tenant is entitled to remain in possession thereof until the lease is duly terminated and eviction takes place in accordance to law. The relationship of landlord and tenant can come into existence only after the transfer of an interest in immovable property pursuant to a contract and creates a right in rem. Where there is no transfer of interest there is no lease.Further, if an option is given to the lessor by the lessee himself to resume the leasehold, it is a personal covenant and does not create an interest in the land.

Parties in Lease
The parties to the lease are the transferor, who is called the lessor or landloard, and the transferee, who is called the lessee or tenant. Both the parties must be competent to contract. The lessor and the lessee cannot be the same person, they have to be two different persons.A lessor can be an absolute owner of the land or a joint tenant or a lessee himselfbut above all must be competent to contract. Thus minors, or unregistered associations cannot be lessees.

Subject Matter of Lease
The subject matter of a lease is a specific immovable property such as land, houses, factories, shops, minerals, buildings etc. Usually a lease of a house and a shop includes not only the superstructure but also the site, unless the same is specifically excluded from the definition of the land in the lease deed.However, terrace and air space above a tenanted multi-storeyed building are not included in lease.

Duration of Lease
The lease need not be for fixed period but its duration should be definite. An uncertainty as to the duration of the term will be detrimental to the lease.When the lease is for specific period, its period cannot be infinite by mere provisions of renewal every year.

Consideration for Lease

There must be a consideration fixed for lease for lease that may be in the form of:
a) money;
b) money’s worth such as a share in crops;
c) service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee.
Consideration may be termed as rent plus premium as well as rent alone or premium alone. Also, a lease without consideration is invalid.

Licence
A licence is a right to do or continue to do, in or upon the immovable property of the grantor, something which would in the absence of such right is unlawful, and such right does not amount to an easement or an interest in the property. Further, it is an authority to do a particular act or series of acts upon another’s land without possessing any estate therein.

Thus, the primary distinction between a lease and a licence is that the lease is a transfer of a right in a specific immovable property, whereas, licence is a bare permission and a licencee is not entitled to notice to quit before evidence.

Primary distinctions between Lease and Licence:

1. A lease is a transfer of an interest in a specific immovable property, while licence is a bare permission, without any transfer of an interest.

2. A lease creates an interest in favour of the leassee with respect of the property, but a licence does not create such an interest.

3. A lease is both transferable and heritable, a sub tenancy can be created by the tenant and on the death of the tenant, the tenancy can be inherited by his/her legal heir, whereas, licence is neither transferable nor heritable.

4. A licence comes to an end with the death of either the grantor or the garantee, since it is a personal contract, but a lease does not comes to an end on either the death of the grantor or grantee.

5. A licence can be withdrawn at any time at the pleasure of the grantor but the lease can come to an end only in accordance with the terms and condition stipulated in the contract of tenancy agreement.

6. A lease is unaffected by the transfer of the property by sale in favour of a third party. It continues and the purchaser has to wait till the time period for which the tenancy was created is over before he can get the possession, whereas, in case of a licence, if the property is sold to a third party, it comes to n end immediately.

7. A lessee has a right to protect the possession in his own right. Whereas, a licencee cannot defend his possession in his own name as he does not have any proprietary right in the property.

8. A lessee in possession of the property is entitled to any improvements or accessions made to the property, while a licencee is not.

Whether a Lease of a Licence

A finding on the question whether the person in possession is a tenant or a licencee is a finding of fact. To ascertain if a document creates a lease or a licence, the substance of the document should be preferred to its form. Where it creates an interest in the property, it is a lease; but, if it only permits another to make use of the property, of which legal possession and control continues with the owner, it is a licence. A licence does not create any estate or interest in the property to which it relates.Thus, whether an instrument operates as a lease or licence is not a matter of words contained in the instrument creating it, but of its substance. The decisive consideration is the intention of the parties, but the intention must be gathered on a true construction of the agreement and not merely from the description given by the parties.

Where, on point of intention the document is ambiguous, the question is to decide in the context of the surrounding antecedent and consequent circumstances, and parole evidence. A document, which expresses the intention of both parties or of one party to create license will nevertheless create tenancy if the rights and obligations enjoyed and imposed satisfy the legal requirements of tenancy.

The mere use of words appropriate to a lease will not preclude its being held a license; so even a document referring to ‘rent’ maybe a license. Transfer of exclusive possession generally indicates an intention to create a lease even though the sum is described as a ‘license fee’, but it is no longer a conclusive test and there maybe cases where transferee in excusive position is a licensee. Where, after the expiry of the original period of lease, the lessee continues in possession and the lessor accepts from him premium for the subsequent period, it is a lease and the lessee could not be ejected without the termination of the freshly created lease.

Justice Hurried is Justice Denied

Nirbhaya’s case shook the entire nation particularly young generation from head to toe. The brutal assault on Delhi based physiotherapist raised large number of voices against Justice Delivery System. This led to certain revolutionary reforms in Judiciary which includes setting up of Fast Track Courts for disposing of the cases relating to heinous crime against women such as abduction, rape, dowry death etc. Chief Justice of India had written to all the High Court of the Country which resulted in creation of such exclusive courts presided over by women Judicial officers in most of the courts so that the large number of cases relating to women pending in various courts are disposed of expeditiously.

On the direction of the High Courts, subordinate judiciary at District level started disposing such cases in speedy mode even in few days. Very often in the print media, we studied about decision of various courts particularly in Punjab that cases relating rape and other crime against women are disposed of by a court within 7 days, 5 days or amazing in 2 days!

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Such a sensitivity of Judicial Officers can be understood particularly when there is huge pressure of High Courts. However, we need to see the scenario from the other side of the wall also. Can such a case, on a very serious matter that too when authenticated investigation is required and live and liberty of accused is at stake should be decided in a haste. No doubt, justice to the prosecute/victim should be provided at any cost and without delay, but sometimes trial by media and social pressure may lead to miscarriage of justice also. A sessions trial such as rape, murder which normally takes months to conclude, if decided within few days to reduce the pend-ency anticipating that if accused in innocent then an appeal to the High Court or the Apex Court may set the person free, is misconceived. If an under trial is economically poor, he may not be able to appeal to superior court and this can confine him behind the bars for years which is violation of his fundamental right to life and liberty provided to every citizen by the Constitution of India under Article 21.

We also come across number of cases when personal enmity can lead to innocent persons booked for rape cases. Recently, Punjab Police has exposed number of such cases where innocent persons were falsely implicated in rape cases and ultimately police withdrew the charges of rape and sexual assault.

When the public outcry wants death sentence to be imposed on perpetrators of such inhuman acts, then sentencing accused in such a small time ignoring other cases in the cause list is not an ideal course of action. What we want is quality in quantity for which Indian Judiciary is acknowledged in the international legal sphere and not just quantity in a hurry to reduce the pend-ency of more than 3 crore cases pending in various courts at all levels for which reforms, known to everybody, like filling up of the existing vacancies of Judges, staff and adequate infrastructure is required and good news is that the necessary steps in this regard have been initiated.

Adoptions Made Easy

Adoption procedure is supposed to become simpler as the new simplified “Guidelines Governing Adoption of Children 2015” notified by the Central Government on 17th July 2015 have come into effect from today. The press release by the Government through PIB states that the new Guidelines are intended to provide for more effective regulation for adoption of orphan, abandoned and surrendered children and would bring more transparency and efficiency in the adoption system. With the new guidelines, it would become possible for Prospective Adoptive Parents (PAPs) to track the status of their application making the entire system more user friendly. Along with it, the fully revamped IT application for the purpose of adoption of children, CARINGS (Child Adoption Resource Information & Guidance System), has also become operational from today.

Adoption-words

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According to new guidelines the prospective adoptive parents should be physically, mentally and emotionally stable; financially capable; motivated to adopt a child; and should not have any life threatening medical condition. Any prospective adoptive parent, irrespective of his marital status and whether or not he has his own biological son or daughter, can adopt a child. Single female is eligible to adopt a child of any gender whereas single male person shall not be eligible to adopt a girl child. In case of a couple, the consent of both spouses shall be required and no child shall be given in adoption to a couple unless they have at least two years of stable marital relationship. Couples with more than four children shall not be considered for adoption. The minimum age difference between the child and either of the prospective adoptive parents should not be less than twenty five years.

The new guidelines also say in unambiguous terms thatNon-resident Indian prospective adoptive parents shall be treated at par with Indians living in India in terms of priority for adoption of Indian orphan, abandoned or surrendered children. Adoptive procedures for resident and non-resident Indians are separately given in the new guidelines. Any child care institution, intending to be recognised as specialised adoption agency, shall apply for it, to the concerned State Government. The functions of these agencies are also detailed in the new guidelines.