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Determination Of Lease

In India, transfer of property is not possible for every individual because of financial issues. The permanent or absolute transfer is a luxury for some people, but a temporary transfer is something that has given every citizen the right of enjoying any property. One of the modes of transferring property for a particular period of time is Lease.

Lease is a transfer of an interest in the property for a stipulated period of time without transferring the ownership of that property. In a lease, right of possession is transferred instead of the right of ownership. Transferor here is called the lessor and the transferee i.e. the one enjoying the property for a period is called lessee. Lease is governed by the Transfer of Property Act, 1882 and it is given from Sections 105 to 117.

Section 105 states the definition of a lease which states that it is a transfer of immovable property for a particular time period for a consideration of which the transferee has accepted the terms surrounding the agreement.

A lease of immovable property determines by forfeiture; that is to say in case the lessee breaks an express condition which provides that, on breach thereof, the lessor may re- enter.

Transfer of immovable property will take place by transferring it from one person to another. To make the transfer valid it is very essential that the person should be competent to make a contract and it should not be forbidden by law. Lease under Transfer of Property Act, 1882 deals with section 105 to section 117. A lease can be done only of immovable property. A lease is the enjoyment of immovable property for a certain period of time or in perpetuity. But, in lease transfer of immovable property is not absolute like there it is in sale. The right of possession is separated from the right of ownership.

Transfer of immovable property will take place by transferring it from one person to another. To make the transfer valid it is very essential that the person should be competent to make a contract and it should not be forbidden by law. A lease may be determined by the re-entry of the lessor, i.e. the lessor may peaceably and lawfully recover possession of the leased land or premises if the lessee breaks any of the covenants specified in the lease.

Determination Of Lease

In a country like India, the transfer of property is not possible for every individual because of economical issue. The permanent or absolute transfer is a luxury for some people, but a temporary transfer is something that has given every citizen the right of enjoying any property. One of the modes of transferring property for a particular period of time is Lease.

The lease is a transfer of an interest in the property for a stipulated period of time without transferring the ownership of that property. In a lease, right of possession is transferred instead of the right of ownership. Transferor here is called the lessor and the transferee i.e. the one enjoying the property for a period is called the lessee.

Determination means the written documentation of a decision of a procurement officer including findings of fact required to support a decision. A determination becomes part of the procurement file to which it pertains.

At the same time, it is important to recognize the conditional precedents essentials for ending the lessor and lessee relationship, so that a relationship based on equity can be sustained and when it's not, can be repudiated. Such repudiation can be expressly or impliedly be done subject to the occurrence or non-occurrence of an event. Determination of lease means termination or end of the contract of lease. After the determination of the lease, the legal relationship between them came to an end.

A lease can be done only of immovable property. A lease is the enjoyment of immovable property for a certain period of time or in perpetuity. But, in lease transfer of immovable property is not absolute like there it is in sale. The right of possession is separated from the right of ownership.

A lease of immoveable property determines:

  1. by efflux of the time limited thereby;
  2. where such time is limited conditionally on the happening of some event´┐Żby the happening of such event;
  3. where the interest of the lessor in the property terminates on, or his power to dispose of the same extends only to, the happening of any event´┐Żby the happening of such event;
  4. in case the interests of the lessee and the lessor in the whole of the property become vested at the same time in one person in the same right;
  5. by express surrender; that is to say, in case the lessee yields up his interest under the lease to the lessor, by mutual agreement between them;
  6. by implied surrender;
  7. by forfeiture; that is to say, (1) in case the lessee breaks an express condition which provides that, on breach thereof, the lessor may re-enter or (2) in case the lessee renounces his character as such by setting up a title in a third person or by claiming title in himself; [or (3) the lessee is adjudicated an insolvent and the lease provides that the lessor may re-enter on the happening of such event]; and in [any of these cases] the lessor or his transferee[gives notice in writing to the lessee of] his intention to determine the lease;
  8. on the expiration of a notice to determine the lease, or to quit, or of intention to quit, the property leased, duly given by one party to the other.


Section 111 lays down the modes in which lease can be terminated

Section 111 lays down the modes in which lease can be terminated. In the case of a lease only 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.

We will discuss each of these modes one by one:
  1. By Efflux of Time (S. 111 (a):
    Where the term of the lease is fixed, the lease determines after the expiry of time period automatically. In case of a lease for a fixed period, no notice to quit is necessary.

    Unregistered lease deed cannot be determined by efflux of time. When tenancy is determined by efflux of time, no notice to quit is necessary.

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

    Determination of lease by efflux of time is available when duration of lease is fixed by a valid lease. Unregistered lease deed cannot be determined by efflux of time. When tenancy is determined by efflux of time, no notice to quit is necessary. Where the agreement specifies the period of tenancy, no notice is required for filing of suit for eviction.

    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.

    Where a covenant for renewal of the lease is there, the lessee may ask for renewal of the lease before his eviction from the leased property. Where the terms of written lease provided for two months' notice for termination of tenancy but the tenancy terminated by efflux of time, it was held that the tenant had become tenant holding over the property and the tenancy from month to month. Therefore, 15 days, notice was held sufficient to terminate the tenancy.
     
  2. By Happening of Some Event (S. 111 (b):
    Clause (b) provides that a lease of immovable property determines where such time is limited conditionally on the happening of some event-by the happening of such event.

    Where the lease contains a condition that the lease will terminate on the happening of some even, it will terminate on the happening of that event, it will terminate on 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. On the determination of the lease the lessor may either re-enter the property or maintain a suit for ejectment.
     
  3. Termination of Lessor's Interest in property (S. 111(c):
    Clause (c) provides that a lease of immovable property determines where the interest of the lessor in the property terminates or his power to dispose of the same extends only to the happening of any event, by the happening of such event. Where a lessor has only a limited interest or power to grant a lease, the lease is determined with the loss of that interest.

    For example, a lease by a Hindu widow who is ended only to a life-estate, determines on her death. A lease granted by a mortgagee in possession and extending beyond the term of the mortgage, determines on redemption.

    Where a railway land was allotted to the lessee for commercial development which became frustrated by reason of the Government acquiring a portion of the land for making mad, it was held that the lessee could not be compelled to take an alternative land for purpose. He became entitled to refund of his lease money.
     
  4. By Merger (S. 111 (d):
    Clause (d) provides that a lease of immovable property determines in case the interests of the lessee and the lessor in the whole of the property become vested at the same time one person in the same right. It is necessary for a merger that two immediate estates should come into the hands of the same person at the same time and in respect of the whole property. A merger is prevented from taking place if there is an intermediate estate outstanding with another person at the relevant time.

    In this case there was the purchase a part of the leasehold property by the lessee from a co-owner landlord. The doctrine of merger is attracted when a leasehold and revision coincide. If the lessee purchases the lessor's interest, the lease is relinquished as the same person cannot at the same time be both landlord and tenant.

    The doctrine of merger is based on the principle of union of two conflicting interests which cannot be held by one person at the same time. Therefore, the leasehold rights in favour of the appellants stand extinguished; Ramesh Kumar Jhambh v. Official Assignee, High Court Bombay, AIR 1993 Bom 374.

    Merger takes place when the tenant himself becomes the absolute owner of the tenanted premises. The original landlord had died. He was a part-owner. His interest in the lease property was purchased by the sub-lessee from his legal heirs. The sub-lessee wanted to evict his lessor from the portion of the premises purchased by him. This is what was not allowed. A person could not be the sub-tenant and owner at the same time. The effect of merger is that a limited interest becomes crystallized into absolute ownership.

    The merger takes place in terms of section 111(d) of the Transfer of Property Act, 1882, only in a case where the interests of the lessee and that of the lessor in the whole of the property become vested at the same time in one person, in the same right.
     
  5. By Express Surrender (S. 111 (e):
    According to clause (e), a lease of immovable property terminates by express surrender, that is to say, in case the lessee yields up his interest under the lease to the lessor, by material agreement between them.

    The surrender consists in the yielding up of the term of the lease accompanied by attender at some future time. In fact, the surrender is counterpart of merger. In merger, Surrender brings extinction of the lease, so that the relationship of the parties to the lease the tenant acquires the reversion whereas in surrender, the landlord acquires the lease.

    That is to say, the lessee yields up his interest under the lease to the lessor, by material agreement between them. Surrender is opposite of merger. In a merger the larger interest is merged with smaller interest whereas in surrender the smaller interest unites with larger interest. But in both, the lease is determined because two interests unite. However, mere relinquishment of 'right to enjoy' is not sufficient; it must be followed by delivery of possession. Surrender without delivery of possession in ineffectual. Surrender need not be in writing. It can be done orally by delivery of possession.

    In case of an express surrender, no formality is required, only the lessee must express his intention to surrender. The lessor must agree to surrender and there must be delivery of possession. Surrender need not be in writing. It can be done orally by delivery of possession. It can be inferred from the acts of the parties. Registered deed is not necessary to evidence surrender. But where a surrender of a part of the premises results in modification of the terms of lease deed, it would require a registered document.
     
  6. By Implied Surrender (S. 111(f):
    An implied surrender takes place either by the creation of new relationship between the lessor and the lessee or by the relinquishment of possession by the lessee and taking over by the lessor.

    When a lessee accepts from the lessor a new lease of the same property which is already leased to him, there is implied surrender of the earlier lease. The former lease is impliedly determined. When a lessee accepts an office inconsistent with lease, there is implied surrender.

    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.

    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. It is also necessary that the surrender must be to the immediate landlord because the transfer of the lease to a superior landlord does not result in a surrender.

    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.

    It was held in PMC Kunhiraman Nair v. CR NagaratnaIyer AIR 1993 SC 307 that there can be implied surrender, if the lessor grants a new lease to a third person with the assent of the lessee under the existing lease who delivers the possession to such person or where the lessee directs his sub tenant to pay the rent directly to the lessor.
     
  7. By Forfeiture (Section 111(g):
    This clause provides that a lease terminates by forfeiture in the following circumstances:
    1. in the case lessee breaks on express condition which provides that on breach of it, the lessor may re-enter the property, or
    2. in case the lessee renounces his character as such by setting up a title in a third person or by claiming title in himself, or
    3. the lessee is adjudicated an insolvent and the lease provides that the lessor may re- enter on the happening of such event.
      1. Breach of Express Condition
        The lease terminates when the express condition is broken by the lessee which had provided that in case of breach of the condition by the lessee the lessor will re-enter the leased property. The right of forfeiture is exercised only when the condition is in fact broken. In the case of Nil Madhabv. Narottam (1890) 17 Cal.826, the lease deed contained an express condition that the lessee shall not alienate his leasehold, but he alienated the property in violation of the condition. It was held that the lessor cannot forfeit property because the lease deed did not contain provision for re-entry.

        The lessee did not at all commence such activities. The unit remained in the state of non-manufacturing for more than the stipulated period. Payment of rents was also in default. The court said that all this showed a clear breach of conditions of lease. The corporation had the right to recover possession of the premises. The fact that lessee had become owners of the premises did not absolve them from their obligation as lessees towards the lessors from whom they had taken the premises on lease.
         
      2. Denial of Title
        The second condition for forfeiture arises when the lessee denies the lessors' right and sets up a title in himself or in a third person. Here the lessee denies his lessors' title and asserts that he or some third person is the true owner. The lessor in such a case becomes entitle to forfeit the tenancy. Repudiation of title or denial of title must be clear and relatable to the knowledge of the lessor.

        The tenant denied title of the land lord during proceedings before the Rent Controllers. As a result thereof the landlord issued a notice of termination of tenancy. The act of repudiation of title in a judicial proceedings was a a deliberate and conscious act.

        The tenant therefore incurred forfeiture of tenancy. The landlord became entitled to recover possession.

        The tenant denied title of the landlord during proceedings before the Rent controller. As result thereof the landlord issued a notice of termination of tenancy. The act of repudiation title in a judicial proceeding was a deliberate and conscious act. The tenant therefore red forfeiture of tenancy. The landlord became entitled to recover possession.
         
      3. Insolvency
        Where the lease deed contains a condition that in case the lessee is adjudicated insolvent the lessor will re-enter the property and where actually the lessee is adjudicated insolvent, the lessor will forfeit the lease. Notice in writing is necessary to forfeit the lease in such a case.

         
  8. On Expiration of Notice to Quit (Section 111(h):
    Clause (h) provides that the lease of immovable property may determine on the expiration of a notice to determine the lease, or to quit, or of intention to quit, the property leased, duly given by one party to the other. (Dwarka das Hiralallahoti v. Kazi Mumbarzuddin, AIR 2007 (NOC) 1636 BOM.)

    A lease terminates when the notice to quit or to determine expires. Under Section 106, periodic leases, like leases from month to month or from year to year are terminated by notice to quit. No notice is necessary in case of leases for fixed term.

    No notice is necessary in case of leases for fixed terms. A one-year lease carried a condition in the rent deed that the lessee would vacate the hop when required by the landlord for her use. It was held that the notice under section 11th) was proper. She became entitled to the decree of eviction. She was not required to prove that the shop was required by her for her personal use. Where the lessee continues in possession even after the notice, he cannot claim title to the property on the basis of adverse possession even after a considerable number of years.

    A one year lease carried a condition in the rent deed that the lessee would vacate the shop when required by the landlord for her use. It was held that the notice under S. 111(h) was proper. She became entitled to the decree of the eviction. She was not required to prove that the shop was required by her for her personal use. (Vijay Kumar v. Harbhajan Kaur, AIR 2013 NOC 217 J&K)

Case Laws
  1. Chadrawati v Surendra AIR 1979 All 406
    Sale of property under lease without determination of the lease by notice under sec. 111(g) would be void as in that case the lease would be subsisting and the owner of the land had no right to sell it with vacant possession and unencumbered with the lease. The consideration paid therefore failed.
     
  2. Chandi Charan v Ashulosh 40 CWN 52
    No notice to quit is necessary when the action for ejectment is brought after the lease has expired and the tenancy has come to an end by efflux of time. When it is not shown that the lessors accepted rent after the termination of the lease, the lessees are tenants by sufferance, being in no better status than trespassers and are liable to ejectment without notice.
     
  3. Dwarka das Hiralallahoti v. Kazi Mumbarzuddin, AIR 2007 (NOC) 1636 BOM:
    Court held that the deceased plaintiff had surrendered his tenancy rights to the extent of half eastern portion of the plot in the month of January 1975 and delivered possession thereof to the defendant No. 1/landlord. On the basis of such findings, the suit came to be dismissed. The first appellate Court raised a single point as to whether the plaintiff is entilted to the recovery of possession of suit plot. The first appellate Court recorded negative finding on this point and dismissed the appeal. Feeling aggrieved, this Second Appeal is preferred by the unsuccessful plaintiff.
     
  4. PMC Kunhiraman Nair v. CR NagaratnaIyer AIR 1993 SC 307
    The High Court held that in the circumstances the appellant could not be permitted to plead in this suit what he did not plead in the earlier suit. According to the High court, the consideration paid for the movables under Deed of Assignment (Ex.B4) dated December 11, 1956 would not make the appellant the tenant of the property.

    The High Court was of the view that the appellant could not be allowed to put forward inconsistent pleas to the detriment of the opposite side. The High Court was also of the view that since there was a lease for running a business, it could not be said that the appellant is a tenant of a building and is entitled to the protection of the Kerala Building (Lease and Rent Control) Act.

Suggestions:
In this time when people are career-oriented thus, it is their need to leave their native place and move to a new city or state. People are emotionally attached to their property and hence, they cannot sell of them. In order to protect their property or there are times when people are in urgent need of money, at that point of time people prefer to lease out their property instead of selling it off.

Simultaneously, there may be times when people moved to new place may require a place to live in or land to cultivate then, to take a property on lease may be a feasible option for them. Henceforth, lease may play a very significant role in today's time.

In past few years, it is evident that the government is focusing too much on lease for many important purposes.

Thus, there must be some initiative taken by the governmental and non-governmental organizations to ensure or to impart knowledge about lease so that there may not be any kind of infringement of rights on part of lessor and lessee. It is very common that lease is generally of agricultural land in India, and almost 99% of the farmers are poor and illiterate so, the education regarding lease will safeguard their interest.

Conclusion
Lease is a very important aspect of real life. Every person has witnessed a lease deal involving renting of a house, car or etc. Furthermore, under Section 111 of the Transfer of Property Act, 1882, the topic determination of lease is very wide and covers the day-to-day life issues.

It specifies different modes by which the lease may be determined. Whatever may be the grounds of determination of a lease, the person who is in the possession of the property, even after the lease has expired, cannot be disposed of by the lessor or his legal representatives without recourse of law as given under Section 111 of the Transfer of Property Act, 1882. This section does not apply to a lease created by the will and to the agricultural leases, exempted from its operation by Section 117 of the Act.

Having said so, in no event will the lessee be construed as a 'trespasser', since a tenant/ lessee has juridical possession over the property and the said tenant/ lessee cannot be deprived of such juridical possession except in due course of law. Thus, in such an event, wherein a tenant refuses to handover possession of the premises despite determination of a lease by efflux of time, the lessor has a right to regain possession of the premises by instituting a suit for ejectment against the lessee (tenant), in the competent court.

However, a suit for ejectment is prohibited under various Rent Control Acts23 and a different mechanism for eviction of the tenant is provided thereunder. Therefore, in case there is a prohibition under the applicable Rent Control Act, then the lessor would not have the right to file a suit for ejectment, and thus, the lessor would be bound to comply with the procedure provided under the applicable Rent Control Act.

On review of the provisions laid down in the Act along with various judicial pronouncements on the subject, it may be concluded that, upon determination of a lease due to efflux of time, the lessee is mandated under law to handover possession of the premises to the lessor. Even in case of a dispute between the parties, the lessee does not have a right to retain possession of the premises subsequent to determination of the lease by efflux of time.

In a lease agreement, there are two parties, the lessor and the lessee. These parties have certain rights and since duty is correlative to rights, hence, the lessor and the lessee also owe certain duties to each other and on the infringement of these rights and liabilities they have the remedy to either sue or claim damages from the other party. Therefore, a lessor has the duty to disclose all the material facts to the lessee and avoid interruptions in the lessee's right to enjoyment of the property and on the other hand, the lessee should pay the rent on time and must not cause damage to the property leased to him.

However, if a lessee/ tenant acts in contravention and does not handover possession of the premises to the lessor despite determination of the lease by efflux of time, then the lessee shall either become a 'Tenant at Will/ Holding Over' or a 'Tenant at Sufferance', depending upon the lessor's consent (express/ implied).

Bibliography:
  • The Transfer of Property Act by Dr Avtar Singh and Prof (Dr) Harpreet Kaur -Sixth edition

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