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Leave and Licence

I. Introduction

Leave and Licence Agreements are a popular mode of occupying immovable property (both offices and residences) especially in the city of Mumbai.

II. Indian Easements Act, 1882

2.1 There is no statutory definition for the term “leave and licence”. The first statute which is relevant for a leave and licence is the Indian Easements Act, 1882. S. 52 of the Act, defines a ‘licence’ as a right granted by one person to another to do something in or upon the grantor’s immovable property, which act would in the absence of such a right be unlawful. It further states that a licence must not amount to an easement or an interest in the property. Thus, a licence is only a permission or a right to do something upon an immovable property. It is solely a personal right or privilege granted to the licensee by the licensor. A licence does not confer any interest in the immovable property.

2.2 S.56 of the Act provides that a licence cannot be transferred by a licensee or his agent unless the terms of the licence so provide. A licence cannot be assigned by the licensee.

2.3 A leave and licence of an immovable property is different from a lease of the same as the lease creates an interest in the property which the licence does not. Over a period of time the Supreme Court and various High Courts have laid down several tests for determining a licence from a lease but none of them are conclusive. The most famous being that of Associated Hotels of India Ltd. v. R.N. Kapoor, AIR 1959 SC 1262 and the latest decision on this issue is of ICICI, (1999) 5 SCC 708 (SC).

2.4 A wide scale misconception among many people is that a leave and licence can only be for 11 months.

III. Rent Act

3.1 The Maharashtra Rent Control Act, 1999 now covers within its ambit all leave and licence arrangements.

3.2 The landlord is responsible for getting the leave and licence agreement registered under the Registration Act. Any landlord who contravenes these provisions shall on conviction be punished with imprisonment up to 3 months and/or fine up to Rs.5,000.

IV. Stamp Duty

4.1 According to Art.36A of the Bombay Stamp Act, the stamp duty on a leave and licence agreement varies according to the location of the property and the tenure of the agreement.

4.2 Please refer to the Topic on Stamp Duties – Schedule 1, Art.36A for the levy of stamp duty.

V. Co-operative Society

5.1 According to the new Model Bye-laws any member who desires to give his flat on leave and licence must apply and obtain the society’s NOC. He would also have to pay non occupancy charges in accordance with the Commissioner’s Circular issued in this respect.

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