Leave and license


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Leave and license

  1. 1. By,<br /> The Spartans.<br />LEAVE AND LICENSE AGREEMENTS<br />
  2. 2. <ul><li>BRIEF SUMMARY
  3. 3. Introduction
  4. 4. Differences
  5. 5. Related Laws
  6. 6. Stamp Duty requirements
  7. 7. Registration Procedures
  8. 8. Common Problems
  9. 9. Solutions
  10. 10. Case Laws
  11. 11. Parties for which agreements are not necessary</li></li></ul><li>Sec 52: Definition<br />Where one person(Licensor) grants to another (licensee)<br />Right to do or continue to do something in or upon an immovable property<br />No transfer of interest or creation of interest in immovable property<br />INTRODUCTION<br />
  12. 12. It important to take note of essential features of license as under:<br />1. A license is not connected with the ownership of land / property but creates only a personal right or obligation;<br />2. A license cannot be transferred or assigned;<br />3. License is purely permissive right arising only by permission, express or implied, and not by adverse exercise or in any other way;<br />4. It only legalize a certain act which would otherwise be unlawful and does not confer any interest in the property itself in or upon or over which such act is allowed to be done;<br />ESSENTIAL FEATURES OF LICENSE<br />
  13. 13. Differences :<br />
  14. 14. Differences (Contd.)<br />
  15. 15. Maharashtra Rent Control Act, 1999<br />Bombay Stamp Act, 1958<br />Indian Easement Act, 1882<br />Registration Act, 1908<br />Transfer of Property Act, 1882<br />Indian Contract Act, 1862<br />Arbitration and Conciliation Act, 1996<br />RELATED LAWS<br />
  16. 16. In the Bombay Stamp Act, 1958 a new article 36A has been added.<br />Stamp duty depends on :-<br />Location of the property.<br />Whether for Residential or Commercial purposes<br />Duration of the agreement.<br />STAMP DUTY REQUIREMENTS<br />
  17. 17. Mumbai City and Suburban Article 36A(a) of the Schedule I of the Bombay Stamp Act, 1958<br />*Average Annual Rent (AAR) plus deposit or money advanced or to be advanced<br />
  18. 18. Parties for which agreements are not necessary - Licensee<br />Paying Guests: Case Law: Feroze N. Dotivalavs P.M Wadhwani 2003.<br />A member of family residing together<br />A person in service or employment of the licensor<br />A person having any accomodation for rendering or carrying on medical or para medical services.<br />A person taking up accomodation in a hotel, lodging house, hostel, dharamshala, marriage hall and home for widows (orphans)<br />
  19. 19. Exemptions from the Maharashtra Rent Control Act<br />Premises belonging to the Government or a local authority<br />Premises let or sub-let to<br />Banks, <br />Any PSU <br />Any Corporation established by or any Central or State Act, foreign missions, international agencies,<br />MNC’s and private or public limited companies having a share capital of more than rupee 1crore.<br />
  20. 20. UNDER Section 55 (1) of the Maharashtra Rent Control Act, 1999, any agreement for Leave and License or letting of any premises entered into between the landlord and the tenant or the licensee as the case may be should be in writing and should be registered under the Registration Act, 1908. <br />Section 55 (2) imposes the responsibility of getting such agreement registered on the landlord.<br />Registration Procedure<br />
  21. 21. Registration Procedure<br />Registration means recording of the content of a document with a registering officer and preservation of the copies of the original document. The documents are registered for the purpose of conservation of evidence, assurance of title, public documents and prevention of any disputes.<br />Under the computerized registration system, registration is easy. <br />For registering documents relating to property, one should go the respective registration office along with the original document and one photocopy. <br />
  22. 22. The document must be printed or typed on one side only and in black color. A photocopy should be taken on only one side of the paper and the paper should be of 90 GSM thickness. There should be butter paper between the two sheets of the photocopy.<br />Original Stamp Duty payment receipt<br />One should go along with along with two witnesses<br />Registration fees and computer service charges is to be paid in cash to sub-registrar at the time of registration<br />Registration Procedure<br />
  23. 23. The Sub-Registrar of Assurances does the following:-<br />He verifies the document to ascertain whether it is legal to register it.<br />He further verifies that the full stamp duty is paid.<br />In his presence all parties executing the document admit that they have executed the document presented for registration. Parties who are present and admitting to execute the document are then personally identified by two independent witnesses. All parties and witnesses present, again sign in the presence of sub-registrar on an additional page attached to the document.<br />Registration Procedure<br />
  24. 24. Parties to the document are photographed and their thumb impression is taken and such photograph and thumb impression is affixed on additional pages attached to the document.<br />He puts his official seal on each page and puts a unique numbering block on each page of the document including the additional pages. On the last page he signs the document as being registered.<br />After completing this procedure, he records the contents of the document, including the additional pages, either by photocopying the content or by scanning the content of the document. <br />Registration Procedure<br />
  25. 25. The photocopy or scanned image is permanently retained by him in his records so that in future whenever a copy of the document is required it can be obtained. Also that copy becomes a public document, which anybody can inspect by paying the requisite inspection fees.<br />After taking a copy of the document, as mentioned above, on the record and after completing the above formalities the original document is returned to the party presenting the document for registration. This completes the process.<br />Registration Procedure<br />
  26. 26. Registration is done after the parties execute the document. The agreement should be registered with the Sub-Registrar of Assurance under the provisions of the Registration Act, 1908 within four months from the date of execution of the document.<br /> However, if due to any unavoidable circumstances, the document is not registered within the time limit, then the document can be registered only on making an application to the Sub-Registrar of Assurance within a further period not exceeding four months and on payment of appropriate fine.<br />Registration Procedure<br />
  27. 27. Consequences of non-compliance: <br />Imprisonment of three months or <br /> with fine not exceeding Rs.5000/- or <br /> with both.<br />In the absence of a written registered agreement, contention of the tenant about the terms and conditions on which the premises have been given either on leave and license or even let out shall prevail.<br />Registration Procedure<br />
  28. 28. Problems & Solutions:<br />Drafting Problems: <br /> Leave and license provides protection to licensor. It is necessary to draft it properly. While facing court decisions court may rule that the same is lease agreement and not the leave and license agreement. <br />
  29. 29. Problems & Solutions: (Continued)<br />The following clauses needs to be mentioned in agreement.<br />Possession: Shall remain with the licensor. Keys and locks with the licensor.<br />Transfer of Right and Interest: Explicitly state that no such transfer is made.<br />Transferability: It is personal in nature and cannot be transferred.<br />Period, purpose and Conditions:<br />
  30. 30. Problems & Solutions: (Conti.)<br />What if tenant does not pays rent as well not vacating the premises owned by you?<br />A 90 days notice to the tenants for demand of the Standard Rent in the manner provided in Section 106 of the Transfer of Property Act, 1882<br />On expiry of 90 days if the tenant fails to pay rent for 90 days, a suit may be filed for eviction of the tenants under the Maharashtra Rent Control Act, 1999 and recover possession of the tenanted premises under Section 16 of the said Act.<br />
  31. 31. Termination and Revocation(Easements Act)<br />Sec 59: Transfer of property by grantor<br /><ul><li>Transferee not bound by the license</li></ul>Sec 60: Revocation by the grantor<br /><ul><li>Revocable at will of licensor
  32. 32. Exceptions : When license is coupled with a transfer of property or licensee acting upon the license, has executed work of permanent Character</li></li></ul><li>Termination and Revocation(Easements Act)<br />Sec 62: Deemed Revocation<br />- Grantor ceases to have interest<br /><ul><li>release of license by licensee
  33. 33. end of period of license
  34. 34. completion of purpose for which license was granted etc.</li></li></ul><li>Khalil Ahmed Bashir Ahmed v/s TufelhusseinSamasbhaiSarangpurwala SC - 1988)<br />- In order to determine whether a document created is a licence or a lease, the real test is to ascertain the Operative intention of the parties i.e. whether they intended to create a license or a lease<br />- If the document creates an interest in the property entitling the transferee to enjoyment, then it is a lease; but if it only permits another to make use of the property without exclusive possession, then it is a license<br />- Substance of the document must be preferred to form<br />CASE LAW 1<br />
  35. 35. Milkha Singh v. Diana (J & K HC- 1964)<br />- A mere license does not create any estate or interest in the property but it only makes an action lawful which without it would be unlawful<br />- the possession of a licensee is not a juridical possession but only an occupation with the premission of the licenser. While the actual occupation remains with the licensee, the control or possession of the property is with the licensor through his licensee.<br />CASE LAW 2<br />
  36. 36. Carona Ltd Vs ParvathySwaminathan & Sons. (SC - 2008)<br />Facts<br />The appellant-tenant appealed against the eviction proceedings initiated by the landlord. The appellant company has paid up share capital more than 1 cr. on the date on which tenancy terminated. The appellant company afterwards reduced its capital by passing a resolution. As per the appellant company MRCA Act was applicable as capital was reduced below Rs. 1 Crore.<br />Decision <br />Held, since tenant public limited company had paid up share capital over Rs.1 cr. on the date when tenancy terminated hence, MRCA, 1999 was not applicable. [Sec 3(1)(b)] <br />Unilateral act of the tenant cannot take away the landlord’s accrued right and the eviction procedures were maintainable even though the tenant company was sick unit.<br />CASE LAW 3<br />
  37. 37. THANK YOU<br />