INTRODUCTION

Transfer of property is an act of conveying property from one person to another, in present
or future. Transfer of Property in India is regulated by the Transfer of Property Act, 1882.
If transfer is inter-vivos, between two living persons, it will be dealt with or be concerned
with The Transfer of Property Act, 1882 or The Sale of Goods Act or similar acts
depending on the subject matter. The Transfer of Property Act of 1882 is the overarching
legislation which governs the transfer of property, both movable and immovable. Chapter
II of the Act, from Sections 5 to 37 apply generally to movable and immovable properties.
The rest of the Act focuses on transactions between only immovable property, detailing
various procedures, methods, approval of transfers etc. The Act governs only those
transactions which result from the mutual conduct of the parties. It doesn’t cover transfers
via inheritance, insolvency or forfeiture.

The Act defines a transfer as an “act by which a living person conveys property, in present
or in future, to one or more living person or to himself and one or more other living
persons.”

Under the act of parties, Transfer of Property Act exists, which gives us further divisions
that is whether the property is movable or immovable, transfer for movable property and
immovable property. In my research paper, I am going to focus on immovable property
and various modes of transfer of immovable property – Sale, Exchange, Gift, Mortgage
and Lease.
 DEFINITIONS

PROPERTY:

The word property has not been defined in the Act, but it has a very wide meaning and
includes properties of all descriptions. It includes movable properties such as case, books,
etc., and includes immovable properties also such as lands or houses. It also includes
intangible properties such as ownership, tenancy, copyrights, etc.

A property is a bundle of rights. It includes movable, immovable, tangible and intangible

assets. When a property is transferred, all the rights along with the property are also
transferred. However arrangements may be made by which some of the rights may be
transferred but not all. A transfer of future property is not valid in India but conveyance of
such property may be valid as a contract to assign. When the property comes into
existence, the equity festers upon the property and the contract to assign becomes a
complete assignment.
TRANSFER OF PROPERTY:

According to the Act, 'transfer of property' means an act by which a person conveys the
property to one or more persons, or himself and one or more other persons. The act of
transfer may be done in the present or for the future. The person may include an individual,
company or association or body of individuals, and any kind of property may be
transferred, including the transfer of immovable property.

The term transfer means a contract plus conveyance. It is a process or an act by which
something is made over to another. Under Transfer of Property Act, 1882; Section 5
defines ‘Transfer of Property’. According to this section, transfer of property means an act
by which a living person conveys the property in present or in future:
1. To one or more other living persons, or

2. To himself, or
3.To himself or one or more other living persons, and to transfer such property is to
perform such act.
The word transfer has also very wide meaning. It may be either transfer of all the right and
interests in the property or transfer of one or more of subordinate right in the property.
IMMOVABLE PROPERTY:

Transfer of property has been defined under Section 5 of the Transfer of Property Act.
According to the act immovable property does not include standing timber, growing crops,
or grass. Interpretation of the section also allows us to construe the fact that things that are
attached to the land and which cannot be detached from the earth and things which are
permanently fixed to the earth also come within the definition of immovable property. For
example, timber, since it is of no use until one takes it out of the land or detaches it, it is
useless therefore it is movable property.

Example of immovable property- A chattel embedded in Earth, An easement, Right of

way, Right of enjoyment of immovable property under lease, Interest of Mortgagee, etc.

LEASE

Section 105 of the TPA defines lease as “is a transfer of a right to enjoy immovable
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.”

Lease is a transfer of right of enjoyment of an immovable property to someone who so

accepts in return for prior payment or periodic flow of valuable consideration. The person
who transfers such a right is called the lessor and the person. The price already paid is
called the premium and the periodic payment of consideration is called rent. The Act
defines lease as a transfer of the right to enjoy a property, for a certain period, express or
implied, in consideration of a price paid or promised, money or any other thing of value, to
be rendered periodically or on such occasions.
 ESSENTIAL ELEMENTS OF A LEASE

Following are the essential ingredients to constitute a ‘valid lease’ of an immovable property:

1. The parties to the lease i.e., lessor and lessee, are necessary. Lease is based on an
agreement between parties competent to contract. A lease granted by minor is
void. The parties should be competent to enter into a contract. A lease granted by
minor is void.

2. The Demise: Lease is a transfer of an interest (right of enjoyment) in an

immovable property. It is a transfer of limited estate and this limited estate or right
of enjoyment, is called demise.

3. Duration of lease: The interest which is created in the property could be for a
specified period or even in perpetuity. The parties to the lease are free to decide
the duration of the lease i.e., the duration can be relaxed at the option of the
parties.

4. Consideration: There should be a valid consideration paid to the lessor by the

lessee, either periodically or on specified occasions.

Duration of the lease in the absence of lease agreement

Section 106 of the Act lays down that in the absence of a contract, both the parties can end
the lease by issuing a notice to quit. The date when the notice to quit is received the
prescribed time period commences. This notice should be written and conveyed to the party
and the party is required to abide by it. The period of the lease is only where there is no
agreement expressly laid down in the lease.

In the case, Shanti Prasad Devi v. Shankar Mahto 1, the expiry before term and its subsequent
renewal was provided in the agreement of lease. The apex court held that mere acceptance of

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Shanti Prasad Devi v. Shankar Mahto (2005) 5 SCC 543
rents on expiry of the period of lease would not amount to as an assent to the continuance of
lease.

This section has classified the lease into two categories to ascertain the term of a lease:

1. When a lease is made for agricultural or manufacturing purpose and is deemed to

be of year, then it will attract a 6-month notice regarding the end of the lease on
the expiry of 1 year.

2. When a lease is made for some other purpose and is deemed to be of month to
month, then it will attract a 15-day notice regarding the end of the lease on the
expiry of 1 month.

Term of Lease

Section 107 of the Transfer of Property Act, 1882, provided for the two modes of creation of
leases (a) Leases which can be made only by registration and (b) Where registration is
optional. In the event, the same is not made through a registered instrument, then, contrary to
what is mentioned in the said lease, the duration of the lease will be assumed to be of a
month, and the same may be terminated by either party by providing a fifteen days’
notice. However, in case the term is less than a year, then the said lease may be made either
by oral agreement accompanied by delivery of possession of the immovable property, or by a
registered instrument. The court in the case, Punjab National Bank v. Ganga Narain Kapur 2
held that the provisions of Section 106 of the Act will apply if the lease is done through an
oral agreement.

The Section read as follows:

107. Leases how made.—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. All other leases of immovable property may be made either
by a registered instrument or by oral agreement accompanied by delivery of
possession.

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Where a lease of immovable property is made by a registered instrument, such instrument or,
where there are more instruments than one, each such instruments shall be executed by both
the lesser and the lessee.

Provided that the State Government may from time to time, by notification in the official
Gazette, direct that leases of immovable property, other than leases from year to year, or for
any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be
made by unregistered instrument or by oral agreement without delivery of possession.

In simpler words, Section 107 of the Act covers three aspects:

1. Registered Deed: When the lease of immovable property is for a term of 1 year or
more.

2. Other leases of immovable property can be either made by a registered deed or by

an oral agreement accompanied by the transfer of possession.

3. A lease will be made by both the parties when the lease is of multiple properties
that require multiple deeds.
The court in the case, Punjab National Bank v. Ganga Narain Kapur 3 held that the provisions
of Section 106 of the Act will apply if the lease is done through an oral agreement.

Rights and liabilities of lessor

The rights and liabilities of lessor and lessee are governed by any contract between the parties
and the local custom or usage and by the provisions of Section 108 of this Act. 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 lease, their
respective rights and liabilities are determined by their own agreement. Section 108 does not
apply in such a case. In the absence of any contract to the contrary, the mutual rights and
liabilities of lessor and lessee arise. These mutual rights and liabilities are explained below.

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Punjab National Bank v. Ganga Narain Kapur AIR 1994 ALL 221
Rights of Lessor

The section does not provide for any specific right of the lessor. However, there are few
rights of the lessor that can be inferred from this section.

1. Right of the lessor to recover the rent from the lease as mentioned in the lease
agreement.

2. In case of any breach of condition by the lessee the lessor has the right to take back
the possession. This right arises from the exception to Section 10 of this Act.

3. In case of any damage done to the property the lessor is entitled to recover the
amount of damages from the lessee.

4. On the termination of the lease term as prescribed in the agreement, the lessor has
the right to take back the possession of his property from the lessee.
Illustrations

 A has leased his land to B for a period of three years with a condition that B shall
not cause damage to the property. B breaches this condition. A is entitled to
recover damages from B for the damage done to his land.

 A has leased his house to B for one year through an agreement. On the termination
of the lease term (one year), A has a right to take back the possession of his
property.

Liabilities of Lessor

Clause (a), (b) and (c) of Section 108 of the Act, lays down the liabilities of the lessor.

1. It is the duty of the lessor to disclose any material defect in the property which the lessee
under ordinary supervision cannot find out or does not know. This defect should of such
nature that the if the lessee would have known about it, he would have not accepted it at all
and if accepted, he would have imposed certain terms and conditions.
There are two kinds of defects:

a. Latent defect- Latent defect cannot be discovered rationally or through inspection

by the lessor.

b. Apparent defect- Apparent defect can be easily discovered through some

inspection.
So basically a lessor shall disclose any apparent defect to the lessee and it is vital to disclose
such defects as they interfere with the enjoyment of the property by the lessee.

In the case, Radha Krishna v. O Faherty4, the lessor was held liable for not disclosing the fact
that the furniture of the tenant was destroyed by the fire caused by the defect in the chimney,
which was not disclosed to the tenant.

2. The lessor is bound by the duty to transfer the right of possession over his property as
without having the possession the lessee cannot have the enjoyment of the property.

Illustration

 A has leased his land to B for a period of three years but he fails to put B in
possession of the property. B can sue A for obtaining possession or may sue for
the rent already paid to him.
3. If the lessee agrees to abide by all the terms and conditions as prescribed in the agreement,
then a lessor can enter into a contract with the lessee, and the lessee can enjoy the property
without any interference and he would be under an obligation to pay the rent.

There would be a breach of lessor’s duty to the implied covenant for the enjoyment of the
property by the lessee if the lessor does not himself has no title over the leased property.

Determination of lease

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Radha Krishna v. O Faherty 3 B.L.R (A.C.) 277
Determination of lease means termination of the contract of lease. After the determination of
lease, the legal relation between the lessor and lessee comes to an end. Section 111 deals with
the various situations in which a lease is determined. Section 111 of the Transfer of Property
Act, 1882 reads as follows:

Determination of lease.—A lease of immoveable property determines—

(a) by efflux of the time limited thereby;

(b) where such time is limited conditionally on the happening of some event—by the
happening of such event;

(c) 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—by the happening of such event;

(d) 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;

(e) 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;

(f) by implied surrender;

(g) 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;

(h) 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.

A lease may be determined in the following situations:

  By Lapse of Time
At the expiration of the time period a lease of immovable property comes to an end. This is
known as determination by lapse of time. There is no requirement of any notice or formality
for the determination of the lease. A lease made for an indefinite period does not mean that
his heirs will have interest in the property unless the agreement has words that indicate a
hereditary interest.

 By happening of Specified Event

If the term of the lease is dependent on the happening of certain event and if any part of the
term fixed remains unexpired, it is of no consequence. In the case, Juthika Mulick v. MY
Bal, it was held that it is not necessary that the term ‘certain’ need not be certain on the date
of the lease.

Illustration

a. A lease shall come to an end if the lessee dies before the expiry of ten years, the
time till which the lease was made.

 By termination of Lessor’s Interest

When the lessor has a limited interest in the property then with the termination of the lessor’s
interest, the lease also comes to an end. If a lessee sublets the property, the sublease comes to
an end upon the death of the lessee.

In the case, Atyam Veeraju v. Pechettti Venkamma, the Supreme Court held that the lease
granted by the manager of the temple comes to an end with the expiry of the office of the
manager or his successor.

 By Merger
In simple terms, in a merger, a greater estate coincides with a lesser estate (the lesser estate is
said to be merged in the greater) and meets in one and the same right and in the same person,
without any intermediate estate. This doctrine is applicable only when the entire interest of
both the lessor and the lessee becomes vested in the same person.
In Parmeshwar Singh v. Sureba Kuer, it was held that the doctrine of merger is only
applicable in the case where the entire interest of the lessor and the lessee becomes vested in
the same person and in the same time.

 By Express Surrender
In surrender, the smaller interest unites with the larger interest. It becomes effective at once
and the lease is determined immediately. The surrender of the estate may be express or
implied.

The lessee’s right to enjoyment of the property reverts back to the owner when he vacates the
property before the expiry of the month.

 By Implied Surrender
In simpler words, it means that when a lessee accepts the same property already leased to him
by the lessor, there is implied surrender of the former lease. If the surrender takes place by
the operation of law, it is implied surrender.

 By Forfeiture
It is another mode for the determination of the lease. If the lessee losses the right to use the
property by his own fault, forfeiture is said to take place. Notice is mandatory for the
forfeiture.

This clause provides that a lease terminates by forfeiture in the following circumstances:- (a)
in the case lessee breaks on express condition which provides that on breach of it, the lessor
may re-enter the property, or (b) 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 (c) the lessee is adjudicated an
insolvent and the lease provides that the lessor may reenter on the happening of such event.

 By expiry of notice to quit

When there is a requirement to terminate the lease, then the lease is determined after the
expiry of the notice to quit. When the lease is for year to year, the notice expires after six
months and when it is for month to month, the notice expires after 15 days. It is not
mandatory to state any ground for the notice to quit.
 Notice to quit and its effects
A formal statement that is issued to the lessee if the lessor desires to end the lease agreement
whether on the grounds as specified under Section 106 or 111 of the Act, is known as a
Notice to quit. The lease can be forfeited as mentioned in the sub-clause (g) of Section 111,
by accepting the notice to quit.

Section 112 of the Act states that if the lessor accepts any rent from the lessee after initiating
the process of termination of the lease on the grounds of forfeiture, it will be assumed that the
notice to quit has been waived and the lease still exists.

Section 113 of the Act, provides the ways, i.e., expressly or impliedly in which a notice can
be waived.

1. Impliedly Waiver of notice to quit: When a lessor issues notice to quit to the lessee
and on the expiry of that notice, another notice is issued to quit to the lessee by the
lessor. The first notice to quit is impliedly waived.

2. Express Waiver of notice to quit: The acceptance of rent by the lessor from the
lessee after the notice to quit has been served is called expressly waived.
Illustrations

 A, the lessor, gives B, the lessee, notice to quit the property leased. After the
expiry of the notice, the lessor accepts the rent by B. The notice in this case is
waived.

 A, the lessor, gives B, the lessee, notice to quit the property leased. After the
expiry of the notice, the lessee remains in the possession of the property. A issues
another notice to quit to B. Here, the first notice to quit is impliedly waived.

Effect of holding over

Section 116 of the Transfer of Property Act, 1882, provides for the effect of Holding Over. It
states that if a lessor allow the lessee to have the possession of the property, the lease will be
renewed. But, if he does not agrees to the holding over of the property by the lessee, a suit
can be initiated against the lessee on the grounds of trespass.

Two conditions are important for the application of Section 116 of the Act:

 After the determination of the lease, the tenant or the lessee must be in possession
of the property.

 The lessor or his legal representative, must either accept the rent from the lessee or
agrees to the holding over of the property by the lessee.
This section is applicable only when the original lease was fixed for year to year or month to
month and not when the lease was for life.

Illustrations

 Rakesh lets a house to Ramesh for three years. Ramesh further underlets the house
to Rajesh at a monthly rent of Rs. 1000. After the expiry of the three years, Rajesh
continues in possession of the house and pays the rent to Rakesh. Here Rajesh’s
lease is renewed from month to month.

 Mohan lets his house to Madan for the life of Mahesh. After the death of Mahesh,
Madan continues to have possession with Mohan’s assent. Here Madan’s lease is
renewed from year to year.
In Padmanabh Pillai v. Sankaran Vishwambharam, the court held that, if the lessor receives
rent from the lessee and is protected by the Rent Acts then a new tenancy is not created under
this section. Here, mere acceptance would nit amount to assent of the lessor about the new
tenancy. The lessor must have independent evidence of assent.

Conclusion
After reviewing the provisions laid down in the Act, along with the various judicial
pronouncements on the subject, it maybe concluded upon that, lease is a very important
aspect of life and therefore, it becomes necessary for every individual to know about the
concepts and the essentials of the lease and also about the rights and the liabilities of the
lessor and the lessee and also to know about how the contract of lease may be terminated.

The provision of lease begins from section 105 of the Transfer of Property Act, 1882 and
continues till Section 117 of the Act. From this article, one can see that the duration is
considered as an important element of every lease. The lease provides for the duration during
which the lessor can enjoy the property. When the term is not given, the lease is fixed on the
basis of local laws and customs. And, in the absence of the term or local laws and customs,
Section 106 of the Act ascertains the term of the lease.

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.

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.After the lease is determined, the lessee loses his right to
possession over the property. But when the lessee still continues to hold possession with the
consent, either by express or implied, the lessee is called a tenant by holding over.

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.