Introduction

Rental housing is predominately an urban phenomenon in India. As per the 2011 Census of India, 31.16% of the Indian Population is urban population and it is expected to reach 36% by 2021. The level of urbanization is expected to reach the 50% mark in the next 3-4 decades. Moreover, among urban households, a total of 28% of households live in rented dwellings. As is apparent from the data a lot of people prefer to live in a rented dwelling and the trend is only increasing. Most young Indians today prefer to make better use of their money rather than invest a huge sum in buying something, therefore leasing is a better option. Moreover, the youth today enjoy switching places and with continuous migration from one city to another it is not advisable to invest huge sums in buying a property. But there are various risks involved in leasing as well.  For e.g. the tenant might stop paying the rent and might not hand over the property back to the Landlord.  In such a case eviction of the Tenant from the Leased property becomes the prime objective of the Landlord. In this article, we shall understand various processes including a Lease Deed, mandatory registration of a Lease Deed, and eviction of the Tenant from a leased property.

What is Lease?

Lease is defined under Section 105 of The Transfer of Property Act, 1882 which states that a Lease of immovable property is a transfer of 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, services 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. The transferor is called the Lessor or Landlord and Transferee is called the Lessee or Tenant.

By the bare reading of the definition, it is clear that:

• Lease involves a transfer of the Right to Enjoy the Immoveable Property. While Leasing, one person gives possession of his property to some other person and subsequently transfers his right to enjoy that property. It is pertinent to note that ownership rights are not transferred in a lease, only the possession and enjoyment of the property rights are transferred.

• Lease can either be for a fixed time or for perpetuity.

• It can either be expressed or implied. But it is also advisable to have a lease agreement as it will act as evidence in the court of law if in case any dispute arises between the Lessor and the Lessee.

• There must be some consideration for a Lease, which can either be taken in the form of a price called premium or Money, Share, Service, or Other Things rendered on a periodic term called rent or both.

• The Lessee must accept all the conditions put forth in the Lease agreement including the time period and other terms & conditions imposed on the transfer.

It is pertinent to note that Leasing is a contractual relationship between the Lessor and the Lessee therefore, the essential elements of a valid contract are necessary to be fulfilled. Moreover, the parties should be competent to enter into the contract according to the Indian Contract Act, 1872.

What is the Difference between Lease and Rent?

Many people are confused if both the terms Rent and Lease are the same or have different meanings. Such confusion is only normal as most of the time the two terms are used interchangeably. Broadly the two terms can mean more or less the same thing though they have subtle differences. Lease is generally for a longer definite time frame. Moreover, the terms given in a lease agreement are fixed and cannot be altered, but the terms of the rent agreement can be modified by the landlord. Moreover, the landlord in case of a rent agreement has more control over the rented property. A lease agreement is difficult to terminate.

What is a Lease Deed?

A lease deed can be simply defined as an arrangement or an agreement between the Lessor and the Lessee. Though it is clear that an agreement to lease does not require writing but one must keep in mind that an oral document is difficult to enforce and remedies available in a court of law are limited in absence of a written document.

There are also certain terms that are essential to a lease and if these points are not mentioned in the agreement, then the Agreement will not be a Lease and will not amount to a valid Lease Deed. Moreover, all the essential consequences must also be kept in mind while drafting the Lease Agreement. Once the Lease Deed/ Lease Agreement is finalized and signed by both parties the same becomes binding and acts as a legal, binding contract between the landlord and the tenant. The Lease Agreement can be used in a court of law in case of any legal proceedings.

Is Registration of Lease Deed Mandatory?

The provisions laid down in the Transfer of Property Act, 1882 make it mandatory for the registration of Lease Deeds in case of an Immovable property leased either from year to year or for a term exceeding one year or where yearly rent has been taken by the Landlord is mandatorily required to be registered under the Registration Act, 1908. Similar provisions are also laid down in the Registration Act. 1908.

Thus any lease deed granting a lease of immovable property for any term less than one year is exempted from this compulsory registration. It is pertinent to note that though the Lease Agreement made for a period of less than a year i.e. 11 is exempted from mandatory registration and payment of the registration fee thereof, the adequate stamp duty must be paid to the government. There is no exemption from paying the stamp duty and the scope of the exemption is only limited till the registration process.

What are the consequences of the Non-Registration of Lease for more than one year?

A lease that is mandatorily required to be registered is void and not valid if is unregistered. Moreover, it cannot be used as a piece of evidence as proof of the terms of the lease. The Hon’ble Supreme Court in M/s. K.B. Saha & Sons Pvt. Ltd. Vs. M/s. Development Consultant Ltd. has held the following:

• A document required to be registered is not admissible into evidence under Section 49 of the Registration Act.
• Such unregistered document can however be used as evidence of collateral purpose as provided in the Proviso to Section 49 of the Registration Act.
• A collateral transaction must be independent of, or divisible from, the transaction to effect which the law required registration.
•  A collateral transaction must be a transaction, not itself required to be effected by a registered document, that is, a transaction creating, etc. any right, title, or interest in immovable property of the value of one hundred rupees and upwards.
• If a document is inadmissible in evidence for want of registration, none of its terms can be admitted in evidence and that to use a document for the purpose of proving an important clause would not be using it as a collateral purpose

It is also pertinent to note that in the case of an unregistered Lease Deed where it was required mandatorily to be registered the Landlord cannot evict the tenant on basis of its terms, but if, after delivery of possession, the rent is paid and accepted it is deemed to be monthly lease terminable by notice of 15 days.

This principle was reiterated by the Hon’ble Supreme Court in Park Street Properties (Pvt.) Ltd. Vs. Dipak Kumar Singh and Ors. wherein it was held that ‘in absence of a registered instrument, the courts are not precluded from determining the factum of tenancy from the other evidence on the record as well as the conduct of the parties.  The duration of such a lease shall be on a month-to-month basis as provided under Section 106 of TOPA.

The timeline for registration of the Lease Agreement is provided under the Transfer of Property Act, 1882 which provides for a window of four months from the date of execution of the agreement. If there is a delay in applying for registration the powers are given to the registration authority that it can condone the delay for a period up to 4 months from the expiration of the original time period on account of an urgent necessity or an unavoidable accident.

What is the Procedure to evict the Tenant or Lessee?

There are certain grounds on which a Tenant can be evicted from the Leased Property.

• In case the Landlord needs his property back either for his own use or for any member of his family.
• The tenant is not complying with the terms mentioned in the Lease Agreement.
• The tenant stopped paying the Lease Rent.
• The tenant has sublet the property without obtaining prior permission from the Landlord.
• Tenant is establishing a title over the property that he/she is the owner of the property.
• Tenant is using the property for carrying out illegal activities.
• Tenant has damaged the leased property.

In all the above-mentioned cases the tenant can be evicted from the leased premises. The procedure for evicting a tenant is generally provided in the rent control acts of specific states. But most of these acts drafted by the states do not have jurisdiction over those cases where the rent is more than a few thousand rupees. For e.g. as per clause (c) of subsection (1) of section 3 of the Delhi Rent Act, 1995, the act shall not be applicable to any premises where the monthly rent on the date of commencement of the act exceeds three thousand five hundred rupees.

Therefore for the properties where the monthly lease rent is more some other procedure needs to be followed for evicting the tenant which is mentioned here below:

Eviction Notice: For evicting a tenant an eviction notice needs to be sent to the tenant by the Landlord as per the terms and conditions mentioned in the Lease Deed. In case it is not explicitly mentioned in the Lease Deed a Legal Notice must be sent as per the provisions laid down in Section 106 of the Transfer of Property Act, 1882 which states:

“In the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months’ notice; and a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days’ notice.”

A reasonable time must be given to the tenant for vacating the rented property. 

Eviction Suit: The tenant may not vacate the rented property even after receiving the eviction notice. In such a case, the landlord can file an eviction suit against the tenant in a civil court under whose jurisdiction the rented property is situated. The court after hearing both the sides issues a final legal notice for eviction for the tenant. The tenant has to vacate the rented property once the court sends the final eviction notice.

It is pertinent to note that the Landlord cannot call the police to evict a tenant from leased property even if the tenant has not paid the rent or the tenant is not handing over the property back after the expiration of the Lease Deed. The police shall not interfere in the process of eviction of the tenant except only if the tenant is using the premises to conduct some illegal activity. However, the help of the police can be taken after a later stage when the Landlord has gotten an eviction order from the court in his favour. In such a case the police shall help the Landlord to get the property back from the possession of the tenant. The same was held in M/S Ram Prakash Sharma vs Baulal Birla where the Hon’ble Supreme Court held that” if the tenant does not vacate within the time granted, the tenant shall be evicted by the police force.”

Conclusion

Though the existing tenancy laws and norms in India are highly in favour of the tenants and it is a very cumbersome task to get the tenant evicted from a leased property, but the government is trying to change this position. In 2021, the Government of India brought the Model Tenancy Act, which aims to balance the rights of all types of tenants & landlords and create an accountable and transparent ecosystem for renting of premises in a disciplined and efficient manner. It also proposes a three-tier adjudicatory mechanism consisting of Rent Authority, Rent Court, and Rent tribunals for effective and speedy adjudication of all tenancy-related disputes. This is a great step ahead toward the resolution of disputes but there is still a long way forward and a speedy dispute mechanism is much needed.