Lease

Section 105, Chapter V of the Transfer of Property Act, 1882
provides for the definition of the term ‘lease’ as a transfer of a

right to enjoy an immovable property for a certain time, or in
perpetuity against consideration of a price paid or promised to the
transferor by the transferee, who accepts the transfer on such
terms. In other words, it is a kind of hindrance on a property in
the form of enjoyment and possession owned by another person.
The transferor is called the lessor, the transferee is called the

lessee, the price is called the premium, and the money, share,
service or other thing to be so rendered is called the rent.
Essential elements of a Lease
The 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. A lease is based on an agreement between parties
competent to contract. A lease granted by a minor is void.
The parties should be competent to enter into a contract. A
lease granted by a 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.
Section 106 of the Act lays down that in the absence of a contract,
both 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.
In the case, Shanti Prasad Devi v. Shankar Mahto, the expiry before
the term and its subsequent renewal was provided in the agreement
of lease. The apex court held that mere acceptance of rents on
expiry of the period of the lease would not amount to an assent to
the continuance of the lease.
This section has classified the lease into two categories to

ascertain the terms of a lease:
1. When a lease is made for agricultural or manufacturing

purposes 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 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, of 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.
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 parties when the lease is of
multiple properties that require multiple deeds.
A lease may be determined in the following situations:
● By Lapse of Time
At the expiration of the 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 an 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

events 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 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
at 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 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 loses the right to use the property by his 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 an 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 the expiry of the 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 grounds for the notice to quit.

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Section 105, Chapter V of the Transfer of Property Act, 1882

provides for the definition of the term ‘lease’ as a transfer of a

The transferor is called the lessor, the transferee is called the

Essential elements of a Lease

The following are the essential ingredients to constitute a ‘valid

1. The parties to the lease i.e., lessor and lessee, are

This section has classified the lease into two categories to

1. When a lease is made for agricultural or manufacturing

Section 107 of the Transfer of Property Act, of 1882, provided for

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

1. Registered Deed: When the lease of immovable property is for

A lease may be determined in the following situations:

At the expiration of the period a lease of immovable property comes

● By happening of Specified Event

If the term of the lease is dependent on the happening of certain

a. A lease shall come to an end if the lessee dies before the

In the case, Atyam Veeraju v. Pechettti Venkamma, the Supreme Court

In simple terms, in a merger, a greater estate coincides with a

In Parmeshwar Singh v. Sureba Kuer, it was held that the doctrine

In surrender, the smaller interest unites with the larger interest.

The lessee’s right to enjoyment of the property reverts to the

In simpler words, it means that when a lessee accepts the same

It is another mode for the determination of the lease. If the

This clause provides that a lease terminates by forfeiture in the

● By the expiry of the notice to quit

When there is a requirement to terminate the lease, then the lease

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