A lease as defined under Section 105 of the Transfer of Property Act, 1882, is a transfer of interest in immovable property for a specific period of time for a certain consideration. It essentially grants the lessee (tenant) the right to possess and use the property for the agreed-upon period.

Key characteristics of a lease:

• Transfer of Interest: A lease involves the transfer of an interest in the property, granting the lessee certain rights.

• Exclusive Possession: The lessee has exclusive possession of the property for the lease term.

• Legal Right to Possession: The lessee has a legal right to enforce their possession against third parties, including the lessor.

• Remedies: In case of breach of the lease agreement, the lessee can seek remedies such as specific performance or damages.

• Ramjibhai Virpal Shah v. Gordhandas Maganlal Bhagat (1954): This case clarified the distinction between a lease and a license. The court held that a lease involves a transfer of interest in the property, granting the lessee exclusive possession, while a license does not.

• Qudrat Ullah v. Municipal Board, Bareilly (1973): This case established the "litmus test" to distinguish between a lease and a license. The court held that if the agreement grants exclusive possession to the transferee, it is a lease; otherwise, it is a license.

• Associated Cement Company Ltd. v. The Government of Andhra Pradesh (1984): This case discussed the concept of "right to enjoy" under Section 105. The court held that this right includes the right to use, occupy, and derive benefits from the property.

• Vodafone Essar Mobile Services Ltd. v. State of U.P. & Ors. (2011): This case dealt with the nature of spectrum allocation agreements. The court held that such agreements, while not strictly leases, involve the transfer of a right to use a scarce resource and thus share some characteristics of a lease.

Determination of Lease Under the Act

Section 111 of the Transfer of Property Act, 1882, outlines the various ways in which a lease can be determined or terminated. It doesn't directly define a lease, but it provides circumstances under which a lease can come to an end.

Here are the primary ways a lease can be determined under Section 111:

1. By Afflux of Time:

• If the lease is for a fixed term, it automatically terminates upon the expiry of that term.

2. By Happening of a Condition:

• If the lease is conditional upon the occurrence of a specific event, it terminates when that event happens.

3. By Termination of Lessor's Interest:

• If the lessor's interest in the property terminates, the lease also terminates.

4. By Merger:

• If the lessor and lessee become the same person, the lease merges with the larger estate and is extinguished.

5. By Surrender:

• If the lessee surrenders their interest in the lease to the lessor, the lease is terminated.

6. By Forfeiture:

• If the lessee breaches a condition of the lease, the lessor may forfeit the lease and regain possession of the property.

7. By Notice to Quit:

• Either party can terminate a periodic tenancy by giving a notice to quit.

8. By Operation of Law:

• In certain circumstances, a lease may be terminated by operation of law, such as bankruptcy or insolvency.

It's important to note that the specific terms of the lease agreement will also determine the circumstances under which the lease can be terminated. For example, a lease may contain specific clauses regarding termination, such as default by the lessee or a change in the use of the property.

License

A license, as defined under Section 52 of the Indian Easement Act, 1882, is a permission granted by the owner of property to another person to do something on the owner's property. It does not create an interest in the property itself.

Key characteristics of a license:

• No Transfer of Interest: A license does not involve the transfer of any interest in the property.

• Revocable: The licensor can revoke the license at any time, subject to reasonable notice.

• Limited Rights: The licensee has limited rights to use the property, and these rights are subject to the licensor's control.

• No Legal Right to Possession: The licensee does not have a legal right to possession of the property.

Associated Hotels of India v. R.N. Kapoor

This case established the "litmus test" to differentiate between a lease and a license. The court held that if an agreement grants exclusive possession to the transferee, it is a lease; otherwise, it is a license.

In conclusion, while both leases and licenses involve the use of property, a lease grants a more substantial interest in the property, including exclusive possession and legal rights.

A license, on the other hand, is a more limited permission to use the property, subject to the licensor's control.