Leave & License, and lease

What are the provisions in bye-laws for sub-letting of flats?  
Model bye-laws  specifies the following circumstances under which a member is allowed to sublet his flat:  
(i) Where the member is required to go out of the area of operation of the society for a long duration on account of exigencies of service or business or on account of the prolonged illness;
(ii) Where the member is unable to occupy the flat owing to absence of facilities for education of his children or is unable to secure admission to the school in the locality for them.
(iii) Where his employer, with a view to ensure efficient discharge of duties, requires him to stay in the accommodation allotted to him by his employer.
(iv) Where a member satisfies the Committee about his inability to occupy or continue to occupy the flat for any other genuine reasons; It also requires previous permission of the society for subletting. However it is submitted that subletting should generally be the right of a member with the condition that the sub letter should not create any nuisance to the society.   

Can a member of Co-op housing society keep a paying guest in his flat?  
A member of co-op housing society can keep a paying guest in his flat after obtaining the written permission of the society. The society is entitled to collect non-occupancy charges from such a member.   

What are the Non-occupancy charges?  
Non-occupancy charges are not the charges for not occupying a flat as the term appears to indicate. Non-occupancy charges can be levied by a society if the flat is occupied by person(s) who are not the family members of the member of the society. The definition of the term “Family” is different under the Model Bye-Laws of 1984 and the Model Bye-laws of 1984 and the Model Bye-laws of 2001; in the former it is very narrow definition whereas in the later it is wider definition as more particularly given in elsewhere in this book. The non-occupancy charges cannot be charged more than 10% that of the services charges (excluding Municipal Taxes) as per Government Notification no. S.G.Y. 1094/15165/No.317/14-C dated 01. 08.2011.           

Q-1. What is mean by License?     
Ans. In legal term, the License is considered as right to do, or continue to do in or upon immovable property of the grantor, something which would, in the absence of such a right, be unlawful, and such right does not amount to an easement or an interest in property. Originally the licensors and licenses mutually respected the object and purpose of this definition, however, as there was shortage of premises, commercial as well as residential some of the licensor became dishonest and wanted to make quick money. These licensors who in order to circumvent the protection given under Bombay Rent, 1947 and/or to deny the protection given under Rent Act started drafting agreement styled or labeled as leave and license through in reality on the basis of facts on circumstances intention was to create tenancy. Similarly some of the dishonest tenants and occupations started claiming interest in the property which subsequently resulted in legal battle.  

Q-2. What are the difference between simple license and bare license?  
Ans. A license may be of two kinds, a bare license which is purely a matter of personal privilege and a license coupled with a grant or interest. A bare license without more is always revocable at the will and the pleasure of licensor and is not assignable. On the other hand, if a license is coupled with a grant of interest then the grantor cannot in general revoke it so as to defeat the grant to which it is incident. A mere license does not create any estate or interest in the property to which it relates.   A license may be purely personal gratuitous or contractual. The first two classes are of mere licenses which are revocable, the third class whether is revocable or not will depend upon the express or implied terms of the contact between the parties. A license coupled with grant of an interest in the property is not revocable. Such a license has been described as a right to enter on land and enjoy a profit a render or other incorporeal hereditament. To understand the true nature of the relationship between the licensor and the licensee, the decisive consideration is the intention of the parties. Where there is no formal document embodying the terms of agreement, the intention is to be inferred from surrounding circumstances and the conduct of the parties.   A license is personal both to the grantor as well as the licensee. It creates no duties and obligations upon the person making the grant and is therefore, revocable except in certain circumstances expressly provided for in the Indian Easements Act itself. In order to grant license a man need not be its owner. The tenancy rights of an immovable property are also the immovable property of this tenant and therefore, he can well grant the license. But by virtue of section 53 of the Act he can obviously grant license subject to the limitation and the extent to which he may be able to transfer his interest, viz. The tenancy rights. Whether the act which is allowed to be done is a bare license or something more than a license will depend on the terms of the transaction. If a person is allowed to do something on the land without interfering with the nature of the land or without taking any profits from it, it could be described to be case of a bare license. Thus if A is allowed just to pass over the land of B, such an interest can properly be described as a bare license a merely walks over the land. He has no right to occupy it. He does not take any profits out of it. He not enjoy the land or its profits in any way. He is merely allowed to do an act on the land, which without permission would be unlawful.  

Q-3. What are the difference between the Lease and license?  
Ans.   a) A License may be granted without writing or registration, unless it is coupled with a transfer of an interest in immovable property. An instrument granting license does not require registration. A lease can only be created by registered instrument, if it is for year-to-year or for a period exceeding one year or if it reserves a yearly rent.
(New Maharashtra Rent Control Act, 1999 registration of license and even monthly tenancy is mandatory (see Section 55)    b) A lease creates interest in the property while license does not. c) In the case of lease there is an exclusive possession of the premises, but in the license there is a right to use premises without exclusive possession. d) A lessee having interest in the property, if illegally deprived of the possession by the lessor, can bring suit for the possession but a license cannot do so.  e) No notice to quit is necessary to determine a license and to bring a suit for ejectment against the licensee. But unless a lease is determined by a due notice to quit or in any other recognized mode, the lessor cannot sue for ejectment against the lessee.  f) A lease is normally a transferable right while a license is not. g) A lease is a heritable right while a license is not. h) A license does not entitle a licensee to sue a stranger in its own name. i) A license is determined when a grantor makes an assignment of the subject matter.   A lease is liable to forfeiture on denial by the lessee of the lessor’s title. This principle does not apply to a license.   

Q-4. What precautions should be taken before the premises given on license?  
Ans.   a) That agreement referring to the leave and license should be on the Stamp paper of Rs.20/- and the stamp paper should be in the name of the party to the agreement and it should be drafted in writing referring to the particulars of the area of the premises, period of license, amount of compensation payable, amount of deposit if any and other particulars and it should be countersigned by two witness. b) In order to maintain the control over the premise exclusively possession should not be given and that only duplicate key should be given by keeping original key with the licensor and stating that under no circumstances key of the premises will be changed.    c) The affidavit of licensee disclosing his full name and address should be taken, stating that after the expiry of the period of license he will vacate the premises unconditionally, if he fails to do so licensor can remove the fixtures and other articles with the help of police. d) It will be stated that the amount of deposit kept by licensee will be forfeited and that the licensee will be treated as a trespasser and will be liable to pay damages and compensation which will be more than two times agreed compensation with penal interest at the rate of Rs.18% or thereabout.   

Q-5. Whether the agreement should be in writing and whether it should be stamped under Bombay Stamp Act, 1958 as amended or whether it should be stamped under Bombay Stamp Act, 1958 as amended or whether it should be registered under Indian Registration Act, 1908?  
Ans. Sub section (1) of this section provided that every agreement for leave and license or letting of the premises between a landlord and the tenant or the licensee shall be in writing and shall be registered under the Registration Act, 1908. Therefore after the commencement of the Act there cannot be an oral agreement for tenancy or license. It must be in writing and registered. The non obstante clause “notwithstanding anything contained in this Act or any other law” gives an overriding effect to this provision and it therefore overrides the Transfer of Property Act, 1882, the Registration Act, 1908 and the Easements Act, 1882.     

Q-6. In case the licensee does not vacate what are the remedied available to the licensor? 
a) Whether he should file suit in High Court or in City Civil Court? b) Whether he should file suit under section 41 of Presidency Small Causes Court Act? c) Whether he should file complaint/application before the Competent Authority under Maharashtra Rent Contact Act?     Ans. It is depend of the fact of the case. If the licensee, where the subject matter of dispute is more than 10% it will go to the Bombay City Civil Court and it is more than 15% will go the Original Side of Bombay High Court. Such dispute should be license which is not covered under the Section 41 of Presidency Small Causes Court or which is not covered in the definition of license under Maharashtra Rent Control Act which will file before Competent Authority. Application for recovery of possession can be made under section 41 only when following conditions are fulfilled. 1) The immovable property must be situated within the local limits of the small Causes Court’s jurisdiction. 2) The annual value at rack-rent must not exceed Rs.2000/- (Bombay Law Rs.10,000/-). 3) The person sought to be removed by an order must be either a) the tenant; or b) one in possession of the property by permission of another person; or c) An occupier i.e. a person claiming under the tenant or permission occupier  4) The tenancy must have been terminated or the permission to occupy should have been withdrawn. 5) There must be a request to the occupant to deliver up possession and such request must have been refused impliedly or otherwise. Application for recovery of possession can be made under section 24 of Maharashtra Rent Control Act, 1999 in respect of the premises which are given on license after 1st October 1987. such agreement must be in writing and duly stamped and registered as required under section 55 of Maharashtra Rent Control Act.    

Q-7. Whether the licensee of the premises of Co-operative Housing Society is included in definition of License?  
Ans. In the definition of License given S.7(5), a person in occupation of premises of a Co-operative Housing Society as a licenses is also included. In such case licensor may be the Society itself or may be its member. When a licensee was given by the member, the member is the licensor and not the Society. Section 7(3) makes only the member the landlord but does not make the Society their landlords (c). The position of licensee of a member, seen N.15. post. Section 7(3) includes licensor member also, in the definition of landlord as the licensee, but does not make the society, landlord. The licensor members are not the tenants of the Society though the bye-laws and tenancy regulations of the society loosely describe them to be so. Therefore, there is no relationship of the landlord and tenant between the society and its member’s licensees (d). On the termination of the member’s interest in the flat, his licensee who has become tenant under this Act, cannot become direct tenant of the Society the member cannot be held to be tenant of the Society under S.105 of the T.P. Act and Section 5 (11) of the Act of (now S.7(15) of this Act (e), therefore, member’s licensee is not protected when an award for possession is obtained by the Society against the member. The award is equally binding on the licensee and he is liable to be removed under the C.P. Code, 0.21, rules 97 and 99 (f). But where members licensee has become deemed tenant, member can only evict him under S.12 or S.13 of the Act of 1947 (now S.15 or S.16).       
Q-8. Which person are excluded from the definition of License?  
Ans. The clause “does not include a paying guest ….. Institution” shows that the person enumerated therein, though in occupation of the premises, and through may ordinarily be considered as licensees, however, for the purposes of this Act are not licensees. These person are- (1) A paying guest, See N.22 post. (2) A member of the family residing together. (3) A servant of the licensor, see S.16, N,32.  (4) A persons conducting the business of the licensor. (5) A person having accommodation for rendering or carrying on medical or para-medical service or activities on or near a nursing home, hospital or sanatorium. (6) A person having accommodation in i) a hotel, lodging house, guest house, club; ii) nursing home, hospital, sanatorium. iii) dharamshala iv) home for windows, orphans or like premises. v) marriage or public hall or like premises vi) place of amusment, or entertainment or like institution  vii) Any premises as (1) belonging to or held (2) by an employee ort his spouse (3) who is temporarily not occupying it, (4) on account of the exigencies of service or provision for residence attached to his or her post, see N.17 post, provided that he or she charges license fee for such premises, not exceeding standard rent & permitted increases and additional sum for services supplied with such premises.     vii) any premises for conducting a canteen crèche dispensary or other services as amenities by any undertaking or institution.

Q-9. What are the provision regarding the payment of Stamp Duty on Agreement of leave and License and on the Lease?   
Ans. Articles 5 of schedule I of the Bombay Stamp Act provided stamp duty for agreements. The Stamp Duty payable under Article 5 (h) of the Schedule I of Bombay Stamp Act for agreement of Leave and License will be Rs. 20/- as there is no specific provision as far as agreement of leave and license is concerned Article 36 provides stamp duty for deed of lease. Agreement of Leave & License does not create any right in the immovable property. The deed of lease creates right in the properly as lessee. The Leave & License Agreement is mere license or permission granted by the owner to guarantee. Sec 52 of easement Act is clear on the point. Thus agreement of leave and license cannot be equated with deed lease.   

To be continued . . . . . . .