CHANAKYA NATIONAL LAW UNIVERSITY PATNA

LEASE AND LICENSE-A COMPARATIVE STUDY

TRANSFER OF PROPERTY ACT, 1882

SUBMITTED TO: SUBMITTED BY:

Dr.B.R.N. SHARMA SUMIT KUMAR SUMAN

CHANAKYA NATIONAL LAW UNIVERSITY 3rd SEMESTER, 628

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ACKNOWLEDGEMENT

This project was a great opportunity for me to understand the value and importance of the

LEASE AND LICENSE: A COMPARATIVE STUDY. It gives incredible pleasure to present a

research work on topic LEASE AND LICENSE: A COMPARATIVE STUDY. I would like to

enlighten the readers of this project and while preparing this project. I tried my level best widen

the horizons and domain of my knowledge too. The essence of this research work is to let the

readers as well as the researcher get acquainted with the legal issue pondered over by LEASE

AND LICENSE: A COMPARATIVE STUDY. I wish to thank and express my deep sense of

gratitude to my project guide Dr.B.R.N. SHARMA SIR for their expert guidance and valuable

comments during the course of the project. I would like to thank librarian of CNLU for his in

providing me a good backup material and quality and quantity of the material in library is good

and helped me in researching. I am indebted to parents and also friends or his advice, support

and very useful suggestions as to the preparation and how to improve this project.  Last but not

the least, all the mistakes and ignorance are responsibilities of undersigned.

- Sumit Kumar Suman

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RESEARCH METHODOLOGY

AIMS AND OBJECTIVES: In this present project researcher want to know about:

Lease

Lcense

Right and duties of lessor and lease.

METHOD: In this present project researcher includes two types of research:

a. Doctrinal

b. Empirical

SOURCE OF DATA: In this present project researcher helped by only secondary sources of

data:

a. Books

b. Websites

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Contents

I. INTRODUCTION

II. LEASE

Definition

Essentials

Features

III. LICENSE

Definition

Types of license

Features

Who may grant license

License when revocable

IV. LEASE AND LICENSE: COMPARISON

V. CONCLUSION

BIBLIOGRAPHY

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INTRODUCTIONA Lease is an agreement in which the landlord agrees to give the tenant the exclusive right to

occupy real property usually for a specific term and, in the exchange, the tenant agrees to give

the landlord somesord of consideration. A lease transfers to the tenant a leasehold interest in the

real property and, unless otherwise provided in the lease, a ease is transferable and irrevocable.

In other words, we can say that a lease is an agreement in which the owner of property who

transfer his property in favour of another for the certain time, i.e. called Lease. And a license is a

personal right granted to a person to do something upon immovable property of the grantor and

does not amount to the creation of interest in the property itself. It is purely a permissive right

and is personal to the grantee. It creates no duties and obligations upon the persons making the

grant and is, therefore, revocable except in certain circumstances expressly provided for in the

Act itself. The license, when granted, has not other effect to confer liberty upon the licensee to

go upon the land which would otherwise be lawful. Duration is essentials of every lease. The

period or duration for which the right to enjoy the property is being transferred is generally

provided in the lease itself by mutual agreement of the parties. Where the lease is otherwise valid

except that its term is not given, the term is fixed on the basis of local law and custom, if any. In

the absence of any mutually agreed term in the lease, local law or custom in respect of its of

duration, the term of a lease is ascertained under the provisions of section 106. This section also

provides for termination of lease. It means this section includes the termination of lease by

expiry of term and also the continuance of lease by renewal. In shanty Prasad devi v. Shankar

Mehta1, The agreement of lease provided for expiry before term and also its subsequent renewal

of this lease. The supreme court held that it was an ‘agreement to the contrary’ within the

meaning of section of 116 (holding over –continuance of lease) therefore there cannot be implied

renewal by ‘holding over’ on merely acceptance of rent offered by the lease. The court observed

that mere acceptance of rent by lessor on expiry of period of lease would not amount to assent to

the continuance of lease.

1 AIR 2005 S.C. 2905.

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LEASEDefinition:

As per section 105 of Transfer of property Act, 1882 defined. - A lease of immovable property is

a transfer of a 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, service or

any other thing of value, to be rendered periodically or on specified occasions, to the transfer by

the transferee, who accepts the transfer on such terms. It means section 105 requires that lease is

a transfer of ‘right of enjoyment’ of an immovable property made for a certain period, in

consideration of a price paid or promised to be paid or, money, share of crops, service or any

other thing of value to be given periodically or on specified occasions to the transferor by

transferee. It means we can say that Lease is not a transfer of ownership in a property ,but it is

transfer of an interest in an immovable property. It is not a transfer of an absolute interest. Here

in this case the transferor is called lessor and transferee is called lessee. Price is called premium,

and the money, share, service, or other thing to be so rendered is called the rent. 2

Essentials:

There are certain essentials elements of the lease:

a. There must be two competent parties i.e., lessor and lessee.

b. The subject matter of lease i.e., immovable property.

c. The duration of lease

d. The demise i.e., right to enjoy immovable property

e. The consideration i.e., premium or rent.

The Supreme Court also stated these following essential ingredients of lease:

There should be a transfer of a right to enjoy an immovable property;

Such transfer must be a certain term, or perpetuity;

The transfer should be in consideration of a premium or rent;

The transfer should be a bilateral transaction, the transferee accepting the terms of

transfer.

2 http://coporatelaws.wordpress.com/2010/04/21/concept-of-leave-and-license-under-indian-law/

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There must be competent parties: there must be two competent parties one is known as lessor

and another is known as lessee. Both parties are competent means both are competent to

contract. Here lessor must have right to transfer the possession of property. The lessor must have

attained the age of majority and must possess a sound mind at the time of granting a lease. The

lessor not only competent to contract but also he must have the authority to effect lease. In a

lease there is not a transfer of ownership but transfer of only ‘possession’. Therefore, not only

the owner but also lessee himself is entitled to grant lease. Since lease is right to transfer

possession, therefore, a person having only possession of immovable property is also entitled to

grant lease provided it does not extend beyond such person’s own possession. Lease by lessee is

called sub-lessee, derivative lease. Minor cannot becomes lessor. It means minor cannot grant

lease. It means lease granted by minor is void. Minor’s guardianguardian of property is authorized to

grant lease without court’s permission for a term not exceeding five years or enuring for more

than one year after minor’s attaining majority. Lessee must be competent to contract. It means

lessee must attain the age of majority and also sound mind. Lessee may be juristic person e.g., a

company or, registered firm, except unregistered firm.

The subject matter of lease: The subject matter of lease must be specific immovable property.

Immovable property has been defined in section 3 of this Act. Therefore, not only land, building

and minerals but also the benefit arise of land such as fisheries, ferries etc. are also immovable

property. There may be composite leases also like lease of a building along with equipment and

lease of a factory along with machinery etc. Leased premises is not only a building of part of

building but also the land and other things appertaining to it and also furniture and other fixtures

provided by the landlord. In Annick chaymotidevyani v. prem mohini mehra3, The duration of

lease : There essential of lease is that the right to enjoy the property must be transferred for a

certain time, express, or implied or in perpetuity. It means in lease transfer the possession of

property for a certain period and beyond this given period lessee cannot retain property. The

period for which the right to use the property is transferred is called ‘term’ of the lease. The term

may be any period of time, longer or shorter, even for perpetuity. But it must specified in the

deeds. The time form which the right of enjoyment begins and the time when it ends must be

fixed and ascertainable. The lease may commence immediately after execution of deed or, may

3 2003 (1) RCR (Rent) 709 (Del).

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commence with effect from a specified future date. The date of commencement may depend on

some future event. The specific mention of date or day is not necessary.

Lease in perpetuity: Lease in perpetuity is also called permanent leases. Duration is necessary

for every lease. Therefore, where a term of lease is neither fixed nor ascertainable by any other

method, the lease may be valid. In England lease in perpetuity is not permissible. In India lease

in perpetuity is permissible and have been in practice since long. Such leases may be created

either by express words or by necessary implication. In chapsibhai v. puroshottam,4 in this case

Supreme Court observed that in such case a lease is a permanent lease because the rights of

lessee or tenant are heritable; such leases are not intended to be only for the life-time of lessee.

The Supreme Court emphasized that a lease deed has to be read as a whole. The court said that

the presence of an absolute discretion to resume the land without assigning any reason and

absence of any express grant in perpetuity and absence of consideration militate against the deed

in question being construed as a lease in perpetuity. The court also observed that a provision for

determination of the lease because of a specified breach was no way comparable to the

reservation of an absolute right to resume at will without assigning any reason in a lease without

consideration. Accordingly, the lease in question was held to be not a lease in perpetuity.

The demise: The demise i.e., right to enjoy immovable property. Lease is a transfer of right of

enjoyment in an immovable property. It is a not a transfer of ownership; it is transfer to partial

interest. Ownership or absolute interest is aggregate of several interests. In a sale, gift or

exchange absolute interest is transferred. In mortgage only partial or limited interest is

transferred for securing the debts.

The consideration: The contract of lease must be supported with some consideration.

Consideration in a lease may be premium or rent. Where the whole amount to be recovered as

consideration from the lessee is paid by him in lump sum, (at one time) the consideration is

called premium. For example, where A executes a lease of his land to B for one year and takes

RS. 1200/- is the premium. It is to be noted that apparently this may look like usufructuary

mortgage because B gets possession of land for advancing RS. 1200/- to A. But the transaction is

nevertheless a lease and not mortgage because the land is held by B not by way of security for

repayment of any loan. Consideration paid periodically is called rent of lease. Rent need not be 4 AIR 1971 S.C. 1878 .

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necessarily in the form of money. Under this section, rent may be paid in the form of services

rendered by lessee to the lessor. Rent fixed for the lease must be certain.

Features:

i. There is a written agreement setting out the terms of occupation;

ii. The area of occupation is precisely defined;

iii. The occupier enjoys exclusive occupation - it is not shared (except with other tenants);

iv. There are no services included in the money paid for occupation - but they might be

stated as a separate item;

v. The money paid does not cover a host of property outgoings too;

vi. The property owner cannot terminate the occupation on very short notice;

vii. In the round, and subject to the terms of the arrangement, the occupier is in a position to

say what goes on in the property.5

Rights and Liabilities of the lessor:

The lessor is bound to disclose all material defects in the property to the lessee. he must

also disclose all the known latent defects in the property to the lessee. However, he need

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not disclose the defects which are discoverable with ordinary care. This based on the

principle of "Caveat Emptor".

The lessor is bound to put the lessee in possession of the leased property. The lessee

however must first request the lessor top out him in possession. If the lessee does not do

so and fails to take possession, then he must not pay the rent for lease.

The lessor must indemnify the lessee for all losses incurred by the latter due to the

interruption in the enjoyment of the property. In other words, it is an implied covenant

that lessee will have free and quiet enjoyment of the property.The covenant for title runs

with the land.

If the lessor transfers the leased property, then the transferee gets all the rights and

liabilities of the lessor. However, for making the transferee liable, the lessee must elect to

treat the transferee as the person liable to him. Further, the transferee is not entitled to any

arrears of rent due before the transfer.

Rights and Liabilities of the Lessee :

During the continuation of the lease, if any accession is made to the property, then such

accessed property must also be returned with the main property to the lessor. In other

words, "Accessory follows the principle" in the accessed lands.

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If part of the property is destroyed by fire then the lease becomes void at the option of the

lessee. However, such destruction of the property must not be due to the wrongful act of

the lessee.

If the lessor neglects to make sufficient repairs even after notice by the lessee. The lessee

can make such repairs himself and can deduct the expenses of such repairs with interest

from the rent.

If the lessor neglects to make payment of revenue, tax, etc., then the lessee can make such

payment and deduct such payments from the rent with interest or recover the amount

from the lessor with interest.

After the termination of the lease, the lessee can remove all the things, which he had

attached to the earth but the must leave the property in the same state as he received it.

If the lease is terminated by some uncertain events, then the lessee or his legal

representatives can get all the crops harvested by them and to have ingress and egress

together with the produce and carry them.

The lessee may sub lease or mortgage the property in the absence of any express

provision in the lease deed.

The lessee is bound to disclose to the lessor any material increase in the value of the

property known to him only.

The lesee is bound to pay the premium or the rent to the lessor or his agent at the proper

time or place.

The lessee is bound to keep the property in good condition. He must return the property

in the same condition as he obtained it. He must allow the lessor and his agent to enter

upon the land and inspect the condition of the land at all reasonable time of the day. He

must give notice of all the defects in the land to the lessor.

The lessee must use the property as a person of ordinary prudence. He must not use the

property for any purpose other than the purpose for which it was leased.

If the lessee becomes aware of any encroachment on the property, he must give

immediate notice to the lessor for taking steps against such encroachment.

The lessee must not construct any permanent structure on the leased property without the

lessor's constant. But for agriculture purpose he can construct such permanent structure,

even without the constant of the lessor.

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After the termination of the lessee, the lessee is bound to return the leased property to the

possession of the lessor

LICENSE

Definition:

A license is a personal right granted to a person to do something upon immovable property of the

grantor and does not amount to the creation of interest in the property itself. It is purely a

permissive right and is personal to the grantee. It creates no duties and obligations upon the

persons making the grant and is, therefore, revocable except in certain circumstances expressly

provided for in the Act itself. The license, when granted, has not other effect to confer liberty

upon the licensee to go upon the land which would otherwise be lawful.

As per Section 52 of Indian Easement Act, 1882 defines License as under:

“Where one person grants to another, or to a definite number of other persons, a right to do or

continue to do, in or upon immovable property of the grantor, something which would, in the

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absence of such rights, be unlawful, and such right does not amount to an easement or an interest

in the property, the right is called a license.”6

Types of license:

There are three types of license:

Bare licenses: A bare license is a license which is not supported by any contract, such as

gratuitous permission to enter a house. It can revoked at any time provided reasonable

notice is given to the licensee to withdraw; otherwise, the licensor may be liable in

damages. In Aldin V. Latimer clark, Muirhead and co.7

Contractual licenses: a contractual license is granted under the terms of some contract

which restricts the right of licensor to revoke the license, e.g. ticket to see a match.

Position relating to contractual licenses was summarized by MEGARRY, J. in Houselow

LBC v Twickenham Garden Development Ltd. In these words:

i. A license to enter land is a contractual license, if it is conferred by a contract; it is

immaterial whether the right to enter the land is the primary purpose of the contract or

is merely secondary.

ii. The willingness of the court to grant equitable remedies in order to enforce or support

a contractual license depends on whether or not the license is specifically enforceable;

iii. A contractual license is not an entity distinct from the contract which brings it into

being; but merely one of the provisions of that contract; and

iv. Even if a contractual license is not specifically enforceable, the court will not grant

equitable remedies in order to procure or aid a breach of the license.8

6 Infra 6.7 [1894]2 Ch 437

8S.A. Kader , “Law of easements and licenses”, 3rd ed., Kolkata: Estern law agency ,2003, Pp.301-303.

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Coupled with an interest: A license coupled with interest involves two things, namely, a

license to enter the land and the grant of an interest, e.g. a right to irrevocable and

assignable, but only as an adjunct of the interest with which it is coupled.

Features:

A license is not connected with the ownership of land / property but creates only a

personal right or obligation;

A license cannot be transferred or assigned;

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License is purely permissive right arising only by permission, express or implied, and

not by adverse exercise or in any other way;

It only legalize a certain act which would otherwise be unlawful and does not confer any

interest in the property itself in or upon or over which such act is allowed to be done;

The landlord has not set up the arrangement with a view to avoiding the obligations he

would have if the arrangement was a lease;

The area of occupation may not be precisely defined;

The occupier shares some or all of the occupation, probably with the landlord;

Some services are included in the licence fee - Council rates, electricity or ironing!

Furniture, fixtures and fittings are included in the deal.

Who may grant license: As per section 53 requires that a license may be granted by anyone

in the circumstances and to the extent in and to which he may transfer his interests in the

property affected by the license.

License when revocable: As per section 60 provides that a license may be revoked by the

grantor, unless-

It is coupled with a transfer of property and such transfer is in force;

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The license, acting upon the license, has executed a work of a permanent character and

incurred expenses in the execution.

In Shankar Gopinath Apte vs. Gangabai Hariharrao Patwardhan9, it was held that the

contentin on behalf of the appellant was that he must be deemed to be a licensee of the

respondent and since he had executed work of permanent character on the land involving heavy

expenses, the license would be irrevocable under section 60(b) of the easement Act, 1882.

The principle behind section 60 is that if a person allows another to build on his land in

furtherance of the purpose for which he had granted license, subject to any agreement to the

contrary, he cannot turn round later on to revoke the license.

Revocation may be express or implied as per section 61 because this section talks about

revocation express or implied. It means the revocation of a license may be express or implied. In

S.J. Pande vs. P.K. Balakrishnan10, it was held that on determination of contractual tenancy,

statutory tenant ceases to have any assignable interest in the property and as such license granted

by him prior to the determination of tenancy would be ‘deemed to be revoked’ under section 62.

Because as per section 62 of easement Act, 1882 talks about license deemed to be revoked when,

it means a license deemed revoked under certain situation:

i. When, from a cause preceding the grant of it, the grantor ceases to have any interest

in the property affected by the license;

ii. When the licensee releases it, expressly or impliedly, to the grantor or his

representative;

iii. Where it has been granted for a limited period, or acquired on condition that it shall

become void on the performance or the nonperformance of a specified act, and the

period expires, or the condition is fulfilled;

iv. Where the property affected by the license is destroy or by superior force so

permanently altered that the licensee can no longer exercise his right;

v. Where the licensee becomes entitled to the absolute ownership of the property

affected by the license;

9 1976 U.J. (S.C.) 82310 AIR 1993 SC 2132.

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vi. Where the license is granted for a specified purpose and the purpose is attained, or

abandoned, becomes impracticable;

vii. Where the license is granted to the licensee as holding a particular office,

employment or character, and such office, employment or character ceases to exist;

viii. Where the license totally ceases to be used as such for an unbroken period of twenty

years, and such cessation is not in pursuance of a contract between the grantor and the

licensee;

ix. In the case of an accessory license when the interest or right to which it is accessory

ceases to exist.11

LEASE AND LICENSE: COMPARISON

All property transactions are governed very strictly by statutory regulation. Tenants are afforded

the most protection as they are in a weaker negotiating position.

This article will be useful reading to both tenants and landlords. It is important that you have the

right agreement in place and that you know your rights and responsibilities.

Choosing between a lease and license is simply a choice of convenience. Some situations suit a

11 VEPA P. Sarthi, ‘law of transfer of property(Easement,trust and wills.)’, 6th ed., Hyderabad: ALT Publication; 2008,vol.I, Pp.267,270-273.

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lease document better, some suit a license.

When to choose a lease:

Here are two examples of leases for illustration purposes:

If someone occupies your house as a holiday home, they are not protected by the

legislation regarding leases. However, if they sell their house and come to live in your

holiday home, they are protected under the lease agreement legislation!

Similarly, if you let your land to a farmer, he is protected. If you let it to your neighbor to

graze her horse, she is not protected.

As illustrated, each situation is unique. An arrangement where I allow you into possession of my

property in exchange for a rent payment is, on the face of it, a lease or tenancy agreement (these

words mean much the same thing). A lease constitutes a continuing agreement, not a short term

one.

When to choose a license:

A license generally comes out of the regulations provided by statute and the situation is very

informal. A lease creates “an interest in land”; a license does not. With a license, the property

owner is effectively saying “OK, you can occupy my property for a while, but I can interrupt at

any time and ask you to leave.” To a property owner, the advantage of a license is that in certain

circumstances, it is easier to exercise control. The disadvantage is that if the arrangement is to

stay outside the regulated environment (and provide you with the associated benefits of

flexibility), it must not be dressed in the clothes of a lease.

So, if an issue about a license comes to court, the judge will “prefer” treating it as a lease (so

giving the protection to your licensee that he would have if he was a tenant). If you want your

deal to be a license, not a lease, you have to make sure you do not accidentally add terms, or

even phrases, usually found in a lease.

There are some general rules about when to choose a licensee and when to choose a lease. If

your scenario is not included in the list of license indicators below, treat it as a lease (as this is

the way it will be interpreted in a court).

Net Lawman does not see it as part of our task to involve you in litigation - on the contrary, we

try to keep you as far away from court as possible. All our documents are set up for a safe

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scenario. We do supply license forms, but only for situations where the circumstance are “cast

iron” in favoring the interpretation of license.

While the label the parties put on the document is a factor, it is by no means conclusive. What

matters is whether the terms of the transaction are characteristic of a license or of a lease.

Unfortunately, there are no set rules. The court will look at each case separately, so just very

roughly.

These characteristics point to a lease:

There is a written agreement setting out the terms of occupation;

The area of occupation is precisely defined;

The occupier enjoys exclusive occupation - it is not shared (except with other tenants);

There are no services included in the money paid for occupation - but they might be

stated as a separate item;

The money paid does not cover a host of property outgoings too;

The property owner cannot terminate the occupation on very short notice;

In the round, and subject to the terms of the arrangement, the occupier is in a position to

say what goes on in the property.

These characteristics point to a license:

The landlord has not set up the arrangement with a view to avoiding the obligations he

would have if the arrangement was a lease;

The area of occupation may not be precisely defined;

The occupier shares some or all of the occupation, probably with the landlord;

Some services are included in the license fee - Council rates, electricity or ironing!

Furniture, fixtures and fittings are included in the deal;12

The owner can terminate the occupation on little or no notice.

12 infra

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DISTINCTION BETWEEEN LEASE AND LICENSE

The main test for deciding whether a person is a licensee of a property or a lessee is that of

exclusive possession, though it may not be the only test. If the right granted conveys to the

grantee an exclusive right of possession, though subject to certain reservations, if shall be a lease

as opposed to license. But where the grantee can only use the property in a certain way and on

certain terms while the property remains in the possession and control of the owner, the right

granted shall be a license.

A lease gives an exclusive interest in the property whereas license does not;

A lease can be assigned to a third person, while a license being a personal right cannot

be so assigned / transferred;

A lessee can bring an action for trespass in his own name but a licensee cannot do the

same. He must do so in the name of the licensor after obtaining his permission.

A lease is not revocable whereas a license is revocable except in two case mentioned in

Section 60 of Indian Easement Act, 1882 (We shall de discussing this aspect of license

later in the post).

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In the case of B.M. Lall vs. M/s Dunlop Rubber Co.13, summed up the distinction between

license and lease as under:

“A lease is the transfer of right to enjoy the premises whereas as license is a privilege to do

something on the premises which otherwise would be unlawful. If the agreement is in writing it

is question of construction of the agreement having regard to its terms and where its language is

ambiguous, having regard to its object, and other circumstances under which it was executed

whether the rights of the occupier are those of a lessee or licensee. The transaction is a lease if it

grants an interest in the land; it is a license if it gives personal privilege with no interest in the

land. The question is not of words but of substance and the label which parties chose to put upon

the transaction though relevant is not, decisive. The test of exclusive possession is not conclusive

though, it is very important indication in favour of tenancy.”

CONCLUSION

A license is a personal right granted to a person to do something upon immovable property of the

grantor and does not amount to the creation of interest in the property itself. It is purely a

permissive right and is personal to the grantee. The normal clauses in lease agreements, if

incorporated in the leave and license agreement, shall not hold good in the eyes of law unless

some specific structuring is done to ensure the validity of such clauses.

“Where one person grants to another or to a definite number of other persons a right to do or

continue to do, in or upon the immovable property of the grantor, something which would, in the

absence of such right be unlawful, and such right does not amount to an easement or an interest

in the property, the right is called a licence.”

If we focus our attention only upon the question of rights in the above two definitions, we find

that in both cases there is a transfer of a right. It may be noted that in a lease the Right consists in

enjoying such property transferred, and so also in a licence the Right consists in doing something

in or upon the immovable property of the Licensor, though without the creation of an interest in

the property. Although it is not clearly stated that a lease creates an interest in the property,

13 [AIR 1968 SC 175]

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inasmuch as the opposite is stated in case of a licence, yet by judicial dicta we have come to

believe that a lease creates an interest in the property merely to highlight a contradistinction

between a lease and a licence. We have, therefore, imputed such creation of a right or interest in

the property, not due to the existence of a positive statement to that effect in the definition of a

lease, but merely because of the statement of its non-creation in case of a licence. This

imputation of the creation of a right in the property in case of lease, is in reality a high overtone

because all that follows from the definition is that the transfer is solely of 'a right to enjoy' which

is equivalent to the 'right to do so, in or upon the immovable property,' as stated in the definition

of a licence. Considering that the Transfer of Property Act and the Indian Easements Act, were

both passed in the same year, 1882, obviously the concept of a Right would not have been

different. We cannot conceive that a lease gives a right to enjoy the property in any manner the

transferee feels best, as against a licensee who could have his rights directed in a particular

manner as per the terms of the grant. In fact, we are quite settled on the principle that if a tenant

does any alteration/modification/improvement, etc., he does so at his own risk, since he does not

have any property rights over the subject-matter of the demise, and he would not be allowed to

contend that he had rights in the property due to which he did the alteration/modification. As

long as he keeps on paying the rent, the dichotomy of owner and tenant shall subsist and

consequently his interest in the property is in no way better or, is as precarious as that of the

licensee. As against this, we find that Section 60(b) of the Easements Act clearly states that a

licence becomes irrevocable when "the licensee, acting upon the licence has executed a work of

permanent character and incurred expenses in the execution", which goes to show that a licensee

can create rights in the property, or, for every practical effect, he is on a safer position than a

tenant, whose tenancy could always be terminated with an appropriate notice as provided in

Section 106 of the Transfer of Property Act. No doubt, we can still argue that the security in

tenure of the licensee arises not by virtue of the creation of "an interest in the property" but in the

creation of a right over the property, i.e. his rights are purely above the surface of the land, as

against the rights of the owner which lie from the surface to below. But if we adopt this

argument, we reach a paradoxical situation. We conceive that the interests of the licensee

restricts only to the structure above the surface. Then, does the structure have no foundation?

Aren't these foundations embedded in the soil? Is this not immovable property? Does not this

structure with its foundation constitutes an integral whole? Can we then conceive immovable

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property as layers of movable property put together? The obvious answer is "NO". The

conclusion is that a licensee can acquire interest in the property if he, under the licence, puts up a

work of permanent character and incurs expenditure. The statement, therefore, that a lease alone

creates interest in the land and that the licence does not so create, is definitely a high overtone

due to the laying of too great an emphasis on the words "does not amount to an easement or an

interest in the property" as found in the definition of a licence, as against its absence in the

definition of a lease.

BIBLIOGRAPHY

1. Shukla, S.N. Transfer of property Act, Allahabad law agency: Allahabad; 2011.

2. Singh Avtar, Text book on the transfer of property Act, Universal law publishing co. New

Delhi; 2005.

3. Sinha R.K., Transfer of property act, Central law agency: Allahabad; 2010.

4. Sharthi VEPA P., Law of transfer of property (Easement, Trust and wills), ALT publishing:

Hyderabad; 2008.

5. Kader S.A., Law of easements and licenses, Eastern law house: Kolkata; 2003.

6. http://www.boddunan.com/articles/education/21-law-a-legal/7439-rights-and-liabilities-of-

lessor-and-lessee.html

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