Rights and Liabilities of Lessor and Lessee
Chapter Forty-Two
Syllabus topic 3.1, "Specific Transfers under the Transfer of Property Act, 1882: Lease [Sections 105 - 117]"
Pages 219 to 224 of 378
In one line
Section 108 is the standard tenancy agreement the law supplies: three duties for the landlord, and fourteen rights and duties for the tenant, all of which the parties may rewrite.
In exam wording: section 108 provides that, in the absence of a contract or local usage to the contrary, the lessor and the lessee of immovable property possess, as against one another, the rights and are subject to the liabilities in the rules following, or such of them as are applicable to the property leased.
Why the section exists
It is the lease counterpart of section 55, and for the same reason. Most tenancies are agreed in a few sentences, and the parties think about rent and duration and nothing else. Rather than leave every dispute about repairs, fixtures, destruction or sub-letting to be argued from first principles, the Act supplies a full set of terms that a fair agreement would have contained.
The opening words matter as much as the rules: "in the absence of a contract or local usage to the contrary". Every clause below can be varied, and in practice many are.
Part (A): the lessor's three clauses
(a) Disclose material defects. The lessor is bound to disclose any material defect in the property, with reference to its intended use, of which he is aware and the lessee is not, and which the lessee could not with ordinary care discover.
The words "with reference to its intended use" are the difference from section 55(1)(a). A defect is judged against what the property was let for: damp that would be trivial in a godown may be material in a lease of a paper warehouse.
(b) Put the lessee in possession. The lessor is bound, on the lessee's request, to put him in possession of the property. Note that the duty arises on request; the lessor need not force possession on an absent tenant.
(c) The covenant for quiet enjoyment. The lessor is deemed to contract that if the lessee pays the rent reserved and performs the contracts binding on him, he may hold the property during the time limited by the lease without interruption.
The benefit runs. As in sections 55(2) and 65, the benefit of that covenant is annexed to and goes with the lessee's interest, and may be enforced by every person in whom the interest is from time to time vested. So an assignee of the lease may sue on it.
Notice that quiet enjoyment is conditional: it protects a lessee who pays and performs, and not one who does not.
Part (B): the lessee's fourteen clauses
The lessee's rights
(d) Accessions. If during the lease any accession is made to the property, it is deemed to be comprised in the lease, subject to the law of alluvion. So the tenant enjoys it for the term, and it goes back with the property at the end.
Rights and Liabilities of Lessor and Lessee
(e) Destruction by irresistible force. If by fire, tempest or flood, or the violence of an army or of a mob, or other irresistible force, any material part of the property is wholly destroyed or rendered substantially and permanently unfit for the purposes for which it was let, the lease is, at the option of the lessee, void.
Three limits sit in that clause. The cause must be irresistible force; the destruction must be of a material part and must be substantial and permanent; and the option is the lessee's alone, so the lessor cannot use his own building's destruction to end an inconvenient lease. Proviso: the lessee cannot rely on it where the injury was caused by his own wrongful act or default.
(f) Repairs. If the lessor neglects to make, within a reasonable time after notice, any repairs he is bound to make, the lessee may make them himself and deduct the expense with interest from the rent, or otherwise recover it.
Notice must come first. A tenant who repairs without notifying the landlord cannot deduct.
(g) Payments. If the lessor neglects to make any payment he is bound to make, which if unpaid is recoverable from the lessee or against the property, the lessee may make it and deduct it with interest from the rent, or otherwise recover it.
(h) Fixtures. The lessee may, even after the determination of the lease, remove all things he has attached to the earth, at any time while he is in possession but not afterwards, provided he leaves the property in the state in which he received it.
The two time limits pull in opposite directions and both must be stated: the right survives the end of the lease, but it dies when possession does.
(i) Crops. When a lease of uncertain duration determines by any means except the fault of the lessee, he or his legal representative is entitled to all crops planted or sown by him and growing when the lease determines, and to free ingress and egress to gather and carry them.
(j) Transfer. The lessee may transfer absolutely, or by mortgage or sub-lease, the whole or any part of his interest, and any transferee may transfer again. But the lessee does not, by reason only of such transfer, cease to be subject to the liabilities attaching to the lease.
Rights and Liabilities of Lessor and Lessee
That last sentence is the examinable half: assignment does not release the assignor. The clause does not authorise a tenant with an untransferable right of occupancy, the farmer of an estate in default of revenue, or the lessee of an estate under a Court of Wards to assign, which mirrors section 6(i).
The lessee's duties
(k) Disclose a fact increasing value. The lessee must disclose any fact as to the nature or extent of the interest he is about to take, of which he is aware and the lessor is not, and which materially increases the value of that interest. The mirror of section 55(5)(a).
(l) Pay rent. He must pay or tender, at the proper time and place, the premium or rent to the lessor or his agent.
(m) Keep and restore the property. He must keep, and on termination restore, the property in as good condition as when he was put in possession, subject only to reasonable wear and tear or irresistible force; must allow the lessor and his agents to enter and inspect at all reasonable times and give or leave notice of any defect; and where the defect was caused by his own act or default, or that of his servants or agents, he must make it good within three months after the notice.
(n) Give notice of proceedings. If he becomes aware of any proceeding to recover the property, or of any encroachment or interference with the lessor's rights, he must with reasonable diligence give notice to the lessor.
(o) Use as a prudent owner. He may use the property and its products as a person of ordinary prudence would use them if they were his own; but he must not use, or permit another to use, the property for a purpose other than that for which it was let, nor fell or sell timber, pull down or damage buildings belonging to the lessor, work mines or quarries not open when the lease was granted, or commit any other destructive or permanently injurious act.
(p) No permanent structures. He must not, without the lessor's consent, erect any permanent structure on the property, except for agricultural purposes.
(q) Give up possession. On the determination of the lease, he is bound to put the lessor into possession.
A worked example
Bhavana lets a shop at Solapur to Chirag for five years at Rs. 50,000 a month, by a registered lease that says nothing beyond the parties, the property, the term and the rent.
The roof leaks and Bhavana knew. A material defect with reference to the intended use, which Chirag could not discover with ordinary care. Clause (a) required disclosure.
Rights and Liabilities of Lessor and Lessee
Chirag asks for the keys and Bhavana delays. Clause (b): she is bound on request to put him in possession.
The municipality's tax is Bhavana's to pay and she does not, and it is recoverable against the shop. Under clause (g) Chirag may pay it and deduct it with interest from the rent.
The shutter breaks and Bhavana is bound to repair it. Chirag must give notice and allow a reasonable time; only then may he repair and deduct under clause (f).
Chirag installs a heavy display counter bolted to the floor. Under clause (h) he may remove it at any time while he is in possession, even after the lease ends, provided he leaves the shop as he received it. Once he has given up possession, the right is gone.
A mob burns out the rear half of the shop. Irresistible force under clause (e). If a material part is wholly destroyed or made substantially and permanently unfit for the purpose let, the lease is void at Chirag's option. Bhavana cannot elect. If Chirag's own negligence caused the fire, the proviso denies him the benefit.
Chirag sublets half the shop. Permitted by clause (j), and he remains liable on the lease notwithstanding.
He starts running a workshop instead of a retail shop. Clause (o) forbids using the property for a purpose other than that for which it was let.
He builds a permanent mezzanine without asking. Clause (p) forbids a permanent structure without the lessor's consent, the exception for agricultural purposes not applying.
Someone encroaches on the rear wall. Under clause (n) Chirag must tell Bhavana with reasonable diligence.
At the end of five years. Under clause (m) he must restore the shop in as good condition as he received it, fair wear and tear excepted, and under clause (q) put Bhavana into possession.
What it does NOT mean
None of it is mandatory. All of it yields to a contract or local usage to the contrary.
Quiet enjoyment is conditional on the lessee paying rent and performing his covenants.
A lessee cannot repair and deduct at once. Notice and a reasonable time come first.
Destruction does not end the lease automatically. It is void at the lessee's option, and not at the lessor's.
The right to remove fixtures does not survive giving up possession, though it does survive the end of the term.
Assignment does not release the lessee. He remains subject to the liabilities of the lease.
Wear and tear is not a breach. Clause (m) excepts reasonable wear and tear and irresistible force.
Agricultural purposes are the one exception to the ban on permanent structures.
Rights and Liabilities of Lessor and Lessee
Distinctions
| Lessor's clauses, part (A) | Lessee's duties, part (B) |
|---|---|
| (a) disclose material defects with reference to intended use | (k) disclose facts increasing the value of his interest |
| (b) put the lessee in possession on request | (l) pay premium or rent at the proper time and place |
| (c) covenant for quiet enjoyment, conditional on payment and performance | (m) keep and restore in as good condition, allow inspection, remedy his own defects within three months |
| (n) give notice of proceedings and encroachments | |
| (o) use as a prudent owner, and only for the purpose let | |
| (p) no permanent structure without consent, except for agriculture | |
| (q) give up possession on determination |
| Section 55 (sale) | Section 108 (lease) | |
|---|---|---|
| Seller or lessor discloses | A material defect in property or title | A material defect with reference to the intended use |
| Buyer or lessee discloses | A fact increasing the value of the seller's interest | A fact increasing the value of the interest he is about to take |
| Risk of destruction | On the buyer once ownership passes | The lease is void at the lessee's option |
Quick revision
- Section 108 applies in the absence of a contract or local usage to the contrary.
- Lessor (A): (a) disclose material defects with reference to intended use; (b) put the lessee in possession on request; (c) quiet enjoyment, conditional on payment and performance, and the benefit runs with the lessee's interest.
- Lessee's rights (B): (d) accessions comprised in the lease; (e) destruction by irresistible force makes the lease void at his option, unless he caused it; (f) repair and deduct after notice; (g) pay the lessor's dues and deduct; (h) remove fixtures while in possession, even after the term; (i) crops on determination of a lease of uncertain duration not through his fault, with ingress and egress; (j) transfer or sublet, but he stays liable.
- Lessee's duties: (k) disclose value-increasing facts; (l) pay rent; (m) keep and restore, allow inspection, remedy his own damage within three months of notice; (n) notify proceedings and encroachments; (o) use prudently and only for the purpose let; (p) no permanent structure without consent, except for agriculture; (q) deliver possession at the end.
Test yourself
1. What are the lessor's three obligations? To disclose material defects in the property with reference to its intended use which he knows and the lessee could not discover with ordinary care; to put the lessee in possession on his request; and the deemed covenant that the lessee paying rent and performing his covenants may hold the property for the term without interruption.
2. Is the covenant for quiet enjoyment absolute? No. It operates if the lessee pays the rent reserved and performs the contracts binding on him.
Rights and Liabilities of Lessor and Lessee
3. A flood destroys most of a leased godown. Can the lessor treat the lease as at an end? No. Under clause (e) the lease is void at the option of the lessee, not of the lessor, and only where a material part is wholly destroyed or rendered substantially and permanently unfit for the purpose let.
4. When may a lessee repair and deduct the cost from rent? Where the lessor neglects to make, within a reasonable time after notice, repairs he is bound to make. The lessee may then make them and deduct the expense with interest from the rent, or otherwise recover it.
5. Until when may a lessee remove fixtures he attached? At any time while he is in possession of the property, even after the determination of the lease, but not after he has given up possession, and he must leave the property in the state in which he received it.
6. Does sub-letting release the lessee from his obligations? No. Clause (j) allows him to transfer, mortgage or sub-let, but provides that he does not by reason only of such transfer cease to be subject to the liabilities attaching to the lease.
7. Within what time must a lessee make good a defect he caused? Within three months after notice of it has been given or left by the lessor.
8. May a lessee put up a permanent structure? Not without the lessor's consent, except for agricultural purposes.
The rest of this subject
These notes are cut from the University's printed syllabus. Open the syllabus itself, or the past papers, for the same subject.