Queries on lease agreement

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We are the Company having a more than Rs 1 crore capital and have taken the plot of land on lease for a period of 99 years with an option to renew further 99 years subject to we write a letter of Intention before 3 months of the expiry date. We had written the letter to the landlord for intention to renew the same but the landlord refused to do so against which we have gone to the City Civil Court for performance of the lease deed and the same is pending for hearing. After executing the lease deed we have constructed the Building and now we are selling the premises to other party. Since we have the owner of the premises but below the premises are leasehold premises and the same is pending for hearing and final disposal. The Owner of the Land has gone to the Small Cause Court to vacate the land saying that we are not covered under the New Bombay Rent Act since we have taken the plot of Land on Lease and also our capital is more than one Crore. Can they go to the Small Cause Court since the matter is pending in the City Civil Court and since we are the Owner of the premises.

 

Kamlesh Mehta, Mumbai

If the lease is in respect of land, under the repealed Bombay Rent Act, the land was included within the definition of "premises". After the expiry of lease, if the lessee remains in possession, such lessee was also protected under the definition of "tenant". The eviction of such tenant from the demise premises i.e. the land was available to the landlord only under Section-12 and 13 of such repeal Act. After coming into force the Maharashtra Rent Control Act, the Bombay Rent Act has been repealed. Under the new Act, the "land" has been deleted from the definition of "premises" Recently the Bombay High Court has also held that the "land" being no more included within the definition of "premises", after the expiry of the period of lease, the lessor is entitled to evict the lessee from such land. If the lease has expired after 31st March, 2000, no notice of termination is required and if the same has expired before coming into operation of MRC Act or if such lessee is "tenant holding over" a notice of termination of tenancy is required. Once the suit for eviction is filed by the lessor, the lessor will be entitled to decree for possession as also the "mesne profit" if the lessee has not vacated the premises from the date of termination of its tenancy. In such suit the lessee will be entitled to remove the structure standing thereon and if the lessee does not remove those structure, the same will go along with the land and non of the occupier of such structure will have any protection under the Rent Control Legislation or under the Transfer of Property Act.

 

Where a decree has been passed for recovery of possession of the plot of land demise, on which the lessee-tenant has erected a permanent structure, such decree can be executed under Order 21 rule 35 of the Code of Civil Procedure, if necessary, by removal of any person bound by the decree. This view was taken by the Court way back in the year 1958 by the Bombay High Court and thereafter in the matter of Suman V/S Norman Joseph Ferreira as also in Goregaon Malyalee Samaj V/S Popatlal Prabhudas & Sons. As regards the renewal of the lease and your suit for specific performance against the lessor is concerned, it depends on the other terms and condition of the lease, the forfeiture of the lease. If the right to get renewal itself is under consideration before the Court, today your right to such land is nothing but as "tenant at sufferance" and does not have any right over the land. In such circumstances, the lessor will be entitled to evict you from the premises and such decree will be binding upon the occupants of the building.

I had purchased a property in the year 1995 which had commercial shops on the ground floor which was already given on rent. Out of the shops the rent receipt for one shop was in the name of "S" and the rent receipt for the second shop was in the name of "M". Both the shops were occupied by "A" as the dividing wall between the two shops was not in existence. The previous owner said that his consent was not taken to remove the wall and the Municipal Plan also shows two separate shops, when I enquired with the tenants they said that they were in partnership with "A".In the year February 1997 the second tenant requested me to change the receipt from the trust in the name of his son as the trust was in the name of his son who was a minor at that time and now he is major. I consented to the said change and after February 1997, I am issuing receipts for the second shop in the name of "M".Now in about October 2002 I had traveled abroad for a couple of months and when I came back in early January I saw the full shop has been redone, the furniture completely new and the shop is occupied by "Z" and they have put their big sign board above the shop. I enquired with my tenants if they had sub-let the shop and they told me that they have not sublet the shop but they are appointed as commission agents by "Z". My request to you is to let me know whether as what they have done is legal or not and what action can I take in this matter and whether I should stop taking rent from them. I even requested the tenants to give me their copy of the agreement if any with "Z", but they have not done so still. Is it possible to change the complete furniture and change the business completely?

 

Vijay K. Vaswani, Pune

First upon all you must write a letter calling upon both your tenant to explain as to in what Capacity "M" is occupying the premises. As narrated by you, that those tenants have informed you that they are appointed as commission agents by "Z", ask your tenant to furnish the copies of the Agency Agreements, how much amount your tenant is receiving and all other details as to who is in occupation of the premises, who sit in the shop etc.

You have to thereupon scrutinize the said detail as to find out as to whether there is any genuine agency or it is camouflage arrangement and how much amount the tenant is receiving. Upon receipt of all the information and after scritinising the same you can file a suit for eviction on the ground of "unlawful-subletting or giving the premises on license. In the same suit you can also take-up a ground of "waste" being an act of waste and having damaged the demise premises by removing the partition wall between both the shops. As the tenant having removed the dividing wall, there is no support to the ceiling of the demise premises. There is also no support to the identical Wall of the above premises, which act of the tenant can be termed as an of waste.

By stopping the acceptance of rent will not serve your purpose. The tenants are entitled to change the furniture as well as business, unless in the tenancy agreement or lease if it is specifically provided that the premises are let only for the specific business.

If the purpose of business is specifically provided and also provided that the tenant will not be entitled to carryon any other business from the demises premises, then such at will be amounting to the breach of the terms and condition of tenancy and will give you cause of action to evict the tenant.

 

I have purchased a flat in Kolkata from a Developer who constructed a multistoried building on a portion of the land in existing premises. The Deed of Conveyance (Indenture) has the Developer as the confirming Party, owner of the land as the Lessor and I, the purchaser, as the Lessee. The indenture grants and demises to the Lessee a lease of an undivided proportionate share of interest of the Lessor in the land for a period of 134 years (99 years initial lease renewable by another 35 years).As per one of the provisions of the indenture: "the Lessee has the right and liberty to sublet, mortgage, assign, sell or otherwise deal with their lease hold interest in the demised property and the unit (Flat) or any portion thereof, without being required to obtain any further consent of the Lessor".Another provision in the indenture says that " the Lessee shall and will on expiration of the present demise peacefully and quietly surrender, yield and deliver unto the Lessor possession of the demised property with the said unit (Flat) and every part there of".In the event of sale of the demised property to a third party, will such party (the purchaser) be bound by the requirement to surrender and deliver the property along with the unit (Flat) to the Lessor (the land owner) on expiration of the period of lease? Given the long term duration of the lease, does it fall in the category of a 'perpetual lease'? If so, what special rights, if any, accrue to the Lessee (purchaser of the Flat)? And can the Kolkata Municipal Corporation (KMC) be urged to change the status of the Assesse to that of 'owner 'in place of 'Lessee'? What other options are available to the purchaser of the flat to secure change of status to owner?

 

Prakash Patnaik

Kolkata

The terms of the head lease is always binding upon the successor of the lessee. So if you sale the flat or unit in such building, the purchaser will be bound by such terms of the lease. Otherwise also under the Transfer of Property Act, once the lease has expired in respect of the land, the lessee has to return the demise premises. As the lease is only for a period of 99 years with right of renewal, the same is not a lease in perpetuity. If you want a lease in perpetuity, the same must be provided in the lease deed itself. In your case the lease is for fixed period.

Even by changing the status in the record of Kolkata Municipal Corporation, your right or status will not be changed vis-avis the land. Whether in the record of Municipal Corporation even if you are shown as the owner of the structure, you will continue as lessee in respect of the land.

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