Chanakya National Law University, Patna

PROPERTY law-I

Project on:-

Liabilities of Lessor
Submitted To: Mr. B.RN. Sharma (Faculty for Property Law)

Submitted By: Parth Gaurav Roll No.: 435

Semester: III, 2nd Year.

ACKNOWLEDGEMENT
The present project on the Liabilities of Lessor has been able to get its final shape with the support and help of people from various quarters. My sincere thanks go to all the members without whom the study could not have come to its present state. I am proud to acknowledge gratitude to the individuals during my study and without whom the study may not be completed. I have taken this opportunity to thank those who genuinely helped me.

With immense pleasure, I express my deepest sense of gratitude to Mr.B.R.N. Sharma, Faculty for Property Law, Chanakya National Law University for helping me in my project. I am also thankful to the whole Chanakya National Law University family that provided me all the material I required for the project. Not to forget thanking to my parents without the co-operation of which completion of this project would not had been possible.

I have made every effort to acknowledge credits, but I apologies in advance for any omission that may have inadvertently taken place.

Last but not least I would like to thank Almighty whose blessing helped me to complete the project.

RESEARCH METHODOLOGY
Method of Research:
The researcher has adopted a purely doctrinal method of research. The researcher has made extensive use of the library at the Chanakya National Law University and also the internet sources.

Aims and Objectives:

The aim of the project is to present an overview of the terms LIABILITIES OF LESSOR through cases, decisions and suggestions and different writings and articles.

Scope and Limitations:

Though the study of the term Liabilities of Lessor is an immense project and pages can be written over the topic but due to certain restrictions and limitations I was not able to deal with the topic in great detail.

Sources of Data:
The following secondary sources of data have been used in the project1. Cases 2. Books

Method of Writing:
The method of writing followed in the course of this research paper is primarily analytical.

Mode of Citation:
The researcher has followed a uniform mode of citation throughout the course of this research paper.

CONTENTS
1) Introduction

2) Liabilities of Lessor Duty to disclose latent material defect Duty to give possession Covenant for quiet enjoyment

3) Rights of Lessee Right to accretions Right to avoid lease on destruction of property Right to deduct cost of repairs Right to deduct outgoings Right to remove fixtures Right to remove crops Right to assign his interest

4) Conclusion

Introduction
Sec 105 of Transfer of Property Act defines Lease. It says 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 transferor by the transferee, who accepts the transfer on such terms. 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: (a) Price paid or promised, or (b) Money, (c) A share of crops, (d) Service, or (e) Any other thing of value. It can clearly be interpreted from the definition that lease is not a transfer of ownership in property, it is transfer of interest in an immovable property. The interest is the right to use or enjoy the immovable property. Since interest is an immovable property is considered as property, lease is a transfer of property. It is only transfer of partial interest, not of absolute interest. Here, i.e in lease the transferor is called the lessor who is usually known as landlord and the transferee is called lesee who is usually known as tenant. Essential Elements of Lease: 1. The parties i.e. transferor and the transferee. 2. The demise i.e. right to enjoy immovable property 3. The term i.e. the duration 4. The consideration i.e. premium or rent1.

B. Arvind Kumar v Government of India, (2007) 5 SCC 745

Liabilities of Lessor
(a) The lessor is bound to disclose to the lesee any material defect in the property, with reference to its intended use, of which the former is and the latter is not aware, and which the latter could not with ordinary care discover; (b) the lessor is bound on the lesses request to put him in possession of the property; (c) The lessor shall be deemed to contract with the lesee that, if the latter pays the rent reserved by the lease and performs the contracts binding on the lesee, he may hold the property during the time limited by the lease without interruption The benefit of such contract shall be annexed to and go with the lesses interest as such, and may be enforced by every person in whom that interest is for the whole or any part thereof from time to time vested. The rights and liabilities of the lessor are determined by 1) By contract; 2) By local usage; and 3) By this section.

Contract These are the covenants expressed in the lease. An expressed covenants always overrides an implied covenant, i.e, the covenants implied by this section.2 Thus the covenant for quite enjoyment under cl(c) may be excluded by a contract to the contrary. In a Calcutta case,3 there was an express covenant not to claim compensation for dispossession of any kind. This was valid, but did not relieve the lessor of his duty under cl(b) to put the lessee in possession. In Provesh Chandra Dalui & anor v Biswanath Banerjee & anor,4 it was held that in construing a lease deed the court must look at the words used in the contract, unless they are such that one may suspect that they do not convey the intention correctly. If the words are clear, there are very little the court can do about it.

2 3

Line v Stephenson (1838) 5 Bing (NC) 183 Ahamadar Rahaman v Jaminiranjan (1930) ILR 57 Cal 114 4 AIR 1989 SC 1834

In Kwality Pulp & Paper Mills, Valsad v The Gujarat Industrial Development Corporation,5it was held that where under express terms of the lease deed excavation of the demised premises was prohibited, it was held that digging of bore would amount to excavation. Local Usage A usage may still be in the course of growth and it may require evidence for its support in each case, but in the result it is enough if it appears to be so well known and acquiesced in that it may reasonably presumed to have been an ingredient imported by the parties to their contract. 6 It need not be immemorial or universal if it is prevalent usage in the neighbourhood where the land lies. When a usage is proved, it overrides the covenants implied by this section and even express contracts are construed as subject to it. By this Section Clause (a)Lessors Duty of Disclosure It provides that the lessor is bound to disclose to the lessee any material defect in the property with reference to its intended use of which the lesser is aware but the lessee is not aware and which the lessee could not discover with ordinary care. It must of such nature that if lessee would have known it, he would either have not accepted the lease or would have taken it on different terms and conditions. The lessor is bound to inform only latent material defect in the property which may affect the intended use or enjoyment of the property by lease. There is no duty to disclose any latent i.e. apparent defect or defect of such nature which does not affect lessees right of enjoyment. Defective title is not any material defect because it does not affect the possession and use of property by the lessee. Therefore, lessor has no duty to disclose defect in title, e.g., disputed ownership of the leased-property. But, if the furniture of the tenant of a thatched house is destroyed by fire caused by a defect in the chimney not disclosed to the tenant, the landlord would be held liable for the loss incurred by the tenant.7

5 6

AIR 1988 Guj 104 Juggomohun v Manikchund (1859) 7 MIA 263 7 Radha Krishna v O.Faherty, 3 Bom. L.R. (A.C.) 277

Clause (b)--Duty to Give Possession It says that the lessor is bound on the lessees request to put him in possession of the property. The clause imposes a statutory obligation on the lessor to put the lessee into possession of the property leased. However, this duty of lessor to deliver possession arises only when there is a request by the lessee in this respect. Lease is transfer of the right to enjoy or use an immovable property. Without possession, enjoyment of property is not possible. Lessor is, therefore, liable to deliver the possession of property to lessee in any manner in which lessee becomes capable of using the property. Delivery of possession may be actual or constructive, as may be possible under the circumstances. Where a lessor fails to put the lessee in possession of the property, the lessee can sue the lessor for obtaining possession. He may sue also for the rent already paid and also claim damages from the lessor. Where the lessee could not get possession of only a part of the property he may repudiate the whole lease. But, if the lessee wants to remain in possession of only a part of the whole property, he must pay a reasonable amount of rent. Where the property is in possession of a third person, the lessee is entitled to file a suit against such third person for getting possession. Where the tenant vacated the premises but did not give possession to landlord till the security amount was refunded to him, it was held that the tenant was liable to pay the rent for the period he retained the possession whether he used the premises or not. He has an independent remedy to recover the security.8 Clause (c)Covenant for Quiet Enjoyment It provides that the lessor shall be deemed to contract with the lessee that, if the lessee pays the rent reserved under the lease and performs the contracts binding on the lessee, he may hold the property during the time limited by the lease without interruption. It is the duty of the lessor to ensure that the lessee ought not to be interfered with during the period of lease either by him or anyone else.

Uberoisons (Machines) Ltd. V. Samtel Color Ltd., 2003 (2) RCR (Rent) 376 Del.

Lease being transfer of the right of enjoyment in an immovable property, it is implied duty of lessor to ensure the lessee a peaceful enjoyment of this right. Accordingly, the lessor is deemed to have contracted that during the term of lease of lessee continues to pay the rent, he is entitled to possess the property without intereference. Quiet enjoyment means no interference or objection in the lessees possession of immovable property during the period of lease. Lessors duty to covenant for quiet enjoyment of lessee is indirectly connected with this duty to covenant for perfect title in the property. If lessors title is defective or disputed, there is likelihood of interference by other claimants of property. Where the lessor has no title to the land and a third person does not allow the lessee to possess or continue possession of the leased property, there is breach of lessors duty to the implied covenant for quiet enjoyment.9 The lessee is therefore entitled to get back the premium paid to lessor. If the landlord keeps his logs of wood in a room leased to the tenant, it is breach of duty by landlord because tenant cannot have quiet enjoyment of the premises. There is breach of this duty also when the lessor does mining work beneath the land leased to the tenant who is put to inconvenience due to such mining work. Implied covenant for quiet enjoyment of property protects the lessee from any disturbance only from lessor or any other person claiming under him. It does not protect the lessee against wrongful acts of a trespasser. Therefore, where the interference is made by any trespasser, the lessee shall take action not against lessor but against such trespasser . The second paragraph of Section 108(c) provides that implied covenant for quiet enjoyment of lessee is deemed to be annexd to the leased property. Therefore, if lessee assigns his interest, e.g., by sub-letting the property, such covenant for quiet enjoyment shall pass onto the transferee. The result is, the sub-lessee too would be entitled to the same protection which law provides to lessee. For example, A lets out his land to B for a term of 1 year. B assigns his right of enjoyment of land to C. During the period of 1 year, too is entitled to have quiet enjoyment of property as B has against A.

Vinayak Rao v Bhondu, AIR 1942 Nag. 103

Rights of Lessee
Sec 108 (d) to sec 108 (j) deals with the rights of a lessee which are as follows:(i) (ii) Right to enjoy the accretions. Right to avoid the lease in case of any destruction of property by fire, tempest, flood, violence of an army or of mob or other irresistible force. (iii) Right to repair the property when lessor neglects to make and to deduct the expenses of repairs from rent. (iv) Right to make such payments which are obligatory on the lessor and to deduct that amount from the rent. (v) (vi) (vii) Right to remove fixtures made by him during tenancy. Right to have the benefit of crops growing on the land sown or planted by him. Right to assign his interest in the leased property, i.e., right to sub-let the property.

Right to enjoy the accretions It provides that if during the continuance of the lease any accession is made to the property, such accession shall be deemed to be comprised in the lease. However, such accession will be subject to the law relating to the alluvion for the time being in force. Thus, where some land is added to the leased property by change of the course of a river, the lessee has right to sue and enjoy the increased area of land together of land together with the with the main property. Where the lessee himself makes an encroachments on adjoining land and thereby includes it in the leased property, although he may enjoy it during the lease but he must be presumed to have made them for the benefit of his lessor. If the lessee acquires also a title by an adverse possession over the adjoining land, he must be deemed to have acquired for his landlord. The lessee is bound to surrender such accretions to the lessor on the expiry of the lease; he cannot keep it for his own benefit. But lessor himself has no right to get the accessions separated from the main property during continuance of the lease. However, the lessor may demand some additional rent for the additional property added to the original grant (main property).

Right to avoid the lease in case of any destruction of property by fire, tempest, flood, violence of an army or of mob or other irresistible force Where the property is rendered substantially and permanently unfit for use due to fire, flood, violence, mob or other uncontrollable reasons, the lessee has a right to get the lease terminated before expiry to the term. The very object of lease is to confer the right of use and enjoyment of an immovable property to the lessee. Therefore, if it becomes impossible due to injury caused to the property which makes it unfit for its use, the lessee must be given the right to avoid the lease. Whether the destruction is permanent or substantial so as to make it unfit for use by the tenant or not, is a matter of fact. The main point is that tenanted property cannot be used for the purpose for which the lease was made. Where the property destroyed by earthquake or cyclone could be made fit for use by repairs, the lessee has no right to avoid the lease. Lessee cannot avoid the lease also where the property is destroyed by his own wrongful or negligent act. When the parties have agreed that tenant shall continue to pay the rent even in contingencies given in this clause, the tenant cannot avoid the lease. Where a site was part of the building leased out and the property was destrioyed, the Kerela High Court 10 held that relationship of landlord and tenant nevertheless existed and the lease was not avoidable under Section 108(e) of this act. However, the court observed that is such a situation, the tenant would not be entitled to buils structure without the consent of the landlord. Right to repair the property when lessor neglects to make and to deduct the expenses of repairs from rent It provides that if the lessor neglects to make any repairs which he is bound to make to the property after notice within a reasonable time, the lessee may make the repairs himself and deduct the expense of such repairs with interest from the rent or otherwise recover it from the lessor. The lessor is not bound to make repairs to the leased property. But where he agrees at the same time of the lease with the lessee that he will make the necessary repairs then he becomes bound to make the repairs. If within the reasonable time after notice by the lessee, the lessor does not undertake repairs the lessee may himself do the repairs and recover the amount from the lessor or deduct it from the rent but he is not entitled to

10

V. Kalpakkam Amma v. Muthuruma Iyer Muthukrishna, AIR 1995 Ker, 99

avoid the lease on this ground. It is the duty of the tenant to establish by evidence that the landlord was bound to carry out repairs under an agreement, custom or usage otherwise his claim will not be sustainable because this section does by itself make a landlord liable to carry out repairs.11 Right to make such payments which are obligatory on the lessor and to deduct that amount from the rent It provides that if the lessor neglects to make any payment which he is bound to make and which, if not made by him, is recoverable from the lessee or against the property, the lessee may make such payment himself and deduct it with interest from the rent or otherwise recover it from the lessor. Where the lessee makes the payment which the lessor was bound to make like taxes, revenue etc. and which if not paid were recoverable from the lessee or the land, the lessee may make the necessary payment and recover the amount paid by him from the lessor or deduct it from the rent with interest. The payment must not be voluntary and it must be compulsory and the lessee must have made the payment under protest. 12 If there is no evidence that he paid under protest, he cannot maintain an action for recovery.13 Right to remove fixtures made by him during tenancy It provides that the lessee may even after the determination of the lease remove, at any time whilst he is in possession of the property leased but not afterwards, all things which he has attached to the earth provided he leaves the property in the state which he received it. This clause enables the lessee to remove anything which he attached to the property. The clause provides an exception to the general rule that the things attached to the earth become part of it. After the amendment of 1929, the lessee has become authorized to remove trees or fixtures set up by him on the lease so long as he is possession of the property even though the tenancy has come to an end. However, while removing such fixtures he must see that the property is left in the same condition in which he had

11 12

Mirza Afzal Beg v Prabhu Dayal, AIR 1973 All 26. Baker v Greenhill, 3 QB 145 13 Landlord and Tenant, Wood, sixth Edn, p. 595

received it.14 Where a shop was let in 1968 and the tenant converted the hall into two rooms by raising partition wall and fixing a door without the consent of the landlord, the suit for eviction was filed in 1981, it was held that the mere inaction on the part of the lessor had not entitled the lessee to the resist the suit on the ground of estoppels.15 Right to have the benefit of crops growing on the land sown or planted by him It provides that when a lease of uncertain duration becomes determined by means except the fault of the lessee, he or his legal representative is entitled to all the crops planted or sown by the lessee and growing upon the property when the lease determines and to free ingress and egress to gather and carry them. This right is exercisable where the leases are of uncertain duration, e.g., eases from year to year. In other class of leases, the parties themselves may stipulate in respect of removal of crops. Right to assign his interest in the leased property, i.e., right to sub-let the property It provides that the lessee may transfer absolutely, or by way of mortgage or by sub-lease the whole or any part of his interest in the property and any transferee of such interest or part may again transfer it. The lessee shall not, by reason only of such transfer, cease to be subject of any of the liabilities attaching to the lease. This clause, in absence of a contract to the contrary, empowers the lessee to transfer whole of his interest. The interest may be transferred absolutely or by way of mortgage or sub-lease. His transferee or his assignee has also been empowered to transfer his interest again. On the termination of the lease, the obligation of handing over the possession of the property is of the lessee and not of the sub-lessee because only the original lessee is privy to the contract.16 Where in the lease in question though the expression parting with possession is preceded by the expression of sale, transfer or assigning. It is not mere parting with possession, but otherwise parting with possession. Thus the clause envisages not only
14 15

Vasudevan v Vallia, 24 Mad 47 (FB) Shiv Ram v. Sham Lal, 2003 (2) RCR (Rent) 285 (P&H) 16 Swansea Corporation v. Thomas, (1882) 10 QBD 48

parting with possession in the context of sale, transfer or assigning but also parting with possession in other contexts, which would include the cases of sub-letting.17 A tenant having an untransferable right of occupancy, the farmer of an estate in respect of which default has been made in paying revenue, or the lessee of a state under the management of a court of wards is not entitled to assign his interest as such tenant, farmer or lessee. The lessee or licensee cannot claim to have acquired customary right to get lease or license. In Ramchandra Wahiwat-dar Subs. By Moreshwar v. Narayan18 , fishing rights in tank were granted to fisherman on lease or license, their right being permissive, they could not claim customary rights to get lease/ license.

17 18

Rajandheer (India) Pvt. Ltd. V. DDA, AIR 2004 Del 208 AIR 2003 SC 3286

Conclusion
Every lease agreement has two parties: lessor and lessee. The Transfer of Property Act confers certain rights and liabilities to lessors and lessees. The lessor and the lessee of an immovable property possess these rights and are subject to some liabilities. However, this is effective only in the absence of a contract. Further, these rights and liabilities may also be affected by local usage to the contrary.In case of lessors. A lessor is bound to disclose to a lessee any material defect in the property with reference to its intended use. This is so in cases where the lessor is aware of the defects but the lessee is not, and could not discover them either. Also, where the lessor is bound by the lessee's request to put him in possession of the property, he will be deemed to be liable to ensure that if the lessee pays the rent reserved by the lease and performs the contracts binding on the lessee, he may hold the property during the time limited by the lease without any interruption. In case of lessees. The Act confers some rights and liabilities on lessees. These include: If during the continuance of the lease any accession is made to the property, the accession will be deemed to be comprised in the lease If 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 will, at the option of the lessee, be void. This may be caused by fire, flood etc. If the lessor neglects to make, within a reasonable time after notice, any repairs which he is bound to make to the property, the lessee may make the same himself, and deduct the expense of the repairs with interest from the rent, or otherwise recover it from the lessor. If the lessor neglects to make any payment which he is bound to make, the lessee may make the payment himself, and deduct it with interest from the rent, otherwise recover it from the lessor. The lessee may, even after the determination of the lease, remove at any time while he is in possession of the property leased, all things which he has attached, provided he leaves the property in the state in which he received it.

The lessee may transfer absolutely or by way of mortgage or sub-lease the whole or any part of his interest in the property, and any transferee of such interest or part may again

transfer it. In such cases, the lessee will not cease to be subject to any of the liabilities attached to the lease. The lessee is bound to disclose to the lessor any fact as to the nature or extent of the interest which the lessee is about to take of which the lessee is aware of and which materially increases the value of such interest.

The lessee is bound to pay or tender, at the proper time and place, the premium or rent to the lessor or his agent. The lessee is bound to keep, and on the termination of the lease restore, the property in as good a condition as it was in at the time when he was put in possession, subject only to the changes caused by reasonable wear and tear or irresistible force.

Further, a lessee is bound to allow the lessor and his agents, at all reasonable times during the term, to enter into the property and inspect the condition. When a defect has been caused by any act or default on the part of the lessee, his servants or agents, he is bound to make it good within three months after a notice has been given. If the lessee becomes aware of any proceedings to recover the property, any encroachment made, or any interference with the lessor's rights concerning the property, he is bound to give notice of it to the lessor. A lessee should use the property as a person of ordinary prudence would use it, as if it was his own. However, he must not use, or permit another to use the property for a purpose other than that for which it was leased. He must not, without the lessor's consent, build on the property any permanent structure. On the determination of the lease, the lessee is bound to put the lessor into possession of the property.

Bibliography
Books referred:Transfer of Property Act, 1882 (bare provision). The Transfer of Property Act, Dr. S.N.Shukla. Transfer of Property Act, Sir Dinshaw Mulla The Transfer of Property Act, R.K.Sinha. Sites referred: http://www.legalservicesindia.com/ http//:www.manupatra.com/ http//:www.psychcentral.com/