Consequences of Non-Registration of Lease Deed

It is to be noted that in terms of Section 107 of the Act, a lease of an immoveable property
for any term exceeding one year can be only under a registered document. It is to avoid
registration, in most cases lease agreements are entered into between the parties for a
period not exceeding 11 months with the option to renew to further periods of 11 months
on the expiry of the lease by efflux of time. In view of the fact that all lease
arrangements/agreements exceeding one year requires registration, the consequences of
non registration is enumerated herein below. It is relevant to note that various courts have
held time and again any lease agreement exceeding one year can be made only under a
registered instrument. However, in the event of the lease deed/agreement requiring
registration is not registered, the same is not fatal to the lease arrangement but only
creates a lease for less than one year. In other words notwithstanding the understanding
between the Parties and the terms of the lease deed the Agreement would be taken to be
effective only for a period not exceeding one year. The next question that arises is, if the
unregistered lease agreement is deemed as not exceeding one year, what is the
consequences of such deeming provision? On expiry of the initial 11 months of the
unregistered lease agreement, the lease arrangement/agreement would be deemed as a
month to month lease arrangement between the Parties. The terms and conditions of un
registered lease agreement would therefore become non enforceable and non binding on
the parties. The lease would be reduced to a month to month tenancy without the binding
effect of the terms and conditions of the non registered lease agreement.

Counter View

Non-registration of leases for more than one year is a serious offence. It does not establish
any rights between the landlord and the tenant. It cannot be produced in court for want of
registration. While under stamping a document is excusable, non-registration simply
makes the document inadmissible as evidence. As the statutory protection of tenants has
been removed in most cases, registration of a lease for more than one year is advisable in
all cases where the lease value is large and protection of the contract by law is deemed
necessary. On the other hand, even in cases of lease for more than one year, an agreement
of lease can be entered into and possession given to the lessee by a later act. The lease
deed remains pending for registration. This transaction will be protected by the doctrine
of part performance. The stamp duty will remain high, but the serious consequences of
non-registration do not arise. Under stamping such an instrument is not an un-rectifiable
offence.

If the lease deed is not registered then after one year it will be lease from month to
month. if the landlord files suit for eviction after terminating the lease as per TP Act after
one year, the tenant can not defend the duration if the same is not registered.
Non-registration of such an agreement makes the entire exercise of drawing it up futile. If
a lease deed for more then one year is not registered, same is not admissible in evidence
and no any party can grant any relief on the basis of inadmissible document. It will treated
as month to month lease and can be terminated with a notice of 15 days as per T.P.Act.

An unregistered lease/rent agreement cannot be read as evidence in a court of law. These

minor omissions give rise to prolonged litigation. It would therefore be prudent to take
some legal help while entering into such transactions. A lease deed or sub-lease of
immovable property would be compulsorily registerable under Section 17 (1)(d) of the
Registration Act and Section 107 of the Transfer of Property Act. In the absence of -
such a document, Section 49 visualizes no legal effect or an effective transfer by way
of a lease or sub lease.1

1
Noida V. Army Welfare Housing Organisation and Ors.