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 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.”
Decisions of the Supreme Court in Associated Hotels of India Ltd. vs. R.N. Kapoor [AIR 1959 SC 1262] summed the concept of License as under :
“… Under the aforesaid section, if a document gives only a right to use the property in particular way or under certain terms while it remains in the possession and control of the owner thereof, it will be a license. The legal possession, thereof, continues to be with the owner of the property, but the licensee is permitted to make use of the premises for a particular purpose. But for the permission, his occupation would be unlawful. It does not create in his favour any estate or interest in the property.”
It is important to take note of essential features of license as follows :
- 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;
- 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.
A leave and license agreement is an instrument/agreement wherein the licensor allows the licensee to temporarily occupy and/or use one portion of immovable property for carrying on his business for/or residential purposes.
A person who is legally entitled to enter into a contract may take a property under Leave and License.
A licensee only has the right to occupy and use the property as a mere licensee. The licensee cannot transfer his right over the property and also does not have exclusive possession of the property. The legal possession of the property is deemed to be that of the licensor.
Any kind of immovable property, including land, flats etc. may be taken on leave and license unless there is a restriction on the transferability of rights of such property.
Generally, any Leave and License Agreement for a period above 1 year should be compulsorily registered. In Maharashtra, Leave and License agreement for a period below 1 year is also compulsorily registrable.
Registration of any document proves the validity and enforceability of a document. To prove any dispute between the parties, the agreement will have to be produced before the Court. However, if such agreement is not registered then such agreement will not enforceable and admitted by the Court.
Additionally the Court has the power to impound such document and require the parties to pay the deficit stamp duty together with any penalty / fine / interest as may be applicable. Therefore, if the agreement is registered it will be difficult for either party to deny the existence of the document and go back upon its obligations.
It would take 10-20 minutes to complete the Leave and License Agreement online with all necessary information. Once the Leave and License agreement is completed by you, same will be verified with you by us, pay the stamp duty and deliver the Leave and License agreement your Doorstep within 48 hours.
A lock-in period is a period within which any party or both parties cannot terminate the agreement. Typically a breach of the lock-in provision involves payment of a penalty which typically is the rent/license fee for the balance term of the agreement.
The licensor can also contractually recover the penalty from the refundable security deposit. The licensee can contractually refuse to handover possession of the property till such time that he/she has not received the license fee for the term of the agreement.