What are the rights of statutory tenant, lessee and licensee?

Letting out premises is a sensitive issue. Both landlords and tenants turn hawkish in any discussion on this. The battle of owners versus occupiers would turn less hostile if each understood their limits, claiming only that which is rightfully theirs. There can be roughly three kinds of occupation – statutory tenant, lessee and licensee. Described below are the rights of each of them.

1. Statutory Tenant: A tenant is a protected species under the Maharashtra Rent Control Act, 1999 and is often aptly referred to as a statutory tenant. He can be evicted only on the limited grounds mentioned in the said Act. The most common ground being “the premises are reasonably and bona fide required by the landlord for occupation by himself or by any person for whose benefit the premises is held.” It is justifiable that ‘destruction of the premises by the tenant’ gives the landlord the right to seek repossession of his property and end the tenancy. Change of use, as well as/or non-use of the premises by the tenant for a continuous period of six months, is yet another ground for eviction under section 16 of the Rent Control Act.

A statutory tenant pays a nominal rent. Upon his death, any relative residing with him at the time of his demise steps into the former’s shoes by law. No testamentary bequest can be made by the tenant in respect of his tenancy rights nor can he transfer, mortgage, sub-let, give on license basis, or otherwise part with his tenancy rights. A tenancy is a creation of the statute and lives as well as falls as by the provisions thereof. Any transgression may cost a tenant dear.

2. Lessee: In the hierarchy of possessory rights, the position of the lessee is far superior. Here, the Transfer of Property Act comes into play. It is a transfer of a right to enjoy property by the lessor/owner in favour of the lessee, so much so that, unless there is a contract or a local usage to the contrary, a lessee can assign, sub-lease, mortgage, or part with his interest in the property. A lessee does not live under the fear that, on the grounds of bona fide requirements his lessor will have him evicted from the premises. He breathes freer air. It is not unusual to come across leases for a term of 100 years or even in perpetuity. There is precious little that an owner can do once he has leased out his property.

3. Licensee: A licensee finds a place for himself at the bottom of the pyramid. He has no interest whatsoever in the premises. As suggested by the term ‘license’, a licensee occupies premises at the pleasure of the licensor/owner.

In wonderful legalese, section 52 of the Indian Easement Act, 1882 defines ‘license’ as follows. “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 the immovable property of the grantor, something which would, in the absence of such right, be unlawful, and such right does not amount to an easement or an interest in the property, the right is called a license”.

This wafer thin right is therefore regarded as the safest option by premises owners in Mumbai. And why not: if a licensee refuses to vacate residential premises, under the Rent Act, a fast track Competent Authority can decide on matters governing eviction and mesne profits. Mesne profits can be as much as twice the license fee fixed under the agreement.

Needless to add, all the three types of instruments- tenancy agreement, lease deed and a leave and license agreement- are compulsorily registerable. Not registering of a tenancy or a leave and license agreement can land the landlord/owner behind bars for a term extending up to three months!

(Divya B Malcolm is a senior associate with Kochhar & Co. The views expressed are her own and not to be construed as legal advice)

Courtesy: Moneylife