Difference between lease and licence agreement: A cardinal distinction between a lease and a licence is that in a lease, there is a transfer of interest in the leased property whereas, in the case of a licence, there is no such transfer of any interest in the property, although the licensee may have a right to occupy the subject property, e.g.land.

The Supreme Court in Khalil v. Tufelhussain [AIR 1988 SC 184,190]: “If an interest in the immovable property is created so as to entitle the transferee to enjoyment, it is a lease. If permission to use the land, without exclusive permission, is, alone, gathered, a licence is the legal result.”

In Indian law, the expression “licence” is defined differently under different legislations. For example, “licence” is defined in a certain manner in the Easements Act, of 1882. It is also defined in a certain manner in the Maharashtra Rent Control Act, 1999. For the present, suffice it to say that, in case of a lease, there is a transfer of an interest in the property coupled with an exclusive right of occupation or use. In case of a licence, there is merely a right to the use of the property in a certain way and on certain terms, while the property remains in possession and control of the owner.

It was held by the Bombay High Court in Balvantsingji v. Bhagwantrao [AIR 1980 Bom. 333]: ” The test of exclusive possession is an extremely important test for deciding as to whether a particular transaction is a lease and/ or leave and licence. The right of entering or right to visit is something far different from possession in respect of the land.”

About the author


  • Rajesh Doshi Darshan Industries says:

    Dear sir, As i m from mumbai we are having lease property for a period of 40+40 year . At the time of making agrement it was between aroon dyeing & printing works n Harish Bhanji pujara he was karta in joint family. it is being made between those two in 27th day of october 1973 at bhayander,taluka & Dis.Thana with condition mentioned is ,on the expiration of term of lease of 40 year,lessees shall on 6 month previous notice in writing,in their behalf,before the expiry of the said period of 40 years,shall be entitled to renewal of lease herein,for a period of 40 years on the same term & conditions,except the said clause for renewal & except that the rent or lease charges payable by the lesse shall be increased by 15%.
    After that on 26 day of Augest 1989 tri part agreement has been made as Aroon dyeing want to leave the same property ,with Harish Bhanji Pujara as confirming party & Darshan Industries on As it is Above Term N condition applied in original Agrement.Rent is paid till march 2017 with increment of 15% from november to march 2015 + 2016 + 2017. As lease deed Expired on october 2014 n renewal letter is given to Harish Bhanji Pujara on 26/12/12 from Advocate of High Court, Hand delivery n received the same with signature.
    As their is a dispute in their family one of brother expired on 16/1/98 n other brother expired on 2008.The onwer has not informed to us.An one of Brother Daughter made case Against Harish Bhanji Pujara n gave a paper notice on 1/5/2014.
    Because of this Mr.Harish B. Pujara has not given Rent Reciept n not sigend Renwal as per agreement.
    Even he has not inform us as he was his karta of family is automatically cancelled on expiry of two family member.in this case what is to be done

    View Comment

Leave a Reply

Your email address will not be published. Required fields are marked *