Lease of immovable property for a period of less than a year is compulsory registrable unless concerned State Government notifies otherwise

Lease of immovable property for a period of less than a year is compulsory registrable unless concerned State Government notifies otherwise

Transfer of property act hereinafter referred as TP Act categorically says about lease of immovable property how made at section 107 which is being reproduced herein below:

107. Leases how made. —  

A lease of immoveable property from year to year, or for any term exceeding one year or reserving a yearly rent, can be made only by a registered instrument.

All other leases of immoveable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.

Where a lease of immoveable property is made by a registered instrument, such instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee:

Provided that the State Government may from time to time, by notification in the Official Gazette, direct that leases of immoveable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument or by oral agreement without delivery of possession.

With regards to duration of lease section 106 of TP Act “written contract” in title and “contract” in the body. Section 4 of TP Act mandates that “the Chapters and sections of this Act which relate to contracts shall be taken as part of the Indian Contract Act, 1872 (9 of 1872)”. The terms “contract” has a special meaning as given in section 10 of the Indian Contract Act under the heading of what agreements are contracts. As per the said section only those “agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Nothing herein contained shall affect any law in force in India, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents”. Any provision of law which intends to stipulate a special feature of to a contract will not be affected rather that will be considered a unique feature of that contract. Registration of a documents is a source of revenue for state government. Hence object of a person; who does not get the document registered which a law intended to be registered; cannot be said lawful as he wants to evade to pay revenue for state government. Second proviso of Section 107 of TP Act by using the terms “all other leases” for Lease of immovable property for a period of less than a year provides that such lease may be either by a registered instrument or by oral agreement accompanied by deliver of possession. TP Act by this provision, in clear terms, intends that leases of immovable property if not made by an oral agreement accompanied by delivery of possession then it must be by a registered instrument. Hence any unregistered lease deed of immovable property for a period of less than a year being without lawful object will not be recognised by law and such cannot be helpful to party to such lease

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Section 4 of TP Act mandates that “Section 54, paragraphs 2 and 3, Sections 59, 107 and 123 shall be read as supplemental to the Indian Registration Act, 1908 (16 of 1980)”. Section 49 of the Registration Act under heading of Effect of non-registration of documents required to be registered mandates “No document required by Section 17 or by any provision of the Transfer of Property Act, 1882 to be registered shall (a) affect any immovable property comprised therein…”. These provisions are with respect to issue of effect of non-registration of a documents needs to be read together. It is crystal clear that a document to be registered is stipulated in section 17 of The Registration Act or any provision of the Transfer of Property Act, 1882. As such section 17 of The Registration Act alone does not provide exhaustive list of documents to be registered. Only two options have been provided by second proviso of Section 107 of TP Act section 107 for lease of immovable property for a period of less than a year i.e.

1) either by a registered instrument or

2) by oral agreement accompanied by deliver of possession.

As such leases of immovable property if not made by an oral agreement accompanied by delivery of possession, it must be by a registered instrument and not by unregistered instruments unless concerned State Government notifies otherwise. I have not came across any such notification whereby it has been directed that direct that leases of immovable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument. In absence of such notification leases of immovable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, mandatory be made only by registered instrument.

Now still some people even some advocate(s) may deny out rightly aforesaid position saying it is my own explanation as same is against the general prevailing perception. They emphasis on judicial pronouncements on the issue in hand. Below is relevant judicial pronouncement on the issue in hand.

The Hon’ble Delhi High Court in Chemical Sales Agencies vs Smt. Naraini Newar on 17 September, 2004 Equivalent citations: AIR 2005 Delhi 76, 2005 (1) ARBLR 193 Delhi, 114 (2004) DLT 272, 2004 (77) DRJ 224 http://indiankanoon.org/doc/1028412/

 “Section 107 of the Transfer of Property Act, 1882 clearly provides that a lease of immovable property from year to year, or for any term exceeding one year or reserving a yearly rent, can be made only by a registered document. It further provides that all other leases of immovable property must be either by a registered instrument or by oral agreement accompanied by deliver of possession. Thus, only if there is a registered instrument or there is an oral agreement accompanied by delivery of possession can it be said that a relationship of Lesser and lessee is created. In the present case, I find that there is no registered instrument creating any such relationship. The purported lease agreement dated 01.05.1992 is not a registered document. It is not property stamped and by virtue of Section 49 of the Registration Act, 1908, the said document shall not effect any immovable property nor be received as evidence of any transaction affecting such property.”

The Hon’ble Karnataka High Court in Abdul Rasheed S/O Meeran Sab vs Srinivas S/O Kashinathrao on 16 April, 2014  http://indiankanoon.org/doc/59543538/ 

answering the issue of whether a lease deed, where the term of lease stated therein does not exceed one year, requires to be registered under the provisions of the Registration Act, 1908 said :

“As could be seen from the above quoted provisions, all leases not covered by first para of S.107 of the T.P. Act may be made either by a oral agreement accompanied by delivery of possession, or by a registered instrument. A lease, the registration whereof is not compulsory under S.17(1)(d) of the Registration Act, becomes compulsorily registrable, if reduced into writing in view of second para of S.107 of the T.P. Act read with para 2 of S.4 thereof. A written unregistered lease of immovable property, even though the term of lease stated therein does not exceed one year, is inadmissible in evidence in view of S.49 of the Registration Act, 1908 read with second para of S.107 of the Transfer of Property Act, 1882 & second para of S.4 thereof. A lease for a period of one year falls within the expression 'All other leases' stated in para 2 of S.107 of the T.P. Act and may be made by a oral agreement accompanied by delivery of possession.”