Lease and License-Distinction

The definition of “Lease” under the Indian Stamp Act, 1899 is a bit wider than what is provided under Transfer of Property Act, 1882. In the sum and substance, it can be said that a license is a right or permission granted by a competent authority or the owner of premises to carry on business or to do an act which, without such license/permission would be illegal. In other words, it is a formal or official permit or permission to carry on some business or to do some act which, without the license, would be unlawful and the word ‘License’ and ‘Permit’ are often used synonymously. The word “Lease” is frequently used to designate the contract by which relationship of landlord and tenant is created. A “Lease” is a species of contract for possession and profits of land and tenements, either for life or for a short period of time or during the pleasure of parties or a contract for the possession and profit of the land for a determinate period with the recompense of rent. A lease may be regarded as a conveyance or grant of an estate or interest in the real property, for limited period with conditions attached. A “License” is distinguishable from a “Lease” in more than one ways. “License” generally provides to the Licensee, less rights in real estate than a “Lease”. If a contract gives exclusive possession of premises against all the world, including the owner, it is a “Lease”, but if it merely confers a privilege to occupy the premises under the owner, it is a “License”. Accordingly, a license in a property is the permission or authority to engage in a particular act or series of acts upon the land of another without possessing an interest therein, and is thus subject to management and control retained by owner. A lease generally conveys an interest in the land, requires a writing to comply with the Statute of frauds and transfers possession, while the license merely excuses acts done by one, on the land in possession of another, that without license, would be trespass and conveys no interest in land. M/s Godwin Construction Pvt. Ltd. V. State of U.P., 2014 (124) RD 298.

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