Almost everybody signing one of these believes the title at the top of the page decides what it is. It does not. In 1959 the Supreme Court said that "clever drafting can camouflage the real intention of the parties", and set out four tests a court applies instead. Those four tests, the two statutory definitions they sit on, and the two state rules that change the answer entirely are all below, in the words of the statutes and the judgment.
Two people can sign documents with identical headings and identical rent figures, and one of them will have created a tenancy while the other created a permission. The difference is not in the heading. It is in a single question:
Did the owner part with legal possession, or only give permission to use?
If the owner parted with possession and transferred a right to enjoy the property for a period, that is a lease — an interest in the property has moved. If the owner kept legal possession and merely permitted somebody to do something on the premises which would otherwise be trespass, that is a licence — nothing has moved.
Everything else on this page follows from that. Whether the occupant can be summarily removed or must be sued. Whether the right dies with the person or passes to their heirs. Whether it can be assigned. Whether rent control can be invoked. And, in one state, whether the owner has committed a criminal offence by not registering the document.
"A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms."
"The transferor is called the lessor", "the transferee is called the lessee", "the price is called the premium", and "the money, share, service or other thing to be so rendered is called the rent".
Section 105, Transfer of Property Act, 1882 — "Lease defined".
The operative words are "a transfer of a right to enjoy". A lease is a transfer. Something leaves the owner and vests in the lessee for the period. That is why a lease is an interest in immovable property, why it is heritable and generally assignable unless the contract says otherwise, and why the formalities for creating one are heavier.
"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."
Section 52, Indian Easements Act, 1882 — "'License' defined".
Read the closing words: "does not amount to … an interest in the property". That is not decoration. It is the boundary of the whole concept. The moment an arrangement gives the occupant an interest in the property, it has stopped being a licence as the Act defines it, whatever the parties called it and whatever they believed they were doing.
Notice also what a licence positively is: permission to do something which would otherwise be unlawful. Without the licence, the occupant walking into the flat would be a trespasser. The licence removes the unlawfulness. It does not hand over the flat.
The leading authority is more than sixty years old, is quoted in almost every lease-or-licence dispute decided since, and is almost never quoted on the commercial pages that sell these documents. It is worth having in front of you in the Court's own words.
"To ascertain whether a document creates a licence or lease, the substance of the document must be preferred to the form."
"The real test is the intention of the parties — whether they intended to create a lease or a licence."
"If the document creates an interest in the property, it is a lease; but, if it only permits another to make use of the property, of which the legal possession continues with the owner, it is a licence."
"If under the document a party gets exclusive possession of the property, prima facie, he is considered to be a tenant; but circumstances may be established which negative the intention to create a lease."
And the sentence that explains why the other four exist: it is "the substance of the agreement that matters and not the form, for otherwise clever drafting can camouflage the real intention of the parties".
Associated Hotels of India Ltd v. R.N. Kapoor, Supreme Court of India, judgment dated 19 May 1959, AIR 1959 SC 1262.
What that last sentence means for the document you are about to sign. A great many "leave and licence" agreements in circulation are ordinary tenancy agreements with the words changed — "rent" becomes "licence fee", "tenant" becomes "licensee", "lease" becomes "licence period" — and nothing else touched. The occupant still gets the whole flat, still gets the only set of keys, still has it for years, and the owner still never goes there.
That is precisely the camouflage the Supreme Court said it would look through. Renaming the parties does not change who has possession.
The honest way to use this. If what you actually want is a licence, then structure the arrangement as one and the document will describe something real: a defined part of the premises, retained access for the owner, a short period, no right to assign or sub-let, services provided by the owner. If what you actually want is a tenancy — and for most residential lettings it is — then use a rent agreement drafted properly and deal with the consequences openly. A tenancy honestly documented is safer than a licence that will not survive being read.
Tell us the facts — who gets what part of the premises, for how long, who holds the keys, and whether the owner has access. Two minutes on the phone will tell you which document you need, and it may not be the one you came here for.
People treat this as a technicality. It is not — six practical consequences follow, and every one of them shows up at the worst moment.
| Lease / tenancy | Licence | |
|---|---|---|
| What passes | An interest in the property — a transfer of the right to enjoy it | Nothing. Permission only; legal possession stays with the owner |
| Possession | The lessee has legal possession for the term | The licensee has occupation and use; possession remains the owner's |
| Transferable? | Generally assignable and sub-lettable unless the contract forbids it | Personal to the licensee. It is a permission given to that person |
| Heritable? | Generally passes to heirs | Generally comes to an end; a permission does not naturally survive the person |
| Ending it | By the terms, by notice as the statute requires, or by forfeiture — then by suit if the lessee stays | By the terms; and see Section 60 of the Easements Act on revocation |
| If the occupant refuses to go | Suit for possession and mesne profits | In Maharashtra, application to the Competent Authority under Section 24 of the Rent Control Act, with damages at double the licence fee. Elsewhere, an ordinary civil suit |
| Rent control | May attract the protections of the applicable rent statute | Generally outside tenancy protection — which is the historical reason the instrument exists |
| Formalities | Section 107 of the Transfer of Property Act; registration under Section 17(1)(d) of the Registration Act above the threshold | Registration threshold applies similarly — and in Maharashtra, Section 55 requires registration regardless |
"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 instrument."
"All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession."
Where a lease 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".
Section 107, Transfer of Property Act, 1882 — "Leases how made".
Delhi landlords have inherited a fear of creating a tenancy from an era when rent control genuinely made a tenant very difficult to remove. For most lettings happening in Delhi today, that fear is attached to a statute that does not apply to them, and here is the provision that says so.
"to any premises, whether residential or not, whose monthly rent exceeds three thousand and five hundred rupees; or"
Section 3 is headed "Act not to apply to certain premises", and clause (c) — inserted with effect from 1 December 1988 — takes premises above that monthly figure outside the Act altogether.
Section 3(c), Delhi Rent Control Act, 1958.
Read what that does. The figure has not been revised for a very long time, and almost no letting in Delhi today is below ₹3,500 a month. For everything above it, the protections of the Delhi Rent Control Act are simply not available to the occupant — no standard rent, no statutory protection against eviction under that Act.
The practical consequence for a Delhi landlord: the main historical reason for dressing a tenancy up as a licence has largely gone. You are choosing between two documents on their merits, not escaping rent control. That is a better position to negotiate from, and it means you can afford to document honestly what the arrangement actually is.
An honest caveat, because this is the kind of thing sites gloss over. Rent legislation in Delhi has been the subject of amending and replacement legislation that has not taken effect in the way originally intended, and the position for premises below the threshold, and for old tenancies that long predate it, is different and more protective. If your property is an older letting, a very low rent, or a tenancy that has run for decades, do not read this section as applying to you — that is a situation to take specific advice on.
"Leave and licence" is, as a mass-market instrument, largely a Maharashtra phenomenon, and there is a reason: that state has a statutory framework built specifically around it. If your property is in Maharashtra, the following two sections matter more than everything else on this page.
"any agreement for leave and license or letting of any premises, entered into between the landlord and the tenant or the licensee, as the case may be, after the commencement of this Act, shall be in writing and shall be registered under the Registration Act, 1908." (sub-section (1))
"The responsibility of getting such agreement registered shall be on the landlord and in the absence of the written registered agreement, the contention of the tenant about the terms and conditions subject to which a premises have been given to him by the landlord on leave and license or have been let to him, shall prevail, unless proved otherwise." (sub-section (2))
"Any landlord who contravenes the provisions of this section shall, on conviction, be punished with imprisonment which may extend to three months or with fine not exceeding rupees five thousand or with both." (sub-section (3))
Section 55, Maharashtra Rent Control Act, 1999 — "Tenancy agreement to be compulsorily registered".
If the landlord has not registered the agreement, the occupant's version of the terms prevails unless the landlord proves otherwise. Not "is considered". Prevails.
That means the occupant's account of the rent, the period, the deposit and the conditions becomes the starting point, and the landlord carries the burden of displacing it. There is no more expensive eleven months in Indian property documentation than the ones a Maharashtra landlord saves by not registering.
And sub-section (3) makes it an offence. Imprisonment up to three months, or a fine up to five thousand rupees, or both — on the landlord, for not registering.
"a licensee, in possession or occupation of premises given to him on license for residence shall deliver possession of such premises to the landlord on expiry of the period of licence."
Where the licensee does not, the landlord "shall be entitled to recover possession of such premises from a licensee, on the expiry of the period of licence, by making an application to the Competent Authority, and the Competent Authority, on being satisfied that the period of licence has expired, shall pass an order for eviction."
"Any licensee who does not deliver possession of the premises to the landlord on expiry of the period of licence and continues to be in possession of the licensed premises till he is dispossessed by the Competent Authority shall be liable to pay damages at double the rate of the licence fee or charge of the premises fixed under the agreement of licence."
Section 24, Maharashtra Rent Control Act, 1999.
Now the two sections read together, and this is the whole architecture. Section 24 gives a Maharashtra landlord something no landlord elsewhere in India has for these arrangements: a summary route to eviction on expiry, before a Competent Authority, with damages at double the licence fee for every day of overstay.
But it is built on a written registered agreement. Section 55 requires one and penalises the landlord who does not obtain one. A landlord who skips registration to save a few thousand rupees has given away the summary remedy and handed the occupant a statutory presumption at the same time.
Outside Maharashtra the familiar rule applies, and it is the reason every agreement you have ever been handed runs for eleven months rather than a year.
"leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent"
— are among the documents which, under Section 17(1), "shall be registered".
Section 17(1)(d), Registration Act, 1908 — "Documents of which registration is compulsory".
We have set out the eleven-month reasoning, what you actually lose by not registering under Section 49, and the four-month presentation rule under Section 23 in full on our rent agreement page — there is no purpose in repeating it here. Two points specific to a licence are worth adding.
These are the ones we look for first when a client sends us an existing agreement to review. Each of them, on its own, pushes the document towards a tenancy.
| The clause | Why it points to a lease | What a genuine licence looks like |
|---|---|---|
| Exclusive possession of the whole premises, with the only keys | The strongest single indicator. R.N. Kapoor: exclusive possession makes the occupant prima facie a tenant | A defined part or defined use, with the owner retaining a key and a documented right of access on notice |
| A long period, or automatic renewal indefinitely | Permissions are short by nature; interests are long | A defined, modest period with renewal by fresh agreement rather than automatically |
| A right to assign, transfer or sub-let | A licence is personal to the licensee. A transferable right looks like an interest | Express prohibition on assignment, sub-licensing and parting with possession |
| The occupant made liable for property tax and structural repairs | Those are an owner's or a lessee's burdens, not a permitted user's | Owner retains structural repairs and property tax; occupant pays only usage charges |
| The occupant permitted to make alterations or a fit-out | Investing in permanent works suggests an interest — and see Section 60(b) of the Easements Act on works of a permanent character | Alterations only with written consent, and reinstatement at the end |
| "The Licensee shall be entitled to quiet enjoyment" | Lifted straight from lease drafting; it is the language of a tenancy | Undisturbed use of the permitted area, subject to the owner's retained access |
| No obligation on the owner at all | A licensor who provides nothing and never attends looks like a landlord | Real retained obligations — maintenance, services, access for inspection |
| A "deposit" close to the value of an interest | A large sum can look like a premium for an interest in the property | A proportionate, expressly refundable security deposit for performance and damage |
The test to apply to your own draft. Strike out the words "licence", "licensee" and "licence fee" and replace them with "lease", "tenant" and "rent". Now read it. If it reads perfectly naturally as a tenancy agreement, a court will read it that way too.
"A licence may be revoked by the grantor, unless — (a) it is coupled with a transfer of property and such transfer is in force; (b) the licensee, acting upon the licence, has executed a work of a permanent character and incurred expenses in the execution."
Section 60, Indian Easements Act, 1882 — "License when revocable".
Clause (b) is the one that catches owners. If you permit the occupant to build out the space at their own cost — a shop fit-out, a partition, a permanent installation — you may have moved the arrangement into the territory where the licence is not freely revocable. That is not a reason never to allow a fit-out; it is a reason to deal with it expressly in the document: what may be installed, at whose cost, who owns it, and what happens to it at the end.
And note the limits of Section 60 generally. A licence for a fixed period, granted for consideration under a contract, is not the same thing as a bare permission given as a favour. Where the parties have agreed a term and a fee, how and when it can be ended will be governed primarily by what the contract says about termination, notice and breach — which is why the termination clause deserves more attention than it usually gets.
Full names, addresses and identification. Where the property is co-owned, every co-owner as a party or a valid authority from those not signing. Where it is a society flat, whatever the society's rules require.
Full address, floor, unit number, area, and — for a genuine licence — which part is permitted and what is shared or retained. A licence over "the whole flat" is halfway to a tenancy before anybody has signed.
That the licensor permits the licensee to use and occupy for the permitted purpose, that no tenancy, sub-tenancy or interest in the premises is created or intended, and that legal possession remains with the licensor throughout.
Start and end dates, and how renewal happens — by fresh agreement, not automatically. Notice periods for early termination, on both sides, and what happens on breach.
The amount, the day it falls due, the mode of payment, any escalation on renewal, and a clear split: electricity, water, gas and internet on the occupant; property tax, structural repairs and society outgoings on the owner. That split is doing legal work, not just commercial work.
Amount, mode, what may be deducted, days for refund after handover, and whether it carries interest. Paid and refunded through the banking channel. Keep it proportionate — a deposit that looks like a premium invites the argument that an interest was being bought.
The licensor's right to enter on reasonable notice to inspect, maintain or show the premises, and the retention of a key. For a licence this is not an intrusion clause — it is evidence of the thing that makes it a licence.
Express, and with the named occupants listed where it is residential.
The permitted purpose stated narrowly. Prohibitions on illegal use, on nuisance, on structural alteration without consent, and on using the address for registrations the owner has not agreed to.
What may be installed, with whose consent, at whose cost, who owns it, and the obligation to reinstate. Draft this properly — see Section 60(b) above.
A schedule of fixtures, fittings and appliances with their condition, and meter readings at handover. Signed and dated by both. This one schedule decides most deposit disputes.
Vacant possession on the expiry date, keys returned, dues cleared, condition on return, and the consequence of overstaying — in Maharashtra, the statutory damages at double the licence fee are worth reciting.
Where notices go and how, the applicable law, and a named court. For Maharashtra premises, the Competent Authority route under Section 24 should be expressly acknowledged.
Which party bears the stamp duty and registration fee, and an obligation on both to attend for registration. In Maharashtra, state in terms that the landlord is responsible under Section 55.
Commercial arrangements are structured as licences far more often than residential ones — shop-in-shop counters, kiosks, co-working desks, warehouse racking space, signage rights, ATM sites. In many of them the licence is genuine, and in some it is the obviously correct instrument.
Commercial documents fail this test more clearly than residential ones, because the commercial reality is usually more visible: a business that has invested in a fit-out, put up signage, registered the address and traded from it for years is not describing a permission. If that is your arrangement, a properly drawn and registered lease protects both sides better than a licence that will be re-characterised at the first dispute.
The single most common reason people arrive at this page. The route depends on where the property is.
| Maharashtra | Delhi and most other states | |
|---|---|---|
| The route | Application to the Competent Authority under Section 24 of the Maharashtra Rent Control Act on expiry of the licence period | Civil suit for possession and mesne profits, in the court with jurisdiction |
| What the authority must be satisfied of | That the period of licence has expired — whereupon it "shall pass an order for eviction" | The full range of civil issues, on evidence |
| Compensation for the overstay | Statutory: damages at double the licence fee until dispossession | Mesne profits, to be proved |
| What can defeat it | An unregistered agreement — see Section 55(2), under which the occupant's version prevails | A successful argument that the arrangement was in substance a tenancy |
Do not change the locks. Do not cut the electricity or the water. Do not remove their belongings. Do not send people. Whatever the agreement says and however clearly you are in the right, taking possession by force converts a strong case into a weak one and creates proceedings against you.
The sequence that works: check the agreement and its registration; serve a properly drafted legal notice recording expiry and calling for handover; keep every communication; and move to the statutory or civil route promptly rather than letting months pass, because delay is the first thing the other side will point at.
We are not a law firm and we do not appear in court. Where a matter has reached this stage, our advocate directory is free to search and free to send a request through — filter by property or civil practice and your city.
Almost everything written about these agreements is written for the owner. Six things to check before you sign.
| Your situation | The right document | Why |
|---|---|---|
| Paying guest, a room in an occupied house, a serviced or managed space | Leave and licence | A genuine permission — owner retains the premises, access and services |
| A desk, cabin, counter or kiosk inside somebody else's operation | Leave and licence | Defined use of a defined space; no interest passes |
| An ordinary residential letting of a whole flat for eleven months | Rent agreement | It is what is actually happening. In most of India the rent-control fear that drove the licence no longer applies — see the Delhi section above |
| Whole premises, several years, occupant fitting it out | Lease, registered | An interest is genuinely passing. Document it and register it |
| Maharashtra, any of the above | Whichever fits — and register it | Section 55 requires writing and registration, and penalises the landlord who skips it |
| Sale with possession before conveyance | Sale agreement, not a licence | Possession given pending sale is a different arrangement and should be documented as one |
Those three answers decide which of the three documents you need. We will tell you which one your facts actually are — including when the honest answer is a plain rent agreement rather than the licence you came here for.
| What | Who charges it | Notes |
|---|---|---|
| Our drafting | Us | Starts at ₹1,500. The same figure appears on the service page, so you see it before committing to anything. What we draft depends on your facts — residential or commercial, Maharashtra or elsewhere — rather than on a stock form. |
| Stamp duty | The state government | At actuals. Computed differently from state to state, in several on the licence fee and the deposit together. We tell you the figure before it is paid. An e-stamp is the usual instrument. |
| Registration fee | The state government | At actuals, where registration applies. In Maharashtra it always applies and the responsibility is the landlord's under Section 55. |
| Notarisation | The notary | Where you want it in addition. Notary attestation is not a substitute for registration where registration is required. |
| Turnaround | — | 1 – 2 days for the draft once we have the facts. Registration timing depends on the sub-registrar's appointment. |
| Review of an agreement you were handed | Us | Send it before you sign. We will tell you whether it is a licence in substance or a tenancy wearing a different name. |
The fastest thing we do is tell somebody that the document in front of them is a tenancy agreement wearing a different name. It costs nothing to find that out now, and a great deal to find it out in three years.
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