Monthly Archives: August 2014

Rights of Statutory Tenant, Lessee and Licensee under the concern Acts.

Statutory Tenant

A Statutory Tenant is a protected species under the Maharashtra Rent Control Act, 1999 and is often aptly referred to as a Statutory Tenant. Statutory Tenant 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. 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.


Lessee is protected under the Transfer of Property Act, 1882. 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. It is not unusual to come across leases for a term of 100 years or even in perpetuity. 


 Licensee has no interest whatsoever in the premises. As suggested by the term ‘license’, a licensee occupies premises at the pleasure of the licensor/owner.

Under 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”.

 Therefore Leave and License has to regarded as the safest option by premises owners in Mumbai. 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.

The above 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.


Green Signal from SEBI for Establishment of Real Estate Investment Trust & Infrastructure Investment Trust.

The Securities and Exchange Board of India (SEBI) approved the setting up of Real Estate Investment Trusts (REIT) & Infrastructure Investment Trust (IIT) which is a new source of financing to India’s cash-strapped property developers.

REIT and IIT are Listed Entities that mainly invest in Income Producing Real Estate Assets, the earnings of which are mostly Distributed to their Shareholders. They will get Special Tax Treatment.

At its board meeting in New Delhi, the SEBI said REITs should operate with an asset pool of at least 5 billion rupees ($81.78 million) and have an initial issue size of at least 2.5 billion rupees for shareholders.

REITs will be allowed to invest only in commercial properties.

“The idea is that even if somebody can invest as low as Rs 2 lakh, such a person can get the benefit of the income from the completed projects,” U K Sinha – SEBI Chairman 

Minimum Investment in REIT – INR 2 Lakhs and in IIT – INR 10 Lakhs.

The value of assets held by an IIT should exceed Rs 500 crore. The offer size should be more than Rs 250 crore. Trusts will have to invest 80 per cent or more of assets in completed and revenue- generating projects. An investor should subscribe to minimum Rs 10 lakh in any offer. Public should own minimum 25 per cent of outstanding units. Public offer will be open for a minimum 30 days. If offer fails to meet 75 per cent subscription, trusts will have to refund money. Trusts will have the right to retain maximum oversubscription 25 per cent. Trusts need to distribute at least 90 per cent of net distributable cash flows.


Portfolio companies will be subject to Dividend Distribution Tax. Dividend of the Trusts will be Exempted from the Tax. Interest received by the Trust will be completely Exempted from Tax. The trust will withhold tax on the interest component of the distributed income payable to the unit holders at the rate of 5% for non-resident unit holders and 10% for resident unit holders. The trust will be taxed on any capital gains it makes on the disposal of any assets at the applicable rate. The transfer of units of the listed trust will similar to listed shares. Long-term capital gains on transfer of units will be exempt while Short-term capital gains will be taxable at the rate of 15% provided securities transaction tax is paid on the transfer of such units.