Section 105 of the Transfer of Property Act (TPA) defines a lease as a transfer of the right to enjoy immovable property for a certain time, in consideration of a price paid or promised, or of money, a share of crops, service, or any other thing of value rendered periodically or on specified occasions. Under Indian law, a lease transfers only the right to enjoy the property — not ownership — distinguishing it fundamentally from a sale under Section 54 TPA.
Legal definition
Section 105 of the Transfer of Property Act, 1882 provides:
Section 105: A lease of immoveable 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.
Five essential elements emerge from this definition. First, the parties — a lessor (transferor) and lessee (transferee). Second, the subject matter — immovable property. Third, the transfer — of the right to enjoy, not ownership. Fourth, the duration — for a certain time, express or implied, or in perpetuity. Fifth, the consideration — a premium or rent in the form of money, crops, service, or any other valuable thing.
Registration: Under Section 107 TPA, a lease of immovable property from year to year, or for a term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument. A lease for a period of less than one year may be made either by registered instrument or by oral agreement accompanied by delivery of possession.
How courts have interpreted this term
Associated Hotels of India Ltd. v. R.N. Kapoor [AIR 1959 SC 1262]
The Supreme Court established the distinction between a lease and a licence — one of the most frequently litigated questions in property law. The Court held that if the document creates an interest in the property and transfers the right to enjoy the property, it is a lease under Section 105 TPA; if it only permits the use of premises without creating any interest in the property, it is a licence under Section 52 of the Indian Easements Act, 1882. The test is the substance of the agreement, not its label.
Qudrat Ullah v. Municipal Board, Bareilly [AIR 1974 SC 396]
The Supreme Court held that a lease in perpetuity is valid under Section 105 TPA. The definition expressly contemplates a lease "in perpetuity," meaning there is no inherent legal prohibition against granting a lease that has no fixed termination date, provided the consideration and other essential elements are present.
Pradeep Oil Corporation v. MCD [(2011) 5 SCC 270]
The Court reiterated that the label given by parties to their arrangement is not decisive. Even if a document is titled "licence agreement," the court will examine its terms to determine whether it creates an interest in the property (lease) or merely a permission to use (licence). If exclusive possession is granted for a defined period with rent, the arrangement is a lease regardless of its title.
Why this matters
The classification of an arrangement as a lease under Section 105 TPA rather than a licence has far-reaching consequences. A lessee acquires a transferable interest in the property that can be assigned, sublet (unless prohibited), and is protected by tenancy and rent control legislation. A licensee acquires no interest in the property and can be evicted simply by revoking the licence.
For tenants, particularly in cities governed by rent control legislation, establishing that their arrangement is a lease is crucial. State-specific rent control acts provide tenants with security of tenure, protection against arbitrary eviction, and restrictions on rent increases — protections that are unavailable to licensees.
For landlords, the distinction affects their ability to recover possession. If a court determines that an arrangement labelled as a "leave and licence" is actually a lease, the landlord becomes subject to the restrictions of the applicable rent control act and cannot evict the tenant without establishing a statutory ground for eviction.
Related terms
Broader concepts:
Related concepts:
Sibling transfer types:
Frequently asked questions
What is the difference between a lease and a licence?
Under Section 105 TPA, a lease transfers an interest in immovable property — the lessee acquires a right to enjoy the property. A licence under Section 52 of the Indian Easements Act merely permits the use of premises without creating any interest. The Supreme Court in Associated Hotels v. R.N. Kapoor (1959) held that the test is whether exclusive possession is granted — if so, the arrangement is a lease regardless of its label.
Does a lease need to be registered?
Under Section 107 TPA, a lease from year to year, for a term exceeding one year, or reserving a yearly rent must be effected by a registered instrument. A lease for less than one year can be made orally with delivery of possession. An unregistered lease for a period exceeding one year is not admissible as evidence of the lease.
Can a lease be granted in perpetuity?
Yes. Section 105 TPA expressly contemplates a lease "in perpetuity." The Supreme Court in Qudrat Ullah v. Municipal Board, Bareilly (1974) confirmed that perpetual leases are legally valid under Indian law, provided they meet all essential elements including consideration.
This entry is part of the Veritect Indian Legal Glossary, a comprehensive reference of Indian legal terminology grounded in statutory text and judicial interpretation.
Last updated: 2026-03-27. Veritect provides this content for informational purposes and does not constitute legal advice.