What is the difference between a lease and a licence under Indian property law?

Question

dhiraj.sharma@justicum.com · Accepted Answer

A lease transfers a legal interest in immovable property and grants exclusive possession for a fixed term with rent, whereas a licence merely gives permission to use property without transferring any interest. The Supreme Court in Associated Hotels of India Ltd. v. R.N. Kapoor (AIR 1959 SC 1262) held that the real test is whether exclusive possession is given: if yes, it is a lease; if not, it is a licence. Similarly, in Rajbir Kaur v. S. Chhokar (AIR 1988 SC 1845), the Court reiterated that substance prevails over labels — even if an agreement is called a “licence,” if it grants exclusive possession, it will be treated as a lease.

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