INDIA Law and Practice Contributed by: Vivek Chandy, Archana Tewary, Kumarmanglam Vijay and Brijita Prakash, JSA
6.15 Specific Regulations Laws relating to leases do not differentiate between residential, industrial, commercial or retail leases, but commercial treatment may differ from market to mar - ket. No asset class distinctions relating to leases have been introduced due to the COVID-19 pandemic. 6.16 Effect of the Tenant’s Insolvency It is market practice to include a termination event in the lease triggered by the tenant’s insolvency. How - ever, where the tenant is under a corporate insolvency resolution process, upon admission of the insolvency application a moratorium is declared with the effect of, inter alia, prohibiting the recovery of any property by an owner/lessor where such property is occupied by or in possession of the tenant under insolvency. 6.17 Right to Occupy After Termination or Expiry of a Lease If contractually permitted, the tenant may continue to occupy the premises as a monthly tenant after the expiry/termination of lease or if the landlord does not refund the IFRSD in time. In all other cases, the ten - ant would have to leave the premises on the date of the expiry/termination of the lease, failing which the landlord can approach the court to evict the tenant, who will be a trespasser. The landlord can also claim mesne profits from the tenant for such unauthorised occupation. 6.18 Right to Assign a Leasehold Interest Under TOPA, a lessee may transfer absolutely, or by way of mortgage/sublease, whole or part of their interest in the property, and any transferee of such interest or part may again transfer it, subject to the lessee not ceasing any of the liabilities attached to the lease and there being no contract to the contrary. For statutory tenants, state legislation (such as the Maharashtra Rent Control Act 1999) also prescribes transfer restrictions. The sublessee must abide by the lease agreement executed. In commercial leases, landlords generally permit assignment/subleasing to affiliates/group companies but not to unrelated third parties.
6.19 Right to Terminate a Lease Events of default and termination rights are contractu - ally agreed between parties, including granting a cure period following such an event of default. Such events would be standard events, such as breach of lease terms, failure to pay rent for over two rent cycles, force majeure events, failure of landlord to rectify structural damage/defects, any claims/governmental action resulting in the tenant not being able to use or access the property, breach of sanctions laws/anti-bribery laws, etc. 6.20 Registration Requirements Immovable property leases from year to year or for more than 12 months or reserving a yearly rent require mandatory registration at the SRA. The Registration Act requires the deed to be registered within four months of its execution. An additional four months’ discretionary extension may be granted by the SRA, by levying a penalty, if such non-registration was due to unavoidable circumstances. After registration, the lease is recorded in the local Registry of Deeds and becomes a public document. Stamp duty is payable on the lease deed before it is registered, by the tenant, unless it is otherwise agreed to be shared between the parties. Although licences are not normally required to be reg - istered, certain states (such as Maharashtra; see the Maharashtra Rent Control Act) mandate it. 6.21 Forced Eviction Where a tenant is in breach of the lease, the landlord would have to follow the procedure set out in the lease deed to evict the tenant, including giving the tenant an opportunity to cure the default. Thereafter, the land - lord can issue a notice of termination and initiate legal action to recover the premises (and mesne profits) where the tenant remains in occupation. The process of tenant eviction may take three to seven years. In rent-controlled properties, evicting a tenant could take much longer. 6.22 Termination by a Third Party A third party cannot terminate a lease unless contrac - tually agreed. If a condemnation event by a govern - ment body occurs, the lease will stand terminated as
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