by Mr. Vikash Agarwal
Hon’ble SC recently ruled that “transfer” in a lease deed should be read broadly, not confined to the Transfer of Property Act. Parties can agree to terms beyond statutory provisions, provided they don’t contravene laws or public policy. The “transfer” clause aims to retain the lessor’s control over the property and prevent alienation jeopardizing the lessor’s rights.
A key factor in lease assignments is the ***unearned increase***, referring to the difference between the gross investment in the lease and the present value of minimum lease payments from the lessor’s perspective. This is generally paid on all transfers, implying that the lessor is entitled to a portion of the value increase of the leased property, which arises due to factors like market appreciation.
Doesn’t this support the argument that assigning a long-term lease is akin to land transfer, involving the transfer of not just land use rights, but also potential financial benefits? The interplay with the ongoing GST dispute is worth watching.
**CA 8336/09
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