Difference between extension and renewal of lease deed

Calcutta High Court in a matter laid down the difference between “extension” and “renewal” of the lease deed. It was held that in the case of renewal, a new lease is required while in the case of extension the same lease continues in force during additional period by the performance of the stipulated act. In other words, the word ‘extension’ when used in its proper and usual sense in connection with a lease, means prolongation of the lease.

This was so held in the matter titled as Jute Corporation of India Ltd vs. ABL International Ltd. dated 23^rd April, 2018 and reported as MANU/WB/0259/2018

Challenge

Whether an unregistered lease was an extension of an earlier lease and therefore did not require any registration or stamping

Held

Renewal of lease and extension of lease are two distinctly separate concepts. While extension does not create a fresh or new lease, renewal does. If it is a renewal and hence a fresh lease, it must be created according to provisions in Section 107 of the Transfer of Property Act, 1882 read with Section 17 of Registration Act, 1908 and Indian Stamp Act, 1898. The law does not know of any other way of creating or renewing a demise. Under no other circumstances a demise can be created or renewed but termed as an “extension” not requiring registration and stamping if it is so termed, it is to avoid registration and stamp duty.

The Calcutta High Court opined that if the period of demise expires, then that period can be extended by a fresh demise, by whatever name one may call it. It may be called a new lease, a fresh lease or a renewal of the existing lease. The key factor is creation of a demise. This creation of a demise of over one year requires registration under Section 107 of the Transfer of Property Act, 1882 read with Section 17 of Registration Act, 1908 and stamping under the Indian Stamp Act, 1898.