How to transfer my spinning factory to another person for ten years. He is willing to operate my factory because I want to settle abroad. The factory is situated on my land and it is debt free. I have installed all necessary equipment for making synthetic yarn. A few of them have been imported from Italy. He is willing to pay pagdi in advance and also to a fixed amount each year. I want to keep ownership of my land and transfer only machinery and equipment to him. In this situation what would be the best mode to transfer.
Asked from: Uttar Pradesh
You should execute the transfer through a registered lease agreement, duly attested by two witnesses. The factory in question constitutes immovable property, as its equipment and machinery are permanently affixed to the land. This permanent installation reflects the clear intention of the owner to enjoy the land more beneficially on a long-term basis.
In accordance with the Transfer of Property Act, when the value of the property exceeds one hundred rupees, or the lease is for a term exceeding one year or involves rent exceeding one year’s value, the lease must be executed by a registered instrument.
The transfer of the right to operate the spinning factory located on the land constitutes the transfer of an interest in immovable property, as it amounts to yielding benefits from that immovable property. Therefore, any oral agreement or a notarised deed executed on a ₹100 stamp paper will not create any valid or enforceable right in favour of the transferee.
To ensure legal validity, the lease agreement must be:
- Executed as a registered deed,
- Properly stamped in accordance with the applicable Stamp Act, and
- Attested by at least two witnesses.
Failing to follow this process will render the transfer legally ineffective and may expose you to unnecessary disputes in the future. The said mode should be adopted to transfer the spinning factory to another person.
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