I want to rent out my commercial space for ATM in Hinjewadi, so what is the procedure?

Renting out your commercial space for an ATM in Hinjewadi, Pune, is a common and generally straightforward process, but there are some important legal and practical steps you should follow to ensure compliance with Indian law and to protect your interests as a landlord.

Legal Overview: In India, letting out a commercial property for an ATM is considered a commercial lease. The transaction is governed primarily by the Transfer of Property Act, 1882, and, in Maharashtra, the Maharashtra Rent Control Act, 1999, may also apply depending on the nature and duration of the lease. Since Hinjewadi falls under Pune jurisdiction, local municipal regulations and zoning laws must also be considered.

Step-by-Step Procedure:

1. Check Title and Permissions: Ensure you have clear title to the property and that there are no encumbrances or legal disputes. Verify that your property is approved for commercial use. If the property is in a residential zone, you may need to obtain a change of land use or special permission from the Pune Municipal Corporation or relevant planning authority. Some societies or complexes require No Objection Certificates (NOC) from the society or association for installing an ATM.

2. Identify the Tenant (Bank or ATM Operator): Usually, banks or authorized ATM operators (like Indicash, Muthoot, or India1) will approach you, or you can reach out to them directly. Banks often have standard requirements regarding location, security, and access.

3. Negotiate Terms: Discuss and agree on rent, security deposit, lease duration (typically 5-10 years for ATMs), escalation clauses, maintenance, electricity charges, and who will bear the cost of fit-outs and security. ATMs are generally considered a commercial activity, as clarified in various judgments (see, for example, the principle that “a shop/commercial unit is deemed to be booked for a commercial purpose” as referenced in your provided judgments).

4. Draft and Execute a Lease Agreement: The lease agreement should clearly state the purpose (installation and operation of ATM), area leased, rent, security deposit, duration, renewal terms, and termination clauses. Include clauses regarding maintenance, insurance, liability, and compliance with RBI and local regulations. The agreement should specify that the premises are being let out for a commercial purpose, as this affects the applicability of rent control laws and taxation (see the discussion in judgments regarding the use of premises for “commercial purpose”).

5. Stamp Duty and Registration: Under the Registration Act, 1908, and the Maharashtra Stamp Act, 1958, lease agreements exceeding 11 months must be registered and appropriately stamped. Even for shorter periods, registration is advisable for enforceability. Stamp duty in Maharashtra for commercial leases is typically higher than for residential leases and is calculated based on the duration and rent.

6. Municipal and Statutory Compliance: The bank/ATM operator will usually obtain necessary permissions from the RBI and local authorities for operating the ATM. You may need to assist in obtaining a NOC from the society or municipal authority, if required.

7. Handover and Fit-Out: Once the agreement is executed, hand over possession for the limited purpose of ATM installation. The bank/operator will handle installation, security (CCTV, guards), and connectivity.

Relevant Legal Principles and Judgments:

• The Supreme Court and various High Courts have consistently held that letting out premises for commercial purposes (including ATMs, shops, offices) is distinct from residential letting and is governed by different legal principles (see, for example, the principle that “the buildings on the plot have been constructed for residential/commercial purpose and therefore, the same are covered by the provisions of the Bombay Rent Act”).

• In disputes regarding the nature of use, courts look at the express terms of the lease deed and the actual use of the premises (see the illustration regarding lease deeds specifying the purpose, as in the case of “Gokulam Industries and Saw Mills”).

Practical Advice:

• Always insist on a formal, registered lease agreement to avoid future disputes.

• Ensure that the agreement specifies the use as “ATM installation and operation” to avoid ambiguity.

• Clarify responsibility for property tax, electricity, and maintenance in the agreement.

• If your property is mortgaged, check with your lender if NOC is required for leasing.

Tax Implications:

• Rental income from commercial property is taxable under “Income from House Property” under the Income Tax Act, 1961.

• If your total rental income exceeds the GST threshold (currently ₹20 lakhs per annum), GST registration and compliance may be required.

In Summary:

Renting out your commercial space for an ATM in Hinjewadi involves ensuring clear title, confirming commercial use permissions, negotiating and executing a detailed lease agreement, paying appropriate stamp duty and registration charges, and complying with local municipal and statutory requirements. The legal position is well-settled that such letting is a commercial transaction, and courts will uphold the terms of a properly executed lease deed.

If you need a draft lease agreement or assistance with registration, it’s advisable to consult a local property lawyer to ensure all legal formalities are properly completed. This will safeguard your interests and ensure a smooth transaction with the bank or ATM operator.

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Disclaimer: All opinions and views are personal.

Best wishes,

Advocate Rajeev K Jha

Expert Technical and Environmental Due Diligence Services | Technical & Environmental due diligence || Sarve Permits

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