Agreement To Sell Doesn't End Landlord-Tenant Relations Automatically: SC

The Supreme Court has held that the mere execution of an agreement to sell between a landlord and a tenant does not automatically terminate the pre-existing tenancy unless the terms or conduct of the parties show express or implied surrender. Furthermore, an unregistered agreement to sell cannot be invoked to protect possession under part performance under Section 53A of the Transfer Of Property Act, 1882.

A Division Bench comprising Justice Prashant Kumar Mishra and Justice N.V. Anjaria dismissed a Special Leave Petition challenging concurrent judgments of the Small Causes Court, the First Appellate Court, and the Bombay High Court ordering eviction of a tenant.

Court's Analysis on Surrender and Part Performance

Analyzing the statutory provisions, the Supreme Court distinguished R. Kanthimathi and Another v. Beatrice Xavier (Mrs.), noting that in the present case, the agreement contained no recital indicating that possession was held pursuant to the sale agreement rather than the lease. Examining Section 111 of the Transfer Of Property Act, 1882, the Bench placed reliance on Shah Mathuradas Maganlal & Co. v. Nagappa Shankarappa Malage and Others ( "(1976) 3 SCC 660": 1976 CaseBase(SC) 197) and Vayyaeti Srinivasarao v. Gaineedi Jagajyothi ( "2026 SCC OnLine SC 84": 2026 CaseBase(SC) 25) to explain express and implied surrender of tenancy.

The Court noted that an agreement to sell does not confer title, citing Suraj Lamp and Industries Private Limited (2) Through Director v. State of Haryana and Another, Narandas Karsondas v. S.A. Kamtam ( "(1977) 3 SCC 247": 1976 CaseBase(SC) 5), Ram Baran Prasad v. Ram Mohit Hazra ( "AIR 1967 SC 744": 1966 CaseBase(SC) 212), and Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra. Mentioning B. Paramashivaiah v. M.K. Shankar Prasad ( "AIR 2009 Kar 88": 2008 CaseBase(KAR) 359), the Bench highlighted that surrender by operation of law requires unequivocal conduct. Referring to Arjunlal Bhatt Mall Gothani and Others v. Girish Chandra Dutta and Another and D.S. Parvathamma v. A. Srinivasan ( "(2003) 4 SCC 705": 2003 CaseBase(SC) 135), the Court reiterated that a tenant remaining in possession cannot claim part performance under Section 53A unless possession was given afresh under the contract. Moreover, relying on Ameer Minhaj v. Dierdre Elizabeth (Wright) Issar and Others ( "(2018) 7 SCC 639": 2018 CaseBase(SC) 531), the Bench affirmed that Section 17(1A) of the Registration Act, 1908, inserted by the Registration and Other Related Laws (Amendment) Act, 2001, mandates registration of contracts to claim Section 53A protection.

The Court, in its reasoning, observed: "the mere execution of an agreement to sell between a landlord and tenant does not ipso facto bring about a determination of the subsisting tenancy; it is only when the terms of the agreement or the unequivocal conduct of the parties, inconsistent with the continuance of the existing tenancy, disclose either an express or implied surrender within the meaning of Section 111(e) or (f) of the TP Act, that the lease can be said to have been determined; the continuous possession of a tenant even after the execution of an agreement to sell does not amount to part performance under Section 53A of the TP Act unless such possession is shown to be directly relatable to and flowing from the agreement to sell; and any agreement to sell, not being a registered deed of conveyance, does not by itself confer any title or interest in the property."

The Court has following directions:

"The present Special Leave Petition is sans merit and, accordingly, the same stands dismissed."

Background

The dispute arose from a shop room in Pune let out at a monthly rent. During the tenancy, the landlady executed an agreement to sell on September 21, 2004, receiving Rs. 40,000 as earnest money out of Rs. 1,90,000. Clause 4 of the agreement stipulated that if the balance loan was not sanctioned within three months, the agreement would stand cancelled and possession would be handed back in its previous condition. When the sale did not materialise, the landlady instituted a suit for eviction on grounds of bona fide need and default. The Small Causes Court decreed the eviction suit, which was upheld by the First Appellate Court and affirmed by the Bombay High Court in revision. The tenant then approached the Supreme Court.

Case Details:
Case No.: SPECIAL LEAVE PETITION (CIVIL) NO.17699 OF 2026
Neutral Citation: 2026 INSC 853
Case Title: NAZIM SHAIKH HASAN v. NASIR MUSHTAQ SHAIKH AND OTHERS

Source: 2026 CaseBase(SC) 782