Court clarifies that possession by tenant under an agreement to sell must be clearly linked to the sale to end tenancy; notice terminating tenancy valid despite inclusion of time-barred rent arrears
In a significant judgment dated September 7, 2026, the Allahabad High Court, presided by Justice Dr. Yogendra Kumar Srivastava, dismissed a revision petition challenging the eviction of tenants from a disputed shop in Kanpur Nagar. The court affirmed the lower Small Causes Court's decree, holding that an agreement to sell executed between a landlord and tenant does not ipso facto terminate the existing tenancy unless there is clear and cogent evidence showing a change in the legal basis of possession.
The case arose when the plaintiff-landlord filed a suit for eviction against the defendants, who were tenants of a shop, alleging default in payment of rent from January 2003 to August 2019. The defendants contended that their tenancy ceased following an agreement to sell dated December 24, 2002, supported by an alleged letter of possession and payment of the sale consideration, asserting that their possession had since been in part performance of the sale agreement.
Upon detailed scrutiny of the pleadings, documents, and evidence, the Court emphasized the critical distinction between physical possession and the legal character of possession. It was noted that the defendants were already in possession as tenants prior to the agreement to sell, and mere continuation of possession coupled with payment of consideration was insufficient to establish that the possession had become referable to the agreement to sell under Section 53-A of the Transfer of Property Act, 1882.
The Court further examined the disputed letter of possession dated December 24, 2002, finding that it was not satisfactorily proved, as the witnesses to the document were not examined, and its terms conflicted with the registered agreement which explicitly stated that possession was to be delivered at the time of executing the sale deed. The Court held that the burden was on the defendants to prove an express or implied surrender of the tenancy, which was not met.
Importantly, the Court reiterated the principle that an agreement to sell creates contractual rights but does not itself transfer ownership or terminate tenancy. The tenancy continues unless lawfully surrendered or determined by notice or agreement. Citing precedents including Nazim Shaikh Hasan v. Nasir Mushtaq Shaikh and H.K. Sharma v. Ram Lal, the Court underscored that possession under a tenancy does not automatically convert into possession in part performance of a sale agreement without clear evidence.
Regarding the notice dated September 1, 2019, which purported to terminate the tenancy and demanded rent arrears including amounts allegedly barred by limitation, the Court held that the inclusion of time-barred arrears does not invalidate the notice if the intention to terminate tenancy is clearly communicated. The Court relied on established principles that limitation bars remedy but not the underlying right, and the notice must be construed in a common-sense manner.
The Court also addressed the defendants’ argument that rent deposits made under protest negated default, holding that such deposits do not discharge liability unless they satisfy legal requirements fully.
In conclusion, the Allahabad High Court found no jurisdictional error or perversity in the lower court’s findings. The tenancy was held to subsist despite the agreement to sell, the notice terminating the tenancy was valid, and the eviction decree was upheld. The revision petition was dismissed with no order as to costs.
This judgment clarifies the law relating to the interplay between tenancy rights and agreements to sell, emphasizing the necessity of clear proof to alter the legal character of possession and the validity of tenancy termination notices despite claims of barred arrears.
Bottom Line:
An agreement to sell between a landlord and tenant does not automatically terminate the existing tenancy unless there is a clear and legally recognized change in the basis of possession, and such change must be proved by cogent evidence.
Statutory provision(s):
Transfer of Property Act, 1882 Section 53-A, Section 106; Provincial Small Cause Courts Act, 1887 Section 25; Evidence Act, 1872 Section 92
Rajesh Kumar Chaurasia v. Suresh Kapoor, (Allahabad) : Law Finder Doc Id # 2974374
