Supreme Court Upholds Landlord-Tenant Relationship Despite Agreement to Sell, Supreme Court affirms that the landlord-tenant relationship persists unless expressly or impliedly surrendered under the Transfer of Property Act.
In a significant ruling, the Supreme Court of India has reinforced the principles governing landlord-tenant relationships and agreements to sell properties. The apex court dismissed the Special Leave Petition (Civil) No. 17699 of 2026, filed by Nazim Shaikh Hasan, challenging the Bombay High Court's judgment which upheld the decisions of the Small Causes Court and the First Appellate Court. These courts had directed Hasan to vacate and hand over the possession of a shop located in Pune to the respondents' predecessor, Jainbi Mushtaq Shaikh.
The court's decision centered around the interpretation of the Transfer of Property Act, 1882, particularly Section 111 concerning the determination of leases. The bench, comprising Justices Prashant Kumar Mishra and N.V. Anjaria, emphasized that the mere execution of an agreement to sell between a landlord and tenant does not automatically terminate the landlord-tenant relationship. Instead, an express or implied surrender, as defined under Section 111(e) or (f) of the Act, is necessary to determine the tenancy.
The case involved a dispute over a shop in Pune, which was originally leased to Hasan at a monthly rent of Rs. 1500. During the tenancy, an agreement to sell the shop to Hasan was executed, with a part payment of Rs. 40,000 made against a total consideration of Rs. 1,90,000. However, the sale did not materialize, and Hasan continued in possession as a tenant. The original plaintiff, citing default in rent and other grounds, sought possession through a civil suit.
The Supreme Court elucidated that the subsisting tenancy continues unless the agreement to sell or the conduct of the parties expressly indicates a surrender of the lease. The court also clarified that an unregistered agreement to sell, post the 2001 amendment of the Registration Act, 1908, cannot invoke protection under Section 53A of the Transfer of Property Act. Thus, continuous possession as a tenant before the agreement does not automatically confer possession under the agreement.
Additionally, the court highlighted that Hasan's failure to seek specific performance of the agreement to sell undermined his claim of an altered relationship from landlord-tenant to vendor-vendee. The court also rejected arguments questioning the jurisdiction of the Small Causes Court and the necessity for impounding the agreement due to inadequate stamp duty and non-registration.
This ruling reaffirms the legal principles that uphold the sanctity of the landlord-tenant relationship and clarify the implications of agreements to sell within the framework of Indian property law.
Bottom Line:
Mere execution of an agreement to sell between a landlord and tenant does not automatically terminate the existing landlord-tenant relationship unless there is an express or implied surrender under Section 111(e) or (f) of the Transfer of Property Act, 1882.
Statutory provision(s): Transfer of Property Act, 1882 Section 111(e), (f), Section 53A; Registration Act, 1908 Section 17(1A); Specific Relief Act, 1963
Nazim Shaikh Hasan v. Nasir Mushtaq Shaikh, (SC) : Law Finder Doc id # 2960594
