Still a Tenant: Supreme Court Says an Agreement to Sell Does Not Automatically End a Tenancy

Case at a glance: The Supreme Court has dismissed a tenant’s challenge to an eviction decree, holding that an agreement to sell between landlord and tenant does not, by itself, end the tenancy. A lease ends only by express or implied surrender under Section 111 of the Transfer of Property Act, and an unregistered agreement executed after 24 September 2001 cannot attract Section 53A protection.

The petitioner was a tenant of a 200 sq ft ground-floor shop at Kondhwa Khurd, Pune, at Rs 1,500 a month. On 21 September 2004 the owner executed an agreement to sell the shop to him for Rs 1,90,000, of which Rs 40,000 was paid, with Rs 1,50,000 due within three months. The sale did not go through, and in 2010 the landlord sued for possession citing rent default, change of use and bona fide need.

The tenant argued that the tenancy came to an end with the agreement to sell. The Small Causes Court decreed possession in 2015, the first appellate court dismissed his appeal in 2023, and the Bombay High Court dismissed his revision on 1 April 2026.

The Key Question Before the Court

Does an agreement to sell between landlord and tenant, with part payment, end the landlord-tenant relationship?

Surrender, Part Performance and Registration

The Court distinguished R. Kanthimathi v. Beatrice Xavier, where the agreement recorded that the property had already been surrendered to the buyer. Here the agreement contained no term on possession and did not stop rent. Relying on Shah Mathuradas Maganlal and Vayyaeti Srinivasarao, it held that a lease ends only by express surrender under Section 111(e) or implied surrender under Section 111(f), neither of which was shown. A clause requiring possession to be returned “as it was in the previous condition” if the loan was not sanctioned was consistent with a continuing tenancy.

Continued possession by a tenant is not part performance under Section 53A unless it flows from the agreement (D.S. Parvathamma). Under Section 17(1A) of the Registration Act, an agreement executed after 24 September 2001 must be registered to claim Section 53A protection (Ameer Minhaj), and an unregistered agreement confers no title (Suraj Lamp). The tenant had also not sued for specific performance. Pleas on the Small Causes Court’s jurisdiction and on impounding the agreement were rejected.

What the Court Actually Held

• An agreement to sell does not automatically terminate a tenancy.
• Only express or implied surrender under Section 111(e) or (f) ends a lease.
• Continued possession is not part performance unless it flows from the agreement.
• An unregistered agreement to sell confers no title and, if executed after 24.09.2001, no Section 53A protection; the SLP was dismissed.

Why This Judgment Matters

• It settles a recurring defence in eviction suits by tenants who agreed to buy.
• It applies the 2001 registration requirement to Section 53A claims.
• It explains why impounding an unregistered agreement does not cure non-registration.

What Should Advocates Take Away From the Judgment?

For Tenants

• Record any change in the character of possession expressly in the agreement.
• Sue for specific performance in time if the landlord backs out.

For Landlords

• An unregistered agreement to sell with a tenant does not by itself defeat eviction proceedings.

Key Takeaways

Frequently Asked Questions

The agreement records Rs 40,000 paid; the tenant pleaded Rs 90,000. The judgment does not reconcile the two figures.

No. The Court said impounding would not cure the lack of registration.

The Court distinguished it on facts, as the agreement there recorded that possession had been surrendered to the buyer.

Conclusion