13 August 2026 – The Supreme Court in Nazim Shaikh Hasan v. Nasir Mushtaq Shaikh & Ors.
considered whether the execution of an agreement to sell between a landlord and tenant, along
with part payment of the sale consideration, automatically ends the existing landlord-tenant
relationship.
Statutory provisions involved:
Section 54, Transfer of Property Act, 1882: Agreement to sell does not by itself create
any interest or charge in immovable property.
Section 111(e) & (f), Transfer of Property Act, 1882: Express and implied surrender of
lease.
Section 53A, Transfer of Property Act, 1882: Part performance.
Section 17(1A), Registration Act, 1908: Registration requirement for agreements relied
upon for protection under Section 53A.
Facts:
The petitioner was a tenant in a shop owned by the respondents’ predecessor at a monthly rent of
Rs.1,500. During the tenancy, the parties entered into an agreement to sell dated 21.09.2004 for
Rs.1,90,000, out of which the petitioner paid Rs.40,000 and agreed to pay the remaining amount
within three months.
The sale, however, was not completed. The petitioner continued in possession of the shop.
Subsequently, the landlord filed a suit for possession on grounds including rent default, change in
use of the premises and bona fide requirement.
The petitioner argued that after the agreement to sell, the landlord-tenant relationship had ended
and he was in possession as a prospective purchaser. The Small Causes Court rejected this
contention and ordered eviction. The First Appellate Court and the Bombay High Court upheld
the decision. The matter then reached the Supreme Court.
Legal Issue:
Whether the execution of an agreement to sell by a landlord in favour of an existing tenant,
coupled with part payment of the sale consideration, automatically terminates the landlord-tenant
relationship?
Obiter:
The Court clarified that an agreement to sell does not automatically terminate an existing
tenancy. There must be an express or implied surrender of tenancy under Section 111(e) or (f) of
the Transfer of Property Act.
The Court distinguished R. Kanthimathi v. Beatrice Xavier, observing that in that case the
agreement itself contained circumstances showing a clear intention to change the relationship
between the parties. The present agreement contained no such indication.
The Court further observed that merely continuing in possession after entering into an agreement
to sell does not amount to possession under Section 53A when the person was already in
possession as a tenant.
The Court also reiterated that an agreement to sell does not itself create any title or interest in
immovable property; ownership passes only through a legally executed conveyance.
In the present case, the agreement specifically provided that if the loan was not sanctioned, the
agreement would stand cancelled and possession would be handed back in the previous
condition. This showed that the parties continued to recognise the existing arrangement rather
than replacing the tenancy with a purchaser-vendor relationship.
Ratio:
If a tenant enters into an agreement to purchase the tenanted property, the tenancy does not end
merely because the agreement is executed or part consideration is paid. The tenancy will be
determined only where the agreement or conduct of the parties shows an express or implied
surrender under Section 111(e) or (f) of the TP Act. Continued possession of an existing tenant
does not by itself amount to part performance under Section 53A. Further, an unregistered
agreement to sell executed after the 2001 amendment cannot be relied upon for Section 53A
protection.
Coram:
Justice Prashant Kumar Mishra
Justice N.V. Anjaria
