Facts
The petitioner was a tenant of the respondents’ predecessor in a 200 sq.ft. shop at Pune at a monthly rent of Rs.1,500/-. During subsistence of the tenancy, an agreement to sell dated 21.09.2004 was executed for Rs.1,90,000/-, of which Rs.40,000/- was paid. The balance was to be paid within three months. The agreement subsequently failed, and the landlord instituted a suit for possession alleging, inter alia, bona fide requirement. The Small Causes Court, First Appellate Court and Bombay High Court held that the landlord-tenant relationship continued.
Issues Framed
“Whether on the execution of the agreement to sell by the landlord in favour of the tenant, upon receiving part consideration, the inter se relationship of landlord-tenant ceases and fresh rights and obligations flow from the agreement to sell.”
Court’s Reasoning
(a) Determination of tenancy. The Court distinguished R. Kanthimathi v. Beatrice Xavier, where the agreement expressly indicated possession pursuant to the sale agreement and substantial consideration had been paid. The present agreement contained no such stipulation and did not provide for cessation of rent or alteration of the landlord-tenant relationship. (Paras 11–14)
(b) Surrender under the TP Act. S.111(e) and (f) TP Act recognise express and implied surrender. Implied surrender requires circumstances or conduct demonstrating that the earlier relationship could no longer subsist. The Court held that neither the agreement nor the parties’ conduct disclosed such surrender. Payment of Rs.40,000/- out of Rs.1,90,000/- could not, by itself, determine the tenancy. (Paras 15–21)
(c) Clause 4 of the agreement. The provision requiring restoration of possession “as it was in the previous condition” upon failure of the loan was consistent with continuance of the tenancy and demonstrated that possession remained referable to the tenancy. (Para 22)
(d) S.53A TP Act. Continued possession by an existing tenant does not, by itself, constitute possession pursuant to the agreement to sell. Further, the agreement was unregistered. Under S.17(1A) Registration Act, an unregistered agreement executed after 24.09.2001 has no effect for purposes of S.53A TP Act. (Paras 18, 24–25)
Held
The concurrent findings required no interference. The petitioner’s plea that the tenancy had transformed into a vendor-vendee relationship and that protection under S.53A TP Act was available was rejected. The Special Leave Petition was dismissed.
Conclusion
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.
Relevant Para
20) The ratio flowing from the aforesaid pronouncements, read conjointly, can be distilled to the following propositions:
(i) 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;
(ii) 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;
(iii) 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
(iv) any agreement to sell, not being a registered deed of conveyance, does not by itself confer any title or interest in the property.”
Case Details
Citation: 2026 INSC 853
Decided on: 13 August 2026
Case Title: Nazim Shaikh Hasan v. Nasir Mushtaq Shaikh and Others
Court: Supreme Court of India
Bench: Prashant Kumar Mishra J., N.V. Anjaria J.