Mere Agreement to Sell Does Not Terminate Tenancy; Unregistered Agreement Cannot Protect Tenant Under Section 53A: Supreme Court

Case Name: Nazim Shaikh Hasan v. Nasir Mushtaq Shaikh and Others

Date of Judgment: 13 August 2026

Citation: 2026 INSC 853

Bench: Justice Prashant Kumar Mishra and Justice N.V. Anjaria

Held: The Supreme Court held that the mere execution of an agreement to sell between a landlord and tenant does not automatically terminate the existing tenancy or transform their relationship into that of vendor and purchaser. A tenancy is determined only where the agreement’s express terms or the parties’ unequivocal conduct establish an express or implied surrender under Sections 111(e) or 111(f) of the Transfer of Property Act, 1882. A tenant’s continued possession after entering into an agreement to sell cannot, by itself, constitute part performance under Section 53A when such possession originated from and remains attributable to the tenancy. The Court further held that an agreement to sell executed after 24 September 2001 must be registered to confer protection under Section 53A. An unregistered agreement has no effect for that purpose by virtue of Section 17(1A) of the Registration Act, 1908. Even payment of deficient stamp duty and penalty cannot cure the absence of compulsory registration or make Section 53A available to the tenant.

Summary: The petitioner was occupying a shop in Pune as a tenant at a monthly rent of ₹1,500. During the subsistence of the tenancy, the landlady entered into an agreement dated 21 September 2004 to sell the premises to him for ₹1,90,000. The petitioner paid ₹40,000, while the balance of ₹1,50,000 was required to be paid within three months. The sale was never completed, and the landlady subsequently instituted eviction proceedings alleging rent default, change of user and bona fide requirement. The tenant resisted eviction by claiming that the agreement to sell had ended the landlord-tenant relationship and that he thereafter possessed the premises as a prospective purchaser. The Small Causes Court rejected this defence and ordered eviction, a decision successively affirmed by the First Appellate Court and the Bombay High Court. Before the Supreme Court, the tenant relied on R. Kanthimathi v. Beatrice Xavier to argue that the parties’ relationship had changed upon execution of the agreement. The Supreme Court distinguished that decision because the agreement in R. Kanthimathi expressly referred to possession having been surrendered under the sale arrangement, and almost the entire sale consideration had been paid. In the present case, the agreement contained no clause terminating the obligation to pay rent, surrendering the tenancy or making continued possession referable to the proposed sale. On the contrary, the agreement contemplated its cancellation if the tenant failed to obtain a loan and provided for restoration of possession according to the previous arrangement, thereby reinforcing the continuation of the tenancy. The Court also noted that the tenant never instituted a suit for specific performance, which further undermined his claim that the relationship had changed from landlord-tenant to vendor-vendee.

Decision: The Supreme Court dismissed the Special Leave Petition and upheld the concurrent orders directing the petitioner-tenant to vacate and hand over possession of the shop. It found no express or implied surrender of tenancy under Section 111 of the Transfer of Property Act and held that the tenant could not invoke Section 53A because his possession continued in the capacity of a tenant and the 2004 agreement to sell was admittedly unregistered. Consequently, the landlord-tenant relationship remained intact, and the Small Causes Court continued to possess jurisdiction over the eviction proceedings.