Sale of Property Does Not Extinguish Earlier Leasehold Rights; Punjab & Haryana High Court Restores Trial Court Decree and Rejects Challenge After 15-Year Delay

Case Name: Mohinder Kaur (Since Deceased) through LRs and Others v. Mohan Singh (Since Deceased) through LRs and Others; connected with Gurmej Singh and Another v. Jaswinder Singh and Others

Date of Judgment: 25 May 2026

Citation: RSA-1333-1994 and RSA-2572-1994

Bench: Justice Tribhuvan Dahiya

Held: The Punjab and Haryana High Court held that execution of a subsequent sale deed transferring ownership rights does not automatically extinguish pre-existing leasehold rights where the lease transactions were genuine and had been acted upon. The Court further held that mutation entries based on valid registered lease deeds cannot be treated as void and challenged after an unexplained delay of nearly fifteen years.

Summary: The dispute concerned two parcels of agricultural land measuring 93 kanals 2 marlas and 32 kanals situated in District Hisar. The plaintiffs sought a declaration that perpetual lease deeds executed in favour of Tirlochan Singh were sham and benami transactions created merely to defeat rights of pre-emptors and that they were owners in possession of two-third share in the suit property.

The plaintiffs asserted that Tirlochan Singh and the plaintiffs were real brothers and that although lease deeds had been executed in Tirlochan Singh’s name before the sale transactions, the real ownership flowed from the subsequent sale deeds executed jointly in favour of all three brothers. It was further alleged that Tirlochan Singh later created rights in favour of Mohinder Kaur through a collusive decree despite lacking authority to transfer leasehold interests.

The defendants opposed the suit and maintained that Tirlochan Singh had valid leasehold rights over the land before the execution of sale deeds and that such lease rights continued independently. They further contended that mutation entries had been validly sanctioned and that the suit was hopelessly barred by limitation.

The Trial Court had upheld the validity of the lease deeds and held the defendants entitled to rights flowing therefrom. The First Appellate Court, however, partly reversed those findings by holding that no sufficient evidence existed to establish lease rights over 25 kanals 2 marlas of land out of the second parcel and consequently granted relief to the plaintiffs regarding that portion.

Before the High Court, the defendants sought to produce additional evidence in the form of a registered lease deed dated 17.06.1964 relating to the remaining 25 kanals 2 marlas of land. The Court allowed the application observing that the document was necessary for proper adjudication of the dispute and directly addressed the evidentiary gap identified by the First Appellate Court.

After examining the evidence, the Court held that Tirlochan Singh had in fact been put into possession of the entire land as lessee prior to the execution of sale deeds. The Court noted that the lessors themselves had admitted leasing the land to Tirlochan Singh before subsequent transfer of ownership rights and the recitals in the sale deeds also referred to such prior lease arrangements.

The High Court further observed that the plaintiffs themselves had admitted possession of the defendants over the suit land and the newly produced lease deed completed the evidentiary chain demonstrating validity of leasehold rights over the entire second parcel of land. Consequently, the Court found the findings of the First Appellate Court unsustainable.

On limitation, the Court held that mutation entries sanctioned in 1970–71 were challenged only in 1985 after nearly fifteen years. Rejecting the lower appellate Court’s reasoning that the mutation was non est, the Court observed that the mutation had a valid basis in registered lease deeds and sale deed recitals and therefore could not be treated as void.

Decision: The High Court allowed RSA-1333-1994 and dismissed RSA-2572-1994. The judgment of the First Appellate Court to the extent it had reversed the Trial Court findings was set aside and the Trial Court judgment and decree were restored in entirety.