Supreme Court says tenancy not ended by agreement to sell without surrender of possession

The case concerns a dispute between a tenant-petitioner and landlord-respondents regarding whether the landlord-tenant relationship ceased upon the execution of an agreement to sell, where the tenant had paid part of the consideration but the sale did not complete.

Who it concerns: Petitioner: Nazim Shaikh Hasan; Respondents: Nasir Mushtaq Shaikh and others; Bench: Justice Prashant Kumar Mishra.

What the court decided

• The Court analyzed whether the tenancy ended upon the execution of the agreement to sell.
• The Court distinguished the present case from R. Kanthimathi v. Beatrice Xavier, noting the current agreement lacked stipulations indicating possession was surrendered under the sale agreement or that rent obligations ceased.
• The Court examined the concepts of express and implied surrender under Section 111 of the Transfer of Property Act, 1882.
• The Court noted that the agreement to sell in this case contained a clause stating it would stand cancelled if the loan was not sanctioned, requiring the refund of the initial payment and handover of possession.

Also in the document

• The Court found the agreement to sell in this case materially different from the precedent cited by the petitioner because it did not explicitly state that possession was surrendered in pursuance of the sale agreement.
• The agreement to sell included a condition that if the bank loan was not sanctioned within three months, the agreement would be cancelled, the seller would refund Rs. 40,000, and the purchaser would hand over possession.