Nazim Shaikh Hasanv.Nasir Mushtaq Shaikh & Ors

Supreme Court Holds Agreement to Sell Does Not Automatically Terminate Landlord-Tenant Relationship

Case Snapshot

Case Name: Nazim Shaikh Hasan v. Nasir Mushtaq Shaikh & Ors.

Citation: 2026 INSC 853

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

Date of Judgment: August 13, 2026

Area of Law: Property Law, Landlord-Tenant, Transfer of Property Act, Registration Act

The Judgment in One Line

Execution of an agreement to sell between landlord and tenant does not automatically determine tenancy unless express or implied surrender is established.

Why This Judgment Matters

This judgment clarifies the critical distinction between an agreement to sell and the determination of a landlord-tenant relationship. The Supreme Court held that merely entering into an agreement to sell does not ipso facto terminate the tenancy. The Court distinguished R. Kanthimathi v. Beatrice Xavier, emphasizing that the decision in that case turned on specific contractual terms indicating surrender of possession. The judgment also clarifies that Section 53A of the Transfer of Property Act cannot protect a tenant's possession under an unregistered agreement executed after September 24, 2001, due to Section 17(1A) of the Registration Act. This ensures that tenants cannot avoid eviction merely by entering into an agreement to sell.

Background

The respondent's predecessor owned a shop premises. The petitioner was a tenant in the shop. On September 21, 2004, an agreement to sell was executed between the landlord and tenant for a total consideration of ₹1,90,000. The tenant paid ₹40,000 as advance, with the balance of ₹1,50,000 to be paid within three months, subject to loan sanction. Clause 4 stipulated that if the loan was not sanctioned, the agreement would stand cancelled, the advance would be refunded, and the tenant would hand over possession "as it was in the previous condition."

The landlord filed a suit for eviction on the ground of bona fide requirement. The Small Causes Court decreed the suit, holding that the landlord-tenant relationship continued despite the agreement to sell. The First Appellate Court and the High Court affirmed. The tenant appealed to the Supreme Court.

Issues Before the Court

1. Whether the execution of an agreement to sell between a landlord and tenant determines the subsisting tenancy.

2. Whether the tenant can claim protection under Section 53A of the Transfer of Property Act based on the agreement to sell.

3. Whether the agreement to sell had the effect of surrendering the tenancy under Section 111(e) or (f) of the Transfer of Property Act.

What Did the Supreme Court Hold?

The Supreme Court dismissed the special leave petition, upholding the concurrent findings of the courts below. The Court's reasoning was detailed and anchored in settled principles:

Agreement to Sell Does Not Automatically Terminate Tenancy: The Court held that mere execution of an agreement to sell does not ipso facto bring about a determination of the subsisting tenancy. Only when the terms of the agreement or the conduct of the parties disclose an express or implied surrender within the meaning of Section 111(e) or (f) of the Transfer of Property Act can the lease be said to have been determined.

R. Kanthimathi Distinguished: The Court distinguished R. Kanthimathi v. Beatrice Xavier, noting that in that case, the agreement to sell expressly stated that the demised property "had already been surrendered" to the possession of the tenant, and a substantial part of the consideration had been paid. In the present case, the agreement contained no such stipulation. Clause 4 expressly provided for cancellation and restoration of possession "as it was in the previous condition"—which was consistent with the continuance of tenancy.

No Express or Implied Surrender: The Court found no express surrender under Section 111(e) because the tenant did not yield up possession to the landlord. There was no implied surrender under Section 111(f) because there was no unequivocal conduct inconsistent with the continuance of tenancy. The tenant continued in possession as a tenant, not as a purchaser.

Section 53A Protection Unavailable: The Court held that the tenant could not claim protection under Section 53A of the Transfer of Property Act because: (i) the agreement was unregistered, and (ii) Section 17(1A) of the Registration Act provides that an unregistered agreement to sell executed after September 24, 2001, shall have no effect for the purposes of Section 53A. The tenant's possession was referable to the tenancy, not to the agreement to sell.

Part Performance Not Established: The Court applied D.S. Parvathamma v. A. Srinivasan, holding that a person already in possession as a tenant cannot claim that his possession thereafter was referable to the agreement to sell. Having entered into possession as a tenant and continued in that capacity, the tenant could not say that the agreement changed his character.

No Suit for Specific Performance: The tenant had not instituted a suit for specific performance. This conduct militated against the plea that the jural relationship had transformed from landlord-tenant to vendor-vendee.

Key Legal Principles

1. Agreement to sell does not terminate tenancy — mere execution of an agreement to sell between landlord and tenant does not automatically determine the subsisting lease.

2. Express surrender requires yielding up possession — under Section 111(e) of the TP Act, express surrender must involve the lessee giving up possession to the lessor by mutual agreement.

3. Implied surrender requires unequivocal conduct — under Section 111(f), the conduct of the parties must be inconsistent with the continuance of the existing tenancy.

4. Section 53A protection unavailable for unregistered agreements post-2001 — Section 17(1A) of the Registration Act provides that unregistered agreements executed after September 24, 2001, have no effect for Section 53A purposes.

5. Part performance requires possession referable to the agreement — a person already in possession as a tenant cannot claim that his possession thereafter was referable to an agreement to sell.

6. Clause for restoration of possession indicates continuance of tenancy — if the agreement provides for restoration of possession upon cancellation, it indicates that possession was referable to the tenancy.

Important Precedents

R. Kanthimathi v. Beatrice Xavier, (2000) 9 SCC 339

• Distinguished: in that case, the agreement expressly stated that possession had been surrendered, and substantial consideration was paid; the decision turned on its own peculiar facts.

Vayyaeti Srinivasarao v. Gaineedi Jagajyothi, 2025 SCC OnLine SC 421

• Held that an agreement to sell does not automatically determine tenancy; continuous possession as a tenant does not amount to part performance under Section 53A.

Shah Mathuradas Maganlal & Co. v. Nagappa Shankarappa Malage, (1976) 3 SCC 660

• Explained the concepts of express surrender and implied surrender under Section 111(e) and (f) of the TP Act.

Suraj Lamp and Industries Pvt. Ltd. v. State of Haryana, (2012) 1 SCC 656

• Held that an agreement to sell does not confer title or interest in property; only a registered sale deed transfers ownership.

D.S. Parvathamma v. A. Srinivasan, (2003) 4 SCC 705

• Held that a person already in possession as a tenant cannot claim that his possession thereafter was referable to an agreement to sell.

Ameer Minhaj v. Dierdre Elizabeth (Wright) Issar, (2018) 4 SCC 785

• Held that Section 17(1A) of the Registration Act mandates registration of agreements for Section 53A purposes; unregistered agreements have no effect.

Practical Impact

For advocates: This judgment is crucial when advising clients in landlord-tenant disputes. It establishes that tenants cannot avoid eviction merely by entering into an agreement to sell. The judgment also clarifies that the decision in R. Kanthimathi is limited to its peculiar facts and does not lay down a broad proposition that an agreement to sell automatically terminates tenancy. Advocates must examine the specific terms of the agreement to determine whether there is an express or implied surrender.

For future litigation: The judgment provides clarity on the interplay between agreements to sell and tenancy rights. It also reinforces the mandatory registration requirement for agreements to sell executed after September 24, 2001, for the purpose of Section 53A protection.

May be cited: In any landlord-tenant dispute where the tenant claims that an agreement to sell has terminated the tenancy, and in cases where a tenant seeks protection under Section 53A of the TP Act.

Lawcurb Quick Insight

The Court's reliance on Clause 4 of the agreement—which provided for cancellation and restoration of possession "as it was in the previous condition"—is significant. This clause was inconsistent with the tenant's claim that the tenancy had been surrendered, as it contemplated a reversion to the status quo ante upon failure of the sale.

Lawcurb Practice Note

When advising tenants in eviction proceedings, do not assume that an agreement to sell automatically defeats the landlord's claim for eviction. The agreement must expressly or impliedly evidence a surrender of tenancy. Mere execution of an agreement to sell, without more, is insufficient.

Remember This Ratio

Mere execution of an agreement to sell between landlord and tenant does not automatically determine tenancy; express or implied surrender must be established.

Exam Lens

Q: What is the distinction between express surrender under Section 111(e) and implied surrender under Section 111(f) of the Transfer of Property Act? A: Express surrender under Section 111(e) requires the lessee to yield up possession to the lessor by mutual agreement. Implied surrender under Section 111(f) is by operation of law and occurs when the conduct of the parties is unequivocally inconsistent with the continuance of the existing tenancy, such as the creation of a new lease or relinquishment of possession.

Q: When can a tenant claim protection under Section 53A of the Transfer of Property Act? A: Section 53A protects a transferee who has taken possession pursuant to a contract of transfer and has done some act in furtherance of the contract. However, for agreements executed after September 24, 2001, the agreement must be registered to have any effect for Section 53A purposes. A person already in possession as a tenant cannot claim that his possession was referable to the agreement to sell.

Q: What is the effect of Section 17(1A) of the Registration Act on agreements to sell? A: Section 17(1A), introduced with effect from September 24, 2001, provides that documents containing contracts to transfer immovable property for the purpose of Section 53A of the TP Act shall be registered. If such documents are not registered, they shall have no effect for the purposes of Section 53A.

Final Outcome

• Special Leave Petition dismissed — the Supreme Court upheld the concurrent findings of the courts below.

• Tenancy not terminated — the agreement to sell did not determine the landlord-tenant relationship.

• No express or implied surrender — neither the terms of the agreement nor the conduct of the parties indicated a surrender of tenancy.

• Section 53A protection unavailable — the agreement was unregistered and executed after September 24, 2001, and the tenant's possession was referable to the tenancy, not the agreement.

• Eviction order upheld — the tenant was directed to vacate and handover possession.

• No costs — pending applications disposed of.

Lawcurb Verdict

This judgment is a significant clarification of the law on the interplay between agreements to sell and landlord-tenant relationships. By holding that an agreement to sell does not automatically terminate tenancy, the Court has prevented tenants from using such agreements as a shield against eviction. The distinction of R. Kanthimathi ensures that the decision is not misread as laying down a broad proposition. The judgment also reinforces the mandatory registration requirement for agreements to sell post-2001, closing a potential loophole. A principled decision that upholds the rights of landlords while protecting tenants from exploitation.

This report is prepared by Lawcurb for educational and informational purposes only. It is a concise summary of the judgment and should not be construed as legal advice. Readers are encouraged to refer to the original judgment before relying on any legal proposition.