Nazim Shaikh Hasan v. Nasir Mushtaq Shaikh and Others, 2026

The appellant was a tenant in the property belonging to the respondent-landlord.

During the subsistence of the landlord-tenant relationship, the parties entered into an agreement to sell concerning the same property.

The total agreed sale consideration was ₹1,90,000.

The appellant paid ₹40,000 towards the agreed consideration.

A balance amount of ₹1,50,000 remained payable.

The agreement contemplated completion of the sale within a period of three months, subject to payment of the remaining consideration.

The appellant continued to remain in possession of the property after execution of the agreement to sell.

The appellant subsequently failed to pay the remaining consideration within the stipulated period.

The respondent-landlord instituted proceedings seeking recovery of possession of the property.

The appellant resisted the claim by contending that the original landlord-tenant relationship had come to an end upon execution of the agreement to sell.

The appellant further contended that his continued possession thereafter was not as a tenant but as a prospective purchaser.

He relied upon Section 53A of the Transfer of Property Act and argued that his continued possession constituted part performance of the agreement to sell.

The Trial Court rejected the appellant's defence and directed him to hand over possession of the property.

The First Appellate Court upheld the Trial Court's decision.

The appellant thereafter approached the Bombay High Court, which also upheld the orders directing him to surrender possession.

Aggrieved by the Bombay High Court's decision, the appellant approached the Supreme Court of India.

Before the Supreme Court, the appellant again argued that the agreement to sell had brought the tenancy to an end.

He further argued that his continued possession after the agreement was protected under Section 53A TPA.

The Supreme Court examined whether execution of the agreement to sell had resulted in an express or implied surrender of the existing tenancy.

The Supreme Court dismissed the appeal filed by the tenant.

The Court held that the mere execution of an agreement to sell between a landlord and tenant does not automatically bring an existing tenancy to an end.

The Court explained that determination of tenancy after an agreement to sell depends upon the terms of the agreement or the unequivocal conduct of the parties.

The Court examined whether the agreement contained any express provision demonstrating that the tenancy had been surrendered.

It found that the agreement contained no stipulation indicating that possession thereafter would be referable to the agreement to sell.

The agreement also did not provide for cessation of the tenant's obligation to pay rent.

There was consequently no express indication that the existing landlord-tenant relationship had been terminated.

The Court further found no unequivocal conduct on the part of the tenant demonstrating an implied surrender of tenancy.

The Court therefore held that the tenancy continued despite execution of the agreement to sell.

The appellant's payment of ₹40,000 out of the total consideration of ₹1,90,000 did not, by itself, determine the tenancy.

The Court then examined the appellant's reliance upon Section 53A TPA.

The Court explained that Section 53A protects a transferee who has obtained possession pursuant to a contract of transfer and has performed or is willing to perform the necessary obligations under the contract.

However, the Court held that mere continued possession by an existing tenant after entering into an agreement to sell does not automatically amount to part performance.

The Court distinguished a situation where a person is inducted into possession for the first time pursuant to an agreement to sell from a situation where the person was already in possession as a tenant.

Where a tenant was already occupying the property before the agreement to sell, continued occupation does not automatically establish that possession has changed its legal character.

The Court relied upon D.S. Parvathamma v. A. Srinivasan to explain this distinction.

The appellant had entered possession originally in the capacity of a tenant.

He neither established that his tenancy had ceased nor demonstrated that his possession thereafter commenced exclusively in the capacity of a prospective purchaser.

His continued occupation without disavowing his status as a tenant was therefore inconsistent with his plea of part performance.

The Court consequently rejected the argument that Section 53A protected his possession.

The Court further reiterated that an agreement to sell does not by itself confer title or interest in immovable property because it is not a registered conveyance.

The Court therefore upheld the orders of the Trial Court, First Appellate Court and Bombay High Court directing the appellant to hand over possession.

The appeal was accordingly dismissed.a

The judgment provides important clarification concerning the relationship between tenancy and an agreement to sell.

The Court rejected the proposition that execution of an agreement to sell automatically extinguishes an existing landlord-tenant relationship.

The legal status of possession does not change merely because the tenant subsequently agrees to purchase the property.

The Court correctly focused on the intention and conduct of the parties to determine whether the tenancy had actually been surrendered.

Section 111(e) TPA recognises determination of a lease through express surrender, while Section 111(f) recognises determination through implied surrender.

The existence of an agreement to sell is therefore not enough; there must be something in the agreement or conduct showing that the parties intended to bring the tenancy to an end.

The judgment establishes that an implied surrender cannot be inferred merely from the fact that the tenant agreed to purchase the property.

The Court's approach prevents a tenant from unilaterally changing the legal character of possession simply by relying upon an agreement to sell.

The continued payment or obligation to pay rent can be an important circumstance in determining whether the original tenancy continued.

In the present case, the agreement did not indicate that the tenant's obligation to pay rent had ceased.

The agreement also did not state that the tenant's possession would thereafter be treated as possession pursuant to the proposed sale.

These factors supported the conclusion that the tenancy remained subsisting.

The Court's interpretation of Section 53A TPA is equally significant.

Section 53A is a protection against the transferor enforcing certain rights against a transferee who has taken possession in part performance of a contract.

However, the statutory protection requires a connection between the possession and the contract.

A tenant already in possession cannot automatically satisfy this requirement merely by continuing to occupy the property after entering into an agreement to purchase it.

The crucial question is whether possession after the agreement flows from the agreement itself rather than from the earlier tenancy.

The judgment therefore distinguishes between continuation of existing possession and possession obtained pursuant to part performance of a contract.

This distinction is particularly important because otherwise every tenant who enters into an agreement to purchase rented premises could potentially claim that the tenancy had transformed into possession under Section 53A.

The Court relied upon D.S. Parvathamma v. A. Srinivasan to reinforce the principle that a person already in possession in one legal capacity must demonstrate a clear change in the character of possession before claiming protection based upon a subsequent contract.

The Court also correctly noted that an agreement to sell does not itself create title or ownership rights.

Ownership of immovable property ordinarily passes through the legally recognised conveyancing process rather than merely through an executory agreement to sell.

The decision therefore preserves the distinction between a contractual right to obtain a conveyance and an existing proprietary interest in the property.

The judgment also demonstrates that payment of part of the sale consideration does not automatically extinguish the tenant's existing legal status.

The appellant had paid ₹40,000 out of ₹1,90,000, but that payment did not establish that his possession had changed from tenancy to ownership or prospective ownership.

The decision is significant for landlords and tenants because it clarifies that an agreement to sell must be carefully examined to determine whether it contains provisions affecting the existing tenancy.

It also provides guidance for courts dealing with disputes where tenancy and sale transactions overlap.

The four principles formulated by the Supreme Court provide a useful framework for determining whether a tenancy survives an agreement to sell.

The judgment ultimately balances contractual rights and tenancy rights by requiring clear evidence of surrender before treating an existing lease as terminated.

Overall, the Court's decision establishes that an agreement to sell is not, by itself, a surrender of tenancy, and continued possession of an existing tenant is not automatically transformed into possession under Section 53A TPA.