Whether Tenant Can Acquire Possessory Right in Tenanted Premises under The Oral Agreement of Sale

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Sunday, 4 April 2021

Whether tenant can acquire possessory right in tenanted premises under the oral agreement of sale?

 I have perused the judgment of the Trial Court. Trial Court has

decreed the suit on the ground that in the written statement the Appellant admitted payment of rental amount from time to time and did not claim that the status of the Appellant was severed as a tenant completely. Even assuming that the Appellant had entered into an agreement to sell for purchasing the suit property from the Respondent and had paid part consideration, at best, the Appellant could rely on the agreement for two purposes i.e. (i) file a suit for specific performance seeking execution of

the sale deed; and (ii) claim protection under Section 53A of the Act. It was also an admitted case that there was no written Agreement to Sell ever executed between the parties and the defence of the Appellant was based on an oral agreement. Based on the amendment to Section 17 of the Registration Act, whereby the Registration of an Agreement to Sell has been made compulsory as well as amendment to Section 53A of the Act

and the Indian Stamp Act, 1899, the Trial Court concluded that in the absence of a registered Agreement to Sell the Appellant could not claim protection under Section 53A of the Act. Based on the proposition of law laid down in Sudhir Sabharwal vs. Rajesh Pruthi 2014 AIR CC 2850 by this Court that mere Agreement to Sell of immovable property will not terminate the landlord-tenant relationship, the Trial Court was of the view

that no purpose would be served to put the matter to trial and passed the judgment, noting that while there was no admission, however, if thedefendant has no legal defence, then under Order XIV Rule 1(6) CPC, judgment can be straightaway passed.{Para 12}

14. Appellant in the written statement admitted that he was inducted as a tenant in the year 2013 vide a registered lease deed dated 09.09.2013 and also admitted the renewal of the lease till 2015. Appellant, however, set up an oral agreement to sell and also pleaded payment of Rs.30 Lakhs towards part consideration of the sale price.

15. The issue that arises before this Court is as to whether the

Appellant could claim retention of the suit property on the plea of an oral Agreement to Sell.

16. The answer to the above question in my view can only be against the Appellant. The legal position on this aspect is no longer res integra. Section 17 of the Registration Act was amended by the Registration and Other Related Laws (Amendment) Act, 2001, Act No.48 of 2001, by insertion of Section 1(A) therein and by virtue of the Amendment, registration of an Agreement to Sell has been made compulsory with effect from 24.09.2001. Section 17(1-A) reads as follows:-

“Section (1A). The documents containing contracts

to transfer for consideration, any immovable

property for the purpose of Section 53A of the

Transfer of Property Act, 1882 (4 of 1882) shall be

registered if they have been executed on or after the

commencement of the Registration and other

Related Laws (Amendment) Act, 2001 and if such

documents are not registered on or after such

commencement (i.e. w.e.f. 24.09.2001), then, they

shall have no effect for the purposes of the said

Section 53A.”

17. Therefore, a buyer cannot avail the benefit of Section 53A of the Act if the agreement to sell is not registered. When a tenant enters into an agreement to sell for buying the tenanted premises but the agreement to sell is not in conformity with law, the relationship continues as landlord tenant and while the tenant can seek specific performance, but he acquires no right to retain possession, till a sale deed is registered in his favour.

In view of the legal position that “mere agreement

to sell of immovable property does not create any

right in the property save the right to enforce the

said agreement” and in view of the preceding

discussion that “mere agreement of sale will not

terminate landlord- tenant relationship unless there

is specification to that effect in agreement itself”,

this Court is of the view defendant has not right to

occupy the said property.”

18. In Shiv Kumar vs. Sumit Gulati, RSA No.417/2015, decided on 04.12.2015, the Court held that when the defendant claims possession on the basis of an oral agreement to sell, the same cannot be recognized in view of the amended Section 53A of the Act. 

19. Significantly in the present case the relationship between the

parties as landlord-tenant is an admitted position. It is also admitted that the rent of the premises was over Rs.3,500/- as also that the Respondent terminated the lease by sending a notice under Section 106 of the Act. In view of the said position and in the absence of the alleged oral agreement being registered, the Trial Court has rightly passed a decree for recovery of the suit property and no infirmity can be found. The suit is pending on

other reliefs and shall be continued and adjudicated in accordance with law.

 IN THE HIGH COURT OF DELHI AT NEW DELHI

 RFA 272/2020 and CM 28819/2020, 28820/2020 and 28818/2020

PRASHANT GOYAL Vs INDRANIL WADHWA .

CORAM:

HON'BLE MS. JUSTICE JYOTI SINGH

Date of decision: 11.11.2020