Sunday, 3 February 2019

Whether tenancy will come to end if agreement of sale is executed between landlord and tenant?

 As observed supra, such is not the case here
because we do not find any such clause or a clause
akin thereto in the agreement dated 13.05.1993 and
nor we find that the existing conditions in the
agreement discern the intention of the parties to
surrender the tenancy agreement either expressly or
impliedly.
38. In the light of the foregoing discussion, we are
of the considered opinion that the tenancy in
question between the parties did not result in its
determination as contemplated under Section 111
of TP Act due to execution of the agreement dated
13.05.1993 between the parties for sale of the suit
house and the same remained unaffected

notwithstanding execution of the agreement dated
13.05.1993
39. A fortiori, the respondent (lessor) was rightly
held entitled to file an application against the
appellant (lessee) under Section 21 (1) (a) of the UP
Act and seek the appellant's eviction from the suit
house after determining the tenancy in question.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL Nos. 12371238
OF 2019

Dr. H.K. Sharma Vs  Shri Ram Lal 

Dated:January 28, 2019.
Abhay Manohar Sapre, J.

1. Leave granted.
2. These appeals are directed against the final
judgment and orders dated 03.10.2017 in Recall
Application No.871 of 2017 in W.P.(MS) No.396 of
2016 and dated 17.07.2017 in W.P.(MS) No.396 of
2016 passed by the High Court of Uttarakhand at
Nainital.
1
3. In order to appreciate the short controversy
involved in these appeals, few relevant facts need
mention infra.
4. The appellant is the “opposite party” whereas
the respondent is the “applicant” in the original
application out of which these appeals arise.
5. The respondent (applicant) is the owner of
house bearing No.5A, Court Road, Nardev Shastri
Road, Dehradun comprising of four rooms, one
kitchen, two verandahs and two galleries. The
respondent has let out a portion of this house
consisting of three rooms, one kitchen, latrinebathroom,
one store and two verandas (hereinafter
referred to as the “suit house”) to the appellant on a
monthly rent of Rs.750/as
per the tenancy
agreement dated 22.07.1985 entered into between
them.

6. On 28.04.2008, the respondent filed an
application under Section 21(1) (a) of the U.P. Urban
Buildings (Regulation of Letting Rent and Eviction)
Act, 1972 (hereinafter referred to as “the UP Act”)
against the appellant (opposite party) before the
Prescribed Authority (Civil Judge) Sr. Division,
Dehradun seeking his eviction from the suit house.
7. The eviction was sought on the ground of
respondent's bona fide need for his residence and
also the members of his family. The respondent
alleged that he has retired from the services and
has no other suitable house of his own where he
can live and, therefore, requires the suit house for
his personal residence as also for the residence of
the members of his family.
8. The appellant (opposite party) contested the
application by filing the written statement. While

denying the ground of bona fide need, it was
contended that the appellant has entered into an
agreement on 13.05.1993 with the respondent for
purchase of the suit house and pursuant thereto he
has also paid huge amount to the respondent. It
was contended that since the parties have already
entered into an agreement of sale/purchase of the
suit house, the relationship of landlord/tenant
between them has ceased to exist and now it no
longer subsists and has come to an end.
9. It was also contended that consequent upon
the execution of the agreement between the parties
for the purchase of the suit house, the appellant is
no longer in possession of the suit house as tenant
but is now in possession as a purchaser of the suit
house in part performance of the agreement dated
13.05.1993 qua the respondent.
4
10. In other words, it was contended that the
relationship of landlord and tenant between the
parties has come to an end and now the same stood
converted into the new relationship of buyer and
seller of the suit house. It was, therefore,
contended that the application filed by the
respondent under Section 21(1) (a) of the UP Act
against the appellant for his eviction from the suit
house is not maintainable and, therefore, it is liable
to be dismissed on this short ground.
11. The Prescribed Authority by order dated
03.11.2010 dismissed the respondent's application
and held that since the parties entered into an
agreement dated 13.05.1993 for sale of the suit
house, the appellant was not required to pay any
monthly rent to the respondent inasmuch as
according to him the relationship of the landlord
5
and tenant between the parties has come to an end.
He also decided the issue of bona fide need against
the respondent and in appellant's favour.
12. The respondent felt aggrieved and filed an
appeal before the Appellate Court. By order dated
19.12.2015, the Appellate Court dismissed the
appeal and affirmed the order of the Prescribed
Authority. The respondent (applicant) felt aggrieved
and filed the writ petition under Article 227 of the
Constitution of India before the High Court of
Uttarakhand at Nainital.
13. By impugned order dated 17.07.2017, the
High Court allowed the writ petition and set aside
the order of the Appellate Court and the Prescribed
Authority. The appellant felt aggrieved and filed
recall application. The High Court by order dated
03.10.2017 dismissed the recall application.
6
14. The High Court held that mere agreement to
sell the suit house would not result in termination
of landlordtenant
relationship between the parties
unless there is a stipulation in the agreement itself
to that effect. It was also held that since the
agreement in question relied on by the appellant
(opposite party) is not a registered agreement, he is
not entitled to raise the plea of part performance
based on Section 53A
of the Transfer of Property
Act, 1882 (for short “the TP Act”) against the
respondent. The High Court further held that the
respondent being an old man has every right to live
in his house in the last leg of his life and more so
when he has no other house of his own in the city
and, therefore, he has made out a case of bona fide
need for his residence as also for the members of
his family.
7
15. It is against these two orders of the High Court,
the opposite party, i.e., the tenant has filed these
appeals by way of special leave in this Court.
16. So, the short question, which arises for
consideration in these appeals, is whether the High
Court was justified in allowing the respondent's
application filed under Section 21(1) (a) of the UP Act.
16A. Heard Mr. Jitendra Mohan Sharma, learned
senior counsel for the appellant and Mr. Narender
Hooda, learned senior counsel for the respondent.
17. Mr. Jitendra Sharma, learned senior counsel for
the appellant while assailing the legality and
correctness of the impugned order has essentially
argued one point.
18. Placing reliance on the decision reported in R.
Kanthimathi & Anr. vs. Beatrice Xavier (Mrs.)
[(2000) 9 SCC 339], learned counsel contended that
8
the High Court erred in allowing the application filed
by the respondent against the appellant.
19. It was his submission that the issue raised by
him in support of his submission remains no longer
res integra and stands decided by the decision
rendered in the case of R. Kanthimathi (supra) in
appellant's favour.
20. Learned counsel elaborated his submission by
contending that the moment the landlord and the
tenant enters into an agreement of sale/purchase of
the tenanted property while subsistence of the
tenancy and the tenant pursuant to such agreement
pays part consideration to the landlord towards sale
price of the tenanted premises, the relationship of
landlord and tenant comes to an end and ceases to
exist, i.e., it results in termination of the tenancy
agreement ipso facto and in its place brings into
9
existence a new relationship between the parties,
namely, that of the purchaser and the seller of the
tenanted premises.
21. It was his submission that it is for this reason,
the application filed by the respondent as landlord
of the tenanted premises to seek the appellant's
eviction as his tenant from the suit house was
wholly misconceived and not maintainable for want
of any subsisting relationship of landlordtenant
between them. It was, therefore, rightly dismissed
by the Prescribed Authority and the Appellate
Authority but wrongly allowed by the High Court by
the impugned order.
22. In reply, learned counsel for the respondent
(applicantlandlord)
supported the impugned order
and contended that no case is made to interfere in
the impugned order.
10
23. Having heard the learned counsel for the
parties and on perusal of the record of the case, we
find no merit in these appeals.
24. The question, which arises for consideration in
these appeals, is when the lessor and the lessee
enters into an agreement for sale/purchase of the
tenanted premises where the lessor agrees to sell
the tenanted premises to his lessee for
consideration on certain conditions, whether, as a
result of entering into such agreement, the Jural
relationship of lessor and the lessee in relation to
the leased property comes to an end and, if so,
whether it results in determination of the lease.
25. In other words, the question that arises for
consideration is when the lessor enters into an
agreement to sell the tenanted property to his lessee
during the subsistence of the lease, whether
11
execution of such agreement would ipso facto result
in determination of the lease and severe the
relationship of lessor and the lessee in relation to
the leased property.
26. In our considered opinion, the aforementioned
question has to be decided keeping in view the
provisions of Section 111 of the TP Act and the
intention of the parties to the lease whether
the
parties intended to surrender the lease on execution
of such agreement in relation to the tenanted
premises or they intended to keep the lease
subsisting notwithstanding the execution of such
agreement.
27. Chapter V of the TP Act deals with the leases
of Immovable property. This chapter consists of
Section 105 to Section 117.
12
28. A lease of an immoveable property is a
contract between the lessor and the lessee. Their
rights are governed by Sections 105 to 117 of TP
Act read with the respective State Rent Laws
enacted by the State.
29. Section 111 of the TP Act deals with the
determination of lease. Clauses (a) to (h) set out the
grounds on which a lease of an immoveable
property can be determined.
30. Clauses (e) and (f) with which we are
concerned here provide that a lease can be
determined by an express surrender; in case, the
lessee yields up his interest under the lease to the
lessor by mutual agreement between them whereas
Clause (f) provides that the lease can be determined
by implied surrender.
13
31. This Court in the case of Shah Mathuradas
Maganlal & Co. vs. Nagappa Shankarappa Malage
& Ors., (1976) 3 SCC 660 considered the scope of
clauses (e) and (f) of Section 111 of the TP Act and
laid down the following principle in Para 19 as
under.
“19. A surrender under clauses (e) and (f)
of section 111 of the Transfer of Property
Act, is an yielding up of the term of the
lessee's interest to him who has the
immediate reversion or the lessor's interest.
It takes effect like a contract by mutual
consent on the lessor's acceptance of the act
of the lessee. The lessee cannot, therefore,
surrender unless the term is vested in him;
and the surrender must be to a person in
whom the immediate reversion expectant on
the term is vested. Implied surrender by
operation of law occurs by the creation of a
new relationship, or by relinquishment of
possession. It the lessee accepts a new lease
that in itself is a surrender. Surrender can
also be implied from the consent of the
parties or from such facts as the
relinquishment of possession by the lessee
and taking over possession by the lessor.
Relinquishment of possession operates as an
implied surrender. There must be a taking of
possession, not necessarily a physical taking,
14
but something amounting to a virtual taking
of possession. Whether this has occurred is a
question of fact.
32. It is in the light of the aforementioned legal
principle, the question involved in this case has to
be examined.
33. Perusal of Agreement to Sell dated 13.05.1993
(Annexure P1)
shows that though the agreement
contains 9 conditions but none of the conditions
provides much less in specific terms as to what will
be the fate of the tenancy. In other words, none of
the conditions set out in the agreement 13.05.1993
can be construed for holding that the parties
intended to surrender the tenancy rights.
34. A fortiori, the parties did not intend to
surrender the tenancy rights despite entering into
an agreement of sale of the tenanted property. In
other words, if the parties really intended to
15
surrender their tenancy rights as contemplated in
clauses (e) or (f) of Section 111 of the TP Act while
entering into an agreement to sell the suit house, it
would have made necessary provision to that effect
by providing a specific clause in the agreement. It
was, however, not done. On the other hand, we find
that the conditions set out in the agreement do not
make out a case of express surrender under clause
(e) or implied surrender under clause (f) of Section
111 of the TP Act.
35. It is for this reason, the law laid down by this
Court in the case of R. Kanthimathi (supra) has no
application to the facts of this case and is, therefore,
distinguishable on facts. Indeed, it will be clear from
mere perusal of para 4 of the said decision quoted
hereinbelow:
“4. As aforesaid, the question for
consideration is, whether the status of tenant
16
as such changes on the execution of an
agreement of sale with the landlord. It is
relevant at this junction first to examine the
terms of the agreement of sale. The relevant
portions of the agreement of sale records the
following:
“I the aforesaid Mrs. Beatrice Xavier
hereby agree out my own free will, to sell,
convey and transfer the property to you Mrs.
R. Kanthimathi wife of Mr. S. Ramaswami,
435 Trichy Road, Coimbatore for a mutually
agreed sale consideration of Rs.25,000/.
I shall be proceeding to Coimbatore and
shall execute the sale deed and present the
same for admission and registration before
the Registering Authority, accepting and
acknowledge payment of the balance of
consideration of Rs. 5000/(
Rupees five
thousand only) at the time of registration
and shall complete the transaction of sale
and conveyance as the property demised has
already been surrendered to your
possession.” (Emphasis in Original)
36. The words highlighted in italics of the
agreement were construed by Their Lordships for
holding that these italicized words in the agreement
clearly indicate that the parties had really intended
to surrender their tenancy rights on execution of the

agreement of sale and bring to an end their jural
relationship of the landlord and tenant.
37. As observed supra, such is not the case here
because we do not find any such clause or a clause
akin thereto in the agreement dated 13.05.1993 and
nor we find that the existing conditions in the
agreement discern the intention of the parties to
surrender the tenancy agreement either expressly or
impliedly.
38. In the light of the foregoing discussion, we are
of the considered opinion that the tenancy in
question between the parties did not result in its
determination as contemplated under Section 111
of TP Act due to execution of the agreement dated
13.05.1993 between the parties for sale of the suit
house and the same remained unaffected

notwithstanding execution of the agreement dated
13.05.1993
39. A fortiori, the respondent (lessor) was rightly
held entitled to file an application against the
appellant (lessee) under Section 21 (1) (a) of the UP
Act and seek the appellant's eviction from the suit
house after determining the tenancy in question.
40. Before parting, we make it clear that we
examined the terms of the agreement dated
13.05.1993 only for deciding the question as to
whether the execution of agreement, in any manner,
resulted in determination of the existing tenancy
rights between the parties in relation to the suit
house in the context of the TP Act and the UP Act
and not beyond it.
41. Coming to the next question as to whether the
respondent has made out a case of his bona fide

need for his residence and the members of his
family as contemplated under the UP Act, suffice it
to say, it being a question of fact, the finding
recorded by the High Court on this question does
not call for any interference in this appeal. It is
binding on this Court. Even otherwise, we find no
good ground to interfere in the finding for the
reason that the respondent being a landlord and a
retired man has every right to live in his house with
his family. Therefore, there is no perversity in the
finding of the High Court on this issue.
42. In the light of the foregoing discussion, we
concur with the reasoning and the conclusion
arrived at by the High Court in the impugned order.
It does not call for any interference.
43. The appeals thus fail and are accordingly
dismissed.
20
44. The appellant is, however, granted three
months’ time to vacate the suit house subject to the
appellant furnishing usual undertaking in this
Court within two weeks from the date of this order
and paying entire arrears of rent upto date
including three months rent to be paid in advance
to the respondent to enable him to remain in
possession for a period of three months from the
date of this order. The arrears of rent, as directed,
be paid by the appellant to the respondent within
one month from the date of this order.
………...................................J.
[ABHAY MANOHAR SAPRE]
....……..................................J.
[DINESH MAHESHWARI]
New Delhi;
January 28, 2019.

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