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

1. Present Appeal has been filed against the judgment dated

07.10.2020 passed by the Trial Court in Suit No.308/2020 whereby the

Trial Court has partly decreed the suit and passed a decree of possession

in favour of the Plaintiff/Respondent and against the Defendant/Appellant

herein with respect to property bearing No.A-75, Ground Floor,

Chittranjan Park, New Delhi.

2. Short but relevant facts are that the Plaintiff/Respondent herein

claiming to be the owner/landlord of the suit property filed a suit for

possession and recovery of arrears of rent and charges for amenities

alongwith mesne profit and damages with future and pendente lite

interest. The Plaintiff/Respondent alleged that the Defendant/Appellant

entered into a lease agreement for the property for a period of 12 months

at a rent of Rs.40,000/- per month in addition to the utility charges and

the lease deed was registered on 11.09.2013. The lease was extended by

fresh lease deeds in 2014 and 2015 whereby the rent was increased to

Rs.42,000/- per month.

3. As per the Respondent, the lease deed ended by efflux of time on

31.08.2016 and the tenancy continued on month to month basis.

Respondent alleged that the Appellant began defaulting in payment of

rent from July, 2016 and eventually stopped paying the rent with effect

from June, 2019.

4. The Respondent terminated the lease by serving on the Appellant a

legal notice dated 24.06.2020 under Section 106 of the Transfer of

Property Act, 1882 (hereinafter referred to as ‘the Act’). The arrears of

rent as per the Respondent amounted to Rs.11,43,000/- uptil 30.06.2020

upon which interest at the rate of 18% p.a. accrued to the Respondent

alongwith holding charges of Rs.3,000/- per day, calculated from

11.07.2020 till the date the suit was filed.

5. Appellant entered appearance in the suit and filed a written

statement alongwith reply to the application under Order XVA of the

CPC taking a defence that the Respondent had not approached the Court

with clean hands. The Appellant disputed the landlord-tenant relationship

as it was a practice between the parties to register a lease deed as was

done for the deeds executed for the years 2013-2015. Post 2015 no lease

deed was executed as the Respondent had offered to sell the property and

had acted on this offer by handing over possession to the Appellant.


Appellant agreed to purchase the property for a total sale consideration of

Rs.1.3 Crores. It was orally agreed that the Appellant will initially pay

Rs.30 Lakhs and the remaining shall be paid at the time of executing the

sale deed. Between August 2015 and July 2019 Respondent had been

accepting the alleged rent in his account as well as in cash which is

reflected in bank statement and calculation sheet placed on record before

the Trial Court.

6. As per the chronology of dates, matter was listed for arguments on

28.09.2020 before the Trial Court on the Application under Order XVA

Rule 1 CPC and the Court also heard arguments on the issue of passing

judgement without holding a trial as per Order XII Rule 6 read with

Order XIV Rule 1(6) CPC. On 07.10.2020 the Trial Court partly decreed

the suit for recovery of possession of the property and the Appellant was

directed to hand over vacant possession to the Respondent within 30

days.

7. Learned counsel for the Appellant contends that mere admission of

landlord-tenant relationship by the Appellant cannot take away the right

of the Appellant to contest the suit and the Trial Court ought to have

proceeded with the trial on the defence set up by the Appellant. It is also

argued that the Trial Court failed to appreciate that the Appellant had

disputed the landlord-tenant relationship, as after 2015 no lease deeds

were executed owing to the fact that the Respondent had offered to sell

the property and this is substantiated by the handing over of possession to

the Appellant.

8. Learned counsel further contends that the defence of the Appellant

was supported by the contents of the plaint itself as the Appellant had

regularly paid the agreed rent till the last month of the registered lease

deed i.e August 2016, as per calculation sheet placed on record with the

plaint. Respondent had himself admitted in the legal notice dated

24.06.2020 as well as the plaint that he had to relocate to Maharashtra

and therefore it was a natural presumption that he was intending to

dispose of his property. Trial Court also failed to appreciate that between

August 2016 to July 2019 Respondent accepted the rent in his account as

well as cash, which is reflected in the bank statement and the calculation

sheet placed on record. Onus to prove that the Appellant was allowed to

occupy the property as a tenant was squarely on the Respondent, which

he failed to discharge. Respondent did not even prove why after August

2016 he did not enter into a registered lease deed as per past practice and

why no objections were raised on late payment of the alleged rent until

March, 2019.

9. Learned counsel contends that it is a settled law that in a case

where a defendant raises objections which go to the root of the case, it

would not be appropriate to exercise discretion under Order XII Rule 6

CPC and more importantly there were no clear admissions on the part of

the Appellant. Reliance is placed on the judgment of the Supreme Court

in Satish Chander Ahuja vs. Sneha Ahuja 2020 SCC OnLine SC 841

where the Court has held that it is discretionary for a Court to pass

judgment on admission and the discretion has to be exercised keeping in

mind that a judgment without trial permanently denies any remedy to the

Defendant by way of an appeal on merits and unless the admission is

clear, unambiguous and unconditional the discretion should not be

exercised.

10. Learned counsel for the Respondent has defended the judgment by

reiterating the arguments made before the Trial Court and submits that

the Trial Court has rightly passed the decree as the landlord-tenant

relationship was admitted, the rent of the property was admittedly over

Rs.3,500/- and a legal notice dated 24.06.2020 had been issued by the

Respondent under Section 106 of the Act terminating the month to month

tenancy.

11. I have heard learned counsel for the Appellant and learned counsel

for the Respondent.

12. 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 the

defendant has no legal defence, then under Order XIV Rule 1(6) CPC,

judgment can be straightaway passed.

13. For the sake of completeness I may note that Respondent herein

being the Plaintiff filed a suit before the Trial Court seeking the following

reliefs :

“A. a decree for recovery of peaceful and vacant

possession of House No. A-75, Ground Floor,

Chittranjan Park, New Delhi – 110019 kindly be

passed in favour of the plaintiff and against the

defendant.

B. a decree for recovery of utility charges such as

electricity, water charges and RWA charges as may

be pending till the date of handing over of peaceful

vacant possession of House No. A-75, Ground

Floor, Chittranjan Park, New Delhi – 110019 kindly

be passed in favour of the plaintiff and against the

defendant.

C. Recovery of Rs. 11,84,,000/- amounting to rental

till 31/07/2020, along with interests accruing due to

no payment of the rentals till date of filing of the

RFA 272/2020 Page 7 of 11

plaint, along with future interest be passed in favour

of the plaintiff and against the defendant.

D. Recovery of Rs. 60,000/- amounting as mesne

profit @ Rs. 3,000/- per day from 10/07/2020 for

unauthorized use of the said property till the

peacefull vacant possession is handed over to the

plaintiff, along with interests accruing due to nonpayment

of the mesne profits till date of handing

over of physical vacant possession of House No. A-

75, Ground Floor, Chittranjan Park, New Delhi –

110019 be passed in favour of the plaintiff and

against the defendant.

E. Costs of the suit may be awarded in favour of the

plaintiff and against the defendant.”

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 landlordtenant

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.

This has been clearly held by this Court in Sudhir Sabharwal (supra).

The relevant portion of which is as follows :-

“The plaintiff had filed a suit seeking decree of

possession against the defendant in respect of the

premises in dispute. The application sought decree

on the basis of admissions made by the defendant in

his written statement. The plaintiff is a landlord of

property No. G-27/4, Rajouri Garden, New Delhi

and its ground floor was let out to the defendant at

the rent of Rs. 25,000/- per month. The plaintiff

issued notice to the tenant on 29.6.2011 followed by

a reminder on 11.1.2012 asking them to vacate the

premises. But there was no compliance of the

plaintiff’s request therefore the suit was filed to seek

possession as well as damages. The defendant had

admitted the enhanced rent of Rs. 27.500/- from

1.7.2011 and that the tenancy period had been

extended by another seven months by the plaintiff.

But he also claimed in the written statement that the

plaintiff had agreed to sell the rental premises to the

defendant for a total consideration of Rs.

2,10,00,000/- for which the defendant had paid

bayana/advance payment of Rs. 21,20,000/- i.e.

10% of the total sale consideration and that the

plaintiff had duly executed receipt in this regard.

What follows is that even if the /defendant were to

succeed in his suit for specific performance of

agreement to sell, till the execution of a conveyance

deed in pursuance to the decree, if any, in favour of

the defendant, the defendant has no ground in law to

save his possession of the premises. The status of the

defendant would continue to be as before i.e. of a

tenant whose tenancy has been determined.

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. The same view has been

taken by the Courts in other judgments in Babita Joshi vs. Dilip Rawat, (2015) 219 DLT 697 and Kaushal Aggarwal vs. Ashok Malhotra, CS(OS) 165/2009 decided on 17.02.2009.

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.

20. The appeal is accordingly dismissed. Pending applications are also

dismissed.

21. At this stage Mr. Bajaj submits that the Appellant may be

permitted some time to vacate the premises as it would be impossible for

the Appellant to vacate immediately and find another premises on

account of the prevailing circumstances due to Pandemic Covid-19.

22. Mr. Indranil Wadhwa, Respondent is present in Court. Mr.

Wadhwa consents to the Appellant vacating the premises within a period

of two months from today.

23. Accordingly, it is directed that the Appellant shall vacate the

property bearing No.A-75, Ground Floor, Chittranjan Park, New Delhi-

110 019 within a period of sixty days from today and hand over the

vacant and peaceful possession to the Respondent. Respondent shall pay

RFA 272/2020 Page 11 of 11

the user charges at the agreed rate of Rs.42,000/- per month for the two

months that he would occupy the premises.

24. Appellant shall give an undertaking to this effect on an affidavit

within a period of seven working days from today. Needless to add that

the Appellant shall be bound by the undertaking.

(JYOTI SINGH)

JUDGE

NOVEMBER 11, 2020

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