Mere Agreement to Sell of the Leased Property to the tenant would not terminate Landlord-Tenant relationship

In a recent judgment, the Supreme Court observed that mere agreement to sell the property of the landlord to the tenant would not result in termination of landlord-tenant relationship between the parties unless there is a stipulation in the agreement itself to that effect.
The said ruling was held in the matter of Dr. H.K. Sharma vs. Shri Ram Lal (Civil Appeal Nos. 1237­1238 Of 2019), decided on 28.01.2019.

Challenge

The issue in the present matter was that when the lessor and lessee enters into an agreement for sale of the tenanted premises where the lessor agrees to sell the tenanted premises to his lessee for consideration on certain conditions then whether, as a result of entering into such agreement, the Jural relationship of lessor and  lessee in relation to the leased property comes to an end.

Held

While upholding the High court judgment in favour of landlord, the Supreme Court observed that the agreement for sale between landlord and the tenant states no conditions as to what the fate of the tenancy would be. The Bench further said that none of the conditions set out in the agreement could be construed for holding that the parties intended to surrender the tenancy rights.

Referring to various provisions of the Transfer of property Act, 1881 the Bench held that if the parties really intended to 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. Thus, 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.