25 March 2025 Civil Appeals >> Civil & Consumer Law   |   Dispute with Tenant/Landlord >> Property & Real Estate  

The Supreme Court has set aside a judgment of Som Nath v/s Ravinder Kumar., by the Punjab and Haryana High Court, thereby restoring the eviction order against a tenant who had failed to complete a property purchase agreement. The core of the dispute revolved around whether a landlord-tenant relationship existed despite a subsequent agreement to sell the property and a conditional decree for specific performance.

Background of the Case:

The appellant, owner of the premises, rented it to the respondent in June 2007. Later, in October 2007, an agreement to sell the property to the respondent was executed, with a deadline for the sale deed. This date was extended, but the respondent failed to make the balance payment, leading to the lapse of a specific performance decree that was conditional upon timely payment. The appellant then sought possession and arrears of rent under Section 13 of The East Punjab Urban Rent Restriction Act, 1949, alleging non-payment of rent since August 2007.

The respondent contested the eviction, arguing that no landlord-tenant relationship existed due to the sale agreement and specific performance decree.

Decisions by Lower Courts:

The Rent Controller and the Appellate Authority both ruled in favor of the appellant, finding that a landlord-tenant relationship existed, the respondent was in arrears of rent, and the eviction petition was maintainable. They noted the respondent's admission of not paying rent and the failure to comply with the conditions of the specific performance decree.

High Court's Reversal:

The High Court, in a brief order, overturned these concurrent findings. It reasoned that the absence of a written tenancy agreement and the existence of an agreement for sale, coupled with a specific performance decree (even if unfulfilled), meant there was no landlord-tenant relationship, thus rendering the eviction petition non-maintainable.

Supreme Court's Analysis and Decision:

The Supreme Court examined the scope of the High Court's revisional powers under Section 15(5) of the 1949 Act, noting that while broad, judicial discipline requires a thorough examination of factual findings. The Court found that the High Court erred by:

• Overlooking oral tenancy agreements: The High Court disregarded the possibility of an oral tenancy agreement, which was the basis of the appellant's claim and supported by his testimony. The Rent Controller and Appellate Authority had accepted this oral evidence, especially considering the respondent's prior sale of his own property and his occupation of the disputed premises before the sale agreement.
• Misinterpreting the effect of a sale agreement on tenancy: The Supreme Court clarified that a contract for sale of immovable property does not, by itself, create any interest in or charge on such property as per Section 54 of the Transfer of Property Act, 1882. Title transfers only upon the registration of a sale deed. Since the specific performance decree was conditional and the respondent failed to fulfill that condition, no conveyance occurred, and therefore, the landlord-tenant relationship did not terminate under Section 111(d) of the Transfer of Property Act, 1882.

Given these reasons, the Supreme Court concluded that the High Court had no valid basis to overturn the concurrent findings of fact by the Rent Controller and the Appellate Authority. Consequently, the Supreme Court allowed the appeal, set aside the High Court's judgment, and restored the eviction order passed by the Appellate Authority.

Section 54, Transfer of Property Act - 1882  

Transfer of Property Act, 1882