An Agreement To Sell Does Not Confer Ownership Rights: Himachal Pradesh High Court

The Court was hearing a civil revision petition filed against an order of the Rent Controller, which had accepted the tenant’s objections to eviction on the ground that an agreement to sell had been executed between the parties, allegedly altering their status.

A Bench comprising Justice Vivek Singh Thakur, while deciding the matter, observed that “Agreement to Sell does not create any title in favour of the purchaser as it is only an Agreement to Sell but not sale or transfer of property subject matter of the Agreement to Sell.”

The petitioner was represented by Advocate Y.P. Sood, while the respondent proceeded ex parte.

Background

The matter arose from an eviction petition filed by a landlord seeking recovery of arrears of rent and possession of certain premises. The tenant did not contest the proceedings, leading to an ex parte eviction order.

Subsequently, in execution proceedings, the tenant’s legal representatives objected to the eviction, claiming that an agreement to sell had been executed years earlier between the landlord and one of the tenant’s family members for a portion of the same property.

It was contended that this agreement altered the legal relationship between the parties, rendering the eviction order unenforceable. The Rent Controller accepted the objection, holding that the landlord’s right to seek eviction was diminished due to the agreement to sell.

Challenging this finding, the landlord approached the High Court, contending that the agreement did not extinguish the tenancy and that ownership could not pass in the absence of a registered sale deed executed in compliance with the Transfer of Property Act, 1882.

Court’s Observation

The Himachal Pradesh High Court, at the outset, examined the contents of the agreement to sell and noted that it did not amount to a sale or transfer of ownership.

The Court observed that under Section 54 of the Transfer of Property Act, an agreement to sell does not create any title in favour of the purchaser as it is only an Agreement to sell, but not a sale or transfer of property subject matter of the Agreement to sell.

The Bench further noted that the tenancy continued unaffected, as the agreement in question was not for the entire tenanted premises, and the record contained no indication that the agreement terminated the tenancy.

The Court also found that the alleged purchaser had not taken any step for specific performance of the agreement, nor had any registered sale deed been executed despite multiple extensions of time.

The Court remarked that “had it been an Agreement to Sell only, then there was possibility of drawing inference that tenancy came to an end at the time of execution of the agreement. As the agreement was in alternative to sell or lease out, therefore, it has to be construed that on execution of such agreement, the tenancy would not come to an end.”

The Court accordingly concluded that the Rent Controller had misconstrued the scope of the agreement and erroneously concluded that it covered the entire premises under tenancy. It was observed that the agreement related to only part of the property, and the Rent Controller’s decision was therefore unsustainable in law.

Conclusion

Allowing the revision petition, the High Court set aside the order of the Rent Controller and restored the execution proceedings, directing that the matter be concluded expeditiously.

The Court instructed the parties to appear before the Rent Controller on a specified date for further proceedings and clarified that any objection based on the pending civil suit between the parties shall be decided in accordance with the law.

Cause Title: Prem Mohini Gupta v. Sumitra (Deceased) through LRs (Neutral Citation: 2025:HHC:32830)

Appearances

Petitioner: Y.P. Sood, Advocate

Respondent: Proceeded ex parte

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