Mere Agreement To Sell With Option To Lease Does Not End Landlord-Tenant Relationship: Himachal Pradesh High Court

The Himachal Pradesh High Court has held that when an agreement to sell has the option to either sell or lease the property, the landlord tenant relationship continues to exist.

The Court clarified that according to Section 54 of the Transfer of Property Act, 1882 “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.”

Justice Vivek Singh Thakur remarked that: “Had it been an Agreement to Sell only, then there was a possibility of drawing inference that tenancy came to an end… As the agreement was in the alternative to sell or lease out… tenancy would not come to an end.”

In 2015, landlord Prem Mohini Gupta filed a rent petition seeking eviction of her tenant, Sumitra Devi, on the ground of non-payment of rent from March 2001.

The rent controller allowed the petition and tenant was directed to evict the premises.

However, after the original tenant's death her son Shyam Lal denied execution of the eviction order, contending that the landlord had already agreed to sell the property to him through an agreement to sell.

The rent controller allowed the submission of the tenant's son and held that the status of parties stood changed in view of Agreement to Sell and remarked that in case this fact would have been disclosed at the time of filing the eviction petition there were minimal chances of passing the eviction order in favour of landlord.

Aggrieved, the landlord filed revision petition before the High Court.

The High Court reiterated that “As per Section 54 of the Transfer of Property Act, 1882, 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.”

Further, the High Court observed that it was not exclusively an agreement to sell but also was an alternative to either sell out or lease out the property.

Thus, the Court held that if it was an agreement to sell, then an inference could have been drawn that the tenancy came to an end. However, the agreeement was in the alternative to sell or lease out, so the tenancy did not come to an end.

Case Name: Prem Mohini Gupta v/s Sumitra (Deceased through LRs)

Case No.: Civil Revision No.88 of 2021

Date of Decision: 22.09.2025

For the petitioner: Mr. Y.P. Sood, Advocate

For the respondent: Ex-Parte

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