Sanchayita Lahkar

The High Court of Himachal Pradesh, Single Bench of Justice Vivek Singh Thakur, held that when an agreement between parties contains an option to either sell or lease a property, the landlord-tenant relationship remains intact. Setting aside the Rent Controller’s order that had accepted objections to the execution of an eviction decree, the Court observed that the 2004 agreement relied upon by the tenant’s representatives neither covered the entire rented premises nor transferred ownership in the absence of a registered sale deed. The execution proceedings were restored, with directions for their expeditious disposal by December 31, 2025.

A landlord filed a rent petition seeking eviction of a tenant on the ground of non-payment of rent since March 2001. The tenant did not appear before the Rent Controller and was proceeded ex parte. After considering the landlord’s evidence, the Rent Controller directed payment of arrears of rent with statutory interest within 30 days, failing which eviction would follow. The amount was not deposited, and execution proceedings were initiated. The tenant subsequently passed away, and her legal representatives were brought on record. They filed objections, contending that the landlord had executed an agreement to sell the property in 2004 in favour of one of the tenant’s family members, thereby altering the parties’ status from landlord and tenant to prospective seller and purchaser.

Also Read: Supreme Court: For a Valid Oral Gift (Hiba) under Mohammedan Law, Proof of Public Possession Is Essential; Absence of Mutation Raises Doubt over Ownership Claims

The objectors argued that part payment of the sale consideration had been made and possession delivered, asserting that the eviction order was obtained by concealment and misrepresentation. They produced a copy of the 2004 agreement to sell, which referenced a prior agreement from 2002, subsequently cancelled. The landlord countered that the agreement did not cover the entire tenanted premises, did not extinguish tenancy rights, and that no sale deed was executed as the purchaser failed to obtain necessary government permission. The Rent Controller, relying on earlier Supreme Court decisions, accepted the objections and held that the tenancy relationship had ceased due to the agreement to sell.

On revision, the High Court examined the agreement clauses and found that it provided an alternative option to either sell or lease the property, and therefore, did not terminate the landlord-tenant relationship. The Court noted that no sale deed was executed and that the agreement only related to part of the property. It held that the Rent Controller had erred in law and fact, set aside the impugned order, and restored the execution proceedings for expeditious disposal.

The Court observed that the Agreement to Sell dated January 21, 2004, referred only to part of the property—two rooms on the top floor of the Bakery Building, Dhalli—and not to the entire tenanted premises mentioned in the eviction order. The judgment records that “it has been wrongly concluded by the Rent Controller that subject matter of Agreement to Sell dated 21.1.2004 is the same as that in the Rent Petition.”

The Court further recorded that the agreement itself contained explicit clauses clarifying that two rooms occupied by Sumitra Devi were “not the part and parcel of the property hereby being agreed to be sold.” Thus, the Rent Controller’s assumption that the tenancy covered the same area was incorrect.

The Court also stated that under Section 54 of the Transfer of Property Act, 1882, an agreement to sell does not create ownership rights. “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 Court stated. It held that Shyam Lal could not claim ownership without execution of a sale deed.

Further, the Court noted that despite claiming to have entered into the agreement, neither Shyam Lal nor his legal representatives had sought its specific performance. “There is nothing on record that Shyam Lal or his successor-in-interest ever took any step, including filing a suit for specific performance,” the judgment recorded.

Justice Thakur observed that the Agreement to Sell was in fact a dual-purpose document referring to both sale and lease: “Agreement dated 21.1.2004 is an Agreement to Sell/Lease… it was having alternative either to sell out or lease out the property.” Therefore, it could not be said that the landlord-tenant relationship was terminated upon its execution. The Court held that “as the agreement was in alternative to sell or lease out, therefore, it has to be construed… that on execution of the agreement to sell/lease, the tenancy would not come to an end.”

The Court set aside the impugned order dated January 7, 2021, passed by the Rent Controller, Shimla, Justice Vivek Singh Thakur directed that “the Objection Petition is directed to be restored to its original status with original number before the concerned Rent Controller Shimla.”

Also Read: HP High Court Upholds Acquittal in Charas Case | Joint Consent Memo for Search Breached Mandatory Section 50 Safeguards under NDPS Act

The judgment directed the landlord (Decree Holder) to appear before the Rent Controller on October 13, 2025, and to take steps for the service of Kamlesh, the widow of deceased objector Shyam Lal. The Court ordered that “if any objection is taken by Kamlesh on the basis of Civil Suit preferred by her, then such objection shall be decided by the Executing Court in accordance with law.”

“The Execution Petition shall be decided by the Executing Court as expeditiously as possible, preferably on or before 31.12.2025.”

Advocates Representing the Parties
For the Petitioner: Mr. Y.P. Sood, Advocate

Case Title: Prem Mohini Gupta v. Sumitra (Deceased) through LRs
Neutral Citation: 2025: HHC:32830
Case Number: Civil Revision No. 88 of 2021
Bench: Justice Vivek Singh Thakur