A Tenant Cannot Become an Owner Merely on the Basis of an Agreement to Sell: Legal Position Explained
Introduction
The relationship between a landlord and tenant is governed by the terms of tenancy and the provisions of the Transfer of Property Act, 1882. A tenant entering into possession of a property under a tenancy arrangement cannot subsequently change the character of his possession and claim ownership merely on the basis of an alleged Agreement to Sell. The courts have consistently held that a person who enters a property as a tenant continues to remain a tenant unless his status is legally changed by a valid contract or by operation of law.
The judgment in M/s Jagdambey Builders vs. J.S. Vohra, 2016 SCC OnLine Del 765 reaffirms this settled principle and clarifies that a tenant cannot claim ownership rights merely by alleging an Agreement to Sell, particularly when such agreement is unregistered or not legally enforceable.
Tenant Cannot Claim Ownership Through an Alleged Agreement to Sell
In M/s Jagdambey Builders vs. J.S. Vohra, the Court observed that where a person comes into possession of premises as a tenant, his possession remains that of a tenant. A subsequent claim based upon an Agreement to Sell does not automatically transform his status into that of an owner.
The Court emphasized that an Agreement to Sell does not itself create any right, title, or interest in immovable property. Ownership rights arise only after execution and registration of a valid Sale Deed in accordance with law.
Therefore, a tenant cannot avoid his obligation to surrender possession by claiming that there was an oral or incomplete Agreement to Sell between the parties.
Requirement of Registered Agreement for Protection Under Section 53A TPA
Section 53A of the Transfer of Property Act, 1882 provides protection of possession in cases of part-performance of a contract. However, after the amendment to the Registration Act, 1908, an Agreement to Sell involving possession must be registered to claim protection under Section 53A.
The Court observed that where the alleged Agreement to Sell is neither written nor registered, the person in possession cannot seek protection of part-performance.
The Stamp Act also requires appropriate stamp duty on such documents. An unregistered or insufficiently stamped document cannot be relied upon to claim possessory rights against the true owner.
Principle: “Once a Tenant, Always a Tenant”
The principle that a tenant cannot deny his landlord’s title is well established.
In Jiwan Das vs. Narain Das, AIR 1981 Delhi 291, it was held that even after passing of a decree for specific performance, the purchaser does not acquire ownership rights until the Sale Deed is executed in his favour.
Similarly, in M.R. Sawhney vs. Doris Randhawa, AIR 2008 Delhi 110, the Court held:
“Once a tenant is always a tenant unless the status is changed by contract or operation of law.”
This means that the original nature of possession continues unless there is a legally recognized change.
Agreement to Sell Does Not Confer Ownership Rights
An Agreement to Sell only creates a contractual right to seek execution of a Sale Deed. It does not transfer ownership.
The Supreme Court in Md. Raza vs. Geeta, (2022) 13 SCC 756, held that merely because a tenant or licensee has filed a suit for specific performance, he cannot claim himself to be the owner of the property.
Ownership arises only after:
- A decree for specific performance is passed; and
- A Sale Deed is executed pursuant to that decree.
Until then, the person remains only a tenant or permissive occupant.
Tenant Cannot Change Nature of Possession Without Consent
The principle was also recognized in Abdul Hakim Mia vs. Pana Mia Miaji, AIR 1919 Calcutta 293 (DB), where it was held that a tenant cannot alter the character of his possession without the consent of the landlord.
A tenant who entered the property acknowledging the landlord’s ownership cannot later claim hostile ownership merely because negotiations for sale took place.
No Protection Under Section 53A Without Registered Agreement
The Delhi High Court in Uma Hada vs. Sunil Gupta, 2021 SCC OnLine Del 3009 and Pawandeep Singh vs. Gurdeep Singh Virdi, 2019 (7) AD (Del) 506, reiterated that after amendment of Section 17(1A) of the Registration Act, an unregistered Agreement to Sell cannot provide protection under Section 53A of the Transfer of Property Act.
Thus, a person relying upon an oral Agreement to Sell or an unregistered document cannot resist eviction or recovery of possession.
Conclusion
The legal position is clear:
- A tenant cannot become an owner merely by claiming an Agreement to Sell.
- An Agreement to Sell does not create ownership rights.
- An oral Agreement to Sell cannot defeat the rights of the true owner.
- Protection under Section 53A TPA is unavailable without a registered Agreement.
- A tenant remains a tenant until ownership is legally transferred through a registered Sale Deed.