Himachal Pradesh High Court Reinstates Landlord-Tenant Relationship Amidst Dispute Over Agreement to Sell

Court Overturns Rent Controller's Order, Emphasizes Execution of Agreement to Sell Does Not Terminate Tenancy

In a recent judgment, the Himachal Pradesh High Court has reinstated the landlord-tenant relationship between Prem Mohini Gupta and Sumitra Devi's successors, emphasizing that an agreement to sell does not inherently terminate such a relationship unless explicitly stated in the agreement. The judgment, delivered by Justice Vivek Singh Thakur on September 22, 2025, overturned a previous decision by the Shimla Rent Controller.

The dispute originated when Prem Mohini Gupta, the landlord, filed a Rent Petition in 2015 against Sumitra Devi for arrears of rent dating back to 2001. Despite an eviction order granted in 2016, Sumitra Devi's successors contested the execution of this order, arguing that an agreement to sell executed in 2004 between the landlord and Shyam Lal, Sumitra Devi's successor, altered the status of the property and the tenancy.

The Rent Controller had previously ruled in favor of Shyam Lal, acknowledging the agreement to sell as a factor affecting the tenancy status. However, the High Court found that the agreement included provisions for both sale and lease, indicating that the landlord-tenant relationship persisted. The court noted that Section 54 of the Transfer of Property Act, 1882, clarifies that an agreement to sell does not constitute an actual transfer of ownership.

Justice Thakur highlighted that the agreement did not cover the entire premises and that the lack of a specific clause terminating the tenancy further supported the continuation of the landlord-tenant relationship. The court also observed that neither Sumitra Devi nor her successors pursued any legal action for the specific performance of the sale agreement, reinforcing the view that the tenancy had not ended.

Consequently, the High Court set aside the Rent Controller's order from January 2021 and restored the objection petition to its original status. The case will return to the Rent Controller for further proceedings, where objections based on the pending civil suit filed by Kamlesh, Shyam Lal's wife, will be adjudicated separately.

The judgment underscores the importance of clear contractual terms and the legal distinction between an intention to sell and the actual transfer of property rights. It also serves as a reminder of the procedural requirements for challenging eviction orders in tenancy disputes.

Bottom Line:

Execution of an agreement to sell does not necessarily terminate the landlord-tenant relationship, especially if the agreement provides alternatives such as lease or sale.

Statutory provision(s): Transfer of Property Act, 1882 Section 54

Prem Mohini Gupta v. Sumitra (Deceased), (Himachal Pradesh) : Law Finder Doc Id # 2782328