In other words, the question that arises for consideration is when the lessor enters into an agreement to sell the tenanted property to his lessee during the subsistence of the lease, whether 11 execution of such agreement would ipso facto result in determination of the lease and severe the relationship of lessor and the lessee in relation to the leased property.

Hon’ble Mr. Justice Abhay Manohar Sapre 

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL Nos. 1237­1238 OF 2019 (Arising out of S.L.P.(C) Nos.28420­28421 of 2017) Dr. H.K. Sharma     ….Appellant(s) VERSUS Shri Ram Lal       ….Respondent(s)                   J U D G M E N T Abhay Manohar Sapre, J. 1. Leave granted. 2. These appeals are directed against  the final judgment   and   orders   dated   03.10.2017   in   Recall Application No.871 of 2017 in W.P.(MS) No.396 of 2016 and dated 17.07.2017 in W.P.(MS) No.396 of 2016 passed by the High Court of Uttarakhand at Nainital.  1 3. In order to appreciate the short controversy involved in these appeals, few relevant facts need mention infra. 4. The appellant is the “opposite party” whereas the   respondent   is   the   “applicant”   in   the   original application out of which these appeals arise. 5. The   respondent   (applicant)   is   the   owner   of house bearing No.5A, Court Road, Nardev Shastri Road,   Dehradun   comprising   of   four   rooms,   one kitchen,   two   verandahs   and   two   galleries.     The respondent   has   let   out   a   portion   of   this   house consisting   of   three   rooms,   one   kitchen,   latrinebathroom, one store and two verandas (hereinafter referred to as the “suit house”) to the appellant on a monthly   rent   of   Rs.750/­   as   per   the   tenancy agreement dated 22.07.1985 entered into between them.  2 6. On   28.04.2008,   the   respondent   filed   an application under Section 21(1) (a) of the U.P. Urban Buildings (Regulation of Letting Rent and Eviction) Act, 1972 (hereinafter referred to as “the UP Act”) against   the   appellant   (opposite   party)   before   the Prescribed   Authority   (Civil   Judge)   Sr.   Division, Dehradun seeking his eviction from the suit house.  7. The   eviction   was   sought   on   the   ground   of respondent’s  bona fide  need for his residence and also   the   members   of   his   family.   The   respondent alleged that he has retired from the services and has no other suitable house of his own where he can live and,  therefore,  requires the suit house for his personal residence as also for the residence of the members of his family.  8. The   appellant   (opposite   party)   contested   the application by filing the written statement. While 3 denying   the   ground   of  bona   fide  need,   it   was contended that the appellant has entered into an agreement on 13.05.1993 with the respondent for purchase of the suit house and pursuant thereto he has also paid huge amount to the respondent. It was contended that since the parties have already entered into an agreement of sale/purchase of the suit   house,   the   relationship   of   landlord/tenant between them has ceased to exist and now it no longer subsists and has come to an end.  9. It was also contended that consequent upon the execution of the agreement between the parties for the purchase of the suit house, the appellant is no longer in possession of the suit house as tenant but is now in possession as a purchaser of the suit house in part performance of the agreement dated 13.05.1993 qua the respondent.  4 10. In   other   words,   it   was   contended   that   the relationship   of   landlord   and   tenant   between   the parties has come to an end and now the same stood converted into the new relationship of buyer and seller   of   the   suit   house.     It   was,   therefore, contended   that   the   application   filed   by   the respondent under Section 21(1) (a) of the UP Act against the appellant for his eviction from the suit house is not maintainable and, therefore, it is liable to be dismissed on this short ground. 11. The   Prescribed   Authority   by   order   dated 03.11.2010 dismissed the respondent’s application and   held   that   since   the   parties   entered   into   an agreement   dated   13.05.1993   for   sale   of   the   suit house, the appellant was not required to pay any monthly   rent   to   the   respondent   inasmuch   as according to him the relationship of the landlord 5 and tenant between the parties has come to an end. He also decided the issue of bona fide need against the respondent and in appellant’s favour. 12. The   respondent   felt   aggrieved   and   filed   an appeal before the Appellate Court. By order dated 19.12.2015,   the   Appellate   Court   dismissed   the appeal   and   affirmed   the   order   of   the   Prescribed Authority. The respondent (applicant) felt aggrieved and filed the writ petition under Article 227 of the Constitution   of   India   before   the   High   Court   of Uttarakhand at Nainital.  13. By   impugned   order   dated   17.07.2017,   the High Court allowed the writ petition and set aside the order of the Appellate Court and the Prescribed Authority.   The   appellant   felt   aggrieved   and   filed recall application. The High Court by order dated 03.10.2017 dismissed the recall application.  6 14. The High Court held that mere agreement to sell the suit house would not result in termination of landlord­tenant relationship between the parties unless there is a stipulation in the agreement itself to   that   effect.   It   was   also   held   that   since   the agreement in question relied on by the appellant (opposite party) is not a registered agreement, he is not entitled to raise the plea of part performance based on Section 53­A of the Transfer of Property Act,   1882   (for   short   “the   TP   Act”)   against   the respondent. The High Court further held that the respondent being an old man has every right to live in his house in the last leg of his life and more so when he has no other house of his own in the city and, therefore, he has made out a case of bona fide need for his residence as also for the members of his family. 7 15. It is against these two orders of the High Court, the   opposite   party,   i.e.,   the   tenant   has   filed   these appeals by way of special leave in this Court. 16. So,   the   short   question,   which   arises   for consideration in these appeals, is whether the High Court   was   justified   in   allowing   the   respondent’s application filed under Section 21(1) (a) of the UP Act.  16A. Heard   Mr.   Jitendra   Mohan   Sharma,   learned senior   counsel   for   the   appellant   and  Mr.   Narender Hooda, learned senior counsel for the respondent. 17. Mr. Jitendra Sharma, learned senior counsel for the   appellant   while   assailing   the   legality   and correctness   of   the   impugned   order   has   essentially argued one point.  18. Placing reliance on the decision reported in  R. Kanthimathi   &   Anr.  vs.  Beatrice   Xavier   (Mrs.) [(2000) 9 SCC 339],  learned counsel contended that 8 the High Court erred in allowing the application filed by the respondent against the appellant.  19. It was his submission that the issue raised by him in support of his submission remains no longer res   integra  and   stands   decided   by   the   decision rendered in the case of R. Kanthimathi  (supra) in appellant’s favour.  20. Learned counsel elaborated his submission by contending that the moment the landlord and the tenant enters into an agreement of sale/purchase of the   tenanted   property   while   subsistence   of   the tenancy and the tenant pursuant to such agreement pays part consideration to the landlord towards sale price of the tenanted premises, the relationship of landlord and tenant comes to an end and ceases to exist, i.e., it results in termination of the tenancy agreement  ipso facto  and in its place brings into 9 existence a new relationship between the parties, namely, that of the purchaser and the seller of the tenanted premises.  21. It was his submission that it is for this reason, the application filed by the respondent as landlord of   the   tenanted   premises   to   seek   the   appellant’s eviction   as   his   tenant   from   the   suit   house   was wholly misconceived and not maintainable for want of   any   subsisting   relationship   of   landlord­tenant between them. It was, therefore, rightly dismissed by   the   Prescribed   Authority   and   the   Appellate Authority but wrongly allowed by the High Court by the impugned order. 22. In reply, learned counsel for the respondent (applicant­landlord) supported the impugned order and contended that no case is made to interfere in the impugned order. 10 23. Having   heard   the   learned   counsel   for   the parties and on perusal of the record of the case, we find no merit in these appeals. 24. The question, which arises for consideration in these appeals, is when the lessor and the lessee enters into an agreement for sale/purchase of the tenanted premises where the lessor agrees to sell the   tenanted   premises   to   his   lessee   for consideration on certain conditions, whether, as a result of entering into such agreement, the Jural relationship of lessor and the lessee in relation to the  leased property comes to an  end and, if so, whether it results in determination of the lease. 25. In other words, the question that arises for consideration   is   when   the   lessor   enters   into   an agreement to sell the tenanted property to his lessee during   the   subsistence   of   the   lease,   whether 11 execution of such agreement would ipso facto result in   determination   of   the   lease   and   severe   the relationship of lessor and the lessee in relation to the leased property. 26. In our considered opinion, the aforementioned question   has   to   be   decided   keeping   in   view   the provisions of Section 111 of the TP Act and the intention of the parties to the lease ­ whether the parties intended to surrender the lease on execution of   such   agreement   in   relation   to   the   tenanted premises   or   they   intended   to   keep   the   lease subsisting notwithstanding the execution of such agreement.   27. Chapter V of the TP Act deals with the leases of   Immovable   property.   This   chapter   consists   of Section 105 to Section 117.  12 28. A   lease   of   an   immoveable   property   is   a contract between the lessor and the lessee. Their rights   are governed by Sections 105 to 117 of TP Act   read   with   the   respective   State   Rent   Laws enacted by the State.  29. Section   111   of   the   TP   Act   deals   with   the determination of lease. Clauses (a) to (h) set out the grounds   on   which   a   lease   of   an   immoveable property can be determined.  30. Clauses   (e)   and   (f)   with   which   we   are concerned   here   provide   that   a   lease   can   be determined by an express surrender; in case, the lessee yields up his interest under the lease to the lessor by mutual agreement between them whereas Clause (f) provides that the lease can be determined by implied surrender. 13 31. This Court in the case of   Shah Mathuradas Maganlal & Co. vs. Nagappa Shankarappa Malage & Ors.,  (1976) 3 SCC 660  considered the scope of clauses (e) and (f) of Section 111 of the TP Act and laid down the following principle in Para 19   as under. “19. A   surrender   under   clauses   (e)   and   (f) of section   111 of   the   Transfer   of   Property Act,   is   an   yielding   up   of   the   term   of   the lessee’s   interest   to   him   who   has   the immediate  reversion  or  the   lessor’s interest. It   takes   effect   like   a   contract   by   mutual consent on the lessor’s acceptance of the act of   the   lessee.   The   lessee   cannot,   therefore, surrender  unless  the  term   is  vested   in  him; and   the   surrender   must   be   to   a   person   in whom the immediate reversion expectant on the   term   is   vested.   Implied   surrender   by operation  of law occurs by the  creation of  a new   relationship,   or   by   relinquishment   of possession. It the lessee accepts a new lease that   in   itself   is   a   surrender.   Surrender   can also   be   implied   from   the   consent   of   the parties   or   from   such   facts   as   the relinquishment   of   possession   by   the   lessee and   taking   over   possession   by   the   lessor. Relinquishment of possession operates as an implied surrender. There must be a taking of possession, not necessarily a physical taking, 14 but something amounting to a virtual taking of possession. Whether this has occurred is a question of fact.  32. It is in the light of the aforementioned legal principle, the question involved in this case has to be examined. 33. Perusal of Agreement to Sell dated 13.05.1993 (Annexure P­1) shows that though the agreement contains 9 conditions but none of the conditions provides much less in specific terms as to what will be the fate of the tenancy. In other words, none of the conditions set out in the agreement 13.05.1993 can   be   construed   for   holding   that   the   parties intended to surrender the tenancy rights.  34. A fortiori,  the   parties   did   not   intend   to surrender the tenancy rights despite entering into an agreement of sale of the tenanted property.   In other   words,   if   the   parties   really   intended   to 15 surrender their tenancy rights as contemplated in clauses (e) or (f) of Section 111 of the TP Act while entering into an agreement to sell the suit house, it would have made necessary provision to that effect by providing  a specific clause in the agreement. It was, however, not done. On the other hand,  we find that the conditions set out in the agreement do not make out a case of express surrender under clause (e) or implied surrender under clause (f) of Section 111 of the TP Act.    35. It is for this reason, the law laid down by this Court in the case of R. Kanthimathi (supra) has no application to the facts of this case and is, therefore, distinguishable on facts. Indeed, it will be clear from mere perusal of para 4 of the said decision quoted hereinbelow:   “4.   As   aforesaid,   the   question   for consideration is, whether the status of tenant 16 as   such   changes   on   the   execution   of   an agreement   of   sale   with   the   landlord.   It   is relevant at this junction first to examine the terms of the agreement of sale. The relevant portions of the agreement of sale records the following: “I   the   aforesaid   Mrs.   Beatrice   Xavier hereby   agree   out  my   own   free   will,   to   sell, convey and transfer the property to you Mrs. R.   Kanthimathi   wife   of  Mr.   S.   Ramaswami, 435 Trichy Road, Coimbatore for a mutually agreed sale consideration of Rs.25,000/­. I shall be proceeding to Coimbatore and shall  execute  the  sale  deed  and  present  the same   for   admission   and   registration   before the   Registering   Authority,   accepting   and acknowledge   payment   of   the   balance   of consideration   of   Rs.   5000/­   (Rupees   five thousand   only)   at   the   time   of   registration and   shall  complete  the  transaction  of   sale and conveyance as the property demised has already   been   surrendered   to   your possession.”           (Emphasis in Original) 36. The   words   highlighted   in   italics   of   the agreement were construed by Their Lordships for holding that these italicized words in the agreement clearly indicate that the parties had really intended to surrender their tenancy rights on execution of the 17 agreement of sale and bring to an end their jural relationship of  the landlord and tenant. 37. As observed supra, such is not the case here because we do not find any such clause or a clause akin thereto in the agreement dated 13.05.1993 and nor   we   find   that   the   existing   conditions   in   the agreement discern the intention of the parties to surrender the tenancy agreement either expressly or impliedly.  38. In the light of the foregoing discussion, we are of   the   considered   opinion   that   the   tenancy   in question between the parties did not result in its determination as contemplated under Section 111 of TP Act due to execution of the agreement dated 13.05.1993 between the parties for sale of the suit house   and   the   same   remained   unaffected 18 notwithstanding execution of the agreement dated 13.05.1993  39. A fortiori,    the respondent (lessor) was rightly held   entitled   to   file   an   application   against   the appellant (lessee) under Section 21 (1) (a) of the UP Act and seek the appellant’s eviction from the suit house after determining the tenancy in question. 40. Before   parting,   we   make   it   clear   that   we examined   the   terms   of   the   agreement   dated 13.05.1993   only   for   deciding   the   question   as   to whether the execution of agreement, in any manner, resulted in  determination of  the  existing tenancy rights between the parties in relation to the suit house in the context of the TP Act and the UP Act and not beyond it. 41. Coming to the next question as to whether the respondent has made out a case of his  bona fide 19 need   for   his   residence   and   the   members   of   his family as contemplated under the UP Act, suffice it to   say,   it   being   a   question   of   fact,   the   finding recorded by the High Court on this question does not call for any interference in this appeal.   It is binding on this Court.  Even otherwise, we find no good   ground   to   interfere   in   the   finding   for   the reason that the respondent being a landlord and a retired man has every right to live in his house with his family.  Therefore, there is no perversity in the finding of the High Court on this issue. 42. In   the   light   of   the   foregoing   discussion,   we concur   with   the   reasoning   and   the   conclusion arrived at by the High Court in the impugned order. It does not call for any interference. 43. The   appeals   thus   fail   and   are   accordingly dismissed.  20 44. The   appellant   is,   however,   granted   three months’ time to vacate the suit house subject to the appellant   furnishing   usual   undertaking   in   this Court within two weeks from the date of this order and   paying   entire   arrears   of   rent   upto   date including three months rent to be paid in advance to   the   respondent   to   enable   him   to   remain   in possession for a period of three months from the date of this order.  The arrears of rent,  as directed, be paid by the appellant to the respondent within one month from the date of this order.           ……………………………………..J. [ABHAY MANOHAR SAPRE]                                                                            ….………………………………….J.         [DINESH MAHESHWARI] New Delhi; January 28, 2019. 21