Cal HC | Parties to agreement of sale consciously changing their relationship cannot seek relief on the basis of previously established relationship

Calcutta High Court: The Division Bench of Soumen Sen and  Ajoy Kumar Mukherjee, JJ., dismissed an appeal concerned with a breach of contract. The appeal arose out of a judgment in a suit for recovery of possession and injunction. Trial Court had decreed the suit on contest and dismissed the counter claim filed by the defendant.

Plaintiff was the landlord in respect of the suit premises, he had filed a suit for eviction in the Small Causes Court at Calcutta for eviction of the defendant/appellant who was a tenant under the plaintiff in respect of the second floor of the suit premises. During the pendency of the eviction suit appellant expressed her willingness to purchase the second floor of the suit premises and purchased the same for a consideration of Rs 13 lakhs.

The parties thereafter executed an agreement for sale on 15th February, 2006 which contained the detailed terms and conditions for the sale. Under the said agreement it was agreed that the entire consideration amount of Rs.13 lakhs shall be paid in installments commencing from December, 2006 and ending with November, 2008. It was further agreed that a sum of Rs.5 lakhs shall be paid within March 2007 as a condition precedent. The purchaser/defendant/appellant also agreed to pay a sum of Rs.40,000/- at the time of execution of the agreement which she paid by an account payee cheque bearing no. 253304 dated December 11,2006.

The plaintiff/respondent received Rs.40,000/- by cheque as the first installment. It should be noted that the balance consideration money was not paid. The defendant/appellant had also failed to make the payment of Rs.5 lakh within March 2007 as agreed between the parties. In view of such breach the plaintiff/respondent rescinded the said agreement and sued the defendant/appellant for recovery of possession.

Ms Sabita Mukherjee Roy Chowdhury, the Counsel for the appellant submitted that the Trial Judge completely erred in arriving at a finding that by reason of the execution of the agreement for sale, the relationship of the plaintiff and defendant as landlord and tenant ceased to exist. She further submitted that the intention of the parties was to continue with the relationship of the landlord and tenant until the execution of the sale deed. The termination of the agreement does not, ipso facto, give right to the landlord to evict the tenant on the ground of surrender of tenancy.

Mr Sourav Sen, the Counsel for the respondent, submitted that it was interesting to note that the agreement for sale used the expression ‘occupancy charge’ as opposed to “rent” thereby giving a clear indication that the period for which the appellant would remain in possession she would pay occupancy charges. He further submitted that when the appellant was inducted as tenant it meant that both the parties agreed that their relationship was to be that of landlord and tenant, which position however altered later when the landlord decided to sell the suit property to the tenant.

The Court clearly inferred that the parties consciously entered into the agreement for sale thereby altering their respective status. The agreement for sale was entered to at a point of time when the earlier suit for eviction was pending.

The defendant/appellant did not deny the due execution of the said agreement. The Court noted that evidence showed that the said agreement was acted upon and parties have altered their position on the basis of the said agreement. Once the agreement was entered into and acted upon the old relationship of landlord and tenant came to an end.

The Court reiterated the relevant paragraph of the Supreme Court ruling in R. Kanthimathi v. Beatrice Xavier, (2000) 9 SCC 339 which stated:

“This decision clearly spells out that once there is agreement of sale between a land lord and a tenant, the old relationship as such comes to an end. It goes on to record that even after the cancellation of such agreement of sale the status of tenant is not restored as such. In other words, on the date of execution of the aforesaid agreement of sale their status as that of landlord and tenant changed into a new status as that of a purchaser and a seller.”

The Court in these circumstances dismissed the appeal holding that parties who have acted in terms of the agreement for sale and altered their relationship consciously cannot now go back to their old relationship and seek relief in terms of such relationship. There is a clear and conscious act on the part of the appellant to surrender her right as a tenant to acquire a superior right of an owner of the second floor of the suit premises. [Sashi Jain v. Sandip Sarkar, 2022 SCC OnLine Cal 388, decided on: 02-03- 2022]


Suchita Shukla, Editorial Assistant has reported this brief.

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