Tenant Cannot Retain Possession Based On Alleged Oral Sale Agreement & Cash Payments Without Written Registered Document: Delhi High Court

"In the absence of any written agreement containing the terms of transfer, the defendant cannot claim protection under Section 53A of the Transfer of Property Act. The said plea therefore does not create any legal right in favour of the defendant to continue in possession of the suit premises." Delhi High Court, in a significant ruling dated July 7, 2026, held that a tenant cannot resist eviction or retain possession of a property by merely asserting an oral agreement to sell and alleging cash payments without a registered written document.

A bench of Justice Prathiba M. Singh and Justice Madhu Jain observed that in the absence of a written agreement, the statutory protection under Section 53A of the Transfer of Property Act (TPA) is not available to the tenant.

The Court emphasized that the discretionary power under Order XII Rule 6 of the Code of Civil Procedure (CPC) is intended to provide speedy relief where there is no substantial dispute requiring a trial. The bench noted that where the relationship of landlord and tenant is admitted and the lease has expired, a decree for possession can be passed notwithstanding a sham or unreliable defense of a pending sale transaction.

The Respondent-Plaintiff filed a suit for recovery of possession against the Appellant-Tenant regarding a shop in New Delhi. The Plaintiff claimed ownership through a registered Gift Deed and stated that the tenant had become irregular in rent payments after the lease expired in 2019. The tenant resisted the suit, claiming he had paid ₹50 lakhs in cash towards an oral agreement to sell the property for a total consideration of ₹80 lakhs.

The primary question before the Court was whether the Trial Court was justified in passing a preliminary decree for possession under Order XII Rule 4 and Rule 6 of the CPC. The Court was also called upon to determine if a tenant could claim protection under Section 53A of the TPA based on alleged oral agreements and cash receipts in the absence of a registered instrument.

Requirement Of Registered Written Agreement For Section 53A TPA

The Court observed that the Trial Court correctly identified the lack of a written, registered Agreement to Sell. It noted that the defense under Section 53A of the TPA requires the existence of a written contract containing the terms of the transfer. Without such a document, the tenant has no legal right to remain in possession after the termination of the tenancy.

The bench affirmed that an alleged oral agreement, even if supported by disputed cash receipts, cannot supersede the admitted landlord-tenant relationship. The Court held that the ingredients for a decree of ejectment were satisfied as the relationship was admitted, the rent was beyond the threshold of the Delhi Rent Control Act, and the lease had expired.

"The said plea therefore does not create any legal right in favour of the defendant to continue in possession of the suit premises."

Inconsistency In Receipts And Unreliable Evidence

The Court perused the original receipts produced by the tenant and found them to be irreconcilable. It noted that some receipts described the property as a "scooter/car" payment, while others mentioned "loans upon interest" or security deposits for a single shop. Some receipts inconsistently claimed to cover the entire plot containing ten shops, rather than just the suit property.

The bench remarked that such documents do not inspire confidence and prima facie appeared to be fabricated. It held that the description of the property in the receipts was wholly inaccurate and could not be accepted as credible proof of a sale transaction for immovable property.

Court Finds Defense To Be Sham And Lacking Credibility

Illegality Of High-Value Cash Transactions

Addressing the tenant's claim of paying ₹50 lakhs in cash, the Court relied on the Supreme Court’s decision in The Correspondence, RBANMS Educational Institution v. B Gunashekar & Anr. (2025). The bench noted that high-value cash transactions for property sales without banking channels often violate Section 269ST of the Income Tax Act, 1961.

The Court observed that since the entire alleged transaction was based on cash, no benefit could be extended to the tenant. It held that valid tender of such substantial amounts must be verifiable, and the lack of banking records further weakened the tenant's claim of a bona fide sale agreement.

"The Court cannot take into consideration such payment as being valid tender in view of the clear decision of the Supreme Court."

Mala Fide Nature Of Belated Amendments And Counter-Claims

The bench took serious note of the tenant’s conduct in the Trial Court. It observed that the tenant did not initially file a counter-claim or the alleged receipts with the written statement. These were only introduced through an amendment application under Order VI Rule 17 CPC after the application for judgment on admissions had been heard and was listed for orders.

The Court categorized this as a "belated and mala fide attempt" to delay the proceedings. It held that such conduct leads to severe doubt regarding the bona fides of the defendant. The bench reiterated that even if the amendment were allowed, it would not change the legal reality that no registered sale document existed to protect the tenant’s possession.

Scope Of Order XII Rule 6 CPC In Summary Disposal

The Court analyzed the principles of Order XII Rule 6 CPC, referencing recent precedents like Pushpa & Ors. v. Dayawati & Ors. (2026). It noted that while the power is discretionary and requires a clear, unequivocal admission, the court must be satisfied that the defense raised does not create a substantial triable issue.

In the present case, the Court found that the landlord-tenant relationship was admitted and the "sale defense" was legally untenable and factually inconsistent. Consequently, there was no room for controversy that would necessitate a full trial regarding the possession of the property.

The High Court concluded that the landlady, being the lawful owner dependent on rental income, cannot be deprived of the beneficial use of her property by a tenant whose lease has expired. The bench found the appeal devoid of merit and dismissed it, imposing costs of ₹50,000 on the Appellant-Tenant to be paid within four weeks.

Date of Decision: July 7, 2026