Unregistered sale agreement is admissible for collateral purposes to determine the status of a tenancy.

The defendant was inducted as a monthly tenant in the suit property by the plaintiff’s late husband on January 15, 2001

Following the death of her husband in 2009, the plaintiff filed an eviction suit under the Bihar Building (Lease, Rent, and Eviction) Control Act (now JBC Act) on grounds of personal necessity and default in rent payment since January 2004

The defendant contested the suit, asserting that the landlord-tenant relationship ceased after an un-registered Memorandum of Understanding (2007) and an Agreement of Sale (Exhibit E, dated 30.10.2008) were executed for a consideration of Rs. 35 lakhs

The defendant claimed protection of possession under the doctrine of part performance (Section 53A of the Transfer of Property Act)

The Trial Court decreed the eviction, and the 1st Appellate Court affirmed the decree, refusing to consider the unregistered Agreement of Sale as evidence due to lack of registration

The defendant filed this second appeal before the High Court.

1. Whether the learned 1st Appellate Court was justified in refusing to consider Exhibit-E (unregistered agreement of sale) on the ground that it was an un-registered agreement?

2. Whether the appellant ceased to be a tenant after the agreement of sale dated 30.10.2008?

The court applied Section 17(1-A) and Section 49 of the Registration Act, 1908, as amended in 2001, which mandates the registration of documents containing contracts to transfer immovable property for the purpose of Section 53A of the Transfer of Property Act (TPA)

It relied on Suraj Lamp and Industries v. State of Haryana (2012) 1 SCC 656, which held that an agreement to sell does not confer title or transfer interest except for the limited right under Section 53A of the TPA

Furthermore, it applied the principle from Mool Chand v. Nanagram (2007) 15 SCC 783, stating that while unregistered documents are inadmissible for claiming part performance, they may be received as evidence for "collateral transactions"

Finally, it considered the distinction between temporary suspension of rent and permanent severance of tenancy as discussed in H.K. Sharma v. Ram Lal (2019) 4 SCC 153

The Court observed that since the Agreement of Sale (Exhibit E) was executed after the 2001 amendment to the Registration Act, it could not be used to seek protection under Section 53A of the TPA because it was unregistered

However, the High Court found that the 1st Appellate Court erred in completely ignoring the document; it should have been considered for the "collateral purpose" of determining if the nature of the defendant's possession had changed from "tenant" to "purchaser"

Upon analyzing the specific terms of Exhibit E, the Court noted Clause 6, which stipulated that if the defendant declined to purchase the property, he would be liable to pay rent at a revised rate from October 2007

This clause indicated that the parties never intended to permanently extinguish the landlord-tenant relationship until the final sale deed was executed

The Court distinguished the present case from R. Kanthimathi v. Beatrice Xavier (2000) 9 SCC 339, noting that the conduct and contract terms here did not suggest a total surrender of tenancy

However, on the second issue, it held that the appellant did not cease to be a tenant because the agreement terms preserved the potential for the tenancy to continue

The Court further noted that since the eviction was also decreed on the ground of "bonafide personal necessity"—a finding not challenged by a substantial question of law—the decree remained sustainable regardless of the rent default issue

The second appeal was dismissed, affirming the eviction decree