Introduction:
In Amit Jain & Ors. v. Anila Jain & Ors. [2025 LiveLaw (Del) 824, CS(OS) 82/2025], the Delhi High Court delivered a decisive ruling clarifying that monthly payments made under a registered lease deed cannot be construed as instalments towards the sale consideration of a property. Justice Manmeet Pritam Singh Arora, while dismissing the plaintiffs’ claim for ownership rights over the disputed property, held that their assertion of treating rent payments as sale instalments was both impermissible and inadmissible in law. The plaintiffs had sought a declaration of title and a permanent injunction against the defendants, who are descendants of the original titleholder. They relied on an alleged agreement to sell, a customary sale deed, and the claim that monthly payments of ₹22,000 under a lease deed were, in fact, instalments towards a total sale price of ₹13,20,000. The Court, however, found these arguments untenable, emphasizing that a lease deed cannot be retrofitted to represent a sale transaction and that customary sale documents have no legal standing in conferring ownership rights. Referring to Supreme Court precedents, including Shakil Ahmed v. Syed Akhlaq Hussain (2023), the Court ruled in favour of the defendants, who contended that the plaintiffs’ claims were contrary to the contemporaneous legal documents.
Arguments of the Plaintiffs:
The plaintiffs contended that their predecessors had entered into an unregistered agreement to sell the disputed property with the original titleholder before his death. As per this arrangement, the total sale consideration was fixed at ₹13,20,000. To facilitate payment of this amount, a registered lease deed was executed between the parties. According to the plaintiffs, it was agreed that a sum of ₹22,000 per month would be paid over five years as part of this lease, which they argued was not actually rent but monthly installments of the sale consideration. On this basis, the plaintiffs asserted that they were occupying the property as proposed purchasers and had fulfilled the obligations required under the agreement to sell.
The plaintiffs further relied on what they described as a “customary sale deed,” claiming it confirmed their right over the property. They argued that the lease deed was only a formal arrangement to streamline payments and did not reflect the true nature of the transaction. They maintained that once the total sum of ₹13,20,000 was paid through the monthly installments, their title over the property should be recognized by law. Moreover, they sought a permanent injunction to prevent the defendants, who were descendants of the original owner, from asserting any rights over the property or interfering with their possession. The plaintiffs’ counsel emphasized that the agreement to sell and the customary sale deed, read in conjunction with the lease arrangement, established a clear intention of the original titleholder to transfer the property to them.
Additionally, the plaintiffs alleged that the defendants were attempting to unlawfully dispossess them by denying the authenticity of the documents and the arrangement, despite the plaintiffs’ continuous possession and regular payments. They argued that the courts should take a pragmatic view of the arrangement, recognize the payments as part of the sale consideration, and issue a declaration of ownership in their favour.
Arguments of the Defendants:
The defendants, represented by Mr. O. P. Aggarwal, challenged the plaintiffs’ claims, arguing that the entire narrative of the plaintiffs was contrary to the legally binding documents on record. They pointed out that the only registered document between the parties was a lease deed, which explicitly categorized the payments as “rent” and not as instalments of any sale consideration. They argued that the plaintiffs had failed to produce any registered sale deed or evidence to show that ownership was intended to be transferred. According to the defendants, the plaintiffs’ claim was an afterthought aimed at converting a lease arrangement into a sale transaction without the requisite legal formalities.
The defendants also attacked the validity of the alleged customary sale deed relied upon by the plaintiffs. They contended that such documents, even if genuine, cannot confer ownership rights over immovable property, as title transfer can only take place through a registered sale deed under the Transfer of Property Act and the Registration Act. They cited the Supreme Court’s decision in Shakil Ahmed v. Syed Akhlaq Hussain (2023), which categorically held that proprietary rights cannot be claimed based on unregistered customary sale documents. The defendants further asserted their right to seek possession and arrears of rent as lawful landlords under the registered lease deed. They claimed that the plaintiffs’ continued possession beyond the lease terms was unlawful and that their refusal to pay rent was further evidence of their malafide intention.
Moreover, the defendants argued that the plaintiffs’ contention that rent payments were actually sale installments was a deliberate attempt to evade tax liabilities, as such transactions would typically attract stamp duty and registration charges. The defendants emphasized that such disguised transactions could not be recognized by a court of law, which must rely on the express terms of the registered documents. They urged the Court to dismiss the plaintiffs’ suit and allow them to pursue their rightful remedies, including recovery of possession and rent arrears.
Court’s Judgment:
After examining the facts, documents, and arguments from both sides, Justice Manmeet Pritam Singh Arora held that the plaintiffs had failed to establish any legal title over the suit property. The Court emphasized that the plaintiffs’ attempt to treat monthly rent payments under a registered lease deed as instalments towards a sale consideration was both impermissible and inadmissible in law. The Court stated:
“Submission of the Plaintiffs that the payment of monthly rent of ₹22,000/- under the registered Lease Deed was allegedly towards installment of sale consideration is again a plea impermissible and inadmissible in law. The plaint fails to explain the justification for paying sale consideration camouflaged as rent. Presumably, this would have also been done to avoid tax liability. This modus of payment of sale consideration is not permissible in law and, therefore, on a demurrer cannot be accepted by the Court as legal proof of payment of sale consideration.”
The Court found that the contemporaneous documents, particularly the registered lease deed, clearly established the nature of the plaintiffs’ occupation as tenants rather than as prospective purchasers. The assertion that they occupied the property pursuant to an agreement to sell was directly contradicted by the lease deed, which categorized them as lessees paying rent. Justice Arora underscored that the lease deed, being a registered document, had evidentiary value and could not be overridden by unregistered agreements or customary documents.
Regarding the customary sale document, the Court unequivocally held that such documents cannot create title or ownership rights over immovable property. It reiterated that the transfer of immovable property valued above ₹100 must be executed through a registered sale deed as per the law. Referring to Shakil Ahmed v. Syed Akhlaq Hussain (2023), the Court noted that the Supreme Court had already rejected similar claims of proprietorship based on customary documents. The Court ruled that the plaintiffs’ reliance on such a document was legally untenable.
Consequently, the Court rejected the plaintiffs’ plea for declaratory ownership or any injunction against the defendants. It held that the defendants, being legal heirs of the original titleholder, retained ownership rights over the property and were free to pursue legal remedies, including eviction and recovery of arrears of rent, as per law. The Court also declined to grant any equitable relief to the plaintiffs, observing that their claim was based on a misrepresentation of the lease arrangement.
Justice Arora concluded that the plaintiffs’ suit was devoid of merit and dismissed it accordingly. The ruling serves as a stern reminder that ownership of immovable property cannot be claimed on the basis of informal arrangements or disguised transactions and that proper legal documentation is essential for the transfer of title.