Monthly Rent Payment Cannot Be Accepted As Instalments Towards Sale Consideration Of Property: Delhi High Court

The Delhi High Court has made it clear that monthly payment of rent made under a registered lease deed cannot be construed as instalments towards the sale consideration of a property.Justice Manmeet Pritam Singh Arora thus rejected a suit filed seeking title over the suit property on the strength of an agreement to sell, a customary sale deed and the alleged monthly instalments.The bench observed,“Submission of the Plaintiffs that the payment of monthly rent of Rs. 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 demurer cannot be accepted by the Court as legal proof of payment of sale consideration.”Plaintiffs sought a permanent injunction against Defendants, descendants of the original title holder, restraining them from asserting any rights in the suit property.It was averred that Plaintiffs' predecessors entered into an unregistered Agreement to Sell with the title holder, before his demise, and agreed to pay Rs. 13,20,000/- as full and final payment towards the purchase of suit property.It was further averred that in order to pay the amount, a Registered Lease Deed was executed whereby it was agreed that an amount of Rs. 22,000/- per month will be paid for five years in lieu of payment of Rs. 13,20,000/-.Thus it was contended by the Plaintiffs that the rent was actually instalments towards the sale consideration.The Defendants on the other hand disputed the genuineness of the customary sale documents and sought possession, arrears of rent based on the registered lease deed.Agreeing with the Defendant, the High Court held that in view of the registered lease deed, the assertion that Plaintiffs occupied the suit property as a proposed purchaser, in pursuance of the Agreement to Sell, is contrary to the contemporaneous documents.“Moreover, the submission of the Plaintiffs that the payment of monthly rent of Rs. 22,000/- under the registered Lease Deed was allegedly towards installment of sale consideration is again a plea impermissible and inadmissible in law,” Court said.So far as the Customary sale document is concerned, the High Court said such document does not entitle a party to seek a declaratory title in law, as such customary documents do not create any title in favour of the proposed Vendees.It relied on Shakil Ahmed v. Syed Akhlaq Hussain (2023) where the Supreme Court negated the claim of proprietorship in the immovable property made by the plaintiff therein based on similar customary documents.The Court also refused to pass an injunction restraining the defendants from pursuing their legal remedies.Appearance: Mr. Kunal Tandon, Sr. Advocate with Mr. Amandeep Singh, Ms. Natasha and Mr. Pawan Kant Singh, Advocates for Plaitniffs; Mr. O. P. Aggarwal, Advocate for D1 to D-3Case title: Amit Jain & Ors. v. Anila Jain & Ors.Citation: 2025 LiveLaw (Del) 824Case no.: CS(OS) 82/2025 Click here to read judgment

Monthly Rent Payment Cannot Be Accepted As Instalments Towards Sale Consideration Of Property: Delhi High Court

Kapil Dhyani

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