Madras High Court· 28 July 2026
Whether a lessee can seek enforcement of lease cum sale transaction solely on the basis of offer and acceptance letters?
Punjab and Sind Bank v. M/s.Dewa properties Ltd
OSA No. 70 of 2026 · OSA No. 70 of 2026
Coram: Justice P. Velmurugan · Justice K. Govindarajan Thilakavadi
Answer
No. An offer and acceptance letter may constitute a binding contract if it contains all essential terms, but it does not by itself convert the lessee into a purchaser; in a lease cum sale transaction ownership passes only upon fulfilment of the contractual conditions and execution of the sale deed, and until then the relationship remains that of lessor and lessee. A lease, however long its duration, even for 99 years, does not transfer ownership, the lessor retaining the revisionary interest, and nomenclature is not decisive since the substance of the transaction governs.
Headnote
Transfer of Property Act, 1882 — s.105 — s.54 — Specific Relief Act, 1963 — s.16(c) — Lease cum sale agreement — Long term lease — Continuous readiness and willingness — Discretionary equitable relief —
Transfer of Property Act, 1882 — s.54 — Lease cum sale agreement — Offer and acceptance does not convey ownership —
Held: An offer and acceptance letter may constitute a binding contract where it contains all essential terms, but does not by itself convert the lessee into a purchaser. Ownership passes only upon fulfilment of the contractual conditions and execution of a valid sale deed. (¶24)
Transfer of Property Act, 1882 — s.105 — Long term lease — A 99 year lease is not a sale —
Held further: A lease, however long its duration, even for 99 years, does not transfer ownership, the lessor retaining the revisionary interest. The nomenclature is not decisive; the substance of the transaction governs. (¶25)
Specific Relief Act, 1963 — s.16(c) — Continuous readiness and willingness — Default in an essential reciprocal obligation —
Held further: Continuous readiness and willingness must be evidenced by actual conduct, and a plaintiff in persistent default of an essential reciprocal obligation cannot assert it. An agreement must be enforced as a whole and not selectively. Appeal dismissed. (¶27, 29, 31)
In the Court's own words
Paragraph 24The plaintiff is the appellant herein. He relies upon the offer and acceptance letters, contending that it constituted a lease cum sale agreement. The plaintiff seeks enforcement of the contract and consequential relief of permanent injunction. The plaintiff nevertheless claims to acquired the status of a purchaser and asserts that the defendant cannot interfere with his possession or deal with the property. An offer and acceptance letter may constitute a binding contract if it contains all essential terms. However, it does not, by itself, convert the lessee into a purchaser. In a lease cum sale transaction, ownership passes only upon fulfilment of the contractual conditions and execution of the sale deed or conveyance in accordance with law. Until then, the relationship between the parties remains that of lessor and lessee. Therefore, the plaintiff in the present suit cannot be deemed to be a purchaser merely because the transaction is described as a lease cum sale agreement. Ownership remains with the defendant until the contractual conditions are fulfilled and a valid sale deed is executed.
Paragraph 25Section 105 of the Transfer of Property Act, 1882 defines a lease as a transfer of a right to enjoy immovable property for a certain time or in perpetuity in consideration of price, premium or rent. On the other hand, Section 54 of the same Act defines a sale as a transfer of ownership. There can be no question of any sale for 99 years and there can be no question of paying any rentals if the transaction is in fact a sale. A sale is an absolute transfer of ownership and there can be no residual interest if the transaction is a sale. A lease for however long, even 99 years, is only a lease and not a sale. In Residents Welfare Association, Noida V. State of Uttar Pradesh, reported in (2009) 14 SCC 716, the Hon'ble Supreme Court has considered a 99 year lease and held that the same is only a lease. Therefore, a lease, however long its duration, even for 99 years does not transfer ownership. The lessor retains the revisionary interest. Therefore, a 99 year lease is not, merely because of its duration, a sale. The Hon'ble Supreme Court has consistently held that the nomenclature is not decisive. The substance of the transaction governs. Unless the ownership is conveyed, a long term lease remains a lease.
Acts & Sections
s.16(c) Specific Relief Act, 1963s.105 Transfer of Property Act, 1882s.54 Transfer of Property Act, 1882s.53A Transfer of Property Act, 1882One judgment a day. That's the whole habit.
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