The Supreme Court held that a subsisting tenancy does not cease merely because the landlord and tenant execute an agreement to sell the property. The tenant's possessory rights under the tenancy continue until the agreement is converted into an actual sale deed. An agreement to sell creates no transfer of ownership or title under the Transfer of Property Act. The ruling clarifies that contractual rights from tenancy and rights under an agreement to sell operate on separate legal planes simultaneously.

This ruling turns on a fundamental distinction in Indian property and contract law: an agreement to sell is not a sale. Under Section 54 of the Transfer of Property Act, 1882, a contract for sale of immovable property does not, of itself, create any interest in or charge on such property. Ownership and title remain with the seller until a registered sale deed is executed and registered.

A tenancy, by contrast, is a legal right of possession created under a lease — governed by Sections 105–117 of the Transfer of Property Act or applicable Rent Control legislation. The tenant's right to occupy is independent of who owns or proposes to transfer the property.

The Supreme Court's holding confirms that these are two distinct legal relationships. The tenant does not lose their statutory or contractual protection merely because they have agreed to purchase the same premises. The agreement to sell may give rise to a right to specific performance (Section 10, Specific Relief Act), but it does not extinguish a pre-existing tenancy.

For CLAT PG, the critical doctrinal point is the difference between an agreement to sell (creates personal obligation, no title) and a sale deed (transfers title). Examiners frequently test whether a student can identify what rights a document creates — and this judgment directly engages that distinction in a novel factual setting.