New Delhi, March 11, 2025 – The Supreme Court has ruled that an agreement to lease does not create leasehold rights unless the lease deed is executed and registered, setting a crucial precedent in property law disputes.

The judgment came in the case of Delhi Development Authority (DDA) vs. S.G.G. Towers (P) Ltd. & Ors., where the apex court overturned the Delhi High Court’s affirmation of an auction sale concerning the disputed plot.

DDA’s Appeal Against Auction Sale

The dispute traces back to 1957 when the Delhi Improvement Trust (now DDA) entered into an agreement to lease a plot to M/s Mehta Constructions.

However, the lease deed was never executed or registered, as mandated by Clause 24 of the agreement, which explicitly stated that no title, rights, or interest would be created without execution.

In 1972, M/s Mehta Constructions agreed to sell the property to M/s Pure Drinks Pvt. Ltd., which later executed a sale deed in 1985.

Despite the Delhi High Court ordering its registration, the company went into liquidation, leading to an auction sale in 2000. The first respondent, S.G.G. Towers (P) Ltd., purchased the property in this auction.

Supreme Court Verdict: No Leasehold Rights Without Execution

In its judgment, the Supreme Court relied on Clause 24 of the agreement, holding that since the lease deed was never executed, no leasehold rights ever vested in M/s Mehta Constructions.

Consequently, S.G.G. Towers (P) Ltd. also could not claim ownership or leasehold rights over the property.

“The first respondent is not entitled to either ownership or leasehold rights in respect of the said plot. The first respondent cannot claim to be a lessee as the lease in terms of the lease agreement was never executed,” the Court observed.

The auction sale was conducted on an ‘as it is’ basis, meaning S.G.G. Towers only acquired whatever rights M/s Mehta Constructions had—which were none.

The Court further clarified that the DDA remains entitled to reclaim possession or recover unearned income from the first respondent.

Implications of the Judgment

• Clarity on Leasehold Rights – The ruling reinforces the principle that an unexecuted lease agreement does not create property rights, impacting real estate transactions where lease deeds remain pending execution.
• DDA’s Right to Recover Property – The DDA has been granted liberty to proceed against the concerned parties to recover possession or unearned income.
• Regularization Option for Buyer – If S.G.G. Towers wishes to retain the property, they may apply for DDA’s approval, subject to payment of unearned income.

Supreme Court Protects DDA’s Interests

This landmark judgment upholds the sanctity of property law, ensuring that ownership or leasehold rights cannot be assumed merely based on an agreement to lease.

The Supreme Court’s decision paves the way for similar cases, reinforcing the importance of execution and registration of lease deeds in real estate transactions.

With this ruling, the Delhi Development Authority has the right to reclaim the property, and any future claims over the plot must align with legal lease execution protocols.

Case Details:

• Case Title: Delhi Development Authority vs. S.G.G. Towers (P) Ltd. & Ors.
• Citation: 2025 LiveLaw (SC) 306
• Bench: Justice Abhay S. Oka and Justice Ujjal Bhuyan
• Advocates for DDA: Mr. Abhinav Mukerji (Sr. Adv.), Mr. Nitin Mishra, Ms. Mitali Gupta, Mr. Ishaan Sharma
• Advocates for Respondents: Mr. Anand Sukumar, Mr. S. Sukumaran, Mr. Bhupesh Kumar Pathak, Mr. Kshitis Mittal, Mr. Harish Malhotra (Sr. Adv.), Mr. Dhruv Kapur, Mr. Baldev, Mr. Vidit Agarwal, Ms. Ritika Sethi, Mr. Satish Kumar

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