The Jharkhand High Court has held that the sale of a tenanted property, including through an auction conducted by a financial corporation, does not by itself provide a ground to evict tenants. The Court said eviction must follow the grounds and procedure prescribed under the Jharkhand Building (Lease, Rent and Eviction) Control Act.
Justice Ananda Sen passed the order on September 7, 2026, while disposing of a writ petition filed by five tenants of premises in Jugsalai, Jamshedpur.
The petitioners were tenants in premises originally belonging to M/s Sahu Hotel. A loan had been taken from the Bihar State Financial Corporation (BSFC), but following default, the Corporation auctioned the property.
The tenants had not participated in the auction. After the auction was completed, BSFC issued a notice dated May 12, 2017, directing the tenants to vacate the premises on the ground that the property had already been sold.
The tenants challenged the notice before the High Court.
Justice Ananda Sen held that the mere fact that the property had been sold could not be treated as a ground for evicting existing tenants. The Court noted that tenancy matters were governed by the Jharkhand Building (Lease, Rent and Eviction) Control Act.
"The fact that the property has been sold cannot be a ground to evict the tenants," the Court observed. It further held that only the grounds recognised under the applicable tenancy law could lead to eviction.
The Court also noted that BSFC had taken possession of the property. Until the property was transferred to another purchaser, BSFC was to be treated as the landlord for practical purposes.
The High Court held that BSFC could not direct the tenants to vacate merely because the property had been sold. It directed the existing tenants to pay rent to BSFC.
If any tenant defaulted in payment, BSFC could take appropriate steps for eviction in accordance with the Jharkhand Building (Lease, Rent and Eviction) Control Act. The Court further directed that if BSFC later transferred the building to another person, the tenants would thereafter pay rent to the new owner, with BSFC informing the existing tenants about the transfer. The writ petition was accordingly disposed of.
Case Title: Kanti Lal Jain & Others v. State of Jharkhand & Others
Case Number: WP(C) No. 3104 of 2017
Judge: Justice Ananda Sen
Decision Date: September 7, 2026
