IndiaLaw Monthly Newsletter – June Edition

No Title Without Transfer: Supreme Court Clarifies Legal Divide Between Agreement to Sell and Registered Conveyance

Introduction

In a recent decision clarifying the statutory framework governing immovable property transactions in India, the Supreme Court in Vinod Infra Developers Ltd. v. Mahaveer Lunia & Ors.1 held that a mere Agreement to Sell (ATS), even if accompanied by possession or payment, does not confer ownership rights unless followed by a registered sale deed. The Court reaffirmed that title to immovable property cannot pass through an unregistered ATS, and any claim based solely on such an agreement is unenforceable in the absence of a suit for specific performance. The decision is examined in the context of the relevant statutory framework and judicial interpretation, with emphasis on the legal distinction between an Agreement to Sell and registered conveyance.

Background of the Case

The dispute arose when Vinod Infra Developers Ltd., the appellant, challenged the validity of sale deeds executed by the respondents based on an unregistered agreement to sell and an unregistered power of attorney. The appellant contended that the documents in question were executed merely as security for a loan and were later revoked prior to the execution of the sale deeds. Despite the revocation, the respondents proceeded to register sale deeds and have them mutated in their names in the revenue records.

The appellant sought declaratory relief, cancellation of the sale deeds, possession of the property, and an injunction. The trial court held that triable issues existed. However, the High Court reversed the decision and rejected the plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908 (CPC), leading to the present appeal before the Supreme Court.

Judicial Determination

The Supreme Court allowed the appeal and restored the plaint. The Court held that:

• An unregistered Agreement to Sell does not create any right, title, or interest in the property.
• No suit for specific performance was filed by the respondent, and therefore, no legal right could be asserted based on the ATS.
• A power of attorney, even if notarized, does not confer title, especially where it has been revoked prior to the execution of sale deeds.
• Revenue entries are fiscal in nature and cannot establish proprietary rights in the absence of a registered conveyance.

The Court observed that the revocation of the power of attorney prior to execution rendered the subsequent sale deeds void of legal authority and thus ineffective in law. Citing Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana2, the Court reiterated that SA/GPA/WILL transactions do not constitute valid transfers and cannot substitute for a registered sale deed.

In addition, the Court clarified that where a plaint contains multiple causes of action, it cannot be rejected in its entirety solely because one relief appears legally untenable. This principle preserves the right to adjudication where triable issues are raised.

The Court also rejected the respondents' argument that revenue courts had jurisdiction under tenancy laws, holding that disputes concerning ownership and title fall within the exclusive domain of civil courts. Revenue records serve only fiscal purposes and do not confer title.

Legal Position on ATS vs. Conveyance

Agreement to Sell (ATS)

• An ATS is merely a contractual promise between the parties to execute a future sale.
• It is governed by the Indian Contract Act, 1872, and Section 54 of the Transfer of Property Act, 1882, which states that a contract for sale does not by itself create any interest in or charge on the property.
• The only remedy available to the buyer in the event of non-performance is to file a suit for specific performance under the Specific Relief Act, 1963.
• Section 16(c) of the Specific Relief Act stipulates that the party seeking specific performance must prove that they have performed, or have always been ready and willing to perform, the essential terms of the contract. This provision ensures that the relief of specific performance is granted only to those who demonstrate bona fide contractual compliance.

Conveyance Deed (Sale Deed)

• A sale deed is the final and legally binding instrument that effects the transfer of title.
• It must be duly executed, stamped, and registered under the Registration Act, 1908.
• A registered sale deed is conclusive proof of ownership and allows for mutation of the property in revenue records.

Statutory Framework

What the Decision Means for Property Transactions

The judgment serves as a significant clarification for stakeholders in real estate transactions. Its implications include:

For Buyers: Executing an Agreement to Sell is not sufficient to obtain ownership. The transaction must culminate in a registered sale deed to be legally enforceable.

For Sellers/Lenders: In the absence of a registered deed, sellers cannot assert ownership or enforce rights based solely on an ATS.

For Courts: A plaint based solely on an unregistered ATS, without a corresponding prayer for specific performance, is liable to be rejected under Order VII Rule 11 CPC, unless distinct triable issues are disclosed.

Conclusion

The decision in Vinod Infra Developers Ltd. reaffirms the foundational legal principle that immovable property can only be transferred through a registered conveyance deed. Informal arrangements, such as unregistered agreements or powers of attorney, cannot substitute the statutory requirement of a registered instrument.

The Supreme Court has, through consistent jurisprudence, sought to curb the reliance on such informal documents and has emphasized the necessity of compliance with statutory formalities for the legal transfer of title. This clarity is essential not only for property owners and buyers but also for reducing litigation and promoting transparency in real estate transactions.

No Title Without Registration: Supreme Court Clarifies Ownership Under Indian Property Law

Introduction

In a detailed and consequential decision, the Supreme Court reaffirmed that immovable property can only be transferred through a registered instrument. It held that an unregistered agreement to sell, even if subsequently validated or acted upon, does not confer a legal title. The ruling came in the context of a dispute involving land in Telangana, adjudicated in Mahnoor Fatima Imran & Ors. v. State of Telangana & Ors, where the Court also emphasized that mere possession, when not lawfully established, cannot justify protection from dispossession under Article 226 of the Constitution.

Factual Background

The dispute relates to 53 acres of land situated in Raidurg village, Ranga Reddy District, Telangana. This land was originally part of a larger 525-acre tract held by 11 individuals, which was subsequently declared surplus under the Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act, 1973.

In 1982, Bhavana Cooperative Housing Society Ltd. (hereinafter referred to as "Society") claimed to have purchased the disputed land through an unregistered sale agreement. Although the agreement was not registered, it was later validated in 2006 by the Assistant Registrar, though it still did not attain the status of a registered conveyance.

Based on this unregistered agreement, the Society executed registered sale deeds in favor of various individuals, including Mahnoor Fatima Imran and others. These individuals asserted possession and approached the High Court seeking protection from dispossession by the Telangana State Industrial Infrastructure Corporation (TSIIC), alleging unlawful takeover.

Legal History

• The original owners had executed a General Power of Attorney (GPA) in 1974 in favor of a partnership firm (Sri Venkateswara Enterprises).
• Declarations under the Andhra Pradesh Land Reforms Act, 1973, and the Urban Land (Ceiling and Regulation) Act, 1976, were filed.
• By 1975, 99.07 acres, including the 53 acres in question, were declared surplus and vested in the State.
• Society filed a suit for specific performance in 1991, which was dismissed for default in 2001. A restoration application was also rejected in 2004.
• Nevertheless, the 1982 agreement was validated in 2006, and based on it, registered sale deeds were executed.

Issues Before the Supreme Court

• Whether a sale deed executed based on an unregistered and doubtful agreement to sell could confer a valid title?
• Whether the petitioners' possession was established in a manner sufficient to invoke protection under Article 226?
• Whether land that had vested in the State under land reforms could be claimed through private conveyance?

Legal Provisions Every Buyer Should Know

To make property transactions legally secure, familiarity with the following provisions is essential:

1. Sections 17 and 49 of the Registration Act, 1908
These sections mandate that any transaction involving the transfer of rights in immovable property must be registered. An unregistered document cannot be used as evidence in court and does not confer ownership.

Application in this case:

The petitioners' claim was based on an unregistered 1982 agreement. Despite being "validated" in 2006, it remained legally ineffective. The Court held that only a properly registered sale deed can confer ownership.

2. Section 53A of the Transfer of Property Act, 1882 (Doctrine of Part Performance)
This provision offers limited protection to a buyer who:

• Has taken possession under a contract for sale,
• Has fulfilled or is willing to fulfill contractual obligations, and
• Can prove actual, lawful possession.

Application in this case:

The petitioners failed to establish possession or contractual performance. The Court held that protection under Section 53A was not available.

Supreme Court's Analysis

1. Unregistered Agreement Cannot Confer Title
The Court held that under the Registration Act, 1908, any document that purports to transfer rights in immovable property must be compulsorily registered. The 1982 agreement was never registered, and its later "validation" in 2006 could not cure this statutory defect.

Further, the Court noted that there were two conflicting versions of the 1982 agreement, one indicating part payment and the other full payment, raising questions about its authenticity. Referring to Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana, the Court reiterated that only a registered sale deed can legally transfer title.

2. Failure to Prove Possession

The petitioners failed to establish actual, lawful possession of the property. Their reliance on earlier interim orders issued in writ proceedings did not prove physical possession. The Court cited Balkrishna Dattatraya Galande v. Balkrishna Rambharose Gupta, to emphasize that in proceedings under Article 226 of the Constitution, possession must be demonstrated with evidence, not merely asserted.

3. Land Vesting Under Land Reforms: Final and Binding

The Court held that the land had already vested in the State in 1975 under the Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act, 1973. Once such statutory vesting takes place, the land cannot be privately transferred. The alleged "revalidation" of the agreement in 2006 and the subsequent sale deeds executed in favour of the petitioners had no legal effect.

The Court relied on earlier binding decisions in State of A.P. v. N. Audikesava Reddy, and Omprakash Verma v. State of A.P., both of which had upheld the finality and legal sanctity of land vested under statutory ceiling laws.

Implications for Practitioners and Real Estate Stakeholders

• Developers should undertake comprehensive due diligence when acquiring land through GPA, unregistered agreements, or legacy title documents. This is especially critical in urbanizing areas or regions previously subject to land ceiling laws.
• Financial institutions must implement robust title verification before accepting land as collateral. Relying on layered or backdated documents poses significant legal and financial risks.
• Litigants and property buyers must recognize that registration is not a procedural step; it is the legal foundation of ownership. Courts will not uphold rights arising from unregistered documents, even when accompanied by possession or part performance.

Conclusion

The Supreme Court's ruling in Mahnoor Fatima Imran settles a critical position in Indian property law: registered ownership is the only valid foundation for title to immovable property. Unregistered agreements, however old or "validated," and claims based solely on possession cannot override statutory requirements for lawful transfer.

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