No Title To Immovable Property Can Be Transferred On Basis Of Unregistered Instrument: NCLAT

Brief Facts

The Appellant has filed this appeal against an order passed by the Adjudicating Authority. The IA was filed by the Liquidator under Sections 43, 44, 66 & 67 of the Insolvency and Bankruptcy Code, 2016 , which Application has been allowed and the transaction has been held to be a fraudulent and not conveying any rights or interest of the Corporate Debtor in favour of the Appellant.

The appellant submitted that by an Agreement executed in 2006 for an amount of Rs.4,00,000/-, the Appellant has acquired rights on the shop in question which was taken from one Precision Fasteners Private Limited and that none of the documents including the executed document i.e., Sale Agreement for shops dated 07.09.2006 in favour of the Appellant was registered and that property in question were part of the Government grant hence it was not required to be registered.

Refuting the submissions, the respondent submitted that this property was always shown in the records in the name of the Corporate Debtor and the Promoters/Directors of the Corporate Debtor themselves have pleaded before the Adjudicating Authority that there was no authority in favour of the Executive Director who is claimed to have executed a Sale Agreement and that there is no right in the Appellant and the entire CIRP is concluded. The Order has been passed by the Adjudicating Authority to handover the possession of the shops by the Appellant.

Observations:

The tribunal noted that the Sale Agreement for shops dated 07.09.2006 which has been brought on the record by the Appellant and is the basis of rights of the Appellant admittedly is an unregistered document.

It further added that Adjudicating Authority in the Order impugned has referred to the Amendment Act 2001 inserted vide Act 48/2001 in Section 17(1A) of the Registration Act which required the compulsory registration of any document conveying title.

It further said that the fact that the property is shown in the records in the name of the Corporate Debtor, Liquidator has every right to take possession of the shop on which the Appellant could not prove any title. The Appellant on the basis of the unregistered agreement to sell, cannot claim to have acquired any title.

The Supreme Court in 'Shakeel Ahmed Vs. 'Syed Akhlaq Hussain held that “no title could be transferred with respect to immovable properties on the basis of an unregistered Agreement to Sell or on the basis of an unregistered General Power of Attorney. The Registration Act, 1908 clearly provides that a document which requires compulsory registration under the Act, would not confer any right, much less a legally enforceable right to approach a Court of Law on its basis.”

The tribunal concluded that no error has been committed by the Adjudicating Authority in allowing the Application filed by the Liquidator and directing the Appellant to handover the possession declaring the transaction invalid and without transferring any title.

Case Title: Rahat Hussain Versus Divyesh Desai & Ors.

Case Number: Company Appeal (AT) (Insolvency) No. 2373 of 2024 & I.A. No. 8905 of 2024

Judgment Date: 7/01/2025

Click Here To Read/Download The Order