Until Sale Deed Is Registered, Ownership Of Immovable Property Isn't Transferred : Supreme Court

The Supreme Court has reiterated that the ownership of an immovable property does not get transferred until the sale deed is registered. Mere transfer of possession and payment of consideration will not transfer ownership, unless the sale deed is registered.

Referring to Section 54 of the Transfer of Property Act, 1882, a bench comprising Justice BV Nagarathna and Justice NK Singh observed that the provision stipulated that the transfer can be made only through a registered instrument. The use of the term “only” in the provision signified that, for tangible immovable property valued at one hundred rupees or more, a sale becomes lawful only when it is executed through a registered instrument.

"Where the sale deedrequires registration, ownership does not pass until the deed is registered, even if possession is transferred, and consideration is paid without such registration. The registration of the sale deed for an immovable property is essential to complete and validate the transfer. Until registration is effected, ownership is not transferred," the Court observed.

Reference was made to the judgment in Babasheb Dhondiba Kute vs. Radhu Vithoba Barde 2024 LiveLaw (SC) 225 which held that "the conveyance by way of sale would take place only at the time of registration of a sale deed in accordance with Section 17 of the Registration Act, 2008." Till the registration is made, there is no conveyance in the eye of law.

The bench made these observations while approving the auction sale in favour of an auction purchaser in terms of the SARFAESI Act. An objection was raised by a party, who claimed to be in possession of a portion of the secured asset. The bench rejected this objection by noting that there was no registered sale deed in favour of the objector. He was claiming right on the basis of an agreement to sell, which was unregistered and a General Power of Attorney.

Since the agreement was unregistered, the Court observed that neither the bank nor the auction purchaser could have detected it despite exercising due diligence.

"Thus, all the documents relied upon by respondent No.2 to claim ownership of the basement of the secured asset are unregistered documents and fail to meet the requirements of a valid sale under Section 54 of the Transfer of Property Act. Respondent No.2 thus did not have any title to claim the ownership of the basement of the secured asset," the Court observed.

Also from the judgment - Sale By Way Of Public Auction Can't Be Set Aside Unless There's Material Irregularity Or Fraud/Collusion : Supreme Court

Case Title : Sanjay Sharma v. Kotak Mahindra Bank Ltd.

Citation : 2024 LiveLaw (SC) 1054

Click here to read the judgment