The Supreme Court of India has reiterated that ownership of immovable property cannot be transferred without a registered sale deed. The Court clarified that mere possession and payment of consideration are insufficient to establish ownership unless the sale deed is formally registered.
A bench comprising Justice BV Nagarathna and Justice NK Singh referred to Section 54 of the Transfer of Property Act, 1882, which mandates that the transfer of immovable property valued at ₹100 or more must be executed through a registered instrument. The bench emphasized the significance of the term “only” in the provision, underscoring that registration is essential to make the sale lawful.
Key Observations by the Court
The Court observed, “Where the sale deed requires registration, ownership does not pass until the deed is registered, even if possession is transferred, and consideration is paid. The registration of the sale deed for immovable property is essential to complete and validate the transfer. Until registration is effected, ownership is not transferred.”
The bench also referred to a previous judgment in Babasheb Dhondiba Kute vs. Radhu Vithoba Barde (2024 LiveLaw SC 225), which held that a sale is legally recognized only when the sale deed is registered under Section 17 of the Registration Act, 2008. The Court stated that until registration is completed, there is no valid conveyance in the eyes of the law.
Case Details: SARFAESI Act Auction Sale
The bench made these remarks while approving an auction sale under the SARFAESI Act. An objection was raised by a party claiming possession of a portion of the secured asset. However, the Court dismissed the objection, noting that the claimant did not possess a registered sale deed.
The claimant relied on an unregistered agreement to sell and a General Power of Attorney to assert ownership. The Court ruled that these documents did not meet the legal requirements for transferring ownership under Section 54 of the Transfer of Property Act.
Court’s Conclusion
The Court observed, “All the documents relied upon by respondent No.2 to claim ownership of the basement of the secured asset are unregistered and fail to meet the requirements of a valid sale. Respondent No.2 thus did not have any title to claim ownership of the basement of the secured asset.”
The Court also noted that since the agreement was unregistered, neither the bank nor the auction purchaser could have detected it during due diligence.
This judgment reinforces the necessity of registering sale deeds to establish lawful ownership of immovable property and serves as a reminder of the importance of adhering to legal procedures in property transactions.
