The Supreme Court, in its judgment delivered on January 7, 2025, reiterated that ownership of an immovable property does not transfer merely through possession and payment of consideration. Unless the sale deed is registered, no legal ownership is established. A bench comprising Justice B.V. Nagarathna and Justice N.K. Singh emphasized the mandatory requirement of registration under Section 54 of the Transfer of Property Act, 1882.
Key Observations
Referring to Section 54, the bench noted that the provision explicitly requires the transfer of tangible immovable property, valued at one hundred rupees or more, to be lawful only through a registered instrument. The Court underscored the significance of the term “only” in the provision, stating that:
“Where the sale deed requires registration, ownership does not pass until the deed is registered, even if possession is transferred and consideration is paid. Registration is essential to complete and validate the transfer.”
The bench also cited the precedent set in Babasheb Dhondiba Kute vs. Radhu Vithoba Barde [2024 LiveLaw (SC) 225], which held that a conveyance of sale is legally recognized only upon the registration of the sale deed as per Section 17 of the Registration Act, 1908. Until such registration is effected, ownership is not legally transferred.
Case Background
The observations were made in the context of approving an auction sale conducted under the SARFAESI Act. An objection was raised by a party (Respondent No. 2) claiming possession of a portion of the secured asset based on an unregistered agreement to sell and a General Power of Attorney. The bench rejected the objection, ruling that the unregistered documents did not confer any valid title to the objector.
Court’s Reasoning
The Court observed that, since the agreement relied upon was unregistered, it failed to meet the legal requirements under Section 54 of the Transfer of Property Act. Moreover, the unregistered nature of the documents meant that neither the bank nor the auction purchaser could have detected the claim despite exercising due diligence.
The bench stated:
“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.”
Conclusion
The Court approved the auction sale in favor of the purchaser and dismissed the objection raised by Respondent No. 2. This judgment reaffirms the legal principle that a registered sale deed is indispensable for transferring ownership of immovable property, ensuring transparency and legal clarity in property transactions.
Case Details
Title: Sanjay Sharma v. Kotak Mahindra Bank Ltd.
Bench: Justice B.V. Nagarathna and Justice N.K. Singh
This decision serves as a critical reminder for individuals and institutions about the importance of registering sale deeds to avoid disputes and ambiguities regarding ownership of immovable properties.
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