The Supreme Court has reiterated that ownership of immovable property cannot transfer without registering the sale deed, as per Section 54 of the Transfer of Property Act, 1882. This decision strengthens clarity on property ownership laws.
The Supreme Court has reaffirmed that ownership of immovable property cannot be transferred without registering the sale deed. The Court clarified that possession and payment of consideration alone are insufficient to transfer ownership unless accompanied by a registered instrument, as mandated under Section 54 of the Transfer of Property Act, 1882.
Registration is Mandatory for Ownership Transfer
- A Bench comprising Justice BV Nagarathna and Justice NK Singh observed that Section 54 explicitly states that for tangible immovable property valued at ₹100 or more, ownership can only be transferred through a registered sale deed.
- The Court remarked: “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 of the sale deed is essential to complete and validate the transfer.”
- Relying on the earlier judgment in Babasheb Dhondiba Kute vs. Radhu Vithoba Barde, 2024 LiveLaw (SC) 225, the Bench highlighted that “conveyance by way of sale occurs only at the time of registration of a sale deed as per Section 17 of the Registration Act, 2008.”
Case Background: Auction Sale Dispute
The observations were made in a case concerning an auction sale under the SARFAESI Act. The objection was raised by an individual claiming ownership of part of the secured asset based on:
- An unregistered agreement to sell, and
- A General Power of Attorney (GPA).
The Bench dismissed the objection, emphasizing that ownership cannot be claimed without a registered sale deed. The unregistered documents failed to meet the legal requirements under Section 54 of the Transfer of Property Act.
- The Court stated: “Documents relied upon by respondent No. 2 to claim ownership of the basement are unregistered and fail to meet the requirements of a valid sale under the law.”
- It further held that neither the bank nor the auction purchaser could have detected the objector's claim during due diligence, given the unregistered nature of the documents.
Public Auction and Limited Grounds for Challenge
The Supreme Court reiterated that public auction sales cannot be invalidated unless there is evidence of:
- Material irregularity, or
- Fraud or collusion.
The Bench approved the auction sale, dismissing the claims of the objector, as they lacked merit and legal standing.
Legal Precedents Highlighted
The Court referred to previous rulings to underscore the principle that registration is essential for transferring ownership:
- Babasheb Dhondiba Kute vs. Radhu Vithoba Barde, 2024 LiveLaw (SC) 225 – Conveyance takes place only upon registration.
- Sale By Way Of Public Auction Can't Be Set Aside Unless There’s Material Irregularity Or Fraud – Reinforces the integrity of auction processes.
The Court clarified that registration is mandatory for ownership transfer, and auction sales can only be challenged on grounds of fraud or material irregularity. This decision strengthens clarity on property ownership laws.
Case: SANJAY SHARMA v. KOTAK MAHINDRA BANK LTD.
