Section 54 of the Transfer of Property Act: Legal Mandate for Registration
The Supreme Court of India has clarified in the landmark case Sanjay Sharma v. Kotak Mahindra Bank Ltd (2024) that the ownership of immovable property cannot be legally transferred unless a sale deed is duly registered. This ruling applies even if possession has been handed over and payment has been made.
The Supreme Court underscored the critical need to adhere to Section 54 of the Transfer of Property Act, 1882, which requires the registration of sale deeds for tangible immovable properties valued at Rs. 100 or more. A bench comprising Justice B.V. Nagarathna and Justice N.K. Singh highlighted that the term “only” in Section 54 reinforces the legal requirement that property transfers are valid solely when the sale deed is duly registered.
No Ownership Without a Registered Sale Deed
The court explained that mere possession or payment does not establish ownership. Until the sale deed is formally registered, ownership remains with the seller. Informal agreements or partial payments, even accompanied by possession, do not hold legal validity in the absence of registration.
The judgment also referred to the precedent set in Babasheb Dhondiba Kute v. Radhu Vithoba Barde (2024), where the court held that property conveyance by sale is legally recognized only after the registration of the sale deed as stipulated under Section 17 of the Registration Act, 2008.
This decision arose in the context of an auction sale under the SARFAESI Act. A party objected, claiming possession based on an unregistered agreement to sell and a General Power of Attorney. The court rejected the claim, ruling that the lack of a registered sale deed rendered the claim invalid.
The bench observed that unregistered documents presented by the respondent failed to meet the statutory requirements under Section 54. Consequently, the respondent could not establish legal ownership of the property. This ruling reinforces the importance of proper registration in securing property rights.
Ensuring Legal Ownership: A Step Toward Clarity
The Supreme Court’s ruling provides much-needed clarity and strengthens the legal framework for property transactions in India. By emphasizing the requirement for registered sale deeds, the judgment safeguards buyers and ensures transparency in real estate dealings.