A recent ruling by the Supreme Court of India has clarified that a registered sale deed, by itself, is not a definitive proof of ownership of a property. The ruling emphasizes that a valid title and lawful possession are also necessary to establish ownership. This pronouncement has significant implications for property buyers, sellers, and investors across the country.
The Supreme Court made this observation in the case of Mahnoor Fatima Imran & Ors. vs. M/S Viswesara Infrastructure Pvt. Ltd. & Ors.. The dispute involved 53 acres of land in Telangana, which had been declared surplus under the Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act, 1973 and was vested with the State government in 1975. Despite this, a cooperative society claimed rights over the land and sold portions of it through registered sale deeds. The Supreme Court bench, comprising Justice Sudhanshu Dhulia and Justice K. Vinod Chandran, held that a registered sale deed does not confer ownership if the seller does not have a legal and valid title to the property.
The ruling reinforces the principle that "title matters more than paperwork". The court emphasized that registration provides public notice of a transaction but does not validate the transfer unless the seller had a clear and marketable title. The Supreme Court has made it clear that ownership must be proven through a valid title, lawful possession, and adherence to statutory requirements, not just the existence of a registered document.
The Supreme Court has reiterated that the transfer of ownership in immovable property requires the registration of a sale deed. Referring to Section 54 of the Transfer of Property Act, 1882, the Court emphasized 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.
The Supreme Court has also clarified that agreements of sale, general power of attorney (GPA) sales, or wills are not substitutes for complete legal ownership. These documents do not substitute for the legal transfer of title. The Court invalidated GPA sales as substitutes for registered sale deeds, reaffirming that GPA transactions do not convey legal ownership and cannot be treated as valid property transfers.
Implications for Property Owners and Buyers
This ruling serves as a crucial reminder for property owners and buyers to conduct thorough due diligence before entering into any property transaction. It is essential to verify the seller's title and ensure that all necessary legal documents are in place. Buyers should not rely solely on agreements of sale, GPAs, or wills, as these do not guarantee ownership.
To legally establish ownership of immovable property, buyers and owners must support their claims with multiple layers of documentation. This includes all prior sale deeds, title deeds, and mutation records. It is also important to ensure that the sale deed is registered within four months of its execution; delays beyond this period can render the deed legally ineffective.
The Importance of Due Diligence
The Supreme Court's ruling underscores the importance of caveat emptor, or "buyer beware". The court has clarified that title flows from lawful ownership, not just paperwork. If the registered deed is based on fraud or defective title, the buyers can face eviction, lose money, or end up in court battles.
Experts recommend examining the full chain/history for the title of property for at least 30 years and checking to make sure that the property is clear from all encumbrances. Buyers must ensure that the seller has a clear and lawful title, all transactions are registered within prescribed timeframes, and possession is backed by lawful authority.
In conclusion, the Supreme Court's ruling clarifies that a registered sale deed is not the only factor in determining property ownership. A valid title, lawful possession, and adherence to statutory requirements are equally important. This ruling emphasizes the need for thorough due diligence and caution in property transactions.
