Unregistered Agreements Do Not Confer Title Without Specific Performance: SC Clarifies

Summary:

In Vinod Infra Developers Ltd. v. Mahaveer Lunia & Ors.[1], the Supreme Court addressed whether an unregistered agreement to sell, executed without a subsequent suit for specific performance, could be relied upon to claim ownership or transfer rights in immovable property. The Court held that such unregistered documents, without a suit for specific performance, cannot be used to assert ownership or create interest in the property. The Court reversed the High Court’s order which had rejected the appellant’s plaint under Order VII Rule 11 of the Civil Procedure Code, holding that serious triable issues were raised that required full adjudication in a civil court.

Issue Raised:

The principal issue was whether a party can rely on an unregistered agreement to sell and a revoked power of attorney, in the absence of a suit for specific performance, to assert ownership or transfer rights in immovable property. Additionally, the Court examined whether the plaint raised triable issues sufficient to survive a preliminary rejection under Order VII Rule 11 of the CPC.

Arguments:

The appellant argued that the suit disclosed substantial issues regarding the legality of sale deeds executed by Respondent No.1 after the revocation of authority. The documents, they claimed, were executed not to transfer ownership but to secure a loan transaction, effectively creating a mortgage. They asserted that the agreement to sell was unregistered and that no suit for specific performance had been filed by the respondents. As such, the documents could not confer title or ownership. The appellant maintained that the revocation of the power of attorney prior to the sale deeds rendered them invalid, and that title disputes must be determined by civil courts, not revenue authorities. They also argued that the plaint contained more than one cause of action, and at least one was legally sustainable, thereby barring complete rejection under Order VII Rule 11.

The respondents contended that the documents executed in 2014 reflected a sale and not a mortgage, and that the claim of a mortgage was introduced only at the time of filing the suit. They submitted that the reliefs sought related to khatedari rights and possession and were therefore within the jurisdiction of the revenue courts under the Rajasthan Tenancy Act. They further argued that the suit was deficient in court fees and lacked proper pleadings. According to them, the mutation entries based on registered sale deeds were valid, and the High Court was justified in rejecting the plaint.

Judgment:

The Supreme Court allowed the appeal and restored the trial court’s decision. It held that the plaint cannot be rejected under Order VII Rule 11. The Court held that the sale agreement as also power of attorney was unregistered, and the power of attorney was also subsequently revoked before the execution of the sale deeds. The plaintiff was not suing to compel the respondent as vendor to perform the contract. The Court stated that in such cases, a contract of sale cannot give title or rights in the property.

 It further held that even if the transaction was reflected in tax records or supported by a notarised power of attorney, these facts did not confer title. The Court reiterated that revenue records cannot establish ownership, and that issues of title must be decided by civil courts. The Supreme Court emphasized that the rejection of a plaint is only appropriate when it discloses no cause of action or is barred by law on its face. Since the appellant’s suit raised distinct legal questions concerning the execution of sale deeds after revocation of authority, the plaint could not be rejected at the preliminary stage.

Analysis:

The current judgment is merely unambiguous in the sense that an agreement to sell, whether with or without registration, without a suit for specific performance of contract does not create an enforceable interest in a contract to sell the immovable property. A contract to sell made between a purported owner and an intending purchaser cannot be held to be one for sale because even if the document is taken to be a contract, it is something less than a deed of transfer and as such falls short of a concluded sale. The court also fell back upon Sections 17 and 49 of the Registration Act, wherein unregistered documents cannot be received as evidence to affect the immovable property not covered by the registration, except under a suit for specific performance, or in cases of collateral nature.

However, there was no such litigation instituted by the respondent herein. The Court rejected the High Court’s conclusion that the claim was academic or barred, holding that the execution of sale deeds after the revocation of the power of attorney constituted a separate and distinct cause of action. It also observed that even if one cause of action is valid, the plaint must proceed to trial. The judgment confirmed that title disputes must be adjudicated by civil courts and that procedural defects such as incorrect court fees must be given an opportunity for rectification.

Conclusion:

The ruling reinforces the mandatory legal requirements for transfer of immovable property and limits the ability to rely on unregistered instruments or revoked authorities to claim ownership.

[1] Civil Appeal No. 7109 of 2025 [Arising out of SLP(C) No. 4862 OF 2025]