Sanjay Sharma v. Kotak Mahindra Bank

The Supreme Court in its recent judgement on 10 December 2024, has reiterated the fact that only on registration of a sale deed can the ownership of an immovable property be transferred. Irrespective of the transfer of possession and payment of consideration, a transfer of ownership will only be valid once the sale deed has been registered.

A bench comprising Justice BV Nagarathna and Justice NK Singh referred to Section 54 of the Transfer of Property Act, 1882 and said that the provision mandates that the transfer of tangible immovable property valued at one hundred rupees or more must be carried out only through a registered instrument. The inclusion of the term “only” emphasizes that a sale of such property is legally valid solely when executed via a registered instrument.

The bench made these remarks while confirming the auction sale in favour of the purchaser under the SARFAESI Act. An objection was raised by a party claiming possession of a portion of the secured asset. However, the bench dismissed the objection, stating that the objector had no registered sale deed. Instead, he was asserting his rights based on an unregistered Agreement to Sell and a General Power of Attorney.

The court also made reference to the judgement of Babasheb Dhondiba Kute v. Radhu Vithoba Barde 2024 INSC 122 which held that conveyance by way of a sale would only take place when the sale deed has been registered in accordance with Section 17 of the Registration Act, 2008. It also reiterated another well-settled principle by making reference to V.S. Palanivel v. P. Sriram 2024 INSC 659 which held that a sale by public auction can only be set aside on account of an irregularity and/or illegality committed in holding the auction.

Further, the Hon’ble Court also observed that on account of the agreement being unregistered, it was not possible for either the bank or the auction purchaser to find out about the same despite having successfully completed the process of due diligence.

Hence the case was finally decided in favour of the Appellant, and it was held that all the documents cited by the party claiming possession of a portion of the secured asset (Respondent No.2) to assert ownership of the basement of the secured asset are unregistered and do not fulfil the legal requirements for a valid sale under Section 54 of the Transfer of Property Act. Consequently, Respondent No.2 lacked any legitimate title to claim ownership of the basement.