Unregistered Agreements To Sell, Even If Coupled With Possession Don't Convey Title: SC

The Supreme Court has reiterated that an unregistered agreement to sell, even when coupled with possession, does not create any title or interest in immovable property. Title to immovable property can only be transferred through a registered sale deed, the Court affirmed, while setting aside a Rajasthan High Court order that had rejected a civil suit at the preliminary stage.

A bench comprising Justices J.B. Pardiwala and R. Mahadevan held that the High Court erred in rejecting the plaint filed by Vinod Infra Developers Ltd, without properly appreciating the presence of distinct and triable issues.

Referring to Section 54 of the Transfer of Property Act, 1882, the bench emphasized that a contract for sale of immovable property “does not, by itself, create any interest in or charge on such property.”

“This legal position has been conclusively laid down by this Court in Suraj Lamp & Industries (P) Ltd v. State of Haryana (2012), wherein it was held that unregistered agreements to sell, even if coupled with possession, do not convey title or create any interest in the immovable property,” the bench noted.

The same principle was reaffirmed in Cosmos Co-operative Bank Ltd v. Central Bank of India & Ors (2025), and again in M.S. Ananthamurthy v. J. Manjula, where the Court conducted a detailed analysis of statutory provisions and precedents.

In the present case, the Court held that the unregistered agreement to sell dated May 24, 2014, executed by the appellant’s managing director and respondent No.1, Mahaveer Lunia, conferred no enforceable rights in favour of the latter under Section 54. The authority under which the documents were executed had also been revoked prior to the registration of the impugned sale deeds.

“Furthermore, Section 23 of the Registration Act mandates that any document required to be registered must be presented for registration within four months from the date of its execution,” the bench observed, noting that neither the agreement to sell nor the power of attorney were ever registered.

"Despite the execution of the agreement to sell on May 24, 2014, no attempt was made by respondent No.1 to have it registered within the stipulated period. This inaction further supports the appellant’s contention that the said agreement is not only inadmissible under Sections 17 and 49 of the Act, but also legally ineffective due to non-compliance with the mandatory requirement of timely registration. The failure to seek specific performance or register the document within the period prescribed under Section 23 renders the foundational document unenforceable in law,” the Court held.

The bench also flagged the improper application of Order VII Rule 11 of the Civil Procedure Code by the High Court, which had rejected the plaint in its entirety, treating the issue concerning the registered sale deeds of July 2022 as “academic.”

“This approach is contrary to the well-settled legal principle that a plaint may be rejected under Order VII Rule 11 CPC only if, on a plain reading of the plaint, it discloses no cause of action or falls within the other narrowly defined grounds under the said provision, such as under-valuation, insufficient court fees, or bar by any law,” the bench stated.

The Court underscored that selective severance of reliefs is impermissible where different causes of action are independently pleaded and supported by distinct facts. “The High Court’s wholesale rejection of the plaint, without appreciating that the reliefs claimed flowed from multiple and distinct causes of action – particularly one arising after the revocation of the power of attorney – amounts to an improper application of Order VII Rule 11 CPC,” the bench added.

Respondent No.1 had argued that the transaction was reflected in income tax records, that a notarized power of attorney and consent letter existed, and that possession had been delivered to them. However, the bench dismissed these as matters requiring trial:

“Such factual disputes cannot be resolved at the stage of considering an application under Order VII Rule 11 CPC. Therefore, these contentions, even if raised, do not furnish a valid ground for rejection of the plaint at the threshold.”

The Court agreed with the appellant’s submission that mutation entries based on the disputed sale deeds could not be treated as proof of ownership. “It is well settled that issues relating to title of immovable property fall exclusively within the jurisdiction of civil courts and not revenue authorities. Revenue entries are administrative in nature and intended only for fiscal purposes,” the bench said.

It also clarified that Section 207 of the Rajasthan Tenancy Act, 1955, which bars civil court jurisdiction in tenancy-related disputes, had no application here as the dispute pertained to title, validity of sale deeds, and declaration of ownership—issues that are triable exclusively by a civil court.

Additionally, the bench faulted the High Court for rejecting the plaint on the ground of insufficient court fee without affording the plaintiff an opportunity to rectify it. “The law mandates that the plaintiff be afforded an opportunity to rectify such deficiency. Only upon failure to comply, can the plaint be rejected. This principle was affirmed by a three-Judge Bench of this Court in Tajender Singh Ghambhir v. Gurpreet Singh (2014),” it noted.

In conclusion, the Court restored the order of the Additional District Judge, Jodhpur, and directed that the suit be taken up for adjudication in accordance with law.

Background of the Case

Vinod Infra Developers Ltd claimed ownership over 18 bighas and 15 biswas of agricultural land in Village Pal, District Jodhpur, purchased in 2013. The company took a loan of ₹7.5 crore from respondent No.1, Mahaveer Lunia. On May 23, 2014, the Board of Directors passed a resolution authorising Managing Director Vinod Singhvi and respondent No.1 to sell the land. An unregistered power of attorney and agreement to sell were executed.

In August 2015, the original sale deeds were impounded for insufficient stamp duty. While the company challenged this before the Rajasthan Tax Board (which remanded the matter), the original title documents were handed to the respondents as loan security.

On May 24, 2022, the company passed a resolution revoking all earlier authorisations. Despite this, respondent No.1 executed sale deeds on July 13 and 14, 2022, which were registered on July 19, and led to the respondents’ names being mutated in revenue records.

The company then filed a civil suit seeking declaration, possession, and injunction. The trial court dismissed the respondents’ application under Order VII Rule 11 CPC, but the High Court reversed this, rejecting the plaint in toto, an error now corrected by the Top Court.

Case Title: Vinod Infra Developers Ltd. v. Mahaveer Lunia & Ors.