LEGAL ISSUE: Whether a sale deed, duly executed and presented for registration, remains valid despite a significant delay in its actual registration and whether a subsequent purchaser can claim bona fide status if the vendor had already transferred the property through a prior sale deed.
CASE TYPE: Property Law, Civil Law
Case Name: Kaushik Premkumar Mishra & Anr. vs. Kanji Ravaria @ Kanji & Anr.
Judgment Date: 19 July 2024
Introduction
Date of the Judgment: 19 July 2024
Citation: 2024 INSC 540
Judges: Justice Vikram Nath, Justice Ahsanuddin Amanullah
Can a seller, who has already sold a property, sell it again to a different buyer after a significant delay in the registration of the first sale deed? The Supreme Court of India recently addressed this crucial question in a case involving a property dispute where the registration of the initial sale deed was delayed by 26 years. This judgment clarifies the rights of the original purchaser and the responsibilities of subsequent purchasers.
The Supreme Court bench, comprising Justice Vikram Nath and Justice Ahsanuddin Amanullah, delivered the judgment. Justice Vikram Nath authored the opinion for the bench.
Case Background
The case revolves around a property located in village Shelwali, Tehsil Palghar, District Thane, Maharashtra. The original owner, Respondent No. 2, sold half of the property to the Appellants (Kaushik Premkumar Mishra and his brother) on December 2, 1985. On the same day, the remaining half was sold to the Appellants’ collaterals. Both sale deeds were presented for registration on December 5, 1985. However, due to a deficiency in stamp duty, the Appellants’ sale deed was not registered at that time, while the collaterals’ sale deed was registered.
In December 2010, Respondent No. 2 executed another sale deed for the same property in favor of Respondent No. 1. When the Appellants discovered this in June 2011, they completed the registration of their 1985 sale deed on June 14, 2011, after paying the deficient stamp duty. Subsequently, the Appellants filed a suit to cancel the 2010 sale deed and for a permanent injunction against Respondent No. 1.
Timeline:
| Date | Event |
|---|---|
| 02.12.1985 | Respondent No. 2 executes a Sale Deed in favor of Appellant No. 1 and his minor brother for the suit land. |
| 02.12.1985 | Respondent No. 2 executes another Sale Deed in favor of collaterals of the Appellants for the remaining half portion of the land. |
| 05.12.1985 | Both Sale Deeds are presented for registration before the Sub-Registrar, Palghar. |
| 1985 | Sale Deed in favor of collaterals of the Appellants was registered and their names were mutated in revenue records. |
| 1985 | Sale Deed in favor of the Appellants could not be registered due to deficiency in stamp duty. |
| 08.10.1999 | Appellant’s brother Ambrish passes away. |
| 03.12.2010 | Respondent No. 2 executes a Conveyance Deed for the suit land in favor of Respondent No. 1. |
| 08.06.2011 | Appellants discover Respondent No. 1 attempting to take possession of the suit land. |
| 14.06.2011 | Appellants obtain a certified copy of the Conveyance Deed in favor of Respondent No. 1. |
| 14.06.2011 | Appellants’ Sale Deed of 1985 is registered after removing the deficiency in stamp duty. |
| 27.06.2011 | Appellants file a suit for cancellation of the sale deed dated 03.12.2010 and for a perpetual injunction. |
| 24.02.2016 | Trial Court dismisses the suit. |
| 07.03.2019 | First Appellate Court allows the appeal and sets aside the judgment of the Trial Court. |
| 09.06.2022 | High Court allows the Second Appeal, setting aside the judgment of the first Appellate Court and restoring that of the Trial Court. |
| 19.07.2024 | Supreme Court allows the appeal, sets aside the judgment of the High Court and restores the judgment of the first Appellate Court. |
Legal Framework
The case involves several key legal provisions:
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Section 11 of the Indian Contract Act, 1872: This section deals with the competency of parties to contract, specifying that a minor is not competent to enter into a contract.
“Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind and is not disqualified from contracting by any law to which he is subject.” - Section 17 of the Registration Act, 1908: This section specifies which documents require compulsory registration, including instruments of sale of immovable property.
- Section 49 of the Registration Act, 1908: This section outlines the effect of non-registration of documents required to be registered, stating that such documents cannot be received as evidence of a transaction affecting immovable property.
- Section 54 of the Transfer of Property Act, 1882: This section defines “sale” as a transfer of ownership in exchange for a price and states that a sale of immovable property of the value of one hundred rupees and upwards can be made only by a registered instrument.
- Section 85 of the Registration Act, 1908: This section deals with the destruction of documents that remain unclaimed for more than two years.
- Section 114 of the Indian Evidence Act, 1872: This section allows the court to presume the existence of certain facts.
- Section 32A of the Registration Act, 1908: This section, inserted in 2001, mandates that the vendee must sign the document of sale for immovable property and affix a passport size photograph and thumb impression along with proof of identification.
Arguments
The Appellants argued that the sale deed executed in 1985 was valid, as it was duly executed, presented for registration, and the deficiency in stamp duty was later paid. They contended that the vendor, Respondent No. 2, did not specifically deny the execution of the sale deed or receiving consideration. They also pointed out that the subsequent sale to Respondent No. 1 was fraudulent.
Respondent No. 2 argued that the sale deed was void because the Appellants were minors at the time of execution and that the registration was done after a delay of 26 years, making it invalid. They also contended that the suit was barred by limitation and that the Appellants had not sought a declaration of title.
Respondent No. 1, the subsequent purchaser, claimed to be a bona fide purchaser for value without notice of the prior sale. They argued that the Appellants’ sale deed was not validly registered and that they had exercised due diligence before purchasing the property.
The following table summarizes the arguments of both sides:
| Appellants’ Submissions | Respondent No. 2’s Submissions | Respondent No. 1’s Submissions |
|---|---|---|
| Respondent No. 2 did not specifically deny executing the sale deed. | The sale deed in favor of the Appellants was registered after 26 years. | Respondent No. 1 was a bona fide purchaser. |
| Respondent No. 2 did not cross-examine Appellant No. 1 or enter the witness box. | The suit was not maintainable as no relief of declaration of title was sought. | The sale deed in favor of the Appellants was not validly registered. |
| The first Appellate Court had decreed the suit, and no appeal was filed by Respondent No. 2. | Appellant No. 1 admitted that he did not know the details of the payment and did not have proof of consideration. | Appellant No. 1 had failed to prove the basis of the claim i.e. the sale deed dated 02.12.1985. |
| The objection to the registration process was not raised by Respondent No. 2 in the written statement. | Appellant No. 1 admitted that he was a minor at the time of the execution of the sale deed. | Respondent No. 1 had exercised due diligence before purchasing the property. |
| There is no limitation for registering a sale deed once it has been presented for registration. | The sale deed was not enforceable under law as the mandatory legal conditions were not fulfilled for its registration. | |
| The sale deed relates back to the date of execution once registered. | The sale deed was registered in violation of the Indian Stamp Act, 1899 and the Registration Act, 1908. | |
| Respondent No. 2 executed a sale deed for the remaining half of the land on the same day, which was registered. | The sale deed was not validly registered as per Section 60 of the Registration Act, 1908. | |
| The sale deed in favor of the Appellants was never challenged by Respondent No. 2. | The document was unclaimed for 26 years and hence, by operation of Section 85 of the Registration Act, 1908, it should have been destroyed. | |
| The sale deed is valid even if the purchaser is a minor as the minor was represented by his natural guardian. | Compulsory affixing of photograph on the conveyance deed was not followed at the time of registration process. | |
| The subsequent purchaser was not a bona fide purchaser as the sale deed mentioned “as is where is basis”. |
Issues Framed by the Supreme Court
The Supreme Court framed the following issues for consideration:
- Whether the sale deed dated 02.12.1985 was executed by Respondent No. 2?
- Whether the sale consideration was paid with respect to sale deed dated 02.12.1985?
- Whether the sale deed dated 02.12.1985 was presented for registration on 05.12.1985 or not?
- Whether delayed registration of the sale deed dated 02.12.1985 would prove to be fatal?
- Whether non-mutation would take away the right created by the sale deed in favor of the vendees?
- Whether respondent no.2 had any right, title or interest left in the suit property after 02.12.1985?
- Whether the sale deed dated 02.12.1985 was void as the vendees were alleged to be minors?
- Whether the respondent no. 1 was a bona fide purchaser for value by way of a subsequent sale deed dated 03.12.2010?
Treatment of the Issue by the Court
The following table demonstrates as to how the Court decided the issues
| Issue | Court’s Decision | Reason |
|---|---|---|
| Whether the sale deed dated 02.12.1985 was executed by Respondent No. 2? | Yes | Respondent No. 2 did not specifically deny execution, and the sale deed was duly signed and presented for registration. |
| Whether the sale consideration was paid with respect to sale deed dated 02.12.1985? | Yes | Respondent No. 2 did not deny receiving consideration, and a registered document carries a presumption of correctness. |
| Whether the sale deed dated 02.12.1985 was presented for registration on 05.12.1985 or not? | Yes | The sale deed was presented before the Sub-Registrar on 05.12.1985 as per the document. |
| Whether delayed registration of the sale deed dated 02.12.1985 would prove to be fatal? | No | Once registered, the sale deed relates back to the date of execution, and delay does not invalidate it. |
| Whether non-mutation would take away the right created by the sale deed in favor of the vendees? | No | Non-mutation does not affect the rights created by a valid sale deed. |
| Whether respondent no.2 had any right, title or interest left in the suit property after 02.12.1985? | No | Respondent No. 2 had transferred all rights through the sale deed of 02.12.1985. |
| Whether the sale deed dated 02.12.1985 was void as the vendees were alleged to be minors? | No | The minor was represented by his natural guardian, and the sale deed would be valid at least for the minor’s share. |
| Whether the respondent no. 1 was a bona fide purchaser for value by way of a subsequent sale deed dated 03.12.2010? | No | Respondent No. 1 could not claim to be a bona fide purchaser as the vendor had already transferred the property through a prior sale deed. |
Authorities
The Supreme Court considered several authorities in its judgment:
| Authority | Court | How it was used by the Court |
|---|---|---|
| Alka Bose vs. Parmatma Devi and others, (2009) 2 SCC 582 | Supreme Court of India | The Court relied on this case to state that an agreement of sale signed by the vendor alone and possession delivered to the purchaser is a valid contract. |
| Anathula Sudhakar vs. P. Buchi Reddy & Ors., (2008) 4 SCC 594 | Supreme Court of India | This case was cited by the respondents to argue that the suit was not maintainable as no relief of declaration of title was sought. |
| Raghwendra Sharan Singh vs. Ram Prasanna Singh by LR, (2020) 16 SCC 601 | Supreme Court of India | This case was cited by the respondents to argue that the suit was not maintainable as no relief of declaration of title was sought. |
| Mathai Mathai vs. Joseph Mary & Ors., (2015) 5 SCC 622 | Supreme Court of India | This case was cited by the respondents to argue that a contract with a minor is void ab initio. |
| Smriti Debbarma vs. Prabha Ranjan Debbarma, (2023) SCC On Line SC 9 | Supreme Court of India | This case was cited by the respondents to argue that the burden of proof was on the plaintiff. |
| Kunda wd/o Mahadeo Supare & Ors. vs. Haribhau s/o Husan Supare, (2014) 5 Mah. L.J.726 | High Court of Bombay | This case was cited by the respondents regarding the presumption of existence of certain facts by the Court. |
| Raghunath & Ors. vs. Kedar Nath, (1969) 1 SCC 497 | Supreme Court of India | This case was cited by the respondents regarding the effect of non-registration of documents. |
| Bondar Singh & Ors. Vs. Nihal Singh & Ors., (2003) 4 SCC 161 | Supreme Court of India | This case was cited by the respondents regarding the effect of non-registration of documents. |
| Suraj Lamps and Industries Pvt. Ltd. vs. State of Haryana and Anr., (2009) 7 SCC 363 | Supreme Court of India | This case was cited by the respondents regarding the effect of non-registration of documents. |
| S. Kaladevi v. V.R. Somasundaram & Ors., (2010) 5 SCC 401 | Supreme Court of India | This case was cited by the respondents regarding the effect of non-registration of documents. |
| M/s Paul Rubber Industries Pvt. Ltd. vs. Amit Chand Mitra & Anr., SLP No.15774 of 2023 | Supreme Court of India | This case was cited by the respondents regarding the effect of non-registration of documents. |
| Sukhwinder Singh vs. Jagroop Singh and Anr., 2020 SCC Online SC 86 | Supreme Court of India | This case was cited by the respondents regarding bona fide purchaser. |
| Seethakathi Trust Madras vs. Krishnaveni, (2022) 3 SCC 150 | Supreme Court of India | This case was cited by the respondents regarding bona fide purchaser. |
| Hansa V. Gandhi vs. Deep Shankar Roy, (2013) 12 SCC 776 | Supreme Court of India | This case was cited by the respondents regarding bona fide purchaser. |
| Hardev Singh vs. Gurmail Singh, (2007) 2 SCC 404 | Supreme Court of India | This case was cited by the respondents regarding bona fide purchaser. |
| Veena Singh (dead) Thr. LRs. District Registrar/Additional Collector, (2022) 7 SCC 1 | Supreme Court of India | This case was cited by the respondents regarding the mandatory requirements of registration. |
| The Tehsildar, Urban Improvement Trust and Anr. vs. Ganga Bai Menariya (dead) through Lrs. and others, (2024) 2 SCR 650 | Supreme Court of India | This case was cited by the respondents to argue that the suit was not maintainable as no relief for declaration of title was sought. |
| Krishnaveni vs. M.A. Shagul Hameed and another, Civil Appeal No.2591 of 2024 @ SLP(Civil) No.23655 of 2019 | Supreme Court of India | This case was cited by the respondents for the proposition that the sale contract with the minor even though he was the vendee, would be void ab-initio. |
| Babasaheb Dhondiba Kure vs. Radha Vithoba Barde, C.A. No.002458 of 2024 | Supreme Court of India | This case was cited by the respondents for the proposition that conveyance by way of sale would take place only at the time of registration of a sale deed in accordance with section 17 of the Act, 1908. |
Judgment
The Supreme Court analyzed the submissions of both parties and the authorities cited. The following table summarizes how the court treated each submission:
| Submission | How it was treated by the Court |
|---|---|
| Respondent No. 2 did not specifically deny executing the sale deed. | Accepted. The Court noted that a vague statement of not recollecting the execution could not be treated as a denial. |
| Respondent No. 2 did not cross-examine Appellant No. 1 or enter the witness box. | Significant. The Court highlighted that the lack of cross-examination and failure to testify weakened Respondent No. 2’s case. |
| The first Appellate Court had decreed the suit, and no appeal was filed by Respondent No. 2. | Noted. The Court observed that the absence of an appeal by Respondent No. 2 was a crucial factor. |
| The objection to the registration process was not raised by Respondent No. 2 in the written statement. | Significant. The Court noted that the issue of registration was not raised by the Respondent No. 2 in written statement, and hence, could not be a ground of challenge. |
| There is no limitation for registering a sale deed once it has been presented for registration. | Accepted. The Court clarified that there is no time limit for registering a sale deed after it has been presented. |
| The sale deed relates back to the date of execution once registered. | Accepted. The Court affirmed that the title relates back to the date of execution of the sale deed and not the date of registration. |
| Respondent No. 2 executed a sale deed for the remaining half of the land on the same day, which was registered. | Significant. The Court noted that Respondent No. 2 executed another sale deed on the same day which was registered and that there was no explanation for the same. |
| The sale deed in favor of the Appellants was never challenged by Respondent No. 2. | Significant. The Court noted that the sale deed was never challenged by the Respondent No. 2 through a counter-claim or an independent suit. |
| The sale deed is valid even if the purchaser is a minor as the minor was represented by his natural guardian. | Accepted. The Court held that the sale deed was valid as the minor was represented by his natural guardian. |
| The subsequent purchaser was not a bona fide purchaser as the sale deed mentioned “as is where is basis”. | Accepted. The Court stated that the subsequent purchaser was not a bona fide purchaser. |
| The sale deed in favor of the Appellants was registered after 26 years. | Rejected. The Court held that the delay in registration does not invalidate the sale deed. |
| The suit was not maintainable as no relief of declaration of title was sought. | Rejected. The Court held that the suit was maintainable. |
| Appellant No. 1 admitted that he did not know the details of the payment and did not have proof of consideration. | Rejected. The Court noted that the payment was mentioned in the sale deed and that the vendor did not deny receiving the consideration. |
| Appellant No. 1 admitted that he was a minor at the time of the execution of the sale deed. | Rejected. The Court noted that the minor was represented by his natural guardian and the sale deed would be valid for the minor’s share. |
| The sale deed was not enforceable under law as the mandatory legal conditions were not fulfilled for its registration. | Rejected. The Court stated that the sale deed was registered and hence, it is valid. |
| The sale deed was registered in violation of the Indian Stamp Act, 1899 and the Registration Act, 1908. | Rejected. The Court held that the sale deed was registered by the authorities and hence, it is valid. |
| The sale deed was not validly registered as per Section 60 of the Registration Act, 1908. | Rejected. The Court held that the sale deed was registered by the authorities and hence, it is valid. |
| The document was unclaimed for 26 years and hence, by operation of Section 85 of the Registration Act, 1908, it should have been destroyed. | Rejected. The Court held that the document was registered by the authorities and hence, it is valid. |
| Compulsory affixing of photograph on the conveyance deed was not followed at the time of registration process. | Rejected. The Court noted that the sale deed was presented for registration in 1985, much before the insertion of section 32A in the Act, 1908, which mandated the affixing of the photograph. |
| Respondent No. 1 was a bona fide purchaser. | Rejected. The Court held that the Respondent No. 1 was not a bona fide purchaser as the vendor had already transferred the rights through a prior sale deed. |
| Appellant No. 1 had failed to prove the basis of the claim i.e. the sale deed dated 02.12.1985. | Rejected. The Court held that the Appellant No. 1 had proved the sale deed and the same was valid. |
| Respondent No. 1 had exercised due diligence before purchasing the property. | Rejected. The Court held that the Respondent No. 1 was not a bona fide purchaser as the vendor had already transferred the rights through a prior sale deed. |
The Court made the following observations regarding the authorities:
- The Court relied on Alka Bose vs. Parmatma Devi and others to affirm that a sale agreement signed by the vendor and possession delivered to the purchaser is a valid contract.
- The Court distinguished the cases cited by the respondents (Raghunath & Ors. vs. Kedar Nath, Bondar Singh & Ors. Vs. Nihal Singh & Ors., Suraj Lamps and Industries Pvt. Ltd. vs. State of Haryana and Anr., S. Kaladevi v. V.R. Somasundaram & Ors., M/s Paul Rubber Industries Pvt. Ltd. vs. Amit Chand Mitra & Anr., Maya Devi v. Lalta Prasad, and Veena Singh (dead) thr. LRs . v. District Registrar/Additional Collector) as not applicable to the facts of the case.
- The Court rejected the arguments based on Anathula Sudhakar vs. P. Buchi Reddy & Ors. and Raghwendra Sharan Singh vs. Ram Prasanna Singh by LR that the suit was not maintainable.
- The Court distinguished the case of Mathai Mathai vs. Joseph Mary & Ors., stating that the sale deed was valid in the present case as the minor was represented by his natural guardian.
- The Court rejected the arguments based on Smriti Debbarma vs. Prabha Ranjan Debbarma and Kunda wd/o Mahadeo Supare & Ors. vs. Haribhau s/o Husan Supare.
- The Court rejected the arguments based on Sukhwinder Singh vs. Jagroop Singh and Anr., Seethakathi Trust Madras vs. Krishnaveni, Hansa V. Gandhi vs. Deep Shankar Roy, Hardev Singh vs. Gurmail Singh, and Raghwendra Sharan Singh vs. Ram Prasanna Singh by LR regarding the bona fide purchaser.
- The Court rejected the arguments based on Krishnaveni vs. M.A. Shagul Hameed and another, and Babasaheb Dhondiba Kure vs. Radha Vithoba Barde.
Final Decision
The Supreme Court allowed the appeal, setting aside the judgment of the High Court and restoring the judgment of the first Appellate Court. The court held that:
- The sale deed executed in 1985 was valid, and the delay in registration did not invalidate it.
- The vendor, Respondent No. 2, had no right to sell the property again in 2010, as the property had already been transferred through the 1985 sale deed.
- Respondent No. 1 was not a bona fide purchaser as the vendor had no right to sell the property.
The Supreme Court emphasized that once a sale deed is executed and presented for registration, the title relates back to the date of execution upon registration, regardless of the delay.
Key Takeaways
This judgment reinforces several key legal principles:
- Validity of Sale Deed: A sale deed is valid if it is duly executed, presented for registration, and the consideration is paid, even if the registration is delayed.
- Relation Back Doctrine: Once a sale deed is registered, the title relates back to the date of execution, not the date of registration.
- Bona Fide Purchaser: A subsequent purchaser cannot claim to be a bona fide purchaser if the vendor had already transferred the property through a prior sale deed.
- Effect of Non-Mutation: Non-mutation of property in revenue records does not affect the title created by a valid sale deed.
- Competency of Parties: A sale deed is valid even if the purchaser is a minor, provided the minor is represented by a natural guardian.
Flowchart of the Case
1985: Sale Deed Executed by Respondent No. 2 to Appellants
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1985: Sale Deed Presented for Registration; Stamp Duty Deficiency
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2010: Respondent No. 2 Executes Another Sale Deed to Respondent No. 1
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2011: Appellants Discover Second Sale Deed
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2011: Appellants Pay Stamp Duty and Register the 1985 Sale Deed
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2011: Appellants File Suit to Cancel Second Sale Deed
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Trial Court: Dismisses the Suit
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First Appellate Court: Allows the Appeal
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High Court: Sets Aside First Appellate Court’s Judgment
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Supreme Court: Allows the Appeal; Restores First Appellate Court’s Judgment