NCLAT Cannot Declare Registered Sale Deed as Non-binding in Absence of Title Transfer through Registered Conveyance or Suit for Specific Performance
- REEDLAW
- Apr 17
- 3 min read
The Supreme Court held that the NCLAT could not have declared the registered sale deed as non-binding on the company in the absence of a registered conveyance transferring title or a suit filed by the company for specific performance of the alleged agreement to sell.
The Supreme Court Bench comprising Justice Abhay S. Oka and Justice Ujjal Bhuyan, while reviewing an appeal along with connected interlocutory applications, held that mere possession of immovable property pursuant to an unregistered agreement for sale does not confer ownership or any legal interest in the property under Section 54 of the Transfer of Property Act, 1882. Accordingly, the Court ruled that the NCLAT exceeded its jurisdiction in declaring the registered sale deed as not binding on the company in the absence of a registered conveyance or a suit for specific performance.
The Supreme Court granted permission to file civil appeals and condoned the delay in their filing. With the consent of the parties, the appeals were taken up for final hearing. The core issue in the appeals was limited to the findings recorded by the National Company Law Appellate Tribunal (NCLAT) in paragraph 16 of its impugned judgment, wherein the NCLAT held that the land in question was in the possession of the company under an agreement for sale, supported by part performance, and that the company’s possession could not be disturbed by the appellants, despite the absence of a registered sale deed in the company’s favour.
The Supreme Court reiterated the settled legal position under Section 54 of the Transfer of Property Act, 1882, that an agreement for sale does not create any title or interest in immovable property unless it is executed through a registered sale deed as per the Indian Registration Act, 1908. The Court noted that the original owner, late Shri M.A. Shanmugam, had not executed any registered sale deed in favour of the company prior to his demise. Therefore, the NCLAT exceeded its jurisdiction by declaring that the sale deed dated 31st October, 2011, executed by the legal heirs of Shri Shanmugam, was not binding on the company merely on the basis of the company’s possession and alleged part performance of an unregistered agreement.
It was further observed by the Court that there was no material on record to indicate that the company had ever filed a suit for specific performance of the agreement with late Shri Shanmugam. In the absence of any registered transfer of title or legal proceedings to enforce the agreement, the NCLAT could not have nullified the sale deed. Accordingly, the Supreme Court set aside the NCLAT’s declaration that the sale deed dated 31.10.2011 was not binding on the company.
While allowing the appeals partly, the Supreme Court clarified that it had not adjudicated upon the ownership claims of any parties arising from the impugned sale deed. The rights of the parties, including those of respondent No.10-company and the appellant, to seek a declaration or enforce their claims before the appropriate forums, were left open. The company’s right to seek its remedies was also preserved.
Mr. Kunal Tandon, Sr. Advocate, Mr. Kush Chaturvedi, AOR, Ms. Prerna Priyadarshini, Ms. Richa Sandilya, Ms. Natasha Singh, Mr. Syed Farraz Alam, Mr. Atharva Gaur, Mr. Aayushman Aggarwal and Mr. Shaurya Gupta, Advocates, represented the Appellants.
Mr. R Jawahar Lal, Mr. Sayyam Maheshwari, Ms. Meghna Kumar, Advocates, Mr. Balaji Srinivasan, AOR, Ms. Nappinai, Sr. Advocate, Mr. V. Balalji, Mr. B. Dhananjay, Mr. C. Kannan, Mr. Nizamuddin and Mr. S. Devendar, Advocates, Ms. Astha Tyagi and Mr. G. Balaji, AORs, appeared for the Respondents.
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