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Supreme Court Judgement on Unregistered Sale Agreement

Bysupport

May 29, 2023

The Supreme Court of India recently passed a judgment on the validity of unregistered sale agreements. In a significant ruling, the apex court held that unregistered sale agreements cannot create any right, title, or interest in an immovable property. The judgment is likely to have far-reaching consequences for the real estate sector in India.

The case before the court involved the sale of a property in West Bengal. The buyer had signed a sale agreement with the seller, but the agreement remained unregistered. The buyer later discovered that the property was already mortgaged, and the seller had no right to sell it. The buyer approached the court, seeking a refund of the amount paid for the property.

The main issue before the court was whether an unregistered sale agreement can create any right, title, or interest in an immovable property. The buyer argued that the agreement was enforceable as it contained the terms and conditions of the sale and was signed by both parties. The seller contended that the agreement was invalid as it was not registered as required under the law.

The Supreme Court examined the relevant provisions of the Indian Registration Act, 1908, which mandates the registration of certain types of documents, including sale agreements, for the transfer of immovable property. The court noted that the purpose of such registration is to provide clarity and certainty in property transactions and to prevent fraud and disputes.

The court held that an unregistered sale agreement cannot be received as evidence of any transaction affecting an immovable property. The court observed that the agreement did not create any right, title, or interest in the property, and was a mere contract for sale. The court noted that the buyer could not claim any right over the property based on an unregistered agreement.

The implications of the judgment are significant, particularly for the real estate sector. Many property transactions in India are based on unregistered sale agreements, which are used as a substitute for registration. The judgment has now made it clear that such agreements are not legally enforceable and cannot create any right, title, or interest in an immovable property.

The judgment is likely to lead to more transparency and accountability in property transactions and reduce disputes and litigations. It will also encourage buyers and sellers to complete the registration process and comply with the law. The ruling is a reminder that compliance with legal procedures is crucial for the validity and enforceability of any transaction involving immovable property.

In conclusion, the Supreme Court judgment on unregistered sale agreements has significant implications for the real estate sector in India. The ruling clarifies that unregistered sale agreements do not create any right, title, or interest in an immovable property, and are not legally enforceable. The judgment underscores the importance of complying with legal procedures and completing the registration process in any property transaction.

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