The Supreme Court on September 1 reaffirmed that the title to immovable property cannot be transferred without a registered sale deed. The bench, consisting of Justices Aravind Kumar and Sandeep Mehta, set aside a decision made by the Delhi High Court. The High Court had upheld a trial court’s order that granted possession, a mandatory injunction, and a declaration, even though no registered sale deed had been executed to validate the conveyance in the plaintiff’s favor.
The plaintiff, referred to as the Respondent, claimed to have purchased the property from his father in 1996 through an Agreement to Sell, a General Power of Attorney, an affidavit, a receipt, and a registered Will. He alleged that his brother, (the defendant), who was initially a licensee, later sold half the property to a third party (Respondent No. 2) illegally.
The defendant, who is the Appellant, contended that the property was orally gifted to him in 1973 and that he had been in possession of it since then. He challenged the validity of the plaintiff’s documents and sought a declaration of ownership.
Both the trial court and the High Court ruled in favor of the plaintiff, prompting the appeal to the Supreme Court. The Supreme Court’s judgment, authored by Justice Aravind Kumar, held that a mere agreement to sell does not legitimize a transfer. He noted, “In this case, the plaintiff undisputedly asserts that there is only an agreement to sell and that no sale deed has been executed in his favor by his father. According to established legal principles, this document does not confer valid title on the plaintiff, as it is not a deed of conveyance under Section 54 of the Transfer of Property Act. At best, it allows the plaintiff to seek specific performance for the execution of a sale deed, but it does not create an interest or charge on the suit property.”
The Court clarified the difference between a registered sale deed and an agreement to sell: “There is a distinction between a sale deed and an agreement for sale or a contract for sale. A contract for sale of immovable property is an agreement that such a sale will occur on terms settled between the parties. In contrast, a sale is a transfer of ownership; a contract for sale merely creates a right to obtain another document—a registered sale deed—to finalize the sale transaction. Section 54 defines ‘sale’ without including an agreement of sale and does not confer proprietary rights to the transferee nor does it create any interest or charge in the property. If, after entering into a contract for the sale of property, the seller unjustifiably avoids executing a sale deed, the buyer can file a suit for specific performance of the contract.”
Furthermore, the Court rejected the plaintiff’s reliance on the Power of Attorney, stating that such documents do not validate a transfer; “it does not ipso facto change the nature of the document to become a conveyance deed.” The Court explained, “A power of attorney does not constitute a sale. A sale involves the transfer of all rights in the property to the transferee, while a power of attorney merely authorizes the grantee to perform certain acts regarding the property, including selling it if the grantor allows.”
The judgment emphasized, “It is essential to review the recitals of the General Power of Attorney presented by the plaintiff. The GPA only authorizes the grantee to manage the property, which includes the power to rent it out and create a mortgage, among other responsibilities. However, it is silent regarding the aspect of conveyance. The recitals indicate that the grantor intended to limit the powers of the grantee to managing the property, without granting any interest in it. This aligns with the established legal principle that a power of attorney is an agency giving the agent the authority to conduct transactions on behalf of the principal. Even if we accept the validity of the Power of Attorney in favor of the plaintiff, it still does not confer a valid title concerning the suit property,” the Court observed.
Additionally, the Court disputed the plaintiff’s reliance on the Will after discovering suspicious circumstances surrounding it. “The alleged propounder of the Will, Lt. Sh. Kundan Lal, had four children, including both the plaintiff and the defendant. There is no explanation as to why the Will’s propounder chose to exclude the other three children from the inheritance, nor is it clear whether any other properties or assets were allocated to them. It is highly improbable that a father would grant all his property to one child at the expense of the other three without evidence of estrangement. This creates significant suspicion regarding the validity of the Will.”