In a recent ruling in the case VINOD INFRA DEVELOPERS LTD. VERSUS MAHAVEER LUNIA & ORS., the Supreme Court of India reaffirmed that an agreement to sell, in the absence of a suit for specific performance, cannot be used to claim ownership, title, or transfer benefits in immovable property. The verdict reinforces settled legal principles under the Transfer of Property Act, 1882 and emphasizes the requirement of a registered sale deed to legally convey title.
The bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan delivered the judgment while hearing an appeal in a property dispute. The Appellant had filed a suit for declaration of title, possession, and injunction, contending that Respondent No.1 could not assert any legitimate title over the property merely based on an agreement to sell and a Power of Attorney (PoA) that had already been revoked.
Key Legal Observations
The Court made it clear that:
“In the absence of a suit for specific performance, the agreement to sell cannot be relied upon to claim ownership or to assert any transferable interest in the property,”
This observation was made in response to the respondent’s attempt to enforce a 2014 agreement to sell despite not instituting any suit for specific performance under the Specific Relief Act. The respondent had also executed sale deeds in 2022 and managed to mutate the property in the revenue records, actions the Appellant strongly contested as being unauthorized and unlawful.
Agreement to Sell Is Not a Conveyance
The Court reiterated that an unregistered agreement to sell has no legal standing to transfer title:
“It is a settled law that a transfer of immovable property by way of sale can only be by a deed of conveyance. An agreement to sell is not a conveyance. It is not a document of title or a deed of transfer of property and does not confer ownership right or title.”
This is in line with the landmark precedent Suraj Lamp & Industries (P) Ltd. v. State of Haryana, where the Court held that possession coupled with an agreement to sell does not grant ownership rights.
The bench also drew reference from the judgment in M.S. Ananthamurthy v. J. Manjula, reiterating the position that ownership or legal title can only be conveyed by a registered sale deed, and not through an agreement to sell or a PoA—even if backed by possession:
“Accordingly, it is abundantly clear that the unregistered agreement to sell dated 24.05.2014 cannot, under any circumstance, create or convey any right, title or interest in favour of Respondent No.1 under Section 54 of the Transfer of Property Act, 1882. The subsequent revocation of authority further nullifies any claim to title based on such documents.“
Conclusion
This judgment serves as a critical reminder that ownership of immovable property cannot be claimed through informal or unregistered documents. A proper deed of conveyance—duly registered—is essential to create or transfer legal rights in property. In the absence of a suit for specific performance, agreements to sell do not provide any enforceable right to title or possession.
This decision not only upholds legal consistency but also aims to curb misuse of agreements to sell for asserting ownership without proper legal channels being followed.
