In a recent landmark decision, the Supreme Court held that a vendor who has executed a sale deed cannot execute another deed for the same property merely because the initial deed is pending registration. The Court emphasised that once a deed is executed, the vendor forfeits all rights over the property, regardless of the registration status.
The bench, comprising Justices Vikram Nath and Ahsanuddin Amanullah, stated:
“The issue of registration of a document is with the State. Which, requires compulsory registration of documents so that it is not deprived of revenue by way of stamp duty payable.
The purchaser may have no means to pay stamp duty or exorbitant demand of stamp duty. It is made by the registering authority. The purchaser is unable to pay at that time. But, he remains satisfied with the fact that the vendor has fairly and duly executed the sale deed. This was presented it for registration and put him in possession of the purchased property which he is peacefully enjoying. He is always at liberty to pay the deficiency of stamp duty at any point of time. The document presented for registration will remain with the Registering Authority. This is till such time, the deficiency is removed.
More insight
However, this pendency of registration on account of deficiency cannot endure any benefit to the vendor, who has already eliminated all his rights by executing the sale deed after receiving the sale consideration. He cannot become the owner of the transferred land merely because the document of sale is pending for registration.
It is the purchaser who cannot produce such document which is pending registration with respect to the immovable property in evidence before the Court of law as the same would be inadmissible in view of statutory provision contained in the TP Act as also the Act, 1908.”
The Court clarified that the only consequence of non-registration is that the purchaser cannot use the deed as evidence due to the Transfer of Property Act, 1882 and the Registration Act, 1908. The second sale deed executed by the vendor while the first was pending registration is deemed void.
Case Background:
The case involved a property transaction from 1985, where Respondent No. 2 executed a sale deed in favour of the appellant and his minor brother, which remained unregistered due to stamp duty issues. In 2010, Respondent No. 2 executed another deed for the same property to Respondent No. 1. The appellants, upon discovering this, registered their deed in 2011 and filed a suit against Respondent No. 1 for the cancellation of the second deed.
Court’s Findings:
The Supreme Court examined several issues, including:
- Whether Respondent No. 2 received sale consideration and executed the sale deed in 1985.
- The validity of the 1985 deed given the appellants’ minority.
- Whether Respondent No. 1 was a bona fide purchaser.
The Court found that the 1985 deed was validly executed, endorsed by the Sub-Registrar, and impounded for non-payment of stamp duty, which was later rectified. Despite the appellants being minors, the Court noted that their mother, as their natural guardian, represented them in the transaction.
Bona Fide Purchaser Doctrine
The Court ruled that a subsequent purchaser cannot be deemed a bona fide purchaser if the vendor had already transferred rights via a prior sale deed. The vendor’s deceitful conduct and pre-existing transfer nullify any protection for the subsequent purchaser.
The Supreme Court allowed the appellants’ appeal, cancelled the second sale deed, and imposed a Rs. 10 lakh exemplary cost on the respondents. The Court highlighted the importance of upholding the trust in the legal system. Additionally, ensuring that the law aids those wronged by deceitful practices in property transactions.
