2020 (11) TMI 1100 - HC - Indian Laws

Validity of Subsequent Property Transfers post Agreement of Sale Registration. Registering Officer limitations.

The Larger Bench concluded that the registration of an Agreement of Sale does not prohibit subsequent transfers of the property. The Registering Officer ... Correctness to effect subsequent transfers in respect of the same property, where agreement for sale is registered in respect of immovable property - whether the transfer is restricted to one time in respect of the immovable property, unless the previous transfer or any agreement is set aside in the court of law, and other transfer is permissible? - HELD THAT:- The contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest or charge on such property. The agreement of sale is merely a document creating right to obtain a document of sale on fulfillment of terms and conditions specified therein and it is only capable of enforcement in the event of breach of contract by the other side. Even to enforce such agreement for specific performance, the agreement holder has to establish not only the contract but other grounds viz., ready and willingness on his part to get a decree of specific performance provided the suit is filed within time. In Narandas Karsondas vs. S.K. Kamtam & another [[1976 (12) TMI 186 - SUPREME COURT]] the Honourable Supreme Court also considered the nature of the right created on the immoveable property by a contract for sale. It has been stated that contract of sale in view of section 24 of T.P. Act does not of itself create any interest in or charge on the property. The personal obligation created by a contract of sale (as recognised in Section 3 of the Specific Relief Act and section 91 of the Trust Act is described in Section 40 of the T.P. Act) as an obligation arising out of contract. An annexure to the ownership of the property, but not amounting to interest or easement therein. Section 19(b) of Specific Relief Act also protects the subsequent transferee for value and for consideration in good faith without notice of the original contract. Even if a person has no title to the property has entered into a contract for sale, the transferee can seek for specific performance under section 13 of the Specific Relief Act. There is no bar for creating subsequent transfer of the immovable property. Effect of the subsequent transfer is always subject to the earlier transfer created by the transferor of the immovable property. Therefore, it cannot be said that since the agreement for sale is registered the owner viz., the Vendor has no right to 'execute any document. In MRS. VENKATAMMA VERSUS THE SUB-REGISTRAR, HOSUR, KRISHNAGIRI DISTRICT. MR. M. CHANDRAPPA [2019 (12) TMI 1640 - MADRAS HIGH COURT] in fact settlement deed has been presented for registration by the Vendor after three years of the so called contract. Merely on the basis of the agreement for sale, the registrar refused to register the document which is against the very substantive law of the country. If such approach is accepted a situation may arise in every loan transaction if some contract is registered, merely because it shown in the encumbrance as a registered agreement, the owners of the property would be prohibited from dealing with the property as long as the encumbrance finds place in the encumbrance certificate Such situation in fact would lead to deprive the right of the owner of the property to deal with the property which is a constitutional right. The view taken by the learned single judge in Venkattamma vs. The Sub-Registrar and another, does not lay down correct position of law and the same is hereby overruled. Another single Judge in N. RAJU VERSUS THE DISTRICT REGISTRAR, DISTRICT REGISTRAR'S OFFICE, THE SUB-REGISTRA, SUB-REGISTRAR'S OFFICE, THIRUVERUMBUR, [2019 (3) TMI 2021 - MADRAS HIGH COURT] had directed to register the subsequent agreement, however without any reasons. In the above judgment also the learned single Judge has not gone into the provisions of law except issuing a mere direction. The said judgement is also not based on any discussion on substantive law or proceedings and therefore does not lay down any law. If an agreement for sale is registered in respect of immovable property, the same will not be a bar for the owner of the property to effect subsequent transfers in respect of the same property. The Registrar has no right to refuse to register the document, except the documents relating to immovable properties mentioned in Section 22-A of the Tamil Nadu Act and as contemplated under Rule 162 of the Registration Rules. Issues Involved:1. Conflict between two Single Judge orders regarding the registration of subsequent documents when an Agreement of Sale is already registered.2. Examination of the provisions of the Registration Act, 1908, and the Transfer of Property Act, 1882.3. Authority of the Registering Officer to refuse registration of documents.4. Legal implications of registering an Agreement of Sale on subsequent transfers of the same property.Detailed Analysis:1. Conflict Between Two Single Judge Orders:In W.P.(MD) No. 24429 of 2018, a Single Judge directed the registration of an Agreement of Sale despite an earlier registered Agreement of Sale for the same property. Conversely, in W.P. No. 33601 of 2019, another Single Judge directed that the Petitioner should seek a declaration from a competent Civil Court to nullify the earlier Agreement of Sale before registering a Settlement Deed for the same property. This conflict led to the matter being referred to a Larger Bench for resolution.2. Examination of the Provisions of the Registration Act, 1908, and the Transfer of Property Act, 1882:The judgment extensively analyzes the Registration Act, 1908, highlighting Sections 19, 20, 21, 22-A, 23, 34, 34-A, 35, and relevant rules. It clarifies that the Registering Officer's authority to refuse registration is limited to specific grounds such as language issues, interlineations, and insufficient property descriptions. The Transfer of Property Act, 1882, sections such as 6, 7, 41, 42, 43, 48, 53, 56, and 57, were also scrutinized to determine the legality of subsequent transfers of property.3. Authority of the Registering Officer to Refuse Registration of Documents:The judgment emphasizes that the Registering Officer cannot refuse to register a document except for reasons explicitly stated in the Registration Act and relevant rules. This includes ensuring proper execution, identity verification, and compliance with statutory requirements. The judgment also notes that the Registering Officer's role is limited to verifying execution and identity, not the validity of the document.4. Legal Implications of Registering an Agreement of Sale on Subsequent Transfers of the Same Property:The judgment clarifies that registering an Agreement of Sale does not create any interest or charge on the property itself but merely a right to obtain a sale deed upon fulfilling the terms. Subsequent transfers are permissible and valid, subject to earlier created rights. The judgment overrules the Single Judge's decision in W.P. No. 33601 of 2019, stating that an Agreement of Sale does not bar subsequent transfers.Conclusion and Reference Answer:The Larger Bench concluded that an Agreement of Sale's registration does not prevent the property owner from executing subsequent transfers. The Registrar cannot refuse to register subsequent documents based on a previously registered Agreement of Sale, except under specific statutory provisions such as Section 22-A of the Tamil Nadu Act and Rule 162 of the Registration Rules. The judgment underscores the principle that the purpose of registration is to provide public notice, and subsequent transfers remain subject to any pre-existing rights.Post-Judgment Instructions:The reference was answered, and the writ petition in W.P. No. 674 of 2020 was directed to be posted before the learned Single Judge for disposal.