The Legal Significance of a Registered Sale Deed in the Transfer of Immovable Property: An Analysis

In the realm of property transactions in India, particularly concerning immovable property, the distinction between an agreement to sell & a registered sale deed assumes paramount importance. An agreement to sell is often misconstrued as a document conferring ownership rights, yet judicial pronouncements by the Hon’ble Supreme Court of India and statutory provisions under the Transfer of Property Act, 1882, consistently emphasize that ownership of immovable property is transferred only through a duly registered sale deed. 

An agreement to sell constitutes a contractual framework wherein a buyer expresses intent to acquire immovable property, & a seller often a developer undertakes to complete a project and transfer ownership by a specified date, contingent upon payment(schedule of payment). 

Despite clause for possession or issuance of an allotment letter, this agreement lacks the legal efficacy to transfer ownership. Section 54 of the Transfer of Property Act, 1882, explicitly stipulates that a "contract for sale" does not "create any interest in or charge on such property," rendering it a mere precursor to a transaction that acquires proprietary force only through a registered sale deed under the Registration Act, 1908.

Hon'ble Supreme Court in Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana & Anr. (2011) ruled that transactions involving sale agreements, general powers of attorney, (SA/GPA) do not constitute valid transfers of immovable property title, requiring a registered sale deed under Section 54 of the Transfer of Property Act, 1882. 

The principle reaffirmed by a Division Bench of Hon'ble Supreme Court stating "a sale becomes lawful only when it is executed through a registered instrument. where the sale deed requires registration, ownership does not pass until the deed is registered, even if possession is transferred, and consideration is paid without such registration [Sanjay Sharma v. Kotak Mahindra Bank Ltd. (2024).]

Despite the clear legal position, real-world practices in cities like Mumbai reveal a stark anomaly. Many individuals engage in transactions based solely on agreement to sale, including resale of properties even Registrar of Assurances(sub registrar) allows such registration and chain of agreements, the last person presumes himself to be the owner. Similarly some individuals even claim ownership based on possession & agreement to sale.  One may obtain a physical possession but merely having possession doesn't mean ownership or having a Title. 

Section 53A of the Transfer of Property Act, 1882, protects buyers in possession under an agreement to sell, preventing the seller from reclaiming the property if the buyer has fulfilled their contractual obligations. This is known as the doctrine of part performance.

Once executed and registered, a sale deed is a legally binding document but a sale deed inadequately stamped(stamp duty paid inadequately) inadmissible as evidence in a court of law(though its a curable defect).