Supreme Court Restored Suit Over Alleged GPA Sale, Holding Unregistered Papers Cannot Confer Title and Triable Issues Remained

A bench of Justices J.B. Pardiwala and R. Mahadevan heard an appeal challenging a Rajasthan High Court order which had, by way of civil revision, set aside the trial court's refusal to reject a plaint and instead had dismissed the plaint under Order VII Rule 11 CPC; the dispute concerned whether unregistered instruments and a revoked power of attorney could support registered sale deeds and confer title to agricultural land.

The Court allowed the appeal, set aside the High Court order dated 31.01.2025 and restored the Additional District Judge’s order dated 14.07.2023, directing that the plaint be taken on file and the suit proceed in accordance with law. The Court reiterated the settled proposition that "rejection of a plaint under Order VII Rule 11 CPC was permissible only when the plaint, on its face and without considering the defence, failed to disclose a cause of action" and that at the prima facie stage the court must confine its examination to the averments in the plaint. The Court, in its reasoning, observed: "In the present case, Respondent No.1 has not instituted any suit for specific performance. Moreover, the power of attorney relied upon was unregistered and had already been revoked prior to the execution of the sale deeds. Therefore, Respondent No.1 cannot rely on the unregistered documents to assert any proprietary rights and had no valid authority to execute the impugned sale deeds." The Court also emphasised that an unregistered agreement to sell "did not, in law, confer any title, interest or ownership rights" and that the High Court erred in treating the subsequent cause of action arising from registered sale deeds as merely "academic".

Background

The appellant company claimed ownership of 18 bighas 15 biswas of agricultural land in Village Pal, Jodhpur, and pleaded that it had obtained a loan of Rs. 7,50,00,000/- in May 2014 from Respondent No.1. A board resolution, an unregistered power of attorney and an unregistered agreement to sell dated 24.05.2014 were executed in favour of Respondent No.1; the appellant maintained these instruments constituted security and, in substance, a mortgage. The original purchase deeds were impounded by the Collector of Stamps in 2015 for insufficient stamp duty and were later handed to the private respondents as security. The appellant revoked the board resolution and the power of attorney in May 2022. Thereafter, Respondent No.1 executed sale deeds dated 13.07.2022 and 14.07.2022, registered on 19.07.2022, and mutations were effected in revenue records in favour of Respondent No.1 and Respondent Nos.2–4.

The appellant filed Original Civil Suit No. 122 of 2022 seeking declaration, possession and permanent injunction, contending that the later registered sale deeds were void in view of the revocation and the unregistered character of the earlier instruments. Respondent Nos.1–4 applied under Order VII Rule 11 CPC to reject the plaint; the trial court dismissed that application, finding triable issues, but the High Court allowed the civil revision and rejected the plaint. The appellant then obtained leave and appealed.

The Supreme Court reviewed statutory provisions — notably Sections 17, 23 and 49 of the Registration Act, 1908 and Section 54 of the Transfer of Property Act, 1882 — and relevant precedents including S. Kaladevi v. V.R. Somasundaram, Suraj Lamp & Industries Ltd. v. State of Haryana and later authorities reaffirming that an unregistered agreement to sell or a general power of attorney did not by themselves create or transfer title in immovable property. The Court held that the unregistered instruments could not be relied upon to establish proprietary rights, that the revocation prior to the execution of the sale deeds vitiated any claimed authority, and that factual disputes about possession, mutation and the character of the transaction could not be resolved on an Order VII Rule 11 application. The Court found that the High Court had erred in rejecting the plaint in its entirety by treating the cause of action arising from the registered sale deeds as "academic" and by engaging in merits-based inquiry at the threshold. The appeal was allowed, the High Court order was set aside, the trial court’s order was restored, and the plaint was directed to be taken on file for trial; the parties were ordered to bear their own costs and the trial court was directed to proceed "uninfluenced by any observations made in this judgment."

Case Details: Case No.: CIVIL APPEAL NO. 7109 OF 2025 (Arising out of SLP(C) No. 4862 of 2025); 2025 INSC 772 Case Title: Vinod Infra Developers Ltd. v. Mahaveer Lunia & Ors. Appearances: For the Petitioner(s): [Advocates not specified in the judgment] For the Respondent(s): [Advocates not specified in the judgment]