Unregistered Sale Deed Cannot Confer Part-Performance Protection: Madras HC

An unregistered and unstamped sale document disguised as a power of attorney cannot be relied upon to seek statutory protection under Section 53A of the Transfer of Property Act, 1882. The Madras High Court has held that permissive occupiers under an invalid conveyance must surrender possession upon revocation, leaving restitution as their sole legal remedy.

A single judge bench of Dr. Justice A.D. Maria Clete was dealing with a second appeal challenging the reversal decree passed by the First Appellate Court in a property dispute involving the Tamil Nadu Slum Clearance Board allotment.

Unregistered Sale Documents Barred Under Stamp and Registration Laws

Analyzing the nature of the transaction documents, the High Court observed that an instrument transferring all ownership rights operates as a sale deed regardless of its title as a 'sale power deed'. The Court emphasized that statutory bars under the Indian Stamp Act, 1899 and the Registration Act, 1908 strictly prevent such inadmissible instruments from conferring equitable property protections.

The Court, in its reasoning, observed: "In the present case, Exs.B1 to B3 establish that possession of the suit property was never delivered to the defendant. Although possession is stated to have been delivered under Ex.B4, that document, as already held, is not an agreement of sale but, in substance, an unregistered sale deed executed on insufficiently stamped paper. Consequently, Ex.B4 is chargeable with proper stamp duty and penalty under Section 35 of the Indian Stamp Act, 1899, and, being an unregistered sale deed affecting immovable property, is also subject to Section 49 of the Registration Act, 1908. The proviso to Section 49 saves only an unregistered agreement to sell when relied upon for the limited purpose contemplated therein, including a claim under Section 53A of the Transfer of Property Act. The said proviso does not extend such protection to an unregistered sale deed."

The Court has following directions:

"If the respondent/plaintiff has already deposited the sum of Rs.3,20,000/- pursuant to the decree of the lower appellate Court, the appellant/defendant shall deliver vacant possession of the plaint 'B' Schedule property to the respondents/legal representatives of the plaintiff within two months from the date of receipt of a copy of this judgment. Upon such delivery of vacant possession, the appellant/defendant shall be entitled to withdraw the said amount, subject to due identification and compliance with the procedure prescribed by the Court below.

If the said amount has not already been deposited, the respondents/legal representatives of the plaintiff are granted two months from the date of receipt of a copy of this judgment to deposit Rs.3,20,000/- before the trial Court. Upon such deposit, the appellant/defendant shall forthwith deliver vacant possession of the plaint 'B' Schedule property to the respondents/legal representatives of the plaintiff, and thereafter the appellant/defendant shall be entitled to withdraw the deposited amount in accordance with law."

Background:

The plaintiff filed a suit for recovery of possession regarding a portion of property originally allotted by the Tamil Nadu Slum Clearance Board to his father. The plaintiff admitted receiving a total of Rs. 3,20,000/- from the defendant under various documents, including an unexecuted "sale power deed," but argued that the money was taken to overcome financial difficulties and that no absolute title could be transferred without a registered deed from the Board. The defendant claimed to have purchased the property, taken possession in part performance, and perfected title over time while relying on Anathula Sudhakar v. P. Buchi Reddy (Dead) by LRs. and others ( "(2008) 4 SCC 594": 2008 CaseBase(SC) 1320) and Ramesh Chand Ardawatiya v. Anil Panjwani ( "(2003) 7 SCC 350": 2003 CaseBase(SC) 955).

The trial court initially dismissed the suit, holding that the defendant was in possession under part performance. However, the lower appellate court reversed the decision, holding that the plaintiff lacked absolute ownership but had possessory rights, and ordered possession to be handed over upon repayment of Rs. 3,20,000/-. Dismissing the defendant's second appeal, the High Court held that Section 43 of the Transfer of Property Act, 1882 was inapplicable without subsequently acquired title, upheld the first appellate court's decree, and directed the handover of possession against the refund of the money.

Case Details:
Case No.: S.A. No. 1085 of 2014
Case Title: R.Saraswathi v. R.Rajendran (died) and Ors.
Appearances:
For the Petitioner(s): Mr.R.Subramanian for M/s.R.Meenal.
For the Respondent(s): Mr.A.S.Narasimhan.

Source: 2026 CaseBase(MAD) 5227