REG 036 Registration of Sale Deeds

Registration of Sale Deeds: Why Registration Is Required, How Title Passes, and How a Registered Instrument Can Be Undone

A sale deed is the commonest registrable instrument in India, and almost every question that arises about the Registration Act arises first about a sale deed. The rule itself is short. Section 54 of the Transfer of Property Act, 1882 says that a sale of tangible immovable property of the value of one hundred rupees and upwards can be made only by a registered instrument, and Section 17(1)(b) of the Registration Act, 1908 makes such an instrument compulsorily registrable. What follows from those two provisions is the whole of this note: what the office does with the deed, when the title actually passes, what the registered deed proves, what it cannot prove, and what a person must do when he says the deed should never have been executed at all.

The sale deed from execution to title, and the only route by which a registered deed can be undone

1. Why a Sale Deed Requires Registration

The two provisions work together and are not duplicates of one another. Section 54 is the rule of transfer: it says what a sale is and prescribes the only mode by which tangible immovable property worth one hundred rupees or more can be sold. Section 17(1)(b) is the rule of registration: it commands that an instrument of that kind be registered. The consequence of disobeying Section 17 is supplied by Section 49, and the consequence of disobeying Section 54 is that there is no sale at all. In practice the two consequences converge, because a sale deed that is not registered neither transfers ownership under Section 54 nor affects the property under Section 49.

• The monetary threshold of one hundred rupees is on the value of the property, not on the consideration recited. A property worth several lakhs sold for a recited consideration of fifty rupees is still a sale of property of the value of one hundred rupees and upwards.
• A sale of tangible immovable property below one hundred rupees may still be made by delivery of possession, without any instrument. This limb of Section 54 is now of almost no practical use, but it explains why the threshold appears in Section 17(1)(b) at all.
• A reversion or other intangible thing must always be sold by a registered instrument, whatever its value, because there is nothing that can be delivered.
• The requirement attaches to the instrument, not to the transaction. If the parties choose to reduce a sale to writing, that writing must be registered; the Act never compels them to write, but Section 54 leaves them no alternative above the threshold.

2. From Execution to Registration: The Four Stages

It helps to keep four separate acts apart, because the Act attaches different consequences to each of them and a great deal of confusion in practice comes from treating them as one event.

1. Execution. The vendor signs the deed. Execution is the act of the party, and it is complete when the executant signs with the intention of giving effect to the instrument. The registering officer has nothing to do with it.

2. Presentation. The deed is presented at the proper office under Sections 28 to 31, within the time allowed by Sections 23 to 26, by a person competent to present it under Section 32, namely a person executing or claiming under the document, the representative or assign of such a person, or the agent of any of them holding a power of attorney authenticated under Section 33.

3. Admission or enquiry. The registering officer enquires under Section 34 whether the document was executed by the persons who purport to have executed it, and satisfies himself as to their identity. If the executant appears and admits execution, the officer proceeds. If the executant denies execution or fails to appear, the officer must refuse under Section 35(3), and the remedy then lies in Sections 73 to 77.

4. Registration. The officer endorses the document under Section 58, certifies it under Section 60, and copies it into Book 1 under Section 51. The certificate under Section 60 is conclusive evidence that the document has been duly registered in the manner provided by the Act.

3. When Title Passes: Section 47 and the Date of Execution

This is one of the most misunderstood provisions in the Act, and the misunderstanding runs in both directions. Section 47 does not say that a sale is complete on execution and that registration is a formality. It says that once registration has taken place, the document is treated as operating from the date it would have operated from had no registration been required, which for a sale deed is ordinarily the date of execution. Registration is a condition precedent to the deed operating at all; but once that condition is satisfied, the operation relates back.

• Before registration, the deed operates from no date at all. An unregistered sale deed does not transfer title on its date of execution and then wait to be perfected. It simply does not transfer title.
• After registration, the transfer takes effect from the date of execution. So a vendor who executes a sale deed on 1 March and dies on 10 March, the deed being registered on 20 March, has effectively sold on 1 March, and the property does not pass to his heirs.
• The relation back matters most for competing transfers. Where the same vendor executes two deeds in favour of two purchasers, Section 47 read with Section 48 determines which prevails, and the answer turns on the dates of execution and not on which purchaser reached the registration office first.
• Section 47 does not apply to the delivery of possession or to the payment of price, which are governed by the contract between the parties, nor does it cure a deed that was never validly executed.

4. The Registration Date and the Execution Date Distinguished

5. The Unregistered Sale Deed

• Ownership does not pass. An unregistered sale deed does not affect the immovable property comprised in it. The vendor remains the owner, and the purchaser holds no title, however much of the price he has paid and however long he has been in possession.
• It cannot be received as evidence of the sale. Clause (c) shuts the document out as evidence of the transaction it records.
• It may be used for a collateral purpose. The proviso lets the deed in to prove something that the law does not require a registered instrument to effect: the nature of possession, the character in which a party holds, or the fact that some transaction took place. The line is that the document may not be used to prove the transfer of title, which is the very thing it was required to be registered for.
• It may be used as evidence of a contract in a suit for specific performance. A deed that fails as a conveyance may still show that the parties agreed on a sale, and the purchaser may sue to compel execution and registration of a proper deed.
• It may be used as evidence of part performance under Section 53A. This is the shield discussed at length in the note on agreements to sell.

6. What a Registered Sale Deed Proves, and What It Does Not

A registered sale deed is a strong document, but it is not a title. Indian law has no system of title guarantee, and the register is a register of documents, not of titles. Section 60 certifies that the document has been registered; it certifies nothing about the transaction the document records.

7. Registration Does Not Cure a Want of Title in the Vendor

This is the single most important limitation on the effect of registration, and it follows from the rule nemo dat quod non habet, that no one can give what he does not have. A vendor who owns nothing conveys nothing, and the fact that his deed has been registered adds nothing to what he had. The registering officer never enquired into his title and had no power to; registration is therefore no warranty of it.

• Sale by a person with no title at all passes no title to the purchaser, whatever the deed says and whatever the purchaser paid. The true owner's rights are untouched, and his remedy is a suit for declaration and possession.
• Sale by a co-owner of the whole property conveys only his own undivided share, not the shares of the other co-owners who did not execute.
• Sale by a person with a defective title conveys that title with the same defect. The purchaser steps into the vendor's shoes and no further.
• Sale of property that has already been sold conveys nothing, because the vendor parted with his title on the earlier sale. Section 48 gives priority to the earlier registered instrument.
• The purchaser's protection is not registration but enquiry. A search of the register under Section 57, an examination of the chain of title, and, where it is available, the defence of a bona fide purchaser for value without notice, are what protect him.

8. The Fraudulent or Forged Sale Deed

A deed may be attacked on two quite different footings, and the distinction governs both the relief and the period of limitation.

Registration is no obstacle to either challenge. A forged deed does not become genuine because it was registered, and a deed obtained by fraud does not become unimpeachable because the Sub-Registrar accepted it. What registration does is fix the time from which the world had notice, which often becomes the starting point for limitation.

9. Cancelling a Registered Sale Deed

Section 31(2) is the key to the whole subject, and it answers by implication the two questions that are most often asked. The register is corrected only on the decree of a court, and the officer's function is confined to noting the cancellation on the copy in his books. He does not adjudicate, and he does not cancel.

10. Can the Sub-Registrar Cancel a Registered Sale Deed?

He cannot. The Registration Act confers no such power, either expressly or by implication. Once the officer has completed registration and endorsed the certificate under Section 60, his function in respect of that document is exhausted and he becomes functus officio. A power to cancel would be a power to adjudicate on title, which is precisely what the Act withholds from him at the stage of registration and cannot be supposed to confer on him afterwards.

11. Unilateral Cancellation by the Vendor

The second common attempt is for the vendor himself, having sold and been paid, to execute a fresh instrument describing itself as a deed of cancellation, and to have that instrument registered. The attempt fails for a reason that is logically prior to any question of procedure: the vendor has nothing left to deal with. On registration of the sale deed, the title passed from him with effect from the date of execution. A person who has divested himself of the property cannot, by his own unilateral act, revest it in himself.

• Mutual cancellation stands on a different footing. Where the vendor and the purchaser both agree that the sale should be undone, what they are really doing is a reconveyance, and it is registrable as such. It transfers the title back; it does not erase the original sale.
• A deed of cancellation cannot be used to defeat a third party who has acquired rights on the faith of the register.
• The remedy of the vendor whose price is unpaid is not cancellation but a suit for the price, or enforcement of the statutory charge of the unpaid vendor under Section 55(4)(b) of the Transfer of Property Act.

12. The Suit for Cancellation

1. Forum. A civil court of competent jurisdiction, ordinarily the court within whose local limits the immovable property is situate.

2. Relief. A declaration that the instrument is void or voidable, an order that it be delivered up and cancelled under Section 31 of the Specific Relief Act, and, where the plaintiff is out of possession, a consequential relief of possession.

3. Who may sue. Any person against whom the instrument is void or voidable and who apprehends serious injury if it is left outstanding. A stranger to the deed who is prejudicially affected may sue for a declaration that it does not bind him, which is often the more accurate relief.

4. Limitation. A suit to set aside an instrument on the ground of fraud or mistake falls within Article 59 of the Limitation Act, 1963, three years from when the facts entitling the plaintiff to have the instrument cancelled first became known to him. Where the deed is a nullity, the plaintiff may not need to have it set aside at all, and the limitation applicable to the substantive relief he seeks will govern.

5. Consequence of the decree. Under Section 31(2), the court sends a copy of the decree to the registering officer, who notes the cancellation on the copy of the instrument in his books. The register is corrected by the court, through the officer, and never by the officer alone.

13. A Registered Sale Deed and Mutation

Mutation is the alteration of the name of the person recorded in the revenue or municipal records as liable to pay land revenue or tax. It is a fiscal act, not a transfer, and the two are constantly confused by parties who believe that title follows the revenue entry.

It follows that a purchaser who has a registered sale deed but no mutation is still the owner, though he will face practical difficulty until the record is corrected; and a person in whose name the property stands mutated, but who holds no registered deed, is not the owner at all.

14. A Registered Sale Deed and an Agreement to Sell

15. The Position Stated Shortly

1. A sale of tangible immovable property worth one hundred rupees or more can be made only by a registered instrument, Section 54 of the Transfer of Property Act, and such an instrument must be registered, Section 17(1)(b).

2. Registration is completed in stages: execution by the party, presentation at the proper office within time, enquiry into execution and identity under Section 34, and registration with the endorsements and certificate under Sections 58 to 61.

3. Once registered, the deed operates from the date of execution and not from the date of registration, Section 47.

4. An unregistered sale deed transfers nothing and cannot be received as evidence of the sale, but it may be used for a collateral purpose, as evidence of a contract in a suit for specific performance, and as evidence of part performance under Section 53A.

5. A registered sale deed proves that the instrument exists and was registered. It does not prove the vendor's title, the truth of the recitals, or the payment of the price.

6. Registration cures no defect in the vendor's title. A person with no title conveys none.

7. A forged deed is void and a deed obtained by fraud is voidable; registration protects neither.

8. A Sub-Registrar cannot cancel a registered document. He is functus officio after registration, Satya Pal Anand v. State of M.P.

9. A vendor cannot cancel a registered sale deed unilaterally; such a cancellation deed is a nullity, Thota Ganga Laxmi v. Government of Andhra Pradesh.

10. The only route is a suit under Section 31 of the Specific Relief Act, 1963, on which the court sends a copy of the decree to the registering officer, who notes the cancellation in his books.

11. Mutation is a fiscal entry. It neither creates nor destroys title, and it yields to the registered deed.