The Supreme Court ruled that unregistered property claims hold no legal value. Only properly documented, registered ownership will be protected by law.
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NEW DELHI: In a powerful message to property defaulters and casual claimants, the Supreme Court recently made it loud and clear:
“If it’s not on paper, it’s not yours.”
The Court stood firmly by an honest auction-purchaser who bought a property through a legal bank auction, only to find himself dragged into a long legal tussle over unregistered and unofficial sale claims.
This judgment isn’t just about one man’s fight for ownership — it’s a clear warning that legal ownership can’t be built on shaky, undocumented promises. If you’re not registered, you’re not recognized.
This judgment was delivered by a two-judge bench of Justice B.V. Nagarathna and Justice Nongmeikapam Kotiswar Singh.
The case revolved around a small basement property in Old Rajinder Nagar, Delhi, caught in a storm of legal claims, unpaid loans, and overlapping documents.
What started as a simple bank auction turned into a courtroom tug-of-war between the auction-purchaser and a third party claiming earlier rights—all based on documents that were never even registered.
Background of the Case
The property in question — a small basement in Old Rajinder Nagar, Delhi — had a rather complicated past. It was originally owned by Champa Bhen Kundia, who later mortgaged it to a finance company for a loan.
That loan eventually landed with Kotak Mahindra Bank. When the loan wasn’t repaid, the bank did what any lender would — it moved ahead under the SARFAESI Act, took possession of the property, and put it up for public auction in 2010.
Enter Sanjay Sharma — a genuine buyer, who saw the notice, bid fairly, paid the full amount of Rs 7.5 lakhs, and got a legal sale certificate from the bank.
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But just when things seemed sorted, in came Raj Kumar Vij — who claimed the basement was already his, based on a web of old, unregistered papers dating back to 2000. What followed was a long legal back-and-forth that stretched across tribunals and finally landed in the Supreme Court.
Issues before the Supreme Court
- Can someone claim a property without a registered sale deed?
- Was the bank auction done fairly and legally?
- Can someone redeem a property after it’s sold?
Supreme Court observation on this
The Supreme Court firmly held that unregistered documents like agreements to sell or powers of attorney do not create legal ownership. It noted that the auction conducted by Kotak Mahindra Bank under the SARFAESI Act was lawful and proper, with no signs of fraud or irregularity.
The auction-purchaser, Sanjay Sharma, had acted in good faith, paid the full amount, and deserved protection under the law. The Court also pointed out that the objector was given multiple chances to repay the dues but failed to do so. By the time he objected, the auction was already completed.
The Court made it clear — one cannot undo a valid auction based on informal, unregistered claims made too late in the day.
Final Judgment of the court
In the end, the Supreme Court sided with fairness and the rule of law. It struck down the Delhi High Court’s decision that had cancelled the auction and restored the earlier order that upheld the sale in favour of Sanjay Sharma.
The Court made it clear that since he had bought the property legally, paid the full amount, and received a proper sale certificate, his ownership couldn’t be questioned just because someone else came in later with unregistered papers.
The Court directed Kotak Mahindra Bank to hand over the property to Sanjay Sharma and said he could take help from the DRT or High Court if needed. At the same time, it allowed Raj Kumar Vij (Respondent No. 2) to take back any money he had deposited during the legal proceedings.
The message was loud and clear — genuine buyers should not suffer because of old, informal claims that were never properly registered or acted upon.
Key Takeaway
“No registration, no ownership.”
The Supreme Court reminded everyone that one can’t claim property rights through old, unregistered papers. Once a property is lawfully auctioned and sold, that sale stands strong.
Genuine buyers deserve protection, and last-minute claims based on informal documents won’t hold up in court.
Importance of Registration of Property Transactions in India
- Legal proof of ownership
- Protection against fraud or future disputes
- Clarity in title for resale or mortgage
According to Indian law, sale of property of more than Rs 100 must be registered.
Effect of this judgment in Real Estate and Property Law
This ruling has sent a strong and much-needed message across the real estate sector:
- This judgment reminded everyone that in property deals, if it’s not registered, it’s not really yours — no matter what was paid or promised.
- It gave buyers more confidence in bank auctions — reassuring them that if the process is fair and legal, their purchase can’t be overturned just because someone shows up later with weak or unregistered claims.
- It sent a strong message that informal property deals won’t hold up — relying on just a power of attorney or an agreement to sell won’t protect you if the matter reaches court.
Advice for Property Buyers and Sellers in India
- Register everything — no matter what.
A sale isn’t real in the eyes of the law unless it’s registered. Paying money or signing papers means nothing without that official stamp. - Don’t trust just words — verify ownership.
Always check who actually owns the property. Ask for original documents, and check for any loans or legal issues tied to it. - Avoid GPA or ‘shortcut’ deals.
It might seem easier to just sign a power of attorney or agreement to sell — but those don’t make you the legal owner. You could lose the property later. - Talk to a lawyer before you sign anything.
Even if it’s a simple deal, having a lawyer check things once can save you years of stress and court visits later.
Important sections one must know
| Section | What It Says |
|---|---|
| Section 17 | All major property transfers must be registered. |
| Section 23 | Document must be registered within 4 months of signing. |
| Section 34(1) | Extra 4 months allowed with fine – but not more than that |
Supreme Court judgments supporting this view
- Suraj Lamps Industries Pvt. Ltd. v. State of Haryana (2012)
The Court put an end to the common practice of buying property through power of attorney, will, or agreement to sell. It ruled that these shortcuts don’t count as a valid sale. - Sanjay Sharma v. Kotak Mahindra Bank Ltd. (2024)
In this case, the Court stood firmly by a buyer who purchased a property through a lawful bank auction. Someone else claimed it was theirs based on old, unregistered papers. - K.B. Saha & Sons Pvt. Ltd. v. Development Consultant Ltd. (2008)
The Court was clear — unregistered documents don’t count when it comes to transferring property. You can’t use them as legal proof in court either.
Case Title:
Sanjay Sharma vs Kotak Mahindra Bank Ltd on 10 December, 2024
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