The Supreme Court has ruled that a duly registered Sale Deed carries a formidable presumption of validity and genuineness. Courts must not casually declare such documents sham without clear, cogent pleadings and strong evidence to rebut this presumption.
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NEW DELHI: In a landmark property law decision, the Supreme Court of India reaffirmed that a registered Sale Deed enjoys a “formidable presumption of validity and genuineness”, and courts must not “lightly or casually” declare such instruments as sham or nominal.
A Bench comprising Justice Manmohan and Justice Rajesh Bindal allowed the appeal by the legal representatives of Hemalatha, set aside a Karnataka High Court order, and restored the decision of the First Appellate Court that upheld the validity of a 1971 registered Sale Deed and Rental Agreement executed in favour of Hemalatha.
ALSO READ: ‘Agreement to Sell’ Doesn’t Give Property Ownership Rights: Himachal Pradesh High Court
Facts of the Case
The dispute arises from a registered Sale Deed dated 12 November 1971 executed by the late Tukaram in favour of Hemalatha for a house in Bidar (Karnataka) for ₹10,000 and a contemporaneous Rental Agreement under which Tukaram continued as a tenant.
Earlier, Tukaram had mortgaged the same house in 1966 to discharge a debt, and the sale was allegedly to discharge that mortgage. After defaulting on rent payments, the appellants initiated eviction proceedings, to which Tukaram responded by suing to declare the Sale Deed and Rental Agreement as a sham, claiming the transaction was actually a disguised mortgage.
Legal Issues Before the Supreme Court
- What is the threshold to declare a registered Sale Deed as a “sham” transaction?
- Whether oral evidence can contradict the clear terms of a registered document under Section 92 of the Indian Evidence Act, 1872?
- Whether the 1971 Sale Deed was a mortgage by conditional sale under Section 58(c) of the Transfer of Property Act, 1882?
Supreme Court’s Analysis
1. Registered Sale Deeds Carry Strong Presumption of Validity
The Court emphatically held that once a Sale Deed is duly registered, it carries a highly significant presumption of authenticity and validity:
“Registration is not a mere procedural formality but a solemn act that imparts a high degree of sanctity to the document.”
Accordingly, courts must not invalidate or brand such documents as sham without clear, cogent and convincing material particulars.
This ruling reinforces the foundational principle that registered instruments are entitled to a strong legal presumption, discouraging frivolous challenges in property disputes.
2. Burden of Proof on Challenger
The Supreme Court observed that the burden to displace the presumption of validity lies heavily on the party challenging the document. The Court emphasized the need for strong pleadings and clear evidence, not vague allegations or clever drafting.
The Bench held that ordinary or nebulous averments are insufficient to prove a registered transaction to be a sham.
3. Limited Scope of Oral Evidence Under Section 92
The Court reiterated the strict rule in Section 92 of the Indian Evidence Act, 1872, which bars parties from introducing oral evidence to contradict the clear recitals of a registered document.
Distinguishing from earlier precedents like Gangabai v. Chhabubai, the Bench held that because the Sale Deed’s terms were clear and unambiguous, there was no scope to allow extrinsic oral evidence to impeach the written agreement.
4. Not a Mortgage by Conditional Sale
The Court ruled that the Sale Deed did not contain any condition for reconveyance or repurchase, a prerequisite under the proviso to Section 58(c) of the Transfer of Property Act, 1882, to qualify as a mortgage by conditional sale.
Thus, the transaction was upheld as an outright sale, not a disguised mortgage.
5. Conduct of the Parties
The Supreme Court placed reliance on the admitted conduct of the respondent Tukaram, including his reply to a 1974 legal notice admitting tenancy and rent default, holding that his later challenge was a strategic attempt to evade eviction rather than an honest plea.
6. Call for Modernising Land Records
In a forward-looking observation, the Court urged the Union and State Governments to modernise land record systems:
“There is an urgent need for digitization of registered documents and land records using secure, tamper-proof technologies such as Blockchain.”
This recommendation underscores growing judicial support for technology-driven reforms to minimise forgery and litigation arising from disputed titles.
The Supreme Court allowed the appeal, set aside the Karnataka High Court order, and restored the First Appellate Court’s decision. The suit challenging the registered Sale Deed and Rental Agreement was dismissed with costs.
Case Title:
Hemalatha (D) by Lrs. v. Tukaram (D) by Lrs. & Ors.
Civil Appeal No. 6640 of 2010
READ JUDGMENT
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