Dispute of title of immovable property fall exclusively within the jurisdiction of civil courts and not revenue authorities.
In a recent judgment, Hon’ble Supreme Court has held that dispute relating to title of immovable property fall exclusively within the jurisdiction of civil courts and not revenue authorities. Revenue entries are administrative in nature and intended only for fiscal purposes. An unregistered agreements to sell, even if coupled with possession, do not convey title or create any interest in the immovable property.
ABCAUS Case Law Citation:
4572 (2025) (05) abcaus.in SC
Important Case Laws relied upon by Parties:
Suraj Lamp & Industries (P) Ltd. v. State of Haryana
S. Kaladevi v. V.R. Somasundaram
Muruganandam v. Muniyandi (Died) through LRs
The appellant company was the owner of an agricultural land. It obtained a loan from the Respondent. The Board of Directors of the appellant company passed a resolution authorising its Managing Director and authorised representative being the Respondent to sell the subject property. Pursuant to the said Board resolution, the MD of the company executed unregistered power of attorney and agreement to sell in favour of Respondent, concerning the subject property.
Subsequently, the original sale deeds through which the appellant company had purchased the subject property were impounded by the Collector of Stamps for insufficient stamp duty. The appellant company challenged this action by filing a revision petition before the State Tax Board, which allowed the revision and remanded the matter to the Collector of Stamps for re-adjudication. In the meanwhile, the appellant company handed over the original documents pertaining to the suit property to the respondent as security for the loan obtained by them.
Subsequently, when the appellant company approached the private respondents to settle the loan and retrieve the original documents, the respondent failed to respond. Consequently, the Board of Directors of the appellant company passed a resolution revoking the authority granted to Respondent, thereby invalidating all the actions related thereto and declaring them as non-est. Accordingly, the power of attorney was also revoked.
Despite the above, the Respondent executed sale deeds transferring the subject land in his favour and other Respondents. Based on these sale deeds, their names were also mutated in the revenue records.
Aggrieved, the appellant company instituted Original Civil Suit before the District Court seeking the reliefs of declaration, possession, and permanent injunction in respect of the subject land. During the pendency of the suit, Respondent took the matter before the High Court, which rejecting the plaint of the appellant company.
Aggrieved by the same, the appellant had preferred an appeal before the Hon’ble Supreme Court.
The Appellant contended that the suit was based on two separate and distinct causes of action: (i) the unregistered agreement to sell being in the nature of a mortgage; and (ii) the execution of the sale deed(s) which were registered subsequent to the revocation of the power of attorney. The High Court treated the entire plaint as unsustainable based on the alleged invalidity of the first cause of action, without adjudicating upon the second.
It was also submitted that the PA and agreement to sell were not intended to effect transfer of ownership, but were executed as security for the loan, thereby constituting a mortgage in substance. It was further stated that the appellant is ready and willing to repay loan to redeem the property.
It was further submitted that under sections 17, 23 and 49 of the Registration Act, 1908, an unregistered agreement to sell is inadmissible in evidence for the purpose of transferring title. In the instant case, no steps were taken to register the agreement to sell, nor was any suit for specific performance filed by the private respondents. Thus, the document had no legal sanctity in establishing ownership or rights in immovable property.
It was also submitted that it is well settled that title to immovable property can only be adjudicated by a competent civil court and not by revenue authorities. The reliance was placed on the judgment of the Court wherein it was held that revenue entries are for fiscal purposes and do not confer title.
The appellant also relied on the decision of the Court which held that if even one cause of action in a plaint survives, the entire plaint must be tried. The doctrine of severance does not apply to reject an entire plaint based on a partial defect.
The Hon’ble Supreme Court observed that at the preliminary stage, the court is required to confine its examination strictly to the averments made in the plaint and not venture into the merits or veracity of the claims. If any triable issues arise from the pleadings, the suit cannot be summarily rejected.
The Hon’ble Supreme Court observed that as per the settled law, in the absence of registration of PoA or the agreement to sell, such documents did not confer valid authority to transfer title. Sections 17 and 49 of the Registration Act, 1908, clearly state that unregistered documents required to be registered are inadmissible in evidence for the purpose of conveying title or completing a sale transaction, and can only be admitted for collateral purposes or in a suit for specific performance. This legal position was established by the Apex Court and was later followed in other decision.
The Hon’ble Supreme Court noted that the Respondent had 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 cannot rely on the unregistered documents to assert any proprietary rights and had no valid authority to execute the impugned sale deeds. Also, Section 54 of the Transfer of Property Act, 1882, categorically provides that a contract for the sale of immovable property does not, by itself, create any interest in or charge on such property.
The Hon’ble Supreme Court observed that this legal position has been conclusively laid down by the Court wherein, it was held that unregistered agreements to sell, even if coupled with possession, do not convey title or create any interest in the immovable property. It was further clarified that such documents are insufficient to complete a sale unless duly registered and followed by appropriate conveyance.
Further, the Hon’ble Supreme Court observed that despite the execution of the agreement to sell, no attempt was made by Respondent to have it registered within the stipulated period. This inaction further supports the appellant’s contention that the said agreement is not only inadmissible under Sections 17 and 49 of the Act, but also legally ineffective due to non-compliance with the mandatory requirement of timely registration. The failure to seek specific performance or register the document within the period prescribed under Section 23 renders the foundational document unenforceable in law. That apart, the revocation of the Board Resolution and Power of Attorney prior to the execution of the impugned sale deeds vitiates the authority under which those deeds were executed by Respondent. Accordingly, serious triable issues arise, which must be adjudicated by a competent civil court.
The Hon’ble Supreme Court opined that the High Court erred in treating the second cause of action pertaining to the sale deeds registered later as merely “academic”, and proceeded to reject the plaint in its entirety without undertaking a judicial examination of this distinct issue. This approach was contrary to the well settled legal principle that a plaint may be rejected under Order VII Rule 11 CPC only if, on a plain reading of the plaint, it discloses no cause of action or falls within the other narrowly defined grounds under the said provision, such as under-valuation, insufficient court fees, or bar by any law.
With respect to the contentions that the power of attorney was notarized, a consent letter was executed, and the transaction was reflected in the income tax records, and the suit was instituted merely to harass and disturb such possession, the Hon’ble Supreme Court opined these all matters require adjudication during trial.
Further, the Hon’ble Supreme Court expressed agreement with the appellant’s contention that the mutation of the respondents’ names in the revenue records, based on disputed sale deeds, cannot be treated as conclusive proof of title, which is a matter for adjudication by a competent civil court. It is well settled that issues relating to title of immovable property fall exclusively within the jurisdiction of civil courts and not revenue authorities. Revenue entries are administrative in nature and intended only for fiscal purposes. The Hon’ble Supreme Court opined that this position has been consistently upheld by the Court and reiterated that the issues raised in the present plaint pertained to ownership, validity of sale deeds, and declaration of title, which are civil in nature and, therefore, triable exclusively by a civil court. However, by rejecting the plaint and reversing the trial Court’s well-reasoned order, the High Court assumed jurisdiction not vested in it at this preliminary stage, thereby committing a jurisdictional error.
The Hon’ble Supreme Court held that the trial court had rightly held that the issues were triable and the High Court erred in overturning this finding and rejecting the plaint in its entirety.
Accordingly, the appeal was allowed. The impugned order of the High Court was set aside, and the order of the Additional District Judge was restored. Consequently, the plaint was directed to be taken on the file of the Trial Court.
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