Agreement To Sell Not Conveyance, Can't Give Any Right In Property Without Suit For Specific Performance : Supreme Court

The Supreme Court recently reiterated that  in the absence of a suit for specific performance of a contract, an agreement to sell cannot be relied upon for claiming ownership or title over the property.

“In the absence of a suit for specific performance, the agreement to sell cannot be relied upon to claim ownership or to assert any transferable interest in the property.”, the court observed.

The bench comprising Justices JB Pardiwala and R Mahadevan heard the case where the Respondent No.1, in the absence of a suit for specific performance of the contract, sought enforcement of an agreement to sell to claim transfer benefits.

Briefly put, the Appellant filed a suit seeking a declaration of title, possession, and injunction over the suit property, arguing that the Respondent No.1 doesn't hold a good title because an agreement to sell and the Power of Attorney (“PoA”) executed in Respondent No.1's favor was revoked.

Despite revocation, the Respondent No.1 executed sale deeds (2022) in his favor and mutated the property in revenue records. Challenging this action, the Appellant filed a suit seeking a declaration of title, possession, and injunction over the suit property.

Being aggrieved by the High Court's decision to reject his suit under Order VII Rule 11 CPC, the Appellant appealed to the Supreme Court.

Setting aside the impugned decision, the judgment authored by Justice Mahadevan held that to claim transfer benefits under the Transfer of Property Act, 1882 (TPA), a suit for specific performance of the contract must be filed, as merely relying on an agreement to sell is insufficient.

Unregistered Agreement To Sell Not Conveyance, Cannot Grant Transfer Benefits

Further, referencing Section 54 TPA, the Court said that even though the suit for specific performance of contract was not instituted, an unregistered agreement to sell would not have benefitted the Respondent No.1 as unregistered agreements to sell, even if coupled with possession, do not convey title or create any interest in the immovable property. (Refer Suraj Lamp & Industries (P) Ltd. v. State of Haryana, (2012) 1 SCC 656).

The Court clarified that title and ownership of immovable property can only be conveyed by a registered deed of sale. (Refer The Cosmos Co-operative Bank Ltd. v. Central Bank of India & Ors., 2025 LiveLaw (SC) 226)

Reference was also drawn from the case of M.S. Ananthamurthy v. J. Manjula, 2025 LiveLaw (SC) 257 where the court undertook a comprehensive analysis of the statutory provisions and precedents and reaffirmed that an unregistered agreement to sell does not and cannot by itself create or transfer any right, title, or interest in immovable property.

"It is a settled law that a transfer of immovable property by way of sale can only be by a deed of conveyance. An agreement to sell is not a conveyance. It is not a document of title or a deed of transfer of deed of transfer of property and does not confer ownership right or title. In Suraj Lamp (supra) this Court had reiterated that an agreement to sell does not meet the requirements of Sections 54 and 55 of the TPA to effectuate a 'transfer'.", the court observed in M.S. Ananthamurthy v. J. Manjula.

“Accordingly, it is abundantly clear that the unregistered agreement to sell dated 24.05.2014 cannot, under any circumstance, create or convey any right, title or interest in favour of Respondent No.1 under Section 54 of the Transfer of Property Act, 1882. The subsequent revocation of authority further nullifies any claim to title based on such documents.”, the court observed, applying the aforesaid law.

Case Title: VINOD INFRA DEVELOPERS LTD. VERSUS MAHAVEER LUNIA & ORS.

Citation : 2025 LiveLaw (SC) 630

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