Supreme Court Reaffirms Necessity of Specific Performance Suit for Establishing Rights Under Agreement to Sell

Introduction

The Supreme Court of India, in Vinod Infra Developers Ltd. v. Mahaveer Lunia & Ors. (2025 LiveLaw (SC) 630), has reiterated the settled legal position that an agreement to sell, by itself, does not confer title or ownership rights over immovable property. The bench comprising Justices JB Pardiwala and R Mahadevan emphasized that specific performance proceedings are mandatory to enforce such agreements under the Transfer of Property Act, 1882 (TPA).

Factual Matrix

The dispute arose from the following sequence of events:

1. Respondent No. 1 claimed rights over the suit property based on an unregistered agreement to sell and a Power of Attorney (PoA), both of which were subsequently revoked.
2. Despite revocation, Respondent No. 1 executed sale deeds in 2022 and mutated the property in revenue records.
3. The Appellant filed a suit seeking:
   • Declaration of title
   • Recovery of possession
   • Permanent injunction
4. The High Court rejected the suit under Order VII Rule 11 CPC, prompting the present appeal.

Legal Issues

1. Whether an unregistered agreement to sell can create any transferable interest in immovable property without a specific performance suit?
2. Whether revocation of PoA nullifies subsequent transactions based on such documents?

Judicial Reasoning

The Supreme Court’s analysis rested on the following legal principles:

1. Agreement to Sell ≠ Conveyance of Title

• Citing Section 54 of the TPA, the Court reaffirmed that a registered sale deed is mandatory for transferring ownership.
• Relying on Suraj Lamp & Industries (P) Ltd. v. State of Haryana (2012) 1 SCC 656, it held:

“An unregistered agreement to sell, even if accompanied by possession, does not create any interest in immovable property.”

2. Necessity of Specific Performance Suit

• The Court clarified that an agreement to sell only creates a personal right to enforce the contract through a specific performance suit under the Specific Relief Act, 1963.
• Absent such a suit, the agreement cannot be relied upon to claim ownership.

3. Effect of Revocation of PoA

• The Court noted that revocation of authority under the PoA rendered subsequent transactions void ab initio.
• This aligns with M.S. Ananthamurthy v. J. Manjula (2025 LiveLaw (SC) 257), where it was held:

“An agreement to sell is not a document of title and cannot confer ownership rights.”

Conclusion & Implications

1. For Litigants:
   • Specific performance suits must be filed to enforce agreements to sell.
   • Unregistered agreements cannot substitute a registered sale deed.
2. For Practitioners:
   • Ensure clients register sale deeds promptly.
   • Advise on immediate legal action if agreements are breached.
3. Precedential Value:
   • Reinforces Suraj Lamp and Ananthamurthy on the non-conveyancing nature of agreements to sell.
   • Strengthens judicial consistency on PoA revocations.

Case Title: Vinod Infra Developers Ltd. v. Mahaveer Lunia & Ors.
Citation: 2025 LiveLaw (SC) 630

Critical Observations

This judgment underscores the strict statutory interpretation of the TPA and highlights the risks of relying on unregistered documents. It serves as a cautionary precedent for property transactions, emphasizing due diligence and timely legal enforcement.