Project III

Property Law

Judgement Re-writing
N.Kathamuthu vs The Sub-Registrar 2024

Udit Sharma
2023-5LLB-144
Section A
Year II, Semester III
B.A., LL.B. (Hons.)

IN THE HIGH COURT OF JUDICATURE AT MADRAS

W.P. No. ___ of 2024

Petitioner: N. Kathamuthu and K. Kannn

Respondents:

1. The Inspector General of Registration, Tamil Nadu

2. The Sub-Registrar, Thiruppuvanam

ORDER

1. The petitioners challenge the refusal of registration in Refusal Check Slips

RFL/Thiruppuvanam/31/2024 and RFL/Thiruppuvanam/32/2024, dated 11.12.2024, and seek
direction for registration of Settlement Deeds.
2. The properties in Survey No. 141/6 and Survey No. 133/3A are held by the petitioners and their
family members. They executed Settlement Deeds in favor of their sons, but the Sub-Registrar
refused registration due to non-production of parent documents.
3. The respondents rely on W.A. No. 271 of 2024, arguing that Rule 55-A of the Tamil Nadu
Registration Rules, 2000, remains valid and mandates compliance.
4. Petitioners cite Federal Bank v. Sub-Registrar (2023 2 CTC 289), asserting that Rule 55-A(i) is
illegal and cannot override statutory provisions.
5. Under the Transfer of Property Act, 1882, a settlement deed transfers interest in immovable
property, operative upon execution and registration under Section 17 of the Registration Act, 1908.
6. Section 6 of the Transfer of Property Act ensures the right to transfer property, which cannot be
restricted by administrative rules inconsistent with statutory provisions.
7. The refusal to register based solely on the absence of parent documents contradicts established
property transfer principles and creates unnecessary barriers to alienation.
8. When interpreting the Transfer of Property Act, a key question arises: Can immovable property be
transferred multiple times unless a prior transfer or agreement is legally set aside? The answer is an
unequivocal "No", for the following reasons:
a) Section 6 of the Transfer of Property Act states that property may be transferred unless
explicitly restricted by the Act or other prevailing laws. However, Section 6(a) prohibits the
transfer of a mere expectancy (spes successionis), whereas Section 43 applies where a
person misrepresents having a present and transferable interest.
b) This distinction was clarified in Jumma Masjid, Mercara v. Kodimaniandra Deviah, where
three grandsons misrepresented that they had a transferable interest post the widow’s death,
despite their actual interest being a mere expectancy. The court ruled in favor of the transferee
 under Section 43, stating that if a transferor misrepresents ownership and the transferee acts in
good faith, the latter is protected.

Section 6(a): Transfers of spes successionis are void ab initio (invalid from the outset).

Section 43: If a transferee relies on misrepresentation and provides consideration, the transfer is
voidable at their option

Subsequent Transferees: If a second transferee acquires the property in good faith, their title is
upheld, while the first transferee may only seek monetary recovery.

Thus, while Section 6(a) prohibits transfers based on mere expectancy, Section 43 protects
innocent transferees relying on misrepresentation.

9. As per Section 7 of the Transfer of Property Act, any person who is competent to contract and
either owns transferable property or is authorized to dispose of property not belonging to them can
transfer such property wholly or partially, absolutely or conditionally, as permitted by law.
10. Section 41 of the Transfer of Property Act deals with the power of an ostensible owner to
transfer property with the express or implied consent of the real owner. The principle underlying
this section is that an ostensible owner, though lacking actual title, can validly transfer property if
the transferee acts in good faith and with due diligence. Similarly, Section 42 governs cases
where a person who has transferred immovable property retains the authority to revoke the transfer.
If such a person later transfers the same property for consideration, the subsequent transfer operates
as a revocation of the earlier transfer to the extent of the reserved power.
11. Likewise, Section 43 of the Transfer of Property Act permits an unauthorized person's
transfer to be deemed legitimate if the transferor later obtains an interest in the property, so long as
the transferee hasn't revoked the transfer. However, as held in Kartar Singh vs. Harbans
Kaur, this principle does not apply to void transactions. In this case, a woman sold land belonging
to her minor son without court authorization. When the sale was later declared void and the mother
inherited the property after the son's death, the transferee sought the benefit of Section 43. The
court ruled that since the transferee should have known the mother lacked legal capacity, Section 43
did not apply. This case underscores that the transfer must not be inherently void, must be for
consideration, and the transferor must later acquire an interest for Section 43 to be invoked.
12. Section 48 of the Transfer of Property Act establishes the principle of priority in cases of
successive transfers. It states that when a person transfers rights over the same immovable property
at different times, the later-created rights are subject to the rights previously created, unless a
special contract specifies otherwise. This provision ensures that earlier transferees retain their
rights, and subsequent transfers cannot override or diminish them. While the law does not prohibit
multiple transfers, it mandates that each later transfer must respect the rights already vested in prior
 transferees, thereby maintaining legal certainty and protecting property interests.It is also pertinent
to note that even if transfer is made during a pending suit, such transfer is not void but is subject to
the result of the suit.
13. The Transfer of Property Act's Section 53 addresses fraudulent transfers. Even if a
fraudulent transfer is conducted with the intention of delaying or defeating the transferor's creditors,
any creditor who wishes to do so may void the transaction. Even in these situations, the transferee's
rights to consideration and good faith are upheld.
14. Section 56 of the Transfer of Property Act deals with marshalling by a subsequent
purchaser. It states that when an owner mortgages multiple properties to one person and later sells
one or more of them to another, the buyer, unless otherwise agreed, has the right to have the
mortgage-debt satisfied out of the unsold properties first, provided this does not prejudice the rights
of the mortgagee or any other person with a legitimate claim. This provision clarifies that while
existing mortgages do not bar subsequent transfers, such transfers remain subject to prior mortgage
obligations.
15. A mortgage constitutes a transfer of an interest in immovable property to secure payment of a
debt or liability. However, this does not prohibit the mortgagor from effecting subsequent transfers,
which will remain subject to the mortgage. The ruling in Suraj Lamp & Industries (P)
Ltd. (II) v. State of Haryana (2012) 1 SCC 656 clarified that ownership in immovable
property can only be transferred through a registered sale deed, reinforcing that agreements for sale
do not create ownership rights. Similarly, in Ghanshyam v. Yogendra Rathi, 2023 SCC
OnLine SC 725, the Supreme Court held that mere execution of an agreement does not bar further
transfers unless declared void by a civil court. Therefore, restricting subsequent transfers based on
an unregistered agreement, as observed in Venkattamma v. The Sub-Registrar, is
legally unsound. Section 54 of the Transfer of Property Act reinforces that a contract for sale does
not create an interest or charge on the property.
16. A simple agreement that a transaction will take place on conditions that have been agreed
upon by both parties is known as a contract for the sale of immovable property. But by itself, it
doesn't establish a charge or ownership interest in the property. All that is granted by an agreement
of sale is the right to acquire a sale deed upon meeting the requirements. Only in the event that one
party violates the contract does it become enforceable. In addition to proving the contract's
existence, the agreement holder must show that they are consistently prepared and willing to abide
by its provisions in order to seek particular performance, so long as the lawsuit is brought within
the allotted period.
17. Section 19(b) of the Specific Relief Act safeguards subsequent transferees who acquire
property for value and in good faith, without knowledge of a prior contract. Additionally, under
Section 13 of the Act, even if a seller lacks a valid title, the transferee may still seek specific
performance. This principle was reaffirmed in Girish Dutt v. Data Din (AIR 1934 Oudh
 35), where the court ruled that a transfer violating Section 13 is void, and any subsequent transfer
dependent on it is also void. In this case, a gift deed created a life estate for an unborn daughter,
which was contrary to Section 13. When the beneficiary died childless, a subsequent transfer to
another party (X) was also rendered void. The ruling emphasized that the validity of a transfer must
be assessed based on the deed’s terms rather than subsequent events.
18. A comprehensive reading of the provisions of the Transfer of Property Act suggests that there
is no legal restriction on executing subsequent transfers of immovable property. Any later transfer,
however, remains subject to the rights created under an earlier transfer. Therefore, the mere
registration of an agreement for sale does not strip the owner of the right to execute further
transactions concerning the property. Refusing to register a subsequent transfer solely based on a
prior registered agreement contradicts fundamental property laws. Accepting such an approach
could lead to situations where property owners are indefinitely restricted from dealing with their
assets merely because an agreement appears in the encumbrance records. This would, in effect,
infringe upon the owner's constitutional right to manage and transfer their property. Courts have
upheld similar principles in Suraj Lamp & Industries (P) Ltd. v. State of
Haryana (2012) 1 SCC 656 and Girish Dutt v. Data Din (AIR 1934 Oudh 35), affirming
that property transactions must be assessed based on legal validity rather than procedural
technicalities.
19. Therefore, the impact of the first proviso represents an arbitrary exercise of power,
effectively nullifying the legal principles established by the Division Bench of this Court.
20. A transfer made during the pendency of a suit is not rendered void but remains subject to the
outcome of the case. Section 53 of the Transfer of Property Act addresses fraudulent transfers
—those executed with the intent to defeat or delay creditors—which are voidable at the option of
any such creditor. However, the law protects the rights of a transferee who has acted in good faith
and for valid consideration. In Yenugu Achayya v. Emaki Venkata Subba Rao
(AIR 1957 SC 854), the Supreme Court examined whether a transfer executed during pending
litigation could override the rights of parties in the suit. The Court held that such transfers are
subject to the doctrine of lis pendens, meaning they do not affect the rights of the litigating parties.
Similarly, in AIR 1968 SC 794, the Court reinforced that while fraudulent transfers could be
voidable, bona fide purchasers who acquired property for value without knowledge of any defect in
the title would be protected. These rulings affirm that the law balances the rights of original
claimants and innocent third-party transferees.
21. Upon a combined reading of various provisions of the Transfer of Property Act, it is evident
that there exists no absolute prohibition on subsequent transfers of immovable property. Any such
subsequent transfer, however, remains subject to the rights created under an earlier transfer
executed by the same transferor. The registration of an agreement for sale does not extinguish the
owner's right to deal with the property, provided such dealings do not violate the substantive legal
 rights of the prior transferee. The refusal of the Registrar to register a subsequent settlement deed
solely on the basis of a prior registered agreement for sale is inconsistent with settled legal
principles. A contrary approach would lead to situations where property owners are indefinitely
restrained from dealing with their property merely because an agreement for sale is recorded in the
encumbrance certificate, thereby infringing upon their constitutional right to property.
22. It is well settled that a transfer made during the pendency of a suit is not void but is subject to
the doctrine of lis pendens under Section 52 of the Transfer of Property Act. The Supreme
Court, in Jaya Mudaliar v. Ayyaswami (AIR 1973 SC 569), reiterated that a transfer
during litigation does not render it invalid per se but makes it subject to the rights determined in the
pending suit. Furthermore, as held in Yenugu Achayya v. Emaki Venkata Subba
Rao (AIR 1957 SC 854), even fraudulent transfers under Section 53 of the Act are voidable at the
option of the aggrieved party, rather than being void ab initio. However, transferees in good faith
who have paid valuable consideration without knowledge of the defect in title are protected under
Section 53A.
23. The doctrine of part-performance, as embodied in Section 53A of the Transfer of
Property Act, plays a crucial role in safeguarding the rights of parties who have acted in furtherance
of a contract. In Baini Prasad v. Durga Devi (2023 SCC OnLine SC 101), the Supreme
Court reaffirmed that if a transferee has taken possession pursuant to an agreement for sale and has
performed or is willing to perform their obligations under the contract, the transferor is estopped
from denying the validity of such possession, even in the absence of a registered conveyance deed.
24. The principles of ostensible ownership, as provided under Section 41 of the Transfer of
Property Act, are also relevant in cases where ownership is transferred by individuals who hold
themselves out as owners. The Supreme Court in Syed Abdul Khader v. Rami Reddy
(AIR 1979 SC 553) observed that third parties who enter into transactions in good faith, relying on
an ostensible owner’s title, must be protected, provided due diligence has been exercised. Similarly,
in Ram Coomer Koondoo v. Mc Queen (1872 11 Beng LR 46), it was held that where an
individual has been allowed to present themselves as the owner of property and third parties have
relied on such representation, the actual owner is precluded from contesting the transfer.
25. Considering the well-established legal principles and precedents, it is clear that the refusal of
the Registrar to register the settlement deed presented by the petitioner was erroneous and contrary
to the substantive provisions of the Transfer of Property Act. The mere existence of a registered
agreement for sale does not, by itself, preclude subsequent transactions, provided they do not defeat
the prior transferee’s rights. Moreover, the doctrine of lis pendens does not nullify transfers made
during pending litigation but merely subjects them to the outcome of the case.
26. In light of the foregoing discussion and judicial precedents, it is held that the impugned order
of the Registrar is set aside. The Registrar is directed to register the document in accordance with
the applicable provisions of law. The writ petition is allowed with no order as to costs.
JUDGE
High Court of Madras
Date: 21 March 2025