Supreme Court: Registered Sale Deeds Cannot Be Declared Sham Without Strong Proof

The Supreme Court of India has held that a registered sale deed carries a strong legal presumption of being genuine and valid. Such a document cannot be casually labelled as a “sham” unless there is clear and convincing evidence to prove otherwise.

A Bench comprising Justice Rajesh Bindal and Justice Manmohan observed that registration is not a mere formality. It is a serious and solemn act that gives legal sanctity to a document. Courts, therefore, must be cautious before declaring a registered instrument to be fake or deceptive.

The case involved a property transaction where the respondent initially mortgaged his house to clear debts. After failing to repay the amount, a registered sale deed was executed in favour of the appellant, making her the owner of the property. Since the respondent continued to stay in the house, a registered rent agreement was also signed, and rent was paid for several months.

Years later, when eviction proceedings began, the respondent claimed that the sale deed was not a real sale but only a mortgage meant to secure a loan. While the Trial Court and the First Appellate Court upheld the sale as genuine, the High Court treated it as a mortgage and reversed the findings.

The Supreme Court set aside the High Court’s decision and restored the First Appellate Court’s ruling. The Court stressed that when both the sale deed and rent agreement are registered, there is a very strong presumption in favour of their authenticity. Clear recitals, unambiguous terms, and consistent conduct of parties leave little scope to doubt the intention behind the transaction.

Accordingly, the Court upheld the sale deed as a valid and genuine transaction, reiterating that registered documents cannot be declared sham without strong pleadings and reliable evidence.