Fraudulent Registration of Sale Deeds in India

Fraudulent Registration of Sale Deeds in India: Legal Framework, Judicial Scrutiny, and Remedies

Introduction

The registration of a sale deed under the Registration Act, 1908, is a cornerstone of property transactions in India, bestowing a degree of solemnity and public notice to the transfer of title. However, the sanctity of this process is often challenged by instances where sale deeds are registered fraudulently. Such fraudulent acts undermine the integrity of property records, lead to protracted litigation, and can cause significant hardship to bona fide owners and purchasers. This article undertakes a comprehensive analysis of the legal landscape surrounding fraudulently registered sale deeds in India. It examines the nature of fraud in this context, the legal status of such deeds, the role and limitations of registering authorities, available judicial remedies, and the critical aspects of limitation and proof, drawing upon statutory provisions and judicial pronouncements from Indian courts.

Understanding Fraud in Relation to Sale Deeds

Fraud, in the context of contracts and conveyances, vitiates the transaction. The Indian Contract Act, 1872, under Section 17, defines 'fraud' to include acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract. This can involve the suggestion of a fact as true which is not true by one who does not believe it to be true, active concealment of a fact, a promise made without any intention of performing it, any other act fitted to deceive, or any such act or omission as the law specially declares to be fraudulent.

Types of Fraud in Execution and Registration of Sale Deeds

Fraud concerning sale deeds can manifest in various forms:

  • Misrepresentation of the Character or Contents of the Document: This occurs when a party is deceived about the fundamental nature of the document they are signing (e.g., believing it to be a loan agreement when it is a sale deed) or its contents. If the executant never intended to sign the document in its operative form, it may be considered void. The Supreme Court in Dularia Devi v. Janardan Singh And Others (1990 SUPP SCC 1 216) held that where an illiterate person signs a document, and it is falsely read over to her, and she never intended to sign what she did sign, the document can be treated as void. Similarly, the Jharkhand High Court in Sukra Munda & Another v. Raju Khalkho & Others (2009), citing Thoroughgood's case (1584), noted that if a person is induced by fraud to execute a document different from what they intended, the deed is void, not merely voidable.
  • Impersonation: Where an imposter poses as the true owner or executant of the sale deed. Such a deed is generally considered void.
  • Execution by a Person with No Title: A sale deed executed by a person who has no title to the property purportedly conveyed is fundamentally flawed. As discussed in Yanala Malleshwari v. Ananthula Sayamma (Andhra Pradesh High Court, 2006), if the vendor has no title, the purchaser’s remedy lies in civil and potentially criminal law.
  • Fraud on the Law of Registration: This involves including a small, often non-existent or inaccessible parcel of land within the jurisdiction of a particular Sub-Registrar solely to enable registration there, without any genuine intention to transfer such parcel. The Patna High Court in Julumdhari Rai And Others v. Debi Rai And Others (1964) elaborated on this, stating that such an intention can be gathered from physical inaccessibility or known absence of title of the transferor to that small parcel.
  • Fraudulent Use of Power of Attorney (PoA): A PoA holder might exceed their authority or use a forged/fraudulently obtained PoA to execute a sale deed. The Supreme Court in Church Of Christ Charitable Trust & Educational Charitable Society v. Ponniamman Educational Trust (2012 SCC 8 706) and Suraj Lamp And Industries Private Limited (2) Through Director v. State Of Haryana And Another (2012 SCC 1 656) has dealt with issues arising from the misuse of PoAs in property transactions.
  • Non-payment or Understatement of Consideration: While non-payment of full consideration might not always render a registered sale deed void if title was intended to pass, fraudulent representations about consideration can be a ground for challenge (Sasikala v. Revenue Divisional Officer And Another, Madras High Court, 2022; Mahender Kehar v. Skyland Builders Pvt. Ltd., Delhi High Court, 2019).

Legal Status of Fraudulently Registered Sale Deeds

Void v. Voidable Deeds

A crucial distinction in law is whether a fraudulently registered sale deed is void *ab initio* (invalid from the outset) or merely voidable (valid until set aside by a competent court).

  • Void Deeds: A sale deed is generally considered void if there is fraud as to the character of the document (non est factum), where the executant was entirely mistaken as to the nature of the document signed (Dularia Devi, 1990; Sukra Munda, 2009). Deeds executed by imposters, or by persons wholly lacking title (e.g., selling someone else's property without any authority), or by minors or persons of unsound mind, are also typically void (Prem Singh And Others v. Birbal And Others, 2006 SCC 5 353). A void deed does not transfer any title, and its invalidity can often be asserted even against third-party purchasers.
  • Voidable Deeds: Where fraud relates to the contents or terms of the document, or where consent is obtained by misrepresentation, coercion, or undue influence, the sale deed is usually voidable at the option of the defrauded party (Prem Singh, 2006). Title passes under a voidable deed but can be divested if the deed is set aside by a court.

The Supreme Court in Prem Singh (2006) clarified that Section 31 of the Specific Relief Act, 1963, refers to both void and voidable instruments. A suit for cancellation of a voidable instrument is necessary, whereas for a void instrument, a declaration may suffice, or its invalidity can be pleaded in defence or collateral proceedings.

Burden and Standard of Proof

The burden of proving fraud rests heavily on the party alleging it. Fraud must be pleaded with specificity and established by clear and cogent evidence, not mere suspicion or conjecture (Mahiruddin Borbhuiya v. Mustt. Rythun Nessa, Gauhati High Court, 1997, citing Union Of India v. M/S Chaturbhai M. Patel & Co., AIR 1976 SC 712). The principles regarding the burden of proof when a document is surrounded by suspicious circumstances, as discussed in the context of wills in S.R Srinivasa And Others v. S. Padmavathamma (2010 SCC 5 274), can be analogously applied. A registered document carries a presumption of due execution and correctness (Abdul Rahim And Others v. Sk. Abdul Zabar And Others, 2009 SCC 6 160; Mahiruddin Borbhuiya, 1997), but this presumption is rebuttable.

The Role of the Registering Authority (Sub-Registrar)

Administrative v. Quasi-Judicial Function

The Sub-Registrar's role in the registration process is primarily administrative, not quasi-judicial. Their duty is to ensure compliance with the procedural requirements of the Registration Act, 1908, such as proper identification of parties, payment of stamp duty and registration fees, and adherence to rules of presentation. They are not empowered to conduct a roving inquiry into the title of the executant or the genuineness of the transaction beyond a certain point. The Supreme Court in Satya Pal Anand v. State Of Madhya Pradesh And Others (2016 SCC 10 767) extensively discussed this, holding that the Registrar's powers do not extend to adjudicating on the substantive validity of the document or disputes related to fraud or title. This view is echoed in Yanala Malleshwari (2006) and Sasikala (2022), where the Madras High Court observed that the Registrar exceeded jurisdiction by adjudicating on fraud and undue influence.

Power to Refuse Registration

Sections 34 and 35 of the Registration Act, 1908, outline the inquiry before registration. If the executant denies execution, the Sub-Registrar must refuse registration under Section 35(3)(a). In such cases, the aggrieved party can apply to the Registrar under Section 73, and if the Registrar also refuses, a civil suit can be filed under Section 77 to compel registration. The Supreme Court in Veena Singh v. Collector (2022) reiterated that disputes involving denial of execution and allegations of fraud are best resolved in a civil suit, not summary proceedings before the Registrar.

Power to Cancel a Registered Deed

A significant issue is whether a Sub-Registrar can cancel a sale deed once it has been registered, particularly on grounds of fraud. The preponderant judicial view, affirmed by the Supreme Court in Satya Pal Anand (2016), is that the Registering Officer has no power to cancel a registered deed. Once registered, a document can generally only be cancelled by a decree of a competent civil court. The Court in Satya Pal Anand distinguished the case of Thota Ganga Laxmi v. State of Andhra Pradesh (2010) 15 SCC 207 (which held unilateral cancellation impermissible) by noting it was based on specific state rules and did not lay down a general principle empowering Registrars to cancel deeds. While some High Courts have entertained petitions seeking directions to registration authorities to act on complaints of fraudulent registration, often based on state-specific circulars or rules (e.g., Murugan.V v. The Deputy Inspector General, Madras High Court, 2022; K.R. Rathinam v. Inspector General Of Registration And Others, Madras High Court, 2022), the overarching principle is that adjudication of fraud and consequent cancellation is the domain of civil courts.

Judicial Remedies and Adjudication

Suit for Cancellation and Declaration

The primary remedy for a person aggrieved by a fraudulently registered sale deed is to approach a competent civil court.

  • Section 31 of the Specific Relief Act, 1963: This provision allows any person against whom a written instrument is void or voidable, and who has reasonable apprehension that such instrument, if left outstanding, may cause him serious injury, to sue to have it adjudged void or voidable, and the court may, in its discretion, so adjudge it and order it to be delivered up and cancelled.
  • Suit for Declaration: A suit for a declaration that the sale deed is void and not binding on the plaintiff can also be filed, often coupled with a prayer for possession if the plaintiff is out of possession.

Limitation for Challenging Fraudulent Deeds

The Limitation Act, 1963, prescribes time limits for initiating legal action.

  • Article 59: This article provides a limitation period of three years to cancel or set aside an instrument or decree or for the rescission of a contract. The time begins to run "when the facts entitling the plaintiff to have the instrument or decree cancelled or set aside or the contract rescinded first become known to him." This article is typically applied to suits challenging voidable sale deeds (Md. Noorul Hoda v. Bibi Raifunnisa And Others, 1996 SCC 7 767; Prem Singh, 2006; Abdul Rahim, 2009). Constructive knowledge may also trigger the limitation period (Md. Noorul Hoda, 1996).
  • Article 65: If the sale deed is void *ab initio*, and the suit is for recovery of possession based on title, Article 65 might be applicable, providing a limitation period of twelve years from when the possession of the defendant becomes adverse to the plaintiff. The Supreme Court in Prem Singh (2006) discussed the distinction in limitation periods for void and voidable documents.

Admissibility of Evidence and Pleadings

Sections 91 and 92 of the Indian Evidence Act, 1872, generally bar oral evidence to contradict, vary, add to, or subtract from the terms of a written contract that has been reduced to the form of a document. However, Proviso (1) to Section 92 permits evidence of any fact which would invalidate any document, such as fraud, intimidation, illegality, want of due execution, want of capacity in any contracting party, want or failure of consideration, or mistake in fact or law. The Delhi High Court in Mahender Kehar (2019) discussed these provisions. The Supreme Court in S. Kaladevi v. V.R Somasundaram And Others (2010 SCC 5 401) held that an unregistered sale deed, though not admissible to prove title, can be admitted for a collateral purpose under the proviso to Section 49 of the Registration Act, 1908, such as to prove the nature of possession or an agreement to sell, even if fraud is alleged in its creation.

Pleadings alleging fraud must be specific and contain full particulars. Vague allegations are insufficient. The Allahabad High Court in Shitla Prasad v. Banwari (2013) emphasized the need for requisite facts to be pleaded to make out a case of fraud.

Impact of Fraudulent SA/GPA Transactions

The Supreme Court in Suraj Lamp (2012) strongly deprecated the practice of property transfers through Sale Agreement (SA)/General Power of Attorney (GPA)/Will, noting that such transactions are often resorted to for evading stamp duty, registration, and other legal obligations, and can facilitate fraudulent dealings. While a genuine GPA is a valid instrument, its misuse in property transactions to effectuate what is essentially a sale without a registered conveyance deed has been a source of much litigation and fraud. The Court clarified that such instruments do not convey title nor do they amount to a transfer or sale of immovable property.

Interplay with Other Laws and Proceedings

  • Criminal Proceedings: Fraudulent registration of sale deeds can also give rise to criminal liability under the Indian Penal Code, 1860, for offences such as cheating (Section 420), forgery (Sections 463, 467, 468), using a forged document as genuine (Section 471), and criminal conspiracy (Section 120B). However, courts are cautious about criminal proceedings being used to give a "colour of criminal case to an already existing dispute between the parties which was essentially civil in nature" (Jasmeet Singh Marwah Petitioner v. State Of Nct Of Delhi & Ors., Delhi High Court, 2016). The remedy for a purchaser defrauded by a vendor with no title includes criminal action (Yanala Malleshwari, 2006).
  • Special Statutes: In certain cases, remedies might be sought under special statutes. For instance, the Madras High Court in M.Saliah Bee v. The District Collector (2021) dealt with a plea by a senior citizen for cancellation of a sale deed allegedly obtained fraudulently, under the Tamil Nadu Maintenance and Welfare of Parents and Senior Citizen Act, 2007.
  • Consolidation Proceedings: The nature of the document (void or voidable) can also determine jurisdiction if consolidation proceedings under state-specific laws are ongoing, as seen in Dularia Devi (1990).

Preventing Abuse of Process

Courts are vigilant against the abuse of judicial process. The Supreme Court in Meghmala And Others v. G. Narasimha Reddy And Others (2010 SCC 8 383) emphasized the need to prevent parties from misusing legal remedies and engaging in protracted litigation through abusive practices, even when fraud is alleged. The bona fides of the complainant are also relevant; for instance, in JIT VINAYAK AROLKAR v. STATE OF GOA AND ORS (Supreme Court Of India, 2025), the Court noted that the complaint of cheating was not by the purchaser, which can alter the perspective on the alleged fraud.

Conclusion

The fraudulent registration of sale deeds poses a significant challenge to the certainty and security of property rights in India. The legal framework provides remedies, primarily through civil courts, for the cancellation or declaration of such deeds as void or voidable. The distinction between void and voidable instruments is critical, impacting the transfer of title, the applicable limitation period, and the nature of relief sought. While registering authorities play a vital role in the initial registration process, their powers to subsequently adjudicate on fraud or cancel registered deeds are limited, with the judiciary being the ultimate arbiter of such disputes. A high burden of proof rests on the party alleging fraud, requiring specific pleadings and cogent evidence. The judiciary strives to balance the sanctity of registered instruments with the imperative to protect individuals from fraudulent practices, while also guarding against the abuse of its own process. Due diligence by all parties involved in property transactions remains paramount to mitigate the risks associated with fraudulent conveyances.