Title to Immovable Property cannot be Transferred based on Unregistered Instrument: NCLAT [Read Order]
The tribunal determined that the Adjudicating Authority had not erred in permitting the Liquidator's application and ordering the Appellant to turn over possession while declaring the transaction void and transferring no title
NCLAT – NCLAT New Delhi – Title transfer immovable property – NCLAT on immovable property title – TAXSCAN
NCLAT – NCLAT New Delhi – Title transfer immovable property – NCLAT on immovable property title – TAXSCAN
The New Delhi Bench of the National Company Law Appellate Tribunal ( NCLAT ) has ruled that as the property is listed in the corporate debtor's name, the liquidator has the power to seize the store. As a result, ownership to immovable property cannot be transferred using an unregistered instrument.
The appellant, Rahat Hussain, has appealed a decision made by the adjudicating authority. In accordance with Sections 43, 44, 66, and 67 of the Insolvency and Bankruptcy Code, 2016, the liquidator filed the IA. The application was granted, and it was determined that the transaction was fraudulent and did not transfer any rights or interests of the corporate debtor to the appellant.
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The appellant claimed that it had acquired the rights to the shop in question from Precision Fasteners Private Limited through an agreement signed in 2006 for Rs. 4,00,000/-. The appellant also claimed that none of the documents, including the Sale Agreement for Shops dated 07.09.2006, in its favor, had been registered and that since the property in question was a part of the government grant, it was exempt from registration requirements.
The respondent refuted the submissions, arguing that the property was always listed in the corporate debtor's name in the records. The corporate debtor's promoters and directors also argued before the adjudicating authority that the Executive Director, who is alleged to have signed a sale agreement, had no authority, that the appellant had no rights, and that the CIRP was over. The Adjudicating Authority issued an order allowing the Appellant to relinquish possession of the stores.
The Sale Agreement for stores dated 07.09.2006, which was brought to the attention of the appellant and forms the basis of the appellant's admittedly unregistered rights, was determined to be an unregistered instrument by a two-member bench consisting of Justice Ashok Bhushan ( Judicial Member ) and Mr. Arun Baroka ( Technical Member ). The Amendment Act 2001, which was added into Section 17(1A) of the Registration Act by Act 48/2001 and mandated the mandatory registration of any document conveying title, was cited by the adjudicating authority in the contested order.
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The bench figured that since the property was listed in the corporate debtor's name in the records, the liquidator had every right to seize the store, even if the appellant was unable to provide any proof of ownership. The appellant cannot assert that it has obtained any title based on the unregistered agreement to sell.
The tribunal determined that the Adjudicating Authority had not erred in permitting the Liquidator's application and ordering the Appellant to turn over possession while declaring the transaction void and transferring no title.
To Read the full text of the Order CLICK HERE
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