Sale deed which is neither registered nor stamped and executed before Notary cannot be the basis for any claim before the IRP with regard to the purchase of immovable property – NCLAT, New Delhi

An Application was filed by a Claimant, Smt. Sabita A. Biswas, before the Hon’ble NCLT, Cuttack, in the matter of ASREC (India) Limited v. RK Jain Construction (India) Pvt.Ltd., seeking directions against the Resolution Professional to admit the claims of the Applicant/Claimant, to deliver the possession of the premises described in the claim form and to pay the arrears of rent for the occupation of the premises by the Corporate Debtor during the Corporate Insolvency Resolution Process (“CIRP”) period. The said claim of the Applicant/Claimant was rejected by the RP.

Such claim of the Claimant/Applicant was based on an unregistered sale deed engrossed on Rs.100/- stamp paper allegedly executed before the Notary and claim amount was mentioned as per the present market value of the property.

The NCLT held that in view of section 17(1) of Registration Act 1908 the sale deed is compulsorily registrable document, and non-registration makes the document ineffective. Further, since the sale deed was engrossed on insufficient stamp paper in view of section 35 of Indian stamp Act, the said document could not be relied for any purpose. In view thereof, the Applicant/Claimant failed to establish her title to the property and that after the purchase she had let out the premises to the Corporate debtor for rent, was unsustainable and thus, claiming arrears of rent during the CIRP period did not arise at all.

Aggrieved Claimant, Smt. Sabita A. Biswas, appealed against the said order of NCLT before the National Company Law Appellate Tribunal, New Delhi (Smt. Sabita A. Biswas Vs. Shri Vinodkumar Pukhraj Ambavat), seeking direction to the Resolution Professional to accept the claim of the Appellant.

NCLAT in view of the above facts and circumstances, held that the NCLT had rightly taken the view that such kind of sale deed which is neither registered nor stamped and was executed before Notary cannot be basis for any claim with regard to the purchase of immovable property as claimed by the Appellant.