SC sets high bar for terming registered Sale Deeds as ‘Sham’
24/01/2026
New Delhi, Jan 23: A Bench of the Supreme Court comprising Justice Rajesh Bindal and Justice Manmohan has reaffirmed the strong legal sanctity attached to registered sale deeds, holding that courts must not lightly or casually declare such documents as "sham" or "nominal". The ruling was delivered in Hemalatha (D) by LRs vs Tukaram (D) by LRs & Ors., setting aside a Karnataka High Court judgment that had treated a registered 1971 sale deed as a mere façade for a loan transaction.
The apex court held that registration is not a mere procedural formality but a solemn act that creates a formidable presumption of validity and genuineness. The burden to rebut this presumption, the Bench observed, lies heavily on the party challenging the document, and such a challenge must be supported by clear, cogent and convincing evidence.
The case arose from a property dispute in Bidar, Karnataka, where the original owner sold his house through a registered sale deed and simultaneously executed a registered rental agreement to continue occupying the premises as a tenant. After defaulting on rent payments and facing eviction proceedings, the seller claimed that the sale deed was nominal and never intended to be acted upon.
Rejecting this plea, the Supreme Court ruled that vague allegations, inadequacy of consideration, or reliance on subsequent conduct are insufficient to invalidate a registered sale deed. The Court further stressed that pleadings alleging sham transactions or fraud must satisfy strict standards akin to Order VI Rule 4 of the CPC and cannot rest on clever drafting or mere suspicion.
The Bench also clarified that a transaction cannot be construed as a mortgage by conditional sale unless the condition for reconveyance is expressly incorporated in the same document, as mandated under Section 58(c) of the Transfer of Property Act.
Allowing the appeal, the Supreme Court restored the validity of the sale deed, cautioning that casual interference with registered property transactions would undermine certainty of titles and weaken public confidence in the rule of law.
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