A transfers his property to B by an unregistered sale deed. C, who has no notice of this transfer, purchases the same property from A. Discuss the rights of B and C.

The problem raises an intersection of three provisions of the Transfer of Property Act, 1882 — section 54 (mode of completing a sale), section 49 of the Registration Act, 1908 (effect of non-registration), and section 48 of the Transfer of Property Act (priority among transfers) — alongside the doctrine protecting a bona fide purchaser for value without notice. The rights of B and C depend critically upon whether the property is of the value of Rs. 100 or more, and upon whether B was in possession of the property so as to constitute constructive notice to C.

The Foundational Statutory Framework

Section 54 of the Transfer of Property Act, 1882 defines a sale of immovable property as a transfer of ownership in exchange for a price and prescribes that where the value of the tangible immovable property is Rs. 100 or more, or the property is a reversion or other intangible thing, the sale can only be made by a registered instrument. An unregistered sale deed, in such cases, does not pass any title to the transferee, as the transfer remains incomplete for want of the mandatory formality of registration.

Section 49 of the Registration Act, 1908 reinforces this position by declaring that a document which is required to be registered but is not registered shall not affect any immovable property comprised therein, nor be received in evidence of any transaction affecting such property. The combined effect of these provisions was stated with clarity by the Supreme Court in Syndicate Bank v Estate Officer and Manager, APIIC Ltd (AIR 2007 SC 3619): a complete title over a property can be acquired by a vendee only when a deed of sale is executed and registered by the vendor in terms of section 54.

Position of B: The Unregistered Transferee

When A transfers the property to B by an unregistered sale deed, no title passes to B in respect of immovable property worth Rs. 100 or more. The unregistered deed is void as a conveyance; it does not create any right, title, or interest in B's favour in the property. The Supreme Court has repeatedly affirmed that an unregistered sale deed does not confer title, and surrender of possession to the buyer without a registered sale deed does not make the buyer an owner (Appineni Vidyasagar v State of Andhra Pradesh, AIR 2004 SC).

B's position is thus reduced to that of a mere contract-holder at best — holding an agreement to sell, which by the express language of the third paragraph of section 54, "does not of itself create any interest in or charge on such property." B retains certain limited rights however:

• Suit for specific performance: B may file a suit for specific performance of the contract against A under the Specific Relief Act, 1963, compelling A to execute a registered sale deed in B's favour.

• Charge for purchase money pre-paid: Under section 55(6)(b) of the Act, where B has paid consideration in anticipation of delivery, B has a charge on the property for the amount so paid and interest thereon, enforceable against the seller and persons claiming under him (other than a bona fide purchaser for value without notice).

• Part performance (section 53A): If B has taken possession of the property in part performance of the contract and has performed or is willing to perform his part of the bargain, section 53A protects B's possession as a defence — he may resist A from disturbing that possession. However, section 53A only operates as a shield, not a sword: it cannot be used to perfect B's title or enforce the contract against a subsequent purchaser.

Position of C: The Subsequent Purchaser without Notice

C purchases the same property from A by a registered instrument, without any notice — actual, constructive, or imputed — of the prior unregistered transfer to B. C is thus a bona fide purchaser for value without notice.

Since the prior transfer to B was unregistered, it did not pass title to B; A retained ownership in law. A, still being the legal owner at the time of sale to C, validly conveyed title to C through a registered deed. The registration of C's deed constitutes constructive notice to the world under Explanation I to section 3 of the Act (as amended in 1929), but this is notice of C's title — it does not revive any title in B's favour.

C therefore acquires a valid and indefeasible title. The principle is rooted in the maxim nemo dat quod non habet applied in reverse — since B never acquired title under the unregistered deed, A never divested himself of ownership, and was competent to pass that ownership to C.

The only qualification to C's protection arises if B was in actual possession of the property before C's purchase. Under Explanation II to section 3, a person acquiring immovable property is deemed to have notice of the title of any person in actual possession thereof. If B was in actual possession, C is fixed with constructive notice of B's possessory rights, and C's claim of being a purchaser "without notice" would fail. In that event, C's subsequent registered purchase would not immunise him from B's right to protect possession under section 53A, though it would still not restore title to B.

The Inter-relationship of the Two Transfers

The interplay between these two transfers is resolved by a compact chain of reasoning:

The key distinction is between a transfer by act of parties (which requires registration for completion under section 54) and the protection afforded to a bona fide purchaser for value without notice. Section 54's requirement of registration is not merely a procedural formality — it is constitutive of the transfer itself. Until registration, the sale is incomplete, and incomplete transfers cannot displace a subsequent purchaser who takes with consideration and without notice.

Conclusion

The settled legal position is that B, holding only an unregistered sale deed for property worth Rs. 100 or more, acquires no title and cannot enforce his claim against C, who purchases by a registered deed without notice of B's transaction. C's title is indefeasible. B's remedies lie exclusively against A: to sue for specific performance of the contract, to recover consideration paid under section 55(6)(b) of the Act, and to protect possession under section 53A of the Act if he has taken possession in part performance of the contract — though this last remedy operates only as a personal defence against A and cannot be enforced as a proprietary right against C.