Burden of proof lies with party disputing nature of transaction in registered sale deeds: Supreme Court

On 4 May 2023, Supreme Court of India has held, in Damodhar Narayan Sawale (D) through LRs Vs Shri Tejrao Bajirao Mhaske & Ors., that a registered sale deed carries a presumption of being a genuine transaction, and the burden of proving otherwise lies with the party disputing the nature of the transaction. The case involved a dispute between two defendants, one of whom sold land to the other and subsequently sold the same land to a third party. The second defendant disputed the nature of the transaction with the third party, claiming that the first sale was made as collateral for a money lending transaction.

The Court, in its judgment, noted that the sale deed in question was registered and its execution was not in dispute, which carried a presumption of genuineness. The burden was thus on the second defendant to prove that the transaction did not reflect the true nature of the sale. The Court also observed that since the second defendant had not disputed the sale of one acre of land to the plaintiff as per the sale deed, the other contentions raised by the second defendant against the plaintiff were inconsequential and unnecessary to be gone into.

The Court further held that the validity of the sale deed executed by the second defendant in favour of the first defendant was not an issue that could be raised by the second defendant against the first defendant in the subject suit, as it would amount to adjudication of a claim by way of counter-claim by one defendant against their co-defendant. The Court also noted that the first defendant had not disputed the sale of the land to the plaintiff, and had in fact admitted the joint execution of the sale deed and receipt of sale consideration.

In light of these observations, the Supreme Court set aside the judgment of the High Court, which had restored the decree of dismissal of the suit of the trial court and restored the judgment and decree of the Court of Additional District Judge, Buldana. The Court allowed the appeal with costs.

This judgment provides important guidance on the presumption of genuineness that attaches to registered sale deeds and highlights the burden of proof that lies with parties disputing the nature of such transactions.

Subject: Civil Law - Validity of sale deed - Challenge by co-defendant - Inter-se dispute on validity of sale deed between co-defendants - Admissibility of parol evidence to show contract was never intended to be acted upon - Registration and admission of execution of sale deed carrying presumption of genuineness - Burden of proof on party disputing nature of transaction in registered sale deed.

May 04.2023

Damodhar Narayan Sawale (D) through LRs Vs Shri Tejrao Bajirao Mhaske & Ors.