Unregistered Agreement Of Sale Entered Before Attachment Cannot Defeat Decree-Holder’s Claim: Andhra Pradesh High Court

"To attract sub-section (2) of Section 64 C.P.C, the private transfer or delivery of the attached property or of any interest thereon must have been made pursuant to any contract of transfer entered into and registered before the attachment." Andhra Pradesh High Court, in a significant ruling dated April 16, 2026, held that an unregistered agreement of sale, even if it predates a court-ordered attachment, cannot protect the property from being attached under Section 64 of the CPC.

A bench of Justice Ravi Nath Tilhari and Justice Balaji Medamalli observed that to claim the protection of Section 64(2) of the Code of Civil Procedure, a contract for transfer must be both "entered into and registered" before the attachment takes place.

The appellant filed a claim petition under Order XXI Rule 58 CPC seeking to raise an attachment over a property in Rajamahendravaram, citing an agreement of sale from 2018. The 1st Respondent, a decree-holder, had attached the property in June 2019 to realize an arbitral award. The appellant contended that his rights under the prior agreement prevailed over the subsequent attachment.

The primary question before the court was whether an unregistered agreement of sale entered into before an attachment could satisfy the requirements of Section 64(2) of the CPC. The court was also called upon to determine if a Lok Adalat award obtained by the claimant against the judgment debtors would bind a decree-holder who was not a party to those proceedings.

The Mandatory Twin Conditions Of Section 64(2) CPC

The Court undertook a detailed analysis of Section 64 of the CPC, which governs private alienations of property after attachment. The bench noted that while Section 64(1) generally renders private transfers after attachment void against claims enforceable under the attachment, Section 64(2) provides a specific exception for transfers made pursuant to prior contracts.

"Entered Into And Registered" Requirement Is Non-Negotiable

The bench emphasized that the 2002 amendment to the CPC introduced a critical phrase to sub-section (2). The Court observed that for a transfer to be saved from being declared void, it must be made in pursuance of a contract that was both entered into and registered before the date of attachment.

The judges noted that in the present case, the alleged agreement of sale dated June 4, 2018, was not a registered document. They held that an unregistered agreement fails to meet the statutory threshold required to defeat an attachment, regardless of whether it was executed chronologically before the court's order.

"A perusal of Section 64 C.P.C makes it evident that to attract sub-section (2)... the contract of transfer must have been entered into and registered before the attachment."

Adverse Inference Drawn From Non-Production Of Agreement

The Court expressed serious concern over the fact that the appellant never actually produced the original agreement of sale before the Executing Court or the High Court. The bench remarked that the appellant and the judgment debtors were closely related and that the subject property was adjacent to the appellant’s existing house.

The bench held that the failure to produce the document, combined with the close relationship between the parties, indicated an attempt to defeat the decree-holder’s legitimate claims. The Court observed that the conduct of the parties reflected adversely on the genuineness of the transaction.

Lok Adalat Awards Cannot Bind Non-Party Decree Holders

Regarding the Lok Adalat award obtained by the appellant in a suit for specific performance against the judgment debtors, the Court held it had no bearing on the decree-holder's rights. Since the 1st Respondent (the decree-holder) was not a party to that suit or the Lok Adalat settlement, the resulting award could not be used to prejudice their interest in the attached property.

The bench clarified that while a Lok Adalat award has the force of a decree between the parties involved, it cannot be used as a tool to bypass the statutory protections granted to an attaching creditor under Section 64 of the CPC.

"The 1st respondent/D.Hr, was not party to the proceedings before the Lok Adalat... accordingly, the award passed by the Lok Adalat was held not to be binding on the D.Hr."

No Interest Created In Property Without Registration

Invoking Section 54 of the Transfer of Property Act, 1882, the Court reiterated that a mere agreement of sale does not, of itself, create any interest in or charge on such property. The bench held that without a registered instrument, the appellant could not claim a superior title that would necessitate raising the attachment.

The Court concluded that the Executing Court was correct in dismissing the claim petition, as the unregistered agreement offered no legal shield against the attachment. The bench found no illegality or irregularity in the lower court's refusal to release the property from the execution proceedings.

The High Court dismissed the appeal, confirming that the attachment levied in 2019 remains valid. The ruling clarifies that post-2002, the protection of Section 64(2) CPC is strictly reserved for those who have registered their prior contracts of sale.

Date of Decision: 16 April 2026