Hemalatha (D) by LRs v. Tukaram (D) by LRs & Ors.

  

A registered sale deed cannot be lightly declared sham; strong presumption of validity attaches, rebuttable only by clear pleadings and cogent proof, and not by vague allegations or subsequent conduct.

 

Background

Tukaram executed a registered Sale Deed dated 12.11.1971 in favour of Hemalatha for ₹10,000, followed by a registered Rental Agreement under which Tukaram continued in possession as tenant. After eviction proceedings were initiated for default in rent, Tukaram filed a civil suit seeking declaration that the sale deed and rental agreement were sham and nominal, contending that the transaction was in substance a loan/mortgage. The Trial Court decreed the suit; the First Appellate Court reversed it; the High Court restored the Trial Court’s decree. The purchasers appealed.

 

Issues Framed

1. What is the legal threshold for declaring a registered sale deed to be sham or nominal?
2. Whether oral evidence was admissible to contradict the clear terms of a registered sale deed in view of ss. 91–92 IEA.
3. Whether the transaction amounted to a mortgage by conditional sale under s. 58(c) TPA.
 

Court’s Reasoning

(i) Presumption of Validity of Registered Instruments

• A registered sale deed carries a strong presumption of validity and genuineness; registration is a solemn act andnot a mere formality.
• The burden lies heavily on the party alleging sham nature to rebut this presumption with clear, cogent, and convincing evidence.

(ii) Pleading Standard and s. 92 IEA

• Mere assertions that a document is “sham” are insufficient. Pleadings must satisfy a standard akin to Order VI Rule 4 CPC, with material particulars; clever drafting creating an illusion of cause of action is impermissible.
• Oral evidence is not admissible to contradict clear and unambiguous terms of a registered deed under ss. 91–92 IEA, unless fraud, coercion, lack of capacity, or absence of consideration is specifically pleaded and proved.

(iii) No Mortgage by Conditional Sale

• For s. 58(c) TPA to apply, the condition of reconveyancemust be embodied in the same document effecting the sale. The impugned sale deed contained no such condition.
• The transaction therefore could not be treated as a mortgage by conditional sale.

(iv) Conduct and Contemporaneous Documents

• Execution of a registered rental agreement, payment of rent for fourteen months, symbolic delivery of possession recorded in the sale deed, and absence of any immediate demand for reconveyance undermined the plea of sham.
• Alleged inadequacy of consideration, without proof of no consideration, does not invalidate a sale.
 

Decision 

• The appeal was allowed.
• The High Court judgment was set aside, and the registered sale deed upheld as a bona fide, outright sale.
 

Ratio 

A registered sale deed enjoys a strong presumption of validity, and courts must not declare it sham or nominal absent strict pleadings with material particulars and compelling evidence rebutting that presumption; oral evidence cannot be used to contradict its clear terms under ss. 91–92 IEA, nor can it be treated as a mortgage by conditional sale unless the statutory condition under s. 58(c) TPA is embodied in the deed itself

 

Case Details

• Citation: 2026 INSC 82
• Decided on: 22 January 2026
• Case Title: Hemalatha (D) by LRs v. Tukaram (D) by LRs & Ors.
• Court: Supreme Court of India
• Bench: Manmohan, J.

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