This case is based on question that whether unregistered sale deed or mere agreement to sell can serve the purpose of valid sale.
This case starts with the story that a Bank granted a cash credit facility of Rs. 2.25 crores to the company M/s. Mahaganesh Texpro Private Limited. The directors of this company Shri. Dillon P. Shah and Smt. Shivangi P. Shah stood surety for the repayment of the cash credit facilities. When the company did not repaid the amount of Rs. 2,98,94,363/- along with interest due to the Bank,a final recovery notice was issued by the Assistant Registrar of the Cooperative Societies and they initiated proceedings against the company and the sureties Sh. Dhillon P. Shah and Smt. Shivangi P. Shah for recovery of the amount. Demand notice was also sent to the Company and also to THE PARTIES. As per the notice both the properties namely flat No. 12/5 Gopal Bhuvan, New Shrinath Kunj Co-operative Housing Society Bapubhai Vash Road, Ville Parle (West) Mumbai and bungalow owned by Smt. and Sh. Dhillon P. Shah wereto be attached and sold for recovery of the dues of the Bank. Both the properties were attached and the bungalow was sold for a sum of Rs. 1.6 crores.
A third person Nagraj Ganeshmal Jain claimed ownership of the Flat No. 12/5 Gopal Bhuvan, New Shrinath Kunj Co-operative Housing Society Bapubhai Vash Road, Ville Parle(West) Mumbaion the ground that Late sh. Dhillon was not able to pay back the loan granted by him hence Sh. Dhillon signed an agreement to sell of the said property of which the stamp duty was also paid. Moreover he challenged the attachment order of the suit property on the ground that he had purchased the flat through agreement dated 04.10.1995 and was in possession of the same from 12.04.1996. The court held that an agreement to sell is not complete if it is not registered. Even one can take its defense only if the document is registered and not otherwise. Hence the claim of Nag raj Ganesh mal Jain is rejected and cannot claim the membership of the suit premises.