Kabja Property Opinion:

1. There is only transfer of interest in the property, and not transfer of title of the Property.
2. The transfer of interest is being carried by way of unregistered agreement/deed between the parties on Rs. 100/- non judicial stamp paper, and the same is being notarised with the public notary.
3. No registered sale deed/conveyance deed is being executed between the parties for transfer of rights and title of the property.

Now, That the Apex Court of India has clearly pronounced in Suraj Lamps & Industries Pvt. Ltd. v State of Haryana that immovable property can be lawfully transferred/conveyed only by a registered deed of conveyance. Where the deed is not registered, there is no transfer, and property does not pass.

Mere delivery of the deed will not operate as delivery of the property, nor in the recital in the sale deed of delivery of possession suffice, for such a recital might be inserted without any attempt at fulfilment. However, if the unregistered deed of value less than Rs. 100/- is accompanied by delivery of the property, the sale would be effective by virtue of delivery of possession, and would not be rendered nugatory by the unregistered deed.

Kabja property would not create a valid mortgage (whether equitable or registered), and we cannot securitized/invoked, in case of default by the Borrower/Security Provider. If this will be the only security from the Borrower for the loan facility, then such loan facility shall be treated as unsecured loan only.