Karnataka High Court: Unregistered Sale Agreement Does Not Create Ownership
Court upholds ED’s attachment of Kingfisher Towers flat as proceeds of crime in Vijay Mallya case
Ruling clarifies property law and strengthens anti-money laundering enforcement in India
By Our Legal Correspondent
New Delhi: November 22, 2025:
In a landmark judgment delivered on 14 November 2025, the Karnataka High Court ruled that an unregistered agreement to sell does not confer ownership rights on the buyer. The Court upheld the Enforcement Directorate’s (ED) attachment of a luxury flat in Kingfisher Towers, Bengaluru, linked to fugitive businessman Vijay Mallya, declaring it as proceeds of crime under the Prevention of Money Laundering Act (PMLA), 2002.
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The ruling has major implications for property transactions across India, reinforcing the principle that ownership of immovable property arises only upon execution and registration of a valid sale deed.
Background of the Case
The dispute centred around an 8,321 sq. ft. flat in Kingfisher Towers, developed jointly by United Breweries (Holdings) Ltd (UBHL) and Prestige Estate Projects Ltd. Businessman Rajendrakumar Jain claimed he had paid ₹18.4 crore in 2011 under an agreement to sell and was therefore the rightful owner.
However, in 2015, the Central Bureau of Investigation (CBI) registered cases against Vijay Mallya, Kingfisher Airlines, and UBHL for bank fraud involving loans worth over ₹9,200 crore. The ED subsequently attached the flat in 2016 as part of its money laundering probe.
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Jain challenged the attachment, arguing that his agreement to sell gave him ownership rights. The Appellate Tribunal (PMLA) initially quashed the ED’s order in 2019. The ED appealed to the Karnataka High Court, which has now restored the attachment.
Key Observations of the Court
- Agreement to sell ≠ ownership: The Court held that a mere agreement to sell, even if followed by payment, does not transfer ownership. Title remains with the seller until a registered sale deed is executed.
- Attachment lawful: The ED’s attachment of the flat was declared lawful under Section 42 of the PMLA.
- Buyer has no legal title: Jain was found to have no ownership rights, as his agreement was unregistered.
- Property as proceeds of crime: The Court ruled that the flat was linked to bank fraud and constituted proceeds of crime.
- Doctrine of registration reinforced: The judgment reaffirmed that registration is mandatory for transfer of immovable property under the Registration Act, 1908.
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Why This Matters
This ruling is significant for several reasons:
- Property law clarity: It reinforces that unregistered agreements cannot confer ownership rights.
- Anti-money laundering enforcement: Strengthens ED’s powers to attach properties linked to financial crimes.
- Investor caution: Warns buyers against relying solely on agreements to sell without registering sale deeds.
- Bank recovery efforts: Supports ongoing efforts to recover over ₹17,000 crore owed by Mallya’s group to banks.
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Impact on Property Buyers
- Legal risk: Buyers relying on unregistered agreements risk losing property rights.
- Mandatory registration: Reinforces the need to execute and register sale deeds to secure ownership.
- Due diligence: Encourages stricter verification of property titles before purchase.
Impact on Enforcement Agencies
- Strengthened authority: ED’s powers under PMLA to attach properties linked to financial crimes are reinforced.
- Judicial backing: Provides legal clarity for future attachments in high-profile fraud cases.
- Deterrence: Sends a strong message against attempts to shield properties through unregistered agreements.
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Expert Reactions
Legal experts hailed the ruling as a landmark in property and financial law.
- Senior advocates noted that the judgment closes loopholes often exploited in real estate transactions.
- Academics highlighted that the ruling strengthens India’s anti-money laundering framework.
- Banking sector representatives welcomed the decision, saying it supports recovery of public funds lost in frauds.
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Broader Context
The case is part of India’s ongoing efforts to recover assets linked to Vijay Mallya, who fled to the UK in 2016 amid charges of bank fraud and money laundering. Mallya’s companies, including Kingfisher Airlines, defaulted on loans worth thousands of crores, leading to multiple investigations by the CBI and ED.
The Karnataka High Court’s ruling aligns with earlier Supreme Court judgments that emphasised the importance of registration in property transactions. It also strengthens India’s compliance with global anti-money laundering standards.
Conclusion
The Karnataka High Court’s ruling that unregistered agreements do not create ownership rights is a landmark in property and financial law. By upholding the ED’s attachment of the Kingfisher Towers flat, the Court has reinforced the principle that ownership arises only through registered sale deeds and strengthened India’s fight against financial crimes.
This verdict protects property law integrity, supports bank recovery efforts, and warns buyers against shortcuts in real estate transactions. It marks a decisive step towards transparency and accountability in India’s property market.
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