SC flags deficiencies, asks Law panel to examine blockchain technology for property registration

New Delhi: Flagging systemic deficiencies in colonial-era property laws, the Supreme Court on Friday batted for a nationwide reform by asking the Law Commission to prepare an extensive report and examine using the Blockchain technology for restructuring property registration process.

Blockchain technology creates a secure, transparent, and immutable digital ledger for all property transactions, which makes it tamper-proof and reduces fraud and also provides a single, verifiable source of truth for ownership history, making it easier and faster for buyers to verify a property’s title and for the system to process transactions through smart contracts.

The direction was issued in a landmark ruling by a bench comprising justices Pamidighantam Sri Narasimha and Joymalya Bagchi which struck down Bihar’s 2019 amendment empowering registering authorities to refuse registration of sale or gift deeds without proof of mutation or ‘jamabandi’ allotment.

“The constitutionally protected right to own immovable property inherently includes the freedom to freely acquire, possess and dispose of it at will. The efficiency and transparency with which immovable property is bought and sold is demonstrative of a nation’s institutional maturity and a testament of the confidence and trust its citizens repose in the integrity of its legal and transactional framework,” Justice Narasimha, who authored the 32-page verdict, said.

The verdict referred to the “long-sustained dichotomy between registration and ownership” in property laws and said, “the time has come to move towards a system in which the sale and purchase of immovable property becomes simpler, and registration serves as a conclusive proof of ownership guaranteed by the State.” On dichotomy, it said the Registration Act mandates the registration of documents, not titles, and this distinction forms the cornerstone of our country’s presumptive titling system.

“Since this presumption is rebuttable in a court of law, a substantial burden rests on the prospective buyer, who must undertake a painstaking search of title. There is no doubt that this uncertainty has been distressing for those seeking to purchase property,” it said, adding that disputes over property constitute nearly 66 percent of all civil litigation. Noting that existing laws, the Transfer of Property Act, the Stamp Act, and the Registration Act, reflect colonial-era constructs, the verdict observed that the country continues to operate under a “presumptive titling” system, where registration serves as evidence of a transaction but not conclusive proof of ownership.

It stressed the need to evolve toward a “conclusive titling system guaranteed by the State”, which would simplify property transactions and reduce litigation.

In a direction, it suggested that the Centre explore the use of Blockchain technology to create a tamper-proof, transparent, and unified digital land records system.

It noted that Blockchain’s immutability and traceability could help prevent fraudulent and multiple registrations and ensure public trust in ownership frameworks by maintaining verifiable, timestamped records of property transfers, encumbrances, and cadastral maps.

“Blockchain technology could address the structural fragility of India’s record-keeping system,” it said, adding that the technology could integrate cadastral maps, survey data, and revenue records into a single, publicly accessible framework. The verdict said the law panel should encompass existing legislations to recommend a regulatory and technological framework for integrating Blockchain in land registration. The impugned Bihar rules empowered registering officers to refuse registration of sale or gift deeds unless the seller could produce proof of ‘jamabandi’ or holding allotment, records of land mutation under the Bihar Land Mutation Act, 2011. The verdict held that these requirements were arbitrary, unreasonable, and impossible to fulfil, given that mutation and land survey processes in Bihar remain incomplete. It said the evidence revealed that 80 per cent of ‘jamabandis’ in Bihar remain in the names of ancestors, many of whom are long deceased, making compliance practically unworkable.

“The process of mutation and survey is nowhere near completion. Interlinking registration with jamabandi or holding allotment would illegally impede the right to buy and sell property and effectively deprive citizens of property,” it said.

The verdict came on a plea filed by a person named Samiullah, represented by lawyer Athenam Velan, against a Patna High Court judgement refusing to quash the 2019 rules that enabled registering authorities to refuse registration of sale or gift deeds without proof of mutation. The verdict reiterated the settled principle that mutation does not confer ownership but merely serves as an entry for fiscal purposes. It emphasised that title adjudication lies within the jurisdiction of civil courts, not with registering officers and therefore, conditioning registration upon mutation certification “transforms registration offices into tribunals of title”, contrary to the intent of the Registration Act. Setting aside the Patna High Court’s judgment that had upheld the 2019 Bihar amendment, it allowed appeals, quashing the Notification of October 10, 2019.

“We hold that the prescription of mentioning and producing jamabandi allotment or holding allotment as a precondition for registration of a legally presented document under sub-rules (xvii) and (xviii) of Rule 19 is arbitrary and illegal and as such, liable to be set aside,” it said.