Supreme Court moots blockchain reform for property registration; asks Law Commission for roadmap

The Supreme Court on Friday delivered a significant judgment that could reshape the way property transactions are recorded and verified in India. [Samiullah v. State of Bihar]

A Bench of Justices PS Narasimha and Joymalya Bagchi directed the Law Commission of India to study how blockchain technology can be used to restructure the property registration process and move towards a system of conclusive titling.

The Court observed that the time had come to simplify the sale and purchase of property and to align India’s laws with technological progress.

“The process may involve restructuring and reviewing our existing laws and may require introduction of new laws for incorporating Blockchain technology with necessary safeguards,” the Bench said.

It asked the Law Commission to consult the Union, the States and experts in information and technology before submitting its report.

Explaining the need for reform, the Court noted that India’s property laws have “long sustained a dichotomy between registration and ownership.” It said that while registration only creates a public record, it does not grant ownership, placing a heavy burden on buyers to conduct extensive title searches.

“Property disputes constitute nearly sixty six percent of all civil litigation,” the Court recorded, adding that the existing presumptive titling system has made property purchase complex and distressing for citizens.

The Bench pointed to the potential of technology to bridge this gap.

“Blockchain technology has garnered particular attention for its potential to transform land registration into a more secure, transparent and tamper-proof system,” it said.

The judgment added that blockchain could ensure “immutability, transparency and traceability,” while integrating cadastral maps, survey data and revenue records into a single verifiable framework accessible to both the authorities and the public.

The Court said that the reform process may require reviewing and harmonising several central laws, including the Transfer of Property Act, 1882, the Registration Act, 1908, the Indian Stamp Act, 1899, the Evidence Act, 1872, the Information Technology Act, 2000 and the Data Protection Act, 2023.

The Bench stated that a unified legal framework could bring integrity and efficiency to India’s fragmented system of property records.

"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.”

The judgment was passed in a challenge to amendments to Rule 19 of the Bihar Registration Rules, 2002, which empower registering authorities to refuse registration of documents if proof of mutation of the property under sale in favour of the vendor is not produced along with the registering document. While setting aside the amendments, the Court held,

"...the said sub-rules tilt the balance and empower the registering authorities to produce collateral evidence of title to the property as a pre-condition for registration, such a measure, through subordinate legislation, is also against the purpose and object of the Act."

The Bench found that the rules forced citizens to produce collateral evidence of title, something the Act does not require. It also noted that Bihar’s process of survey and settlement was “nowhere near completion,” making such conditions unworkable.

In its judgment, the Court questioned the complexity of property transactions in India, observing that the constitutionally protected right to own immovable property inherently includes the freedom to freely acquire, possess and dispose it at will. It noted,

"Rather curiously, our property laws have long sustained a dichotomy between registration and ownership. The Registration Act, 19081 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 then asked whether 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. To this end, it said,

"Blockchain technology has garnered particular attention for its potential to transform land registration into a more secure, transparent and tamper-proof system. It is suggested that adoption of Blockchain technology would ensure immutability, transparency and traceability, thereby minimizing fraud and unauthorized alterations."

It thus urged the Central government to leverage technology for integrating the property registration regime with conclusive titling.

Senior Advocate Manan Kumar Mishra and Advocate A Velan appeared for the appellants.

Senior Advocate Ranjit Kumar, assisted by Advocate Manish Kumar, appeared for the State of Bihar.

[Read Judgment]