1. Cancellation of the Sale Transaction
If a land sale is found to be illegal due to lack of ownership rights, fake documentation, or prohibited transfers, the sale can be:
- Declared null and void by the relevant revenue or judicial authority
- Revoked by the Sub-Registrar if identified during or after registration
- Subject to restoration of possession to the rightful owner
This results in the loss of land, money, and legal standing for the buyer.
2. Criminal Proceedings Against the Seller
Selling land fraudulently or without proper authorization may invite criminal charges under:
- Indian Penal Code Sections 420 (Cheating), 468 (Forgery), and 471 (Using forged document)
- Charges of criminal breach of trust or misrepresentation
- Arrest, prosecution, and possible imprisonment ranging from 2 to 7 years
Criminal liability can extend to agents, intermediaries, or legal representatives involved in the illegal transaction.
3. Imposition of Fines and Penalties
State governments may impose heavy monetary fines for violating land sale rules, such as:
- Selling agricultural land to non-farmers in states with restrictions
- Transferring land under litigation or without conversion approval
- Failure to obtain necessary NOCs or clearances
Penalties can include fixed statutory fines or percentage-based penalties on the transaction value.
4. Land Reversion or Seizure by Government Authorities
In cases where land is:
- Assigned by the government for specific purposes (e.g., SC/ST, industrial, or institutional use)
- Under ceiling, environmental, or forest protection laws
Illegal sale may lead to seizure or reversion of land back to the government, and any construction or development may be demolished without compensation.
5. Civil Litigation and Compensation Claims
Illegal land sales often lead to civil suits filed by:
- Genuine landowners, co-owners, or legal heirs
- Buyers defrauded by the seller or agents
- Third-party claimants disputing the transaction
The seller may be ordered to return the purchase amount with interest, pay compensatory damages, or face attachment of assets.
6. Disqualification from Future Transactions
Individuals or entities involved in illegal land deals may be:
- Blacklisted by industrial development authorities or land regulatory bodies
- Disqualified from future auctions, leases, or land allotments
- Restricted from accessing financial aid or institutional financing
This impacts their credibility and limits participation in formal land markets.
7. Stamp Duty and Registration Penalties
If a sale is conducted without proper stamp duty payment or by misrepresenting the transaction type, penalties may include:
- Up to 10 times the shortfall in stamp duty
- Additional registration cancellation charges and interest
- Legal proceedings under the Indian Stamp Act and Registration Act
This also results in potential disqualification of the document from being used as valid proof of ownership.
