INTRODUCTION
In November 2021, a plot of “land” in the metaverse platform Decentraland reportedly sold for about 2.43 million US dollars, a price comparable to luxury property in major cities.[1] Platforms like Decentraland and The Sandbox have turned pixels into plots, with ownership represented by Non-Fungible Tokens (NFTs) on a blockchain. For Indian law, which still categorizes property through 19th-century categories, this raises the question of whether “digital land” can ever be treated as immovable property under the Transfer of Property Act, 1882 (TPA), or is it merely another species of movable “goods”?[2]
IS VIRTUAL LAND “GOODS” OR “PROPERTY”?
Section 2(7) of the Sale of Goods Act, 1930 defines “goods” as every kind of movable property other than actionable claims and money.[3] Indian courts have struggled to decide whether software and digital products even fit this concept[4], but the Supreme Court resolved this ambiguity in Tata Consultancy Services v State of Andhra Pradesh.[5] The Court treated canned software as “goods” because it has utility, can be bought and sold, and can be transmitted, transferred, stored, and possessed.
NFT-based “land” is essentially code on a blockchain, a token representing a unique coordinate in a virtual world and conferring control over what is built there. On a straightforward extension of TCS, such a token is clearly movable, transferable, and capable of possession in the legal sense, which strongly supports classifying it as “goods” or at least as movable/intangible property.[6]
Yet something about that classification feels incomplete. The market value of virtual plots depends heavily on “location,” such as being placed near a popular virtual venue or brand experience, mimicking the “location, location, location” logic of physical real estate. Treating it purely as a generic movable risks ignoring the spatial, exclusionary, and planning-like features that draw investors into “virtual real estate” in the first place.
THE IMMOVABLE PROPERTY THRESHOLD
The TPA does not define “immovable property” in positive terms. Section 3 simply states that it “does not include standing timber, growing crops or grass”.[7] To fill the gap, courts rely on Section 3(26) of the General Clauses Act, 1897, which defines “immovable property” to include land, benefits to arise out of land, and things attached to the earth or permanently fastened to anything attached to the earth.[8][9]
The Supreme Court, in its rulings, has fleshed out “immovable property” by emphasising physical permanence and site-specific benefits. In Shantabai v State of Bombay[10], quarry leases were assessed for their intended attachment to land. Ananda Behera v State of Orissa[11] classified an exclusive fishing right over a lake as a “benefit arising out of land”[12] being inseparable from the physical water body and terrain, and without that tangible substrate, the right had no existence. Virtual land, as mutable data on distributed servers, lacks this materiality and cannot meet the threshold.
Virtual land fails this physicality requirement at several levels. It sits on servers distributed across jurisdictions, and the data itself can be copied, migrated, or even deleted by the platform, which makes both the “attachment to the earth”[13] and the “benefit arising out of land” concepts difficult to apply directly. At best, one could argue that there is a “benefit arising out of” a digital ecosystem. Still, current Indian jurisprudence has not extended immovable-property logic to purely digital spaces with no physical substrate.
WHY REGISTRATION AND TITLE DON’T MAP ONTO THE BLOCKCHAIN
Even if a court were to expand on the concept and recognise virtual land as immovable property, serious conflicts with registration law would immediately arise.[14] Section 54 TPA requires a sale of immovable property valued above ₹100 to be effected by a registered instrument[15], which must then be registered under Section 17 of the Registration Act, 1908.[16]
However, metaverse “sales” are executed via smart contracts that are a self-executing code on a blockchain that transfers the NFT from the seller’s wallet to the buyer’s wallet once payment is confirmed. No deed is registered with an Indian sub-registrar, no stamp duty is paid under state law, and the only fee involved is a “gas fee” paid to miners or validators.
Under Section 49 Registration Act, an unregistered document that is required to be registered cannot affect immovable property or be received as evidence of such a transaction, subject to exceptions.[17] If virtual land were reclassified as immovable, most current NFT transfers would immediately fall foul of this rule, leaving buyers with control over a token but no registrable title that an Indian court could recognise as ownership. The blockchain would record control, but the state’s property system would see nothing.[18]
SMART CONTRACTS: VALID CONTRACT, SHAKY PROPERTY
Section 10 of the Indian Contract Act, 1872 has laid down that the basic requirements for a valid contract include free consent, lawful consideration, and a lawful object.[19] The Supreme Court in Trimex International FZE Ltd v Vedanta Aluminium Ltd decided that binding contracts can be concluded via an exchange of emails or other electronic communications, even in the absence of a signed formal agreement.[20]
This position is reinforced by Section 10A of the Information Technology Act, 2000, which expressly provides that a contract is not unenforceable merely because electronic records were used in its formation.[21] NFTs bought via smart contracts therefore rest on a valid contractual foundation, provided the usual elements of offer, acceptance, and consideration are present.
What remains uncertain is not the existence of a contract but the type of relief a court will grant. If virtual land is treated as movable/intangible property, the natural remedy for a breach is damages, and possibly specific performance of delivery of the token, but not real-estate-style claims such as declaratory title under TPA or suits under the special jurisdiction rules for immovable property.
JURISDICTION: WHERE IS THE “LAND” LOCATED?
Section 16 of the Code of Civil Procedure, 1908 requires suits about immovable property to be filed where the property is situated, reflecting the classic lex situs rule.[22] In a metaverse scenario, however, the buyer might be in Mumbai, the seller in Singapore, and the platform’s servers distributed between the United States and Europe. There is no obvious “situs” inside India for the virtual plot.[23]
In cyber disputes, Indian courts have gravitated toward Section 20 CPC [24](place where defendant resides or cause of action arises)[25] and a “purposeful availment” test for websites, as seen in Banyan Tree Holding (P) Ltd v A Murali Krishna Reddy.[26] These decisions suggest that if a metaverse platform or seller targets Indian users and concludes transactions with them, an Indian court can assume jurisdiction even when the data and servers are elsewhere.
Enforcement of this is still very fragile. Getting an Indian decree implemented against foreign-hosted servers or a foreign-incorporated platform will usually depend on foreign law and cross-border cooperation, which Indian decisions cannot guarantee on their own.
TAXATION WITHOUT FULL LEGAL RECOGNITION
While property doctrine hesitates, tax law has moved fast. Finance Act 2022 inserted Section 2(47A) into the Income-tax Act[27], defining “virtual digital asset” to include crypto tokens and NFTs, and Section 115BBH now imposes a flat 30% tax on income from the transfer of such assets.[28] Guidance on virtual digital assets makes it clear that NFTs representing virtual land fall within this broad category, so gains from selling Decentraland plots to Indian tax residents are taxable in India even if property law does not treat them as “land”.
Policy explanations around these provisions also emphasise that taxing something does not automatically confer legal or regulatory recognition beyond tax law.[29] As a result, virtual land is an “asset” for the taxman but largely invisible to the registrar or the TPA’s structure.
CONCLUSION
TPA, read with the General Clauses Act and classical Supreme Court decisions on immovable property, presupposes a physical substrate: land, water, things attached to the earth, and benefits arising from it. Virtual land, by contrast, is an entry in a distributed ledger controlling what can be displayed or built at a particular coordinate in a platform’s database.
Under current Indian law, it is therefore more defensible to treat virtual land as a species of movable/intangible property or “goods” governed by the Sale of Goods Act, the Contract Act, and, for some disputes, the IT Act, rather than as immovable property under the TPA. That leaves investors in a somewhat paradoxical position: they hold assets that are taxed like high-value investments but lack the robust, territorially anchored protections of classical real estate law.
In the long run, trying to force such assets into 19th-century categories is likely to generate more confusion than clarity. A more coherent response would be a sui generis “digital property” regime that recognises the permanence and transferability of blockchain-based rights without insisting that they be “attached to the earth,” while building in jurisdiction, consumer-protection, and enforcement rules tailored to borderless platforms.[30] Until such a framework emerges, however, virtual real estate will remain, legally speaking, closer to software licences and digital tokens than to land.
Author(s) Name: Purvi S Jain (Jindal Global Law School, O.P. Jindal Global University)
References:
[1] ‘Virtual real estate plot sells for record $2.4 million’ (Reuters, 23 November 2021) <https://www.reuters.com/markets/currencies/virtual-real-estate-plot-sells-record-24-million-2021-11-23/> accessed 11 December 2025
[2] Transfer of Property Act 1882
[3] Sale of Goods Act 1930, s 2(7)
[4]‘Service Tax on Software Upheld’ (IndiaCorpLaw, 2 September 2010) <https://indiacorplaw.in/2010/09/02/service-tax-on-software-upheld/> accessed 12 December 2025
[5] Tata Consultancy Services v State of Andhra Pradesh (2005) 1 SCC 308
[6] Shreyas Jain, ‘Ownership Rights in the Metaverse: A Case for Digital Property Law Reform in India’ (2023) 32(3) Indian Journal of Legal Studies 175
[7] Transfer of Property Act 1882, s 3
[8] Soli J Sorabjee (ed), Mulla: The Transfer of Property Act (14th edn, LexisNexis 2023) Commentary on s 3, ‘Immovable Property’
[9] General Clauses Act 1897, s 3(26)
[10] Shantabai v State of Bombay AIR 1958 SC 532
[11] Ananda Behera v State of Orissa AIR 1956 SC 17
[12] General Clauses Act 1897, s 3(26)
[13] Transfer of Property Act 1882, s 3
[14] V Lakshmikumaran and V Sridharan, ‘Blockchain and the Law: The Indian Perspective’ (2021) 13(2) Nalsar Law Review 54
[15] Transfer of Property Act 1882, s 54
[16] Registration Act 1908, s 17
[17] Registration Act 1908, s 49
[18] Primavera De Filippi and Aaron Wright, Blockchain and the Law: The Rule of Code (Harvard University Press 2018) 32–34
[19] Indian Contract Act 1872, s 10
[20] Trimex International FZE Ltd v Vedanta Aluminium Ltd (2010) 3 SCC 1 (SC)
[21] Information Technology Act 2000, s 10A
[22] Code of Civil Procedure 1908, s 16
[23] Anirudh Rastogi, Cyber Law: Law of Information Technology and Internet (2nd edn, LexisNexis 2021) 482–485.
[24] ibid
[25] Code of Civil Procedure 1908, s 20
[26] Banyan Tree Holding (P) Ltd v A Murali Krishna Reddy 2008 SCC OnLine Del 1882
[27] Income-tax Act 1961 s 2(47A), inserted by the Finance Act 2022
[28] Income-tax Act 1961, s 115BBH
[29] Nirmala Sitharaman, ‘Speech of the Minister of Finance introducing the Budget for 2022-2023’ (1 February 2022) <https://www.indiabudget.gov.in/doc/bspeech/bs202223.pdf> accessed 12 December 2025
[30] Law Commission, Digital Assets: Final Report (Law Com No 411, 2023)
