ASSIGNMENT OF SPECIFIC DECREE DOES NOT REQUIRE REGISTRATION

In a Civil Suit a person may file a suit in a Civil Court for recovery of money against the other person who obtained amount as loan etc. The Civil Court may, after hearing both the parties may pass a decree in favour of the plaintiff for the said amount. The plaintiff may execute the decree against the defendant, if he fails to pay the amount to the plaintiff.

The issue to be discussed in this article is as to whether the decree can be assigned to a third person and if so whether it is to be registered under the Registration Act, with decided case laws.

According to the Indian Contract Act, contractual obligations which are in personal nature cannot be assigned. Otherwise, the decree may be assigned to the third party. The assignee can execute the decree. Whether such assignment is to be registered? The answer is given by the Supreme Court in Rajeswari & Ors. Versus Shanmugam & Anr. - 2025 (11) TMI 1187 - Supreme Court.

In case of an immovable property and its value is more than Rs.100/- then it requires compulsory registration. According to Section 17(1)(e) and (f) of the Registration Act the assignment and transfer of the decree relating to immovable property of the value of Rs. 100/- and upwards is compulsorily registrable.

In the above said case an ex-parte order was passed against the predecessor of the appellant by the First Sub Court, Erode, Tamil Nadu. The first defendant in this case claimed to be the assignee of the decree dated 13.09.1993 passed by the Sub Court, Erode. The assignment deed was executed on 17.07.1995. The assignee filed an execution petition seeking to recognise the assignment and also for directions to execute the sale deed and deliver the possession of the property to him. The Executing Court ordered the execution of sale deed in favour of the assignee, the first respondent in this case.

The appellants, who are the legal heirs of the deceased judgment debtor, filed an Execution Application under Section 47 of the Civil Procedure Code on 31.10.2009 with the prayer to set aside the sale deed dated 13.03.2008 which is in favour of the first respondent. The appellants also made a prayer to dismiss the execution petition filed by the assignee on the ground that the assignment has not been registered properly under the Registration Act which is not enforceable under the law.

The Executing Court allowed the application filed by the appellants. The Court allowed the application and held that it is required to register the assignment of loan. The respondent filed a review petition before the High Court. The High Court allowed the revision petition. The High Court held that what has been assigned by the decree holder was only a right to derive benefits from the decree passed by the Court and nothing more and as such the deed of assignment was not compulsorily registrable.

The appellant, therefore, filed the present appeal before the Supreme Court. The appellant submitted the following before the Supreme Court-

• The assignment of decree is compulsorily registrable when the decree purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of Rs.100/- and upwards, to or in immovable property.
• The Executing Court has rightly held that the assignment and transfer of the decree relating to the immovable property of the value of Rs.100/- and more is compulsorily registrable.
• Since the assignment was not registered the same is not having value at all.
• A decree passed in a suit for specific performance of a sale agreement on immovable property creates an interest in the immovable property.
• If the assignment of the decree of specific performance is not registrable, parties will get a specific performance decree and instead of executing a sale deed, they will assign the decree multiple times for 12 years thereby they can avoid the registration charges which will defeat the purpose and object of the provisions of the Registration Act, 1908.

The respondent no. 1 submitted the following before the Supreme Court-

• The decree itself does not create or transfer any right as regards the suit property but only confers a right to obtain sale through the process of law.
• The assignment of a decree for specific performance does not require registration.
• Upon passing of a decree for specific performance the contract between the parties is not extinguished; that the parties to the contract continue to bear their rights and obligations to complete the contract in accordance with the terms and conditions of the contract; that the decree is subject to the further process, up to the stage of execution of the sale deed and its registration.
• The grant of specific performance is an equitable relief and merely because a decree for specific performance is passed, it cannot be presumed that a decree-holder is bound to get the sale deed executed in his favour.
• A decree for specific performance does not elevate the status of a decree-holder to that of an owner since no right, title or interest in or charge on the immovable property is created in favour of the decree holder.

The Supreme Court considered the submissions of the parties to the present appeal. The Supreme Court gone through the original documents obtained from the High Court and the translated copy of the assignment deed and gone through the same.

The Supreme Court observed that neither an agreement of sale nor a decree passed on the basis of specific performance of the contract gives any right or title to the decree holder and the right and title passes to him only on the execution of the deed of sale either by the judgment debtor himself or by the Court itself in case the judgment debtor fails to execute the sale deed.

The Supreme Court noticed that the fundamental principle that with the passing of a decree of the specific performance, the contract between the parties is not extinguished. Section 28 of the Specific Relief Act, 1963, statutorily recognizes this principle with regard to contracts for the sale or lease of immovable property, the specific performance.

Then the Supreme Court analysed the scope of Section 17(1)(e) of the Registration Act, 1908. The Supreme Court observed that it will be clear that what this section prescribes is that registration is mandatory only for non-testamentary instruments transferring or assigning any decree or order of a Court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property. In the present case the decree itself which is for specific performance does not create or purport to create any right, title or interest in any immovable property. Therefore, the question of registering an instrument assigning such a decree cannot arise.

The Supreme Court upheld the order passed by the High Court and dismissed the appeal.