2018 (7) TMI 2354 - SC - Indian Laws

Unregistered sale agreements admissible as evidence under Section 49 proviso despite Section 53A restrictions

SC allowed appeal in specific performance suit involving unregistered sale agreement. Court held unregistered agreements to sell immovable property can be ... Admissibility of unregistered agreements to sell as evidence - Suit for relief of specific performance of contract with alternative relief of refund of advance amount and permanent injunction against the Defendants was questioned - whether the suit agreement dated 9th July 2003, on the basis of which relief of specific performance has been claimed, could be received as evidence as it is not a registered document? - HELD THAT:- The document containing contract to transfer the right, title or interest in an immovable property for consideration is required to be registered, if the party wants to rely on the same for the purposes of Section 53A of the 1882 Act to protect its possession over the stated property. If it is not a registered document, the only consequence provided in this provision is to declare that such document shall have no effect for the purposes of the said Section 53A of the 1882 Act. The issue is no more res integra. In S. Kaladevi v. V.R. Somasundaram and Ors., [2010 (4) TMI 1184 - SUPREME COURT] this Court has re-stated the legal position that when an unregistered sale deed is tendered in evidence, not as evidence of a completed sale, but as proof of an oral agreement of sale, the deed can be received as evidence making an endorsement that it is received only as evidence of an oral agreement of sale under the proviso to Section 49 of the 1908 Act. Reverting to the registered General Power of Attorney, the same has been executed by the original Defendant No. 1 -predecessor in title of Respondent Nos. 1 & 2 (Defendant Nos. 3 & 4), in favour of Respondent No. 3 (Defendant No. 2). Being a registered document, in our opinion, the Trial Court was justified in observing that there is a legal, rebuttable presumption that the same has been duly stamped. As observed by the Trial Court, the question as to whether the document is hit by the provisions of the 1882 Act or the 1899 Act can be decided after the parties adduce oral and documentary evidence. The High Court, therefore, should have stopped at that instead of analysing the said instrument by invoking the principle of incorporation by reference to the agreement to sell dated 12th November, 1995. The Trial Court was right in overturning the objection regarding marking and exhibiting these documents as urged by Respondent Nos. 1 & 2 (Defendant Nos. 3 & 4), while making it clear that the question regarding the genuineness, validity and binding nature of the documents, including as to whether it is hit by the provisions of 1882 Act or the 1899 Act, as the case may be, would be decided at the appropriate stage. This appeal ought to succeed by restoring the order of the Trial Court dated 1st June, 2016 in the above terms. The Trial Court shall decide all other issues concerning the validity, genuineness, applicability and binding nature of the documents including whether it is hit by the provisions of the 1882 Act or the 1899 Act on its own merits and uninfluenced by the observations made by it or by the High Court - Appeal allowed. Issues Involved:1. Admissibility of unregistered agreements to sell as evidence.2. Validity of the General Power of Attorney executed on insufficient stamp duty.3. Applicability of Section 17(1A) of the Registration Act, 1908.4. Effect of non-registration under Section 49 of the Registration Act, 1908.5. The power of the court to impound insufficiently stamped instruments under the Indian Stamp Act, 1899.Detailed Analysis:1. Admissibility of Unregistered Agreements to Sell as Evidence:The core issue addressed in the judgment was whether the suit agreement dated 9th July 2003, which was not registered, could be admitted as evidence in a suit for specific performance. The court clarified that under Section 49 of the Registration Act, 1908, an unregistered document can be received as evidence of a contract in a suit for specific performance. However, it cannot have any effect under Section 53A of the Transfer of Property Act, 1882, which pertains to part performance. The court relied on precedents like S. Kaladevi v. V.R. Somasundaram to establish that an unregistered sale deed could be used as evidence of an oral agreement of sale.2. Validity of the General Power of Attorney Executed on Insufficient Stamp Duty:The General Power of Attorney dated 2nd May 1996 was executed on a stamp paper of Rs. 100/-. The High Court had interpreted this document as being given for consideration, thereby requiring higher stamp duty applicable to a deed of conveyance. However, the Supreme Court opined that being a registered document, there is a legal presumption of it being duly stamped, which is rebuttable. The Trial Court had initially allowed the document to be marked as evidence, leaving the question of its sufficiency of stamp duty to be decided later based on further evidence.3. Applicability of Section 17(1A) of the Registration Act, 1908:The suit agreement of 9th July 2003, executed after the commencement of Section 17(1A) of the Registration Act, required compulsory registration. The High Court had erred in concluding that the agreement was inadmissible in evidence. The Supreme Court clarified that while the document could not have any effect under Section 53A of the Transfer of Property Act, it could still be received as evidence of a contract for specific performance under the proviso to Section 49 of the Registration Act.4. Effect of Non-Registration under Section 49 of the Registration Act, 1908:The Supreme Court reiterated that non-registration of a document required by Section 17 does not preclude its use as evidence of a contract in a suit for specific performance. The proviso to Section 49 allows for such documents to be admitted in evidence for limited purposes, such as proving an oral agreement of sale, but not for affecting immovable property or conferring any power.5. The Power of the Court to Impound Insufficiently Stamped Instruments under the Indian Stamp Act, 1899:The High Court had referenced Avinash Kumar Chauhan v. Vijay Krishna Mishra regarding the court's power to impound insufficiently stamped instruments. The Supreme Court noted that this issue should be considered by the Trial Court at the appropriate stage, as it had been left open for determination based on the evidence presented by the parties.Conclusion:The Supreme Court allowed the appeal, restoring the Trial Court's order dated 1st June 2016, which permitted the documents to be marked as evidence subject to proof and relevancy. The Trial Court was directed to decide all other issues concerning the validity, genuineness, and binding nature of the documents, including their compliance with the provisions of the Transfer of Property Act, 1882, and the Indian Stamp Act, 1899, on their own merits. The suit, pending since 2010, was directed to be disposed of expeditiously within six months.