2023 (4) TMI 1408 - SC - Indian Laws

Unregistered Agreement to Sell can be admitted as evidence in specific performance suits under Section 49 proviso

R. HEMALATHA Versus KASHTHURI

R. HEMALATHA Versus KASHTHURI - 2023 INSC 336 ISSUES PRESENTED and CONSIDEREDThe core legal question considered by the Supreme Court was whether an unregistered Agreement to Sell, which is compulsorily registrable under the Tamil Nadu Amendment Act, 2012, can be received as evidence in a suit for specific performance. This issue revolves around the interpretation of Section 17(1)(g) of the Registration Act as amended by the Tamil Nadu Amendment Act, 2012, and the proviso to Section 49 of the Registration Act.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe legal framework primarily involves the Registration Act, 1908, specifically Sections 17 and 49, as amended by the Tamil Nadu Amendment Act, 2012. Section 17(1)(g) mandates compulsory registration of agreements relating to the sale of immovable property valued at Rs. 100 and upwards. The proviso to Section 49 allows unregistered documents affecting immovable property to be admitted as evidence of a contract in a suit for specific performance.Court's Interpretation and ReasoningThe Court analyzed the legislative intent behind the Tamil Nadu Amendment Act, 2012, which aimed to prevent loss to the exchequer due to unregistered transactions on nominal stamp paper. It noted that while Section 17(1)(g) requires registration of agreements to sell, there was no corresponding amendment to Section 49. The Court emphasized the proviso to Section 49, which permits the admission of unregistered documents as evidence in specific performance suits, thus creating an exception to the general rule of inadmissibility.Key Evidence and FindingsThe primary evidence in question was the unregistered Agreement to Sell dated 10.09.2013. The Trial Court initially deemed it inadmissible based on the Tamil Nadu Amendment Act. However, the High Court reversed this decision, relying on the proviso to Section 49, which the Supreme Court upheld.Application of Law to FactsThe Court applied the proviso to Section 49 to the facts, determining that the unregistered agreement could be admitted as evidence of a contract in the specific performance suit. The absence of an amendment to the proviso to Section 49, despite the Tamil Nadu Amendment, was pivotal in the Court's decision.Treatment of Competing ArgumentsThe appellant argued that admitting the unregistered agreement would render the 2012 amendment meaningless, as it was intended to enforce compulsory registration. The respondent countered, citing the proviso to Section 49, which allows such documents in specific performance suits. The Court sided with the respondent, emphasizing the legislative gap in not amending the proviso to Section 49.ConclusionsThe Court concluded that the unregistered Agreement to Sell is admissible in evidence under the proviso to Section 49, despite the compulsory registration requirement under Section 17(1)(g) of the Tamil Nadu Amendment Act, 2012.SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal ReasoningThe Court stated, 'As per proviso to Section 49 of the Registration Act, an unregistered document affecting immovable property and required by Registration Act to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877.'Core Principles EstablishedThe decision reinforces the principle that unregistered agreements can be admitted in specific performance suits under the proviso to Section 49, notwithstanding state amendments requiring compulsory registration.Final Determinations on Each IssueThe Supreme Court dismissed the appeal, affirming the High Court's decision to admit the unregistered Agreement to Sell as evidence in the suit for specific performance. The Court held that the proviso to Section 49 serves as an exception to the general rule of inadmissibility for unregistered documents affecting immovable property.