Unstamped, unregistered sale deed used to prove possession in partition suit; barred u/s35, marking set aside

In a partition suit, the dominant issue was whether an unstamped and unregistered sale deed could be admitted for a "collateral purpose" to prove possession. The HC held that under s.35 of the Indian Stamp Act, 1899 an unstamped instrument is wholly inadmissible for any purpose until the requisite duty and penalty are paid, and under the proviso to s.49 of the Registration Act an unregistered document is admissible only for specific performance or for a collateral transaction independent of the transfer requiring registration. Possession pursuant to a sale deed is not divisible from the transfer and is therefore not collateral. The order permitting marking of the document was set aside and the revision was allowed.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether an unregistered document styled as a sale deed could be received in evidence in a partition suit under the proviso to Section 49 of the Registration Act, on the plea that it is relied upon only for the "collateral purpose" of proving possession.

(ii) Whether the delivery of possession recited in such unregistered sale deed is a "collateral transaction" independent of, or divisible from, the main transaction of sale so as to permit its evidentiary use despite non-registration.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i) & (ii): Admissibility of an unregistered sale deed for collateral purpose of proving possession

Legal framework (as discussed by the Court): The Court examined Section 49 of the Registration Act and its proviso, under which an unregistered document required to be registered cannot be received as evidence of a transaction affecting immovable property unless registered, but may be received (a) as evidence of a contract in a suit for specific performance, or (b) as evidence of any collateral transaction not required to be effected by a registered instrument. The Court further applied the principles on "collateral transaction" as discussed in the judgment, namely that a collateral transaction must be independent of or divisible from the transaction requiring registration, and if a document is inadmissible for want of registration, none of its terms can be admitted to prove an important clause under the guise of collateral purpose.

Interpretation and reasoning: The Court analysed the contents and nature of the document sought to be marked. It was styled as a sale deed, its recitals described sale for a stated consideration, and it recorded delivery of possession pursuant to the sale. The Court treated payment of consideration, transfer of title, and delivery of possession as integral parts of a single transaction of sale. On the pleadings as well, the defendants' case of possession was directly founded on the alleged purchase and being put in possession pursuant to that sale transaction. Therefore, proving possession by relying on the recitals of delivery of possession in the sale deed would amount to proving a term of the very transaction which required registration, rather than proving an independent or divisible collateral transaction.

The Court distinguished the precedent relied upon by the respondents on the ground that it concerned a different factual setting (a document enumerating shares in an earlier oral partition) where the document was admitted with caution only for limited collateral purpose; whereas in the present case, the asserted possession flowed from, and was inseparable from, the alleged sale itself.

Conclusions: The Court held that the unregistered sale deed could not be received in evidence. It further held that it could not even be received for the so-called collateral purpose of proving possession, because the delivery of possession recorded in the sale deed was not an independent or divisible collateral transaction but an integral part of the sale transaction. Consequently, the trial court erred in permitting the document to be marked for collateral purpose, and the impugned order was set aside.

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