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of <h1>Unregistered deed assigning specific performance decree held valid; no compulsory registration under Section 17(1)(e) Registration Act</h1> <h3>Rajeswari & Ors. Versus Shanmugam & Anr.</h3> SC held that an unregistered deed assigning a decree for specific performance of an agreement to sell immovable property is valid and does not require ... Requireent of registration of deed under the provisions of the Registration Act, 1908 - deed assigning a decree for specific performance of an agreement of sale of immovable property - HELD THAT:- As will be seen, what has been the subject matter of the assignment is a decree for specific performance of an agreement of sale. It will be trite at this stage to consider what exactly is the nature and legal character of a decree for specific performance. It will be seen from Babu Lal vs. M/s Hazari Lal Kishori Lal and others [1982 (1) TMI 206 - SUPREME COURT] 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. Decree for specific performance, extinguishes the contract or not - HELD THAT:- It will be seen that in case of immovable property of value of one hundred rupees and upwards, transfer of ownership will occur only on the execution of a registered instrument - It is also relevant to notice 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 of which has been decreed. Scope of section 17(1)(e) of Registration Act - HELD THAT:- On analyzing Section 17(1)(e) of the Registration Act on which the case of the appellant pivots, 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 this case, when the decree itself which is for specific performance does not create or purport to create any right, title or interest in any immovable property, the question of registering an instrument assigning such a decree cannot arise. The assignment deed (Exhibit B1) assigning the decree of specific performance in this case did not require registration. The Executing Court which denied execution of the decree was clearly wrong and the High Court which set aside the judgment of the Executing Court was clearly right. The judgment of the High Court upheld - appeal dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether a non-testamentary instrument assigning a decree for specific performance of an agreement to sell immovable property is compulsorily registrable under Section 17(1)(e) of the Registration Act, 1908. 2. Whether a decree for specific performance of a contract of sale operates to create, declare, assign, limit or extinguish any right, title or interest in immovable property for the purposes of Section 17(1)(e). 3. Interaction of the legal character of a contract of sale, a decree for specific performance, the Transfer of Property Act and the Specific Relief Act with the requirement of registration for assignments of decrees. 4. Applicability of Order XXI Rule 16 CPC and Section 15 Specific Relief Act to an assignee seeking execution of a decree for specific performance. ISSUE-WISE DETAILED ANALYSIS Issue 1: Compulsory registration under Section 17(1)(e) of an assignment of a decree for specific performance Legal framework: Section 17(1)(e) prescribes compulsory registration of non-testamentary instruments transferring or assigning any decree or order of a Court when such decree or order purports or operates to create, declare, assign, limit or extinguish any right, title or interest in immovable property of value Rs.100 and upwards. Precedent treatment: The Court considered earlier High Court and appellate decisions taking divergent views-some holding that assignment of such decrees requires registration, others holding it does not. The Court expressly concurred with the reasoning of the judgment holding that a decree for specific performance does not itself create title and therefore an assignment of such a decree is not within Section 17(1)(e). Interpretation and reasoning: The Court examined the language of Section 17(1)(e) and held that the section is attracted only if the decree itself purports or operates to create, declare or assign a right, title or interest in immovable property. Since a decree for specific performance does not itself transfer ownership or create title (ownership passes only on execution of a registered sale deed), the decree does not purport or operate to create or assign an interest in immovable property for the purposes of Section 17(1)(e). Consequently an assignment of such a decree is not compulsorily registrable under that provision. Ratio vs. Obiter: Ratio - Section 17(1)(e) is not attracted to assignments of decrees for specific performance because such decrees do not create or transfer title or other proprietary interest in the immovable property. Conclusion: Assignment of a decree for specific performance does not require registration under Section 17(1)(e) where the decree does not itself create, declare, assign, limit or extinguish any right, title or interest in immovable property. Issue 2: Nature and legal character of a decree for specific performance - whether it creates title or interest Legal framework: Transfer of Property Act sections on sale (Section 54) and related provisions; Specific Relief Act provisions (including Section 28) and authoritative expositions of specific performance as equitable relief. Precedent treatment: The Court reviewed precedents establishing that an agreement of sale does not of itself create any interest in immovable property (Section 54 TP Act) and that a decree for specific performance is in the nature of a preliminary decree, leaving execution (including conveyance and registration) to follow. The Court followed these precedents in holding that neither the contract nor the decree vests title in the decree-holder. Interpretation and reasoning: A decree for specific performance recognizes the right to have the contract specifically enforced but does not itself effectuate the transfer of ownership; title passes only upon execution of the sale deed (conveyance), which, for immovable property of value Rs.100 and upwards, must be by a registered instrument. The Specific Relief Act (Section 28) and the equitable character of specific performance underpin the principle that the contract subsists post-decree and that completion of sale remains a necessary step to transfer title. Ratio vs. Obiter: Ratio - Decree for specific performance does not extinguish the contract nor does it itself transfer ownership; ownership transfers only upon execution of a registered sale deed. Conclusion: A decree for specific performance does not create any right, title or interest in immovable property in favour of the decree-holder; title vests only upon the execution and registration of the sale deed in accordance with statutory requirements. Issue 3: Interaction of statutory provisions and consequences for registration policy and revenue arguments Legal framework: Transfer of Property Act (sale/contract distinctions); Registration Act Section 17(1)(e); Specific Relief Act provisions; stamp/registration requirements for conveyance. Precedent treatment: The Court adopted the view that statutory scheme contemplates separation between contractual rights and conveyance/transfer of proprietary rights, and that registration is required for instruments that effectuate proprietary transfer. Earlier holdings to the contrary were treated as incorrectly applying Section 17(1)(e) where the decree did not itself create proprietary rights. Interpretation and reasoning: The Court rejected the argument that permitting assignment of decrees without registration would facilitate avoidance of registration charges through serial assignments, observing that until execution of the sale deed no proprietary right vests in the assignee; hence revenue loss or avoidance of registration cannot be assumed. The statutory architecture requires registration where title or proprietary interest is created or transferred; an assignment of a mere procedural right to execute a decree does not effect such a transfer. Ratio vs. Obiter: Ratio - Policy or revenue considerations do not extend the scope of Section 17(1)(e) to encompass assignments of decrees that do not purport to create or transfer proprietary rights. Conclusion: Arguments based on potential avoidance of registration or revenue loss do not justify construing Section 17(1)(e) to require registration of assignments of decrees for specific performance that do not themselves transfer title or interest. Issue 4: Right of assignee to execute the decree - Order XXI Rule 16 CPC and Section 15 Specific Relief Act Legal framework: Order XXI Rule 16 CPC permits transferees of decree to apply for execution as if they were decree-holders, subject to provisos requiring notice to transferor and judgment-debtor and hearing of objections; Section 15 Specific Relief Act permits representative-in-interest to obtain specific performance except in certain circumstances. Precedent treatment: The Court noted established law recognizing assignability of rights under contract (subject to exceptions) and the statutory recognition of assignees/representatives-in-interest obtaining specific performance and executing decrees. Interpretation and reasoning: The assignment in question purported to transfer rights and interests arising out of the decree; such assignment is cognizable and an assignee may execute the decree under Order XXI Rule 16 subject to compliance with provisos (notice and hearing). Section 15 corroborates that a representative-in-interest (including assignee of contractual interest) may seek specific performance unless the contract is personal or otherwise non-assignable. Ratio vs. Obiter: Ratio - An assignee of a decree for specific performance can apply for execution under Order XXI Rule 16 CPC, and the assignment is effective to transfer contractual rights though not proprietary title until conveyance. Conclusion: Assignment of rights under a decree is actionable by the assignee under Order XXI Rule 16 CPC and Section 15 Specific Relief Act, subject to statutory safeguards (notice/hearing) and limitations on assignability inherent in contract law. Final disposition flowing from analysis The Court held that assignment of a decree for specific performance of an agreement to sell immovable property does not require registration under Section 17(1)(e) because the decree does not itself create or transfer any right, title or interest in immovable property; the decree-holder (or assignee) acquires proprietary rights only upon execution and registration of the sale deed, and an assignee may seek execution under Order XXI Rule 16 CPC and Section 15 Specific Relief Act subject to compliance with their provisos and limitations.
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