Introduction
The Supreme Court held that an unregistered agreement to sell is admissible in a suit for specific performance under the proviso to Section 49 of the Registration Act, 1908. The decision clarifies the evidentiary value of such documents when not used to establish title.
- Section 49, Registration Act, 1908 – Bars use of unregistered documents affecting immovable property but allows their use under the proviso for specific performance or collateral transactions.
- S. Kaladevi v. V.R. Somasundara, (2010) 5 SCC 401 – Precedent affirming use of unregistered documents to prove contracts in specific performance cases.
Facts
The appellant and respondent entered into an unregistered agreement to sell on 01.01.2000. The appellant claimed part payment was made, and possession of the property was handed over. The respondent allegedly failed to execute the final sale deed.
A suit for specific performance was filed, which was dismissed by the trial court and affirmed by the High Court due to non-registration of the document.
Interested in Reading more? Read our other blogs for deeper insights into the Shah Bano case.
Issues
- Whether an unregistered agreement to sell is admissible in evidence in a suit for specific performance.
- Whether the trial court erred in excluding the agreement based on the provisions of the Registration Act and Stamp Act.
Contentions of the Petitioner
The agreement was not presented to prove a completed transfer of title but only to establish the existence of an oral agreement. Under the proviso to Section 49 of the Registration Act, an unregistered document can be admitted to prove a contract in a suit for specific performance. Relied on the precedent set in S. Kaladevi v. V.R. Somasundara (2010) 5 SCC 401.
Contentions of the Respondent
As per the Tamil Nadu amendment to the Registration Act, registration of such agreements is mandatory. The document is inadmissible as it lacks registration and appropriate stamp duty, violating statutory requirements.
Court’s Analysis
The Court reaffirmed the principle in S. Kaladevi that an unregistered agreement can be admitted in evidence to prove the existence of an agreement in a specific performance suit. Highlighted that Section 49’s proviso enables use of such documents in cases where the relief sought is not based on a completed sale but on contract formation. Stated that such documents can be received in evidence with an endorsement indicating their limited purpose.
Conclusion
The Supreme Court allowed the appeal.
Held that the unregistered agreement was admissible as evidence of the oral agreement to sell under the proviso to Section 49 of the Registration Act, 1908.
