Unregistered Agreement To Sell Is Admissible As An Evidence In Suit For Specific Performance As Per Proviso To Section 49 Of Registration Act- SC

The Supreme Court has held that an unregistered agreement to sell, which was otherwise required to be compulsorily registered, shall be admissible in evidence in a suit for specific performance in terms of Proviso to Section 49 of the Registration Act. The only exception to the Proviso of Section 49 would be documents mentioned in Section 17 (1A) of the Act. 

The Bench of Justice MR Shah and Justice Krishna Murari observed that “Under the circumstances, as per proviso to Section 49 of the Registration Act, an unregistered document affecting immovable property and required by Registration Act or the Transfer of Property Act to be registered, may be received as evidence of a contract in a suit for specific performance under Chapter­II of the Specific Relief Act, 1877, or as evidence of any collateral transaction not required to be effected by registered instrument, however, subject to Section 17(1A) of the Registration Act. It is not the case on behalf of either of the parties that the document/ Agreement to Sell in question would fall under the category of document as per Section 17(1A) of the Registration Act.”

Advocate D. Kumanan appeared for the appellant and Advocate Rajesh Kumar appeared for the respondent.

The case of the appellant/defendant was that an unregistered Agreement to Sell was executed in favour of the respondent/plaintiff in 2013. In 2014, a civil suit for specific performance was instituted wherein the Trial Court had framed a preliminary issue on the admissibility of the Agreement to Sell in evidence.

The State of Tamil Nadu amended Section 17 of the Act vide the Tamil Nadu Amendment Act No.29 of 2012 and inserted Section 17(1)(g) and the explanation to Section 17(2) has been omitted. As per Section 17(1)(g) compulsory registration of agreement relating to sale of immovable property of the value of Rs.100/­ and upwards was required. On the other hand, as per Section 49 of the Act, an unregistered Agreement to Sell could be admitted as evidence of a contract in a suit for specific performance.

The Trial Court held that the unregistered Agreement to Sell could be admitted as evidence of contract in a suit for specific performance. Against the Trial Court order, the respondent preferred a revision petition before the Madras High Court.

The High Court set aside the order on the ground that the suit in question was a suit for specific performance, which fell within the first exception in proviso to section 49. Thus, the High court directed to receive the Agreement to Sell in evidence. Aggrieved of the order, the appellant approached the Apex Court.

The issue dealt with was- whether an unregistered Agreement to Sell for sale of an immovable property, which otherwise required registration, could be received in evidence in a suit for specific performance?

The Apex Court said that despite insertion of Section 17 (1)(g), making the Agreement to Sell affecting any immovable property compulsorily required to be registered, there was no corresponding amendment to Section 49 of the Act.

Further, the Court observed that as per proviso to Section 49, an unregistered document affecting the immovable property which was required to be registered under the Act, may be received as evidence of a contract in a suit for specific performance under Chapter­ II of the Specific Relief Act, 1877, or as evidence of any collateral transaction not required to be effected by registered document.

The Apex Court observed that “...the proviso to Section 49 came to be inserted vide Act No.21 of 1929 and thereafter, Section 17(1A) came to be inserted by Act No. 48 of 2001 with effect from 24.09.2001 by which the documents containing contracts to transfer or consideration any immovable property for the purpose of Section 53 of the Transfer of Properties Act is made compulsorily to be registered if they have been executed on or after 2001 and if such documents are not registered on or after such commencement, then there shall have no effect for the purposes of said Section 53A. So, the exception to the proviso to Section 49 is provided under Section 17(1A) of the Registration Act. Otherwise, the proviso to Section 49 with respect to the documents other than referred to in Section 17(1A) shall be applicable.”

Accordingly, the appeal was dismissed, and the High Court’s decision was upheld.

Cause Title- R. Hemalatha v. Kashthuri 

Click here to read/download the Judgment