KORUKONDA CHALAPATHI RAO & ANR. versus KORUKONDA ANNAPURNA SAMPATH KUMAR

[2021] 11 S.C.R.

AKORUKONDA CHALAPATHI RAO & ANR.

KORUKONDA ANNAPURNA SAMPATH KUMAR

(Civil Appeal No(s). 6141 of 2021)

BOCTOBER 01, 2021

[K. M. JOSEPH AND S. RAVINDRA BHAT, JJ.]

Registration Act, 1908 – ss. 17(1)(b), 49 – Partition – FamilySettlement, if required registration – Suit filed by respondent interalia for declaration of title over the plaint schedule property andCeviction of the appellants – Appellants filed the evidence affidavitand sought to mark Kharurunama - the family settlement and receipt,allowed by trial court – High Court held that the documents beingunregistered and unstamped were inadmissible in evidence – Onappeal, held: Words used in the document referred to theDarrangements allegedly which the parties made in the past – It doesnot purport to by itself create, declare, assign, extinguish or limitright in properties and thus, the Khararunama may not attracts.49(1)(a) – If the Khararunama by itself, does not ‘affect’ immovableproperty, being record of the alleged past transaction, thoughrelating to immovable property, there would be no breach ofEs.49(1)(c), as it is not being used as evidence of transactioneffecting such property – Being let in evidence is different frombeing used as evidence of the transaction – Mere admission, inevidence of the Khararunama and the receipt would not produceany legal effect on the immovable properties in question – Further,Fin view of the nature of the Khararunama, being record of the allegedtransactions, it may not require to be stamped – Impugned judgmentset aside – Transfer of Property Act, 1882 – Code of Civil Procedure,1908 – Or.13, rr.3, 4 – Deeds and Documents.Registration Act, 1908 – Proviso to s.49, exceptions under –GDiscussed.

Allowing the appeal, the Court

HELD: 1.1 Section 49 deals with the effect of non-registration of documents which are compulsorily registrableunder Section 17 of the Registration Act and Transfer of PropertyH

Act. Section 49(a) of the Registration Act declares that anunregistered document which is compulsorily registrable cannot‘affect’ any immovable property comprised therein. Section 49(c)of Registration Act prohibits the admitting of compulsorilyregistrable documents which are unregistered as evidence of anytransaction affecting immovable property unless it has beenregistered. The proviso carves out two exceptions. This Courtis only concerned, in this case, with only one of them and that iscontained in the last limb of the proviso. The unregistereddocument can be used as evidence of any collateral transaction.This is however subject to the condition that the said collateraltransaction should not itself be one which must be effected by aregistered document. What would constitute collateraltransaction? If it were collateral transaction, then an unregistereddocument can indeed be used as evidence to prove the same.Would possession being enjoyed or the nature of the possessionon the basis of the unregistered document, be transaction andfurther would it be collateral transaction? This question is posedas the contention of the appellants is that even if the Khararunamadated 15.4.1986 cannot be used as evidence to prove the factumof relinquishment of right which took place in the past, theKhararunama can be looked into to prove the conduct of theparties and the nature of the possession which was enjoyed bythe parties. The law is not that in every case where party setsup the plea that the court may look into an unregistereddocuments to show the nature of the possession that the courtwould agree to it. The cardinal principle would be whether byallowing the case of the party to consider an unregistereddocument it would result in the breach of the mandate of theSection 49 of the Registration Act. [Paras 24-26, 29][851-B-C,E-F; 852-B-E; 853-G-H; 854-A]1.2 If this Court applies the test as to whether the Khararunamain this case by itself ‘affects’, i.e., by itself creates, declares, limitsor extinguishes rights in the immovable properties in question orwhether it merely refers to what the appellants alleged were pasttransactions which have been entered into by the parties, then,going by the words used in the document, they indicate that thewords are intended to refer to the arrangements allegedly

Awhich the parties made in the past. The document does notpurport to by itself create, declare, assign, extinguish or limitright in properties. Thus, the Khararunama may not attract Section49(1)(a) of the Registration Act. [Para 33][857-E-G]

2.3 As far as Section 49(1)(c) of the Registration Act isBconcerned, it provides for the other consequence of compulsorilyregistrable document not being so registered. That is, underSection 49(1)(a), compulsorily registrable document, which isnot registered, cannot produce any effect on the rights inimmovable property by way of creation, declaration, assignment,limiting or extinguishment. Section 49(1)(c) in effect, reinforcesCand safeguards against the dilution of the mandate of Section49(1)(a). Thus, it prevents an unregistered document being used‘as’ evidence of the transaction, which ‘affects’ immovableproperty. If the Khararunama by itself, does not ‘affect’ immovableproperty, being record of the alleged past transaction, though

Drelating to immovable property, there would be no breach ofSection 49(1)(c), as it is not being used as evidence of transactioneffecting such property. However, being let in evidence, beingdifferent from being used as evidence of the transaction ispertinent. Thus, the transaction or the past transactions cannot

be proved by using the Khararunama as evidence of theEtransaction. That is, it is to be noted that, merely admitting theKhararunama containing record of the alleged past transaction,is not to be, however, understood as meaning that if those pasttransactions require registration, then, the mere admission, inevidence of the Khararunama and the receipt would produce anyFlegal effect on the immovable properties in question. As far asstamp duty goes, on the finding regarding the nature of thedocument, viz., Khararunama, being record of the allegedtransactions, it may not require to be stamped. When there hasbeen partition, then, there may be no scope for invoking theconcept of antecedent right as such, which is inapposite after aGdisruption in the joint family status and what is more an outrightpartition by metes and bounds. The appellants and therespondents, admittedly, partitioned their joint family properties.This is clear from the Khararunama wherein it is stated that theyhave divided the joint family properties. The properties, which

KORUKONDA CHALAPATHI RAO v. KORUKONDA ANNAPURNASAMPATH KUMAR

are mentioned in the Khararunama, became the separateproperties of the respondent. The impugned Judgment is setaside. [Paras 34-36][857-G-H; 858-A-E, G-H; 859-A-B]

Subraya M.N. v. Vittala M.N. (2016) 8 SCC 705 : [2016]5 SCR 924; Thulasidhara v. Narayanappa (2019) 6 SCC409 : [ 2019] 8 SCR 212; Kale v. Dy. Director ofConsolidation AIR 1976 SC 807 : [1976] 3 SCR 202;Kirpal Kaur v. Bachan Singh and Ors. AIR 1958 SC199 : [1958] SCR 950; Ram Charan v. Girja Nandini AIR1966 SC 292; Krishna Beharilal v. Gulabchand AIR1971 SC 1041 : [1971] Suppl. SCR 27; Yellapu UmaMaheswari and Another v. Buddha Jagadheeswararaoand Others (2015) 16 SCC 787; Sita Ram Bhama v.Ramvatar Bhama (2018) 15 SCC 130 : [2018] 10 SCR503; Roshan Singh and Others v. Zile Singh and OthersAIR 1988 SC 881 : [1988] 2 SCR 1106; SMS TeaEstates (P) Ltd. v. Chandmari Tea Co. Private Ltd. (2011)14 SCC 66 : [2011] 9 SCR 382 – referred to.

Muruga Mudallar and Ors. v. Subba Reddiar AIR 1951Madras 12; K. Panchapagesa Ayyar and Ors. v. K.Kalyanasundaram Ayyar and Ors AIR 1957 Madras472; A.M. Chakrapani Reddiar and others AIR 2001Madras 135 – referred to.

N. Varada Pillai v. Jeevarathnammal AIR 1919 P.C.44 – referred to.

Case Law Reference

ACIVIL APPELLATE JURISDICTION: Civil Appeal No. 6141of 2021.

From the Judgment and Order dated 22.04.2016 of the High Courtof Judicature at Hyderabad for the State of Telangana and the State ofAndhra Pradesh in C.R.P. No.373 of 2015.B

M. Vijaya Bhaskar, Adv. for the Appellants.

K. Sita Rama Rao, Vijay Babu, Venkateswara Rao Anumolu,Advs. for the Respondent.

The Judgment of the Court was delivered by

CK. M. JOSEPH, J.

1. Leave granted.

2. By the impugned order the High Court has set aside the orderpassed by the Trial Court by which latter order, the Trial Court overruledthe objections of the respondent to the marking of Exhibits-B12 and B13Don the score that they were documents which were unregistered andunstamped and matter was posted for the evidence of DW1 for markingthe said document. The High court found that the documents whichwere the unregistered family settlement “Khararunama” and receiptof Rs. 2,00,000/- (Rupees two lakhs) by the respondent, were notEadmissible in evidence.

3. The respondent is the younger brother of the appellants. Therespondent instituted the present Suit (O.S. No.39 of 2001) seekingdeclaration of title over the plaint schedule property and for eviction ofthe appellants who are the defendants and consequential perpetualFinjunction is also sought against the appellants.

4. It is not in dispute that there was partition between theappellants, the respondent and their other siblings. The partition list ismarked as Exhbit-A8 in the suit. It is dated 17.11.1980. The plaintschedule properties are part of F-Schedule in the Deed of partitionGallotted to the respondent. The case of the respondent is based on thesaid partition deed allotting F-schedule to him. It is, inter alia, his casein the suit as amended by order dated 19.12.2012 that he was in hospitalas in patient for treatment of his liver ailment. The appellants allegedlyobtained his signatures on papers and made up the alleged settlementdated 15.4.1986 and the alleged receipt dated 08.12.1983 (The documentsH

which are in controversy). It is his further case that appellants are inoccupation of the property with his permission. On refusal of theappellants to vacate and after exchange of notices, the suit is filed seekingthe relief as noted. There are two plaint schedule items. Item No.1 is theterrace house, ground floor and upstairs. Item no.2 is half share nadavaportion in the boundaries in terms of F-Schedule of the partition deed.

5. On the other hand, the case of the appellants is that whilepartition list dated 17.11.1980 was executed recording the fact of partition,which was already effected, there were subsequent developments. Therespondent and his wife raised dispute before elders complaining thatthe portion given to them was not sufficient. At the intervention of theelders, it was settled and agreed between the appellants and therespondent that respondent should give away his portion to the secondappellant and respondent should also give away his one-third portion inNadava margam to the appellants and in consideration for the same thefirst appellant was to give Rs.25,000/- and the second appellant was togive Rs.75,000/- to the respondent. The said amounts were paid. On theadvice of the elders the case of the appellants is that Khararunamadated 15.04.1986 was executed recording the facts. On the pleading ofrespondent and his wife to permit them to stay on, the respondent waspermitted to occupy the property. It is the further case of the appellantsthat in December, 1993, respondent and his wife informed the appellantsthat they would vacate the portion in the second appellant’s house andleave the same but defendants should pay some more money as theyintended to vacate the property. The elders settled the matter and it isalleged that Second appellant had to pay Rs.2,00,000/-. Out of affectiontowards the respondent and to purchase peace, the second appellantagreed to pay Rs.2,00,000/- (Rupees Two Lakhs). Accordingly,Rs.2,00,000/- was paid on 08.12.1993 in the presence of elders and thereceipt dated 08.12.1993 was issued by the respondent to the secondappellant and on the same day, respondent is alleged to have vacatedand left the portion in his occupation in the house of the second appellantand shifted to rented portion.

6. After completion of the evidence on behalf of the respondent,appellants filed the evidence affidavit and sought to mark theKharurunama and receipt dated 08.12.1993. As already noticed, the trialcourt allowed the said documents to be marked. By the impugnedjudgment the High Court has found that in the absence of registrationand not being stamped the documents were inadmissible.

A7. We heard the learned counsel for the parties. We heard ShriM. Vijay Bhaskar, learned Counsel on behalf of the appellants and alsoShri Venkateshwar Rao, learned Counsel on behalf of the respondent.

8. It is submitted by the appellants that the Family settlementKhararunama dated 15.04.1986 was prepared in triplicate. TheBrespondent also obtained one of the triplicate copies. In his examinationthe respondent admitted his signature in the said ‘Khararunama’ and thesame has been marked as B1 to B3. It is further submitted that therespondent as PW1 has admitted his signature on the receipt dated08.12.1993 marked as (B4). B9 to B11 are stated to be admission ofsignature on the Khararunama dated 15.04.1986 upon the respondentCbeing confronted with the Khararunama. It is pointed out that HighCourt erred in not considering the family settlement Khararunama andreceipt dated 08.12.1993 in accordance with well-established principlesrelating to the law of family settlement /family arrangement. Reliance isplaced on the judgment of this court in Subraya M.N. v. Vittala M.N.1Dto contend that there can be an oral relinquishment of the share of thefamily members in the family settlement and family arrangement. If theterms of the said family settlement is reduced into writing, and it is onlya memorandum executed subsequently recording the terms of the oralfamily settlement, then, no registration is needed, it is contended. Thedecision of this Court in Thulasidhara v. Narayanappa2 has also beenErelied upon. It is lastly contended that even if the family settlementKhararunama is required to be registered, in view of the fact that withoutregistration written document of family settlement/arrangement couldbe used as corroborative evidence as explaining the arrangement madethereunder and the conduct of the parties, the order of the High Court isFinfirm.

9. Per contra, apart from reiterating his case about the appellantsobtaining his signature on blank papers and subsequently utilizing themfor the family settlement, it is contended that family settlementKhararunama dated 15.04.1986 required registration under sectionG17(1)(b) of the Registration Act, 1908. Under the said settlement,appellants ought to pay certain sum to the respondent. The documentwould come into force after the receipt of the consideration. It iscontended that the High Court is right in finding that unregistered family

1 (2016) 8 SCC 705H2 (2019) 6 SCC 409

Khararunama, whereunder past transaction of relinquishment isrecorded, was inadmissible for want of registration and deficiency ofstamp duty.

10. The Khararunama reads, inter alia, as follows:

“We, the three are brothers. We and our brothers divided familyproperties and executed partition list dated 17-11-1980. As perthe said partition list schedule property fallen to No.1 of us andE schedule property fallen to No.2 of us and schedule propertyfallen to No. 3 of us and we are enjoying those properties. Whilethe matter stood some constructions were undertaken to the house.Nos. 2 and 3 of us have divided the property which jointly fallento them and made some constructions and enjoying. Nadava wayis being enjoyed by all of us jointly.

Even after 17-11-1980 by this date we are having common diningthough properties are dividedand little disputes are arising amongus and elders are interfered and settled.

We have not reduced into writing the events that took place amongthree of us subsequent to 17-11-1980. We are enjoying theproperties as per the following changes as per the advice of theelders.

The Nadava way which was originally fell jointly to three of us isbeing enjoyed by Nos.1 and 2 of us since no. 3 of us gave awayhis undivided 1/3[rd] in favour of Nos. 1 and 2 of us. Likewise, Nos.1 and 2 of us have been enjoying said Nadava way with anunderstanding to enjoy Nadava way likewise if any further floorsare raised over ground floor. The undivided ½ share house portionwhich originally fallen to share of No. 3 of us which wassubsequently mutually divided among Nos. 2 and 3 of us wasgiven away by No.3 of us to No.2 of us and accordingly No.2 ofus has been in enjoyment of the entire house portion. No.3 of us isenjoying with absolute rights the shop room which was fallen tohis share with an understanding that No.3 of us can raiseconstructions over the said shop room within the measurementsof shop room. We have been enjoying with an understanding thateastern wall of above said shop shall be joint between Nos.2 and3 of us and western wall shall be joint for all the three of us andnorthern wall shall be joint between Nos.2 and 3 of us. We have

been enjoying with an understanding that none of us shall arrangeany door-ways, windows or ventilators to said joint walls.

For the above adjustments No.1 of us has already paid Rs.25,000/- (Rupees Twenty-Five Thousand) to No. 3 of us previously andNo. 2 of us has already paid Rs. 75,000/- (Rupees Seventy-FiveThousand) to No. 3 of us previously.

We have agreed to arrange separate steps from our respectiveground floor portion as and when further floors are constructed.

Nos. 1 to 3 of us have been enjoying the properties as mentionedabove with absolute rights. We have been enjoying the remainingCproperties fallen to us as per partition list dated 17-11-1980 whichare not mentioned in this document.

This Kharurunama is executed for record purpose and forremembrance purpose. All the contents of this document are readover and explained to all of us and we have willfully agreed theDcontents on our volition. We will not raise any disputes in future.”

Parties 1 and 2 are the appellants. The 3[rd] party is the respondent.

11. As far as the receipt is concerned, it is signed on 20 paiserevenue stamp. It is allegedly executed by the respondent having receivedRs.2,00,000/- (Rupees two lakhs) on 08.12.1983 as per the advice of theEelders besides the amount of Rs.1,00,000/- (Rupees one lakh) alreadypaid to the respondent mentioned in the Khararunama dated 15.04.1986while vacating the house portion mentioned in the Kharurunamaexcepting the shop room which fell to the share of the respondent underthe Partition List 1980 purportedly signed by two witnesses. It is executedFin favour of the second appellant.

12. Undoubtedly, Section 17(1)(b) makes ‘other non-testamentaryinstruments’, which purport or operate to create, assign, limit or extinguishwhether in present or in future any right or interest whether vested orcontingent of the value of Rs.100/- and upwards in an immovable propertyGcompulsorily registrable. Section 17(1)(c) reads as follows:

“17(1)(c) non-testamentary instruments which acknowledge thereceipt or payment of any consideration on account of the creation,declaration, assignment, limitation or extinction of any such right,title or interest; and”

13. Section 17 (2) provides nothing in Clauses (b) and (c) of sub-Section(1) applies, inter alia, to any instrument of partition made by therevenue officer. Section 49 of the Registration Act reads as follows:

“49. Effect of non-registration of documents required to beregistered.—No document required by section 17 1[or by anyprovision of the Transfer of Property Act, 1882 (4 of 1882)], to beregistered shall—

(a) affect any immovable property comprised therein, or

(b) confer any power to adopt, or

(c) be received as evidence of any transaction affecting suchproperty or conferring such power, unless it has beenregistered:[ 54] [Provided that an unregistered document affectingimmovable property and required by this Act or the Transfer ofProperty Act, 1882 (4 of 1882), to be registered may be receivedas evidence of contract in suit for specific performance underChapter II of the Specific Relief Act, 1877 (3 of 1877)[ 55],[ 56] [***]or as evidence of any collateral transaction not required to beeffected by registered instrument.] ..”

14. There is long line of judgments of this court dealing with thequestion as to whether family arrangement is compulsorily registrable.We need only refer to the case of Kale v. Dy. Director ofConsolidation3. This Court has summed up the essentials of the familysettlement in the following proposition:

“10. In other words to put the binding effect and the essentials ofa family settlement in concretised form, the matter may bereduced into the form of the following propositions:

“(1) The family settlement must be bona fide one so as toresolve family disputes and rival claims by fair and equitabledivision or allotment of properties between the various membersof the family;

(2) The said settlement must be voluntary and should not beinduced by fraud, coercion or undue influence;

(3) The family arrangement may be even oral in which caseno registration is necessary;

(4) It is well settled that registration would be necessary onlyif the terms of the family arrangement are reduced into writing.Here also, distinction should be made between documentcontaining the terms and recitals of family arrangementmade under the document and mere memorandum preparedafter the family arrangement had already been made eitherfor the purpose of the record or for information of the courtfor making necessary mutation. In such case the memorandumitself does not create or extinguish any rights in immovableproperties and therefore does not fall within the mischief ofSection 17(2) of the Registration Act and is, therefore, notcompulsorily registrable;

(5) The members who may be parties to the family arrangementmust have some antecedent title, claim or interest even apossible claim in the property which is acknowledged by theparties to the settlement. Even if one of the parties to thesettlement has no title but under the arrangement the otherparty relinquishes all its claims or titles in favour of such aperson and acknowledges him to be the sole owner, then theantecedent title must be assumed and the family arrangementwill be upheld and the courts will find no difficulty in givingassent to the same;

(6) Even if bona fide disputes, present or possible, which maynot involve legal claims are settled by bona fide familyarrangement which is fair and equitable the family arrangementis final and binding on the parties to the settlement.”

(Emphasis supplied)

15. In the facts of this case, the contention of the appellants isthat the Kharurunama dated 15.04.1986 merely sets out the arrangementarrived at between the brothers which is the family arrangement and itwas mere record of the past transaction and therefore by itself it didnot create or extinguish any right over immovable property. Resultantly,Gthe document did not attract Section 17(1)(b) of the Registration Act. Inother words, it is contended that even if there is relinquishment of rightsby the family member, since the document is only record of what hadalready happened in the past, the law did not mandate registration.

16. It is to be noted that in this regard emphasis is placed by theHappellants on the decision of this Court inSubraya M.N. v. Vittala M.N.

(supra). Therein, in regard to the dispute to plaint items 1 and 2 properties,there was D22 resolution passed by the village panchayat signed by thePanchayatdar, plaintiffs 3 and 4 and defendant. It was, inter alia,mentioned therein that the defendant, in whose favour the plaintiffs 3and 4 relinquished the rights, had paid Rs.15,000/- each to the saidplaintiffs. Dealing with the impact of Section 17 and 49 of the RegistrationAct this Court, inter alia, held:

“16. Even though recitals in Ext. D-22 are to the effect ofrelinquishment of right in Items 1 and 2, Ext. D-22 could be takenas family arrangements/ settlements. There is no provision of lawrequiring family settlements to be reduced to writing and registered,though when reduced to writing the question of registration mayarise. Binding family arrangements dealing with immovableproperty worth more than rupees hundred can be made orally andwhen so made, no question of registration arises. If, however, it isreduced to the form of writing with the purpose that the termsshould be evidenced by it, it required registration and withoutregistration it is inadmissible; but the said family arrangement canbe used as corroborative piece of evidence for showing or-explaining the conduct of the parties. In the present case, Ext. D22 panchayat resolution reduced into writing, though not registeredcan be used as piece of evidence explaining the settlement arrivedat and the conduct of the parties in receiving the money from thedefendant in lieu of relinquishing their interest in Items 1 and 2.”

(Emphasis supplied)

17. This view has been also followed in Thulasidhara v.Narayanappa4. Paragraph-9.5 reads as below:

“9.5. As held by this Court in Subraya M.N. [SubrayaM.N. v. Vittala M.N., (2016) 8 SCC 705] even without registrationa written document of family settlement/family arrangement canbe used as corroborative evidence as explaining the arrangementmade thereunder and conduct of the parties. In the present case,as observed hereinabove, even the plaintiff has also categoricallyadmitted that the oral partition had taken place on 23-4-1971 and

he also admitted that 3 to 4 panchayat people were also present.However, according to him, the same was not reduced in writing.

ATherefore, even accepting the case of the plaintiff that there wasan oral partition on 23-4-1971, the document, Ext. D-4 dated 23-4-1971, to which he is also the signatory and all other familymembers are signatory, can be said to be list of propertiespartitioned. Everybody got right/share as per the oral partition/partition. Therefore, the same even can be used as corroborativeBevidence as explaining the arrangement made thereunder andconduct of the parties. Therefore, in the facts and circumstancesof the case, the High Court has committed grave/manifest errorin not looking into and/or not considering the document Ext. D-4dated 23-4-1971.”C18. In the said case plaintiff had admitted the oral partition andthe unregistered document dated 23.04.1971 to which he was thesignatory, was accepted as the list of properties in the partition.

19. InRam charan v. Girja Nandini5, this Court was dealing witha case of compromise decree and this Court went on to hold that itDwas family arrangement. It went on to hold as follows:

“.. For as the Privy Council pointed out in Mst. Hiran Bibi’s case,AIR 1914 PC 44 in family settlement each party takes sharein the property by virtue of the independent title which is admittedto that extent by the other parties. It is not necessary, as wouldEappear from the decision in Rangasami Gounden v. NachiappaGounden 46 Ind App 72 (AIR 1918 PC 196), that every partytaking benefit under family settlement must necessarily be shownto have, under the law, claim to share in the property. All thatis necessary is that the parties must be related to one another inFsome way and have possible claim to the property or claim oreven semblance of claim on some other ground as, sayaffection.”

(Emphasis supplied)

20. This view has been reiterated in Krishna Beharilal v.GGulabchand6. In Yellapu Uma Maheswari and Another v. BuddhaJagadheeswararao and Others7, this Court found that the

5 AIR 1966 SC 292

6 AIR 1971 SC 1041

H7 (2015) 16 SCC 787

relinquishment of the right was made through the document. Hence, itwas found that documents were compulsorily registrable. This Courtinter alia held as follows:

“15. It is well settled that the nomenclature given to the documentis not decisive factor but the nature and substance of thetransaction has to be determined with reference to the terms ofthe documents and that the admissibility of document is entirelydependent upon the recitals contained in that document but not onthe basis of the pleadings set up by the party who seeks to introducethe document in question.A thorough reading of both Exts. B-21and B-22 makes it very clear that there is relinquishment of rightin respect of immovable property through document which iscompulsorily registrable document and if the same is not registered,it becomes an inadmissible document as envisaged under Section49 of the Registration Act. Hence, Exts. B-21 and B-22 are thedocuments which squarely fall within the ambit of Section 17(1)(b)of the Registration Act and hence are compulsorily registrabledocuments and the same are inadmissible in evidence for thepurpose of proving the factum of partition between the parties.We are of the considered opinion that Exts. B-21 and B-22 arenot admissible in evidence for the purpose of proving primarypurpose of partition.”

21. We may notice that inSita Ram Bhama v. Ramvatar Bhama8,wherein the appellant and respondent were brothers, according to theappellant, memorandum of settlement as decided by their late fatherwas recorded in regard to his acquired property. The question arose asto whether the settlement was admissible. It is necessary to noticeparagraph-10, which reads as under:

“10. The only question which needs to be considered in the presentcase is as to whether document dated 9-9-1994 could have beenaccepted by the trial court in evidence or the trial court has rightlyheld the said document inadmissible. The plaintiff claimed thedocument dated 9-9-1994 as memorandum of family settlement.The plaintiff’s case is that earlier partition took place in the lifetimeof the father of the parties on 25-10-1992 which was recorded as

Amemorandum of family settlement on 9-9-1994. There are morethan one reasons due to which we are of the view that the documentdated 9-9-1994 was not mere memorandum of family settlement,rather family settlement itself. Firstly, on 25-10-1992, the fatherof the parties was himself owner of both, the residence and shopbeing self-acquired properties of Devi Dutt Verma. The High CourtBhas rightly held that the said document cannot be said to be will,so that the father could have made the will in favour of his twosons, the plaintiff and the defendant. Neither the plaintiff nor thedefendant had any share in the property on the day when it is saidto have been partitioned by Devi Dutt Verma. Devi Dutt VermaCdied on 10-9-1993. After his death, the plaintiff, the defendantand their mother as well as sisters become the legal heirs underthe Hindu Succession Act, 1956 inheriting the property being aClass I heir. The document dated 9-9-1994 divided the entireproperty between the plaintiff and the defendant which documentis also claimed to be signed by their mother as well as the sisters.DIn any view of the matter, there is relinquishment of the rights ofother heirs of the properties, hence, the courts below are right intheir conclusion that there being relinquishment, the document dated9-9-1994 was compulsorily registrable under Section 17 of theRegistration Act.”

E22. Thereafter, we may notice the view of this Court in paragraph-13 as under:

“13. There is only one aspect of the matter which needsconsideration i.e. whether the document dated 9-9-1994, whichwas inadmissible in evidence, could have been used for anyFcollateral purpose. In suit for partition, an unregistered documentcan be relied upon for collateral purpose i.e. severancy of title,nature of possession of various shares but not for the primarypurpose i.e. division of joint properties by metes and bounds…”

23. No doubt in the said case, the court has followed the JudgmentGin Yellapu Uma Maheswari and Another(supra). It found that theunregistered memorandum could be used for collateral purpose withinthe meaning of Section 49 of the Registration Act subject to payment ofpenalty and stamp duty.

24. Order 13 Rule 3 of the Code of Civil Procedure, 1908H(hereinafter referred to as ‘the Code’, for short) enables the Court to

reject any document which is considered irrelevant or otherwiseinadmissible recording the ground of such rejection. Order 13 Rule 4 ofthe Code provides for the procedure when document has been admittedin evidence. Section 49 deals with the effect of non-registration ofdocuments which are compulsorily registrable under Section 17 of theRegistration Act and Transfer of Property Act. Section 49(a) of theRegistration Act declares that an unregistered document which iscompulsorily registrable cannot ‘affect’ any immovable propertycomprised therein. The expression ‘affect’ has been explained by thefull bench judgment of the Madras High Court in Muruga Mudallarand Ors. v. Subba Reddiar9. We may notice only the following discussionin the judgment of Satyanarayana Rao,J.:“As pointed out by Spencer J. in Saraswathamma v. Paddayya,46 Mad. 349 : (A. I. R. 1923 Mad. 297) the verb “affect” inSection 49 is only compendious term employed by the Legislatureto express the meaning of the longer phrase “purporting oroperating to create, declare, assign, limit or extinguish, whether inpresent or in future, any right, title or interest whether vested orcontingent to”(See also Kanjee & Moolji Bros, v. ShanmughamPillai, 56 Mad. 169 : (A. I. R. 1932 Mad. 734), where the view ofSpencer J. was accepted).”

25. Section 49(c) of Registration Act prohibits the admitting ofcompulsorily registrable documents which are unregistered as evidenceof any transaction affecting immovable property unless it has beenregistered. In the very same Judgment, we notice the following discussion:

“The other consequence of non-registration is to prohibit thedocument from being received not “in” evidence, but “as” evidenceof any transaction affecting such property. The emphasis on theword “as” was, in my opinion, rightly laid by Venkatasubba Rao J.in Saraswathamma v. Paddayya, 46 Mad. 349 : (A. I. R. 1923Mad. 297), where the learned Judge observed:

“What is prohibited by the section is receiving document asevidence of

transaction, not merely receiving it in evidence, i.e., as piece ofevidence having bearing on the question to be ultimately decided.”

In other words, the prohibition is to prevent person fromestablishing by the use of the document in evidence “transaction,affecting Immovable property”. person should not be permittedto establish indirectly by use of the document what he is prevented”from doing directly under Clause (a).

(Emphasis supplied)

26. The proviso carves out two exceptions. We are onlyconcerned, in this case, with only one of them and that is contained inthe last limb of the proviso. The unregistered document can be used asevidence of any collateral transaction. This is however subject to theCcondition that the said collateral transaction should not itself be one whichmust be effected by registered document. It is this expression containedin the proviso which leads us to ask the question as to what wouldconstitute collateral transaction. If it were collateral transaction, thenan unregistered document can indeed be used as evidence to prove theDsame. Would possession being enjoyed or the nature of the possessionon the basis of the unregistered document, be transaction and furtherwould it be collateral transaction? We pose this question as thecontention of the appellants is that even if the Khararunama dated15.4.1986 cannot be used as evidence to prove the factum ofrelinquishment of right which took place in the past, the KhararunamaEcan be looked into to prove the conduct of the parties and the nature ofthe possession which was enjoyed by the parties.

27. In N. Varada Pillai v. Jeevarathnammal10, the Privy CouncilCourt took the view that though unregistered, the document could beused to explain the nature of the possession of person. In the saidFcase, in fact, two widows, who were in possession of the property inequal shares applied to the Collector that they had given away theproperty as Stridhan to lady and that the orders may be issued fortransferring the property to her. The property was so transferred on thebasis of the petition. On the question whether the transferee had obtainedGtitle by adverse possession while finding the unregistered petition beforethe Collector could not be admitted to prove gift, the fact that transfereewas continuing as donee and owner was gleaned from the said petitionto support the case of adverse possession.28. An attempt to derive support from the said judgment wasrefused on different set of facts by this court inKirpal Kaur v. BachanSingh and Ors.[11]. In the said case the court was dealing with thefollowing facts. The widow of Hindu upon the death of her husbandcame by possession of the plaint schedule properties. She even got theproperty mutated. gift was made by her. The reversioners thereafterapproached her and an unregistered document was entered into withher wherein she purported to acknowledge that she had only life estate.Thereafter the suit came to be filed. The widow set up the case ofadverse possession. On the other hand, the plaintiffs placed reliance onthe unregistered document and relied upon the judgment of theN. VaradaPillai(supra). This Court repelled the case of the plaintiffs and held asfollows inKirpal Kaur(supra):

“15. We cannot agree that on the authority of Varatha Pillai’scase (1918) 46 I.A. 285, the agreement of February 6, 1932, canbe admitted in evidence in the case in hand to show the nature ofHarnam Kaur’s possession of the lands subsequent to its date. InVaratha Pillai’s case (1918) 46 I.A. 285, Duraisani had got intopossession only after the petition and claimed to retain possessiononly under the gift mentioned in it. The petition was thereforeadmissible in evidence to show the nature of her possession. Inthe present case Harnam Kaur had been in possession before thedate of the document and to admit it in evidence to show thenature of her possession subsequent to it would be to treat it asoperating to destroy the nature of the previous possession and toconvert what had started as adverse possession into permissivepossession and, therefore, to give effect to the agreement containedin it which admittedly cannot be done for want of registration.Toadmit it in evidence for the purpose sought would really amount togetting round the statutory bar imposed by Section 49 of theRegistration Act.”

(Emphasis supplied)

29. This is significant for the reason that the law is not that inevery case where party sets up the plea that the court may look into anunregistered documents to show the nature of the possession that thecourt would agree to it. The cardinal principle would be whether by

Aallowing the case of the party to consider an unregistered document itwould result in the breach of the mandate of the Section 49 of theRegistration Act.

30. We may also usefully refer to the views expressed by theDivision Bench of the Madras High Court in K. Panchapagesa AyyarBand Ors. v. K. Kalyanasundaram Ayyar and Ors.12:

“25. To sum up it is well settled in long series of decisions whichhave since received statutory recognition by the Amending Act of1929 (vide the concluding words of the new proviso to Section 49of the Registration Act) that compulsorily registrable but anCunregistered document is admissible in evidence for collateralpurpose that is to say, for any purpose other than that of creating,declaring, assigning, limiting or extinguishing right to immovableproperty.

The expression “collateral purpose” is no doubt very vague oneDand the Court must decide in each case whether the purpose forwhich it is sought to use the unregistered document is really acollateral one or is to establish directly title to the immovableproperty sought to be conveyed by the document. But by the simpledevice of calling, it “collateral purpose” party cannot use theunregistered document in any legal proceedings to bring aboutEindirectly the effect which it would have had if registered.

To quote Sir George Lowndes in James R. R. Skinner v. RobertHercules Skinner ILR 51 All 771: MANU/PR/0091/1929 : AIR1929 PC 269 (Z 22) the collateral purpose to which the documentis put should be nothing else than an evasion of the statute andFrender almost nugatory the hitherto well-established rule relatingto the limited uses to which an unregistered partition deed can beput to.”

(Emphasis supplied)

31. In Roshan Singh and Others v. Zile Singh and Others13,Gthe question arose whether Exhibit P12 in the said case was an instrumentof partition and therefore inadmissible for want of registration underSection 49 of the Registration Act or whether it was merely

12 AIR 1957 Madras 472H13 AIR 1988 SC 881

memorandum of family arrangement. This Court after referring to thedocument held as follows:

“8. According to the plain terms of the document Exh. P-12, it isobvious that it was not an instrument of partition but merely amemorandum recording the decision arrived at between the partiesas to the manner in which the partition was to be effected. Theopening words of the document Exh. P-12 are: ‘Today afterdiscussion it has been mutually agreed and decided that....’ Whatfollows is list of properties allotted to the respective parties.From these words, it is quite obvious that the document Exh. P-12contains the recital of past events and does not itself embody theexpression of will necessary to effect the change in the legalrelation contemplated. So also the Panch Faisla Exh. P-1 whichconfirmed the arrangement so arrived at, opens with the words‘Today on 31-1-1971 the following persons assembled to effect amutual compromise between Chaudhary Puran Singh andChaudhary Zile Singh and unanimously decided that....’ The purportand effect of the decision so arrived at is given thereafter. One ofthe terms agreed upon was that the gher marked B2 would remainin the share of Zile Singh, representing the Plaintiffs.

9. It is well-settled that while an instrument of partition whichoperates or is intended to operate as declared volition constitutingor severing ownership and causes change of legal relation tothe property divided amongst the parties to it, requires registrationunder Section 17(1)(b) of the Act, writing which merely recitesthat there has in time past been partition, is not declaration ofwill, but mere statement of fact, and it does not requireregistration. The essence of the matter is whether the deed is apart of the partition transaction or contains merely an incidentalrecital of previously completed transaction. The use of the pasttense does not necessarily indicate that it is merely recital of apast transaction.It is equally well-settled that mere list ofproperties allotted at partition is not an instrument of partitionand does not require registration. Section 17(1)(b) lays down thata document for which registration is compulsory should, by itsown force, operate or purport to operate to create or declaresome right in immovable property. Therefore, mere recital ofwhat has already taken place cannot be held to declare any right

Aand there would be no necessity of registering such document.Two propositions must therefore flow: (1) partition may beeffected orally; but if it is subsequently reduced into form of adocument and that document purports by itself to effect divisionand embodies all the terms of bargain, it will be necessary toregister it. If it be not registered, Section 49 of the Act will preventBits being admitted in evidence. Secondly evidence of the factumof partition will not be admissible by reason of Section 91 of theEvidence Act, 1872. (2) Partition lists which are mere records ofa previously completed partition between the parties, will beadmitted in evidence even though they are unregistered, to proveCthe fact of partition: See Mulla’s Registration Act, 8th Edn., pp.54-57.”

(Emphasis supplied)

Thereafter, the Court also approved of the use of the said documentfor collateral transaction and observed as follows:D

“11. Even otherwise, the document Exh. P 12 can be looked intounder the proviso to Section 49 which allows documents whichwould otherwise be excluded, to be used as evidence of ‘anycollateral transaction not required to be effected by registeredinstrument’. In Varada Pillai v. Jeevarathnammal, (1919) 46 IndEApp 285 : AIR 1919 PC 44 the Judicial Committee of the PrivyCouncil allowed an unregistered deed of gift which requiredregistration, to be used not to prove gift ‘because no legal titlepassed’ but to prove that the donee thereafter held in her ownright. We find no reason why the same rule should not be madeFapplicable to case like the present.”

32. In SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. PrivateLtd.14, the question arose whether an arbitration agreement contained ina compulsorily registrable document which was not registered could beused to prove the collateral transaction, namely, the provision forarbitration. This court held as follows:G

“11. Section 49 makes it clear that document which iscompulsorily registerable, if not registered, will not affect theimmovable property comprised therein in any manner. It will also

H14 (2011) 14 SCC 66

not be received as evidence of any transaction affecting suchproperty, except for two limited purposes. First is as evidence ofa contract in suit for specific performance. Second is as evidenceof any collateral transaction which by itself is not required to beeffected by registered instrument. collateral transaction is notthe transaction affecting the immovable property, but transactionwhich is incidentally connected with that transaction. The questionis whether provision for arbitration in an unregistered document(which is compulsorily registerable) is collateral transaction, inrespect of which such unregistered document can be received asevidence under the proviso to Section 49 of the Registration Act.

16. An arbitration agreement does not require registration underthe Registration Act. Even if it is found as one of the clauses in acontract or instrument, it is an independent agreement to refer thedisputes to arbitration, which is independent of the main contractor instrument. Therefore having regard to the proviso to Section49 of the Registration Act read with Section 16(1)(a) of the Act,an arbitration agreement in an unregistered but compulsorilyregisterable document can be acted upon and enforced for thepurpose of dispute resolution by arbitration.”

(Emphasis supplied)

33. If we apply the test as to whether the Khararunama in thiscase by itself ‘affects’, i.e., by itself creates, declares, limits orextinguishes rights in the immovable properties in question or whether itmerely refers to what the appellants alleged were past transactions whichhave been entered into by the parties, then, going by the words used inthe document, they indicate that the words are intended to refer to thearrangements allegedly which the parties made in the past. The documentdoes not purport to by itself create, declare, assign, extinguish or limitright in properties. Thus, the Khararunama may not attract Section49(1)(a) of the Registration Act.

34. As far as Section 49(1)(c) of the Registration Act is concerned,it provides for the other consequence of compulsorily registrabledocument not being so registered. That is, under Section 49(1)(a), acompulsorily registrable document, which is not registered, cannotproduce any effect on the rights in immovable property by way ofcreation, declaration, assignment, limiting or extinguishment. Section

A49(1)(c) in effect, reinforces and safeguards against the dilution of themandate of Section 49(1)(a). Thus, it prevents an unregistered documentbeing used ‘as’ evidence of the transaction, which ‘affects’ immovableproperty. If the Khararunama by itself, does not ‘affect’ immovableproperty, as already explained, being record of the alleged pasttransaction, though relating to immovable property, there would be noBbreach of Section 49(1)(c), as it is not being used as evidence of atransaction effecting such property. However, being let in evidence, beingdifferent from being used as evidence of the transaction is pertinent[See Muruga Mudallar(supra)]. Thus, the transaction or the pasttransactions cannot be proved by using the Khararunama as evidenceCof the transaction. That is, it is to be noted that, merely admitting theKhararunama containing record of the alleged past transaction, is notto be, however, understood asmeaning that if those past transactionsrequire registration, then, the mere admission, in evidence of theKhararunama and the receipt would produce any legal effect on theimmovable properties in question.D

35. As far as stamp duty goes, on our finding regarding the natureof the document, viz., Khararunama, being record of the allegedtransactions, it may not require to be stamped. We notice the followingconclusion of the Division Bench of the Madras High Court inA.C.Lakshmipathy and others v. A.M. Chakrapani Reddiar and others15:E

“42. To sum up the legal position

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(V) However, document in the nature of Memorandum,evidencing family arrangement already entered into and hadFbeen prepared as record of what had been agreed upon, inorder that there are no hazy notions in future, it need not be stampedor registered.”

36. No doubt, when there has been partition, then, there may beno scope for invoking the concept of antecedent right as such, which isGinapposite after disruption in the joint family status and what is morean outright partition by metes and bounds. In this regard, it is to be noticedthat the appellants and the respondents, admittedly, partitioned their jointfamily properties. This is clear from the Khararunama wherein it is

stated that they have divided the joint family properties. The properties,which are mentioned in the Khararunama, became the separateproperties of the respondent.

37. Resultantly, the Appeal is allowed. The impugned Judgment isset aside subject to the observations as contained in this Judgment. Therewill be no Order as to costs.

Divya Pandey

Appeal allowed.