R. HEMALATHA versus KASHTHURI

[2023] 2 S.C.R. 834

[2023] 2 S.C.R.

R. HEMALATHA

KASHTHURI

Civil Appeal No. 2535 of 2023

BAPRIL 10, 2023

[M. R. SHAH AND KRISHNA MURARI, JJ.]

Registration Act, 1908 – ss.17(1A), Proviso to s.49 – SpecificRelief Act, 1877 – Chapter-II – Suit for specific performance –Unregistered Agreement to Sell – Admissibility in evidence – Held:CAs per proviso to s.49, an unregistered document affecting immovableproperty and required by Registration Act or the Transfer of PropertyAct to be registered, may be received as evidence of contract in asuit for specific performance under Chapter-II of the 1877 Act, oras evidence of any collateral transaction not required to be effectedDby registered instrument, however, subject to s.17(1A) of theRegistration Act – In the present case, it is not the case on behalf ofeither of the parties that Agreement to Sell in question would fallunder the category of document as per s.17(1A), Registration Act –Therefore, High Court rightly held relying upon proviso to s.49 thatthe unregistered Agreement to Sell in question shall be admissibleEin evidence in suit for specific performance and the proviso isexception to the first part of s.49 – Appeal fails – Registration (TamilNadu Amendment) Act, 2012 – Transfer of Property Act, 1882 –ss.53, 53A – Specific Relief.

Registration Act, 1908 – s.17(1)(g) – Registration (TamilFNadu Amendment) Act, 2012 – Effect of – Discussed.

Dismissing the appeal, the Court

HELD: 1.1 By Tamil Nadu Amendment Act, 2012, Section17(1)(g) has been inserted and “explanation” to Section 17(2)Ghas been omitted. Thus, on and after the Tamil Nadu AmendmentAct, 2012, as per Section 17(1)(g), instrument of agreementrelating to sale of immovable property of the value of Rs.100/-and upwards is required to be registered compulsorily. However,despite the same and despite the “explanation” to sub-section(2) of Section 17 has been omitted, there is no correspondingH

amendment made to Section 49 of the Registration Act. Thus, asper proviso to Section 49, an unregistered document affectingthe immovable property and required by Registration Act to beregistered may be received as evidence of contract in suit forspecific performance under Chapter-II of the Specific Relief Act,1877, or as evidence of any collateral transaction not required tobe effected by registered document. [Paras 8-10][843-F-H; 844-E-F]

1.2 At this stage, the primary statement of objects andreasons to the Tamil Nadu Amendment Act, 2012, is also requiredto be referred to and considered. The primary statement ofobjects and reasons seem to suggest that amendment has beenintroduced by the State of Tamil Nadu bearing in mind the loss tothe exchequer as public were executing the documents relatingto sale of immovable property etc. on white paper or on stamppaper of nominal value. The proviso to Section 49 came to beinserted vide Act No.21 of 1929 and thereafter, Section 17(1A)came to be inserted by Act No. 48 of 2001 with effect from24.09.2001 by which the documents containing contracts totransfer or consideration any immovable property for the purposeof Section 53 of the Transfer of Properties Act is madecompulsorily to be registered if they have been executed on orafter 2001 and if such documents are not registered on or aftersuch commencement, then there shall have no effect for thepurposes of said Section 53A. So, the exception to the proviso toSection 49 is provided under Section 17(1A) of the RegistrationAct. Otherwise, the proviso to Section 49 with respect to thedocuments other than referred to in Section 17(1A) shall beapplicable. [Paras 11, 12][844-F-H; 845-A-B]1.3 Under the circumstances, as per proviso to Section 49of the Registration Act, an unregistered document affectingimmovable property and required by Registration Act or theTransfer of Property Act to be registered, may be received asevidence of contract in suit for specific performance underChapter-II of the Specific Relief Act, 1877, or as evidence of anycollateral transaction not required to be effected by registeredinstrument, however, subject to Section 17(1A) of the RegistrationAct. It is not the case on behalf of either of the parties that the

Adocument/ Agreement to Sell in question would fall under thecategory of document as per Section 17(1A) of the RegistrationAct. Therefore, in the facts and circumstances of the case, theHigh Court has rightly observed and held relying upon provisoto Section 49 of the Registration Act that the unregistereddocument in question namely unregistered Agreement to Sell inBquestion shall be admissible in evidence in suit for specificperformance and the proviso is exception to the first part ofSection 49. Therefore, the present appeal fails. [Paras 13, 14][845-C-F]

Dayal Singh vs. Indar Singh, (1926) 24 LW 396 –Creferred to.CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2535of 2023.

From the Judgment and Order dated 01.02.2022 of the High Courtof Judicature at Madras at Madurai in CRPMD No. 1877 of 2017.D

Pulkit Tare, D. Kumanan, Advs. for the Appellant.

K. S. Mahadevan, Ms. Swati Bansal, Rangarajan R., RajeshKumar, Advs. for the Respondent.

The Judgment of the Court was delivered byE

M. R. SHAH, J.

1. Leave granted.

2. Feeling aggrieved and dissatisfied with the impugned judgmentand order passed by the High Court of Judicature at Madras at MaduraiFpassed in Revision Application No.1877 of 2017 dated 01.02.2022 bywhich the High Court has allowed the said revision application preferredby the respondent herein by quashing and setting aside the order passedby the learned Trial Court passed in I.A. No.159 of 2017 in O.S. No.199of 2014 by further directing that the document in question shall be receivedGin evidence in the suit for specific performance, the original defendanthas preferred the present appeal.

3. The facts leading to the present appeal in nut-shell are as under:

2.1 That the respondent herein is an original plaintiff (hereinafterreferred to as “original plaintiff”) instituted civil suit being O.S. No.199Hof 2014 for specific performance of the Agreement to Sell dated

R. HEMALATHA v. KASHTHURI

[M. R. SHAH, J.]

10.09.2013. After the chief-examination of the plaintiff as PW-1, on theapplication filed by the appellant – original defendant, preliminary issuewas framed by the learned Trial Court on the admissibility of theAgreement dated 10.09.2013 in evidence. It was the case on behalf ofthe defendant that in view of the Tamil Nadu Amendment Act No.29 of2012 to the Indian Registration Act, under which the instruments ofagreement relating to sale of immovable property of the value of Rs.100/- and upwards is compulsorily required to be registered, the saidunregistered document shall be inadmissible in evidence. On the otherhand, relying upon Section 49(a) and (c) of the Act, it was submitted thatan unregistered Agreement to Sell can be admitted as evidence of acontract in suit for specific performance. The learned Trial Court heldthe preliminary issue in favour of the defendant and against the plaintiffby observing that the unregistered Agreement dated 10.09.2013 shallnot be admissible in evidence.2.2 Feeling aggrieved and dissatisfied with the order of the learnedTrial Court, the plaintiff preferred the present revision application beforethe High Court. By the impugned judgment and order, the High Courthas allowed the revision petition relying upon Section 49 of the RegistrationAct by setting aside the order passed by the learned Trial Court anddirected that the agreement in question be received in evidenceconsidering the fact that the suit in question is suit for specificperformance, which falls within the first exception carved out in theproviso to Section 49.

2.3 The impugned judgment and order passed by the High Courtdirecting to receive the unregistered Agreement to Sell in evidence in asuit for specific performance, the original defendant has preferred thepresent appeal.

3. Learned counsel appearing on behalf of the appellant herein –original defendant has vehemently submitted that in the facts andcircumstances of the case, the High Court has materially erred in directingto receive the unregistered agreement in evidence.

3.1 It is submitted that it is an admitted position that the Agreementto Sell dated 10.09.2013 which is the foundation or basis of the suit is anunregistered Agreement to Sell and therefore cannot be exhibited inevidence for the main purpose in the suit, in view of the Tamil NaduAmendment to Section 17 of the Registration Act making an Agreementto Sell to be compulsorily registered with effect from 01.12.2012.

A3.2 It is submitted that the “explanation” attached to sub-clause(2) of Section 17 which also relates to Agreement to Sell has been omitted.It is submitted that said explanation was inserted by Amendment Act,1927, to overcome the judgment of the Privy Council in the case ofDayal Singh vs. Indar Singh, (1926) 24 LW 396. It is submitted thatin that case, an advance paid under an Agreement to Sell being chargeBon the property as per Section 55(6)(v) of the Transfer of Property Actwas held to create an interest and hence, unregistered Agreement toSell cannot be admitted in evidence. The explanation remedied thesituation and save the Agreement to Sell from the requirement ofcompulsory registration.C

3.3 It is submitted that Section 54 of the Transfer of Property Actstates that an Agreement to Sell by itself does not create any interest inor charge on the property. As per Section 17(2)(v) of the RegistrationAct with reference to Section 1(b) and (c), that an agreement/documentsimplicitor merely creating right to obtain another document, was savedDfrom compulsory registration. It is submitted that thus prior to theamendment of 2012 and after the amendment, an Agreement to Sellsimplicitor or reciting payment of earnest money was not required to beregistered. For these savings, an Agreement to Sell would also haverequired registration, as it is document affecting immovable property.It is submitted that now after the 2012 amendment, an Agreement toESell for Rs.100/- or upwards is to be compulsorily registered. Anagreement recital for payment of advance is also to be compulsorilyregistered as the “explanation” in Section 17(2) introduced by 1927amendment after Dayal Singh’s case, has been omitted by the presentamendment. The advance amount and sale consideration are part andFparcel of the transactions between the parties.

3.4 It is submitted that as per Section 49(a) and (c) of theRegistration Act, document requires to be registered, if not registeredshall not affect the immovable property comprised therein and shall notbe received as evidence of any transaction affecting such property. It isGsubmitted that prior to 2012 amendment, when an Agreement to Sellwas not required to be registered, Section 49(a) and (c) had no operationin relation to an Agreement to Sell. So an unregistered Agreement toSell had no restriction in being received as evidence of any transactionaffecting such immovable property or affecting immovable property assuch. Thus, the terms of the document and the transaction embodied inHit could be relied on in its entirety in any proceeding in the pre-amendmentera. It is submitted that however now after the amendment, Section49(a) and (c) of the Registration Act which are both substantive law andrule of evidence, apply to an unregistered Agreement to Sell and it shallnot affect immovable property and shall not be received as evidence oftransaction affecting immovable property.

3.5 It is further submitted by the learned counsel for the defendantthat if the interpretation of the Hon’ble High Court given in the impugnedorder is followed, then the same would render the Amendment Act,2012 otiose and meaningless, simply because the situation before thesaid amendment was exactly as has been laid down in the impugnedorder. The legislative intent behind making an Agreement to Sell, acompulsorily registrable document has been completely ignored by theHon’ble High Court.

3.6 It is submitted that after introduction of specific provisionrelating to Agreement to Sell in Section 17(1)(g) of the Act, and in theabsence of any amendment in Section 17(2) to include clause (g) alsowithin its fold, Section 17(2)(v) will only operate in relation to documentscovered under the general provision of Clauses (b) and (c) of sub-section(1). it is submitted that in that sense Section 17(2)(v) will apply to allother agreements to mortgage, to lease, to release, to exchange etc. butwill not apply to an Agreement to Sell.

3.7 Making above submissions, it is prayed to allow the presentappeal and quash and set aside the impugned order passed by the Hon’bleHigh Court and to restore the order passed by the learned Trial Court.

4. While opposing the present appeal, learned counsel appearingon behalf of original plaintiff has heavily relied upon the proviso to Section49 of the Registration Act which specifically provides that an unregistereddocument affecting the immovable property and required by theRegistration Act to be registered may be received as evidence of acontract in suit for specific performance under Chapter-II of the SpecificRelief Act or as evidence of any collateral transaction not required to beaffected by registered instrument.

4.1 It is submitted that as rightly observed and held by the Hon’bleHigh Court though Section 17(1) of the Registration Act has beenamended by the Tamil Nadu Act, 2012 by inserting Section 17(1)(g),making the Agreement to Sell/ Agreement affecting any immovable

Aproperty compulsorily required to be registered, there is no correspondingamendment to Section 49 more particularly proviso to Section 49 of theRegistration Act.

4.2 It is further submitted that even the object and purpose ofTamil Nadu Amendment Act, 2012 more particularly inserting SectionB17(1)(g) is required to be considered which has been elaborately dealtwith and considered by the Hon’ble High Court in the impugned judgmentand order. It is submitted that perusal of statement of objects andreasons to the Act No.29 of 2012 would suggest that primarily theamendment has been introduced by the State of Tamil Nadu by reasonof the fact that instruments of agreement relating to sale of immovableCproperty, instruments of power of attorney relating to immovable propertyand instruments evidencing agreement of deposit of title deeds, whichwere not registrable were resulting in loss to the exchequer as the publicwere executing these documents on white paper or on stamp paper ofnominal value.D4.3 With the above submissions and heavily relying upon the provisoto Section 49 of the Registration Act, it is prayed to dismiss the presentappeal.5. We have heard the learned counsel appearing on behalf ofErespective parties at length. The short question posed for the considerationof this Court is effect of Section 17(1)(g) of the Registration Act applicableto the State of Tamil Nadu by which Section 17(1)(g) of the RegistrationAct has been inserted and instruments of agreement relating to sale ofimmovable property of the value of Rs.100/- and upwards is madecompulsorily registrable and whether such unregistered agreementFrelating to sale of immovable property can be received in evidence in asuit for specific performance?

6. While answering the aforesaid issues and appreciating thesubmissions made by learned counsel appearing on behalf of therespective parties, Section 17 of the Registration Act, 1908, as applicableGprior to the Registration (Tamil Nadu Amendment) Act, 2012 and Section17 post Amendment Act, 2012, are required to be referred to which areas under.

7. Section 17 of the Registration Act, 1908, post Tamil NaduAmendment Act, 2012 reads as under :H

[M. R. SHAH, J.]

“17. Documents of which registration is compulsory.—(1) Thefollowing documents shall be registered, if the property towhich they relate is situate in district in which, and if theyhave been executed on or after the date on which, Act No.XVI of 1864, or the Indian Registration Act, 1866, or theIndian Registration Act, 1871, or the Indian Registration Act,1877, or this Act came or comes into force, namely:—

(a) instruments of gift of immovable property;

(b) other non-testamentary instruments which purport oroperate to create, declare, assign, limit or extinguish, whetherin present or in future, any right, title or interest, whethervested or contingent, of the value of one hundred rupees andupwards, to or in immovable property;

(c) non-testamentary instruments which acknowledge thereceipt or payment of any consideration on account of thecreation, declaration, assignment, limitation or extinction ofany such right, title or interest; and

(d) leases of immovable property from year to year, or forany term exceeding one year, or reserving yearly rent;

[(e) non-testamentary instruments transferring or assigningany decree or order of Court or any award when such decreeor 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, ofthe value of one hundred rupees and upwards, to or inimmovable property:]

Provided that the [State Government] may, by order publishedin the [Official Gazette], exempt from the operation of thissub-section any lease executed in any district, or part of adistrict, the terms granted by which do not exceed five yearsand the annual rents reserved by which do not exceed fiftyrupees.

[(1A) The documents containing contracts to transfer forconsideration, any immovable property for the purpose ofsection 53A of the Transfer of Property Act, 1882 (4 of 1882)shall be registered if they have been executed on or after the

commencement of the Registration and Other Related laws(Amendment) Act, 2001 (48 of 2001) and if such documentsare not registered on or after such commencement, then, theyshall have no effect for the purposes of the said section 53A.]

(2) Nothing in clauses (b) and (c) of sub-section (1) appliesto—

(i) any composition deed; or

(ii) any instrument relating to shares in joint stock Company,notwithstanding that the assets of such Company consist inwhole or in part of immovable property; or

(iii) any debenture issued by any such Company and notcreating, declaring, assigning, limiting or extinguishing anyright, title or interest, to or in immovable property except inso far as it entitles the holder to the security afforded by aregistered instrument whereby the Company has mortgaged,conveyed or otherwise transferred the whole or part of itsimmovable property or any interest therein to trustees upontrust for the benefit of the holders of such debentures; or

(iv) any endorsement upon or transfer of any debenture issuedby any such Company; or

(v) [any document other than the documents specified in sub-section (1A)] not itself creating, declaring, assigning, limitingor extinguishing any right, title or interest of the value of onehundred rupees and upwards to or in immovable property,but merely creating right to obtain another document whichwill, when executed, create, declare, assign, limit or extinguishany such right, title or interest; or

(vi) any decree or order of Court [except decree or orderexpressed to be made on compromise and comprisingimmovable property other than that which is the subject-matterof the suit or proceeding]; or

(vii) any grant of immovable property by [Government]; or

(viii) any instrument of partition made by Revenue-Officer;or

R. HEMALATHA v. KASHTHURI

[M. R. SHAH, J.]

(ix) any order granting loan or instrument of collateralsecurity granted under the Land Improvement Act, 1871, orthe Land Improvement Loans Act, 1883; or

(x) any order granting loan under the Agriculturists, LoansAct, 1884, or instrument for securing the repayment of loanmade under that Act; or

[(xa) any order made under the Charitable Endowments Act,1890 (6 of 1890), vesting any property in Treasurer ofCharitable Endowments or divesting any such Treasurer ofany property; or]

(xi) any endorsement on mortgage-deed acknowledging thepayment of the whole or any part of the mortgage-money,and any other receipt for payment of money due under amortgage when the receipt does not purport to extinguish themortgage; or

(xii) any certificate of sale granted to the purchaser of anyproperty sold by public auction by Civil or Revenue-Officer.

[Explanation.—A document purporting or operating to effecta contract for the sale of immovable property shall not bedeemed to require or ever to have required registration byreason only of the fact that such document contains recitalof the payment of any earnest money or of the whole or anypart of the purchase money.]”

8. By Tamil Nadu Amendment Act, 2012, Section 17(1)(g) hasbeen inserted and “explanation” to Section 17(2) has been omitted.Section 17(1)(g) as inserted by Tamil Nadu Amendment Act, 2012, readsas under :

“17(1)(g) instruments of agreement relating to sale ofimmovable property of the value of one hundred rupees andupwards.”

9. Thus, on and after the Tamil Nadu Amendment Act, 2012, asper Section 17(1) (g), instrument of agreement relating to sale ofimmovable property of the value of Rs.100/- and upwards is required tobe registered compulsorily. However, despite the same and despite the“explanation” to sub-section (2) of Section 17 has been omitted, there is

Ano corresponding amendment made to Section 49 of the RegistrationAct. Section 49 of the Registration Act is as under :

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

[Provided that an unregistered document affecting immovableproperty and required by this Act or the Transfer of PropertyAct, 1882 (4 of 1882), to be registered may be received asDevidence of contract in suit for specific performance underChapter II of the Specific Relief Act, 1877 (3 of 1877) , ***or as evidence of any collateral transaction not required tobe effected by registered instrument.]”

10. Thus, as per proviso to Section 49, an unregistered documentEaffecting the immovable property and required by Registration Act to beregistered may be received as evidence of contract in suit for specificperformance under Chapter-II of the Specific Relief Act, 1877, or asevidence of any collateral transaction not required to be effected byregistered document.F11. At this stage, the primary statement of objects and reasons to

F11. At this stage, the primary statement of objects and reasons tothe Tamil Nadu Amendment Act, 2012, is also required to be referred toand considered. The primary statement of objects and reasons seem tosuggest that amendment has been introduced by the State of Tamil Nadubearing in mind the loss to the exchequer as public were executing theGdocuments relating to sale of immovable property etc. on white paper oron stamp paper of nominal value.

12. At this stage, it is required to be noted that the proviso toSection 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 effectfrom 24.09.2001 by which the documents containing contracts to transferH

or consideration any immovable property for the purpose of Section 53of the Transfer of Properties Act is made compulsorily to be registeredif they have been executed on or after 2001 and if such documents arenot registered on or after such commencement, then there shall have noeffect for the purposes of said Section 53A. So, the exception to theproviso to Section 49 is provided under Section 17(1A) of the RegistrationAct. Otherwise, the proviso to Section 49 with respect to the documentsother than referred to in Section 17(1A) shall be applicable.

13. Under the circumstances, as per proviso to Section 49 of theRegistration Act, an unregistered document affecting immovable propertyand required by Registration Act or the Transfer of Property Act to beregistered, may be received as evidence of contract in suit for specificperformance under Chapter-II of the Specific Relief Act, 1877, or asevidence of any collateral transaction not required to be effected byregistered instrument, however, subject to Section 17(1A) of theRegistration Act. It is not the case on behalf of either of the parties thatthe document/ Agreement to Sell in question would fall under the categoryof document as per Section 17(1A) of the Registration Act. Therefore,in the facts and circumstances of the case, the High Court has rightlyobserved and held relying upon proviso to Section 49 of the RegistrationAct that the unregistered document in question namely unregisteredAgreement to Sell in question shall be admissible in evidence in suit forspecific performance and the proviso is exception to the first part ofSection 49.

14. In view of the above and for the reasons stated above, thepresent appeal fails and the same deserves to be dismissed. It isaccordingly dismissed. There shall be no orders as to costs.

Divya Pandey(Assisted by : Abhishek Agnihotri and Roopanshi Virang, LCRAs)

Appeal dismissed.