The Supreme Court has ruled that an unregistered agreement to sell can be admitted as evidence to prove the existence of a contract in a suit for specific performance. This decision was based on the proviso to Section 49 of the Registration Act, 1908.
The Court highlighted that the proviso to Section 49 of the Registration Act allows an unregistered document affecting immovable property to be presented as evidence of a contract in a suit for specific performance. It can also be used as evidence of a collateral transaction.
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“We are of the opinion that the prayer of the appellant in the interlocutory application falls under proviso to Section 49 of the Registration Act, which provides that an unregistered document affecting immovable property may be received as evidence of a contract in a suit for specific performance. The proviso also enables the said document to be received in evidence of a collateral transaction.” — Supreme Court
Case Background
The judgment was delivered by a bench comprising Justices PS Narasimha and Joymalya Bagchi. The case originated from Tamil Nadu, where the Registration Act has been amended to make the registration of agreements to sell mandatory.
The appellant had entered into an unregistered agreement to sell in 2000 with the respondent. The appellant filed a suit for specific performance, claiming that the respondent had accepted part payment and handed over possession but did not execute the sale deed.
However, the trial court dismissed the suit, stating that the unregistered agreement was inadmissible under the Stamp Act and Registration Act. This decision was upheld by the High Court. Aggrieved, the appellant approached the Supreme Court.
Setting aside the lower court’s decision, the Supreme Court referred to the case of S. Kaladevi v. V.R. Somasundara (2010) 5 SCC 401, where it was held that an unregistered document could be used to establish an oral agreement of sale in a specific performance suit but not as evidence of a completed sale.
The Court explained that since the appellant sought to prove the formation of a contract and not the title, the unregistered agreement could be used as evidence.
“When an unregistered sale deed is tendered in evidence, not as evidence of a completed sale, but as proof of an oral agreement of sale, the deed can be received in evidence making an endorsement that it is received only as evidence of an oral agreement of sale under the proviso to Section 49 of the 1908 Act,” the Court said in S. Kaladevi v. V.R. Somasundara.
The Supreme Court allowed the appeal, permitting the unregistered agreement to be used as evidence to prove the existence of a contract between the parties.
Case Title: MURUGANANDAM VERSUS MUNIYANDI (DIED) THROUGH LRS.
Appearance:
For Petitioner(s) :Mr. B Karunakaran, Adv. (Arguing Counsel) Mr. Ajith Williyam S, Adv. Mr. Shubham Dubey, Adv. Ms. Shruti Vaibhav, Adv. Mr. Anoop Prakash Awasthi, AOR
