UNREGISTERED AGREEMENT TO SALE IS ADMISSIBLE EVIDENCE IN A CASE INVOLVING SPECIFIC PERFORMANCE.

Unregistered agreements to sell are now acceptable evidence in actions seeking specific performance, according to the Supreme Court.

The appeal contesting the Madras High Court ruling by which the High Court permitted the revision application put up by the respondent was being handled by the bench of Justices M.R. Shah and Krishna Murari.

The respondent is the original plaintiff who filed a civil lawsuit in R. Hemalatha v. Kashthuri seeking particular performance of the purchase agreement dated 10.09.2013. The Trial Court established a preliminary issue about the admissibility of the Agreement dated 10.09.2013 in evidence following the primary examination of the plaintiff as PW1 on the application submitted by the appellant – original defendant.

It was argued on behalf of the defendant that the unregistered document would not be admissible in evidence due to the Tamil Nadu Amendment Act No. 29 of 2012 to the Indian Registration Act, which requires the registration of all instruments of agreement relating to the sale of real property valued at Rs. 100 and above.

On the other hand, it was argued that an unregistered Agreement to Sell might be considered as proof of a contract in a lawsuit for specific performance by citing Section 49(a) and (c) of the Act.

By stating that the unregistered Agreement dated 10.09.2013 should not be accepted in evidence, the trial court determined that the preliminary issue in favour of the defendant and against the plaintiff.

The plaintiff preferred the revision application before the High Court because she felt wronged and unsatisfied with the Trial Court’s ruling. The adjustment has been approved by the High Court through the contested judgement and decree.

The bench was asked to consider the following:

Can such an unregistered agreement for the sale of real estate be used as proof in a specific performance lawsuit?

The bench noted that at this point, it is also necessary to refer to and take into consideration the primary statement of objects and reasons to the Tamil Nadu Amendment Act, 2012. The primary statement of objects and reasons seems to imply that the amendment was introduced by the State of Tamil Nadu in consideration of the loss to the exchequer as a result of the public signing documents pertaining to the sale of real estate, among other things, on white paper or stamp paper of low value.

The Supreme Court noted that Act No. 21 of 1929 added the proviso to Section 49, and Act No. 48 of 2001 added Section 17(1A) with effect from September 24, 2001, making it mandatory for documents containing contracts to transfer or receive consideration for any immovable property for the purposes of Section 53 of the Transfer of Properties Act to be registered if they were executed on or after 2001 and if such documents are not already registered. Therefore, Section 17(1A) of the Registration Act provides the exception to the proviso to Section 49. If not, the proviso to Section 49 with regard to documents other than those mentioned in Section 17(1A) shall apply.

The bench explained that pursuant to the proviso to Section 49 of the Registration Act, a document affecting real property that is required to be registered under the Registration Act or the Transfer of Property 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 that is not required to be accomplished by registered instrument, subject to Sect.

According to the Supreme Court, the High Court correctly noted and held that the unregistered document in question, namely the unregistered Agreement to Sell in question, shall be admissible in evidence in a suit for specific performance. The proviso is an exception to the first part of Section 49 of the Registration Act.

The bench dismissed the appeal in light of the aforementioned.

SUBMITTED BY NEHA A. PARDESHI/4^TH Year BLS LLB/TRCL

Admin