R. HEMALATHA VERSUS KASHTHURI

R. HEMALATHA  VERSUS KASHTHURI 

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2535/2023

(@SLP (C) No. 14884/2022)

R. HEMALATHA           ...APPELLANT(S)

    

VERSUS

KASHTHURI        …RESPONDENT(S)

J U D G M E N T

M. R. Shah, J.

1. Leave granted. 

2. Feeling   aggrieved   and   dissatisfied   with   the

impugned judgment and order passed by the

High   Court   of   Judicature   at   Madras   at

Madurai   passed   in   Revision   Application

Page 1 of 26

No.1877 of 2017 dated 01.02.2022 by which

the High Court has allowed the said revision

application preferred by the respondent herein

by quashing and setting aside the order passed

by   the   learned   Trial   Court   passed   in   I.A.

No.159   of   2017   in   O.S.   No.199   of   2014   by

further   directing   that   the   document   in

question shall be received in evidence in the

suit   for   specific   performance,   the   original

defendant has preferred the present appeal. 

3. The facts leading to the present appeal in nutshell are as under:

2.1 That   the   respondent   herein   is   an   original

plaintiff   (hereinafter   referred   to   as   “original

plaintiff”) instituted civil suit being O.S. No.199

of   2014   for   specific   performance   of   the

Agreement to Sell dated 10.09.2013. After the

Page 2 of 26

chief­examination of the plaintiff as PW­1, on

the application filed by the appellant – original

defendant, a preliminary issue was framed by

the learned Trial Court on the admissibility of

the Agreement dated 10.09.2013 in evidence. It

was the case on behalf of the defendant that in

view of the Tamil Nadu Amendment Act No.29

of 2012 to the Indian Registration Act, under

which the instruments of agreement relating to

sale   of   immovable   property   of   the   value   of

Rs.100/­   and   upwards   is   compulsorily

required to be registered, the said unregistered

document   shall   be   inadmissible   in   evidence.

On the other hand, relying upon Section 49(a)

and (c) of the Act, it was submitted that an

unregistered Agreement to Sell can be admitted

as evidence of a contract in a suit for specific

performance. The learned Trial Court held the

Page 3 of 26

preliminary issue in favour of the defendant

and against the plaintiff by observing that the

unregistered   Agreement   dated   10.09.2013

shall not be admissible in evidence.

2.2 Feeling   aggrieved   and   dissatisfied   with   the

order of the learned Trial Court, the plaintiff

preferred   the   present   revision   application

before   the   High   Court.   By   the   impugned

judgment   and   order,   the   High   Court   has

allowed   the   revision   petition   relying   upon

Section 49 of the Registration Act by setting

aside the order passed by the learned Trial

Court   and   directed   that   the   agreement   in

question be received in evidence considering

the fact that the suit in question is a suit for

specific   performance,   which   falls   within   the

Page 4 of 26

first   exception   carved   out   in   the   proviso   to

Section 49.

2.3 The impugned judgment and order passed by

the   High   Court   directing   to   receive   the

unregistered Agreement to Sell in evidence in

a   suit   for   specific   performance,  the   original

defendant has preferred the present appeal.

3. Learned counsel appearing on behalf of the

appellant   herein   –   original   defendant   has

vehemently submitted that in the facts and

circumstances of the case, the High Court has

materially   erred   in   directing   to   receive   the

unregistered agreement in evidence.

3.1 It is submitted that it is an admitted position

that the Agreement to Sell dated 10.09.2013

which is the foundation or basis of the suit is

an   unregistered   Agreement   to   Sell   and

Page 5 of 26

therefore cannot be exhibited in evidence for

the main purpose in the suit, in view of the

Tamil Nadu Amendment to Section 17 of the

Registration Act making an Agreement to Sell

to be compulsorily registered with effect from

01.12.2012.

3.2 It is submitted that the “explanation” attached

to   sub­clause   (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   of  Dayal   Singh   vs.   Indar   Singh,

(1926) 24 LW 396. It is submitted that in that

case, an advance paid under an Agreement to

Sell  being  a  charge  on   the  property  as  per

Section 55(6)(v) of the Transfer of Property Act

Page 6 of 26

was   held   to   create   an   interest   and   hence,

unregistered   Agreement   to   Sell   cannot   be

admitted   in   evidence.   The   explanation

remedied   the   situation   and   save   the

Agreement   to   Sell   from   the   requirement   of

compulsory registration.

3.3 It is submitted that Section 54 of the Transfer

of Property Act states that an Agreement to

Sell by itself does not create any interest in or

charge on the property. As per Section 17(2)(v)

of   the   Registration   Act   with   reference   to

Section   1(b)   and   (c),   that   an

agreement/document   simplicitor   merely

creating a right to obtain another document,

was saved from compulsory registration. It is

submitted that thus prior to the amendment

of   2012   and   after   the   amendment,   an

Page 7 of 26

Agreement   to   Sell   simplicitor   or   reciting

payment of earnest money was not required to

be registered. For these savings, an Agreement

to Sell would also have required registration,

as   it   is   a   document   affecting   immovable

property. It is submitted that now after the

2012  amendment,   an   Agreement   to   Sell   for

Rs.100/­   or   upwards   is   to   be   compulsorily

registered. An agreement recital for payment of

advance is also to be compulsorily registered

as   the   “explanation”   in   Section   17(2)

introduced by 1927 amendment after  Dayal

Singh’s case, has been omitted by the present

amendment.   The   advance   amount   and   sale

consideration   are   part   and   parcel   of   the

transactions between the parties.

Page 8 of 26

3.4 It is submitted that as per Section 49(a) and

(c)   of   the   Registration   Act,   a   document

requires to be registered, if not registered shall

not affect the immovable property comprised

therein and shall not be received as evidence

of any transaction affecting such property. It

is submitted that prior to 2012 amendment,

when an Agreement to Sell was not required to

be   registered,   Section   49(a)   and   (c)   had   no

operation in relation to an Agreement to Sell.

So an unregistered Agreement to Sell had no

restriction in being received as evidence of any

transaction affecting such immovable property

or   affecting   immovable   property   as   such.

Thus,   the   terms   of   the   document   and   the

transaction embodied in it could be relied on

in its entirety in any proceeding in the preamendment era. It is submitted that however

Page 9 of 26

now after the amendment, Section 49(a) and

(c)   of   the   Registration   Act   which   are   both

substantive law and rule of evidence, apply to

an unregistered Agreement to Sell and it shall

not affect immovable property and shall not be

received as evidence of transaction affecting

immovable property.

3.5 It is further submitted by the learned counsel

for the defendant that if the interpretation of

the Hon’ble High Court given in the impugned

order is followed, then the same would render

the   Amendment   Act,   2012   otiose   and

meaningless,   simply   because   the   situation

before the said amendment was exactly as has

been laid down in the impugned order. The

legislative intent behind making an Agreement

to Sell, a compulsorily registrable document

Page 10 of 26

has been completely ignored by the Hon’ble

High Court.

3.6 It   is   submitted   that   after   introduction   of   a

specific provision relating to Agreement to Sell

in   Section   17(1)(g)   of   the   Act,   and   in   the

absence of any amendment in Section 17(2) to

include clause (g) also within its fold, Section

17(2)(v)   will   only   operate   in   relation   to

documents   covered   under   the   general

provision of Clauses (b) and (c) of sub­section

(1). it is submitted that in that sense Section

17(2)(v) will apply to all other agreements to

mortgage, to lease, to release, to exchange etc.

but will not apply to an Agreement to Sell.

3.7 Making   above   submissions,   it   is   prayed   to

allow the present appeal and quash and set

aside   the   impugned   order   passed   by   the

Page 11 of 26

Hon’ble High Court and to restore the order

passed by the learned Trial Court.

4. While   opposing   the   present   appeal,   learned

counsel   appearing   on   behalf   of   original

plaintiff has heavily relied upon the proviso to

Section   49   of   the   Registration   Act   which

specifically   provides   that   an   unregistered

document   affecting   the   immovable   property

and   required   by   the   Registration   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 or

as evidence of any collateral transaction not

required   to   be   affected   by   registered

instrument.

4.1 It is submitted that as rightly observed and

held by the Hon’ble High Court though Section

Page 12 of 26

17(1)   of   the   Registration   Act   has   been

amended   by   the   Tamil   Nadu   Act,   2012   by

inserting   Section   17(1)(g),   making   the

Agreement   to   Sell/   Agreement   affecting   any

immovable property compulsorily required to

be   registered,   there   is   no   corresponding

amendment  to  Section   49   more   particularly

proviso to Section 49 of the Registration Act.

4.2 It is further submitted that even the object

and purpose of Tamil Nadu Amendment Act,

2012 more particularly inserting Section 17(1)

(g)   is   required   to   be   considered   which   has

been elaborately dealt with and considered by

the   Hon’ble   High   Court   in   the   impugned

judgment   and  order.  It is  submitted that  a

perusal of statement of objects and reasons to

the   Act   No.29   of   2012   would   suggest   that

Page 13 of 26

primarily the amendment has been introduced

by the State of Tamil Nadu by reason of the

fact that instruments of agreement relating to

sale   of   immovable   property,   instruments   of

power   of   attorney   relating   to   immovable

property   and   instruments   evidencing

agreement of deposit of title deeds, which were

not registrable were resulting in loss to the

exchequer as the public were executing these

documents on white paper or on stamp paper

of nominal value.

4.3 With   the   above   submissions   and   heavily

relying upon the proviso to Section 49 of the

Registration Act, it is prayed to dismiss the

present appeal.

5. We have heard the learned counsel appearing

on behalf of respective parties at length. The

Page 14 of 26

short question posed for the consideration of

this Court is effect of Section 17(1)(g) of the

Registration   Act   applicable   to   the   State   of

Tamil Nadu by which Section 17(1)(g) of the

Registration   Act   has   been   inserted   and

instruments of agreement relating to sale of

immovable property of the value of Rs.100/­

and upwards is made compulsorily registrable

and   whether   such   unregistered   agreement

relating to sale of immovable property can be

received   in   evidence   in   a   suit   for   specific

performance?

6. While   answering   the   aforesaid   issues   and

appreciating the submissions made by learned

counsel appearing on behalf of the respective

parties,   Section   17   of   the   Registration   Act,

1908, as applicable prior to the Registration

Page 15 of 26

(Tamil   Nadu   Amendment)   Act,   2012   and

Section   17   post   Amendment   Act,   2012,   are

required to be referred to which are as under.

7. Section 17 of the Registration Act, 1908, post

Tamil Nadu Amendment Act, 2012 reads as

under :

“17.   Documents   of   which   registration   is

compulsory.—(1) The following documents shall be

registered, if the property to which they relate is

situate in a district in which, and if they have been

executed on or after the date on which, Act No. XVI

of 1864, or the Indian Registration Act, 1866, or the

Indian   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   non­testamentary   instruments   which

purport or operate to create, declare, assign, limit or

extinguish,   whether   in   present   or   in   future,   any

right, title or interest, whether vested or contingent,

of the value of one hundred rupees and upwards,

to or in immovable property; 

(c)   non­testamentary   instruments   which

acknowledge   the   receipt   or   payment   of   any

consideration   on   account   of   the   creation,

Page 16 of 26

declaration, assignment, limitation or extinction of

any such right, title or interest; and

(d) leases of immovable property from year to year,

or for any term exceeding one year, or reserving a

yearly rent;

[(e)   non­testamentary   instruments   transferring   or

assigning any decree or order of a Court or any

award   when   such   decree   or   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,

of the value of one hundred rupees and upwards,

to or in immovable property:] 

Provided that the [State Government] may, by order

published in the [Official Gazette], exempt from the

operation of this sub­section any lease executed in

any district, or part of a district, the terms granted

by which do not exceed five years and the annual

rents reserved by which do not exceed fifty rupees. 

[(1A) The documents containing contracts to transfer

for consideration, any immovable property for the

purpose of section 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

documents   are   not   registered   on   or   after   such

commencement, then, they shall have no effect for

the purposes of the said section 53A.] 

(2) Nothing in clauses (b) and (c) of sub­section (1)

applies to—

(i) any composition deed; or

Page 17 of 26

(ii) any instrument relating to shares in a joint stock

Company, notwithstanding that the assets of such

Company consist in whole or in part of immovable

property; or

(iii) any debenture issued by any such Company

and not creating, declaring, assigning, limiting or

extinguishing   any  right,   title   or  interest,   to   or  in

immovable property except in so far as it entitles

the holder to the security afforded by a registered

instrument whereby the Company has mortgaged,

conveyed or otherwise transferred the whole or part

of its immovable property or any interest therein to

trustees upon trust for the benefit of the holders of

such debentures; or

(iv)   any   endorsement   upon   or   transfer   of   any

debenture issued by any such Company; or

(v)   [any   document   other   than   the   documents

specified   in   sub­section   (1A)]   not   itself   creating,

declaring, assigning, limiting or extinguishing any

right, title or interest of the value of one hundred

rupees and upwards to or in immovable property,

but   merely   creating   a   right   to   obtain   another

document   which   will,   when   executed,   create,

declare, assign, limit or extinguish any such right,

title or interest; or

(vi) any decree or order of a Court [except a decree

or order expressed to be made on a compromise

and comprising immovable property other than that

which   is   the   subject­matter   of   the   suit   or

proceeding]; or

(vii)   any   grant   of   immovable   property   by

[Government]; or

Page 18 of 26

(viii)   any   instrument   of   partition   made   by   a

Revenue­Officer; or

(ix)   any   order   granting   a   loan   or   instrument   of

collateral   security   granted   under   the   Land

Improvement Act, 1871, or the Land Improvement

Loans Act, 1883; or

(x)   any   order   granting   a   loan   under   the

Agriculturists, Loans Act, 1884, or instrument for

securing the repayment of a loan made under that

Act; or

[(xa)   any   order   made   under   the   Charitable

Endowments   Act,   1890  (6  of   1890),   vesting   any

property in a Treasurer of Charitable Endowments

or divesting any such Treasurer of any property; or]

(xi)   any   endorsement   on   a   mortgage­deed

acknowledging the payment of the whole or any

part of the mortgage­money, and any other receipt

for payment of money due under a mortgage when

the   receipt   does   not   purport   to   extinguish   the

mortgage; or

(xii) any certificate of sale granted to the purchaser

of any property sold by public auction by a Civil or

Revenue­Officer.

[Explanation.—A document purporting or operating

to   effect   a   contract   for   the   sale   of   immovable

property shall not be deemed to require or ever to

have required registration by reason only of the fact

that   such   document   contains   a   recital   of   the

payment of any earnest money or of the whole or

any part of the purchase money.]”

Page 19 of 26

8. By Tamil Nadu Amendment Act, 2012, Section

17(1)(g) has been inserted and “explanation” to

Section 17(2) has been omitted. Section 17(1)

(g) as inserted by Tamil Nadu Amendment Act,

2012, reads as under :

“17(1)(g) instruments of agreement relating to sale

of immovable property of the value of one hundred

rupees and upwards.”

9. Thus,   on   and   after   the   Tamil   Nadu

Amendment Act, 2012, as per Section 17(1) (g),

instrument   of   agreement   relating   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 sub­section (2) of

Section   17   has   been   omitted,   there   is   no

corresponding amendment made to Section 49

Page 20 of 26

of   the   Registration   Act.   Section   49   of   the

Registration Act is as under :

“49.   Effect   of   non­registration   of

documents   required   to   be   registered.—No

document   required   by   section   17   [or   by   any

provision of the Transfer of Property Act, 1882

(4 of 1882)], to 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   such   property   or   conferring   such

power,

unless it has been registered: 

[Provided   that   an   unregistered   document

affecting immovable property and required by

this Act or the Transfer of Property Act, 1882 (4

of 1882), to be registered may be received as

evidence   of   a   contract   in   a   suit   for   specific

performance   under   Chapter   II   of   the   Specific

Relief Act, 1877 (3 of 1877) ,  *** or as evidence

of any collateral transaction not required to be

effected by registered instrument.]”

10. Thus,   as   per   proviso   to   Section   49,   an

unregistered   document   affecting   the

Page 21 of 26

immovable   property   and   required   by

Registration   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 document.

11. At this stage, the primary statement of objects

and reasons to the Tamil Nadu Amendment

Act, 2012, is also required to be referred to and

considered. The primary statement of objects

and reasons seem to suggest that amendment

has   been   introduced   by   the   State   of   Tamil

Nadu   bearing   in   mind   the   loss   to   the

exchequer   as   public   were   executing   the

documents   relating   to   sale   of   immovable

Page 22 of 26

property etc. on white paper or on stamp paper

of nominal value.

12. At this stage, it is required to be noted 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

Page 23 of 26

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.

13. 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

Page 24 of 26

in question would fall under the category of

document   as   per   Section   17(1A)   of   the

Registration Act. Therefore, in the facts and

circumstances of the case, the High Court has

rightly observed and held relying upon proviso

to Section 49 of the Registration Act that the

unregistered   document   in   question   namely

unregistered   Agreement   to   Sell   in   question

shall be admissible in evidence in a suit for

specific   performance   and   the   proviso   is

exception to the first part of Section 49.

14. In view of the above and for the reasons stated

above, the present appeal fails and the same

deserves   to   be   dismissed.   It   is   accordingly

Page 25 of 26

dismissed.   There   shall   be   no   orders   as   to

costs. 

…………………………………J.

            (M. R. SHAH)

…………………………………J.

(KRISHNA MURARI)

New Delhi, 

April 10, 2023

Page 26 of 26