Monthly Archives: April 2017

Status of Unregistered Agreement in respect of Immovable Property

Whether an unregistered agreement to sell, accompanied by delivery of possession in favour of a person in possession can be received as evidence and as proof of the agreement and whether a suit for specific performance would lie on the basis of an unregistered agreement to sell:

The Section 17(1A) of the Registration Act, 1908 provides that “the documents containing contracts to transfer for consideration, any immovable property for the purpose of section 53A of the Transfer of Property Act, 1882, shall be registered if they have been executed on or after commencement of the Registration and Other Related laws( Amendment) Act, 2001 and such documents are not registered on or after such commencement, then, they shall have no effect for the purposes of the said section 53A”. This section of the Registration Act specifically declares that if the agreement to sell is unregistered shall have no effect for the purpose of Section 53A of the Transfer of Property Act, 1882. It means that agreement to sell which is unregistered cannot be admissible as evidence. Section 53A of the Transfer of Property Act, 1882 deals with Part Performance where there must be a contract to transfer for consideration any immovable property between the transferor and transferee and the transferee taken possession of the property or any part thereof or being already in possession, continues in possession in part performance of the contract and the act of transferee has done something in part of the contract or willing to perform his part of the contract then transferor shall be debarred from enforcing against transferee. The main object or intent of this section is to prevent transferor from taking advantages on the account of non-registration of the document.

Under the provision of the section 53A, the transferee is entitled to resist any attempt on the part of the transferor to disturb transferee’s lawful possession under the contract of sale and his position either as a plaintiff or as a defendant should make no difference. The transferee can use the shield only as defendant and not as a plaintiff would defeat the very spirit of section 53A for it will be possible for an over-powering transferor to forcibly dispossess the transferee even against the convenants in the contract and compel him to go to the court as plaintiff.

On the other hand, Section 49 of the Registration Act 1908, deals with the effect of non-registration of documents required to be registered which says “No document required by section 17 [or by any provision of the Transfer of Property Act, 1882], to be registered shall

  • affect any immovable property comprised therein, or
  • confer any power to adopt, or
  • be received as evidence of any transaction affecting such property or

unless it has been registered:

[Provided that an unregistered document affection 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 if the Specific Relief Act, 1877 (3 of 1877), or as evidence of any collateral transaction not required to be effected by registered instrument”.

Section 49 of the registration Act is new and for the first time gives legislative sanction to the equitable doctrine of Part Performance. This section of Act is widely accepted on its own merits that a suit for specific performance can be lie on the basis of unregistered agreement to sell and can be admissible as evidence. The proviso of Section 49, which was an unregistered document, could be received as evidence of a contract in a suit for specific performance. The Hon’ble Justice Badar Durrez Ahmed and the Hon’ble Justice Siddharth Mridul agreed with the conclusion  for Section 49 of the Registration Act held by the Learned Single Judge where the unregistered agreement to sell could be received as an evidence in the case of Vinod Kumar & Anr. vs Ajit Singh.

The question that require to be answered are whether an unregistered agreement to sell, acquired by delivery of possession or executed in favour of a person in possession, i.e. an agreement that conceive of part performance, of an agreement to sell as conceived by Section 53A of the Transfer of Property Act, 1882, can be received in evidence as proof of the agreement and as whether a suit for specific performance would lie on the basis of such an unregistered agreement to sell. The object of Section 53A of the Transfer of Property Act, 1882 gives a right to the defendant to protect his possession as against transferor. It is equally available against person who claims under him such as heirs, assign and legal representative. This section is ordinally to be used as a defense and not as a weapon of attack.

The Hon’ble Punjab-Haryana High Court dismissed the appeal and expressed respectful disagreement with judgment in Gurbachan Singh V. Raghubir Singh where there is a conflict regarding legal position as  to whether suit for specific performance  can be decreed on the basis of unregistered agreement to sell in view of Section 17(1A) and the section 49 of the Registration Act. The conflicts between two Single Bench judgments came across to the court. In the case of Gurbachan Singh V. Raghubir Singh[6], the Hon’ble court held that agreement to sell, acquired by delivery of possession is inadmissible in evidence if it is not registered but in the matter of Birham Pal & Ors. V. Niranjan Singh & Ors. the Court held that on the basis of section 49 of the Registration Act, such an agreement can be form the basis of a suit for specific performance. These two judgments are contrary to each other and conflicting the legal position of two section of Indian Registration Act.

The Hon’ble Court opined that section 17(1A) merely declares that such an unregistered contract shall not be pressed into service for the purpose of Section 53(A) of the Transfer of Property Act, 1882. Section 17(1A) of the Registration Act, 1908, does not, whether in specific terms or by necessary intent, prohibit the filing of a suit for specific performance based upon an unregistered agreement to sell, that records delivery of possession or is executed in favour of a person to whom possession is delivered and the proviso to Section 49 of the Indian Registration Act, 1908 put paid to any argument to the contrary. The Hon’ble Court held that (a) a suit for specific performance, based upon an unregistered contract/agreement to sell that contains a clause recording part performance of the contract by delivery of possession or has been executed with a person, who is already in possession shall not be dismissed for want of registration of the contract/agreement; (b) the proviso to Section 49 of the Registration Act, legitimizes such a contract to the extent that, even though unregistered, it can form the basis of a suit for specific performance and be led into evidence as proof of the agreement or part performance of a contract.

It is concluded that on the basis of above judgments given by Hon’ble Courts, legitimized the unregistered agreement to sell as it could be lie in a suit for specific performance and admissible in evidence regarding with proviso of Section 49 of the Registration Act. The unregistered agreement to sell can form the basis of suit of specific performance and be led into evidence as proof of the agreement or part performance of a contract. The Section 53A is generally to be used as a defense and not as a weapon where a defendant is entitle to enjoy the right to protect his possession against transferor or against his heir or assign or legal representative.

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