Whether the legal proposition laid down by the Supreme Court in Balram Singh vs. Kelo Devi [2022 LiveLaw (SC) 800] prescribing a blanket bar in passing a decree for specific performance of a contract based on an unregistered document/ agreement to sell immovable property is a dictum applicable pan India? This question has been raised by many in the legal fraternity.
In Balram Singh, a contention was raised on the side of the defendant/ appellant that the agreement to assign immovable property, involved in the case, was an unregistered document and therefore such an agreement was inadmissible in evidence and, further, the plaintiff/ respondent was not entitled to get a decree for specific performance based on an unregistered agreement for sale. These contentions of the appellant have been accepted by the Court for laying down the aforementioned proposition of law.
The Registration and Other Related Laws (Amendment) Act, 2001 (Central Act 48 of 2001), which amended the Registration Act, 1908, Transfer of Property Act, 1882 and Indian Stamp Act, 1899, has altered the text of Sections 17 and 49 of the Registration Act to a certain extent. In this context, it is pertinent to mention that certain State Amendments have modified the above provisions before and after the Central Act 48 of 2001.
Factual background of the case:
In order to comment on the correctness of the above legal proposition, it will be apposite to understand the facts in the above case tersely mentioned in the decision. Since it was an appeal from the High Court of Judicature at Allahabad, one can legitimately assume that the subject matter of the dispute is situate within the State of Uttar Pradesh. That becomes significant when we deal with the State Amendments to the relevant sections in the Registration Act.
From the facts briefly narrated in the judgment, it can be seen that the plaintiff/ respondent filed a suit for permanent prohibitory injunction before the Trial Court against the defendant/appellant in the year 1997. The suit was on the basis of an unregistered agreement dated 23.03.1996 to sell immovable property. In the suit, the defendant/ appellant raised a counter-claim seeking a decree for possession of the property, virtually indicating that the plaintiff/ respondent was keeping possession of the property pursuant to the unregistered agreement. The Trial Court dismissed the suit and decreed the counter-claim. It is discernable from the judgment that the Trial Court found that the plaintiff could not prove the unregistered agreement propounded by her and she was found to be in unauthorized possession of the suit property. Further, it was also found that the plaintiff was not put in possession of the property pursuant to the agreement.
The matter was taken in first appeal by the plaintiff/ respondent. The Appellate Court reversed the Trial Court’s judgment and decree in favor of the plaintiff and dismissed the defendant’s counter-claim. Against the first appellate judgment and decree, a second appeal was preferred before the High Court. The Court dismissed the second appeal confirming the first appellate court’s judgment and decree. Correctness of the judgment of the High Court was challenged before the Apex Court.
Discussion on the relevant provisions of law:
Provisions relevant in this context are sections 17 and 49 of the Registration Act. Section 17(1)(b) directly applies to the issue. It reads thus:
“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: - ”
- other non-testamentary 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;”
Sub-section (1A) has been introduced to Section 17 of the Registration Act through Act 48 of 2001. The amended provision came into force with effect from 24.09.2001. The provision reads thus:
“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 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”.
Correspondingly section 53A of the Transfer of Property Act was also amended by omitting the words, “the contract, though required to be registered has not been registered, or,”. Subsequent to the said amendments, undoubtedly an unregistered agreement for sale of immovable property could not have been used for claiming the benefit of part-performance enshrined in Section 53A of the Transfer of Property Act. It goes without saying that as per the provisions of the Registration Act, as it originally stood, an unregistered agreement could have been put forward for claiming a decree for specific performance and also any relief based on the claim of part performance.
Section 49 of the Registration Act is relevant because it speaks about the effect of non- registration of documents required to be registered under Section 17 of the Act. The section, after undergoing changes pursuant to Act 48 of 2001, reads thus:
“49. Effect of non-registration of documents required to be registered – No document required by Section 17 or by any provisions of the Transfer of Property Act, 1882 (4 of 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 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.”
The words “received as evidence” has a special significance, because it is different from “received in evidence”. The expression “received as evidence” means the mere production of the document itself proves the transaction mentioned therein, without insisting on any other evidence; whereas, “received in evidence” means only the act of admitting a piece of evidence for proving a particular fact in issue in a case with or without other materials.
In Proviso to section 49 of Registration Act 1908, by the Act 48 of 2001, significantly the words “or as evidence of part performance of a contract for the purposes of Section 53A of the Transfer of Property Act, 1882” have been omitted, obviously to synchronize it with Section 17(1-A).
A close scrutiny of Section 49 will make it clear that whatever that is said in the substantive part of the section will not apply to the circumstances mentioned in the proviso. An unregistered document affecting immovable property and required by Section 17 of the 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 the Specific Relief Act or as evidence of any collateral transaction not required to be effected by a registered instrument. The expression “collateral transaction” has been interpreted as any transaction other than the substantive transaction intended by the document. The proviso makes it explicit that an unregistered document affecting immovable property, though required to be registered under any law, may be received “as evidence” of a contract in a suit for specific performance, if the area where the property is situate is governed by the provisions in the Central Act. In other words, if there is no State Amendment modifying the above Proviso, by applying the provisions in the Central Act, even now, an unregistered agreement may be received “as evidence” of a contract in a suit for specific performance.
For example, in Kerala there is no State Amendment to Proviso to Section 49 and it is in tune with the provisions in the Central Act. Although Sections 17(1)(f) and 17(1)(g) have been inserted by State (Kerala) Act 31 of 2013 (w.e.f. 13.09.2013) no change has been made in Section 49. Section 17(1)(f) stipulates that instruments purporting or operating to effect a contract for the sale of immovable property of the value of one hundred rupees and upwards to be registered. Section 17(1)(g) is about the registration of power of attorney dealing with rights of management, administration, development, transfer etc. In my view, Section 17(1)(f) will only serve two purposes, viz., (i) to scrutinize and curb clandestine real estate dealings and (ii) to collect revenue from such agreements for sale of property by way of stamp duty and registration fees. As the Proviso to section 49 remains in the State of Kerala the same as the Central Act, parties are permitted to rely on unregistered agreements for sale in a suit for specific performance or for proving collateral transactions in any other suit.
Since the property in question is located in the State of Uttar Pradesh, we shall consider the State Amendments to Sections 17 and 49 in the Registration Act which was effected prior to Central Act 48 of 2001. In fact, Sections 17 and 49 were amended by U.P. Act 57 of 1976 which came into force from 1.1.1977. It can be seen that in Section 17(1)(b), the words “of the value of one hundred rupees and upwards” are omitted by the State (U.P.) Amendment. Legal effect of the amendment is that non-testamentary 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 in immovable property shall be registered irrespective of its value.
Now coming to the Proviso to Section 49 of the Registration Act by virtue of the State (U.P.) Amendment, the words “as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 or” have been omitted. Thus it is clear that after the State Amendment by Act 57 of 1976, an unregistered agreement to assign cannot be received “as evidence” of a contract in a suit for specific performance. By the very nature of the State Amendment, a peculiar situation has been created in the State of Uttar Pradesh precluding a person from claiming the relief of specific performance in respect of an unregistered agreement to sell the property. As pointed out earlier, the situation in the State of Kerala remains different even after the amendment.
Therefore, a suit filed in a court of law within the State of Uttar Pradesh in the year 1997 on the basis of an unregistered agreement can only be decided with reference to the provisions impacted by the State Amendments to the Registration Act. If that be so, the unregistered agreement could not have been relied on “as evidence” of a contract in a suit for specific performance by virtue of the Proviso to Section 49 of the Registration Act.
Facts briefly narrated in Balram Singh do not reveal that the plaintiff claimed possession of the property in any manner otherwise than on the unregistered agreement. Unchallengeable is the proposition that in a suit for permanent prohibitory injunction against forceful dispossession, the plaintiff need only to prove that he/she is in possession of the property on the date of institution of the suit. It has been held by the Apex Court that even a trespasser, who is in settled possession, can maintain an injunction suit against the true owner of the property. Since these legal propositions are dependent on the facts in each case, I do not wish to comment on the observations in the judgment regarding the denial of the plaintiff’s claim for injunction.
The declaration of law in Quinn vs. Leathem (1901) A.C. 495, propounded in the previous century, that every judgment must be read as applicable to the particular facts proved or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law but govern and are qualified by the particular facts of the case in such expressions are to be found, has been religiously followed by the Constitutional Courts in this country. Therefore, the law laid down in Balram Singh cannot be applied to all cases, unmindful of the facts and law involved in each case, in which a claim for specific performance is made on the basis of an unregistered sale agreement. Likewise, the proposition laid down therein that an unregistered agreement for sale is inadmissible in evidence cannot be applied blindfolded to all cases where the legal provisions applicable are not akin to the law in State of Uttar Pradesh in this regard. Whole lot of confusions arose on account of the reason that the decision did not reveal fully the peculiar legal position prevalent in the State of Uttar Pradesh.
In my view, the ratio in Balram Singh could be applied only to a case in relation to properties in Uttar Pradesh where a claim for specific performance based on an unregistered agreement is made subsequent to the State Amendment to Sections 17 and proviso to 49 to the Registration Act. Binding nature of the decision depends on the nature and extent of the above provisions applicable to the facts in each case.
Author is a Former Judge of High Court of Kerala and a Senior Advocate Practicing at the Supreme Court.