Unregistered Gift-Deed Cannot Form Basis Of Declaration Suit, Registration Mandatory U/S 123 Transfer Of Property Act: AP High Court

The Andhra Pradesh High Court has emphasised that in a suit for declaration, “documents are the foundation of litigation”, and thus, placing reliance on an unregistered gift deed would constitute a nullity as per Section 123 of the Transfer of Property Act.For reference, Section 123, TPA provides that for the purpose of making a gift of immovable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor, and attested by at-least two witnesses.Justice Harinath N was dealing with a dispute concerning the ownership of a property in Kadapa, for which the petitioner claimed that she purchased the same through a registered sale deed of 2007, executed by the husband of the respondent. Post execution of the sale-deed, the petitioner remained in continuous and uninterrupted possession of the property.However, the respondent filed a suit in 2021 seeking declaration that she is the owner of the property, and further sought permanent injunction restraining interference with her possession. She based her claim on an unregistered gift deed of 2021, allegedly executed in favour of her by her husband. Accordingly, the petitioner filed an application under Order VII Rule 11 CPC, seeking rejection of the plaintiff on the ground that the suit had no valid cause of action and relied upon an invalid document. However, the Trial Court dismissed the same.When the aggrieved petitioner approached the High Court, she argued that she was the lawful purchaser of the property, and that the respondent's suit was premised on an unregistered gift-deed, which has no legal standing. The petitioner referred to Section 17 of the Registration Act and Section 123 TPA, which collectively propound that a gift deed concerning immovable property must be compulsorily registered, and that an unregistered gift deed could not create any title. It was further submitted that the respondent was aware of the 2007 registered sale deed but did not seek cancellation of that document.In contrast, the respondent submitted that her plaint disclosed a clear cause of action, and while deciding an application under Order VII Rule 11, the Court should confine itself to averments in the plaint and not examine disputed facts or defence pleas. She further submitted that the relief sought was declaration of ownership, and if granted, the deed of 2007 would become ineffective. The respondent also pointed out differences in description of the property, claiming that the property was a tiled house, whereas the 2007 document referred to vacant land.As the respondent was placing reliance on an unregistered gift-deed executed after the lapse of 15 years of execution of the sale-deed of 2007, the Court held that an application under Order 7 Rule 11(d) cannot be decided on the basis of an unregistered gift-deed and therefore the plaintiff was liable to be rejected. The Court further pointed out that the respondent had provided no explanation on the fact that she remained silent and did not seek cancellation of the registered document of 2007 executed in favour of the petitioner.Against this backdrop, the Court held,“To maintain the suit, there must be a valid legal cause of action. The primary document on which the plaintiff tries to maintain the suit is an unregistered gift deed. In a suit for declaration, documents are the foundation of the litigation. On the facts of this case, the suit is filed by placing reliance on an unregistered gift deed, which is a nullity in law under Section 123 of the Transfer of Property Act.”The Single-Judge further remarked,“The pleadings and wholesome reading of the plaint makes it amply clear that the suit is manifestly vexatious and the plaintiff intends to use the suit as a tool for harassment. The suit fails on the principle of locus standi and the requirement of prima facie evidence. If this Court is to accept the contention of the respondent that the validity or otherwise of the unregistered gift deed would have to be left open for the trial Court. The further contention of the possibility of the trial Court impounding the document for payment of deficit stamp duty and thereafter, on payment of the deficit stamp duty, the trial Court would consider the validity and relevancy of the document, while deciding the suit on merits, is concerned, the same will lead to opening of floodgates of litigation. There would not be any end to any litigation if the Courts consider maintaining the suits on documents that have no evidentiary value.” The Court also dismissed the contention of the respondent that the matter would have to be relegated to trial keeping in view the prayer of the plaintiff seeking the relief of declaration by observing that Section 123 makes it amply clear that the validity of the unregistered gift-deed is “void ab-initio”, and the said document was not admissible as evidence under Section 49 of the Registration Act, 1908.Accordingly, the Court allowed the petition and set aside the...

Unregistered Gift-Deed Cannot Form Basis Of Declaration Suit, Registration Mandatory U/S 123 Transfer Of Property Act: AP High Court

Saahas Arora

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Unregistered Gift-Deed Cannot Form Basis Of Declaration Suit, Registration Mandatory U/S 123 Transfer Of Property Act: AP High Court

Saahas Arora

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