Unregistered Agreement To Sell Can Be Used For Purpose Of Assessing Nature Of Possession At Interim Stage: J&K&L High Court

The Jammu & Kashmir and Ladakh High Court has held that an unregistered agreement to sell, though inadmissible to prove title, can be relied upon for collateral purposes, including for determining the nature and character of possession at the stage of consideration of an application for temporary injunction.The Court further held that the enquiry at the interim stage is limited to the existence of a prima facie case, balance of convenience, and likelihood of irreparable injury.The Court was hearing a petition under Article 227 of the Constitution of India challenging an order passed by the Principal District Judge, Kupwara, which had dismissed a miscellaneous appeal and upheld the order of the Munsiff, Sogam granting interim injunction in favour of the plaintiffs.A Single Bench of Justice Wasim Sadiq Nargal, while dismissing the petition, observed, “... the argument relating to inadmissibility of the agreement to sell, though legally sound in the context of title, cannot be stretched to negate the limited use of such document for collateral purposes, particularly for assessing the nature and character of possession.”In the petition before the court facts revealed that the respondents/plaintiffs instituted a suit for permanent injunction before the Trial Court, asserting possession over the suit property comprising land, building, and an access pathway. Along with the suit, an application for interim relief was filed, which was initially allowed ex-parte and subsequently confirmed after hearing both sides. The petitioner/defendant preferred a miscellaneous appeal before the Principal District Judge, Kupwara, which was dismissed, upholding the trial court's order on the ground that the plaintiffs had succeeded in establishing a prima facie case of possession and that the balance of convenience lay in maintaining status quo. The petitioner then approached the High Court under Article 227.Court's Observation:The principal contention raised by the petitioner was that both courts below had erred in placing reliance upon an unregistered and unstamped agreement to sell, which, according to the petitioner, does not confer any right, title, or interest in immovable property and is inadmissible in evidence. The Court, however, rejected this contention, observing, “although an agreement to sell does not confer title, it may nonetheless be relied upon for collateral purposes, including for determining the nature of possession. It is well settled that at the stage of consideration of an application for temporary injunction, the Court is not required to conclusively determine title.”The Court referred to Zenit Mataplast (P) Ltd. v. State of Maharashtra (2009) 10 SCC 388 , observing that an interim order is passed on the basis of prima facie findings which are tentative, intended as a temporary arrangement to preserve status quo till the matter is decided finally. The Court also cited Wander Ltd. v. Antox India (P) Ltd. (1990 Supp SCC 727) , holding that in an appeal against exercise of discretion, the appellate court will not interfere unless the discretion has been exercised arbitrarily, capriciously, or perversely, or where the court had ignored settled principles.The Court further observed, “The question as to whether the plaintiff had made out a prima facie case, whether the balance of convenience lay in his favour and whether irreparable loss would ensue in the event interim protection was denied, already stands examined by the Trial Court upon appreciation of the material placed before it. This Court, while exercising supervisory appellate jurisdiction, cannot reassess the material on record as if sitting in appeal over the subjective satisfaction arrived at by the court of first instance merely because another view may also be possible.”On the admissibility of the unregistered agreement, the Court relied on S. Kaladevi v. V.R. Somasundaram (2010) 5 SCC 401 , which held that an unregistered document affecting immovable property may be admitted in evidence for a limited purpose, namely as evidence of a contract in a suit for specific performance or as proof of any collateral transaction not required to be effected by a registered instrument. The Court observed, “.. A plain reading of the aforesaid judgment makes it clear that reliance on an unregistered agreement is permissible to the limited extent of assessing the nature and character of possession, being a collateral purpose in law.”The Court noted that both courts below had primarily considered the factum of peaceful use and possession of the suit property by the plaintiffs, and that “even a person without perfect title, if found in settled possession, is entitled to protection against unlawful interference except in accordance with law.”The Court also rejected the plea that the property was joint and undivided, observing that such issues raise disputed questions of fact which cannot be adjudicated at the interlocutory stage and must be decided during trial.In...

Unregistered Agreement To Sell Can Be Used For Purpose Of Assessing Nature Of Possession At Interim Stage: J&K&L High Court

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