Unregistered Agreement To Sell Admissible As Evidence To Prove Contract In Specific Performance Suit : Supreme Court

The Supreme Court held that an unregistered agreement to sell may be admitted as evidence to establish the existence of a contract in a suit seeking specific performance. The Court said that this arrangement is made possible under the proviso to Section 49 of the Registration Act, 1908, which allows an unregistered document to be received as evidence of a contract in a suit for specific performance or of a collateral transaction. “we are of the opinion that the prayer of the appellant in the interlocutory application falls under proviso to Section 49 of the Registration Act which provides that an unregistered document affecting immovable property may be received as evidence of a contract in a suit for specific performance. The proviso also enables the said document to be received in evidence of a collateral transaction.”, the court said. The bench comprising Justices PS Narasimha and Joymalya Bagchi was hearing an appeal arising from Tamil Nadu, where, by virtue of a State amendment to the Registration Act, it is mandatory to register an agreement to sell.The Appellant while relying on the unregistered agreement to sell (2000) entered with the Respondent, filed a suit for specific performance, asserting that the respondent had accepted part payment and handed over possession of the property, however failed to execute the sale deed. The trial court dismissed the suit, stating that the unregistered agreement to sell was inadmissible under the Stamp Act and Registration Act. Aggrieved by the High Court's affirmation of the trial court's findings, the Appellant moved to the Supreme Court. Setting aside the impugned findings, the Court, relying on the case of S. Kaladevi v. V.R. Somasundara, (2010) 5 SCC 401 observed that an unregistered document can be used to prove an oral agreement of sale in a specific performance suit, not as proof of a completed transfer. Since the Appellant wants to prove the contract formation with the Respondent, and not title, it would be saved by the proviso to Section 49 of the Registration Act, 1908. “When an unregistered sale deed is tendered in evidence, not as evidence of a completed sale, but as proof of an oral agreement of sale, the deed can be received in evidence making an endorsement that it is received only as evidence of an oral agreement of sale under the proviso to Section 49 of 1908 Act”, the court said in S. Kaladevi v. V.R. Somasundara. “It is the case of the appellant that the document sought to be brought on record is intended only to be used as a proof of the oral agreement of sale and that it is permitted under Section 49 of the Registration Act. Under these facts and circumstances, we are of the opinion that the appellant can be permitted to introduce the said document dated 01.01.2000.”, the court held. Accordingly, the appeal was allowed. Case Title: MURUGANANDAM VERSUS MUNIYANDI (DIED) THROUGH LRS.Citation : 2025 LiveLaw (SC) 549Click here to read/download the judgmentAppearance: For Petitioner(s) :Mr. B Karunakaran, Adv. (Arguing Counsel) Mr. Ajith Williyam S, Adv. Mr. Shubham Dubey, Adv. Ms. Shruti Vaibhav, Adv. Mr. Anoop Prakash Awasthi, AOR For Respondent(s) :

Unregistered Agreement To Sell Admissible As Evidence To Prove Contract In Specific Performance Suit : Supreme Court

Yash Mittal

Tags