AMEER MINHAJ versus DIERDRE ELIZABETH (WRIGHT) ISSAR AND ORS. on 4 July 2018

[2018] 5 S.C.R. 173

AMEER MINHAJ

v.

DIERDRE ELIZABETH (WRIGHT) ISSAR AND ORS.

(Civil Appeal No. 18377 of 2017)

JULY 04, 2018

[DIPAK MISRA, CJI, A. M. KHANWILKAR ANDDR. D. Y. CHANDRACHUD, JJ.]

Registration Act, 1908 – s. 17(1A) – Transfer of PropertyAct, 1882 – s. 53A – Document of which registration compulsory –On facts, unregistered agreement to sell, on the basis of which reliefof specific performance claimed, registered power of attorney andgeneral power of attorney – Admissibility in evidence – Trial courtheld that all the three documents could be marked and received asevidence – However, the High Court set aside the same – Held:Document is required to be registered, but if unregistered, can stillbe admitted as evidence of a contract in a suit for specificperformance – In view thereof, the document though exhibited, couldbe received as evidence of a contract in a suit for specificperformance and nothing more – As regards, the General Power ofAttorney, being a registered document, the trial court justified inholding that there is a legal, rebuttable presumption that the samehas been duly stamped – Furthermore, the agreement to sell wasexecuted prior to coming into force of s. 17(1A) – Hence, the samewas not required to be compulsorily registered at the time of itsexecution – Even if it was required to be registered, the same couldbe received as evidence for a limited purpose – Thus, the order ofthe trial court is restored – Genuineness, validity and binding natureof the document or whether it was hit by the provisions of the 1882Act or 1899 Act, to be adjudicated at the appropriate stage – StampAct, 1899.

Allowing the appeal, the Court

HELD: 1.1 On a plain reading of s. 17(1A) of theRegistration Act, 1908 it is amply clear that the documentcontaining contract to transfer the right, title or interest in animmovable property for consideration is required to be registered,if the party wants to rely on the same for the purposes of Section

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A53A of the Transfer of Property Act, 1882 to protect its possessionover the stated property. If it is not a registered document, theonly consequence provided in this provision is to declare thatsuch document shall have no effect for the purposes of the saidSection 53A of the 1882 Act. [Para 10][180-F-G]

B1.2 A document is required to be registered, but ifunregistered, can still be admitted as evidence of a contract in asuit for specific performance. In view thereof, the conclusionrecorded by the High Court in the impugned judgment that thesale agreement is inadmissible in evidence, will have to beunderstood to mean that the document though exhibited, will bearCan endorsement that it is admissible only as evidence of theagreement to sell under the proviso to Section 49 of the 1908Act and shall not have any effect for the purposes of Section 53Aof the 1882 Act. In that, it is received as evidence of a contract ina suit for specific performance and nothing more.[Para 11][181-DF-G]

1.3 Reverting to the registered General Power of Attorney,the same has been executed by the original defendant No.1 -predecessor in title of respondent Nos.1 & 2 (defendant Nos.3& 4), in favour of respondent No.3 (defendant No.2). Being aEregistered document, the trial court was justified in observingthat there is a legal, rebuttable presumption that the same hasbeen duly stamped. As observed by the trial court, the questionas to whether the document is hit by the provisions of the 1882Act or the 1899 Act can be decided after the parties adduce oraland documentary evidence. The High Court, therefore, shouldFhave stopped at that instead of analysing the said instrument byinvoking the principle of incorporation by reference to theagreement to sell dated 12[th] November, 1995. For, the appellant(plaintiff) is not a party to the said document. Indeed, the executorof the document – original defendant No.1 and the defendant No.2Gin whose favour the same has been executed, are parties to thepresent suit. The principal document, namely, the agreement tosell dated 12[th] November, 1995, as rightly noticed by the Courtsbelow, was executed prior to coming into force of Section 17(1A)of the 1908 Act. That provision has been made applicableprospectively. Hence, the same was not required to beHcompulsorily registered at the time of its execution. Even if it was required to be registered, keeping in view the purport ofSection 49 read with Section 17(1A) of the 1908 Act, the samecould be received as evidence for a limited purpose, withouthaving any effect for the purposes of Section 53A of the 1882Act. [Para 12][182-B-F]

1.4 As a result, the trial court was right in overturning theobjection regarding marking and exhibiting these documents asurged by respondent Nos.1 & 2 (defendant Nos.3 & 4), whilemaking it clear that the question regarding the genuineness,validity and binding nature of the documents, including as towhether it is hit by the provisions of 1882 Act or the 1899 Act, asthe case may be, would be decided at the appropriate stage afterthe parties adduce oral and documentary evidence. The order ofthe trial court is restored. [Paras 13, 15][182-F-G; 183-A]

S. Kaladevi v. V.R. Somasundaram and Ors. (2010) 5SCC 401 : [2010] 4 SCR 515; K.B. Saha and SonsPrivate Limited v. Development Consultant Limited(2008) 8 SCC 564 : [2008] 8 SCR 290; Avinash KumarChauhan v. Vijay Krishna Mishra (2009) 2 SCC 532 :[2008] 17 SCR 944 – referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 18377of 2017.

From the Judgment and Order dated 02.12.2016 of the High Courtof Judicature at Madras in C.R.P. (PD) No. 1700 of 2016.

B. Karunakaran, S. Gowthaman, Advs. for the Appellant.

Jayant Bhushan, Sr. Adv., R. Varghese, Chirayu Jain, Ketal Paul,Rohit Kumar Singh, A. Lakshminarayanan, Advs. for the Respondents.

The Judgment of the Court was delivered by A

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AA. M. KHANWILKAR, J. 1. This appeal emanates from thedecision of the High Court dated 2[nd] December, 2016 allowing theapplication preferred by respondent Nos.1 & 2 (defendant Nos.3 & 4)whereby the admissibility of the documents produced by the appellant(plaintiff) in the suit filed by him for relief of specific performance ofcontract with alternative relief of refund of advance amount andBpermanent injunction against the defendants was questioned.

2. The appellant filed a suit in the Court of District Judge of theNilgiris at Udhagamandalam, being O.S. No.23 of 2010, against Mr.Charles Thomas Orme Alford Wright who died during the pendency ofthe suit whereafter respondent Nos.1 & 2 herein (defendant Nos.3 & 4)Cwere brought on record as his heirs and legal representatives. It wasasserted in the suit that the original defendant No.1 was the absoluteowner of 4.80 acres of land in Survey No.H-48A in R.S. No.332/1 ofCoonoor Rural Village. He had entered into an agreement of sale withrespondent No.3 (defendant No.2) on 12[th] November, 1995 agreeing toDsell the said property either to the second defendant or its nominees. It isfurther asserted by the appellant (plaintiff) that in furtherance of thesaid agreement to sell the second defendant was put in possession of theproperty agreed to be sold, in part performance of the agreement of saleand that fact has been recited in the agreement of sale itself. Theagreement also authorized the second defendant, at its discretion, toEdevelop the property by constructing dwelling units thereon for whichthe predecessor in title of respondent Nos.1 & 2 (namely the original 1[st]defendant) was to cooperate and give consent, whenever and wherevernecessary, for the unhindered development of the property. It was thenasserted by the appellant (plaintiff) that to effectuate the stated agreementFto sell, a registered Power of Attorney was executed in favour of thesecond defendant (respondent No.3) by the owner (original firstdefendant). That Power of Attorney was registered on 2[nd] May, 1996 inthe office of Sub Registrar, Coonoor. It was then stated that sincerespondent No.3 (defendant No.2) was unable to develop the said property due to unavoidable situation, he requested the appellant (plaintiff)Gto execute the project of developing the suit property into building sitesfor dwelling units and to sell it to prospective purchasers. The appellant(plaintiff) accepted the said offer after doing due diligence and resultantly,an agreement of sale came to be executed on 9[th] July, 2003 by the 1[st]defendant - the original owner of the suit property namely the predecessorH

in title of respondent Nos.1 & 2 - in favour of the appellant (plaintiff)through his Power of Attorney holder, namely, respondent No.3 (2[nd]defendant) for a consideration of Rs.1 crore. Earnest money of Rs.25lakh was paid at the time of the execution of agreement of sale and thebalance was to be paid within a period of 12 months, subject to certainstipulations. The appellant (plaintiff) was put in possession of the suitproperty upon execution of the agreement of sale dated 9[th] July, 2003.The 1[st] defendant did not fulfill his obligation within the stipulated periodas a result of which a suit for specific performance, permanent injunctionand alternative relief of refund of the advance amount came to be filedon 2[nd] August, 2010.

3. Admittedly, neither the agreement to sell dated 12[th] November,1995 executed in favour of defendant No.2 (respondent No.3) nor theagreement to sell dated 9[th] July, 2003 executed in favour of the appellant(plaintiff) has been registered. The Power of Attorney in favour ofrespondent No.3 (defendant No.2) dated 2[nd] May, 1996 has beenregistered but executed on a stamp paper of Rs.100/- only. The defendantsfiled their written statement to counter the claim set up in the plaint bythe appellant. It is not necessary to dilate on the factual matrix as theissue to be answered in the present appeal/proceedings is very limited.

4. Suffice it to observe that the contesting defendants have assertedthat the Power of Attorney executed in favour of respondent No.3(defendant No.2) by the original owner of the suit property (defendantNo.1) and predecessor in title of respondent Nos.1 & 2) has beencancelled on 2[nd] January, 2002. As a result, respondent No.3 (defendantNo.2) could not have executed the agreement to sell in favour of theappellant (plaintiff) on 9[th] July, 2003.

5. Be that as it may, respondent Nos.1 & 2 (defendant Nos.3 &4) moved a formal application for deciding the admissibility of unregisteredagreements to sell and also to impound the Power of Attorney for havingbeen executed upon payment of insufficient stamp duty and to imposesuitable penalty before proceeding with the trial. That application wasrejected by the Trial Court on 20[th] June, 2011 against which the originaldefendant No.1 and defendant No.3 (respondent No.1) filed a revisionpetition before the High Court of Judicature at Madras, being CRP (MD)No.3422/2011. They were unsuccessful as the High Court dismissedthe revision petition on 30[th] September, 2011 holding that the question ofpayment of stamp duty or the admissibility of the document could be AB

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Adecided only when the stated documents were sought to be markedthrough witnesses and not at that stage. Therefore, after the plaintifffiled an affidavit of evidence and sought to rely on the said threedocuments, defendant Nos.3 & 4 (respondent Nos.1 & 2) who werebrought on record as legal heirs of original defendant No.1, filed a jointapplication, being I.A. No.26/2013, for deciding the question whetherBthe three documents could be received as evidence. That applicationwas decided by the Trial Court on 1[st] June, 2016 partly in favour ofdefendant Nos.3 & 4. The Trial Court essentially answered the questionwith reference to the mandate of Section 17(1A) of the RegistrationAct, 1908 (for short, “1908 Act”) which was inserted by Act 48 of 2001Cwith effect from 24[th] September, 2001. The Trial Court took the viewthat the agreement to sell dated 12[th] November, 1995, having beenexecuted prior to the cut-off date, was admissible and could be markedas an Exhibit. As regards the Power of Attorney executed in favour ofrespondent No.3 (defendant No.2) on 2[nd] May, 1996, the Trial Court opined that since it was a registered document, there was legalDpresumption about the correctness of the valuation of the document forthe purpose of stamp duty. Further, the document was only a GeneralPower of Attorney deed and did not refer to any consideration amount.Further, it only authorized respondent No.3 (defendant No.2) to act interms of the Power of Attorney and therefore, it could not be construedEas a document of conveyance. Accordingly, the Trial Court rejected theobjection of respondent Nos.1 & 2 (defendant Nos.3 & 4) for receivingthe said document as evidence. However, with regard to the thirddocument, being an agreement to sell dated 9[th] July, 2003, the Trial Courtopined that since the same was executed after coming into force ofSection 17(1A) of the 1908 Act, it was required to be registered. ButFthen, considering the purport of the said provision, the document couldstill be exhibited and even if exhibited, the prayer in respect of relief ofprotection of possession in terms of Section 53A of the Transfer ofProperty Act, 1882 (for short, “1882 Act”) could not be granted. In theultimate analysis, the Trial Court opined that all the three documentsGcould be marked and received as evidence. The Trial Court, however,made it clear that it was not examining any other contention regardingthe genuineness, validity and binding nature of the documents or whetherthey were hit by the provisions of the Indian Stamp Act, 1899 (for short,“1899 Act”) and 1882 Act. The documents were marked and merelyexhibited subject to proof and relevancy.H

6. Being aggrieved by the said decision, respondent Nos.1 & 2(defendant Nos.3 & 4) preferred a civil revision petition before the HighCourt of Judicature at Madras being CRP (P.D.) No.1700/2016. TheHigh Court reversed the decision of the Trial Court. The High Courtinterpreted the General Power of Attorney dated 2[nd] May, 1996 andconstrued it as having been given for consideration in furtherance of theagreement to sell dated 12[th] November, 1995. The High Court notedthat since the said General Power of Attorney refers to the agreementto sell dated 12[th] November, 1995, the terms and conditions specified inthe latter document would get incorporated into the Power of Attorney,meaning thereby it was given for consideration, and therefore, it wouldattract stamp duty applicable to a deed of conveyance. It could nothave been executed on the stamp paper of Rs.100/-. Hence, thedocument was inadmissible and could not be received as evidence. Asregards the agreement to sell dated 9[th] July, 2003, the High Court opinedthat the same was required to be registered compulsorily and the TrialCourt was not correct in making an observation that there was no needfor registration thereof. The High Court, accordingly, allowed the civilrevision petition and was pleased to set aside the order passed by theTrial Court and instead allowed the application filed by respondent Nos.1& 2 (defendant Nos.3 & 4), by holding that the General Power ofAttorney dated 2[nd] May, 1996 was given for consideration as it was infurtherance of the agreement of sale dated 12[th] November, 1995. Further,the sale agreement dated 9[th] July, 2003 was inadmissible as evidence forthe purpose of part performance of contract in view of the statutory barin terms of Section 17(1A) read with Section 49 of the 1908 Act.

7. We have heard Mr. B. Karunakaran, learned counsel appearingfor the appellant and Mr. Jayant Bhushan, learned senior counselappearing for the contesting respondents.

8. The limited issue, as considered by the Trial Court and HighCourt at the instance of respondent Nos.1 & 2 (defendant Nos.3 & 4),was about receiving the three documents produced by the appellant(plaintiff) as evidence. The Trial Court had examined the issue withreference to the provisions of the Registration Act only and had leftopen all other questions regarding the validity, genuineness and bindingnature of the said documents, including whether the same were hit bythe provisions of the 1899 Act and the 1882 Act. The Trial Court opinedthat those aspects could be decided on the basis of evidence, both oral ABCDE

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Aand documentary, to be adduced by the parties.

9. In other words, the core issue to be answered in the presentappeal is whether the suit agreement dated 9[th] July 2003, on the basis ofwhich relief of specific performance has been claimed, could be receivedas evidence as it is not a registered document. Section 17(1A) of theB1908 Act came into force with effect from 24[th] September, 2001.Whereas, the suit agreement was executed subsequently on 9[th] July,2003. Section 17 (1A) of the 1908 Act reads thus:

“17. Documents of which registration is compulsory- (1)

The following documents shall be registered, if the property toCwhich they relate is situate in a district in which, and if they havebeen executed on or after the date on which, Act No. XVI of1864, or the Indian Registration Act, 1866, or the IndianRegistration Act, 1871, or the Indian Registration Act, 1877, orthis Act came or comes into force, namely:- XXXXXXXXXD

(1A) The documents containing contracts to transfer forconsideration, any immovable property for the purpose of section53A of the Transfer of Property Act, 1882 (4 of 1882) shall beregistered if they have been executed on or after theEcommencement of the Registration and Other Related laws(Amendment) Act, 2001 and if such documents are not registeredon or after such commencement, then, they shall have no effectfor the purposes of the said section 53A.

XXXXXXXXX”F10. On a plain reading of this provision, it is amply clear that thedocument containing contract to transfer the right, title or interest in animmovable property for consideration is required to be registered, if theparty wants to rely on the same for the purposes of Section 53A of the1882 Act to protect its possession over the stated property. If it is not aregistered document, the only consequence provided in this provision isGto declare that such document shall have no effect for the purposes ofthe said Section 53A of the 1882 Act. The issue, in our opinion, is nomore res integra. In S. Kaladevi Vs. V.R. Somasundaram and Ors.,[1]this Court has re-stated the legal position that when an unregistered sale 1 (2010) 5 SCC 401H

deed is tendered in evidence, not as evidence of a completed sale, but asproof of an oral agreement of sale, the deed can be received as evidencemaking an endorsement that it is received only as evidence of an oralagreement of sale under the proviso to Section 49 of the 1908 Act.Section 49 of the 1908 Act reads thus:

“49. Effect of non-registration of documents required tobe registered.- No document required by section 17 [or by anyprovision of the Transfer of Property Act, 1882 (4 of 1882)], to beregistered shall- (a) affect any immovable property comprised therein, or (b) confer any power to adopt, or

(c) be received as evidence of any transaction affecting suchproperty or conferring such power, unless it has been registered:

Provided that an unregistered document affecting immovableproperty and required by this Act or the Transfer of Property Act,1882 (4 of 1882), to be registered may be received as evidence ofa contract in a suit for specific performance under Chapter II ofthe Specific Relief Act, 1877 (3 of 1877), or as evidence of anycollateral transaction not required to be effected by registeredinstrument.”

11. In the reported decision, this Court has adverted to the principlesdelineated in K.B. Saha and Sons Private Limited Vs. DevelopmentConsultant Limited,[2] and has added one more principle thereto that adocument is required to be registered, but if unregistered, can still beadmitted as evidence of a contract in a suit for specific performance. Inview of this exposition, the conclusion recorded by the High Court in theimpugned judgment that the sale agreement dated 9[th] July, 2003 isinadmissible in evidence, will have to be understood to mean that thedocument though exhibited, will bear an endorsement that it is admissibleonly as evidence of the agreement to sell under the proviso to Section 49of the 1908 Act and shall not have any effect for the purposes of Section53A of the 1882 Act. In that, it is received as evidence of a contract in asuit for specific performance and nothing more. The genuineness, validityand binding nature of the document or the fact that it is hit by the provisions A

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Aof the 1882 Act or the 1899 Act, as the case may be, will have to beadjudicated at the appropriate stage as noted by the Trial Court after theparties adduce oral and documentary evidence.

12. Reverting to the registered General Power of Attorney, thesame has been executed by the original defendant No.1 - predecessor inBtitle of respondent Nos.1 & 2 (defendant Nos.3 & 4), in favour ofrespondent No.3 (defendant No.2). Being a registered document, in ouropinion, the Trial Court was justified in observing that there is a legal,rebuttable presumption that the same has been duly stamped. Asobserved by the Trial Court, the question as to whether the document ishit by the provisions of the 1882 Act or the 1899 Act can be decidedCafter the parties adduce oral and documentary evidence. The High Court,in our opinion, therefore, should have stopped at that instead of analysingthe said instrument by invoking the principle of incorporation by referenceto the agreement to sell dated 12[th] November, 1995. For, the appellant(plaintiff) is not a party to the said document. Indeed, the executor of theDdocument – original defendant No.1 and the defendant No.2 in whosefavour the same has been executed, are parties to the present suit. Theprincipal document, namely, the agreement to sell dated 12[th] November,1995, as rightly noticed by the Courts below, was executed prior to cominginto force of Section 17(1A) of the 1908 Act. That provision has beenmade applicable prospectively. Hence, the same was not required to beEcompulsorily registered at the time of its execution. Even if it was requiredto be registered, keeping in view the purport of Section 49 read withSection 17(1A) of the 1908 Act, the same could be received as evidencefor a limited purpose, without having any effect for the purposes ofSection 53A of 1882 Act.F

13. As a result, the Trial Court was right in overturning the objectionregarding marking and exhibiting these documents as urged by respondentNos.1 & 2 (defendant Nos.3 & 4), while making it clear that the questionregarding the genuineness, validity and binding nature of the documents,including as to whether it is hit by the provisions of 1882 Act or the 1899GAct, as the case may be, would be decided at the appropriate stage.

14. The High Court has adverted to the decision in Avinash KumarChauhan Vs. Vijay Krishna Mishra[3], which, however, deals with thepower of the Court to impound insufficiently stamped instruments inexercise of its power under Section 35 of the 1899 Act. That issue will 3 (2009) 2 SCC 532H

have to be considered by the Trial Court at the appropriate stage whichhas already been kept open.

15. Accordingly, this appeal ought to succeed by restoring theorder of the Trial Court dated 1[st] June, 2016 in the above terms. TheTrial Court shall decide all other issues concerning the validity,genuineness, applicability and binding nature of the documents includingwhether it is hit by the provisions of the 1882 Act or the 1899 Act on itsown merits and uninfluenced by the observations made by it or by theHigh Court.

16. The appeal is allowed in the above terms. There shall be noorder as to costs.

17. As the suit is pending since 2010, we direct the Trial Court todispose of the same as expeditiously as possible, preferably within aperiod of six months from the date of receipt of a copy of this judgment.

Nidhi Jain

Appeal allowed.

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