Unregistered document/agreement to sell is not admissible as evidence in permanent injunction suit: Supreme Court

A division bench of the Supreme Court held on September 23 that in a suit seeking permanent injunction, the unregistered document/agreement to sell on ten rupees stamp paper would not be admissible in evidence.

 “Having conscious [sic] of the fact that the plaintiff might not succeed in getting the relief of specific performance of such agreement to sell as the same was unregistered, the plaintiff filed a suit simplicitor for permanent injunction only. It may be true that in a given case, an unregistered document can be used and/or considered for collateral purpose. However, at the same time, the plaintiff cannot get the relief indirectly which otherwise he/she cannot get in a suit for substantive relief, namely, in the present case the relief for specific performance”, held the judgment written by Justice M.R. Shah, on behalf of himself and Justice Krishna Murari.

The bench was hearing an appeal filed by the appellant (original defendant) against the Allahabad High Court’s order dismissing the second appeal that confirmed the decree passed by the first appellate court, which had reversed the decree of dismissal of the suit passed by the trial court.

The original plaintiff had instituted a suit before the trial court for a permanent injunction only. The suit was filed on the basis of an unregistered agreement to sell dated March 23, 1996. She had sought a permanent injunction restraining the defendant from disturbing her possession of the suit property. However, the original defendant (appellant before the Supreme Court) had filed a counter counter-claim seeking the decree of possession.

The trial court dismissed the suit and refused to grant permanent injunction, but allowed the counter-claim of the defendant on the ground that the original plaintiff could not prove the agreement to sell and that the original plaintiff was in unauthorised possession of the suit property. It was also held by trial court that the original plaintiff could not prove the agreement to sell for a sale consideration of Rs. 14,000, and could not prove that she was put in possession of the suit property on March 23, 1996. On appeal, the first appellate court set aside the trial court’s order, and granted a permanent injunction against the defendant. The high court also affirmed the order of the first appellate court.

In this background, the appeal was heard by the Supreme Court. Holding against the original plaintiff, the court held that “the plaintiff cannot get the relief even for a permanent injunction on the basis of such an unregistered document/agreement to sell, more particularly when the defendant specifically filed the counter-claim for getting back the possession which was allowed by the learned trial Court. The plaintiff cleverly prayed for relief of permanent injunction only and did not seek for the substantive relief of specific performance of the agreement to sell as the agreement to sell was an unregistered document and therefore on such unregistered document/agreement to sell, no decree for specific performance could have been passed. The plaintiff cannot get the relief by clever drafting.”

The bench thus set aside the suit instituted by the original plaintiff for a permanent injunction on the basis of an unregistered agreement. It allowed the counter-claim filed by the original defendant.

Speaking to The Leaflet, a Supreme Court advocate who wished not to be named said that the Supreme Court bench of Justices Shah and Murari here ought to have clarified that the proposition of law that is being discussed and applied only applies in respect of states where registration of an agreement to sell is compulsory. The case arose in the context of the state of Uttar Pradesh, where an agreement to sell immovable property is required to be registered. The Registration Act, 1908 as applicable in general does not require such registration.

According to this advocate, the law is well settled that an agreement to sell is required to be registered only if the transferee seeks the protection of Section 53A of the Transfer of Property Act, 1882 – and not otherwise. Absent this clarification, there is real apprehension that property sellers across the country are going to stonewall specific performance suits, with many a judge applying this judgment uncritically, multiplying appeals and revisions.

Click here to view the full judgment.