An unregistered agreement to sell can be made basis for a suit for specific performance without having any effect under Section 53A of the Transfer of Property Act, 1882
The Supreme Court held that an unregistered agreement to sell can be received as evidence of a contract in a suit for specific performance however, the protection under Section 53A of Transfer of Property Act 1882 would not be available in case of unregistered agreement to sell.
The said ratio was delivered by the Supreme Court in the matter of Ameer Minhaj Vs. Dierdre Elizabeth (Wright) Issar, Civil Appeal NO. 18377 of 2017 decided on 04.07.2018.
Challenge
In the present case, a suit was instituted seeking relief of specific performance of contract with alternative relief of refund of advance amount and permanent injunction.
The limited issue for adjudication before the Supreme Court was whether the suit agreement on the basis of which relief of specific performance was claimed could be received as evidence as it is not a registered document. An additional fact is that while the suit agreement was executed on 09th July, 2003, Section 17(1A) of the Registration Act 1908 mandating registration of an Agreement to Sell, came into force with effect from 24th September, 2001.
Held
The Supreme Court observed that on a plain reading of Section 17(1A) it is amply clear that the document containing contract to transfer the right, title or interest in an immovable property, for consideration, is required to be registered, if the party wants to rely on the same for the purposes protection of its possession under Section 53A of the Transfer of Property Act 1882.
If it is not a registered document, the only consequence provided in this provision is to declare that such document shall have no effect for the purposes of the said Section 53A of the 1882 Act.
The Court placed reliance on the judgment of K.B. Saha and Sons Private Limited Vs. Development Consultant Limited and held that a document is required to be registered, but if unregistered, can still be admitted as evidence of a contract in a suit for specific performance. Therefore, in the context of the present facts, the Court held that the agreement to sell dated 9th July, 2003 is inadmissible in evidence, will have tobe understood to mean that the
document though exhibited, will bear an endorsement that it is admissible only as evidence of the agreement to sell under the proviso to Section 49 of the1908 Act and shall not have any effect for the purposes of Section 53A of the 1882 Act.