Unregistered Document Affecting Immovable Property Admissible As Evidence Of Contract In Suit For Specific Performance: Kerala High Court

The Appeals before the High Court arose from a suit instituted by the first respondent (plaintiff) seeking specific performance of an agreement for the sale of immovable property. The trial court decreed the suit in favor of the plaintiff and dismissed the counterclaim raised by the appellant, who was the first defendant in the original suit (defendant). The defendant challenged the said decree in these appeals.

The Division Bench of Justice Sathish Ninan & Justice P. Krishna Kumar said, “As per Section 49, an unregistered document that is compulsorily registrable under Section 17 shall neither affect any immovable property referred to therein nor be received as evidence of any transaction affecting such property. Nevertheless, the section carves out specific exceptions to this general rule. Notably, an unregistered document affecting immovable property may still be admitted in evidence: (a) as evidence of a contract in a suit for specific performance, and (b) for the purpose of proving any collateral transaction not required to be effected by a registered instrument.

“It is evident from the Amendment Act that the legislature, in its wisdom, chose not to amend Section 49, even as it introduced clause (f) to Section 17(1) of the Act. By retaining the proviso to Section 49, the legislature presumably intended to preserve the exceptions it contains—particularly, the admissibility of unregistered documents in suits for specific performance. Consequently, the legal effect of the proviso remains intact and is not diluted by the amendment”, it added.

Advocate T.R.S. Kumar represented the Appellant while Advocate S. Sujith represented the Respondent.

Factual Background

As per the agreement, the defendant agreed to sell 1.26 acres of land owned by him to the plaintiff. The plaintiff paid the entire sale consideration but was compelled to institute the suit since the defendant failed to execute the sale deed. According to the plaintiff, the agreement for sale was part of a broader compromise arrangement involving certain other parties, aimed at resolving long-standing disputes between them with the defendant’s brother, a multimillionaire. The agreement was also signed by the Power of Attorney holder of the defendant, on behalf of the defendant.

Pursuant to this compromise, the plaintiff and certain other individuals had already transferred their respective properties to the intended parties. The defendant, however, failed to act as per the agreement, it was alleged. The defendant denied being a party to the aforementioned compromise and challenged the validity and enforceability of the sale agreement, asserting that it was unregistered and, therefore, not legally binding. The Trial Court decreed the suit in favor of the plaintiff, and the defendant’s counterclaim was dismissed.

Reasoning

The Bench explained that as per Section 49 of the Registration Act, an unregistered document that is compulsorily registrable under Section 17 shall neither affect any immovable property referred to therein nor be received as evidence of any transaction affecting such property. However, the section carves out specific exceptions to this general rule. An unregistered document affecting immovable property may still be admitted in evidence as evidence of a contract in a suit for specific performance, and for the purpose of proving any collateral transaction not required to be effected by a registered instrument.

The Bench also made it clear that there is nothing in the newly introduced provisions or in Section 49 that supports the proposition that an unregistered document can be used in a suit for specific performance only for the limited purpose of claiming alternate relief, such as a refund of the payment made towards the purchase price or earnest money.

Finding that there was no dispute regarding the genuineness of the agreement, the Bench observed that despite admitting the execution of the agreement and receipt of the advance sale consideration, the defendant did not step into the witness box nor adduce any other evidence in support of his contention. On the other hand, the documents produced by the plaintiff established that the fair value of the land in question was less than Rs. 9,000 per cent, at that time. It also emerged in evidence that there existed an agreement among certain other individuals who were parties to various litigations then pending before the court, one of whom was the defendant's brother.

The plaintiff had already transferred his land in furtherance of the said agreement, with the legitimate expectation that the defendant would execute a sale deed in respect of the plaint schedule property. “These facts clearly point to the conclusion that failure to specifically enforce the contract would result in undue hardship and substantial loss to the plaintiff”, the Bench said.

Thus, finding no reason to interfere with the trial court’s decree for specific performance, the Bench dismissed the appeal.

Cause Title: Shaju v. Victory Granite Bricks Pvt. Ltd. (Neutral Citation: 2025:KER:45599)

Appearance

Appellant: Advocates T.R.S. Kumar, Deena Joseph, K.V. Sabu, Sobin Soman

Respondent: Advocates S. Sujith, T.M. Chandran

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