Muruganandam v. Muniyandi (Died) Through LRs.
Background
The appellant claimed that under a 2000 sale agreement, the respondent had agreed to sell him land after receiving part payment and possession, with the price later revised and further payments made. When the respondent refused to execute the sale deed, the appellant sued for specific performance, and during the suit sought to place on record the original 2000 agreement (only a photocopy had been filed earlier) via an interlocutory application. Both the Trial Court and the Madras High Court rejected this application, holding the document was unstamped and unregistered and therefore inadmissible.
Decision Breakdown
The Supreme Court held that the lower courts had overlooked the proviso to Section 49 of the Registration Act, which allows an unregistered document affecting immovable property to be admitted as evidence of a contract in a suit for specific performance, or as evidence of a collateral transaction, relying on its earlier decision in S. Kaladevi v. V.R. Somasundaram. Since the appellant only wanted to use the document to prove the oral agreement of sale (not as a completed, registered sale deed), it was legally permissible to bring it on record with an appropriate endorsement. The Court allowed the appeal, set aside the High Court's order, and permitted the document to be marked in evidence, while leaving it open to the respondent to contest its relevance and validity at trial.
Lesson Learnt
An unregistered and unstamped sale agreement is not automatically inadmissible in court. The law specifically allows such documents to be used as proof of an oral agreement of sale in a suit for specific performance, even though they cannot themselves transfer legal title to property.