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R. Hemalatha vs. Kashthuri

SLP (C) · 2023 INSC 336Decided 10 Apr 2023
SLP (C) No. 14884/2022), Civil Appeal No. 2535 of 2023

Background

Kashthuri (the respondent) filed a civil suit for specific performance of an Agreement to Sell dated 10 September 2013 against R. Hemalatha (the appellant/original defendant). Hemalatha objected to the agreement being admitted as evidence, arguing that under the Tamil Nadu Amendment (2012) to the Registration Act, 1908, agreements to sell immovable property worth Rs. 100 or more must be compulsorily registered, and since this agreement was unregistered, it could not be used as evidence at all. The trial court agreed with Hemalatha and excluded the document, but the Madras High Court (Madurai Bench) reversed that decision on revision, holding that the unregistered agreement could still be admitted in evidence because the case fell within a specific exception for suits seeking specific performance.

Decision Breakdown

The Supreme Court dismissed the appeal and upheld the High Court's ruling. It held that while the Tamil Nadu Amendment Act, 2012 made agreements to sell compulsorily registrable by inserting Section 17(1)(g), the legislature made no corresponding change to Section 49 of the Registration Act: the provision that actually deals with the legal consequences of non-registration. Section 49's proviso expressly states that an unregistered document required to be registered may still be received as evidence of a contract in a suit for specific performance, or as evidence of a "collateral transaction." Since this proviso was untouched by the 2012 amendment (and the agreement did not fall within the narrow exception under Section 17(1A), which deals with certain contracts under the Transfer of Property Act), the Court held the unregistered Agreement to Sell remained admissible as evidence specifically for the purpose of a specific performance suit.

Lesson Learnt

Even where a state law makes a category of property document compulsorily registrable, an unregistered version of that document may still be usable as evidence in a lawsuit for specific performance, unless the law specifically closes off that exception too, so buyers and sellers should not assume an unregistered agreement to sell is worthless in court, though registering it remains the safer course to avoid other legal risks.

Official source (sci.gov.in)View Judgment (PDF)

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