Source: Supreme Court  

Why in News? 

Recently, the bench of Justices PS Narasimha and Joymalya Bagchi has held that an unregistered agreement to sell is admissible as evidence to prove a contract in a suit for specific performance under the proviso to Section 49 of the Registration Act, 1908. 

• The Supreme Court held this in the matter of Muruganandam v. Muniyandi (Died) Through Lrs, (2025). 

What was the Background of Muruganandam v. Muniyandi (Died) Through Lrs,2025 Case ? 

• The appellant (Muruganandam) and respondent (Muniyandi) entered into an alleged oral agreement for the sale of immovable property. 
• On 01st January 2000, the appellant claimed that the respondent agreed to sell his property after receiving part consideration of Rs. 5000/- and purportedly put the appellant in possession of the said property. 
• Subsequently, on 01st September 2002, the parties allegedly agreed that the property would be sold at the rate of Rs. 550 per cent, with the appellant paying an additional sum of Rs. 10,000/- towards this transaction. 
• The appellant claimed to have paid the balance consideration from time to time thereafter. 
• As the respondent failed to execute the sale deed despite the alleged payments, the appellant instituted a suit (O.S. No. 78 of 2012) before the District Munsiff Court, Madurantakam, seeking specific performance of the agreement and permanent injunction. 
• During the pendency of the suit, the appellant filed an interlocutory application (I.A. No. 1397 of 2014) under Order 7, Rule 14(3) read with Section 151 of the Code of Civil Procedure, 1908, seeking permission to place on record the document dated 01.01.2000 that evidenced the agreement. 
• The appellant contended that due to genuine reasons, the document had got mixed up with other documents, preventing its earlier production, though a photocopy was enclosed with the plaint. 
• The Trial Court dismissed the application on 21st April 2015, holding that the reasons for not producing the original document were unconvincing and that the document was unstamped and unregistered, making it inadmissible under Section 35 of the Indian Stamp Act, 1989, and Section 17 of the Registration Act, 1908. 
• The appellant filed a Civil Revision Petition (CRP.PD. No. 2828 of 2015) before the Madras High Court, which was dismissed on 26th Febuary 2021, affirming that the unstamped and unregistered document could not be brought on record. 
• Aggrieved by the High Court's decision, the appellant approached the Supreme Court through a Special Leave Petition (SLP (C) No. 10893 of 2021).

What were the Court’s Observations?

• The Supreme Court observed that the prayer in the appellant's interlocutory application fell under the proviso to Section 49 of the Registration Act, 1908. 
• The Court noted that this proviso expressly permits an unregistered document affecting immovable property to be received as evidence of a contract in a suit for specific performance. 
• The Court relied on its previous decision in S. Kaladevi v. V.R. Somasundaram (2010) 5 SCC 401, which established that an unregistered document may be received as evidence of a contract in a suit seeking specific performance. 
• The Court observed that when an unregistered document is tendered in evidence not as evidence of a completed sale but as proof of an oral agreement of sale, such document can be received in evidence with an appropriate endorsement. 
• The Court noted that the appellant's plaint had referenced the document dated 01.01.2000, and a photocopy had been filed along with the plaint. 
• The Court recognized that the appellant intended to use the document solely as proof of an oral agreement of sale, which is permitted under Section 49 of the Registration Act. 
• The Court clarified that it had not expressed any opinion on the contents of the document and that the respondent/defendant remained free to contest the relevancy and validity of the document. 
• The Court emphasized that it would be for the Trial Court to consider the submissions and pass appropriate judgment/order as deemed fit. 
• The Court determined that there was no valid legal impediment to allowing the appellant to introduce the document dated 01.01.2000 under the circumstances of the case. 
• The Court observed that the lower courts had erroneously disregarded the proviso to Section 49 of the Registration Act in their assessment of the admissibility of the unregistered document in a suit for specific performance. 

What is Section 49 of the Registration Act,1908 ? 

• Section 49 of the Registration Act, 1908, establishes the legal consequences of non-registration of documents that are required to be registered under Section 17 of the said Act or under any provision of the Transfer of Property Act, 1882. 
• The main provision categorically prohibits any unregistered document, which is mandatorily registrable, from affecting immovable property comprised therein, conferring any power to adopt, or being received as evidence of any transaction affecting such property or conferring such power. 
• The prohibition under Section 49 is tripartite in nature, restricting the evidentiary value, title-creating effect, and transaction-proving capability of unregistered documents that are compulsorily registrable. 
• Notwithstanding the stringent prohibition in the main provision, the proviso to Section 49 carves out two specific exceptions where an unregistered document may still be admitted in evidence: a. As evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act; or b. As evidence of any collateral transaction not required to be effected by a registered instrument. 
• The proviso creates a legal fiction by which an otherwise inadmissible document may be admitted for limited purposes, thereby balancing the strict requirements of registration with principles of equity and justice in specific circumstances. 
• The legal effect of the proviso is to prevent technical requirements of registration from defeating genuine contractual claims, particularly in suits for specific performance where the document serves not to establish title but to prove the existence of a contractual obligation. 
• The proviso does not nullify the requirement of registration but merely provides a procedural accommodation to admit unregistered documents for limited evidentiary purposes in specific legal proceedings. 
• The exception provided under the proviso is particularly significant in cases where parties have acted upon an unregistered agreement and substantial consideration has been exchanged, thus allowing courts to enforce specific performance despite the technical defect of non-registration. 
• The proviso distinguishes between the document's effect on property rights (which remains prohibited without registration) and its admissibility to prove contractual obligations (which is permitted in specific performance suits). 
• The statutory scheme acknowledges that while registration is essential for documents affecting title to immovable property, justice requires that contractual claims not be defeated merely on technical grounds of non-registration when substantial compliance and part performance are established.