Introduction 

• This is a landmark judgment where the Supreme Court clarified the evidentiary value of unregistered sale deeds in suits for specific performance under the Transfer of Property Act and the Registration Act. 
• The Judgment was delivered by a 2- judge Bench consisting of Justice R.M. Lodha and Justice RV Raveendran. 

Facts   

• The plaintiff filed a suit before the Subordinate Judge, Gobichettipalayam, seeking specific performance of an oral sale agreement dated 27th February 2006 and a permanent injunction to protect possession of the suit property. 
• The plaintiff alleged that defendants 1, 2, and 3 jointly entered into an oral sale agreement with her on 27th February 2006 for a consideration of ₹1,83,000. 
• She claimed to have purchased stamp papers, paid the full sale consideration, taken possession of the property, and obtained execution of a sale deed from the defendants on the same day—27th February 2006. 
• The sale deed was taken for registration to the Sub-Registrar’s office on 27th February 2006, but it was not registered due to an existing order of attachment on the suit property. 
• The defendants allegedly promised to get the attachment vacated and complete the registration, but failed to do so, citing subsistence of the attachment. 
• On 4th February 2007, the plaintiff again requested defendants 1 and 2 to register the sale deed, but they refused and attempted to disturb her possession. 
• The 1st defendant, in his written statement, denied any oral sale agreement and stated that the document was signed as a security for a loan of ₹1,75,000 borrowed from the plaintiff, believing it to be an agreement for sale—not a sale deed. 
• On 5th December 2007, during trial, the plaintiff sought to mark the unregistered sale deed as evidence, but the defendants objected. 
• The trial court, by order dated 11th December 2007, upheld the objection and refused to admit the unregistered sale deed in evidence. 
• The plaintiff's revision petition against the trial court’s order was dismissed by the High Court, leading to the present appeal before the Supreme Court. 

Issue Involved  

• Whether unregistered sale deed can be admitted as evidence? 

Observations 

• Effect of Section 49 of the Registration Act, 1908: 
  • If a document that is required to be registered is not registered, it cannot affect the immovable property it refers to, nor can it be admitted as evidence of a transaction affecting such property. 
• Scope of the Proviso to Section 49: 
  • An unregistered document can still be admitted as evidence of a contract in a suit for specific performance, or as evidence of a collateral transaction not required to be effected through a registered instrument. 
• Evidence of Oral Agreement: 
  • An unregistered sale deed may be admitted to prove an oral agreement of sale, but not to prove a completed transfer of ownership. 
• Use for Collateral Purposes: 
  • Such a document can be admitted to establish the character of possession or other collateral matters which do not require registration. 
• Principles from K.B. Saha and sons Private Limited v. Development Consultant (2008): 
  • Unregistered documents are inadmissible to prove sale/gift/lease. 
  • They may still be used for collateral purposes. 
  • A collateral transaction must be independent and not require registration. 
  • If inadmissible, no part of its terms can be relied upon unless for a collateral purpose. 
• Addition to Principles: 
  • An unregistered document can be admitted in evidence as proof of a contract in a suit for specific performance. 
• Application in Present Case: 
  •  Since the plaintiff filed a suit for specific performance, the trial court was wrong to reject the unregistered sale deed dated 27th February 2006 as evidence. 
• Section 3(b) of the Specific Relief Act, 1963: 
  •  This section does not prohibit the use of an unregistered document in a specific performance suit, and the 1908 Act is not violated when courts admit such documents under the proviso to Section 49. 
• Final Outcome: 
  • The Supreme Court allowed the appeal, set aside the High Court order dated 13th November 2008 and the trial court order dated 11th December 2007, and directed the trial court to admit the unregistered sale deed into evidence and proceed with the suit. 

Conclusion 

• An unregistered sale deed can be admitted as evidence of a contract in a suit for specific performance. 
• The ruling reinforces that procedural lapses in registration do not bar substantive contractual rights from being adjudicated.