Unregistered Agreement to sell is admissible in evidence

Agreements are being executed every day in India. Whether corporate or individuals. But there are many problems faced by people while enforcing an agreement. So let us first and foremost keep in mind that on most of the agreements the provisions of The Registration Act, 1908 (Registration Act)
are applicable specially to the agreements which relates to land and immovable property.

Section 17 of the Registration Act provides for mandatory registration of
certain documents such as sale deed, gift deed etc. If the compulsarily registrable instrument is not registered then the said documet may not be taken in evidence in a court of law.

Recently supreme court in In a recent judgment of R. Hemlatha v. Kashthuri
(Hemlatha Case), through a Bench of HMJ M.R. Shah and HMJ C.T. Ravikumar in CIVIL APPEAL NO. 2535/2023 has highlighted the exception to the rule of such compulsarily registrable instruments and agreement.

The Hon’ble Supreme Court in R. Hemlatha v. Kashthuri
(Hemlatha Case), through a Bench of HMJ M.R. Shah and HMJ C.T. Ravikumar in CIVIL APPEAL NO. 2535/2023 has held that an unregistered
agreement to sell can still be admitted as evidence.

In this matter The District Court ruled that the unregistered Agreement was inadmissible as evidence due to its non-registration. This decision was challenged by Kashthuri before the Madras High Court.

In the appeal, the Madras High Court ruled that the proviso to
Section 49 of the Registration Act was aimed to ensure that the
non-registration of a document should not hinder the court from
granting equitable relief, particularly in cases of specific
performance of contracts. Consequently, the Madras High Court held
that the unregistered Agreement could be admitted as evidence,
considering the nature of the suit seeking specific performance.
Aggrieved by the judgment of the Madras High Court, Hemlatha
preferred an appeal before the Supreme Court.

Supreme Court’s Verdict

At the outset, the Supreme Court in R. Hemlatha v. Kashthuri
(Hemlatha Case), through a Bench of HMJ M.R. Shah and HMJ C.T. Ravikumar in CIVIL APPEAL NO. 2535/2023 noted that although the State
of Tamil Nadu had introduced Section 17(1)(g) to the Registration
Act, no corresponding amendment had been made to Section 49. The
Court emphasized that Section 49 was inserted in 1929 and stands
unamended. Taking this into consideration, the Supreme Court
concluded that the unregistered document at hand, namely the
unregistered Agreement, would be admissible as evidence in a suit
for specific performance. As a result, the Supreme Court dismissed
the appeal and upheld the order passed by the Madras High
Court.

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