In a landmark judgment, the Supreme Court of India in Muruganandam v. Muniyandi (Died) through LRs, 2025 (SC) 549, clarified the legal admissibility of unregistered agreements to sell in suits for specific performance.
The Court held that an unregistered sale agreement can be admitted in evidence under the proviso to Section 49 of the Registration Act, 1908, when it is not relied upon to prove transfer of title but to establish the existence of a contractual obligation.
This ruling reinforces the position earlier taken in S. Kaladevi v. V.R. Somasundara, (2010) 5 SCC 401, providing much-needed clarity for litigants and courts dealing with unregistered property agreements.
Legal Background
Section 49 of the Registration Act, 1908 bars the use of unregistered documents that affect immovable property.
However, the proviso to Section 49 creates an exception—allowing such documents to be admitted in evidence for limited purposes, such as in a suit for specific performance or for proving collateral transactions not requiring registration.
Facts of the Case
- The appellant and respondent entered into an unregistered agreement to sell on January 1, 2000.
- The appellant alleged that part payment was made and possession was delivered.
- The respondent failed to execute the final sale deed as agreed.
- The appellant filed a suit for specific performance, which was dismissed by the trial court and later affirmed by the High Court on the ground that the agreement was unregistered and, hence, inadmissible.
Issues Before the Court
- Whether an unregistered agreement to sell can be admitted in evidence in a suit for specific performance.
- Whether the trial court erred in excluding the unregistered agreement under the Registration Act and Stamp Act provisions.
Contentions of the Petitioner
- The petitioner argued that the document was not produced to prove title, but only to establish the existence of an oral contract.
- Cited the proviso to Section 49 of the Registration Act, which expressly allows unregistered documents to be used in suits for specific performance.
- Relied on the Supreme Court’s earlier ruling in S. Kaladevi v. V.R. Somasundara (2010) 5 SCC 401.
Contentions of the Respondent
- The respondent argued that under the Tamil Nadu Amendment to the Registration Act, registration of agreements to sell is mandatory.
- Claimed that the document was inadmissible due to non-registration and insufficient stamp duty, violating statutory provisions.
Court’s Analysis and Observations
The Supreme Court analyzed the scope of Section 49 and reaffirmed the principle in S. Kaladevi.
It held that:
- The proviso to Section 49 allows an unregistered agreement to be received in evidence in a suit for specific performance, provided it is not relied upon to establish ownership or title.
- Such a document can be admitted with a specific endorsement clarifying its limited evidentiary purpose.
- The objective of the proviso is to prevent injustice where contractual obligations are otherwise valid but remain unregistered due to procedural lapses.
Judgment and Conclusion
The Supreme Court allowed the appeal, setting aside the concurrent findings of the lower courts.
It held that:
“An unregistered agreement to sell can be admitted in evidence under the proviso to Section 49 of the Registration Act, 1908, for the limited purpose of proving the contract in a suit for specific performance.”
Thus, the unregistered sale agreement was held admissible as evidence of the underlying oral contract, reaffirming that the bar under Section 49 does not extend to suits seeking specific enforcement of an agreement.
Key Takeaways
- Unregistered sale agreements can still be used as evidence in specific performance suits.
- The proviso to Section 49 of the Registration Act protects bona fide contractual claims.
- The decision ensures that technical lapses in registration do not defeat genuine contractual obligations.
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Reinforces the precedent laid down in S. Kaladevi v. V.R. Somasundara (2010).