The Hon'ble Sri Justice C.V.Nagarjuna Reddy
Civil Revision Petition No.1623 of 2012
27.07.2012
K. Ramamoorthi
C. Surendranatha Reddy
<GIST:
>HEAD NOTE:
Counsel for the petitioner : Mr. R. Dheeraj Singh
Counsel for the respondent : Mr. Sharad Sanghi
?CASES REFERRED:
1. 2006 (6) ALT 292
2. AIR (29) 1942 Sind 27
3. CDJ 2012 APHC 499
4. 43 Madras 244 (PC)
5. 17 Madras 456
6. 35 Madras 63
7. 46 Madras 349
8. (2008) 8 SCC 564
9. AIR 1932 Cal 83(2)
10. AIR 1980 All 180
11. AIR 1989 SC 1806
12. 1969 (1) UJ 86 (SC)
13. AIR 1984 SC 143
14. 2011 AIR SCW 4484
15. AIR 2003 SC 1905 : (2003) 4 SCC 161
16. 2004 (3) ALD 817 (DB)
17. 2011 (2) ALT 373
18. 2009 (2) ALT 19 (SC) : 2009 (2) SCJ 156
19. AIR 2004 AP 243
20. ('92) 15 Mad. 253
21. ('09) 32 Mad. 410
22. ('96) 20 Bom. 553
23. ('19) 6 AIR 1919 Bom. 38 : 21 Bom. L.R.716
JUDGMENT:
The question, which quite often vexes the Bar and the Bench alike, arises in
this case. The question is whether the unregistered sale deed dated 23.01.1976
sought to be produced by the plaintiff in evidence in a suit for permanent
injunction could be marked for a "collateral purposes"? The lower Court has
sustained the objection raised by the defendant that as the sale deed pertains
to an immovable property, which requires compulsory registration, and the same
is not registered, it cannot be admitted in evidence even for the purpose of
proving the plaintiff's possession.
Before delving into the legal position governing the issue, it is necessary to
briefly refer to the facts of the case. The petitioner herein filed O.S.No.169
of 2005 for permanent injunction restraining the respondent herein and the
persons claiming through him from interfering with his peaceful possession of
the plaint schedule property comprising Ac.0.20 cents or 0.081 hectares out of
Ac.1.87 cents in survey No.649/1 of Chittoor Municipality. It is the pleaded
case of the petitioner that his brother K.Gopalan was the absolute owner of the
plaint schedule property, that out of love and affection towards him, his
brother has gifted the plaint schedule property to him on 22.02.2001 under a
registered gift settlement deed, that on the date of execution of the gift
settlement deed, his brother has inducted him in possession, that since then he
has been in continuous possession of the same, and that as the respondent sought
to interfere with his possession, he has filed the suit.
The respondent has filed O.S.No.287 of 2004 in the Court of the learned
Principal Senior Civil Judge, Chittoor for declaration of title and permanent
injunction against the petitioner. On a transfer application, both these suits
were clubbed together for disposal by the learned Principal Junior Civil Judge,
Chittoor. The said suit filed by the respondent is mainly based on the
registered sale deed dated 30.11.2004 executed by the wife and children of
Balasubrahmanyam Pillai in favour of the respondent.
During the trial, the petitioner sought to produce the above-mentioned
unregistered sale deed dated 23.01.1976 stated to have been executed by
Balasubrahmanyam Pillai in favour of K.Gopalan, the brother of the petitioner
who executed Ex.A.1-gift deed in favour of the petitioner. As the said sale deed
was neither properly stamped nor registered, the petitioner got the same
impounded by paying the stamp duty and penalty. The schedule property in
O.S.No.169 of 2005 forms part of the schedule property in O.S.No.287 of 2004.
The petitioner sought to mark the impounded but unregistered sale deed dated
23.01.1976 for a purported collateral purpose, namely, to prove possession of
the property. But the Court below declined permission to mark the document.
The reason assigned by the lower Court for this refusal is that if the
respondent, who filed O.S.No.287 of 2004, succeeds in getting his title
declared, the petitioner will not be entitled for the grant of permanent
injunction and that, therefore, the unregistered sale deed cannot be marked. The
lower Court further reasoned that since the sale Deed is compulsorily
registerable as per Section 17 of the Registration Act, 1908, the same is not
admissible in evidence even though it is impounded. The lower Court cited the
judgment in Rayadurgam Pedda Reddeppa (died) and others v. Rayadurgam Narasimha
Reddy (died) and others1. It needs to be observed that the lower Court has not
dealt with the issue as it ought to have. It has not undertaken any discussion
as to whether the document cannot be admitted into evidence for a collateral
purpose if not for proving the title. Therefore, I would like to examine these
aspects.
Before adverting to the case law, I would like to give a brief prelude to the
issue. The plain dictionary meaning of the phrase "collateral" is "additional
but subordinate, secondary" (Oxford Dictionary, Thesaurus & Word Power Guide,
Indian Edition 2007). An area which often creates a doubt is whether the word
"collateral" should be applied qua the transaction or the relief claimed in the
suit? The proviso to Section 49 of the Registration Act makes it evident that
it is only with reference to the transaction affecting the immovable property.
For example, in a suit for injunction, the main purpose is to prove possession.
The possession in a sale deed is collateral to the transaction. The case law
discussed below would show that the phrase 'collateral purpose' is qua the
transaction and not with reference to the relief claimed in the suit. Equally
important area where the Courts often face the problem is in understanding the
purport of the phrases 'collateral transaction' and 'collateral purpose'.
The spate of precedents on the above aspects for almost a century
notwithstanding, the difficulty for the Courts to understand the true purport of
these aspects is continuing. In this context, I would like to recall the
statement of Davis C.J. In Radhomal Alumal v K.B. Allah Baksh Khan Haji Muhammad
Umar and another 2 herein below:
"In this case, as in other cases, it is easier to state the law than to apply
it".
Indeed, without noticing this judgment, feeling the same difficulty, I have
myself made the following observation on similar lines in Doma Govinda Raju and
another v Vanimisetti Papa Rao and others3:
"While the legal principles do not admit of divergent opinion, the whole problem
arises in their application."
In the present case, I have, therefore, tried to make an endeavour to explain
these aspects in the light of the various judicial precedents.
Section 17 of the Registration Act specified the documents, whose
registration is compulsory. Under clause (b) of sub-section (1) thereof, other
non-testamentary instruments which purport or operate to create, declare,
assign, limit or extinguish whether in present or in future, any right, title or
interest whether vested or contingent, of the value of one hundred rupees and
upwards, to or in immovable property, are included. A sale deed purporting to
convey right and title in the property undoubtedly falls in this category of
instruments. Section 49 of the Registration Act laid down the effect of non-
registration of documents required to be registered. For proper and better
appreciation, this provision is reproduced hereunder:
"No document required by Section 17 or by any provisions of the Transfer of
Property Act, 1882 to be registered shall,
(a) affect any immovable property comprised therein; or
(b) confer any power to adopt; or
(c) be received as evidence of any transaction affecting such property or
conferring such power,
unless it has been registered.
Provided that an unregistered document affecting immovable property and
required by this Act, or the Transfer of Property Act, 1882 to be registered may
be received as evidence of a contract in a suit for specific performance under
Chapter II of the Specific Relief Act, 1877 or as evidence of any collateral
transaction not required to be effected by registered instrument." (Emphasis is
mine)
The proviso to Section 49 of the Registration Act, which is relevant for the
present purpose, carved out an exception to the rule contained in the main
provision as regards the effect of an unregistered document requiring
registration and receiving of such document as evidence of any transaction. The
proviso permits such document to be received as evidence under two
contingencies, namely (1) as a piece of evidence of a contract in a suit for
specific performance in Chapter II of the Specific Relief Act, 1877 and (2) as
evidence of any collateral transaction not required to be effected by registered
document.
As noted hereinbefore, the proviso to Section 49 of the Registration Act
is a subject matter of debate and discussion in a plethora of judgments of
different Courts. In Radhomal Alumal (2 supra), Davis C.J. in his leading
opinion has made a studious reference to the case law and pithily culled out the
opinion of various judgments of Bombay High Court. The learned Chief Justice
observed as under:
"The use of such document in evidence, and the fact that an unregistered
document may be used in evidence but not as evidence has been held to permit the
use in evidence of an unregistered document, though that document affects
immovable property, if the purpose of its use is for any purpose other than that
of creating, declaring, assigning limiting or extinguishing a right to immovable
property: 9 Bombay Law Reporter 393, 13 Bombay Law Reporter 162, 34 Bombay Law
Reporter 415. These words are wide and the term "collateral purpose" is easier
to illustrate than to define."
Davis C.J. further noticed that the High Courts generally have held that a
document which requires registration under Section 17 and is not admissible for
want of registration to prove a gift, or mortgage or sale or lease of land is
nevertheless admissible to prove the possession of the person who holds it.
The learned Chief Justice has referred to a judgment of the Privy Council in
Varada Pillai v Jeevaratnammal4 as an illustration for the point wherein an
unregistered deed of gift requiring registration under Section 17 was admitted
in evidence not to prove the gift but to explain by reference to it the
character of the possession of the lady who held the land and who claimed it,
not by virtue of her deed of gift but on another title, that of adverse
possession. He described the collateral transaction as under:
"A collateral transaction means, I think, a transaction other than the
transaction affecting the immovable property but which is in some way connected
with it."
The question, which arose in Radhomal Alumal (2-supra) was whether the deed of
partnership relating to immovable property requiring registration but not
registered was admissible in evidence for proving the existence of partnership.
The objection to the admissibility of a document was that the deed contained
recitals relating to transfer of interests in immovable property which required
registration. However, the propounder of the deed sought to rely on the said
document for the purpose of proving partnership. While holding that the said
document could be used for the collateral purpose of proving partnership, Davis
C.J., held as under:
"It is difficult in this case to say that what is sued for is something that
affects immovable property. The share of defendant in the lease does not concern
in any way the taking of accounts, and the division of the proceeds. There is no
attempt here to enforce the transfer of the share in the leases, it is quite
immaterial to the relief sought, which can be ascertained and given
independently of whether an interest in the leases was or was not transferred to
defendant. It is sought to bring the unregistered deed upon the record not to
prove a transaction affecting immovable property but as evidence to prove a
collateral transaction, that is not a transaction creating, declaring,
assigning, limiting or extinguishing a right to immovable property, (Bai
Gulabbai v. Shri Datgarji - ('07) 9 Bombay Law Reporter 393), but to prove the
partnership and profits and losses arising from the same."
I may revert to this judgment a little later.
A Larger Bench of the Madras High Court headed by
Rajamannar, C.J., considered the whole gamut of the subject on a copious
reference of the case law on the subject. Two conflicting opinions were
rendered by Satyanarayana Rao, J and Panchapagesa Sastry, J. Rajamannar, C.J.,
agreed with the opinion of Satyanarayana Rao, J, by a short separate opinion of
his own. The document, which fell for consideration of the Court, was a
purported agreement whereunder Acs.4-00 of property was leased out on an yearly
rent of Rs.600/-. The two lower Courts have declined to admit the document into
evidence as it was unregistered. Before the High Court, it was argued that even
if the said document required registration and was not admissible in evidence,
still it could be used for the collateral purpose of proving the anterior oral
agreement which would, nonetheless, be valid because of the agreement being
oral. Satyanarayana Rao, J, who rendered leading opinion, referred to a slew of
judgments notable among them being the Judgment of a Five Judge Bench of Madras
High Court in Rajah of Venkatagiri v Narayana Reddi5. In a Full Bench judgment
of three Judges in Narayanan Chetty v Muthiah Servai6, his Lordship has
noticed the conflict between these two judgments. While dealing with Section 49
of the Registration Act, the learned Judge observed that the prohibition against
admissibility enacted by the said provision is not an absolute one, but the
section renders the unregistered document inadmissible only for the two limited
purposes specified in the section, i.e., clauses (a) and (c) thereof and leaves
it available to be used in evidence for other purposes; that under clause (a) of
S.49, the document required to be registered, but unregistered, is wholly
inoperative and ineffectual to create, declare, assign, limit or extinguish any
right, title or interest in immoveable property and that under-sub clause (c),
an unregistered document cannot be relied upon for proving a transaction
affecting immovable property. While dealing with clause (a), the learned Judge
relied on the following famous observation in Saraswathamma v. Paddayya7:
"What is prohibited by the section is receiving a document as evidence of
a transaction, not merely receiving it in evidence, i.e., as a piece of evidence
having a bearing on the question to be ultimately decided."
In other words, the learned Judge held that the prohibition was to prevent a
person from establishing the use of the document in evidence "transaction
affecting immoveable property" and that a person should not be permitted to
establish indirectly by use of the document what he is prevented from doing
directly under clause (a). While dealing with clause (c), the learned Judge held
as under:
"What one has to see under the clause is to consider what is it that he is
seeking to establish in evidence by using the document. Is he attempting to
prove by the document a "transaction affecting immoveable property". In other
words is he seeking to prove a present demise of the property, or a lease of the
property ?". That is not the object of the plaintiff in the present case. The
object is to establish an agreement to lease the property, which was broken by
the defendant. He is in no way attempting to show that an interest in
immoveable property is created by a present demise of the land. Proof of a mere
agreement to lease, if one remembers the distinction drawn by the Privy Council
in Hemantha Kumari's case, (47 Cal. 485) : (AIR (6) 1919 P.C. 79) between
agreements, which merely enable a person to obtain a lease in future, and
agreements, which operate to create a present demise, or an immediate interest
in land, is not prohibited. The former agreement is not a transaction affecting
immoveable property. The agreement, therefore, in such a case is not hit at
by cl. (c) of S.49, as a mere agreement to lease without more does not create
any interest in immoveable property.....".
The learned Judge concluded by holding as under:
"The restriction imposed by this section is confined to the use of the
document to affect immoveable property and to use the document as evidence of a
transaction affecting immoveable property and no more. If the object in putting
the document in evidence does not fall within any of these two purposes, there
is no reason for excluding the document from evidence altogether. The scope of
the restriction or of the disability imposed cannot be extended beyond the
limits imposed by the section."
On a painstaking effort of analyzing innumerable judgments, the learned
Judge has held that the judgment in Rajah of Venkatagiri (5 supra) has laid down
the law correctly and has, accordingly, overruled the judgment in Narayanan
Chetty (6 supra).
In K.B.Saha & Sons Pvt. Ltd. v Development Consultant Ltd.8, the Supreme Court
has considered the true meaning and purport of "collateral fact/collateral
purpose" with reference to the decided case law. The question that arose before
the Supreme Court was, whether the memorandum of agreement whereunder the suit
property was leased out was admissible in evidence, as the same was not
registered. The further question considered by the Supreme Court was, whether
Clause 9 of the lease agreement which constituted an important term of the lease
agreement could be used as evidence of any collateral transaction not required
to be affected by registered instrument.
After considering the judgments in Haran Chandra Chakrvarti v Kaliprasanna
Sarkar9, Ratan Lai & others v Harisankar & others10, Bajaj Auto Limited v Behari
Lal Kohli11 and Rana Vidya Bhushan Singh v Ratiram12, in paragraph 34 the
Supreme Court deduced the following principles:
"From the principles laid down in the various decisions of this Court and the
High Courts, as referred to hereinabove, it is evident that:-
1. A document required to be registered is not admissible into evidence under
Section 49 of the Registration Act.
2. Such unregistered document can however be used as an evidence of
collateral purpose as provided in the Proviso to Section 49 of the Registration
Act.
3. A collateral transaction must be independent of, or divisible from, the
transaction to effect which the law required registration.
4. A collateral transaction must be a transaction not itself required to be
effected by a registered document, that is, a transaction creating, etc. any
right, title or interest in immoveable property of the value of one hundred
rupees and upwards.
5. If a document is inadmissible in evidence for want of registration, none
of its terms can be admitted in evidence and that to use a document for the
purpose of providing an important clause would not be using it as a collateral
purpose."
On the above legal principles the Supreme Court held that Clause 9 cannot
be looked into for collateral purpose as it constitutes an important term of the
agreement.
In Satish Chand Makhan and others v Govardhan Das Byas and others13, a
registered indenture of lease dated 08.01.1965 was entered between the parties
for a period of five years, on a monthly rent of Rs.311/-. The lessee, acting
upon the lease put up a structure worth more than rupees one lakh and carried on
the business of running a hotel from the demised premises. After the expiry of
five years period, the parties entered into an agreement to renew the monthly
lease for a further period of nine years with effect from 01.06.1971, and they
have accordingly prepared a draft lease agreement which remained unregistered as
required under Section 17(1)(d) of the Registration Act. Clause 9 of the
agreement provided that the lessee shall restore the possession of the demised
premises to the lessors after removing all the superstructure built upon the
land. It has further stipulated that on his failure to comply with the said
condition, the lessor's father would be entitled to recover possession of the
plot with mesne profits. Thereafter, the lessors filed suit for ejectment and
mesne profits. One of the pleas of the defendant was that the unregistered
draft lease agreement was inadmissible for want of registration under Section 49
of the Registration Act. The trial Court has admitted the document into
evidence by marking the same as Ex.B.2 for being used by the plaintiff for the
collateral purpose of proving the term of the subsequent lease under proviso to
Section 49 of the Registration Act. This view of the trial Court was confirmed
by the High Court. Reversing this view taken by the trial Court and the High
Court, the Supreme Court held as under:
"...The unregistered draft lease agreement Ex. B-2 was clearly
inadmissible in evidence under Section 49 of the Registration Act, except for
the collateral purpose of proving the nature and character of possession of the
defendants. The document Ex. B-2 was admissible under the proviso to Section 49
only for a collateral purpose of showing the nature and character of possession
of the defendants. The proviso to Section 49 was however not applicable in the
present case inasmuch as the terms of a lease are not a "collateral purpose"
within its meaning. It follows that the unregistered draft lease agreement Ex.
B-2 was inadmissible in evidence to prove the transaction of lease. It was also
ineffectual to create a valid lease for a renewed term of nine years for want of
registration as required under Section 17(1)(d) of the Registration Act."
(Emphasis supplied)
In M/s.Sms Tea Estates P.Ltd v M/s.Chandmari Tea Co.P.Ltd.14, a lease deed was
entered into between the parties for grant of a long term lease in respect of
two Tea Estates. Clause 35 of the lease deed provided for settlement of
disputes between the parties by arbitration. One of the parties issued a notice
to the other party to refer the disputes to arbitration under Clause 35 of the
lease deed. As the said request was not accepted by the other party, the
aggrieved party filed an arbitration application in the Guwahati High Court
under the Arbitration and Conciliation Act, 1996. The Chief Justice of the
Guwahati High Court dismissed the application by holding that the lease deed was
compulsorily registrable under Section 17 of the Registration Act and Section
106 of the Transfer of Property Act, and that as the lease deed was not
registered, no term in the lease deed could be relied upon for any purpose, and
consequently Clause 35 could not be relied upon for seeking reference to
arbitration. Reversing this view, R.V.Raveendran, J, speaking for the Supreme
Court held as under:
"...Section 49 makes it clear that a document which is compulsorily registrable,
if not registered, will not affect the immovable property comprised therein in
any manner. It will also not be received as evidence of any transaction
affecting such property, except for two limited purposes. First is as evidence
of a contract in a suit for specific performance. Second is as evidence of any
collateral transaction which by itself is not required to be effected by
registered instrument. A collateral transaction is not the transaction affecting
the immovable property, but a transaction which is incidentally connected with
that transaction. The question is whether a provision for arbitration in an
unregistered document (which is compulsorily registrable) is a collateral
transaction, in respect of which such unregistered document can be received as
evidence under the proviso to section 49 of the Registration Act." (Emphasis
supplied)
On analyzing the lease deed, the Supreme Court concluded that when a contract
contains an arbitration agreement, it is a collateral term relating to the
resolution of disputes, unrelated to the performance of the contract, that it is
as if two contracts - one in regard to the substantive terms of the main
contract and the other relating to resolution of disputes - rolled into one, for
purposes of convenience and that an arbitration clause is therefore an agreement
independent of the other terms of the contract or the instrument and
resultantly, even if the contract or its performance is terminated or comes to
an end on account of repudiation, frustration or breach of contract, the
arbitration agreement would survive for the purpose of resolution of disputes
arising under or in connection with the contract. The Supreme Court further
held that similarly, when an instrument or deed of transfer (or a document
affecting immovable property) contains an arbitration agreement, it is a
collateral term relating to resolution of disputes, unrelated to the transfer or
transaction affecting the immovable property. Another important question which
was considered by the Supreme Court was apart from the purpose of existence of
arbitration, whether the unregistered sale deed can be relied upon for proving
possession. The Supreme Court answered this question in the affirmative by
holding as under:
"Where a lease deed is for a term of thirty years and is unregistered, the terms
of such a deed cannot be relied upon to claim or enforce any right under or in
respect of such lease. It can be relied upon for the limited purposes of showing
that the possession of the lessee is lawful possession or as evidence of some
collateral transaction. Even if an arbitrator is appointed, he cannot rely upon
or enforce any term of the unregistered lease deed. Where the arbitration
agreement is not wide and does not provide for arbitration in regard to all and
whatsoever disputes, but provides only for settlement of disputes and
differences arising in relation to the lease deed, the arbitration clause though
available in theory is of little practical assistance, as it cannot be used for
deciding any dispute or difference with reference to the unregistered deed."
(Emphasis supplied)
In Bondar Singh and others v Nihal Singh and others15, a suit was filed for
declaration of title on the basis of the plea that the plaintiffs have become
the owners of the suit schedule property by adverse possession. It was the
pleaded case of the plaintiffs that, one Fakir Chand, the predecessor in
interest of the defendants, sold the land to Tola Singh, the predecessor in
interest of the plaintiffs, under an unstamped and unregistered sale deed dated
09.05.1931. The plaintiffs claimed to have entered into possession of the land
on the basis of the said sale deed and they claimed to be continuously in
possession since then. When the defendants tried to dispossess the plaintiffs,
the latter have filed the suit. In order to show that possession of the
plaintiffs was hostile and continuous by virtue of which the plaintiffs have
perfected their title by adverse possession, they have sought to rely upon
unregistered sale deed dated 09.05.1931 executed by Fakir Chand. The said
document was admitted into evidence and the suit was decreed. While affirming
the judgment of the trial Court and the High Court, the Supreme Court has held:
"Under the law a sale deed is required to be properly stamped and registered
before it can convey title to the vendee. However, legal position is clear law
(sic) that a document like the sale deed in the present case, even though not
admissible in evidence, can be looked into for collateral purposes. In the
present case the collateral purpose to be seen is the nature of possession of
the plaintiffs over the suit land. The sale deed in question at least shows that
initial possession of the plaintiffs over the suit land was not illegal or
unauthorized. It is significant to note that the sale deed is dated 9.5.1931 and
Fakir Chand died somewhere in the year 1949-50. During his lifetime Fakir Chand
never disputed plaintiffs' title or possession of the suit land". (Emphasis
added)
A Division Bench of this Court in A.Kishore @ Kantha Rao v G.Srinivasulu16
considering the judgments in Satish Chand Makhan (13 supra) and Rana Vidya
Bhushan Singh (12 supra), repelled the submission of the respondent before the
Court based on a distinction between an unregistered lease deed and an
unregistered sale deed for considering the documents for collateral purpose.
The argument was that while in a sale deed the title is the main purpose and
possession is collateral purpose, in a lease deed transfer of possession being
main purpose, such a lease deed cannot be looked into even for collateral
purpose. The Division Bench considering the above mentioned judgments of the
Supreme Court held as under:
"Therefore, there is no judgment as such from the Apex Court, which in our view,
lays down that an unregistered lease deed which is compulsorily registerable,
cannot be admitted in evidence even for the purpose of proving the nature of
possession. True, such lease deeds cannot be used for the purpose of providing
the terms of such lease or the lease itself, but they can certainly be used for
the purpose of proving the nature of possession." (Emphasis added)
In Anga Bhuloka Rao v Noorjahan Begum17 a learned single Judge of this Court
placing reliance on the decision of the Supreme Court in Avinash Kumar Chauhan v
Vijay Krishna Mishra18 held that an unregistered sale deed is admissible in
evidence to show the character of possession, which is a collateral purpose.
A case involving the facts identical to the present one was dealt with by
a learned single Judge of this Court in P.M.Anand Babu and others v Mir Akbar
Ali Khan and another19. In that case also a suit was filed for injunction
simplicitor. The plaintiffs relied upon unregistered sale deeds dated
17.09.1953 and 24.04.1971 to prove their possession. The learned Judge has
discussed the phrases "collateral purpose" and "collateral transaction", and
observed that by the simple devise of calling it a "collateral purpose", a party
cannot use the unregistered document in any legal proceedings to bring about
indirectly the effect of which it would have had if registered and similarly the
expression "collateral transaction" in the proviso to Section 49 of the
Registration Act is not to be used in the sense of ancillary or a subsidiary
transaction to a main or principal transaction. The learned Judge held, "the
transaction as recorded could be a particular or specific transaction, but it
would be possible to read in that transaction what may be called the purpose of
transaction and what may be called a collateral purpose, the fulfillment of that
collateral purpose would bring into existence a collateral transaction, a
transaction which may be said to be a part and parcel of a transaction but
nonetheless a transaction which runs together with or on parallel lines with the
same". Upon placing reliance on the judgment of the Supreme Court in Bondar
Singh and others (15 supra), the learned Judge held as under:
"Since the suit filed by the petitioners/plaintiffs is injunction simplicitor
and the unregistered sale deeds sought to be relied on is only to prove their
possession over the property, they can be admitted into evidence under the third
proviso to Section 49 of Registration Act."
On a compendious reference of the case law discussed above, the followings
conclusions emerge:
i) A document, which is compulsorily registrable, but not registered, cannot be
received as evidence of any transaction affecting such property or conferring
such power. The phrase "affecting the immovable property" needs to be
understood in the light of the provisions of Section 17(b) of the Registration
Act, which would mean that any instrument which creates, declares, assigns,
limits or extinguishes a right to immovable property, affects the immovable
property.
ii) The restriction imposed under Section 49 of the Registration Act is confined
to the use of the document to affect the immovable property and to use the
document as evidence of a transaction affecting the immovable property.
iii) If the object in putting the document in evidence does not fall within the
two purposes mentioned in (ii) supra, the document cannot be excluded from
evidence altogether.
iv) A collateral transaction must be independent of or divisible from a
transaction to affect the property i.e., a transaction creating any right, title
or interest in the immovable property of the value of rupees hundred and
upwards.
v) The phrase "collateral purpose" is with reference to the transaction and not
to the relief claimed in the suit.
vi) The proviso to Section 49 of the Registration Act does not speak of
collateral purpose but of collateral transaction i.e., one collateral to the
transaction affecting immovable property by reason of which registration is
necessary, rather than one collateral to the document.
vii) Whether a transaction is collateral or not needs to be decided on the
nature, purpose and recitals of the document.
Having culled out the legal propositions, the discussion on this issue will be
incomplete if a few illustrations as to what constitutes collateral transaction
are not enumerated as given out in Radhomal Alumal (2 supra) and other
Judgments. They are as under:
a) If a lessor sues his lessee for rent on an unregistered lease which has
expired at the date of the suit, he cannot succeed for two reasons, namely, that
the lease which is registrable is unregistered and that the period of lease has
expired on the date of filing of the suit. However, such a lease deed can be
relied upon by the plaintiff in a suit for possession filed after expiry of the
lease to prove the nature of the defendant's possession.
b) An unregistered mortgage deed requiring registration may be received as
evidence to prove the money debt, provided, the mortgage deed contains a
personal covenant by the mortgagor to pay (See: Queen-Empress v Rama Tevan20,
P.V.M.Kunhu Moidu v T.Madhava Menon21 and Vani v Bani22).
c) In an unregistered agreement dealing with the right to share in certain
lands and also to a share in a cash allowance, the party is entitled to sue on
the document in respect of movable property (Hanmantapparao v Ramabai
Hanmant23).
d) An unregistered deed of gift requiring registration under Section 17 of the
Registration Act is admissible in evidence not to prove the gift, but to explain
by reference to it the character of the possession of the person who held the
land and who claimed it, not by virtue of deed of gift but by setting up the
plea of adverse possession (Varada Pillai (4 supra)).
(e) A sale deed of immovable property requiring registration but not registered
can be used to show nature of possession (Radhomal Alumal (2-supra), Bondar
Singh (15-supra) and A.Kishore (16-supra).
The above instances are only illustrative and not exhaustive. There may be many
more situations where a transaction can be collateral to the transaction which
affects the immovable property. The Courts will have to carefully decide on a
case to case basis in the light of the legal principles contained in the above
discussed and various other judgments holding the field.
When we apply the above crystallized legal position to the facts of the case, I
am of the opinion that the unregistered sale deed is admissible in evidence for
the collateral purpose to the limited extent of showing possession of the
plaintiff. As discussed hereinabove, the Courts have been consistently holding
that in a document of sale, possession is treated as collateral to the main
transaction affecting the immovable property. Therefore, I am of the considered
opinion that for the limited purpose of proving the petitioner's possession, the
unregistered document, which is impounded, is admissible in evidence.
The order of the lower Court is accordingly set aside, and the Civil Revision
Petition is allowed.
As a sequel, the interlocutory applications, pending if any, shall stand
disposed of. There shall be no order as to costs.
Before parting with the case, I place on record my appreciation for Sri R.
Dheeraj Singh and Sri Sharad Sanghi, learned counsel for the parties, for the
assistance rendered by them and also Sri J.C. Francis, the learned counsel, for
placing relevant case law before the Court.
______________________________
(C.V.NAGARJUNA REDDY, J)
27th July, 2012
