Admissibility of Unregistered Document

Importance of Registration

Registration of a document gives publicity and public exposure to documents thereby preventing forgeries and frauds in regard to transactions and execution of documents. It gives solemnity of form and perpetuates documents which are of legal importance or relevance by recording them, where people may see the record and enquire and ascertain what the particulars are.[1]

Registration Act, 1908

In India, Registration Act, 1908, (the “Act”) was enacted with the object of providing orderliness, discipline and public notice in regard to transactions relating to immovable property and protection from fraud and forgery of documents of transfer. Section 17 of the Act, therefore, requires compulsory registration of certain types of documents and provides for consequences of non-registration. The scope of Section 17 covers any document (other than testamentary instruments) which purports or operates 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 Rs. 100 and upwards to or in immovable property. Notably, Section 49 of the same Act provides that no document required by Section 17 to be registered shall, affect any immovable property comprised therein or received as evidence of any transaction, unless it has been registered. Section 49 bars the reception in evidence of a document of transfer which is required to be registered under Section 17 of the Registration Act or under the Transfer of Property Act, but is not registered.[2]

Admissibility of Unregistered Document

It is well settled that an unregistered document cannot be received in evidence of any transaction covered by registered document.[3] However, such unregistered document can be used as an evidence of collateral purpose, as provided in the proviso to Section 49 of the Registration Act.[4] The aforesaid law in based on the premise that such document maybe required in evidence to prove the factum of a transaction, though not of its content.[5] Furthermore, such an exception does not apply unless the transaction has been reduced to a document form.[6] There is plethora of cases which has firmly laid down that under the proviso to Section 49 of the Act, an unregistered document can also be admitted into evidence for a collateral fact/collateral purpose[7]. However, in order to admit such document even for collateral purpose, the document so tendered must be duly stamped or should comply with the requirements of Section 35 of the Stamp Act, without which, such document cannot be received in evidence unless duty and penalty are paid under Section 35 of the Stamp Act.[8] In G. Balakishtiah vs. B. Ranga Reddy[9], it was held that unregistered lease deed can be admissible in evidence for proving appellant’s (who was owner of the land in dispute) title to the leased property. Similarly in Hemanta Kumari Debi v. Midnapur Zamindari Co.[10], Privy Council had held that the admission of title in the unregistered lease deeds can be admissible as evidence. More recently in Shibani Basu v. Sandip Ray[11], Supreme Court held that non-registration of a rent note did not debar use of a document that was to be compulsorily registered, for collateral purposes.

Requirement for Compulsory Registration

Expanding the scope of the requirement for compulsory registration, the Apex Court in Raghunath v. Kedarnath[12], held-

“by the enactment of Act 21 of 1922 which by inserting in Section 49 of the Registration Act the words “or by any provision of the Transfer of Property Act, 1882” has made it clear that the documents in the supplemental list i.e. the documents of which registration is necessary under the Transfer of Property Act but not under the Registration Act fall within the scope of Section 49 of the Registration Act and if not registered are not admissible as evidence of any transaction affecting any Immovable property comprised therein, and do not affect any such immovable property.”

Accordingly it was held that the document in question was not admissible as evidence of any transaction affecting the immovable property. However, the above rule does not lay down any prohibition in respect of transfers required to be registered under another document. For instance, in Piru Charan Pal and Anr. v. Minor Sunilmoy Nemo and Anr[13]., it was held that as the document in question was required to be registered under the Bengal Tenancy Act, the prohibition contained in Section 49 of the Registration Act did not apply to it and the document was held to be admissible in evidence for purposes other than proving the title.

Meaning and Scope of ‘Collateral Purpose’

The term “collateral purpose” is often used along with the expression ‘collateral transaction’. Explaining the meaning of the expression, ‘collateral transaction’, the Bombay High Court in Ramlaxmi vs. Bank of Baroda[14], observed that such an expression “is used not in the sense of an ancillary transaction to a principal transaction or a subsidiary transaction to a main transaction. The root meaning of the word ‘collateral’ is running together or running on parallel lines. The transaction as recorded would be a particular or specific transaction. But it would be possible to read in that transaction what may be called the purpose of the transaction and what may be called a collateral purpose, the fulfilment of that collateral purpose would bring into existence a collateral transaction, a transaction which may be said to be a part and parcel of the transaction but none the less a transaction which runs together with or on parallel lines with the same.” However, it is to be noted that the precise meaning and examples of collateral purpose is not exhaustively defined. The meaning of ‘collateral purpose’ may vary depending on the nature of the agreement or document. For instance, in case of lease deed, the term ‘collateral purpose’ would mean proving the nature and character of possession and the purpose of leasing out. Similarly, an unregistered sale deed would be admissible in evidence for collateral purpose to limited extent of showing possession of a party to suit. In Ratan Lal and Ors. v. Harisankar and Ors.[15], it was observed that collateral purpose has a limited scope and meaning and it cannot be used for the purpose of saying that the deed created or declared or assigned or limited or extinguish the right to immovable property. If a mortgage deed is not registered, the mortgagor cannot use it to prove his right of redemption for that is not a collateral purpose.[16] However, 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.[17]

Whether Terms of an Unregistered Document Admissible in Evidence

It is to be noted that 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 proving an important clause would not be using it as a collateral purpose.[18] For instance, in Haran Chandra Chakrvarti v. Kaliprasanna Sarkar[19], it was held that the terms of a compulsorily registerable instrument are nothing less than a transaction affecting the property comprised in it. It was also held that to use such an instrument for the purpose of proving such a term would not be using it for a collateral purpose and that the question as to who is the tenant and on what terms he has been created a tenant are not collateral facts but they are important terms of the contract of tenancy, which cannot be proved by admission of an unregistered lease-deed into evidence. Later Supreme Court in Bajaj Auto Limited v. Behari Lal Kohli[20], held that if a decree purporting to create a lease is inadmissible in evidence for want of registration, none of the terms of the lease can be admitted in evidence and that to use a document for the purpose of proving an important clause in the lease is not using it as a collateral purpose. In M/s Jiwan Industries (P) Ltd. v. Smt. Kamlesh Rani Budhiraja,[21], it was held that-

“an unregistered lease deed can be looked into only for collateral purpose and collateral purpose cannot be interpreted to include therein the terms and conditions by which parties are related to each other as landlord and tenant. Collateral purpose basically is to show the nature of possession i.e. tenant has not illegally entered into possession but has legally entered into possession. All other terms and conditions between the landlord and tenant as stated in the registered lease deed whether it be for the period of lease, or the rate of rent or area of tenancy or other terms and conditions, the same cannot be looked into in view of the specific bar of Section 49 of the Registration Act.”

However, the Hon’ble Supreme Court in SMS Tea Estates Pvt. Ltd. vs. Chandmari Tea Company Pvt. Ltd.[22] held that-

“An arbitration agreement does not require registration under the Registration Act. Even if it is found as one of the clauses in a contract or instrument, it is an independent agreement to refer the disputes to arbitration, which is independent of the main contract or instrument. Therefore having regard to the proviso to Section 49 of Registration Act read with Section 16(1)(a) of the Act[23], an arbitration agreement in an unregistered but compulsorily registrable document can be acted upon and enforced for the purpose of dispute resolution by arbitration.”[24]

Accordingly, an arbitration agreement in an unregistered but compulsorily registrable document can be acted upon and enforced for the purpose of dispute resolution by arbitration.

Judicial Approach

In case of deciding the question of raising an objection against the admissibility of an unregistered document which needs to be registered, the Privy Council in Connecticut Fire Insurance Co v. Kavanagh[25] held that the court should not allow the question to be raised unless it can be disposed off without deciding questions of fact in considering which the court is in a much less advantageous position than the courts below. The Privy Council in ME Moolla Sons Ltd v. Burjorjee refused to allow an objection to the non registration of an agreement of sale to be raised when the agreement had been admitted throughout the litigation and had been treated as valid and no question affecting immovable property was involved in the appeal.[26]

Author: Vivek Verma (NUJS, Kolkata) & Aanchal Jain (NLU, Jodhpur)

[1] Suraj Lamp and Industries Pvt. Ltd. vs. State of Haryana and Anr. AIR 2012 SC 206

[2] Nand Singh v. Seva Singh; AIR 1959 Punj 609 at p. 220

[3] Raghunath and Ors. vs. Kedar Nath, AIR 1969 SC 1316

[4] S. Kaladevi vs. V.R. Somasundaram and Ors., (2010) 5 SCC 401

[5] Nand Singh v. Seva Singh; AIR 1959 Punj 609

[6] Dileep Dalal, Mulla on The Indian Registration Act, 10^th ed., Butterworths, New Delhi; Narsi v. Parshottam (1928) 52 Bom 875

[7] K.B. Saha and Sons Pvt. Ltd. vs. Development Consultant Ltd., (2008) 8 SCC 564, para 17

[8] Avinash Kumar Chauhan vs. Vijay Krishna Mishra, (2009)2SCC532; T. Bhaskar Rao v. T. Gabriel and Ors., AIR 1981 AP 175

[9] AIR 1960 AP 112

[10] AIR 1919 PC 79

[11] AIR 2011 SC 509

[12] AIR 1969 SC 1316

[13] AIR 1973 Cal 1

[14] AIR 1953 Bom 50

[15] AIR 1980 All 180

[16] Bhukan Mian v. Radhika (1938) 176 IC 35

[17] AIR 2004 AP 243

[18] K.B. Saha and Sons Private Ltd. v. Development Consultant Ltd., (2008) 8 SCC 564

[19] AIR 1932 Cal 83(2)

[20] [1989] 3 SCR 730

[21] 208(2014)DLT589

[22] (2011) 14 SCC 66

[23] Arbitration and Conciliation Act, 1996

[24] (2011) 14 SCC 66 at para 9

[25] AIR 1892 Cal 473

[26] 1932 59 IA 161