Andhra HC (Pre-Telangana)
K. Ramamoorthi vs C. Surendranatha Reddy on 27 July, 2012
Author: C.V.Nagarjuna Reddy
Bench: C.V.Nagarjuna Reddy
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