SECOND APPEAL NO. 10 OF 2011

8th November 2019

Petitioner Counsel: Shri S.A. Deole
Respondent Counsel: Shri S.G. Karmarkar
Act Name: Code of Civil Procedure, 1908 Registration Act, 1908 Transfer of Property Act, 1882 Specific Relief Act, 1963

Section :
Section 100 Code of Civil Procedure, 1908 Section 17(1-A) Registration Act, 1908 Section 49 Registration Act, 1908 Section 53-A Transfer of Property Act, 1882 Section 20 Specific Relief Act, 1963

Cases Cited :
Para 12: Ameer Minhaj Vs. Dierdre Elizabeth (Wright) Issar & Ors., 2018(5) All MR 449 (SC)
Para 12: S. Kaladevi Vs. V.R. Somasundaram and Ors., (2010) 5 SCC 401 : [2010(3) All MR 477 (S.C.)]
Para 12: K.B. Saha and Sons Private Limited Vs. Development Consultant Limited, (2008) 8 SCC 564 : [2008(5) ALL MR 485 (S.C.)]

JUDGEMENT

The appellant brought suit for declaration, specific performance and permanent injunction against the respondents qua agreement of sale dated 15-1-2005, the subject matter of which is agricultural land admeasuring 0.50 hectare forming part of land admeasuring 1.00 hectare situated at village Tarodi, P.H. 54.

2. The trial Court decreed the suit by judgment and decree dated 01-10-2009, which is reversed by the District Judge-12, Nagpur by allowing Regular Civil Appeal 531/2009. Being aggrieved, the plaintiff is in appeal under Section 100 of the Civil Procedure Code. The parties shall be referred to by their status in the trial Court.

3. The plaintiff contended that defendant 1 agreed to sell the suit property admeasuring 0.50 hectare vide agreement dated 15-1-2005. The consideration agreed was Rs.40,000/- per acre and the plaintiff paid Rs.40,000/- to defendant 1 at the time of agreement. The plaintiff contended that the possession of the suit property was handed over to the plaintiff at the time of the suit agreement and subsequently in March, 2005 the plaintiff paid the balance consideration of Rs.10,000/- and Rs.3,000/- towards expenses. The plaintiff further contended that defendant 1 executed sale-deed of the entire land admeasuring 1.00 hectare in favour of defendant 2, including the land admeasuring 0.50 hectare which is the subject matter of the suit. These are the basic facts on the basis of which the plaintiff sought a decree of specific performance and a declaration that the sale-deed executed by defendant 1 in favour of defendant 2 is null and void to the extent of the land covered by the suit agreement.

4. The defendants filed a composite written statement. The suit agreement was out-rightly denied and so was the payment of consideration. The defendants further denied that the plaintiff was in possession of the suit property.

5. The trial Court held that the plaintiff proved the suit agreement and that the sale-deed dated 24-5-2005 executed by defendant 1 in favour of defendant 2 did not bind the plaintiff to the extent of land admeasuring 0.50 hectare which is the subject matter of the suit. Perusal of the judgment of the trial Court would reveal that no issue was framed as regards the readiness and willingness of the plaintiff to perform his part of the contract, presumably in view of the case of the plaintiff that having paid the entire consideration to defendant 1, and having received the possession of the suit property, there was nothing left to be done on his part. Perusal of paragraph 24 of the judgment of the trial Court would show that the finding which is recorded is that the plaintiff has paid the entire consideration to defendant 1 and has performed his part of the suit agreement. The trial Court was pleased to impound the suit agreement Exhibit 21 in view of the recital of delivery of possession contained therein. Subject to the impounding of the suit agreement and the payment of the deficit stamp duty, the suit is decreed.

6. Defendant 2, who purchased the suit property from defendant 1, preferred an appeal. Several contentions were raised by defendant 2 while assailing the judgment and decree of the trial Court. However, no grievance was made that in the absence of a specific issue as regards the readiness and willingness of the plaintiff to perform his part of the suit agreement, any prejudice has occasioned. The thrust of the challenge mounted by defendant 2-purchaser to the judgment and decree of specific performance was that such relief is purely discretionary and that the relevant facts were not considered by the trial Court while granting specific performance.

7. The first appellate Court reversed the judgment and decree of the trial Court. The execution of the suit agreement is held proved. The first appellate Court further held that the suit agreement was compulsorily registerable since the possession of the suit property is delivered. The first appellate Court then proceeded to hold that in the absence of registration the suit agreement Exhibit 21 is not a valid agreement.

8. This appeal is admitted on the following substantial questions of law :
(i) Whether the amendment in Section 17(1-A) of the Registration Act can be applied to whole agreement of sale or the scope is limited to Section 53 A of Transfer of Property Act ?
(ii) Whether an unregistered agreement of sale under which the possession is also delivered can be received in the evidence for the purpose of specific performance of contract ?
(iii) Whether the decree can be granted for specific performance on the basis of unregistered agreement in which the possession is also delivered as part performance ?

9. The first appellate Court committed a serious error in non- suiting the plaintiff on the ground that the suit agreement was not registered. The first appellate Court failed to appreciate that in view of the proviso to Section 49 of the Registration Act, 1908 an unregistered document affecting immovable property and required by the said Act or the Transfer of Property Act, 1882 to be registered, is admissible as evidence of a contract in a suit for specific performance of contract.

10. The Registration Act, 1908 was amended by Act 48 of 2001. Section 17(1-A) is inserted with effect from 24-9-2001 and the said provision reads thus :
“17(1-A) The documents containing contracts to transfer for consideration, any immovable property for the purpose of section 53-A of the Transfer of Property Act, 1882, shall be registered if they have been executed on or after the commencement of the Registration and Other Related Laws (Amendment) Act, 2001, and if such documents are not registered on or after such commencement then, they shall have no effect for the purposes of the said section 53-A.”
Simultaneously, the words “or as evidence of part performance of a contract for the purposes of Section 53-A of the Transfer of Property Act, 1882” were deleted from the proviso to Section 49. The legislative intent was, therefore, to make registration sine qua non for admissibility of the agreement for the purposes of Section 53-A of the Transfer of Property Act. In other words, the protective umbrella of Section 53-A of the Transfer of Property Act, 1882 is not available if the possession is delivered pursuant to an agreement which is registered, if the agreement is executed on or after the relevant date.

11. The first appellate Court, committed a manifest error in holding that the suit agreement was illegal for want of registration. The fact that the suit agreement was not registered, was irrelevant in the context of the relief for specific performance, in view of the proviso to Section 49 of the Registration Act.

12. Shri S.A. Deole, learned Counsel for the plaintiff has invited my attention to a relatively recent decision of the Hon’ble Supreme Court in Ameer Minhaj v. Dierdre Elizabeth (Wright) Issar & Ors., 2018(5) All MR 449 (SC) and in particular to paragraphs 9, 10 and 11 thereof, which read thus :
“9. In other words, the core issue to be answered in the present appeal is whether the suit agreement dated 9th July 2003, on the basis of which relief of specific performance has been claimed, could be received as evidence as it is not a registered document. Section 17(1A) of the 1908 Act came into force with effect from 24th September, 2001. Whereas, the suit agreement was executed subsequently on 9th July, 2003. Section 17(1A) of the 1908 Act reads thus:
“17. Documents of which registration is compulsory - (1) The following documents shall be registered, if the property to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act No.XVI of 1864, or the Indian Registration Act, 1866, or the Indian Registration Act, 1871, or the Indian Registration Act, 1877, or this Act came or comes into force, namely:- XXX XXX XXX
(1A) The documents containing contracts to transfer for consideration, any immovable property for the purpose of section 53A of the Transfer of Property Act, 1882 (4 of 1882) shall be registered if they have been executed on or after the commencement of the Registration and Other Related laws (Amendment) Act, 2001 and if such documents are not registered on or after such commencement, then, they shall have no effect for the purposes of the said section 53A.
XXX XXX XXX”
10. On a plain reading of this provision, it is amply clear that the document containing contract to transfer the right, title or interest in an immovable property for consideration is required to be registered, if the party wants to rely on the same for the purposes of Section 53A of the 1882 Act to protect its possession over the stated property. If it is not a registered document, the only consequence provided in this provision is to declare that such document shall have no effect for the purposes of the said Section 53A of the 1882 Act. The issue, in our opinion, is no more res integra. In S. Kaladevi Vs. V.R. Somasundaram and Ors.(2010) 5 SCC 401 : [2010(3) All MR 477 (S.C.)], this Court has restated the legal position that when an unregistered sale deed is tendered in evidence, not as evidence of a completed sale, but as proof of an oral agreement of sale, the deed can be received as evidence making an endorsement that it is received only as evidence of an oral agreement of sale under the proviso to Section 49 of the 1908 Act. Section 49 of the 1908 Act reads thus:
“49. Effect of non-registration of documents required to be registered – No document required by section 17 [or by any provision of the Transfer of Property Act, 1882 (4 of 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 (4 of 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 (3 of 1877), or as evidence of any collateral transaction not required to be effected by registered instrument.”
11. In the reported decision, this Court has adverted to the principles delineated in K.B. Saha and Sons Private Limited Vs. Development Consultant Limited, (2008) 8 SCC 564 : [2008(5) ALL MR 485 (S.C.)] and has added one more principle thereto that a document is required to be registered, but if unregistered, can still be admitted as evidence of a contract in a suit for specific performance. In view of this exposition, the conclusion recorded by the High Court in the impugned judgment that the sale agreement dated 9th July, 2003 is inadmissible in evidence, will have to be understood to mean that the document though exhibited, will bear an endorsement that it is admissible only as evidence of the agreement to sell under the proviso to Section 49 of the 1908 Act and shall not have any effect for the purposes of Section 53A of the 1882 Act. In that, it is received as evidence of a contract in a suit for specific performance and nothing more. The genuineness, validity and binding nature of the document or the fact that it is hit by the provisions of the 1882 Act or the 1899 Act, as the case may be, will have to be adjudicated at the appropriate stage as noted by the Trial Court after the parties adduce oral and documentary evidence.”

13. The fact that possession is delivered in part performance of the contract would make no difference to the admissibility of the unregistered document as evidence of a contract in a suit for specific performance. If the plaintiff is found entitled to the relief of specific performance, the same cannot be denied on the premise that the suit agreement is unregistered and possession is delivered in part performance thereof. However, if a party to the agreement is seeking the benefit of the protective umbrella of Section 53-A of the Transfer of Property Act, to that extent and purpose, the suit agreement will not be admissible. In the present case, the suit agreement was clearly admissible in evidence as evidence of contract for the purpose of specific performance and the fact that possession is also delivered as part performance does not affect the admissibility of the suit agreement as evidence of contract qua the claim of specific performance.

14. The substantial questions of law are, therefore, answered thus :
(i) The amendment by insertion of Section 17(1-A) of the Registration Act is limited to Section 53-A of the Transfer of Property Act.
(ii) Yes, an unregistered agreement of sale pursuant to which possession is also delivered can be received in evidence for the purpose of specific performance of contract.
(iii) Yes. Decree can be granted for specific performance on the basis of unregistered agreement in which the possession is also delivered in part performance of the agreement.

15. The judgment of the first appellate Court is clearly unsustainable and is liable to be set aside, which I accordingly do.

16. However, neither the trial Court nor the first appellate Court has considered the entitlement of the plaintiff to relief of specific performance on the touchstone of Section 20 of the Specific Relief Act which read thus :
“20. Discretion as to decreeing specific performance.-
(1) The jurisdiction to decree specific performance is discretionary, and the court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a court of appeal.
(2) The following are cases in which the court may properly exercise discretion not to decree specific performance:-
(a) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; or
(b) where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff; or\
(c) where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance.
Explanation 1.—Mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause (b).
Explanation 2.— The question whether the performance of a contract would involve hardship on the defendant within the meaning of clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract.
(3) The court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance.
(4) The court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the party.”

17. It is well settled that the relief of specific performance is discretionary and is governed by rules of equity. The Court is not bound to grant specific performance merely because it is lawful to do so. While exercising the discretion, the circumstances of the case, the conduct of the parties and their respective interests will be relevant. There is no strait-jacket formula and indeed there can be none, which can be applied to determine whether the discretion can be exercised in favour of the plaintiff. The suit agreement may not be vitiated by misrepresentation or fraud or factors akin thereto and, yet, in a given fact situation it may be inequitable to grant specific performance in view of the unfair advantage which may be conferred upon the plaintiff or where the defendant may be put to serious hardship.

18. Be it noted, that although a contention was raised in the memo of appeal in the first appellate Court that it would not be just to grant specific performance, the contention is not considered and the first appellate Court has based the reversing judgment on the premise that the suit agreement is not legal for want of registration. Rather than remitting the matter to the first appellate Court, I have ventured to consider the pleadings and the evidence on record to ascertain whether the discretion to grant specific performance could be exercised in favour of the plaintiff, and having done so, I am satisfied that the plaintiff is entitled to specific performance.

19. The plaintiff approached the Court with a simple case of having paid the entire consideration and defendant 1 having sold the suit property to defendant 2 although the plaintiff paid the entire consideration and was placed in possession. A composite written statement is filed on record on behalf of the defendants. The composite written statement is of denial simplicitor. The suit agreement is denied and so is the receipt of consideration. The delivery of possession is denied. It has come in evidence, that the defendants set up an out and out false defence in the written statement. There is clinching evidence on record that the suit agreement was executed and that the plaintiff paid the entire consideration. It has further come in evidence that the plaintiff was and is in possession of the suit property. Considering the evidence on record, I do not see any reason why the discretion should not be exercised in favour of the plaintiff.

20. In the light of the discussion supra, the appeal is allowed. The reversing judgment of the first appellate Court in Regular Civil Appeal 531/2009 dated 14-7-2010 is set aside and that of the trial Court in Regular Civil Suit 151/2008 (Old 29/2005) dated 01-10-2009 is restored.