Property Documents – Effect of Non- registration – With Special Reference to ‘Collateral Purpose’ – A Legal Study.
By Y. Srinivasa Rao, M.A (English Lit.)., B.Ed., LL.M., Research Scholar in Law of Torts., Principal Senior Civil Judge, Tirupati, Andhra Pradesh.
TABLE OF CONTENTS:-
- Section 17 of Registration Act
- Documents of which registration is optional
- Description of property and maps and plans
- Time for presenting documents
- Place for registering documents
- ”Transfer of property” defined
- Sale deed
- Doctrine of part performance
- Lease deed
- Gift deed
- Collateral purpose
A property document is registered for the purpose of conservation ofevidence, assurance of title, publicity of documents and prevention of fraud. In India, the word “transfer” is defined with reference to the word “convey”. The word “transfer” in English law in its narrower and more usual sense refers to the transfer of an estate in land. Section 205 of the Law of Property Act in England defines: “Conveyance” includes a mortgage, charge, lease, assent, vesting declaration, vesting instrument. The word “conveys” in section 5 of the transfer of Property Act is used in the wider sense of conveying ownership. It is seminal to see that a document which purports or operates to create, declare, assign, limit or extinguishes any right, title or interest of the value of Rs. 100/- (one hundred rupees) and upwards, is to be registered. If registration is not done, as specified under section 17 and other relevant provisions of the Registration Act,1908, title will not pass in respect of such property. Under purview of Section 49(c) of the Act, in case of a deed of which registration is compulsory as stated in section 17 of the Registration Act, has not been registered, such document cannot be produced as an evidence in a court of law. Sale agreement, GPA and will transfers do not convey title and do not amount to a transfer of immovable property as was pointed put in Suraj Lamp & Industries (P) Ltd. v. State of Haryana , (2012) 1 SCC 656. In M/S. Dharmaratnakara Rai Bahadur … vs M/S. Bhaskar Raju And Brothers , (2020) 4 SCC 612, it was held that Section 35 of the Stamp Act provides that instruments not duly stamped are inadmissi ble in evidence and cannot be acted upon. Section 35 of the Stamp Act is distinct and different from Section 49 of the Registra tion Act in regard to an unregistered document. Section 35 of the Stamp Act, does not contain a proviso like Section 49 of the Regis tration Act enabling the instrument to be used to establish a collateral transaction.
Section 17 of Registration Act:- Documents of which registration is compulsory si clearly specified in section 17 of the Registration Act,1908. Section 17 (1) vividly specifies what are the deeds that shall be required to be registered.
The following documents shall be registered :-
An instrument of gift of immovable property, an instrument which purports to create, declare, assign, limit or extinguish, whether in present or in future any right, title or interest in immovable property, the value of which exceeds Rs. 100, any instrument which acknowledges the receipt or payment of consideration on account of the creation, declaration, assignment, limitation or extinction of any right, title or interest, leases of immovable property from year to year or for a term exceeding one year and instruments transferring or assigning any decree or order of court or any award where such decree or order or award operates to create, declare, assign, limit or extinguish any right, title or interest in immovable property, the value of which exceeds Rs. 100.
What sub-section 1-A of section 17 says is that 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.
Documents of which registration is optional:-
Section 18 of the Registration Act,1908 is relevant in this context as it speaks about certain documents of which registration is optional. According to this section, registration of documents is optional in the following cases –
(a) instruments (other than instruments of gift and wills) 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 a value less than one hundred rupees, to or in immovable property;
(c) instruments transferring or assigning any decree or order of a court or any award when such decree or order or award 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 a value less than one hundred rupees to or in immovable property;
Description of property and maps and plans :- Section 21 of the Registration Act,1908 explains the procedure as to the description of an immovable property. In order to identify such immovable property that is mentioned a deed,, a clear schedule of such immovable property must be mentioned separately, a fortiori, with clear description and with map and plan. Adoption of such procedure would enable the Registering Authorities to make entries in the relevant book for preservation.
Time for presenting documents :- Section 23 of the Act stipulates time for presenting a document for registration. ubject to the provisions contained in sections 24, 25 and 26, no document other than a will shall be accepted for registration unless presented for that purpose to the proper officer within four months from the date of its execution: Provided that a copy a of a decree or order may be presented within four months from the day on which the decree or order was made, or, where it is appealable, within four months from the day on which it becomes final.
Section 26 of the Act lays down the procedure as to documents executed out of India. As per this provision, when a document purporting to have been executed by all or any of the parties out of India is not presented for registration till after the expiration of the time hereinbefore prescribed in that behalf, the registering officer, if satisfied —
(a) that the instrument was so executed, and
(b) that it has been presented for registration within four months after its arrival in India, may, on payment of the proper registration-fee accept such document for registration.
Section 27 speaks about Wills. It says that ‘Wills’ may be presented or deposited at any time . Under this section, a will may at any time be presented for registration or deposited in manner hereinafter provided.
Place for registering documents:- As is seen from section 28 of the Registration Act,1908, it is clear that every deed referred to in Section 17 (1) clauses (a), (b), (c), (d), (f) and (g) of Section 17 (2), which affects immovable property, and Section 18 clauses (a), (b) and (cc) of the Registration Act, those deeds shall be presented for registration in the office of a Sub-Registrar within whose sub-district the whole or some portion of the property to which such deeds relates is situate. Section 32 of the Act speaks about persons to present documents for registration.
“Transfer of property” defined :- Section 5 of the Transfer of Property Act defines ‘Transfer of property’. This provision says as under: “In the following sections “transfer of property” means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to him- self, or to himself and one or more other living persons and “to transfer property” is to perform such act. In this Section “living person” includes a company or association or body of individuals, whether incorporated or not, but nothing herein contained shall affect any law for the time being in force relating to transfer of property to or by companies, associations or bodies of individuals.”
In Krishna Kumar Khemka vs Grindlays Bank P.L:C. And Ors, 1990 SCR (2) 961 , it was held that “The word “transfer” is defined with reference to the word “convey”. This word in English Law in its narrower and more usual sense refers to the transfer of an estate in hand; but it is sometimes used in a much wider sense to include any form of an assurance inter vivos. The definition in Sec. 205(1)(ii) of the Law of Property is “conveyance includes a mortgage, charge, lease, assent, vesting declaration, vest-. ing instrument, disclaimer, release of every other assurance of property or of any interest therein by any instrument except a will.” This is a special definition adopted for the purposes of the Law of Property Act, 1925. The word “con- veys” in Sec. 5 of the Indian act is obviously used in the wider sense referred to above. Transferor must have an interest in the property. He cannot serve himself from it and yet convey it.”
Under section 54 of the Transfer of Property Act, sale is a transfer of ownership in exchange for a price paid or promised or part-paid and partpromised. Such transfer in the case of tangible immovable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing can be made only by a regis- tered instrument. A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. See. Narandas Karsondas vs S.A. Kamtam & Anr , AIR 1977 SC 774.
A contract of sale does not of itself create any inter- est in, or charge on, the property. This is expressly declared in s. 54 of the Transfer of Property Act. See Rambaran Prosad vs Ram Mohit Hazra & Ors , 1967 SCR (1) 293.The fiduciary character of the personal obligation created by a contract for sale is recognised in section 3 of the Specific Relief Act, 1963 and in section 91 of the Trusts Act. The personal obligation created by a contract of sale is de- scribed in section 40 of the Transfer of Property Act as an obligation arising out of contract and annexed to the owner- ship of property, but not amounting to, an interest or easement therein.
Section 69 of of the Transfer of Property Act deals with mortgagees’ power of sale. Under the said section 69 (1) (c), a mortgagee has power of sale without the intervention of the Court where power is conferred by the mortgage deed and the mortgaged property or any part thereof was on the date of the execution of the mortgage deed, situate within the towns of Calcutta, Madras, Bombay or in any other town or area which the State Government, may, by notification in the official Gazette, specify.
Doctrine of part performance:- Section 53-A was enacted in 1929 by the Transfer of Property (Amendment) Act, 1929, and imports into India in a modified form the equity of part performance as it developed in England over the years. Doctrine of part performance as stated in Section 53-A of the Act is an equitable doctrine which creates a bar of estoppel in favour of the transferee against the transferor.
In Rambhau Namdeo Gajre vs Narayan Bapuji Dhotra, it was observed as under:
It is seen that many a times a transferee takes possession of the property in part performance of the contract and he is willing to perform his part of the contract. However, the transferor some how or the other does not complete the transaction by executing a registered deed in favour of the transferee, which is required under the law. At times, he tries to get back the possession of the property. In equity the Courts in England held that it would be unfair to allow the transferor to take advantage of his own fault and evict the transferee from the property. The doctrine of part performance aims at protecting the possession of such transferee provided certain conditions contemplated by Section 53-A are fulfilled. The essential conditions which are required to be fulfilled if a transferee wants to defend or protect his possession under Section 53-A of the Act have been culled out of this Court in Shrimant Shamrao Suryavanshi & Anr. Vs. Pralhad Bhairoba Suryavanshi, 2002 (3) SCC 676, are:
“(1) There must be a contract to transfer for consideration of any immovable property;
(2) the contract must be in writing, signed by the transferor, or by someone on his behalf;
(3) the writing must be in such words from which the terms necessary to construe the transfer can be ascertained;
(4) the transferee must in part performance of the contract take possession of the property, or of any part thereof;
(5) the transferee must have done some act in furtherance of the contract; and (6) the transferee must have performed or be willing to perform his part of the contract.”
If these conditions are fulfilled then in a given case there is an equity in favour of the proposed transferee who can protect his possession against the proposed transferor even though a registered deed conveying the title is not executed by the proposed transferor. In such a situation equitable doctrine of part performance provided under Section 53-A comes into play and provides that “the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract.”
Protection provided under Section 53-A of the Act to the proposed transferee is a shield only against the transferor. It disentitles the transferor from disturbing the possession of the proposed transferee who is put in possession in pursuance to such an agreement. It has nothing to do with the ownership of the proposed transferor who remains full owner of the property till it is legally conveyed by executing a registered sale deed in favour of the transferee. Such a right to protect possession against the proposed vendor cannot be pressed in service against a third party.
A lease of immovable property is defined in Section 105 of the TP Act. A transfer of a right to enjoy a property in consideration of a price paid or promised to be rendered periodically or on specified occasions is the basic fabric for a valid lease. The provision says that such a transfer can be made expressly or by implication. Once there is such a transfer of right to enjoy the property a lease stands created. What is mentioned in the three paragraphs of the first part of Section 107 of the TP Act are only the different modes of how leases are created. The first paragraph has been extracted above and it deals with the mode of creating the particular kinds of leases mentioned therein. The third paragraph can be read along with the above as it contains a condition to be complied with if the parties choose to create a lease as per a registered instrument mentioned therein. All other leases, if created, necessarily fall within the ambit of the second paragraph. Thus, dehors the instrument parties can create a lease as envisaged in the second paragraph of Section 107 which reads thus:
All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.
When lease is a transfer of a right to enjoy the property and such transfer can be made expressly or by implication, the mere fact that an unregistered instrument came into existence would not stand in the way of the court to determine whether there was in fact a lease otherwise than through such deed. See. Anthony vs Kc Ittoop And Sons And Others ., 2001 (1) MLJ 12 .
Relying on Anthony’s case (supra), in Indian Bank, Adyar Branch vs. Nippon Enterprises South, represented by its Partner, AIR 2011 Mad 238 , the Hon’ble Madras High Court held as under:-
” In Anthony v, K.C. Ittoop and Sons, 2001 (1) MLJ 12, the Supreme Court found that there are three interdictions to claim that an instrument can create a valid lease in law. The first inhibition is that it should be in accordance with the provisions of Section 107 of the Transfer of Property Act. That Section reads as under:
“107. A lease of immovable property from year to year, or for any term exceeding one year, or reserving an yearly rent, can be made only by a registered instrument.”
The second inhibition, as pointed out by the Supreme Court, is Section 17(1)(d) of the Registration Act, which states that where a lease of immovable property from year to year or for any term exceeding one year or reserving an yearly rent, such document should be compulsorily registered. The third inhibition, as noted by the Supreme Court, is Section 49 of the Registration Act relating to the consequence of non-compliance of Section 17. Section 49(c) contemplates that no document required by Section 17 or by any provision of the Transfer of Property Act to be registered shall be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered.”
In Biswabani (P.) Ltd vs Santosh Kumar Dutta And Ors.,(1980) 1 SCR 650 a two judge bench of the Hon’ble Supreme court found that though a second lease-deed executed between the parties (on the expiry of the period mentioned in the first lease-deed) is void for want of registration, the tenant would continue to be protected under the relevant Rent Control Act because on the expiry of the period of first lease the tenant had acquired the right of a statutory tenant
As was held in Varatha Pillai v. Jeevarathnammal, 1918 SCC Online PC 50, 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.
On careful reading of Section 123 of T.P. Act, it leaves no manner of doubt that a gift of immovable property can be made by a registered instrument singed by or on behalf of the donor and attested by at least two witnesses. When read with Section 122 of the Act, a gift made by a registered instrument duly signed by or on behalf of the donor and attested by at least two witnesses is valid, if the same is accepted by or on behalf of the donee.
That such acceptance must be given during the life time of the donor and while he is still capable of giving is evident from a plain reading of Section 122 of the Act.
A conjoint reading of Section 122 and 123 of the Act makes it abundantly clear that “transfer of possession” of the property covered by the registered instrument of the gift duly signed by the donor and attested as required is not a sine qua non for the making of a valid gift under the provisions of Transfer of Property Act, 1882.
As seen from the rulings in Renikuntla Rajamma (D) By Lr vs K.Sarwanamma, (2014) 9 SCC 445 as to the true and correct interpretation of Section 123 of the Transfer of Property Act have for a fairly long period held that Section 123 of the Act supersedes the rule of Hindu law if there was any making delivery of possession an essential condition for the completion of a valid gift. In 2019 , in S.Sarojini Amma vs Velayudhan Pillai Sreekumar, (2019) 4 SCC (Civ) 696, the Apex Court agreed the ratio laid in Renikuntal Rajamma’s case (supra), and held that there is no provision in law that ownership in property cannot be gifted without transfer of possession of such property. However, the conditions precedent of a gift as defined in Sectiodn 122 of the Transfer of Property Act must be satisfied. A gift is transfer of property without consideration. Moreover, a conditional gift only becomes complete on compliance of the conditions in the deed. In Nakka Parthasarathy vs Nakka Krsihnaveni And Another when once the gift deed is voluntarily made without there being any coercion or undue influence, the acceptance of the gift by the donee would be complete even though the deed of gift is not delivered to the donee and the gift property continues to be in the donors possession. See also. Smt. Syamala Raja Kumari’s case . See. the article published in https://articlesonlaw.in Article titled – ”Of-Gifts – A Legal Study’.
The three essential conditions of a valid gift under Mohammadan Law are discussed in Hafeeza Bibi v. Sk. Farid, (2011) 5 SCC 654, Mohd. Sadiq Ali Khan v. Fakr Jahan Begam, 1931 SCC OnLine PC 75. See also. Nasib Ali case, AIR 1927 Cal 197, Makku Rawther’s Children v. Manahapara Charayil, AIR 1982 Ker 27 and Jabeda Khatun v. Moksed Ali, AIR 1973 Gau 105. See. Rasheeda Khatoon v. Ashiq AlI, (2014) 10 SCC 459.
In Bondar Singh & Ors vs Nihal Singh & Ors , it was held that 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 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.
Collateral purpose :- Under the proviso to Section 49 of the Registration Act, an unregistered document can also be admitted into evidence for a collateral fact/collateral purpose, let us now look at the meaning of “collateral purpose”as was explained by the Hon’ble Supreme Court of India in M/S K.B.Saha And Sons Pvt. Ltd vs M/S Development Consultant Ltd . In Haran Chandra Chakrvarti Vs. Kaliprasanna Sarkar [AIR 1932 Cal 83(2)], it was held that the terms of a compulsorily registrable 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.
In Ratan Lal & ors. Vs. Harisankar & Ors. [AIR 1980 Allahabad 180], the Hon’ble Allahabad High Court , while discussing the meaning of the term “Collateral Purpose”, held as follows:
“The second contention was that the partition deed, even if it was not registered could certainly be looked into for a collateral purpose, but the collateral purpose has a limited scope and meaning. 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 ……….term collateral purpose would not permit the party to establish any of these acts from the deed.”
To know the meaning of ‘Collateral Purpose’, see also. Bajaj Auto Limited vs Behari Lal Kohli AIR 1989 SC 1806 , Rana Vidya Bhushan Singh Vs. Ratiram [1969 (1) UJ 86 (SC) . In Rana Vidya Bhushan Singh’s case, it was held that ” A document required by law to be registered, if unregistered, is inadmissible as evidence of a transaction affecting immovable property, but it may be admitted as evidence of collateral facts, or for any collateral purpose, that is for any purpose other than that of creating, declaring, assigning, limiting or extinguishing a right to immovable property. As stated by Mulla in his Indian Registration Act, 7th En., at p. 189 :
“The High Courts of Calcutta, Bombay, Allahabad, Madras, Patna, Lahore, Assam, Nagpur, Pepsu, Rajasthan, Orissa, Rangoon and Jammu & Kashmir; the former Chief Court of Oudh; the Judicial Commissioner’s Court of Peshawar, Ajmer and Himachal Pradesh and the Supreme Court have held that a document which requires registration under Section 17and which is not admissible for want of registration to prove a gift or mortgage or sale or lease is nevertheless admissible to prove the character of the possession of the person who holds under it.”
From the principles laid down in the various decisions of the Supreme Court and the High Courts, as referred to hereinabove, it is evident that :-
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 immoveableroperty 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 proving an important clause would not be using it as a collateral purpose.
The Hon’ble Andhra Pradesh High Court , in K. Ramamoorthi vs C. Surendranatha Reddy , examined the legal position with reference to catena of judgments and arrived at the following conclusions:
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 v. K.B. Allah Baksh Khan Haji Muhammad Umar, AIR 1942 Sind 27, 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).Queen Empressv. Rama Tevan -ILR (1892) 15 Mad 352, P.V.M. Kunhu Moiduv. T. Madhavan Menon – ILR (1909) 32 Mad 410 and Vaniv. Bani – ILR (1896) 20 Bom 553.
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 (Hanmant Apparao Deshpande v. Ramabai Hanmant Meghashyam , AIR 1919 Bom 38).
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 ( Varatha Pillai v. Jeevarathnammal,ILR (1920) 43 Mad 244 ).
(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 v. Nihal Singh (AIR 2003 SC 1905) and A. Kishore v. G. Srinivasulu (2004 SCC OnLine AP 386 ). See also. R.Suresh Babu vs G.Rajalingam And 2 Others , 2016 SCC OnLine Hyd 429 .
The agreement to sell does not create an interest of the proposed vendee in the suit property. As per Section 54 of the Act, the title in immovable property valued at more than Rs. 100/- can be conveyed only by executing a registered sale deed. Section 54 specifically provides that a contract for sale of immovable property is a contract evidencing the fact that the sale of such property shall take place on the terms settled between the parties, but does not, of itself, create any interest in or charge on such property. Unless there was a registered document of sale in favour of the proposed transferee agreement-holders, the title of the land would not get divested from the vendor and would remain in his ownership. 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 that a document like unregistered sale deed, though not admissible in evidence, can be looked into for collateral purposes. Section 35 of the Stamp Act, does not contain a proviso like Section 49 of the Registration Act enabling the instrument to be used to establish a collateral transaction.