Unregistered Sale Agreement Admissible to Prove Contract in Specific Performance Suit : Supreme Court
The Supreme Court in Muruganandam v. Muniyandi (Died) through LRs. held that an unregistered agreement to sell is admissible as evidence to prove the existence of a contract in a suit for specific performance, as permitted by the proviso to Section 49 of the Registration Act, 1908. This proviso allows such documents to be used as evidence of a contract or a collateral transaction, even if they affect immovable property.
The bench of Justices PS Narasimha and Joymalya Bagchi was hearing an appeal from Tamil Nadu, where a State amendment mandates registration of agreements to sell. The appellant, relying on an unregistered agreement dated 01.01.2000, claimed part payment and possession were given but the respondent failed to execute the sale deed. The trial court and High Court rejected the claim, deeming the document inadmissible under the Registration and Stamp Acts.
The Supreme Court set aside these findings, citing S. Kaladevi v. V.R. Somasundara (2010) 5 SCC 401, which permits use of an unregistered document to prove an oral agreement in specific performance suits—not to establish title. Since the appellant sought to prove contract formation, not a completed sale, the Court ruled the document admissible under the proviso to Section 49 and allowed the appeal.