Friday, 13 November 2015

How unregistered documents can be used for collateral purpose?

Then the next question that falls for consideration is whether
these can be used for any collateral purpose. The larger Bench of
Andhra Pradesh High Court in Chinnappa Reddy Gari Muthyala
Reddy Vs. Chinnappa Reddy Gari Vankat Reddy , AIR 1969 A.P.
(242) has held that the whole process of partition contemplates
three phases i.e. severancy of status, division of joint property by
metes and bounds and nature of possession of various shares. In a
suit for partition, an unregistered document can be relied upon for
collateral purpose i.e. severancy of title, nature of possession of
various shares but not for the primary purpose i.e. division of joint
properties by metes and bounds. An unstamped instrument is not
admissible in evidence even for collateral purpose, until the same is
impounded. Hence, if the appellants/defendants want to mark these
documents for collateral purpose it is open for them to pay the
stamp duty together with penalty and get the document impounded
and the Trial Court is at liberty to mark Exhibits B-21 and B- 22 for
collateral purpose subject to proof and relevance.
Accordingly, Civil Appeal is partly allowed holding that Exhibits
B-21 and B-22 are admissible in evidence for collateral purpose
subject to payment of stamp duty, penalty, proof and relevancy.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 8441 OF 2015
ARISING OUT OF
SPECIAL LEAVE PETITION (CIVIL) NO. 12788 OF 2014
YELLAPU UMA MAHESWARI & ANR. ...APPELLANTS
VERSUS
BUDDHA JAGADHEESWARARAO & ORS. ...RESPONDENTS
Dated;October 08, 2015
N.V. RAMANA, J.

Leave granted.
2. This Appeal has been preferred aggrieved by the orders passed
by the High Court of Judicature of Andhra Pradesh in CRP No. 3419
of 2013, dt. 27/12/2013 wherein and whereby the learned Judge has
dismissed the Revision Petition preferred by the
Appellants/Defendant Nos. 1 & 2 by confirming the orders passed in
O. S No. 10 of 2004, dt. 08/07/2013 on the file of Principal Senior
Civil Judge, Anakapalle.
3. The brief facts which are necessary for adjudicating the dispute
involved in the present appeal, in nutshell, are as follows.
4. The 1st respondent/plaintiff filed O.S No. 10 of 2004 on the file
of Senior Civil Judge Court, Anakapalle against the appellants and
others for the relief of partition claiming ¼th share in Item No. 1, ½
share in Item No. 2 of the suit schedule properties.
5. It is the specific case of the1st respondent/plaintiff that one
Jaggayya, who is the foster father of the plaintiff, had acquired certain
properties during his life time and executed a Registered Will dt.
22/05/1964 in a sound and disposing state of mind bequeathing his
immovable properties in favour of the plaintiff/respondent and 1st
defendant/appellant No.1 by giving life estate in favour of his wife
Mahalakshmamma, and the said Mahalakshmamma died on
20/05/2001, as such plaintiff/respondent No.1 and the defendant
Nos.1 & 2/appellants became entitled to the plaint Schedule
properties in equal shares. On his demand, when the defendants
failed to partition the properties by giving him his legitimate right, he
has approached the Court by filling the above suit.
6. The appellants herein (Defendant Nos.1 & 2) resisting the plea
of the plaintiff/respondent No.1 filed the written statement that
appellant No. 1 being the sister’s daughter of Mahalakshamma and
the plaintiff/respondent No. 1 who is the sister’s son of late Jaggayya
were treated as foster son and daughter as Jaggayya had no issues.
In the year 1969 properties were partitioned between the parties. The
plaintiff/respondent No. 1, in spite of having his share in the
properties, taking advantage of appellant No.1’s innocence and
helplessness, has taken other properties which are not allotted to
him, having no other go she (appellant No.1) kept quiet. According to
the defendants/appellants, after the partition they have been enjoying
the properties fell to their respective shares. It is their further case
that on 05-6-1975 plaintiff/respondent No.1 and the first
defendant/appellant No. 1 got executed the Deed of Memorandum of
earlier partition. Both the plaintiff/respondent No.1 and the 1st
defendant/appellant No.1 were given pattadar passbooks and title
deeds in respect of properties fell to their share and in fact, the
plaintiff/respondent No.1 has alienated some of his properties.
Mahalakshsamma in a sound and disposing state of mind executed a
Registered Will dated 27/03/1999 bequeathing all the properties in
favour of 1st defendant/appellant No.1. Further, Mahalkshamma has
given away her life estate in favour of appellant No.1/defendant No.1
and the plaintiff/respondent No.1. Hence, it is pleaded that as
properties were already partitioned in the year 1969, the question of
again partitioning the properties does not arise and sought for
dismissal of the Suit.
7. The appellant No.1/defendant No.1 filed her chief examination
affidavit and sought to mark Exhibits B1 to B 48.The
plaintiff/respondent No.1 raised objection with regard to admissibility
of Exhibits B-21 and B-22. Exhibit B-21, dated 05/06/1975 according
to the defendant/appellant is Deed of Memorandum witnessing earlier
partition effected between the plaintiff/respondent No.1 and the
defendant No.1/appellant No.1. Exhibit B-22 is the Agreement dated
04/06/1975 entered between Late Mahalakshammma,
plaintiff/respondent No.1 and the defendant No.1/appellant No.1.
8. The plaintiff/respondent No.1 took objection with regard to
admissibility of Exhibits B-21 and B-22 on the ground that whole
contents referred to in the Memorandum dated 05/6/1975 discloses
that the second party thereto relinquished her right through the said
documents. Therefore, the Agreement dated 04/06/1975 and
Memorandum dated 05/06/1975 have to be construed as
relinquishment deeds. A relinquishment deed which is compulsorily
registerable document under Sec 17 (b) of the Registration Act, 1908
and hence, the unregistered document is not admissible in evidence.
The plea of the defendants is that the recitals of the said document
discloses past transaction with reference to division of property and
further it discloses the intention of the parties to enter into a separate
agreement for sharing the properties and that the terms therein have
to be implemented in future.
9. Both the Trial Court and the High Court upheld the objection
raised by the plaintiff/respondent No.1 and came to a conclusion that
two recitals i.e. Exhibit B21 and Exhibit B22 are not evidencing the
past transaction, but they prima facie disclose the partition of the
property and relinquishment of rights by one of the parties. As such,
both documents require stamp duty under the Indian Stamp Act, 1899
and registration under the Registration Act, 1908. As Exhibits B21
and B22 are unregistered and unstamped documents, they are not
admissible in evidence. The Trial Court gave a specific finding that
even both the exhibits are not admissible for collateral purpose also.
Aggrieved by that, the present appeal is filed.
10. We have heard the learned senior counsel for the
appellants/defendant Nos.1& 2 and the learned counsel for the
respondents/plaintiff.
11. It is urged by the learned senior counsel Mr. V. V. S. Rao that
Exhibits B21 and B22 are admissible in evidence as both the
documents evidence the past transaction which does not require any
registration and both the Courts below erred in coming to a
conclusion that Exts B21 and B22 require registration ignoring the
true nature of the documents. It is urged that the amendment that is
brought to the Registration Act in 1986, whereby even the past
transaction becomes registerable and the same is not applicable to
Exhibits B21 and B22. It is further urged by the learned senior
counsel that even assuming that Exhibits B21 and B22 require
registration, still the unregistered documents are admissible in
evidence for collateral purpose.
12. The learned counsel Mr. G.V.R. Choudary, appearing for the
respondents, on the other hand, has submitted that the Courts below
were perfectly right in coming to a conclusion that Exhibits B21 and
B22 are compulsorily registerable documents and prayed for
dismissal of the Suit.
13. Now the issue that falls for consideration is:
(1) Whether the Courts below were right in holding that Exhibits B21
and B22 are not admissible in evidence as they are compulsorily
registerable documents?
(2) Whether Exhibits B-21 and 22 are admissible in evidence for
collateral purpose?
14. Before we go in to the merits of the matter, we deem it
appropriate to extract the relevant provisions of the Registration Act,
1908.
Sec. 17 of the Registration Act, 1908
Documents of which registration is compulsory.— (l)
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 Registration Act, 1866, or the Registration Act,
1871, or the Registration Act, 1877, or this Act came or comes
into force, namely:—
(a) Instruments of gift of immovable property;Page 8
8
(b) 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;
(c) non-testamentary instruments which acknowledge the
receipt or payment of any consideration on account of the
creation, declaration, assignment, limitation or extinction
of any such right, title or interest; and
(d) leases of immovable property;
(e) non-testamentary 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 the value of one hundred rupees and
upwards, to or in immovable property:
(f) any decree or order or award or a copy thereof passed by
a Civil Court on consent of the defendants or on
circumstantial evidence but not on the basis of any
instrument which is admissible in evidence under section
35 of the Indian Stamp Act, 1899 (2 of 1899), such as
registered title deed produced by the plaintiff, where such
decree or order or award purports or operate to create,
declare, assign, limit, 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; and
(g) agreement of sale of immovable property of the value of
one hundred rupee and upwards”,
Provided that the State Government may, by order published in
the Official Gazette, exempt from the operation of this subsection
any lease executed in any district, or part of a district,
the terms granted by which do not exceed five years and the
annual rents reserved by which do not exceed fifty rupees.
Section 49 of the Registration Act,1908
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.
15. Section 17 (1) (b) of the Registration Act mandates that any
document which has the effect of creating and taking away the
rights in respect of an immovable property must be registered and
Section 49 of the Act imposes bar on the admissibility of an
unregistered document and deals with the documents that are
required to be registered u/s 17 of the Act.
16. Coming to the facts on hand, the defendant No.1 wanted to
mark Exhibits B21 and B22, according to her, these two documents
are Agreement and a Memorandum which were unregistered and
unstamped documents and do not require registration. We have
seen Exhibits B21 and B22 which are placed before us. Exhibit B22,
dated 04/06/1975 as per the recitals, an Agreement between the
plaintiff/respondent No.1, defendant No.1/appellant No.1 and late
MahaLakshmamma. Clause 1 of the Agreement speaks about
relinquishment of rights of Mahalakshmamma in favour of
plaintiff/respondent No. 1 and defendant No.1/appellant No. 1 and
Clause 4 specifies that the life estate of Mahalakshamama is
devolved upon the plaintiff/respondent No.1 and the defendant
No.1/appellant No.1 equally. It is further specified that the stock
amount of Rs 50,000/- in the shop was given to Mahalakashamma
and left over amount will be divided between plaintiff/respondent
No.1 and defendant No.1/appellant No.1 and further it was agreed
upon that Mahalakahamma was entitled to reside in the house
where she was residing. She was at liberty to reside in the house
of the plaintiff/respondent No. 1 and the plaintiff/respondent No.1
and the defendant No.1/appellant No.1 shall not raise any dispute
over this. Coming to Exhibit B21, date 05/06/1975 which is an
agreement between Mahalakashmma, plaintiff/respondent No.1 and
defendant No.1/appellant No.1 wherein at Clauses 4 to 6 the recitals
pertain to relinquishment of shares between the parties to the
agreement. It is stated in the Memorandum, Ext. B 22, that each of
them having partitioned the properties by good and bad qualities,
have been enjoying the respective properties that fell to their shares,
in proof thereof, the Deed of Memorandum is executed. Taking us
through the recitals of these two documents, the learned senior
counsel tried to impress upon this Court particularly through the last
few lines from Exhibit B-21, that these documents are only
evidencing the past transaction of partition that has taken place but
through these documents no rights in immovable property have
accrued to the parties as envisaged under Sec. 17 of the
Registration Act and which makes these documents out of the
purview of Section 49 of the Registration Act.
17. It is well settled that the nomenclature given to the document
is not decisive factor but the nature and substance of the transaction
has to be determined with reference to the terms of the documents
and that the admissibility of a document is entirely dependent upon
the recitals contained in that document but not on the basis of the
pleadings set up by the party who seeks to introduce the document
in question. A thorough reading of both Exhibits B-21 and B-22
makes it very clear that there is relinquishment of right in respect of
immovable property through a document which is compulsorily
registerable document and if the same is not registered, becomes
an inadmissible document as envisaged under Section 49 of the
Registration Act. Hence, Exhibits B-21 and B-22 are the documents
which squarely fall within the ambit of section 17 (i) (b) of the
Registration Act and hence are compulsorily registerable documents
and the same are inadmissible in evidence for the purpose of
proving the factum of partition between the parties. We are of the
considered opinion that Exhibits B 21 and B22 are not admissible in
evidence for the purpose of proving primary purpose of partition.
18. Then the next question that falls for consideration is whether
these can be used for any collateral purpose. The larger Bench of
Andhra Pradesh High Court in Chinnappa Reddy Gari Muthyala
Reddy Vs. Chinnappa Reddy Gari Vankat Reddy , AIR 1969 A.P.
(242) has held that the whole process of partition contemplates
three phases i.e. severancy of status, division of joint property by
metes and bounds and nature of possession of various shares. In a
suit for partition, an unregistered document can be relied upon for
collateral purpose i.e. severancy of title, nature of possession of
various shares but not for the primary purpose i.e. division of joint
properties by metes and bounds. An unstamped instrument is not
admissible in evidence even for collateral purpose, until the same is
impounded. Hence, if the appellants/defendants want to mark these
documents for collateral purpose it is open for them to pay the
stamp duty together with penalty and get the document impounded
and the Trial Court is at liberty to mark Exhibits B-21 and B- 22 for
collateral purpose subject to proof and relevance.
19. Accordingly, Civil Appeal is partly allowed holding that Exhibits
B-21 and B-22 are admissible in evidence for collateral purpose
subject to payment of stamp duty, penalty, proof and relevancy.
..................................J.
 (RANJAN GOGOI)
 ……………................J.
 (N.V. RAMANA)
New Delhi,
October 08, 2015
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