Thursday, 13 September 2018

Whether title in immovable property can be transferred on basis of unregistered exchange deed?

 This takes us to the next question as to whether the exchange deed at Exhibit P2 is admissible in evidence or not. The transfer of ownership of their respective properties by Defendant Nos. 1 and 2 was done through Exhibit P2 deed of exchange. It was contended by Defendant No. 1 that the exchange was only of the businesses. However, a careful perusal of Exhibit P2 clearly shows that the RCC building is also a subject matter of the deed of exchange. The value of RCC building exceeds Rs. 100/- which is not in dispute. Section 118 of the TP Act defines 'exchange' as under:

118. "Exchange" defined.-When two persons mutually transfer the ownership of one thing for the ownership of another, neither thing or both things being money only, the transaction is called an "exchange".

A transfer of property in completion of an exchange can be made only in manner provided for the transfer of such property by sale.

18. It is clear from this provision that where either of the properties in exchange are immovable or one of them is immovable and the value of anyone is Rs. 100/- or more, the provision of Section 54 of the TP Act relating to sale of immovable property would apply. The mode of transfer in case of exchange is the same as in the case of sale. It is thus clear that in the case of exchange of property of value of Rs. 100/- and above, it can be made only by a registered instrument. In the instant case, the exchange deed at Exhibit P2 has not been registered.

19. Section 49 of the Registration Act, 1908 provides for the effect of non-registration of the document which is as under:

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:

20. Section 17(i)(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 Registration Act imposes bar on the admissibility of an unregistered document and deals with the documents that are required to be registered Under Section 17 of the Registration Act. Since, the deed of exchange has the effect of creating and taking away the rights in respect of an immovable property, namely, RCC building, it requires registration Under Section 17. Since the deed of exchange has not been registered, it cannot be taken into account to the extent of the transfer of an immovable property.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 5415 of 2011

Decided On: 02.07.2018

Shyam Narayan Prasad Vs. Krishna Prasad and Ors.


Hon'ble Judges/Coram:
Abhay Manohar Sapre and S. Abdul Nazeer, JJ.

Citation: (2018) 7 SCC 646.
Read full judgment here: Click here.
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