Agreement To Sell Immovable Property Situated In UP Must Be Registered To Create Right, Title Or Interest: Allahabad HC

The Court arrived at this conclusion through a combined reading of the state amendments made to Sections 17 (Documents of which registration is compulsory) and 49 (Effect of non-registration of documents required to be registered) of the Registration Act, 1908, and Section 54 (Sale) of the Transfer of Property Act, 1882.

For context, Clause (f) was inserted into Section 17 (1) of the 1908 Act by the U.P. Act No. 57 of 1979, providing that if any law requires a document to be registered (such as agreements to sell), it will fall under the compulsory registration category.

Further, vide UP Act No.57 of 1976, clause (b) of sub-section (2) of Section 17 of the 1908 Act was amended by omitting the Explanation thereto,

In effect, this amendment provided that after the commencement of the Amending Act (April 1^st, 1977), an agreement to sell in respect of immovable property lying in the State of UP would necessarily require registration.

Further, Section 54 of the 1882 Act was amended by U.P. Act No.57 of 1976, which came into force on 1st January 1977, providing that a contract for the sale of immovable property can be made only by a registered instrument.

“The aforesaid provisions make it clear that an agreement to sell in respect of immovable property lying in State of U.P. required registration necessarily i.e. compulsorily. Section 17 of Act, 1908 read with Section 54 of Act, 1882, as applicable in U.P., makes it very clear that a contract of sale, as defined in Section 54, can be made only by a registered instrument. By omission of explanation to sub-section (2) of Section 17 of Act, 1908, the legislature has made it very clear that in State of U.P., an agreement to sell immovable property would also require compulsory registration so as to create any right, title or interest in immovable property,” a bench of Justice Kshitij Shailendra held.

The Court made this observation while dealing with a First Appeal From Order filed by one Irfan Qureshi challenging an order of the Judge, Small Causes Court, Bulandshahr, rejecting his injunction application under Order 39 Rule 1 CPC in a suit.

Case in brief

Essentially, it was the case of the appellant-Qureshi (original Plaintiff), that the father of the 2^nd defendant had orally agreed to sell an industrial plot to the appellant for ₹70 Lacs, out of which ₹35 Lacs was paid.

However, despite assurances, the sale deed was not executed. So, he filed a suit claiming a decree for mandatory injunction directing respondent No. 2 to execute the sale deed after receiving the balance of consideration.

In the suit, the appellant also filed an injunction application while praying that the defendants be restrained from interfering with their possession of the property.

The trial court rejected the appellant's injunction application, observing that his suit was essentially for specific performance disguised as a mandatory injunction in an attempt to avoid court fees.

Importantly, the court also noted that, as per the law applicable in the State of UP, the appellant had no case in the absence of a written agreement to sale and for want of its registration.

Challenging the said order, the appellant moved the HC, wherein his counsel argued that once possession was delivered to him, he was entitled to protect it. Therefore, it was contended that the rejection of the injunction application was not according to law, and Section 53-A of the TP Act (Part performance) would apply in favour of the appellant.

For context, this section protects transferees who have taken possession of the property or made improvements based on an oral agreement or an agreement not registered as required by law.

On the other hand, the counsel for the defendant argued that since no written agreement was made between the appellant and the father of the defendant-respondent no.2, the suit for mandatory injunction was not maintainable.

It was further submitted that, at most, the appellant might have a claim for a refund of money, and that too when he could establish that the money had been paid in relation to the proposed sale transaction.

High Court's observations

Examining the relevant provisions of the 1908 Act as well as the TP Act as amended by the State Amendments Act, the Court, for the reasoning outlined in the initial paragraphs of this story, found that in the absence of any written or registered or unregistered agreement for sale, appellant's claim for injunction could not be accepted.

The Court also rejected the contention the appellant's counsel raised that 53A of the TP Act would apply in his favour. It noted that permitting a document to be received in evidence for a limited purpose (as outlined in Section 49 of the 1908 Act) would not influence the rights of the parties vis a vis the immovable property concerned.

For context, as per Section 49 of the 1908 Act, an unregistered document requiring registration cannot be read in evidence. However, its proviso states that such an unregistered document could be received as evidence of part-performance of a contract for Section 53-A of the TP Act 1882 or as evidence of any collateral transaction not required to be effected by a registered instrument.

“…where a document remains unregistered and title does not pass, the agreement between the parties which preceded the ineffective document shall remain and may be received in evidence to look into the terms thereof. This by itself, would not confer any right since no such right has been conferred under the substantive law. Receiving in evidence does not mean conferment of substantive right. The rule of evidence cannot enlarge or alter the provisions of substantive law. It cannot confer rights, if there are none under the substantive law,” the Court remarked.

The Court also said that Section 53-A TP Act would have no application in the present case as to take shelter behind the above provision, one has to satisfy the following conditions:

• The contract should have been in writing, signed by or on behalf of transferor.
• The transferee should have got possession of immovable property covered by contract as a part-performance of the contract.
• If the transferee is already in possession and he continues in possession in part-performance of the contract, he further should have done some act in furtherance of the contract.
• The transferee has either performed his part of contract or is willing to perform his part of the contract.

Stressing that all the postulates of Section 53- A are sine qua non and a party cannot derive benefit by fulfilling only one or more conditions, the Court noted that except an alleged oral understanding between the appellant and the father of respondent no.2, there was no written contract or even any other document.

Thus, the court dismissed the appeal without expressing any opinion as regards the oral and documentary evidence to be led in the original suit or its maintainability.

Case title - Irfan Qureshi vs. Up State Industrial Development Authority And Another

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