SC clarifies legal admissibility of unregistered agreements to sell under Section 49 proviso.

News Desk, New Delhi, 09-May: In a significant legal development, the Supreme Court has ruled that an unregistered agreement to sell can still be admitted as evidence in a suit seeking specific performance, provided the purpose is to establish the existence of a contract — not to claim ownership or title.

The bench of Justices PS Narasimha and Joymalya Bagchi made this observation while allowing an appeal arising from Tamil Nadu, where local amendments to the Registration Act, 1908 make it mandatory to register such agreements. The appellant, relying on an unregistered sale agreement dated 01.07.2000, argued that the respondent accepted part payment and handed over possession but failed to execute the sale deed — compelling him to seek legal recourse.

While both the Trial Court and the Madras High Court dismissed the claim, citing non-registration and insufficiency under the Stamp Act, the apex court overturned their findings. It ruled that the proviso to Section 49 of the Registration Act allows such unregistered documents to be admitted as evidence of a contract in specific performance suits or for collateral transactions.

“The appellant seeks to rely on the document only to establish the existence of a contract, not to assert title. Such usage is permissible under the Registration Act,” the Court noted.

The Court also cited its earlier ruling in S. Kaladevi v. V.R. Somasundara, observing that unregistered sale deeds can support claims of oral agreements in contract enforcement suits — even if they don’t serve as evidence of completed property transfers.

“When an unregistered sale deed is tendered in evidence not as proof of sale, but to support an oral agreement of sale, the proviso to Section 49 applies,” the Court stated.

The judgment emphasized that the appellant did not seek to establish ownership but to validate the agreement’s existence — a legally admissible purpose under the Act.

Accordingly, the appeal was allowed.

📄 You can view a summary of the judgment here (PDF).

Case Title: Muruganandam vs Muniyandi (Died) Through LRs
Citation: Civil Appeal No. 6543 of 2025 | Judgment Date: 08 May 2025

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