Madras High Court Allows Unregistered Sale Deeds as Evidence in Specific Performance Suit

Justice P.B. Balaji Rules Unregistered Sale Deeds Admissible as Proof of Oral Agreements, Subject to Stamp Duty Compliance

News Report:  

In a significant ruling, the Madras High Court has allowed the admissibility of unregistered sale deeds as evidence in suits for specific performance, provided they serve as proof of oral agreements rather than completed sale transactions. Justice P.B. Balaji, presiding over the case of Ananda Nayagi v. Kannikumari, delivered the judgment on August 1, 2025, setting aside the previous orders of the Subordinate Court, Poonamallee.

The case involved two civil revisions petitions filed by Ananda Nayagi and others, seeking specific performance related to properties originally owned by the Slum Clearance Board and allotted to the first defendant. Before the defendants became absolute owners, the plaintiffs had entered into agreements to purchase the properties, with unregistered sale deeds executed upon receipt of the full sale consideration. The trial court had initially refused to mark these unregistered sale deeds, asserting they were not collateral transactions but evidence of completed sales, thus falling under the bar of Section 49 of the Registration Act.

Justice Balaji, however, clarified that such documents could indeed be admitted as evidence of oral agreements of sale. The judgment emphasized that these unregistered sale deeds are admissible under the proviso to Section 49, provided they are treated as evidence of oral agreements rather than completed transactions. The court stressed that a proper endorsement must be made, indicating the documents are received solely as evidence of oral agreements.

The court further directed the trial court to ascertain the stamp duty and penalty payable as of the date of execution of the documents. The revision petitioners are required to pay any deficit stamp duty and penalty, following which the documents may be marked during the examination phase.

The ruling aligns with precedents set by the Supreme Court in similar cases, notably the decision in S. Kaladevi v. V.R.Somasundaram, where unregistered sale deeds were deemed admissible as evidence of contracts in specific performance suits. Justice Balaji's decision reaffirms this stance, providing a pathway for plaintiffs seeking specific performance to utilize unregistered sale deeds as evidence, contingent upon compliance with stamp duty requirements.

The judgment has been met with varied responses from legal experts. Some view it as a reinforcement of established legal principles regarding the admissibility of unregistered documents for specific purposes, while others express concerns over potential implications for property transactions and registration norms.

This ruling is expected to impact numerous ongoing and future cases involving specific performance of sale agreements, especially those where unregistered sale deeds are central to the plaintiffs' claims. It underscores the importance of understanding the nuances of registration laws and the evidentiary value of such documents in civil litigation.

Ananda Nayagi v. Kannikumari, (Madras) : Law Finder Doc Id # 2767356