An Unstamped Instrument Is Not Admissible In Evidence Even For Collateral Purpose #indianlaws

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. 

Supreme Court in the instant matter dealt with the issue of effect of non-registration of a document which requires compulsory registeration. 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.

The instant matter relates to two documents, namely, Agreement and a Memorandum which were unregistered and unstamped documents. As per the recitals, the agreement in question was effectively about relinquishment of rights and as per the relevant clause, life estate in the property devolved upon other parties. It also specifically dealt with entitlement to stock amount. Another document was dealing with relinquishment of shares between the parties to the agreement.

The contention before the Court was that the relevant text of the documents in question merely was evidencing the past transaction of partition that had taken place but through these documents no rights in immovable property had accrued to the parties as envisaged under Sec. 17 of the Registration Act and accordingly these documents were out of the purview of Section 49 of the Registration Act.

The Court observed that 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.

The documents in question were clearly about relinquishment of right in respect of immovable property through a document compulsorily registerable and if the same was not registered, it could not be admitted in evidence. Both the documents in question were held to be squarely falling within the ambit of section 17(i)(b) of the Registration Act and hence compulsorily registerable documents. However, since they were not registered, were rendered inadmissible in evidence for the purpose of proving the factum of partition between the parties.

The consequential connected question that arose was as to whether these documents could be used for any collateral purpose. It was observed 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.

Accordingly it was held that the parties in the instant matter if wants to mark the documents in question for collateral purpose, the same would have to be impounded and requisite stamp duties would have to be paid.

[Yellapu Uma Maheswari vs. Buddha Jagadheeswararao]

(SC, 08.10.2015)

Civil Appeal No. 8441 of 2015