Court’s Decision
In Review I.A. No. 2 of 2024 in Civil Revision Petition No. 1728 of 2022, the Andhra Pradesh High Court dismissed a review petition seeking to recall its previous order permitting an unregistered Exchange Deed to be marked for collateral purposes. The Court reaffirmed its earlier finding that such a document—though inadmissible for proving transfer of title—is admissible to prove delivery of possession, as permitted under the proviso to Section 49 of the Registration Act, 1908. The review petition was held to be devoid of merit.
Facts
The case originated from O.S. No. 56 of 2009 before the Senior Civil Judge, Kandukur, where the plaintiff sought declaration of title and a permanent injunction concerning certain immovable property. During trial, the plaintiff sought to mark an Exchange Deed dated 28.01.1989 as Exhibit A1. The defendants objected on the ground that it was unregistered and hence inadmissible under the Registration Act.
The trial court upheld the objection. On revision, the High Court allowed the unregistered deed to be marked for the limited purpose of showing possession, noting that the exchange had actually taken place orally on 10.06.1985, and the deed merely recorded this past transaction. A subsequent review petition was then filed by the defendants claiming an error of law in the High Court’s interpretation.
Issues
- Whether the unregistered Exchange Deed dated 28.01.1989 can be marked in evidence under the law?
- Whether the earlier High Court order permitting marking of the deed for collateral purposes is legally erroneous and warrants review?
- Whether the Supreme Court’s judgment in Syam Narayana Prasad v. Krishna Prasad & Ors. precludes such admissibility?
Petitioner’s Arguments
The review petitioners (defendants) argued that:
- The Exchange Deed is compulsorily registrable under Section 17(1)(b) of the Registration Act as it affects rights in immovable property.
- As per the Supreme Court in Syam Narayana Prasad v. Krishna Prasad, 2018 (5) ALD 90 SC, such a document cannot be admitted even for collateral purposes.
- The High Court erred in allowing the document to be marked despite it being inadmissible for the main transaction of exchange.
Respondent’s Arguments
The respondent (plaintiff) contended that:
- The document recorded a past oral transaction of exchange that occurred in 1985, and merely memorialised delivery of possession, not creation of title.
- Under the proviso to Section 49 of the Registration Act, such a document is admissible to prove collateral transactions like possession.
- The Supreme Court decision relied on by the petitioners does not prohibit use of such documents for collateral purposes and was misunderstood.
Analysis of the Law
The Court undertook a detailed examination of:
- Section 17(1)(b) of the Registration Act, which mandates registration for documents that create or extinguish rights in immovable property.
- Section 49, which bars unregistered documents from being used to affect such property.
- Proviso to Section 49, which allows such documents to be admitted to prove collateral transactions not requiring registration.
The Court reiterated that the impugned Exchange Deed—although inadmissible to prove title—was admissible to show delivery and nature of possession, a collateral fact.
Precedent Analysis
The petitioners relied on:
- Syam Narayana Prasad v. Krishna Prasad, 2018 (5) ALD 90 SC, where the Supreme Court held that unregistered exchange deeds cannot be used to prove title transfer.
The High Court clarified that the apex court’s ruling dealt with proving title, not possession. It distinguished the current case, where the document was not being used to transfer rights but to show past delivery of possession. The Court instead followed:
- SMS Tea Estates Pvt. Ltd. v. Chandmari Tea Co. Pvt. Ltd., (2011 AIR SCW 4484), which permits reliance on unregistered lease deeds for collateral purposes.
- Bondar Singh v. Nihal Singh, AIR 2003 SC 1905, where an unregistered sale deed was permitted for showing nature of possession.
Court’s Reasoning
The Court held that:
“The document is admissible for collateral purpose to the limited extent of showing the nature and character of possession… There is no error apparent on the face of record justifying exercise of power of review.”
It emphasized that the Exchange Deed recorded a prior oral exchange that had already resulted in possession change and that the document was created to avoid future disputes. The deed was stamped and penalty paid, strengthening its evidentiary weight for collateral use.
Conclusion
The High Court dismissed the review petition, holding:
- The unregistered Exchange Deed is inadmissible to prove title but admissible to prove possession.
- There was no legal error or apparent mistake in the earlier order.
- The review lacked merit and was thus rejected.
Implications
- This ruling reinforces the limited evidentiary value of unregistered documents under Indian property law.
- It clarifies that such documents—while inadmissible to prove ownership—can be used to show possession or collateral facts.
- The judgment promotes a nuanced understanding of Section 49’s proviso and restricts misuse of Supreme Court precedents through misinterpretation.
Summary of Precedents Referred
- Syam Narayana Prasad v. Krishna Prasad & Ors., 2018 (5) ALD 90 SC: Held that unregistered exchange deeds are inadmissible to prove transfer of title. The High Court clarified that this does not preclude collateral use.
- SMS Tea Estates Pvt. Ltd. v. Chandmari Tea Co. Pvt. Ltd., 2011 AIR SCW 4484: Permitted unregistered lease deeds to prove possession.
- Bondar Singh v. Nihal Singh, AIR 2003 SC 1905: Approved use of unregistered sale deeds for showing lawful possession.