In this article we are going to analyse the importance of documents which are
to be registered mandatorily especially lease documents and about the effect of
document which need to be duly stamped as per the law otherwise it cannot be
admissible as evidence in court.
The Registration Act 1908
SEC 17 of the registration act 1908 states about documents which are to be
registered compulsory failing which it has to face the consequences mentioned
under SEC 49 of the same act.
17. Mandatory Documents for Registration:
- The following documents shall be registered, if the property in which
they are located is located, on or after the date of their execution namely:
(D) lease of real estate annually, or any period of more than one year, or
reserve an annual rent;
Therefore, if reference is made to the compulsory registration of such
document in a document relating to lease as provided in Section 17 (d), SEC 49
of the Act
49. The result of non-registration of documents required to be registered
Any document not registered under section 17 or any provision of the Transfer of
Property Act, 1882 to be registered:
- Affect Any Immovable Property Thereof, Or'
- Grant Any Authority To Accept, Or
- If Not Registered, Accept As Evidence Of Any Transaction Affecting Or
Authorizing Such Property:
However, an unregistered document affecting unregistered immovable property
under this Act or the Property Transfer Act, 1882 may be obtained as proof of a
contract in a suite for a specific performance under Chapter II of disaster
Relief Act, 1877 or as evidence of any collateral transaction not required to be
made through a registered instrument.
Therefore, if the lease is more than 1 year and it is not registered under the
conditions given under section 17, it cannot be taken as evidence in court and
can only be accepted as evidence of any collateral transaction.
Case Law:
Korukonda Chalapathi Rao. vs Korukonda Annapurna Sampath ... October 1, 2021[1]
34. In terms of Section 49 (1) (c) of the Registration Act, it provides
consequences of not compulsorily registering a document so registered. That is,
under Section 49 (1) (a), an unregistered, compulsorily registered document
shall have no effect on the rights to immovable property by creation,
declaration, assignment, restriction or termination.
Thus, the use of an unregistered document as evidence of a transaction affecting
immovable property is prohibited.
In this case as related to immovable property, there is no violation of Section
49 (1) (c) if, as already explained, the real name itself does not 'affect' the
immovable property as it is a document of the alleged previous transaction and
it is not used as evidence of a transaction affecting such property.
SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. Pvt. [2]
The question arose as to whether an arbitration agreement contained in a
document that could be compulsorily registered unregistered could be used to
prove a transaction, i.e., a provision for arbitration. This Court said:
11. Section 49 stipulates that a document that must be registered, if not
registered, will in any way affect the immovable property involved.
Except for two limited purposes, it will not be accepted as evidence of any
transaction affecting such property.
The second is evidence of any collateral transaction that does not need to be
made through a registered instrument.
A mortgage transaction is not a transaction that affects real estate, but a
transaction that is accidentally associated with that transaction.
Indian Stamp Act 1899
SEC 35 and 36 states about instrument to be stamped mandatorily if not it cannot
be admitted as evidence in court
SEC 35
Under Section 35 of the Stamp Act, there is a complete and complete impediment
to the acceptance of an unsealed device, regardless of its nature or purpose or
how foreign and free it may be. Failure to comply with the requirements of the
provisions of Section 35 or to comply with the provisions of Section 35 then the
following the procedure mentioned in section 37 to 42 are to be complied.
SEC 36
Once the court has approved a document, it cannot be opened to raise any
objection to the stamp duty, and once agreed upon, the only exception to that is
section 61, the jurisdiction of the appellate court, and so on. To determine and
collect the proper stamp duty to save revenue voluntarily or at the request of
the Collector
Case law:
M/S. Dharmaratnakara Rai Bahadur ... vs M/S. Bhaskar Raju And Brothers on 14
February, 2020 Civil Appeal No. 1599 of 2020[3]
20.When relying on a lease document or any other instrument as contained in the
Arbitration Agreement, the court must first consider whether the document is
properly sealed or not. Although no objection has been raised for it, it is the
duty of the court to consider the matter.
If the court concludes that the
instrument was not properly sealed, as specified in section 38 of the Stamp Act,
1899, it must be confiscated and handled.The court cannot act on such a
document or its provision of arbitration. However, if the deficit duty and
penalty are paid in the manner prescribed by Section 35 or Section 40 of the
Stamp Act, 1899, the document may be acted upon or accepted as evidence.
Analyzes the admissibility of documents as per Stamp Act and Registration Act:
- There is no total bar to accept if the unregistered document is properly
stamped.
- Although u / s.49, an unregistered document (when registration is
mandatory) affecting any rights to the immovable property and the terms and
conditions of the instrument is unacceptable for the main purpose.
- Since an unstamped document (even for collateral purposes) is not
acceptable, if it is not properly stamped, there is a total bar to accept
any part of the instrument as evidence.
Meaning Of Collateral Transaction:
A collateral transaction is not the transaction affecting the immovable
property, but a transaction which is incidentally connected with that
transaction.
So any transaction which affects the rights in the immovable property of a
person that document needs to be registered as per sec 17 of the registration
act 1908
Conclusion
So every document which are to be presented in court needs to be marked ,that is
it has to be registered as per the provisions given above .
A lease document which is more than 1 year term needs to be registered
mandatorily as per sec 17(d) of The registration act 1908 otherwise it cannot be
admitted as evidence in court unless the the immovable property is used in
collateral transaction.
Also a document is to be duly stamped as per provisions given under Indian stamp
act 1899 otherwise it is not admissible as evidence in court
So all these provisions of law needs to be followed.
Reference:
- https://indiankanoon.org/doc/161176425/
- https://indiankanoon.org/doc/147220032/
- https://indiankanoon.org/doc/24736/
- https://indiankanoon.org/doc/1489134/
End-Notes:
- 2021 SCC OnLine SC 847
- 2011) 14 SCC 66 14,
- Civil Appeal No. 1599 of 2020
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