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Can Unregistered Document Admissible In Evidence?

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:

  1. 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:
  1. Affect Any Immovable Property Thereof, Or'
  2. Grant Any Authority To Accept, Or
  3. 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:
  1. https://indiankanoon.org/doc/161176425/
  2. https://indiankanoon.org/doc/147220032/
  3. https://indiankanoon.org/doc/24736/
  4. https://indiankanoon.org/doc/1489134/
End-Notes:
  1. 2021 SCC OnLine SC 847
  2. 2011) 14 SCC 66 14,
  3. Civil Appeal No. 1599 of 2020

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