Prakash Sahu (S) v. Saulal And Others (S)., Supreme Court Of India, Judgment, Law, casemine.com

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Case Number

Civil Appeal No(s). 6772 of 2019 (@ SLP(C) 34778 of 2016)

Disposition

allowed

Judges

Navin Sinha
B.R. Gavai, JJ.
Navin Sinha
B.R. Gavai

Acts

the proviso to Section 49 of the Registration Act, 1908

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Smart Summary

Factual and Procedural Background

The petitioner, Prakash Sahu, challenged an order dated 01 August 2016 of the High Court of Madhya Pradesh (Principal Seat at Jabalpur) rendered in W.P. No. 7381/2016. The High Court had refused to admit an unregistered agreement of sale for any purpose, thereby reversing an earlier decision of the Trial Court (order dated 18 March 2016) that had relied on the Supreme Court judgment in S. Kaladevi v. V.R. Somasundaram. The petitioner sought special leave to appeal, which the Supreme Court granted, converting the matter into the present appeal. After hearing counsel for both sides, the Court delivered its decision on 02 September 2019.

Legal Issues Presented

Whether, under the proviso to Section 49 of the Registration Act, 1908, an unregistered agreement of sale can be looked at for collateral purposes.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
S. Kaladevi v. V.R. Somasundaram (2010) 5 SCC 401	An unregistered document, though inadmissible to prove the transaction itself, may be examined for collateral purposes under the proviso to Section 49 of the Registration Act.	The Trial Court had relied on this decision, outlining five guiding propositions. The Supreme Court held that the High Court erred by failing to consider these propositions and reinstated the Trial Court’s order.

Court's Reasoning and Analysis

The Supreme Court noted that the Trial Court correctly applied the principles laid down in S. Kaladevi, recognizing the limited but permissible use of an unregistered sale agreement for collateral matters. The High Court, in contrast, had categorically excluded the document without engaging with those principles. Observing this omission, the Supreme Court found “sufficient reason” to overturn the High Court’s ruling. By restoring the Trial Court’s order, the Court implicitly reaffirmed that the proviso to Section 49 allows unregistered documents to be admitted for collateral purposes, provided the collateral transaction is distinct and severable from the primary transaction that legally requires registration.

Holding and Implications

Appeal Allowed; High Court order set aside; Trial Court order dated 18 March 2016 restored.

Immediate Effect: The unregistered agreement of sale may be considered for collateral purposes in the underlying suit. All pending applications stand disposed of.

Broader Implications: The judgment reinforces the precedent in S. Kaladevi, clarifying that courts must evaluate whether an unregistered document can be admitted for collateral uses under the proviso to Section 49 of the Registration Act. No new legal principle was created, but the decision underscores the continued vitality of the existing rule.

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Prakash Sahu (S) v. Saulal And Others (S).

1. Leave granted.

2. We have heard learned counsel for the parties.

3. The short question in the present appeal is whether an unregistered agreement of sale can be seen for collateral purposes under the proviso to Section 49 of the Registration Act, 1908.

4. The Trial Court based its reasoning on a decision of this Court in S. Kaladevi v. V.R. Somasundaram (2010) 5 SCC 401 elucidating as follows:—

“(i) In that situation it is essential for the registration of the document, if, unregistered is not admissible in evidence under Section 49 of the Registration Act.

(ii) Yet, such unregistered document can be used by way of collateral evidences provided in the proviso to the Section 49 of the Registration Act.

(iii) For effecting with the collateral transaction, whose registration is required by law should be free from the transaction or be divisible from that.

(iv) Collateral transaction should be such a transaction which may not be automatically expected of effecting by the registered document, i.e. Rupees One Hundred or any transaction or instrument or right or interest in any immovable property of the value of more than Rupees One Hundred.

(v) If the document is inadmissible in evidence in the absence of registration then any of its estopple cannot be admitted in evidence and for use of the document for purposes of proving important part, it would not be utilized by way of collateral purpose.”

5. The High Court failed to consider the aforesaid while holding that the unregistered document could not be taken into consideration for collateral purposes.

6. We consider the same as sufficient reason to set aside the order of the High Court and restore the order of the Trial Court dated 18 March, 2016.

7. The appeal is accordingly, allowed.

8. Pending application(s), if any, shall stand disposed of.

SUPREME COURT OF INDIA

RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal (C) No(s). 34778/2016 (Arising out of impugned final judgment and order dated 01-08-2016 in WP No. 7381/2016 passed by the High Court of M.P. Principal Seat at Jabalpur)

Prakash Sahu.….Petitioner(s);

v.

Saulal & Ors.….Respondent(s)

Date : 02-09-2019 This petition was called on for hearing today.

(Before Navin Sinha and B.R. Gavai)

For Petitioner(s) Mr. Akshat Shrivastava, AOR

Ms. Pooja Shrivastava, Adv.

For Respondent(s) Mr. Akshay Girish Ringe, AOR

Ms. Megha Mukerjee, Adv.

Mr. Siddharth Joshi, Adv.

UPON hearing the counsel the Court made the following

9. Leave granted.

10. The appeal is allowed in terms of the signed order. Pending application(s), if any, shall stand disposed of.

Prakash Sahu (S) v. Saulal And Others (S).

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Prakash Sahu (S) v. Saulal And Others (S).

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