Author: Surya, 3rd Year student at RNB Global University, Bikaner.
Date of decision: 1 April, 2021
Bench: Rajendra Chandra Singh Samant
Original copy: N/A
Statutes involved: Indian Arbitration and Conciliation Act, 1996, Registration Act, 1908, Article 227 of Indian Constitution, Indian Stamp Act, Transfer of Property Act, 1882
- Whether a clause for arbitration mentioned in a document which is not registered id a collateral transaction?
- Whether a document which is not registered can be taken as a proof or evidence under the proviso to section 49 of the Registration Act?
- The Petitioner was aggrieved by the order dated 18 June,2019 thus he filed a petition under Article 227 of Indian Constitution on the ground that the trial court has failed to exercise its jurisdiction by not considering the unregistered document as evidence.
- The petitioner was a plaintiff in a civil suit which was filed for declaration of exchange deed and other reliefs.
- The deed was made between the parties with their free consent and both the parties were in possession of land which they received but the respondent (Jivrakhan Lal Gupta) filed an application Section 250 of the Chhattisgarh Land Revenue Code 1959 due to which the petitioner had to lose the possession of the land.
- It was contended on behalf of the petitioner that the trial court had committed an error thus the order of impounding must be declared illegal and he prayed for other reliefs.
- The Respondent contended that the exchange deed is not registered and as per Section 17 of the Registration Act, 1908 such exchange deed need to be registered. It was also submitted that the petitioner can present this deed as an evidence for proving collateral transactions but for doing so a stamp duty is prescribed.
- The respondent relied on the judgment given by the SC in case of Avinash Kumar Chauhan vs. Vijay Krishna Mishra, it was held that for presenting a document as evidence of any transaction held between the parties under section 49 of Registration Act then the stamp duty for the same must be paid and if it is not paid the same shall be required to be impounded.
- Section 49 states that if a document which needs to be registered is not registered under Section 17 or under Transfer of Property Act then the same will not affect any immovable property and it will not be taken as an evidence of any transaction of any such property, but it can be considered as a proof of a contract in a suit or as an evidence for collateral transactions.
- Where a contract contains any arbitration clause then it will be independent of the other terms and conditions of the contract. Even if the contract is breached, the clause of arbitration mentioned in the contract would survive for the purpose of resolution of disputes.
- The Trial Court passed an order for impounding the deed and directed the petitioner to pay the stamp duty. Therefore, the petitioner moved to the HC.
- It was held that the direction given by the trial court for payment of stamp duty and penalty for the exchange was improper and against the law.
- The impugned order was modified and it was said that the petitioner is required to pay the stamp duty with respect to the agreement between the parties other than the exchange deed, which may be permissible under proviso to Section 49 of the Registration Act along with the other penalties payable and the proceeding be completed accordingly under the provisions of Stamp Act,1899.
- Accordingly, the petition is disposed of.
- From the above case it is clear that an unregistered exchange deed cannot be produced as evidence for the proof of the transaction of the exchange of land between the parties, however, it can be presented as evidence for collateral transactions.
- For submitting it as evidence, the stamp duty on it needs to be paid.
- An Arbitration clause is included in the contract for the purpose of resolution of disputes thus even if the contract is breached, the arbitration clause will survive for resolving the disputes arising out of the contract.