IMPORTANT POINT
Where the decree for pre-emption did not create any title for the first time in the plaintiff, it did not require registration in view of clause (vi) of Section 17(2) of the Registration Act, though it was a decree based on admission.

Headnote:(i) Registration Act, 1908—Sections 17(1), 17(2)(vi), 17(1A)—Transfer of Property Act, 1882—Sections 54, 107 and 123—Decree made on admission based on a family settlement —Plaintiff claimed that a half share in the suit property had been relinquished in favour of himself and his brother by defendant, a co-owner with the assignor of contesting defendants—Having become a co-owner with the assignor of defendants, plaintiff claimed entitlement to enforce a right of pre-emption and recover possession of property from the assignee of the other co-owner —Whether such a decree purported to create a right in the plaintiff which required registration in terms of Section 17(1) of the Registration Act—(No)—Relinquishment was part of a family settlement and hence its validity cannot be questioned on the ground of want of registration.
       Held : On a plain reading of Section 17 of the Registration Act, with particular reference to clause (vi) of sub-section (2) it is clear that a decree or order of a court and a compromise decree that relates only to the subject matter of the suit need not be registered on the ground that it is a non-testamentary instrument which purports to or operates to create, declare, assign, limit or extinguish any right to or in immovable property or which acknowledges receipt or payment of any consideration on account of a transaction which brings about the above results. But if a suit is decreed on the basis of a compromise and that compromise takes in property that is not the subject matter of the suit, such a compromise decree would require registration.(Para 7)
       Suffice it to say that on a plain reading of clause (vi) of Section 17(2) all decrees and orders of Court including a compromise decree subject to the exception as regards properties that are outside the subject matter of the suit, do not require registration on the ground that they are hit by Section 17(1)(b) and (c) of the Act. But at the same time, there is no exemption or exclusion, in respect of the clauses (a), (d) and (e) of Section 17(1) so that if a decree brings about a gift of immovable property, or lease of immovable property from year to year or for a term exceeding one year or reserving an early rent or a transfer of a decree or order of a Court or any award creating, declaring, assigning, limiting or extinguishing rights to and in immovable property, that requires to be registered.(Para 7)
       The plaintiffs in Civil Suit No. 398 of 1980 were the descendants of Jeeta @ Chet Ram. Sheo Ram, the defendant in that suit, was the descendant of Deepa. Deepa and Jeeta were children of Mauji. The property descended from Mauji and one half of the entire property came to the present plaintiff and his brother, the descendants of Jeeta and the other half descended to Phusa and through him to the assignor of the contesting defendants and to Sheo Ram the defendant in the earlier suit, through his mother. It was in this property that a half share was surrendered or relinquished by Sheo Ram in favour of the present plaintiff and his brother. The present plaintiff and his brother could not take possession of the property since Phusa Ram was alive at the relevant time. After the death of Phusa Ram the present plaintiff and his brother filed the earlier suit for establishment of their right on the basis of the arrangement came to with Sheo Ram even during the life time of Phusa Ram. It was that arrangement or relinquishment of right by Sheo Ram that was admitted by him in his written statement in the earlier suit and it was based on that admission that a decree was given to plaintiff and his brother. It was pleaded that the relinquishment or surrender by Sheo Ram was by way of a family arrangement in view of the close relationship enjoyed by the present plaintiff and his brother, the uncles (not direct) on the one hand and Sheo Ram on the other, who was actually their nephew one step removed, but who was treated by them as their own real nephew. There was no case that his share was gifted by Sheo Ram in favour of the present plaintiff and his brother so as to attract clause (a) of Section 17(1) of the Registration Act. It was really a case of clause (b) of Section 17(1) being attracted, if at all. All the courts have found that the relinquishment was part of a family settlement and hence its validity cannot be questioned on the ground of want of registration in the light of the decisions of this Court. Apart from that strand of reasoning, it appears to us that the decree in Civil Suit No.398 of 1980 did not create, declare, assign, limit or extinguish any right in the suit property. It merely recognised the right put forward by the plaintiffs in that suit based on an earlier family arrangement or relinquishment by the defendant in that suit and on the basis that the defendant in that suit had admitted such an arrangement or relinquishment. Therefore, on principle, it appears to us that the decree in Civil Suit No. 398 of 1980 cannot be held to be not admissible or cannot be treated as evidencing the recognition of the rights of the present plaintiff and his brother as co-owners, for want of registration. Nor can we ignore the relief obtained therein by the plaintiff and his brother.(Para 9)
       Going by the history of the legislation, the decisions of the Privy Council and of the High Courts earlier rendered we are satisfied that the decree in Civil Suit No.398 of 1980 is admissible in evidence to establish that there had been a relinquishment of his interest by Sheo Ram in favour of the present plaintiff and his brother and that they were entitled to possession of half share in the property. Firstly, the decree did not create any title for the first time in the present plaintiff and his brother. Secondly, as a decree it did not require registration in view of clause (vi) of Section 17(2) of the Registration Act, though it was a decree based on admission. We have noticed that there is no challenge to that decree either on the ground that it was fraudulent or vitiated by collusion or that it was passed by a court which had no jurisdiction to pass it. It is not as if a litigant cannot admit a true claim and he has necessarily to controvert whatever has been stated in a plaint or deny a transaction set up in the plaint even if, as a matter of fact, such a transaction had gone through. Therefore, merely because a decree is based on admission, it would not mean that the decree is vitiated by collusion.(Para 16)
       (ii) Registration Act, 1908—Section 17—Compromise Decree—Requirement of Registration—Even a decree on a compromise does not require registration if it does not take in property that is not the subject matter of the suit.
       Held that a decree or order of a Court does not require registration if it is not based on a compromise on the ground that clauses (b) and (c) of Section 17 of the Registration Act are attracted. Even a decree on a compromise does not require registration if it does not take in property that is not the subject matter of the suit. A decree or order of a Court is normally binding on those who are parties to it unless it is shown by resort to Section 44 of the Evidence Act that the same is one without jurisdiction or is vitiated by fraud or collusion or that it is avoidable on any ground known to law. But otherwise that decree is operative and going by the plain language of Section 17 of the Registration Act, particularly, in the context of sub-clause (vi) of sub-section (2) in the background of the legislative history, it cannot be said that a decree based on admission requires registration.(Para 12)
       (iii) Transfer of Property Act, 1882—Sections 54, 107 and 123—Inapplicability of the Act to some States—Tendency, if any, to defeat the law of registration has to be curtailed by the legislature—No reason as to why the Transfer of Property Act is not being extended to the concerned States even by now—Its extension would ensure that no transfer is effected without satisfying the requirements of that Act and of the Stamp and Registration Act.
       Held : We also feel that the tendency, if any, to defeat the law of registration has to be curtailed by the legislature by appropriate legislation. In this instance, we wonder why the Transfer of Property Act is not being extended to the concerned states even now. Its extension would ensure that no transfer is effected without satisfying the requirements of that Act and of the Stamp and Registration Acts.(Para 15)

Judgement Key Points

Certainly. Based on the provided legal document, here are the key points:

A decree for pre-emption that does not create a new title in the plaintiff does not require registration under clause (vi) of Section 17(2) of the Registration Act, especially when the decree is based on an admission or a family settlement (!) (!) .
The decree in question recognized a pre-existing right derived from a family arrangement or relinquishment, rather than creating a new right or interest in the property (!) .
The decree was found to be an admission-based decree, which did not involve the creation, declaration, assignment, or extinguishment of rights that would necessitate registration (!) .
The decree did not operate to transfer or assign rights to the property; it merely acknowledged an arrangement or relinquishment that had already occurred, hence it was admissible in evidence without registration (!) .
A family settlement or arrangement, especially one based on close relationships and mutual relinquishments, generally does not require registration if it does not involve the creation of new rights or titles (!) (!) .
The legal requirement for registration applies primarily when a decree or instrument purports to or operates to create, declare, assign, limit, or extinguish rights in immovable property for the first time (!) .
Decrees that are on admission of a pre-existing right or based on family arrangements are typically exempt from registration requirements, provided they do not involve properties outside the subject matter of the suit (!) .
The legislative history and judicial interpretations support that decrees relating only to the recognition of pre-existing rights, especially family arrangements, do not require registration (!) (!) .
The law aims to prevent the evasion of registration and stamp duty requirements by clarifying the scope of what constitutes a registrable instrument, emphasizing that recognition of existing rights does not fall under this scope (!) (!) .
The courts have consistently held that a decree on admission, especially one recognizing a family settlement, is admissible evidence and does not require registration unless it involves the creation of new rights or interests (!) .

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JUDGMENT

P.K. Balasubramanyan, J.—Heard learned counsel for the parties.

Leave granted.

1. This Appeal is by the contesting defendants in a suit filed by Respondent No.1 herein for recovery of possession of the suit property in enforcement of a right of pre-emption claimed by him. The plaintiff claimed that a half share in the suit property had been relinquished in favour of himself and his brother by Sheoram a co-owner with the assignor of the contesting defendants and the said relinquishment had been recognised by the court by decreeing the claim made by the present plaintiff and his brother in Civil Suit No.398 of 1980. Thus, having become a co-owner with the assignor of the contesting defendants, the plaintiff was entitled to enforce a right of pre-emption and recover possession of the property from the assignee of the other co-owner. The contesting defendants resisted the suit. The contention germane to this appeal that was raised by the contesting defendants was that a right was created in the present plaintiff by the decree in Civil Suit No.398 of 1980 which was one based on a compromise and since the decree purported to create a right in the plaintiff in a property in which he had no pre-existing right, the compromise decree required registration in terms of Section 17(1) of the Registration Act and the decree not having been registered, the plaintiff was not entitled to enforce the alleged right of pre-emption as against the contesting defendants or their assignor, the other co-owner.

2. The trial court held that the decree in Civil Suit No.398 of 1980 was enforceable even without registration as it was not hit by Section 17(1) of the Registration Act; that the said decree had recognised the right claimed by the plaintiff and in the circumstances the plaintiff was entitled to a decree for possession from the assignee of the other co-owner in enforcement of his right of pre-emption. On appeal, the lower appellate court affirmed this view of the trial court. The lower appellate court also held that what was involved in Civil Suit No.398 of 1980 was a family arrangement and since a bona fide family arrangement among the members of a family in the larger sense of the term, did not require registration, no objection could be raised by the contesting defendants to the enforceability of the title claimed by the plaintiff. Thus, the decree of the trial court was affirmed. The contesting defendants filed a second appeal. They raised the substantial question of law that the decree in Civil Suit No.398 of 1980 created rights in favour of the plaintiff in a property in which he had no pre-existing right and such a decree, to become enforceable, required registration. Reliance was placed on the decision of this Court in Bhoop Singh vs. Ram Singh Major and others [(1995) Supp. 3 S.C.R. 466) in support. The High Court held that the decree in Civil Suit No.398 of 1980 was based on a family settlement which did not require registration and that the decree itself did not require registration in view of Section 17(2)(vi) of the Registration Act. Thus, the substantial question of law formulated was answered in favour of the plaintiff, the judgments and decrees of the courts below were confirmed and the second appeal filed by the contesting defendants was dismissed. It is challenging this decision of the High Court that this appeal by special leave is filed by the contesting defendants.

3. Before proceeding to consider the question argued before us, we think that it is proper to notice that the case arises from the State of Haryana which was originally a part of the State of Punjab and that the Transfer of Property Act as such did not apply to the State. But, Sections 54, 107 and 123 of the Transfer of Property Act were made applicable to the State of Punjab with effect from 01.04.1955 vide notification dated 23.03.1955. As is clear, Section 54 of the Transfer of Property Act relates to a sale of immovable property of the value of Rs.100/

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2006 Supreme(SC) 816

IMPORTANT POINTWhere the decree for pre-emption did not create any title for the first time in the plaintiff, it did not require registration in view of clause (vi) of Section 17(2) of the Registration Act, though it was a decree based on admission.

Cases Referred (1)

IMPORTANT POINT
Where the decree for pre-emption did not create any title for the first time in the plaintiff, it did not require registration in view of clause (vi) of Section 17(2) of the Registration Act, though it was a decree based on admission.