Must a Sister's Relinquishment Deed Be Registered?

The fight began in Anakapalle. Buddha Jagadheeswararao filed O.S. No. 10 of 2004 there against Yellapu Uma Maheswari and others, asking for partition of the scheduled properties. His case centred on Jaggayya, whom he described as his foster father. Jaggayya had acquired properties during his lifetime. On May 22, 1964, he executed a registered will bequeathing his immovable properties in favour of Buddha, the plaintiff, and Yellapu, the first defendant. The will gave a life estate to Jaggayya's wife, Mahalakshmamma.

One clarification matters for readers who came here with the sister-and-brothers question in mind. The Supreme Court did not decide any claim that someone was forced to sign. In the defence's account, the two people at the centre were a foster son and a foster daughter. The Court ruled only on whether two unregistered papers could be admitted as evidence.

Mahalakshmamma died on May 20, 2001. Buddha's case was that he and the defendants (Nos. 1 and 2) then became entitled to the scheduled properties in equal shares. He said the defendants failed to partition the properties when he demanded his share. That refusal brought him to court.

The defence painted a different family picture. According to the written statement, Yellapu was the daughter of Mahalakshmamma's sister, and Buddha was the son of Jaggayya's sister. Jaggayya had no children, so the two were treated as foster son and foster daughter. The defendants said the properties had already been partitioned in 1969. They alleged that Buddha took advantage of Yellapu's innocence and helplessness to take properties that were not allotted to him. They said she kept quiet because she had no other option.

The defendants pleaded three further points:

• On June 5, 1975, according to them, Buddha and Yellapu got the Deed of Memorandum of earlier partition executed.
• Both had been given pattadar passbooks and title deeds for their shares, and Buddha had sold some of his properties.
• Mahalakshmamma executed a registered will dated March 27, 1999 that bequeathed all the properties in favour of Yellapu, the first defendant. She had also given away her life estate in favour of Yellapu and Buddha.

On this basis, the defendants argued that a fresh partition did not arise.

The case then turned on two pieces of paper. Exhibit B-21 is dated June 5, 1975. The defence described it as a Deed of Memorandum witnessing the earlier partition between Buddha and Yellapu. When the Supreme Court examined the same paper, it described it as an agreement between Mahalakshmamma, Buddha and Yellapu, with Clauses 4 to 6 dealing with relinquishment of shares between the parties. Exhibit B-22 was an agreement dated June 4, 1975 between Mahalakshmamma, Buddha and Yellapu. Buddha objected to both. He argued that their contents showed one party relinquishing her rights, which made them relinquishment deeds. A relinquishment deed must be registered under the Registration Act, 1908, so an unregistered one cannot be admitted in evidence. The defendants replied that the papers only recorded a past division and showed an intention to carry out the sharing terms in future.

The Trial Court and the Andhra Pradesh High Court both upheld Buddha's objection. The Trial Court's orders in O.S. No. 10 of 2004 are dated July 8, 2013 and are on the file of the Principal Senior Civil Judge, Anakapalle. Both courts found that the exhibits were not records of a past transaction. On their face, the papers showed a partition and a relinquishment of rights by one party, so they needed both stamp duty and registration. Because the papers were unregistered and unstamped, the courts held them inadmissible. The Trial Court went further and refused to allow them even for collateral purpose. The High Court dismissed the defendants' revision petition on December 27, 2013. The defendants then appealed to the Supreme Court, where the matter was heard as Civil Appeal No. 8441 of 2015.

The question was not who had cheated whom in 1969. It was whether an unregistered, unstamped paper could be used in a partition suit at all.

Yellapu's side argued that the documents only recorded a past partition and so needed no registration. It also argued that the 1986 amendment to the Registration Act, which made even past transactions registerable, did not apply to Exhibits B-21 and B-22. As a fallback, it argued that even if registration was required, the papers could still be admitted for collateral purpose.

The statute leaves little room. Section 17(1)(b) requires registration of non-testamentary instruments that purport or operate to create, declare, assign, limit or extinguish a right in immovable property worth one hundred rupees or more. Section 49 then says that such an unregistered document cannot be received as evidence of a transaction affecting that property. The proviso to Section 49 leaves a small opening. An unregistered document may be received as evidence of any collateral transaction not required to be effected by registered instrument.

The Supreme Court framed two questions. First, were the courts below right to treat the exhibits as documents that had to be registered? Second, could the documents still be used for collateral purpose?

The Supreme Court read what the papers actually said instead of accepting their labels. Exhibit B-22 included the following terms:

• Clause 1 relinquished Mahalakshmamma's rights in favour of Buddha and Yellapu.
• Clause 4 passed her life estate to both of them equally.
• A stock amount of Rs 50,000 in the shop went to Mahalakshmamma, and the leftover amount was to be divided between Buddha and Yellapu.

In Exhibit B-21, Clauses 4 to 6 dealt with the relinquishment of shares between the parties. The Bench stated the governing principle in these words:

The Court added that the nature and substance of the transaction must be judged from the terms of the document. Admissibility depends on the recitals in the document, not on the pleadings of the party who wants to introduce it. After a thorough reading of both exhibits, the Court found a relinquishment of rights in immovable property through documents that had to be registered. Because they were unregistered, they were inadmissible to prove the fact of partition.

On the second question, the Court referred to a larger Bench of the Andhra Pradesh High Court in Chinnappa Reddy Gari Muthyala Reddy v. Chinnappa Reddy Gari Vankat Reddy, AIR 1969 A.P. (242). That High Court Bench had held that the whole process of partition contemplates three phases:

1. Severancy of status.
2. Division of joint property by metes and bounds.
3. The nature of possession of the various shares.

Applying that line of authority, the Supreme Court ruled on the two exhibits as follows:

• They could not be used for the primary purpose, which is dividing joint properties by metes and bounds.
• They could be relied on for collateral purpose, such as severancy of title and the nature of possession of the shares.
• An unstamped instrument is not admissible even for collateral purpose until it is impounded.

The Court closed two loopholes:

• The label did not control. A paper called an "agreement" or a "memorandum" was still a Section 17(1)(b) document if its clauses relinquished shares or passed on a life estate.
• Primary and collateral use were separated. The unregistered exhibits could not prove the division of joint property. The Trial Court could mark them for collateral purpose once the defendants paid the stamp duty and penalty and had the documents impounded, subject to proof and relevance.

The appeal was partly allowed. Exhibits B-21 and B-22 were held admissible in evidence for collateral purpose, subject to payment of stamp duty, penalty, proof and relevancy.

• Look at the actual papers. The Court decided admissibility by reading the recitals of the memorandum dated June 5, 1975 and the agreement dated June 4, 1975. The papers pleaded alongside them were Jaggayya's registered will dated May 22, 1964, Mahalakshmamma's registered will dated March 27, 1999, and the pattadar passbooks and title deeds the defendants said each side received.
• See where the objection was raised in this case. It arose in the partition suit, O.S. No. 10 of 2004, whose orders of July 8, 2013 are on the file of the Principal Senior Civil Judge, Anakapalle. Buddha objected to Exhibits B-21 and B-22 when Yellapu filed her chief examination affidavit and sought to mark her exhibits. The ruling on admissibility then went by revision to the Andhra Pradesh High Court and on to the Supreme Court.
• If you want to rely on such a paper for collateral purpose, follow the conditions. The judgment says the party must pay the stamp duty together with the penalty and get the document impounded. The Trial Court may then mark it for collateral purpose, subject to proof and relevance.
• Avoid the main mistake in this case. Do not treat an unregistered relinquishment paper as proof of the main partition. Calling it a memorandum or an agreement will not help if its clauses surrender a share. An unstamped paper will not be admitted even for collateral purpose until it is impounded.