SC: exchange of inherited property through unregistered deed is not valid

SC: exchange of inherited property through unregistered deed is not valid

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The Supreme Court of India comprising a bench of Justice Abhay Mohan Sapre and Justice S. Abdul Nazeer in the case of Shyam Narayan Prasad v. Krishna Prasad and Ors. (Civil appeal 5415 of 2011) has held that a property inherited from father, father’s father, father’s father’s father and so on is an ancestral property and the exchange of such a property between two sons (who have inherited the property from their father) will not be valid unless it is registered.

In the instant case, the Appellant and the Respondent No. 5 had inherited some property from their father by way of a partition deed. The appellant got a Shoe shop at Manihari (which is run on a rented premises owned by some other person) and the Respondent No. 5 got half share in a 2 story RCC building which has a liquor business, apart from other inherited property. Respondent Nos. 1-3 are the sons of the Respondent No. 5 and Respondent No. 4 is the son of Respondent No. 1 (grand son of Respondent No. 5).

After the partition, the appellant and the Respondent No. 5 had executed an agreement exchanging the liquor shop with the shoe shop. The said agreement was not a registered agreement. The Respondents 1-4 (plaintiffs in the suit) claim that the property is an ancestral property and they also have a share in the property and thus the Respondent No. 5 (their father) does not have any legal right to exchange the property with the appellant. Moreover, they claim that since the agreement is regarding a transfer of immovable property, it is having no value as it is not registered.

The appellant refutes the claims of the Respondents and states that the property is not an ancestral property as the property was the self-acquired property of his father and he has divided the property amongst his five sons by way of partition. Furthermore he claims that the settlement deed transferred only the business and not the buildings and that the parties have already acted upon the said agreement and is in possession of the property and is thus protected under Section 53A of the Transfer of Property Act,1882.

The questions before the Supreme Court was “whether the property allotted to defendant No. 2 (Respondent No. 5) in the partition dated 31.07.1987 retained the character of a coparcenary property” and “whether the exchange deed is admissible in evidence or not”.

Deciding the first question, the Supreme Court observed that

“12. It is settled that the property inherited by a male Hindu from is father, father’s father or father’s father’s father is an ancestral property. The essential feature of ancestral property, according to Mitakshara Law, is that the sons, grandsons, and great grandsons of the person who inherits it, acquire an interest and rights attached to such property at the moment of their birth. The share which a coparcener obtains on partition of ancestral property is ancestral property as regards his male issue. After partition, the property in the hands of the son will continue to be the ancestral property and the natural or adopted son of that son will take interest in it and is entitled to it by survivorship.”

The Supreme Court discussed the cases of C. Krishna Prasad v. C.I.T., Bangalore, 1975 (1) SCC 160, M. Yogendra and Ors. v. Leelamma N. and Ors., 2009 (15) SCC 184 and Rohit Chauhan v. Surinder Singh and Ors., 2013 (9) SCC 419 in its support.

 Deciding the second question, the Supreme Court observed that the agreement even includes the RCC building (whose value is more than Rs. 100) attracts the provisions of Section 54 of the Transfer of Property Act whereby exchange of a property can only be done through a registered instrument. Section 17(i)(b) of the Registration act mandates that any document which has the effect of creating and taking away the rights in respect of an immovable property must be registered and Section 49 of the Registration Act imposes a bar on the admissibility of an unregistered document and deals with the documents that are required to be registered under Section 17 of the act. Thus, the unregistered deed of exchange cannot be taken into account for the transfer of immovable property.

The court further held that the document cannot even be taken as evidence and is inadmissible as Section 49 of the Registration Act bars a document which is not registered as required under law to be an admissible piece of evidence.

 
The above judgment of the Supreme Court is reproduced below:
 

About Alabhya Dhamija

Alabhya is an Advocate practicing at Delhi High Court and other courts in Delhi.

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