The Hon’ble Division Bench of J.B. Pardiwala, J. and K.V. Viswanathan, J. addressed a nuanced but significant question in property and execution law: Whether a deed assigning a decree for specific performance of a sale agreement relating to immovable property required compulsory registration under Section 17(1)(e) of the Registration Act, 1908?
The Division Bench held that no compulsory registration of an assignment deed, transferring the rights in a decree for specific performance, is required for the reason that no new rights, title or interest in property are created or transferred.
FACTS OF THE CASE
An Execution Application to the decree of specific performance was filed by the assignee seeking the possession and execution of the sale deed as per the decree of specific performance that was granted in favor of the Decree Holder (who transferred the rights to the execution of the decree by way of assignment deed). The Legal heirs of the judgment debtor had filed an application under section 47 of the Code of Civil Procedure, 1908 arguing that the assignment was invalid because it was not registered under the Registration Act, 1908.
This objection was accepted by the Executing Court and the execution application was dismissed on this ground. The High Court reversed the order, holding that the registration was not required for such assignments.
QUESTION OF LAW INVOLVED
- Whether a deed assigning a decree for specific performance constitutes an instrument that creates, declares, assigns, limits or extinguishes rights in immoveable property, thereby requiring compulsory registration under Section 17(1)(e) of the Registration Act, 1908?
- Whether the assignment of a decree is legally valid and executable is unregistered?
- Whether a decree for specific performance creates any right, title or interest in the underlying immovable property prior to execution of the sale deed?
STATUTES INVOVLED
- The Registration Act, 1908:
- Section 17(1)(e)- compulsory registration of instruments
- The Transfer of Property Act, 1882:
- Section 54- contract for sale does not create any interest in or charge on immoveable property;
- Section 40- contractual obligations attached to ownership but not constituting interest in property.
- The Specific Relief Act, 1963:
- Section 28- contract survives despite decree
- Code of Civil Procedure, 1908:
- Order XXI Rule 16- assignee of decree may apply for execution.
- Section 47- questions relating to execution, discharge and satisfaction of decree.
JUDGMENTS REFERRED
- Babu Lal v. M/s Hazari Lal Kishori Lal and Others1: A decree of specific performance only declares the right of the decree-holder to have a transfer executed in his favor of the property covered by the decree. It is only the execution of the sale deed that transfers the title to the property.
- Suraj Lamp & Industries (P) Limited (2) thorugh Director v. State of Haryana and Another2: An agreement of sale does not, of itself, create any interest in or charge on such property. The personal obligation created by a contract of sale is described in Section 40 of the Transfer of Property Act, 1882 as an obligation arising out of contract and annexed to the ownership of property, but not amounting to an interest or easement therein.
- Hungerford Investment Trust Limited (In Voluntary Liquidation) v. Haridas Mundhra and Others3: The contract between parties is not extinguished by the passing of a decree, and it subsists notwithstanding the decree.
- Kapilaben and Others v. Ashok Kumar Jayantilal Sheth4 The term “representative-in-interest” includes the assignee of a contractual interest. As a rule, obligations under a contract cannot be assigned except with the consent of the promise, and when such consent is given, it is really a novation resulting in substitution of liabilities. On the other hand, rights under a contract are assignable uncles the contract is personal in nature or the rights are incapable of assignment either under the law or under an agreement between the parties.
OBITER DICTUM
- With the passing of a decree of specific performance, the contract between the parties is not extinguished.
- Order XXI Rule 16 CPC permits the assignee of a decree to execute it in the same manner and subject to the same conditions as if the applications were made by such decree holder.
RATIO DECIDENDI
- Neither an agreement of sale or a decree passed on the basis of specific performance of the contracts gives any right or title to the decree holder and the right passes to him only on the execution of the deed of sale either by the judgment debtor himself or by the Court itself in case the judgment debtor fails to execute the sale deed.
- Registration is mandatory only for non-testamentary instruments transferring or assigning any decree or order of a Court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees, and upwards, to or in immovable property. When the decree itself which is for specific performance does not create or purport to create aby right, title, or interest in any immoveable property, the question of registering an instrument assigning a decree cannot arise.
- K. Bhaskaram v. Mohammad Moulana5 was held to be incorrect and was over-ruled on this issue.
The Hon’ble Division Bench, by way of this judgment, settled a long-standing conflict by holding that assignment of a decree for specific performance is purely an assignment of rights under a contract, and not an interest in a immoveable property thereby, not requiring mandatory registration under Section 17(1)(e) of the Registration Act, 1908. This ruling reinforces the fundamental principle that title passes only upon execution and registration of sale deed, not upon decree or assignment. The judgment strengthens certainty in execution proceedings and ensures that equitable rights under decrees remain freely assignable without imposing unnecessary formalities.