The Supreme Court of India has held that a deed assigning a decree for specific performance of an agreement of sale of immovable property does not require mandatory registration under Section 17 of the Registration Act, 1908. The bench, comprising Justice J.B. Pardiwala and Justice K.V. Viswanathan, dismissed the appeal filed by the legal heirs of a judgment-debtor, affirming that such a decree does not, by itself, create any right, title, or interest in the immovable property.
Case Background
The case, titled Rajeswari & Ors. v. Shanmugam & Anr. (Civil Appeal No. 13835 of 2025), arose from an execution proceeding. The appellants are the legal heirs of a judgment-debtor against whom an ex-parte decree for specific performance was passed on September 13, 1993, in O.S. No. 100/1989 by the First Additional Sub Court, Erode, Tamil Nadu.
The first respondent, Shanmugam, claimed to be the assignee of this decree via an assignment deed dated July 17, 1995. When Shanmugam filed an Execution Petition (E.P. No. 150/2004) to enforce the decree, the Executing Court initially ordered the execution of the sale deed on March 13, 2008.
However, the appellants filed an application under Section 47 of the Code of Civil Procedure, 1908, seeking to set aside the execution. They argued that the assignment deed was unregistered and thus unenforceable. On April 8, 2010, the Executing Court accepted this contention, relying on the Andhra Pradesh High Court judgment in K. Bhaskaram vs. Mohammad Moulana, and held that the assignment was bad for want of registration under Section 17(1) of the Registration Act.
The first respondent approached the High Court, which reversed the Executing Court’s decision. The High Court held that the assignment was merely of a right to derive benefits from the decree and was not compulsorily registrable. The appellants then moved the Supreme Court.
Arguments of the Parties
Senior Advocate Mr. Jayanth Muth Raj, appearing for the appellants, contended that under Section 17(1)(e) of the Registration Act, as amended in 1929, any assignment of a decree that purports to create or assign an interest in immovable property of the value of one hundred rupees and upwards must be registered.
He argued that a decree for specific performance creates an “interest” in the property. Citing the definition of “interest” from Black’s Law Dictionary, he submitted that failing to register such assignments would allow parties to avoid registration charges by assigning decrees multiple times, thereby defeating the object of the Registration Act.
Conversely, Mr. R. Ganesh, counsel for the first respondent-assignee, argued that a decree for specific performance does not itself transfer any right in the property. It only confers a right to obtain a sale deed through the process of law. He relied on the Bombay High Court judgment in Amol vs. Deorao (2011), which held that such assignments do not require registration.
He submitted that the decree is subject to further processes, including execution and registration of the sale deed, and does not elevate the decree-holder to the status of an owner.
Court’s Analysis and Observations
The Supreme Court focused on the nature of a decree for specific performance and the interpretation of Section 17(1)(e) of the Registration Act.
Nature of Specific Performance Decree Justice Viswanathan, writing for the bench, referred to previous apex court rulings, including Babu Lal v. M/s Hazari Lal Kishori Lal (1982) and Suraj Lamp & Industries (P) Ltd. v. State of Haryana (2012). The Court reiterated that neither an agreement to sell nor a decree for specific performance gives any title to the decree-holder.
The Court observed:
“It will be seen… that neither an agreement of sale nor a decree passed on the basis of specific performance of the contract gives any right or title to the decree holder and the right and title passes to him only on the execution of the deed of sale either by the judgment debtor himself or by the Court itself…”
The judgment clarified that under Section 54 of the Transfer of Property Act, 1882, a contract for sale does not, of itself, create any interest in or charge on such property. The Court noted that even after a decree is passed, the contract between the parties is not extinguished but subsists, subject to the court’s control until the sale deed is executed.
Interpretation of Section 17(1)(e) Analyzing the Registration Act, the bench stated that Section 17(1)(e) mandates registration only for instruments assigning a decree when such decree “purports or operates to create, declare, assign, limit or extinguish… any right, title or interest… to or in immovable property.”
Applying this to the present facts, the Court held:
“In this case, when the decree itself which is for specific performance does not create or purport to create any right, title or interest in any immovable property, the question of registering an instrument assigning such a decree cannot arise.”
The Court expressed concurrence with the Bombay High Court’s view in Amol vs. Deorao, which stated that a decree for specific performance merely recognizes a claim and does not result in the transfer of property.
Overruling K. Bhaskaram The Supreme Court explicitly held that the Andhra Pradesh High Court’s decision in K. Bhaskaram vs. Mohammad Moulana (AIR 2005 AP 524), which the Executing Court had relied upon, “does not lay down the correct law.” The bench noted that in Bhaskaram, the parties appeared to have proceeded on an admission that registration was required, which was not the legal position.
Decision
The Supreme Court concluded that the assignment deed (Exhibit B1) did not require registration. It held that the Executing Court was “clearly wrong” in denying execution, and the High Court was “clearly right” in setting aside that order.
Dismissing the appeal, the Court stated:
“If a party after obtaining an assignment deed does not execute the decree, no right will enure to it in the immovable property. Hence, the argument that there will be loss of revenue to the State is not tenable.”
No order as to costs was made.
