Unregistered document is admissible for collateral purposes to prove debt and sustain a money recovery decree.

The Respondent (Original Plaintiff) held a gas distributorship and entered into a notarized Memorandum of Understanding (MOU) dated 01.07.2010 to sell the agency and its assets to the Appellants (Original Defendants) for Rs. 80,00,000

The Appellants paid an initial Rs. 16,00,000 and took possession of the properties, including vehicles and a godown

However, they defaulted on the remaining installments.

Cheques issued toward the balance were dishonored, leading to a criminal conviction under Section 138 of the Negotiable Instruments Act

The Plaintiff filed Special Civil Suit No. 141 of 2012 for the recovery of Rs. 64,00,000 and a permanent injunction

The Trial Court decreed the suit in favor of the Plaintiff

The Appellants challenged the decree, arguing the suit was based on an unregistered MOU, which is inadmissible under Section 49 of the Registration Act

1. Whether the Plaintiff proved the execution of the Distributorship Transfer Agreement and the subsequent default by the Defendants?

2. Whether the court is justified in decreeing a suit for recovery based on an unregistered Memorandum of Understanding?

The Court primarily applied Section 96 of the Code of Civil Procedure for the exercise of appellate jurisdiction

Regarding the admissibility of documents, it applied Sections 17 and 49 of the Registration Act, 1908, which govern the compulsory registration of documents and the consequences of non-registration

The Court specifically utilized the proviso to Section 49, which allows an unregistered document to be received as evidence of a contract in a suit for specific performance or as evidence of any "collateral transaction"

It further relied on the precedent in S. Kaladevi v. V.R. Somasundaram (2010) 5 SCC 401, which clarifies that an unregistered document can be admitted to prove an agreement between parties or the character of possession, even if it cannot affect the title of the immovable property

The Court noted that the Appellants, in their depositions, admitted to the execution of the MOU, the total consideration of Rs. 80,00,000, and the fact that they remained in possession of the business while paying only Rs. 16,00,000

Since these material facts were admitted, the Court held they required no further proof

Addressing the technical objection of non-registration, the Court reasoned that while the MOU could not legally "transfer" title to the immovable property without registration under Section 17, it was entirely admissible for "collateral purposes"—specifically to prove the existence of the debt and the terms of the agreement in a suit for a money decree

The Court found that the Plaintiff sought recovery of the agreed consideration, not just the perfection of title, making the MOU a valid evidentiary tool under the Section 49 proviso

The Court concluded that the Appellants could not retain the benefits of the contract (possession and profit) while repudiating the obligation to pay based on a registration technicality

The Court held that the Plaintiff was entitled to recover the outstanding Rs. 64,00,000 with interest, as the debt was clearly established through admissions and the MOU

The Court vacated all interim relief and refused the Appellants' request for a stay on the judgment