According to the Registration Act 1908, agreements are required to be registered in Pakistan with respect to its transaction. Merely agreement on Stamp Paper does not make it registered rather it only validates the page however contents of the agreements are required to be registered.
In the light of provisions of Sections 17, 18 and 50 of the Registration Act, 1908, it is obvious that the agreement to sell is not a complete transaction and does not create any right on property till fulfillment of the terms and conditions of the agreement. However, due to tendency in the society of making false and forged documents, such as agreement to sell, and then using it in support of false plea in Civil Courts for establishing the right in property, it is desirable to amend Section 17 of the Registration Act by inserting the agreement to sell as compulsory registrable. It will operate as an effective check to prevent the abuse of an agreement to sell.
Section 17 of the Act describes the documents, which are compulsorily registrable
Section 17. Documents of which Registration is compulsory:—(1) The following documents shall be registered, if the property to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act No.XVI of 1864, or the Pakistan Registration Act, 1866, or the Pakistan Registration Act, 1871, or the Pakistan Registration Act, 1877, or this Act came or comes into force, namely:—
(a) Instruments of gift of immovable property;
(b) other non-testamentary instruments which purport or operate 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;
Explanation.—In the case of an assignment of a mortgage the consideration for the deed of assignment shall be deemed to be the value for registration;
(c) non-testamentary instruments other than the acknowledgment of a receipt or payment made in respect of any transaction to which an instrument registered under clause (o) relates Added ibid which acknowledge the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest; and
(d) lease of immovable property from year to year; or for any term exceeding one year, or reserving a yearly rent:
Provided that the Provincial Government may, by order publish in the official Gazette, exempt from the operation of this subsection any ease executed in any district, or part of a district, there terms granted by which do not exceed five years and the annual rents reserved by which do not exceed fifty rupees.
(e) 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:
(2) Nothing in clauses (d) and (c) of sub-section (1) applies to—
(i) any composition deed; or
(ii) any instrument relating to shares in a Joint Stock Company, notwithstanding that the assets of such Company consists in whole or in part of immovable property; or
(iii) any debenture issued by any such Company and not creating, declaring, assigning, limiting or extinguishing any right title or interest, to or in immovable property except in so far as it entitles the holder to the security afforded by a registered instrument whereby the Company has mortgaged, conveyed or otherwise transferred the whole or part of its immovable property or any interest therein to trustees upon trust for the benefit of the holders of such debentures; or
(iv) any endorsement upon or transfer of any debenture issued by any such Company; or
(v) any document not itself creating, declaring, assigning, limiting or extinguishing any right, title or interest of the value of one hundred rupees and upwards to or in immovable property, but merely creating a right to obtain another document which will, when executed, create, declare, assign, limit or extinguish any such right, title or interest; or
(vi) any decree or order of a Court except a decree, or order expressed to be made on a compromise and comprising immovable property other than that which is the subject-matter of the suit or proceeding; or
(vii) any grant of immovable property by the Government; or
(viii) any instrument of partition made by Revenue Officer; or
(ix) any order granting a loan or instrument of collateral security granted under the Land Improvement Act, 1871, or the Land Improvement Loans Act, 1883, or
(x) any order granting a loan under the Agriculturists Loans Act, 1884 (XII of 1884), the Agricultural Development Bank Ordinance, 1961 (Ordinance No.IV of 1961), or under another law for the time being in force relating to the advancement of loans for agricultural purposes, or any instrument under which a loan, is granted by a cooperative society for any such purpose, or any instrument made for securing the repayment of a loan so granted; or
(xi) any endorsement on a mortgage-deed acknowledging the payment of the whole or any part of the mortgage money, and any other receipt for payment of money due under a mortgage; or
(xii) any certificate of sale granted to the purchaser of any property sold by public auction by a Civil or Revenue Officer; or
(xiii) any counterpart of a lease, where the lease corresponding thereto has itself been registered.
Explanation.—A document purporting or operating to effect a contract for the sale of immovable property shall not be deemed to require or ever to have required registration by reason only of the fact that such document contains a recital of the payment of any earnest money or of the whole or any part of the purchase money.
(3) Authorities to adopt a son, executed after the first day of January, 1872, and not conferred by a will, shall also be registered.
Section 18 prescribes the documents which are optionally registrable.
Section 18. Documents of which registration is optional:— Any document not required to be registered under section 17 may also be registered under this Act.
This Section pertains to the registration of those documents which do not require compulsory registration. The non-registration of such documents however will not affect their validity or admissibility in evidence, but in certain cases, may affect rights of priority.
Section 17(2)(v) provides that a document, not in itself creating a right in immovable property of the value of Rs.100/- and upwards, but merely creating a right to obtain another document which will, when executed, create any such right, need not be registered. An agreement for sale in the usual form acknowledging receipt of earnest and providing for the execution of a regular sale-deed on payment of the balance purchase-money, is a document of this kind.
An agreement to sell in respect of an immovable property containing recites as to payment of price, is not compulsorily registrable. In the case of Muhammad Akram v Muhammad Saleem (PLD 1964 Lahore 490), it was held that an agreement to sell does not create any present right in property. It only recites an agreement arrived at between the parties that the plaintiff-respondent would transfer the property in dispute to the defendants-appellant either by registration of documents of a means of a mutation. It is not a document requiring registration.
It is further mentioned that Section 50 of the Act entitles the party to enforce the contract under the unregistered documents in a suit for specific performance. This Section defines the status of registration of documents relating to land against unregistered documents as follows:—
Section 50. Certain registered document relating to land to take effect against unregistered documents.—(1) Every document of the kind mentioned in clauses (a), (b), (c) and (d) of section 17, sub-section (1), and every document registrable under section 18, in so far as such document affects immovable property or acknowledge the receipt or payment of any consideration in respect of any transaction relating to immovable property shall, if duly registered; take effect as regards the property comprised therein, against every unregistered document relating to the same property, and not being a decree or order, whether such unregistered document be of the same nature as the registered document or not:
Provided that the person in possession of the property under an unregistered document prior in date, would be entitled to the rights under section 53-A of the Transfer of Property Act, 1882 (IV of 1882) if the conditions of that section are fulfilled:
Provided further that the person in whose favour an unregistered document is executed shall be entitled to enforce the contract under the unregistered document in a suit for specific performance against a person claiming under a subsequent registered document, subject to the provisions of clause (b) of section 27 of the Specific Relief Act, 1877.
(2) Nothing in sub-section (1) applies to lease exempted under the proviso to sub-section (1) of section 17 or to any document mentioned in sub-section (2) of the same section, or to any registered document which had not priority under the law in force at the commencement of this Act.
Stamp Paper: Stamp paper shall be used for each agreement or contract according to value prescribed in Stamp Act 1889. The purpose of the Stamp Act is to protect the public revenues and not to interfere with commercial life by invalidating instruments vital to the smooth flow of trade and business. If a document has been executed without the stamp paper, for which it was required, such document can’t be admitted in the evidence subject to the requirements of Law of Evidence and it shall be deemed the discrepancy of the document. However, merely because an instrument can’t be admitted in evidence, does not mean that such instrument is invalid. The stamp duty chargeable on a document shall be decided on the date of the execution of the document, but the penalty leviable is to be determined at the time of its presentation for being used as evidence. In this regard two things shall be important.
Registration: If the contract/agreement is related to the sale or purchase of immovable property or lease of immovable property, The Registration Act, 1908 shall be applicable to all such documents. If a document/Agreement for lease has been executed between parties for one year or more than one year it should be registered; otherwise, it is not effective unless it is registered with concerned Authorities. Many times, it has been assumed that using a stamp paper in a contract is registration of the agreement, but the registration of stamp paper with a vendor does not mean the registration of agreement; it is misunderstanding the applicability of stamp act 1899 and The Registration Act, 1908. For the clarification purpose the difference in applicability of these Acts should be noted that,
Initials on each Page: The purpose behind this requirement is that it prevents one of the parties from later inserting a false or modified page. It prevents fraud in the enforcement of contracts. It makes it difficult for a party to change the contents of an agreement once. In case of change of modification or correction even in a single word or letter both parties shall have to initialize on the place where they have changed or corrected the word or letter. If the contract is signed between two individuals, then both parties have to affix their initials and thumb impressions on each page. This would further protect the documents from any forgery.