Oral Agreement for Sale Cannot Be Dismissed for Want of Stamp or Registration: Calcutta High Court Upholds Injunction

"There Is No Statute Which Mandates Every Agreement For Sale To Be Reduced To Writing", In a significant ruling that protects buyers who rely on oral agreements for property transactions, the Calcutta High Court upheld an ad-interim injunction restraining a seller from alienating suit property, holding that an oral agreement for sale is entirely outside the reach of the Stamp Act and the Registration Act — and that the proviso to Section 49 of the Registration Act expressly carves out a specific exception permitting even unregistered agreements to be received as evidence in suits for specific performance.

A Division Bench of Justice Sabyasachi Bhattacharyya and Justice Biswaroop Chowdhury dismissed the defendant-appellant's challenge to the Trial Court's injunction order, holding that the learned Trial Judge was fully justified in passing the protective order on the basis of an oral agreement for sale. The Court also took the occasion to expressly disapprove a contrary view taken by a Single Judge of the Madhya Pradesh High Court.

Background of the Case

The respondent-plaintiff Safikul Molla filed a suit for specific performance of an oral agreement for sale of immovable property, along with a prayer for permanent injunction and other consequential reliefs. The Trial Court, on an application for temporary injunction, passed an ad-interim order restraining the defendant-appellant Madhab Chandra Basu and his men, agents and assigns from transferring, alienating, changing the nature and character, encumbering, or creating any third-party interest in the suit property for a limited period.

The defendant challenged this order before the Calcutta High Court in FMAT No. 109 of 2026, arguing that the Trial Judge was debarred by law from passing any such order on the basis of an unstamped and unregistered agreement — and that the oral agreement pleaded by the plaintiff did not in any case constitute a concluded contract.

Legal Issues

Three distinct legal questions arose for the Division Bench's consideration: first, whether the Stamp Act and Registration Act requirements apply to an oral agreement for sale of immovable property; second, whether Section 49 of the Registration Act bars a court from acting upon an unregistered agreement even in a suit for specific performance; and third, whether the stage of ad-interim injunction is the appropriate stage to examine questions of admissibility of documents for want of stamp.

Court's Observations and Judgment

On Oral Agreements and the Inapplicability of Stamp and Registration Laws

The Division Bench disposed of the appellant's foundational argument with a clear and unambiguous proposition of law. Both the Stamp Act and the Registration Act, the Court held, operate exclusively on documents reduced to writing. An oral agreement, by its very nature, cannot attract the requirements of either statute.

The Court went further and examined whether the law anywhere mandates that an agreement for sale of immovable property must be reduced to writing. Finding no such mandate, the Bench observed: "There is no statute which mandates every agreement for sale to be reduced to writing. Rather, the language of Section 10 of the Indian Contract Act is wide enough to encompass any sort of reciprocal promises within the ambit of a concluded contract between the parties, without putting any restriction regarding such contract being mandatorily to be in writing."

This holding is significant for practitioners — it reaffirms that an oral agreement for sale, if proven, is a valid concluded contract and can form the basis of a suit for specific performance.

On the Proviso to Section 49 of the Registration Act

The appellant relied heavily on the Supreme Court's decision in Yellapu Uma Maheswari v. Buddha Jagadheeswararao, 2016 (2) CHN (SC) 28, which had affirmed that Section 17(1)(b) mandates registration of documents creating or transferring rights in immovable property and that Section 49 bars unregistered documents from being received in evidence.

The Division Bench distinguished this precedent by pointing to a crucial textual distinction in Section 49 itself. The main body of Section 49 creates the general bar — but the proviso to Section 49 expressly carves out an exception for suits for specific performance. "The proviso thereto stipulates that an unregistered document affecting immovable property and required by the Registration Act or the Transfer of Property Act to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act."

The Court noted that Yellapu Uma Maheswari arose from a partition suit — an entirely different context — and therefore could not operate as a binding precedent in a suit for specific performance where the proviso to Section 49 directly applies. "The bar stipulated in Section 17, read with Section 49, is not applicable to the present case as opposed to the case from which the cited judgment arose."

On the Stamp Act Objection at the Ad-Interim Stage

The appellant pressed the Supreme Court's decisions in Avinash Kumar Chauhan v. Vijay Krishna Mishra, (2009) 2 SCC 532 and Bidyut Sarkar v. Kanchilal Pal, 2025 (1) ICC 534 (SC) to argue that an insufficiently stamped document cannot be the basis for any court order, including an injunction. The Division Bench distinguished both decisions on the ground that they arose at the stage of production of documents in evidence — a stage that had not yet arrived in the present suit.

The Court was categorical that examining stamp defects is a function that belongs to the trial stage, not the ad-interim injunction stage. "It would be premature, at this stage, to observe that despite getting an opportunity and the document having been exhibited with objection, the plaintiff did not remove or cure the defect regarding stamp." At the stage of ad-interim injunction, the court looks only at the pleadings of the plaint, the injunction application, and the documents furnished therewith — not into the admissibility of each document in the manner required at trial.

On the Madhya Pradesh High Court Decision

The Division Bench expressly disapproved the judgment of a Single Judge of the Madhya Pradesh High Court in Chamibai and Others v. Siddhnath and Others, 2025: MPHC-IND: 5866, which had held that even at the stage of a temporary injunction in a suit for specific performance, the document relied upon must be mandatorily registered and stamped. The Calcutta High Court held without hesitation: "In view of our above discussions, and in the light of the proviso to Section 49 of the Registration Act, the said judgment does not lay down the correct proposition of law."

On the Sufficiency of Prima Facie Case

Having resolved all the legal objections against the ad-interim order, the Division Bench affirmed that the Trial Court had correctly applied the standard test for ex parte ad-interim injunctions. A sufficient prima facie case was made out from the pleadings and the other requirements for grant of temporary injunction were satisfied. The appellate court found no reason to interfere with the Trial Judge's protective order.

FMAT was dismissed under Order XLI Rule 11 of the Code of Civil Procedure. CAN was consequentially disposed of. No order as to costs was made.

Date of Decision: April 9, 2026