REAL Estate, Research

Concept Papers: Legal Aspects of Property Transactions in India

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By Dr. Sanjay Chaturvedi, LLB, PhD

The most important Act in India with regard to the immovable property is Transfer of Property Act of 1882.  There are various aspects of transfers of immovable property dealt by  the said Act.  There are two kinds of Transfer which should be known to you.  One is Sale and another is Lease.

SALE

First we will deal with the provisions of Transfer of Property Act with regard to the Sale. Chapter III of the said Act deals with the sale of Immovable Property.  Section 54 of the said Act reads as under :

“54. “Sale” is a transfer of ownership in exchange for price paid or promised or [art-paid and part-promised.  Such a transfer, in the case of tangible immovable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument.

In the case of tangible immovable property, of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property.

Delivery of tangible immovable property takes place when the seller places the buyer, or such person as he directs; in possession of the property.

A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties.

It does not, of itself, create any interest or charge of such property.”

We will consider salient features of Sale.  The  important aspect is that in sale there is a transfer of ownership and not just transfer of restricted rights in the property.  Therefore, in the case of sale, the purchaser becomes new owner of the property.

There has to be price to be paid or promise to be paid or partly paid and partly promised to be paid.  When we talk about the price, it has  to be in terms of money.  If such transfer of ownership is not in exchange of money but some other property, then it is not a sale. The common man is always under the impression that price should be paid before transfer takes place, but it is not so.  Even a promise to pay full consideration or part consideration and promise to pay itself is a consideration and there will be effective and valid transfer.  The ownership of the property will change in favour of the purchaser. The right of the vendor will be restricted only to get the balance of the purchase price.  The Vendor in such circumstances ceased to be the owner of the property

Now we will consider the mode of transfer.  In case of tangible immovable property of value of  Rs. 100/- or more or in case of reversion or other intangible thing, you need to have a registered document.  But if the value of the property is less than Rs.100/-, then it is not necessary to have registered instrument, but delivery of the property is sufficient.  Now you hardly come across any immovable property whose value is less than Rs.100/-. Therefore, for all practical purposes, you have to have a registered document for sale.  If there is no registered transfer deed, then the ownership of the property cannot be transferred and the Vendor will legally continue to be owner of the property even if he has received full consideration

This Section also provide how delivery of tangible immovable property is to be effected.  When the possession is handed over to the purchaser or his nominee, then one can say that the property is delivered.

The last portion of the said Section provide for contract for sale.  There is a difference between contract for sale and sale.  Contract for Sale of immovable property is a contract where parties agree that Vendor will sell the property to Purchaser.  The contract for sale is not a transfer but Vendor agrees to transfer the property to the Purchaser on the Purchaser complying with his obligations under the contract.  The said contract itself does not give or create any interest in the property.  Such contracts only gives a right to the Purchaser to get the property transferred in his favour on the Purchaser complying with all his obligations.

The conveyance, sale deed or transfer deed are normally executed only by the Vendor.  Such documents are not executed by the Purchaser.  However, Contract for Sale needs to be executed by both the Vendor as well as the Purchaser.

Normally, the document of transfer of ownership is called Sale Deed, Conveyance or Transfer Deed.  Whereas Contract for Sale is called Agreement for Sale.  By conveyance or Sale Deed or Deed of Transfer, ownership of property completely get transferred in favour of the purchaser whereas in Agreement for Sale, there is no transfer of ownership of property in favour of the Purchaser.  This distinction between the conveyance or transfer deed or sale deed and agreement for sale needs to be understood for its legal implication.

If there is no price paid or promise to be paid for transfer of ownership of property, then it is not a Sale Deed but it is a gift.  In a gift, there is no consideration payable by the Purchaser to the Vendor.

Instead of price, if for transfer of ownership of property, another property is exchanged and given to the Vendor, then such transaction  is called Exchange.  This is how the Sale, Gift and Exchange defers.  Otherwise other things remain common, viz. the ownership of property is transferred from the Vendor to Purchaser, donor to donee or from exchanger to exchangee.

Section 55 of the said Acts provide for rights and liability of the buyer and seller.  The said Section reads as under:

“55.  In the absence of a contract to the contrary the buyer and the seller of immovable property respectively are subject to the liabilities, and have the rights, mentioned in the rules next following, or such of them as are applicable to the property sold:

  • The seller is bound –
  • to disclose to the buyer any material defect in the property or in the seller’s title hereto of which the seller is, and the buyer is not aware, and which the buyer could not with ordinary care discover.
  • To produce to the buyer on his request for examination all documents of title relating to the property which are in the seller’s possession or power.
  • To answer to the best of his information all relevant questions put to him by the buyer in respect of the property or the title thereto.
  • On payment or tender of the amount due in respect of the price, to execute a proper conveyance of the property when the buyer tenders it to him for execution at a proper time and place.
  • Between the date of the contract of sale and the delivery of the property, to take as much care of the property when the buyer tenders it to him for execution at a proper time and place.
  • Between the date of the contract of sale and the delivery of the property, to take as much care of the property and all documents of title relating thereto which are in his possession as an owner of ordinary prudence would take of such property and documents.
  • To give, on being so required, the buyer, or such person as he directs, such possession of the property as its nature admits.
  • To pay all public charges and rent accrued due in respect of the property up to the date of the sale, the interest on all incumbrances on such property due on such date, and, except where the property is sold subject to incumbrances, to discharge all incumbrances on the property then existing.

 

(2)    The seller shall be deemed to contract with the buyer that the interest which the seller professes to transfer to the buyer  subsists and that he has power to transfer the same.

Provided that, where the sale is made by a person in a fiduciary character, he shall be deemed to contract with the buyer that the seller has done no act whereby the property is incumbered or whereby he is hindered from transferring it.

The benefit of the contract mentioned din this rule shall be annexed to, and shall go with, the interest of the transferee as such, and may be enforced by every person in whom that interest is for the whole or any part thereof from time to time vested.

(3)       Where the whole of the purchase money has been paid to the seller, he is also bound to deliver to the buyer all documents of title relating to the property which are in the seller’s possession or power :

Provided that, (a) where the seller retains any part of the property comprised in such documents, he is entitled to retain them all, and, (b) where the whole of such property is sold to different buyers, the buyer of the lot of greatest value is entitled to such documents.  But in case (a) the seller, and in case (b) the buyer of the lot of greatest value, is bound, upon every reasonable request by the buyer, or by any of the other buyers, as the case may be, and at the cost of the person making the request, to produce the said documents and furnish such true copies thereof or extracts therefrom as he may require; and in the meantime, the seller, or the buyer of the lot of greatest value, as the case may be, shall keep the said documents safe, uncancelled and undefaced, unless prevented from so doing by fire or other inevitable accident.

(4) The seller is entitled –

  • (a) to the rents and profits of the property till the ownership thereof passes to the buyer.
  • Where the ownership of the property has passed to the buyer before payment of the whole of the purchase money, to a charge upon the property in the hands of the buyer, any transferee without consideration or any transferee with notice of the non-payment; for the amount of the purchase-money, or any part thereof remaining unpaid, and for interest on such amount or part from the date on which possession has been delivered.

(5)   The buyer is bound –

  • (a) to disclose to the seller any fact as to the nature or extent of the seller’s interest in the property of which the buyer is aware, but of which he has reason to believe that the seller is not aware, and which materially increases the value of such interest.
  • (b) To pay or tender, at the time and place of completing the sale, the purchase-money to the seller or such person as he directs: provided that, where the property is sold free from incumbrances, the buyer may retain, out of the purchase-money, the amount of any incumbrances on the property existing at the date of the sale, and shall pay the amount so retained to the persons entitled thereto.
  • Where the ownership of the property has passed to the buyer, to bear any loss arising from the destruction, injury or decrease in value of the property not caused by the seller.
  • Where the ownership of the property has passed to the buyer, as between himself and the seller, to pay all public charges and rent which may become payable in respect of the property, the principal moneys due on any incumbrances subject to which the property is sold, and the interest thereon afterwards accruing due.

(6)  The buyer is entitled –

  • (a) where the ownership of the property has passed to him, to the benefit of any improvement in, or increase in value of the property, and to the rents and profits thereof.
  • (b) Unless he has improperly declined to accept delivery of the property, to a charge on the property, as against the seller and all persons claiming under him, to the extent of the seller’s interest in the property, for the amount of any purchase-money properly paid by the buyer in anticipation of the delivery and for interest on such amount; and, when he properly declines to accept the delivery, also for the earnest (if any) and for the costs (if any) awarded to him of a suit to compel specific performance of the contract or to obtain a decree for its rescission.
  • (c)    An omission to make such disclosures as are mentioned in this section, paragraph (1), clause (a), and paragraph (5), clause (a), is fraudulent.”

However, this provision will apply only if there is no contract to the contrary between the buyer and the seller.  Now this section separately provides rights and liabiliities of the buyer and the seller.  The important aspect is title of the seller to the said property.  Before the buyer buys and pays the consideration, he would like to satisfy himself that the seller is the owner of property and he has a clear and marketable title to the said property and therefore Sub Section 1 (d), (F) and (g) of  Section 55 provides for execution and registration of Deed of Sale or conveyance or Transfer Deed, give possession of the property and pay all the outgoings of the property.

Section 55(1)(e) provides that the Vendor will take care and protect the property and documents relating to the said property so that in between the contract for sale and sale itself, the value of of the property or the status of the property is not changed so that buyer will get at the time of sale what he has agreed to purchase.

Sub Section 2 of Section 55 is brought in normal phrazology called a covenant for title.  In that, the Vendor says that he has title to the property and he has right to transfer the same to the purchaser.  Sub Section 55(3) provides that title deeds of the property are to be handed over to the purchaser on completion of sale except in the circumstances provided in the proviso to the sub section (4) of Section 55 providing for the rights of the seller.  Till completion of sale, he is entitled for rent and profits of the property.

Similarly, obligations are cast upon the buyer as set out in para 55(b).  Section 55(b) provides that benefit accruing to the buyer after the sale which means any increase in the value or the rent and profits belong to the purchaser.

 

LEASE

Now we will deal with the topics of Lease.  Chapter V of said Act provide for Leases of immovable property.  Section 105 defines lease, lessor, lessee, premium and rent.

“105.  A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.

The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent.”

In a case of lease, there is no transfer of property but only transfer of right to enjoy the said property.  The ownership of the property continue with the Lessor.  Lessee has only right to enjoy, use and occupy  the property.   However, the lease for particular time which may be expressed or implied or in perpetuating.  In case of lease, consideration could be price paid or promise to be paid of money, share of crop, service or any other thing or value to be rendered periodically or on specific occasion by the transferor to the transferee.  In case of sale, the consideration has to be always in terms of money, but in case of lease it could be in terms of money, it could be in terms of sale of crops or service or any other thing of value.  This is how Lease defers from Sale.  It must be also borne in mind that in ordinary language what we call this as “tenancy”  is a also lease and is covered by the said Act except in case where there are specific provisions under the Rent Control Act.

Section 106 provides for duration of certain leases in absence of certain contract or local usage.  The said Section reads as under :-

“106.  In the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months’ notice expiring with the end of a year of the tenancy; and a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days’ notice expiring with the end of a month of the tenancy.

Every notice under this section must be in writing signed by or on behalf of the person giving it, and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such party, or to one of his family or servants at his residence, or (if such tender or delivery is not practicable) affixed to a conspicuous part of the property”.

This Section provides how lease can be determined or come to an end if there is no written contract or local usage to that effect.

Section 107 covers how leases can be made.  Section 107 reads as under :

“107.  A lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument.

All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.

Where a lease of immovable property is made by a registered instrument, such instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee.

Provided that the State Government may, from time to time, by notification in the official Gazette, direct that leases of immovable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class or such leases, may be made by unregistered instrument or by oral agreement without delivery of possession.”

Any lease of immovable property from year to year or from any term exceeding one year or reserving yearly rent can be made only by registered instrument.  There cannot be such lease by unregistered document or by oral contract.  Other leases can be either by registered instrument or by oral agreement accompanied by delivery of possession.  Such leases are required to be executed both by the lessor and the lessee.

Section 108 of the said Act covers rights and liabilities of the Lessor and the Lessee which reads as under :

“108.  In the absence of a contract or local usage to the contrary, the lessor and the lessee of immovable property, as against one another, respectively, possess the rights and are subject to the liabilities mentioned in the rules next following, or such of them as are applicable to the property leased :-

  1. – Rights and Liabilities of the Lessor
  • The lessor is bound to disclose to the lessee any material defect in the property, with reference to its intended use, of which the former is and the latter is not aware, and which the latter could not with ordinary care discover;
  • The lessor is bound, on the lessee’s request to put him in possession of the property;
  • The lessor shall be deemed to contract with the lessee that, if the latter pays the rent reserved by the lease and performs the contract binding on the lessee, he may hold the property during the time limited by the lease without interruption.

The benefit of such contract shall be annexed to and go with the lessee’s interest as such, and may be enforced by every person to whom that interest is for the whole or any part thereof from time to time vested.

  1. – Rights and Liabilities of the Lessee.
  • If during the continuance of the lease any accession is made to the property, such accession (subject to the law relating to alluvion for the time being in force) shall be deemed to be comprised in the lease;
  • If by fire, tempest or flood, or violence of an army or of a mob or other irresistible force, any material part of the property be wholly destroyed or rendered substantially and permanently unfit for the purposes for which it was let, the lease shall, at the option of the lesee, be void:

Provided that, if the injury be occasioned by the wrongful act or default of the lessee, he shall not be entitled to avail himself of the benefit of this provision;

  • If the lessor neglects to make, within a reasonable time after notice, any repairs which he is bound to make to the property, the lessee may make the same himself, and deduct the expense of such repairs with interest from the rent, or otherwise recover it from the lessor;
  • If the lessor neglects to make any payment which he is bound to make, and which, if not made by him, is recoverable from the lessee or against the property, the lessee may make such payment himself, and deduct it with interest from the rent, or otherwise recover it from the lessor;
  • The lessee may even after the determination of the lease remove, at any time whilst he is in possession of the property leased out but not afterwards all things which he has attached to the earth; provided he leaves the property in the state in which he received it;
  • When a lease of uncertain duration determines by any means except the fault of the lessee, he or his legal representative is entitled to all the crops planted or sown by the lessee and growing upon the property when the lease determines, and to free ingress and egress to gather and carry them;
  • The lessee may transfer absolutely or by way of mortgage or sub-lease the whole or any part of his interest in the property, and any transferee of such interest or part may again transfer it. The lessee shall not, by reason only of such transfer, cease to be subject to any of the liabilities attaching to the lease;

Nothing in this clause shall be deemed to authorise a tenant having an untransferable right of occupancy, the farmer of an estate in respect of which default has been made in paying revenue, or the lessee of an estate under the management of a Court of Wards, to assign his interest as such tenant, former or lessee;

  • the lessee is bound to disclose to the lessor any fact as to the nature or extent of the interest which the lessee is about to take, of which the lease is, and the lessor is not aware, and which materially increases the value of such interest;
  • the lessee is bound to pay or tender, at the proper time and place, the premium or rent to the lessor or his agent in this behalf;
  • the lessee is bound to keep, and on the termination of the lease to restore, the property in as good condition as it was in at the time when he was put in possession, subject only to the changes caused by reasonable wear and tear or irresistible force, and to allow the lessor and his agents, at all reasonable times during the term, to enter upon the property and inspect the condition thereof and give or leave notice of any defect in such condition; and, when such defect has been caused by any act or default on the part of the lessee, his servants or agents, he is bound to make it good within three months after such notice has been given or left;
  • if lessee becomes aware of any proceeding to recover the property or any part thereof, or of any encroachment made upon, or any interference with, the lessor’s rights concerning such property, he is bound to give, with reasonable diligence, notice thereof to the lessor;
  • the lessee may use the property and its products (if any) as a person of ordinary prudence would use them if they were his own; but he must not use or permit another to use the property for a purpose other than that for which it was leased, or fell or sell timber, pull down or damage buildings belonging to the lessor or work mines or quarries not open when the lease was granted, or commit any other act which is destructive or permanently injuries thereto;
  • he must not, without the lessor’s consent, erect on the property any permanent structure, except for agricultural purposes;
  • on the determination of the lease, the lessee is bound to put the lessor into possession of the property.

This provision is of great importance as it covers rights and obligation of the lessor and lessee among themselves.  However, this is so provided there is no contract contrary or usages which are contrary to the same.

Section 111 provides how leases are to be determined.  The said Section reads as under :-

“111.  A lease of immovable property determines –

  • by afflux of the time limited thereby.
  • where such time is limited conditionally on the happening of some event – by the happening of such event.
  • Where the interest of the lessor in the property terminates on, or his power to dispose of the same extends only to the happening of any event – by the happening of such event.
  • In case the interests of the lessee and the lessor in the whole of the property become vested at the same time in one person in the same right.
  • By express surrender; that is to say, in case the lessee yields up his interest under the lease, to the lessor by mutual agreement between them.
  • By implied surrender.
  • By forfeiture; that is to say, – (1) in case the lessee breaks an express condition which provides that, on breach thereof, the lessor may re-enter; or (2) in case the lessee renounces his character as such by setting up a title in a third person or by claiming title in himself; or (3) the lessee is adjudicated as insolvent and the lease provides that the lessor may re-enter on the happening of such event; and in any of these cases the lessor or his transferee gives notice in writing to the lessee of his intention to determine the lease.
  • On the expiration of a notice to determine the lease or to quit or of intention to quit, the property leased, duly given by one party to the other.

 

INDIAN REGISTRATION ACT

Another Act which is very important in matter of real estate is the Indian Registration Act.  The said Act provides for the law relating to registration of document.  The very important section is Section 17 of the said Act.  Part III of the said Act governs the law of registrable document.  Section 17 of the said Act reads as under :

“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 Indian Registration Act, 1866, or the Indian Registration Act, 1871, or the Indian Registration Act, 1877, or this Act came or comes into force, namely :-

  • instruments of gift of immovable property;
  • 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;
  • non-testamentary instruments 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 interests; and
  • lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent ;
  • 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:

Provided that the State Government may, by order published in the Official Gazette, exempt from the operation of this sub-section any lease executed in any district, or part of a district, the terms granted by which do not exceed five years and the annual rents reserved by which do not exceed fifty rupees.

(2)       Nothing in clauses (b) 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 consist in whole or in part of immovable property; or

(iii)     any debenture by any such Company and not creating, declaring, assigning, limiting or extinguishing any right, title or interest, to or 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

  • any endorsement upon or transfer of any debenture issued by any such Company; or
  • 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
  • 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
  • any grant of immovable property by the Government; or
  • any instrument of partition made by a Revenue Officer; or
  • 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
  • any order granting a loan under the Agriculturists Loans Act, 1884, or instrument for securing the repayment of a loan made under that Act; or

(xa)    any order made under the Charitable Endowments Act, 1890 (6 of 1890) vesting any property in a Treasurer of Charitable Endowments or divesting any such Treasurer of any property; or

  • 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 when the receipt does not purport to extinguish the mortgage; or
  • any certificate of sale granted to the purchaser of any property sold by public auction by a Civil or Revenue Officer.

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.

  • Authorities to adopt a son, executed after the first day of January 1872, and not conferred by a will, shall also be registered.

Five categories of documents are compulsorily required to be registered which are described in Section 17(I)(a), (b), (c), (d) and (e).  One important aspect to be remembered is that the instrument of gift of immovable property irrespective of the value, even if it is less than Rs.100/-, such gift requires to be registered under the said Section.  Another aspect which is to be borne in mind that all the documents described therein are non-testamantory instrument, i.e. instrument or document executed and be effective during the life-time of a person.  Testamantory documents  like Will, Codicil are not required to be registered even if under the Will the immovable properties given whose value may be more than lakhs of rupees.  Clauses (b) and (c) cover lage number of documents because any interest which is created, declared, assigned, limit extinguished whether in the present or future or any right, title or interest – whether vested or contingent – in case of immovable property of the value of Rs.100/- and above needs to be registered.  You would have noticed that there is no reference of registration of document of any movable property.  Whereas Section 17(2) gives exceptions of documents which need not be registered even if they fall within Section 17(1)(a) to (e).  Some of the important exceptions are in grant of immovable property by government.  It must be noted that Agreement for Sale does not required to be registered under the Registration Act as it does not create, declare, assign, limit or extinguish any right, title or interest of any immovable property which merely creates a right to obtain conveyance which will, when executed, create, declare, assign, limit or extinguish any such right, title or interest.  In view of Section 17(2)(v), an Agreement for Sale does not require to be registered under the said Registraction Act.  One thing should be borne in mind that Section 17 prescribes law as to documents which are required to be compulsorily registered.  Any document which does not fall within Section 17(1) can be registered, but it is optional.  Another thing which should be borne in mind is that only any document or instrument can be registered.  If there is no writing with signature, then the same cannot be registered.

 

The Law as to effect of document which is required to be compulsorily registered and not registered is governed by Section 49 of the said Act.  The said Section reads as under :-

“49.  Effect of non-registration of documents required to be registered.  No document required by section 17 (or by any provision of the Transfer of Property Act, 1882) to be registered shall –

  • affect any immovable property comprised therein, or
  • confer any power to adopt, or
  • be received as evidence of any transaction affecting such property or conferring such power,

unless it has been registered.

Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882, 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, 1877, or as evidence of part performance of a contract for the purposes of section 53A of the Transfer of Property Act, 1882, or as evidence of any collateral transaction not required to be effected by registered instrument.”

We are vitally concerned with first part, i.e. if any document required to be registered under Section 17 of the said Act or any provisions of Transfer of property Act, then it cannot affect any immovable property comprising therein.  In other words, conveyance, deed of gift  if it is not registered  then the property transfer is invalid.  Therefore such document if required to be compulsorily registered and even if it is executed but not registered it will not affect the immovable property or the rights therein.  The transferee or purchaser  will not get any rights in the said property.

Transfer of Property Act provides that certain documents need to be registered.  If such documents are not registered, then under Section 49 they will not affect any immovable property comprised in the said document.

Section 4 of the Maharashtra Ownership Flats (Regulation and Promotion of Construction, Sale, Management & Transfer) Act, 1963 provide that Agreement for sale of flat need to be registered.  Therefore, registration of the said document is necessary but the same is not required to be registered under the Registration Act or the Transfer of Property Act.  Therefore, the provisions of Section 49 of the Indian Registration Act will not apply to such an Agreement for Sale even if it is not registered.

Such documents are required to be registered with the Sub Registrar of Assurances appointed under the Indian Registration Act within whose jurisdiction the said immovable property is situated.  However, in case of Mumbai, Calcutta, Chennai and Delhi, the documents of any parts of India can be registered with the Sub Registrar of the said Cities.

The fees prescribed to be paid for registration of document is 1 per cent of the consideration and the maximum registration payable for any instrument is Rs.30,000/- in the State of Maharashtra.

 

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