The Indian Registration
Act, 1908 came into effect on the first day of January, 1909 extending to the
whole of India, except the state of Jammu and Kashmir.
The Registration Act
basically aims at giving certainty to the execution of documents and prevents
the operation of fraudulent and secret transactions that are likely to result
in a defective title. The Act specifies:
- The documents that are to be registered;
- How to register;
- Where to register; and
- The effects of registration/non-registration.
Bankers in their role of
disintermediation give different types of loans to different kinds of
clientele, and all against different kinds of securities. In this connection,
they handle innumerable title deeds pertaining to various properties either in
the form of equitable or simple mortgages. Perhaps, no other Act has got such an
influence on decision-making authorities in the bank as much as the
Registration Act, for it has got a greater say in deciding acceptance of
properties as securities for the monies lent, as also in creating effective
charges on the said properties – to ensure that the monies lent are returned.
Implications
of Registration
Registration of a
document admits its execution and gives notice to the world that such a
document has been executed. Such compulsory registration further ensures that
reliable and complete history of all transactions affecting the title to the
property is made available to the citizens at notified offices. Secondly, the
registration of a document indirectly establishes the fact of its compliance
with various statutory requirements such as:
· Provisions under Stamp Act (unless the document
is properly stamped, the registering authority is not supposed to accept it for
registration);
·
The Urban Land Ceiling Act (unless the document
is accompanied by necessary exemptions granted by the competent authority, the
Registrar is not supposed to register the documents);
·
Zonal requirements;
·
Tax liabilities, etc. (properties valued over a
certain cut-off limit cannot be registered, unless no objection certificate is
obtained from the Income Tax authorities).
Usually, every person
desirous of entering into a transaction relating to an immovable property takes
a look at the registration record to examine the change of title to the
property, to know the prior transactions and also the existing transaction
affecting the title to the property. Even if one does not do such a search, but
notices a transaction at a later date, the law imputes that he had knowledge of
the transaction. Incidentally, explanation for Section 3 of the Transfer of
Property Act, 1882 (T.P. Act) provides that, where any transaction relating to
immovable property is required by law to be and has been effected by a
registered instrument, any person acquiring such property shall be deemed to
have notice of such instrument as per the date of registration, provided that
the instrument has been registered and its registration completed in the manner
prescribed in the Registration Act.
Box 1: Lending Banks – Search Period
A lending banker
usually does a search in the records of the Registrar for a period of 30
years in order to trace all the transactions relating to the property under
reference and to establish the validity of the title being claimed by the
applicant for loan.
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The Registration Act
basically deals with documents but not with the transactions thereunder. It is,
however, a different matter that transactions relating to immovable property
would arise under the document and thus the transactions and documents are
inseparable. There are also certain transactions that are taking place and
completed without documents, say for example:
·
Equitable mortgage created by mere deposit of
title deeds; and
·
Partition
of HUF properties orally with no documents.
Box 2: Immovable Property and its Lease
Immovable property –
as per Section 2 (6) of the Transfer of Property Act – includes lands,
buildings, hereditary allowances, rights to ways, lights, ferries, fisheries
or any other benefit to arise out of land, and things attached to the earth
or permanently fastened to anything which is attached to the earth, but not
standing timber, growing crops nor grass.
A lease of immovable
property is a transfer of a right to enjoy such property made for a certain
time, expressed 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.
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In all such cases, where
there are no documents, the question of registration does not arise. But the
Registration Act states that where a document is employed to effectuate any of
the transactions specified in Section 17, such document must be registered
although the transaction is not required to be put in writing.
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