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Thursday, June 12, 2014

Registration Act and the Banker —III: Registration procedure

The Act provides for a detailed procedure for lodgement of the documents for registration, and their registration is subject to compliance with several provisions under various sections. The procedure is grouped under the following heads for an easier and better understanding of the same:
  •          Execution of documents
  •          Presentation of documents
  •          Time for presentation
  •          Place of presentation for registration
  •          Presentation by whom
  •          Admission of execution
  •          Time for appearance for admission
  •          Appearance by whom.
1. Time of Presentation
A document has to be presented for registration within four months from the date of its execution (Section 23). In case of a court decree or order, it can be presented within four months from the day on which it is made. If the decree/order is appealable, it must be presented for registration within four months from the day on which it became final.

Section 25 provides an exception to this rule. It states, “wherever documents not presented within the stipulated period of 4 months owing to unavoidable accidents, etc., may be accepted for registration by the Registrar, upon payment of a fine not exceeding ten times the normal registration fee provided, the delay in presentation is not exceeding 8 months from the date of its execution/from the date on which the decree/order has become final.”

It is imperative from the provisions that the Registrar has no authority to register a document presented after the expiry of prescribed period and hence, even if he registers, it becomes void.

If the mortgage deed is executed by 3-4 persons at different times, the document may be presented for registration and re-registration within four months from the date of each execution (Section 24).

Section 23-A also provides for re-registration of a document but under a different situation. Presume a document was presented for registration by a person not duly empowered to present it, and the Registrar, in turn, registered it. Even then, in the eyes of the law, this registration is void. Under such circumstances, Section 23-A provides for re-registration of such documents if presented for registration by the claimant of the document within four months from his first becoming aware that the registration of the document is invalid. In the case of documents executed out of India, the Registrar has been given certain discretionary powers to accept such documents for registration though presented for registration beyond four months from the date of execution subject to:
·         The presentation of documents within four months after its arrival in India, and
·         Upon payment of proper fee.

A will is however, not subjected to these provisions, i.e., it can be submitted for registration even after the lapse of the prescribed four months.

Box 5: Registration of Will
A will may be presented [Section 40 (i)] for registration either by the testator himself or, on his death, by an executor or otherwise under the will to any Registrar/Sub-Registrar for registration. Similarly, upon presentation of a will by the testator for registration, it may be registered in the same manner as any other instruments [Section 41 (i)]. Whenever a will is presented by other than the testator, the Registering Officer may register it provided he is satisfied that:
·       The will was executed by the testator, and
·    The testator is dead and the person presenting the will is entitled to present the same[Section 41 (ii)]
As provided in Section 42, the testator may, either personally or by duly authorised agent, deposit his will in a sealed envelope superscribed with the  name of the testator and that of his agent, if any, and with the nature of the document. On receiving the sealed envelope, the Registrar, upon his satisfaction about the person presenting the envelope, shall transcribe in his Register Book No.5 the superscription aforesaid, and shall note in the same book and on the said envelope the year, month, day, and hour of such presentation and receipt, and the names of any persons who may testify to the identity of the testator or his agent. The Registrar shall then place and retain the sealed envelope in his fireproof box (Section 42). If a testator desires to withdraw the deposited envelope, he may apply to the Registrar, upon which the Registrar shall deliver the envelope, after satisfying himself as to whether the applicant is the actual testator or his agent (Section 44).On the death of a testator, who has deposited a sealed envelope with a Registrar, an application can be made to the Registrar to open the envelope and copy the contents thereof into his Book No.3; and the Registrar shall comply with such request, provided he is satisfied that the testator is dead (Section 45).

2. Place of Registration
Documents relating to immovable property should be presented for registration in the Office of the Sub-Registrar within whose sub-district the whole or some portion of the property mentioned in the document is situated (Section 28).

Lending bankers often prefer to get such mortgage deeds registered in the Registrar’s offices located in close proximity to them for obvious advantages.

Documents other than relating to immovable property may be presented for registration in the Office of the Sub-Registrar in whose sub-district the document was executed, or any Sub-Registrar’s office located in the state, where all the executants and claimants thereunder desire/intend the same to be registered (Section 29).

In the ordinary course of business, all the documents for registration must be presented at the office of the officer authorized to accept such documents for registration. But in exceptional cases, upon showing a special cause, the officer may accept the documents for registration at the residence of any person desiring to present it for registration (Section 31).

3. Persons Entitled to Present Documents for Registration
Section 32 of the Act states that the following persons are entitled to present the documents for registration at the proper registration office except in situations described under sections 31, 88, and 89:
1.       The person(s) executing or claiming under the document to be registered;
2.      A representative or assignee of such a person;
3.      An agent or representative of such a person, or an assignee through a Power of Attorney;
4.      The testator or, on his death, his executor; and
5.      The donor or, after his death, the donee.

3.1. Executant and Claimant
Executant is a person who not only signs a document but also undertakes an obligation thereunder. Claimant is the person who is entitled to the benefits of the document. Presentation of documents for registration by them is always valid. In the event of there being more than one claimant or executant, any one of them may validly present the document for registration. A minor, claiming under the document, can also present it for its registration.

3.2. Representative or Assignee
Section 2 (10) defines a Representative. It is construed as a legal personal representative excluding an agent. It includes the guardian of a minor and the committee or other legal curator of an insane person. A husband has been identified as a representative to present documents executed by his wife.

3.3. Power of Attorney Holder
An agent, to be eligible for presentation of a document or registration, should be duly authorised by a Power of Attorney and such Power of Attorney should have been executed and authenticated on the lines of section 33.

Box 6: Principal and Agent Legal Implications
An agent, to be eligible for presenting a document for registration and appear for admission of execution before a registering officer, should be duly authorised by a power of attorney executed and authenticated as per the norms prescribed under Section 33. The norms are as under:

A principal residing in India where this Act is in force may execute the power of attorney before and get it authenticated by the Registrar or Sub-Registrar within whose jurisdiction the principal resides.

If, at the time of execution, the principal resides in a part of India where the Act is not applicable, he may execute the power of attorney before and get it authenticated by any Magistrate.If at the time of execution of such power of attorney the principal does not reside in India, he may execute the power of attorney before and get it authenticated by a Notary Public, any Court, Judge, Magistrate, Indian Counsel, Vice Counsel, or the Representative of the Central Government.

The principal may be exempted from presenting himself physically before the registering officer for the purpose of executing the power of attorney in cases where the persons cannot present themselves due to bodily infirmity, inability to attend due to factors beyond their control, imprisonment, and legal exemption from personal presence.

With regard to the execution of documents, their presentation for registration, and physical presence before a registering officer by an agent, the following points merit consideration:
·     Execution of a document, its presentation for registration, and presenting oneself before a registering officer to admit execution are three independent acts.
·        An agent may be authorised to do all or any of these acts.
·      To authorise a person as agent only for execution of document, the power of attorney need not be executed in terms of Section 33.
·        An agent, by virtue of his executing a document, becomes an executant. And in the capacity of executant he is entitled to present the document for registration and its execution. In such cases, the provisions of Section 33 are not attracted.
·         As execution by agent is execution by principal. So the principal continues to have the right of presenting a document for registration and admitting its execution even though the deed was executed by his agent. For example, a document executed by Ram (as agent of the principal – Krishna Mohan) can be presented for registration and admission of its execution by Mohan. But, in such cases, the principal has to execute a power of attorney in favour of Ram on the lines of Section 33.

4. Admission of Execution
It means admitting the fact of entering into an obligation under the document besides admitting to having signed it. To establish this fact, the executant has to appear before the registering authority and admit to having undertaken an obligation besides signing the document.

5. Time for Appearance for Admission
Section 34(1) of the Act states: “No document shall be registered unless the person appears before the registering officer within the time allowed for presentation of a document for registration.”

However, if owing to urgent necessity or unavoidable accident, the person does not so appear, the Registrar may direct a document for registration, provided the delay in appearing does not exceed four months and on payment of prescribed fine. The amount of fine cannot exceed ten times the amount of proper registration. This fee is, of course, in addition to what has been levied under Section 25 for extending the period by four months for the presentation of document for registration.

It is to be noted that the maximum period for presentation of documents for registration is eight months (four months form the date of execution of the document originally provided for under Section 23 plus an extension of four months granted under Section 25). The maximum period for appearance for admission is 12 months (Sections 23, 25, and 34).

6. Appearance by Whom
According to Section 34(1) persons executing the document or their representatives, assignees, or agents are authorised to appear before a registering officer, for admitting its execution. 
On Appearance before the Sub-Registrar, an executant, or his representative or agent, may either admit execution or deny it. Again, mere admission of signing the document is not sufficient. He has also to admit to having undertaken the obligation. In situations like where an executant says that he has signed the mortgage deed, while the documents presented for registration is a sale deed, or states that he signed a blank document but it has been filled up otherwise than agreed for, there cannot be an admission of execution, rather it is a denial. In all such situations, the registering officer has no authority to register the document. Where execution is admitted by some of the executants, the Registrar may register the documents as against them (Section 35(3)). 
On proper admission of execution and making requisite enquiry, the registering officer is duty bound to register the document.

7. Grounds for Refusal of Registration (Section 35)
Registration of a document can be refused by the Registrar:
  • If any of the persons, by whom the document purports to be executed, denies the execution;
  • If any such person appears to the registering officer to be a minor, or insane; and
  • If any person, by whom the document purports to be executed, is dead and the representative or assignee denies its execution.
8. Effects of Registration
A registered document shall operate from the date on which it is executed but not from the date of registration (Section 47). Registration only lends validity which would date back to the time when it was made to be operative.

M/s. Motilal executed a mortgage deed in favour of Bank of India say on 10.06.1998. This deed was registered on 20.07.1998. The mortgage deed becomes operative with effect from 10.06.1998, i.e., its date of execution.

Suppose, a mortgage deed was executed in favour of bank on 08.05.1998, and it was registered on 07.07.1998. In the meanwhile, the borrower sold the property vide a sale deed dated 25.05.1998 and the document was registered on 27.05.1998. Even in the circumstances of this nature, the mortgage deed that was executed on 08.05.1998 stands in priority over the sale deed (though registered subsequently).

According to Section 48, all non-testamentary documents duly registered and relating to either movable or immovable properties, shall take effect against any oral agreement or declaration relating to such property. However, this has got two exceptions:

One exception is that oral agreement would take effect against the registered document if it satisfies the following two conditions:
  • The agreement or declaration has been accompanied or followed by delivery of possession; and
  • The same constitutes a valid transfer under any law for the time being in force.
The second exception is with regard to equitable mortgages. It says that “a mortgage by deposit of title deeds as defined in Section 58 of Transfer of Property Act 1882 shall take effect against any mortgage deed subsequently executed and registered, which relates to the same property”.
Assume, M/s. Batliwala created an equitable mortgage on 10.05.1998 by depositing the title deeds pertaining to their factory properties to secure a working capital limit granted by Bank of India. Subsequently, on 20.07.1998, the company sold the properties to M/s. Kantawala & Sons, executed a sale deed, and the same was registered on 25.07.1998.

As per the provisions of Section 48, the equitable mortgage created on 10.05.1998, though not registered, stands in priority over the sale deed registered on 25.07.1998. In effect, the buyer would be acquiring the property along with its mortgage charges. It is in this context that it is of paramount importance to insist on submission of original title deeds to property by a lending banker before accepting a property as security for a loan.

9. Effects of Non-Registration
Section 49 of the Act states that no document required by Section 17 or by the provision of the T.P. Act, to be registered shall: affect any immovable property comprised therein; 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. Let us now take a close look at the effect of these provisions:
·      “Shall not affect the immovable property” – It means the documents do not bring into effect the transaction which is intended to be brought out by executing the document. We have earlier seen that a document affects the immovable property when it operates to create, declare, assign, limit or extinguish a right, title or interest in the immovable property. So, when the document is not registered (by virtue of this provision), it cannot have the effect of creating, declaring, assigning, limiting or extinguishing a right, title or interest in the property, and therefore, it does not affect the property.
·  “Document cannot be received as an evidence” – It means reception of an unregistered document as evidence of the transaction affecting the property, is prohibited. This, in turn,  means that, though there is a mortgage deed because it is not registered (by virtue of Section 49), there would be no proof of the terms of mortgage that is admissible as evidence before the court. It does not, however, mean that the transaction itself is void, for the transaction exists independent of the document.
By virtue of proviso to Section 49, an unregistered document may be received as evidence in the following situations:
  •   As evidence in a suit for specific performance under the Specific Relief Act
Suppose, Vinod executed a mortgage deed in favour of a bank and the bank failed to get it registered in the prescribed time limit. In the meanwhile, relations became sour. In such circumstances, the bank filed a petition for a specific performance of a contract to register the mortgage deed. In such a suit, the mortgagee may show from the unregistered mortgage deed that an agreement to create a mortgage was actually reached. Here, it can be admitted as evidence of the contract to create a mortgage though it is not admissible being unregistered in proving the very mortgage itself.
  •  As evidence of part performance of a contract for the purposes of Section 53 A of the T.P. Act
Section 53A of the T.P. Act empowers a person in possession of property to resist dispossession if he holds it under an unregistered contract or deal. In such situations, the possessor, in defence of part performance may rely on the unregistered sale deed, and in such circumstances, it is admissible as evidence, though not registered, for proving the nature of possession.
  •  As evidence of any collateral transaction not required to be effected by registered instruments
Suppose, a mortgage deed has been executed to secure a loan received from a bank but it has remained unregistered. Here, though it cannot be admitted to prove the mortgage itself, it can still be used to prove the relationship between the mortgagor and mortgagee, lender and borrower with reference to recitals in the deed to prove the handwriting of the person, receipt of consideration, etc.

10. Registered vs. Unregistered Document
As per the provisions under Section 50 of the Act, a registered document is entitled to priority over an unregistered document. However, the following instances could be an exception:
  • Where the unregistered document relating to the same property is a decree or order;
  • In the case of unregistered leases, which are exempted from compulsory registration under the proviso to sub-section (1) of section 17;
  • In the case of unregistered documents which are exempted from registration under Section 17(2);
  • Where the registered document has no priority under the law in force when the Registration Act came into force; and
  • Where the subsequent transferee under the registered document has actual notice of the previous unregistered document of which registration is optional.
 11. Certificate of Registration
Upon compliance of the provisions under Sections 34, 35, 58, and 59 as applicable to any documents presented for registration, the registering officer shall endorse on the document, a certificate containing the word “Registered “, together with the number and page of the book on which the document has been copied. Such certificate shall be signed, sealed, and dated by the registering officer. It shall then be admissible for the purpose of proving that the document has been duly registered in the prescribed manner and the facts mentioned in the documents have occurred as mentioned therein (Section 60).


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