By Harshit Dusad, ITM University Law School, Gurgaon
“Editor’s Note: The Registration Act, 1908 was enacted to enable easy registration of property, which in turn would prevent property frauds from occurring. Unfortunately, due to a large number of loopholes in the law, sham transactions are easy to get away with. This is more prevalent in the North Indian states, as the registration rules of these states tend to be complex and cumbersome. It is the need of the hour to identify these problems and bring clarity to the execution process of the Registration Act, so as to prevent buyers from falling into the trap of dishonest sellers.”
‘A couple came to the Times Property offices recently. A few years ago, they had invested in an under construction building after checking the antecedents of the developer, who, after luring a few investors, did the vanishing act. Now all the investors have come together and are trying to construct the building themselves. But a new difficulty has cropped up. Another person is claiming the title over that property and is refusing to allow the construction to proceed.’-“The Risk Factor” (Published in the Economic Times, Date: Sep 3, 2005)
Laws relating to properties, whether movable or immovable, have been prominent in Indian legal jurisprudence since the British era. These laws include Transfer of Property Act, Sales of Goods Act, The Registration Act, Stamps Acts which differ from state to state etc. These laws are important as they lay down the procedures relating to sale or transfer of a property by any means, Registration procedure relating to the property enquiries as to registration relating to any property etc. The basic aim behind enactment of these laws was to create a proper mechanism so that registration and transfer of such properties can be done conveniently and further to check that whether a property belongs to a particular person or not. But today such aim is not being achieved. For government, these acts serve as a source of revenue. The government purpose is solved but for general public’s purpose, there are several loopholes that are not allowing the accomplishment of such purpose.
In this research paper, I would like to show such loopholes in relation to the Registration Rules prevailing in the North Indian States which are not providing an adequate procedure through which may be ascertained that who is the rightful owner of any property or it may be ascertained that a person holds which property. Further I would also be talking about the lack of territorial jurisdiction of the Sub-Registrars in these states which makes it really difficult for a person to initiate Search of title of any given property.
These loopholes are deterrent to the whole and sole purpose of the Registration Act, 1908 which is to give notice to public at large that such a document has been executed. These rules are so complex that public is not able to get notice of execution of such documents as the procedure mentioned is very complex and illogical. Therefore there is a need to amend all such rules which are leading to such failure. Further I would also be comparing these Registration Rules with those prevailing in other States such as West Bengal and Karnataka in context of the search procedure adopted by these states.
This is a very common scenario in many property transactions that take place in north Indian states. A big number of cases have been registered where a person has sold his property multiple times by making a fabricated title deed (known as Patta or Khasra). In a recent case, it was found that a person has made 5 copies of the title deed of his land and he took a huge loan from 5 different banks by mortgaging these title deeds to each bank. In another case, there was a dispute over ownership of a land between 2 persons who had bought this land from different persons. It was found in this case that the original owner had sold this land to 2 different persons and afterwards such land was being resold by both persons and such chain continued for 3-4 times. All these cases depict the failure of the sole purpose of the Registration Act which is to provide a method of public registration of documents so as to give information to people regarding legal rights and obligations arising or affecting a particular property, and to perpetuate documents which may afterwards by legal importance, and also prevent fraud.[i]
The provisions of the Registration Act, 1908 are the basic lines on which each state form its own state registration rules which describes the main process by which the registration act is to be implemented in such state. The problem in the execution of the act in the north Indian regions starts from this point where the state form its rules as per its own convenience but these rules are really not followed. Say for instance, S. 57 of the Registration Act very clearly states that Indexes related to Book No. 1 should always be open for inspection by any person applying thereto and Rule 60 of Rajasthan State Rules also state the maintenance of Index No. 1 but in reality, these indexes have been discontinued and are not being prepared since 2003. Therefore, things like this are very much responsible for the failure of the Registration Act, 1908.
PROCEDURE FOR TITLE SEARCH: THE REAL LOOPHOLE
For ascertaining that who the owner of a particular property is or checking that whether a person is the owner of a given property or not, the Registration Act, 1908 has introduced the procedure for actual search. A search report traces the history of a property – who was the original owner of the property and how it has moved hands over a period of time before reaching the present seller. A title certificate, which is issued after the completion of the search procedure, states whether the property is unencumbered and has a clear marketable title.
A clear and marketable title means the seller should be genuine and the actual owner of the property. Further, the property should not be under any dispute or litigation. A search report traces this history of a property. In many cases, the lending bank has its own advocate who specialises in this exercise. The report acts as a security for the purchase of a property. It gives comfort to the purchaser that the title of the property he is planning to purchase is good and he will not face any problems at a later stage due to some pre-existing charges or encumbrance, or legal dispute on the property. A search report gives a buyer the confidence that he is undertaking a transaction with a genuine party.
So we can very easily understand that how important is the concept of title search for the purpose of execution of the Registration Act. But in the North-Indian States, there are a lot of loopholes in the search procedure itself which makes it really difficult for people to ascertain that they are actually entering into a genuine transaction or not. It is because of the following reasons:
The complexity in Search Procedure
The search procedure is itself very complex. In the states like Rajasthan, Delhi, Madhya Pradesh etc., if a person wants to conduct any title search of a property, he has to provide every details such as the details of the property, name of the owner, year or years in which the search is sought, the volume no., date of registration etc. Providing all these details is not really possible which stops people from getting the true search results.
Further, a person can’t ascertain the owner of any given property or ascertain that whether a person holds any property or not if he is not able to furnish all the details. It acts as a hindrance in execution of the Registration Act as the act makes all registered documents, a public document but it is very unfortunate that the general public can’t investigate into such public documents without furnishing all the details.
Lack of Territorial Jurisdiction
Another problem in the registration rules of the north Indian states is that it does not provide for territorial jurisdiction of registrars or sub registrars. Therefore a person may get his property registered in any registrar’s or sub registrar’s office situated in a district. It creates a possibility of dual registration of a property, i.e. a property may be registered twice in different offices. Further, it also makes difficult for the people to conduct search as they have to conduct title search at all the registrar or sub registrar offices in order to get a result. This creates a reason for inconvenience for such people.
No Encumbrance Certificate
An encumbrance certificate is evidence that the property in question is free from any monetary and legal liabilities. It is evidence that the property can be sold as a free title and the ownership will come to you without any associated baggage. This is a document that a person will be able to procure from the registration authority’s office. It is an assurance that the property in which a person is about to invest in is clear of any legal dues and has a marketable title.
But in the north Indian states, the registration authorities don’t even issue such certificate. Therefore people can’t get any information regarding the marketable title of any given property without conducting title search which is itself a procedure full of loopholes in these areas. This clearly serves as an instance which altogether fails whole and sole purpose of the Registration Act, 1908.
COMPARISON WITH RULES OF OTHER STATES
Following are some points of comparison with the Registration Rules of other States:
- The search procedure is not so complex. For example, the West Bengal Registration Rules lay down that a person may conduct a title search of any property irrespective of whether he knows the details of the real owner of such property or not.
- Rule 62 of Karnataka Land Revenue Rules, 1996 has made it compulsory to computerise all the records. Therefore the Karnataka Government has created a different server altogether for this purpose which makes it very easy for people to conduct title search of any property. For this, they just need to fill in some details online and they can get the required information. But in the case of north Indian states, there is no such case. Computerisation of records on such server is merely a dream.
- Rules 140-155 of the Andhra Pradesh State Rules states about Certificate of Encumbrance. It lays down a complete procedure for obtaining such certificate but in the rules of north Indian states, such concept is not even the present.
- There is a proper maintenance of Index No. 1 in states like Tamil Nadu, Karnataka, West Bengal etc. But when we look after the states like Rajasthan, we find that at present, such index is not even prepared. Hence also leads to failure of the Registration Act, 1908.
Though the procedure of Actual search is a part of the Registration Act, 1908 and its state rules but failure in proper execution of this process leads to the failure of the whole and sole purpose of the Act itself as there is no need of this act if people are not able to get proper details of the documents registered under this act. If after the implementation of state rules also, there are cases in which people witness that a person has multiple registration certificates of an immovable property, then it shows that there is some loophole in the act and there is a need of an amendment of such rules. Also certain provisions, that may provide some guidelines on which a state should make its registration rules, can also be added to the present Registration Act. This will help in creating a proper machinery by which there would be a proper implementation of the Registration Act and the purpose for which the act was created would be served.
Edited by Sinjini Majumdar
[i] Malik’s Commentary on The Registration Act 1908, 2nd Edn., Delhi Law House