Maximum civil litigation in India courts is generated because of disputes relating to immovable property. Some cases are based on breach of contract of transfer of property. The provisions relating to transfer of property are mainly governed by the Transfer of Property Act, 1882 and the Registration Act, 1908. Though, we can not overlook the constitutional provision relating to property. Under Article 300A of the Constitution of India, no person shall be deprived of his property save by the authority of law. The Supreme Court of India had observed that the right to property is a human right as well as a constitutional right. The case of Indian Handicrafts Emporium v. Union of India, reported in AIR 2003 SC 3240 should be referred to in this regard.
Statutory provisions related to transfer
It is notable that for the recognition of right to property, certain important provisions in statutes are made by the legislature. These are as follows:
The Transfer of Property Act, 1882
Section 54 of this Act deals with the ‘Sale’ and prescribes “sale how made.” According to this provision, any such 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 value less than one hundred rupees, such transfer may be made either by a registered instrument or by the 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.
The Registration Act, 1908
Section 17 of this Act directs that the registration of certain documents relating to immovable property is compulsory in certain cases. The said documents are:
- An instrument of gift deed of immovable property;
- Any other non-testamentary instrument which purports or operates to create, declare, assign, limit or extinguish any right, title or interest of the immovable property of the value of one hundred rupees and upwards;
- Lease of the immovable property for any term exceeding one year;
- Non-testamentary instrument transferring or assigning any decree or order of a Court or any award which purports or operates to create, declare, assign, limit or extinguish any right, title or interest of the immovable property of the value of one hundred rupees and upwards;
- Any document which purports or operates to affect any contract for sale of any immovable property. This is a Local amendment of Madhya Pradesh with effect from 14.01.2010.
- Power of attorney relating to sale of immovable property in any way. This is a Local amendment of Madhya Pradesh with effect from 14.01.2010.
Law commission’s recommendations
The Law Commission of India, in its report No. 221 of 2009 on “Need for Speedy Justice – Some Suggestions” had made recommendation with respect to sale of immovable property in the following words:
“Para 2.16 When a person purchases immovable property, the sale deed is required to be registered. Normally, the vendor and the vendee show case transaction for sale consideration and an endorsement is also made by the Registrar/ Sub-Registrar to the effect. But when a person has to play a foul game, the major portion of the sale considerations shown to have been paid outside and not before the Registrar/Sub-Registrar and it gives rise to unnecessary litigation, both criminal and civil. With the vast network of Banks and the growing awareness amongst the common people, a time has come to make it mandatory that the consideration for the every sale shall be paid through Bank Draft. This will check frivolous transactions as well unnecessary litigation.”
It is highly surprising that the Central Government i.e. Ministry of Law and Justice, Government of India did not appreciate the report. Resultantly, an important revision in the Transfer of Property Act, 1882 is still pending and has not received any attention of the Parliament.
Amendment needs to prevent corruption
It is pertinent to note that an amendment based on the aforesaid recommendation by the Law Commission could carry out an important role to fight against corruption and prevent offences like “Money Laundering and Income Tax Evasion”. It is well known that the investment in immovable property is very common. It is equally known that cash payment of consideration is a common practice for tax evasion. The report ‘Black Money in the Real Estate Sector: A Study’ by National Institute of Public Finance and Policy made some stark revelations on tax evasion and the prevalent corruption in the real estate sector in India. To an extent, section 40A (3) of Income Tax Act, 1961, directs the disallowance of business expenditure incurred during the course of business or profession in respect of which payment in a sum exceeding rupees 20,000/- is made otherwise than by an account payee cheque drawn on a bank or account payee draft. However, this statutory provision has a limited impact. If the recommendation made by the Law Commission of India is effected, the transactions relating to immovable property shall be transparent and to a extremely great extent, corruption free.