By Sri Y.SRINIVASA RAO, Principal Senior Civil Judge, Tirupati. —-
TABLE OF CONTENTS:
- Introduction
- Sale and Agreement of sale
- Whether a transaction is an out and out sale or mortgage?
- Agreement for re-conveyance and an agreement for conveyance
- Role of the Sub-Registrar (Registration)
- Procedure for registration of documents
- Procedure on admission and denial of execution
- Whether a person can nullify the sale by executing and registering a cancellation deed
Introduction:- The word ‘execution’ under the Indian Evidence Act means signing of the documents after knowing the contents thereof, Indian Standard Casting Co. (P) Ltd. v. Sati Rani Sen, (2001) 1 ICC 657 (Cal) (DB). It conveys the same meaning as ex sequi in Latin and executer in French i.e. carrying out some act or course of conduct to its completion, Hameed Joharan v. Abdul Salam, (2001) 7 SCC 573. Agreement of sale means an agreement entered into between the promoter and the allottee, under section Section 2(c), Real Estate (Regulation and Development) Act, 2016. Under section 54 of Transfer of Property Act, ‘‘Sale” is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. Sale how made.—3Such transfer, in the case of tangible immoveable 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. 1In the case of tangible immoveable 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 immoveable property takes place when the seller places the buyer, or such person as he directs, in possession of the property. Contract for sale.—A contract for the sale of immoveable 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 in or charge on such property.
Sale and Agreement of sale:- If transfer of property is in praesenti, it is called “sale”; but if transfer is to take place at a future time and subject to some conditions to be fulfilled subsequently, it is “agreement to sell”. “Agreement to sell” becomes effective when seller agrees to transfer property in goods to buyer for a price and such contract may either be absolute or conditional. When time in the agreement to sell lapses or conditions therein subject to which property in goods is to be transferred are fulfilled, said “agreement to sell” becomes a “sale”, Hyderabad Engg. Industries v. State of A.P., (2011) 4 SCC 705. Essential feature that distinguishes contract of sale from agreement to sell, is that in contract of sale, property in goods is transferred from seller to buyer immediately, whereas in agreement to sell, property is transferred on a future date/dates. Agreement to sell becomes sale on fulfilment of conditions provided therein or when time provided in agreement elapses, State of Uttaranchal v. Khurana Bros., (2010) 14 SCC 334.
Unregistered sale – Whether admissible in evidence:-
From the dicta laid down in the rulings of Radhomal Alumal v. K.B. Allah Baksh Khan Haji Muhammad Umar, AIR 1942 Sind. 27, Bondar Singh v. Nihal Singh, AIR 2003 SC 1905, A. Kishore v. G. Srinivasulu, (2004) SCC Online AP 386 and R. Suresh Babu v. G. Rajalingam, (2016) SCC Online 429, a sale deed of immovable property requiring registration but not registered can be used to show nature of possession.
Whether a transaction is an out and out sale or mortgage?
The real test is the intention of the parties. In order to constitute a “sale”, the parties must intend to transfer the ownership of the property and they must also intend that the price would be paid either in presenti or in future. The intention is to be gathered from the recital in the sale deed, conduct of the parties and the evidence on record.
“From the date on which possession has been delivered“- Interpretation.
It was on the recommendation of the Special Committee that the words “from the date on which possession has been delivered” were inserted into this clause by Section 17 of the Transfer of Property (Amendment) Act, 1929 (XX of 1929).
This clause obviously applies to a situation where the ownership in the property has passed to the buyer before the whole of the purchase money was paid to the seller or the vendor. What is contained in this clause is based on the English Doctrine of Equitable Lien as propounded by Baron Rolfe in Goode and Anr. v. Burton (1847) 74 RR 633 : 1 Ex. 189. This clause confers statutory recognition on the English Doctrine of Equitable Lien. As pointed out by the Privy Council in Webb and Anr. v. Macpherson 30 Indian Appeals 238, the statutory charge under this paragraph is inflexible. The charge does not entitle the seller to retain possession of the property as against the buyer but it positively gives him a right to enforce the charge by suit. (See: Venkataperumal NAIDU V. Rathnasabhapathi Chettair; Shobhalal Shyamlal Kunni v. Sidhelal Halkelal Bania AIR (1939) Nagpur 210 and Basalingayya Revanshiddappa v. Chinnaya Karibasappa, AIR (1932) Bombay 247).
The basic principle is that the form of transaction is not the final test and the true test is the intention of the parties in entering into the transaction. If the intention of the parties was that the transfer was by way of security, it would be a mortgage. The Privy Council as early as in Balkishen Das and Ors. v. Legge, 27 Indian Appeals 58, had laid down that, as between the parties to the document, the intention to treat the transaction as an out and out sale or as a mortgage has to be found out on a consideration of the contents of document in the light of surrounding circumstances. The decision of this Court in Bhaskar Woman Joshi v. Shrinarayan Rambilas Agarwal and P.L. Bapuswami v. N. Pattay Gounder are also to the same effect. See also. Vidhyadhar vs Manikrao & Anr. , 1999 (2) SCALE 93.
In N. Pattaya Gounder v. P.L. Bappusamy Gounder (supra) , wherein it was observed that the period fixed in the document is a condition precedent for the performance and after the expiry of the period, the right reserved itself is at an end. The period fixed for the deed is not the period of limitation prescribed to any suit.
Important points to remember:-
- Article 131 of Limitation Act is applicable to agreement of sale. K. Simrathmull v. Nanjalingaiah, AIR 1963 SC 1182.
- An agreement for repurchase differs an Agreement of sale . See also. AIR-1950 FC 38.
- In fact, no period of Limitation is fixed under the Limitation Act in respect of an agreement for repurchase.
- Agreement for repurchase is nothing but a concession or an option to contract.
Agreement for re-conveyance and an agreement for conveyance:-
As was pointed out in Babi Jaibunnissa v. Jagadesh Pandit, 1997 (2) LW- SC 257, in the matter of enforcement of the agreement or agreement of re-conveyance, time is not always the essence of the contract, unless the agreement specifically stipulates and there are special facts and circumstances in support there of. See also. Mangalam Pillai v. C.S. Appavu Udayar, AIR-1976 Mad. 360. In In all cases where the subject matter of the bargain is immovable property, the accepted rule is that even if the parties agree that such a contract should be performed within an agreed period of time, then such time would not be the essence of the contract. Further, it was held in Gowriammal @ Gowri v. V. Pechimuthu , relying on rulings reported in AIR-1963 SC 1182 and AIR 1950 FC 38, it was held that an agreement for re-conveyance is a privilege conferred on the original vendor and it is only a concession. Being a concession given to the plaintiff as per agreement of re-conveyance he ought to have come to Court to implement the agreement as it is. It is to be noted that An agreement to reconvey is also an agreement to sale. Time is not always the essence of the contract. Both are governed by same provision of law as was held in AIR 1963 SC 1182, AIR-1961 Mad. 276 and AIR-1976 Mad.360.
Role of the Sub-Registrar (Registration) :- The role of the Sub-Registrar (Registration) stands discharged, once the document is registered (see Raja Mohammad Amir Ahmad Khan (1962 SCR (1) 97). Section 17 of the Act of 1908 deals with documents which require compulsory registration. Extinguishment Deed is one such document referred to in Section 17 (1) (b) . Section 18 of the same Act deals with documents, registration whereof is optional. Section 20 of the Act deals with documents containing interlineations, blanks, erasures or alterations. Section 21 provides for description of property and maps or plans and Section 22 deals with the description of houses and land by reference to Government maps and surveys. There is no express provision in the Act of 1908 which empowers the Registrar to recall such registration. The fact whether the document was properly presented for registration cannot be reopened by the Registrar after its registration. The power to cancel the registration is a substantive matter. In absence of any express provision in that behalf, it is not open to assume that the Sub-Registrar (Registration) would be competent to cancel the registration of the documents in question. Similarly, the power of the Inspector General is limited to do superintendence of registration offices and make rules in that behalf. Even the Inspector General has no power to cancel the registration of any document which has already been registered. See. Satya Pal Anand vs State Of M.P., (2015) 15 SCC 263.
Procedure for registration of documents:-
The procedure for registration of documents is spelt out, inter alia, in part VI of the Act of 1908. Section 32 of the said Act reads thus:
PART VI OF PRESENTING DOCUMENTS FOR REGISTRATION
“32. Persons to present documents for registration.- Except in the cases mentioned in 24[ section 31 , 88, and 89 ], every document to be registered under this Act, whether such registration be compulsory or optional, shall be presented at the proper registration office by some person executing or claiming under the same, or, in the case of a copy of a decree or order, claiming under the decree or order, or by the representative or assignee of such a person, or
(c) by the agent of such a person, representative or assign, duly authorised by power-of-attorney executed and authenticated in manner hereinafter mentioned.”
If the document is required to be compulsorily registered, but while doing so some irregularity creeps in, that, by itself, cannot result in a fraudulent action of the State Authority. Non-presence of the other party to the Extinguishment Deed presented by the Society before the Registering Officer by no standard can be said to be a fraudulent action per se. The fact whether that was done deceitly to cause loss and harm to the other party to the Deed, is a question of fact which must be pleaded and proved by the party making such allegation. That fact cannot be presumed. Suffice it to observe that since the provisions in the Act of 1908 enables the Registering Officer to register the documents presented for registration by one party and execution thereof to be admitted or denied by the other party thereafter, it is unfathomable as to how the registration of the document by following procedure specified in the Act of 1908 can be said to be fraudulent. As aforementioned, some irregularity in the procedure committed during the registration process would not lead to a fraudulent execution and registration of the document, but a case of mere irregularity. In either case, the party aggrieved by such registration of document is free to challenge its validity before the Civil Court. See. Satya Pal Anand vs State Of M.P. (supra).
That provision (Section 34 of the Act) stipulates the enquiry to be done by the Registering Officer before registration of the document. The same reads thus:
“34. Enquiry before registration by registering officer.- (1) Subject to the provisions contained in this Part and in sections 41, 43, 45, 69, 75, 77, 88 and 89 , no document shall be registered under this Act, unless the person executing such document, or their representatives, assigns or agents authorised as aforesaid, appear before the registering officer within the time allowed for presentation under sections 23, 24, 25 and 26:
PROVIDED that, if owing to urgent necessity or unavoidable accident all such persons do not so appear, the Registrar, in cases where the delay in appearing does not exceed four months, may direct that on payment of a fine not exceeding ten times the amount of the proper registration fee, in addition to the fine, if any, payable under section 25, the document may be registered.
(2) Appearances under sub-section (l) may be simultaneous or at different times.
(3) The registering officer shall thereupon-
(a) enquire whether or not such document was executed by the person by whom it purports to have been executed;
(b) satisfy himself as to the identity of the persons appearing before him and alleging that they have executed the document; and
(c) in the case of any person appearing as a representative, assignee or agent, satisfy himself of the right of such person so to appear.
(4) Any application for a direction under the proviso to sub-section (1) may be lodged with a Sub-Registrar, who shall forthwith forward it to the Registrar to whom he is subordinate.
(5) Nothing in this section applies to copies of decrees or orders.” Even this provision does not require presence of both parties to the document when presented for registration before the Registering Officer. Section 35 of the Act of 1908 provides for procedure of admission or denial of execution respectively. The same reads thus:
Procedure on admission and denial of execution:-
35. Procedure on admission and denial of execution respectively (1) (a) If all the persons executing the document appear personally before the registering officer and are personally known to him, or if he be otherwise satisfied that they are the persons they represent themselves to be, and if they all admit the execution of the document, or
(b) If in the case of any person appearing by a representative, assignee or agent, such representative, assignee or agent admits the execution, or
(c) If the person executing the document is dead, and his representative or assignee appears before the registering officer and admits the execution, the registering officer shall register the document as directed in sections 58 to 61, inclusive.
(2) The registering officer may, in order to satisfy himself that the persons appearing before him are the persons they represent themselves to be, or for any other purpose contemplated by this Act, examine any one present in his office.
(3)(a) If any person by whom the document purports to be executed denies its execution, or
(b) if any such person appears to the registering officer to be a minor, an idiot or a lunatic, or
(c) if any person by whom the document purports to be executed is dead, and his representative or assignee denies its execution, the registering officer shall refuse to register the document as to the person so denying, appearing or dead:
PROVIDED that, where such officer is a Registrar, he shall follow the procedure prescribed in Part XII:
28 [PROVIDED FURTHER that the State Government may, by notification in the Official Gazette, declare that any Sub-Registrar named in the notification shall, in respect of documents the execution of which is denied, be deemed to be a Registrar for the purposes of this sub-section and of Part XII. ]” Section 36 of the Act of 1908 provides for procedure when appearance of the executant or witness is insisted upon. The same reads thus:
PART VII OF ENFORCING THE APPEARANCE OF EXECUTANTS AND WITNESSES “36. Procedure where appearance of executant or witness is desired.-If any person presenting any document for registration or claiming under any document, which is capable of being so presented, desires the appearance of any person whose presence or testimony is necessary for the registration of such document, the registering officer may, in his discretion, call upon such officer or court as the State Government directs in this behalf to issue a summons requiring him to appear at the registration-office, either in person or by duly authorised agent, as in the summons may be mentioned, and at a time named therein.”
Whether a person can nullify the sale by executing and registering a cancellation deed:-
The Andhra Pradesh High Court, in the case of Yanala Malleshwari (supra) was called upon to consider whether a person can nullify the sale by executing and registering a cancellation deed and whether the Registering Officer like District Registrar and/or Sub-Registrar appointed by the State Government is bound to refuse registration when a cancellation deed is presented. The fact remains that if the stipulation contained in Section 17 and 18 of the Act of 1908 are fulfilled, the Registering Officer is bound to register the document. The Registering Officer can refuse to register a document only in situations mentioned in Sections such as 19 to 22, 32 and 35. At the same time, once the document is registered, it is not open to the Registering Officer to cancel that registration even if his attention is invited to some irregularity committed during the registration of the document. The aggrieved party can challenge the registration and validity of the document before the Civil Court. The majority view of the Full Bench was that if a person is aggrieved by the Extinguishment Deed or its registration, his remedy is to seek appropriate relief in the Civil Court and a Writ Petition is not the proper remedy.
In Satyapal Anand’s case (supra), it was held that Section 35 of the Act does not confer a quasi-judicial power on the Registering Authority. The Registering Officer is expected to reassure that the document to be registered is accompanied by supporting documents. He is not expected to evaluate the title or irregularity in the document as such. The examination to be done by him is incidental, to ascertain that there is no violation of provisions of the Act of 1908. In the case of Park View Enterprises (supra) it has been observed that the function of the Registering Officer is purely administrative and not quasi-judicial. He cannot decide as to whether a document presented for registration is executed by person having title, as mentioned in the instrument.
Rule 26(i)(k) relating to Andhra Pradesh under Section 69 of the Registration Act.
Rule 26(i)(k) relating to Andhra Pradesh under Section 69 of the Registration Act, which states:
“(i) The registering officer shall ensure at the time of preparation for registration of cancellation deeds of previously registered deed of conveyances on sale before him that such cancellation deeds are executed by all the executant and claimant parties to the previously registered conveyance on sale and that such cancellation deed is accompanied by a declaration showing natural consent or orders of a competent civil or High Court or State or Central Government annulling the transaction contained in the previously registered deed of conveyance on sale:
Provided that the registering officer shall dispense with the execution of cancellation deeds by executant and claimant parties to the previously registered deeds of conveyances on sale before him if the cancellation deed is executed by a Civil Judge or a Government Officer competent to execute Government orders declaring the properties contained in the previously registered conveyance on sale to be Government or Assigned or Endowment lands or properties not register able by any provision of law.
A reading of the above rule also supports the observations we have made above. It is only when a sale deed is cancelled by a competent Court that the cancellation deed can be registered and that too after notice to the concerned parties. In this case, neither is there any declaration by a competent Court nor was there any notice to the parties. Hence, this rule also makes it clear that both the cancellation deed as well as registration thereof were wholly void and non est and meaningless transactions.”