Registration of Contracts

This present article has been written by Pritha Bhowmik during her internship in LeDroit India.

Contract isn’t just an associate degree agreement between two parties promising to perform an associate degree act, but rather it is a legally binding agreement that generates rights and obligations that may be implemented by legal action within the courts. And, this action denotes
the registration of contracts.
Registration is completed when the parties to the contract execute the document to be registered.
Though all contracts are compulsorily agreements but all agreements are not deemed to be contracts. An agreement so as to be a legitimate contract ought to be registered with the Sub-Registrar of Assurance beneath the provisions of the Indian Registration Act, 1908 at an interval of four months from the date of execution of the document.


PROCESS CONCERNING REGISTRATION OF CONTRACTS:
After the registration of an agreement, the Sub-Registrar verifies the document to determine its lawfulness and checks to confirm the payment of the total stamp duty. In his presence, the parties that have executed the document are summoned to admit that they have registered the aforesaid
document. Such parties are then personally identified by two independent witnesses. All the parties and witnesses are again made to sign before the Sub-registrar in a further page hooked up to the document so as to re-confirm the registration.
Parties to the document are photographed and their thumb impressions are taken and such photographs and thumb impressions are pasted on extra pages that are hooked to the document.

The Sub-Registrar then puts his official seal on each page and puts a unique numbering list on each page of the document including the extra ones. On the last page, he then signs the document as being registered. He records the contents of the document, together with the extra pages, either by photocopying the content or by scanning the content of the document. The photocopy or scanned image is for good maintained by him in his records so in future whenever a replica of the document is needed it can be obtained. Also, that document becomes a public document, which
anybody can inspect by paying the requisite inspection fees.
After taking a complete check of the document, as mentioned above, on the record and after completing the above formalities the original document is returned to the party presenting the document for registration. This completes the process.


DOCUMENTS WHICH REQUIRES COMPULSORY REGISTRATION:
Following documents must be registered-
• Instruments of gift of immovable property under Section 17(1)(a) of the Registration act,
1908
• Instruments under section 17(1)(b)
• Receipt of consideration under 17(1)(c)
• Leases under Section 17(1)(d)
• Transfer of decree, order or award of court under section 17(1)(e)
• Authority to adopt a son under section 17(3).

  1. Gift of immovable property: U/S 17(1)(a)
    By virtue of section 17(1)(a) the instrument of gift of an immoveable property is a mandatorily register-able instrument. Such deed having not been registered, cannot de jure convey right, title or interest in or to immoveable property.
    (a) Gift under Muslim Law:
    Although a gift made under Muslim personal law is expressly excluded from the operation
    of section 129 of the Transfer of Property Act, 1882, yet it comes within the purview of
    the Registration Act, 1908 and therefore is compulsory register-able.
  2. Instruments: U/S 17(1)(b)
    (a) Description of the Clause:

Other non-Testamentary instruments which purport or produce declare assign, limit or extinguish whether in present or in future any right, title or interest whether vested or contingent of the worth of one hundred rupees or more to or in immovable property shall be registered.
Illustrations:
(i) Mortgage Deed: A deed is register-able under this clause. The Section 58 of Transfer of Property Act, 1882 provides that where the amount secured is Rs. 100 or upwards, a mortgage can be affected only by a registered instrument.
(ii) Charge: Documents creating a charge on immovable property of the value of Rs. 100 or upwards require registration under this Act.
(iii) Transfer of Redemption: Redemption-deed for transferring back land valuing more than Rs. 100 or upwards require registration, it was a registered mortgage.
(iv) Instrument of Partition: Instrument of Partition of immovable property of the value of Rs. 100, or upwards is compulsorily register-able, under this clause.
(v) Floating Charge: A floating charge creates a contingent right and a document creating such charge is Register-able under Section 17(a)(b).
(vi) Assignment of a Household: An assignment of an interest in leasehold property requires registration of the interest assigned of the value of Rs. 100 or upwards.
(vii) Variation of Mortgage: An agreement by which a mortgagor agrees to pay interest at a rate highest than fixed by the mortgage deed, which itself is registered, requires registration.

  1. Receipt of Consideration: U/S 17(1)(c)
    (a) Description of the Clause:

    “Non-testamentary instruments which recognize the receipt or settlement of any consideration on account of the formation, proclamation, engagement, restriction or extinction of any such right, title or interest” shall be registered.
    Illustrations:
    (i) Sale-deed: A sale deed requires registration under this clause, whereby not only the immovable property is conveyed but the price thereof is also acknowledged.
    (ii) Surrender of Land: A receipt, acknowledging receipt of consideration of over Rs. 100 for surrendering certain lands, is compulsorily register-able.
    (iii) Receipt for Premium: A receipt which purports to be for “Nazrana” paid for a lease requires registration, but not if the sum is less than Rs. 100.
  2. Leases: U/S 17(1)(d)

(a) Description of the Clause: “Leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, is compulsorily register-able”.
(b) Duration of Lease: Duration lease is sole determinant of its registration.
Insofar as the registration is compulsory, a lease must be:
• Year to year, or
• For a term exceeding one year, or
• Reserving early rent.
(c) Where no term is expressed: Where no term of lease is specially fixed and is for an indefinite period, it doesn’t require registration.
(d) Exceptional case: Proviso 17(1)(d): The provincial government, according to proviso of S. 18(1), may exempt any leases the terms granted by which do not exceed five years and the annual rents reserved by which do not exceed fifty rupees.

  1. Transfer of decree, order or award of court U/S 17(1)(e):
    In accordance to this Clause: “Non-testamentary instruments transferring or allocating any decree or order of a Court or any award when such decree or order or award impersonates or operates to produce, proclaim, assign, restrain or put out, whether in
    present or in future, any right, title, or interest whether vested or contingent to the value of one hundred rupees and more, to or in an immovable property”, shall be registered.
    Illustrations:
    (i) Mortgage-decree: A mortgage decree must be regarded as in relation to immovable property and is within the clutches of this clause.
    (ii) Decree creating charge: A decree creating a charge, creates a right to or in immovable property and an assignment thereof comes under clause (c) of this section.
  2. Authorities to adopt a son U/S 17(3):
    An authority to adopt, a son, as distinguished from deed of adoption, is compulsorily register-able, for the reason that it is not merely a deed, but adoption itself, that create the status of adopted son and create interest in the property.
    DOCUMENTS THAT DON’T REQUIRE COMPULSORY REGISTRATION:
    There are several documents which aren’t compulsorily register-able under Section 17 of the Registration Act. Some of them require high stamp tax under the Karnataka Stamp Act and a few of them don’t. Even those which require high stamp tax, if they’re under stamped, are often

rectified later by paying a penal amount 10 times the first amount. Non-payment of stamp tax
doesn’t make the document void or otherwise invalid.
The effects of under stamping as per the Stamp Act are:

  1. To form the document inadmissible for evidence before any authority capable of receiving evidence of before any public authority.
  2. The document can also be confiscated for imposing the payment of full stamp value. An under stamped instrument are often admitted as evidence in court if penal stamp tax 10 times the worth of the first amount is paid.
    The list of documents that do not require registration:
    • Power of attorney that is given except the power to sell property.
    • Development agreement.
    • Agreement of sale given by a proprietor to a property developer.
    • Lease agreement/ leasehold deed for a period of less than one year.
    • Memorandum of oral partition recording a past undertaking.
    IMPORTANCE/SIGNIFICANCE OF REGISTRATION OF CONTRACTS:
    The Registration Act, 1908, was enacted with the intention of providing orderliness, discipline and public notice in reference to transactions concerning immovable property and protection from fraud and forgery of documents of transfer. This is often achieved by requiring compulsory registration of certain sort of
    documents and providing for consequences of non-registration. Section 17 of the Registration Act clearly provides that any document (other than testamentary instruments) which claims or operates to form, announce, assign, restrain or put up whether in present or in future “any right, title or interest” whether
    vested or contingent of the worth of Rs. 100 and more to or in immovable property.
    Section 49 of the said Act provides that no document required by Section 17 to be registered shall, influence any immovable property comprised therein or acquired as evidence of any settlement affected such
    possessions, unless it has been registered. Registration of a document gives notice to the planet that such a document has been executed.
    Registration provides safety and security to transactions concerning immovable property, albeit the document is lost or destroyed. It gives publicity and dissemination to documents thereby preventing forgeries and frauds in reference to transactions and execution of documents. Registration provides information to people that may affect a property, on the character and extent of the rights which persons may have, affecting that property.
    In other words, it enables people to seek out whether any particular property with which they’re concerned, has been subjected to any legal obligation or liability and who is or are the person/s presently having right, title, and interest within the property. It gives solemnity of form and perpetuate documents which are of legal importance or relevance by recording them, where people may even see the record and enquire and ascertain what the particulars are and as far as land is concerned what obligations exist with reference to them. It ensures that each person handling immovable property can rely confidently upon the statements contained within the registers (maintained under the said Act) as a full and complete account of all transactions by which the title to the property could also be affected and secure extracts/copies duly certified.

  • CONCLUSION: If registration of documents isn’t made, the method of verification and certification of title becomes difficult. Registration of documents reduces disputes and litigations to an outsized extent.

Leave a Comment