Cancellation of Fraudulent Registration (For Non Lawyers)

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One, Mrs.Kanaka purchased a land in Madippakkam in 1987 and she has not made building. As the plot was vacant for a quite long time, it attracted the land grabbers.

As a result, they forged a document purported to be the sale deed of 1987. They also created two fictitious persons, named Mrs.Kanaka and her daughter Mrs.Murugavalli. Based on the forged document, the impersonated Kanaka made a settlement deed, whereby she transferred the subject land to the fictitious Murugavalli, and registered the deed in SRO. This is fraudulent registration. Now, the original Kanaka wants to cancel the fraud deed.

Another lady, named Mrs.Subhadra, purchased a vacant land in 1990 from one Mr.Kumar, erected a building thereon and is living in that house. In 2010, a stranger visited her house and introduced himself as the agent of Kumar who sold the plot to Subhadra. He showed the Power of Attorney, appointing him as agent. He also claimed that Subhadra has not bought the plot from original Kumar. As such the sale became invalid. And he asked her to vacate from house and land.

Later, it is found that the self claimed agent was a fraudulent and the said Power of Attorney was fraudulently registered by impersonation.  Now, she wants to cancel the GPA. Otherwise, the marketability of title shall be in question.

It is not possible to register a cancellation deed unilaterally as in the case of other deeds. It is considered that a cancellation of registered deed by executants is against public policy and also felt that by permitting the registration of cancellation deeds, the vendors or executants shall misuse the provisions and allowing it would amount to abuse of process of law.

The only remedy to the aggrieved party was to approach the competent Civil Court, which is lengthier and costlier one.

A curative remedy has been made by Registration department of Tamil Nadu provides not only relief to the aggrieved party but also prevents further fraud and cheating of innocent future purchasers. The mandatory procedure confers power of Executive Magistrate on District Registrar to make inquiry and to pass orders to annul the fraudulent registration.

The aggrieved party shall lodge a complaint through Sub Registrar concerned to District Registrar, who shall conduct an inquiry. On inquiry if it is proved that the subject registration has taken fraudulently, the DR shall pass orders to this effect that the registration is annulled.

The DR shall complete the enquiry within two months and if the parties are not appearing for two summons, ex-parte order shall be passed.

In light of the above procedure, it is advised that the aggrieved party may prepare a detailed petition, preferably with the help of a property lawyer, giving

·        All the facts, documents and evidences showing the title of the petitioner  

·        Full details about the fraudulently registered documents and

·        Clearly evidencing the fact of fraud of impersonation, false representation, admission, false documents and evidences

The recital of the petition shall be precisely prepared so as to enable the authority to form an idea about the fraud happened which would lead to the right decision at an early stage.

As the DR deals with the cases specific to the fraudulent registrations alone, the number of cases are less as compared to that in Civil Courts. As such, a speedy recovery can be expected and ensured at a cheaper cost.

    But at the same time, the public shall not make baseless and worthless false claims and complaints as the cost of complaining is low

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Cancellation of Fraudulent Registration

To read  the Article for Non-Lawyers,  CLICK here

It is not possible to execute and register a cancellation deed or revocation deed as in the case of other deeds. The executant cannot unilaterally cancel the previous deeds and register the same.

It is considered that a cancellation of previously registered deed by executants is against public policy and also felt that by permitting the registration of cancellation deeds, the vendors or executants shall misuse the provisions and allowing it would amount to abuse of process of law.

The only remedy to the aggrieved party was to approach the competent Civil Court.

It was held by Courts, in relation to cancellation deed, as follows:

·        A deed of cancellation of previous transfer unilaterally executed by the transferor does not create or extinguish any right, title or interest in the property and is no effect. Hence, such a document cannot be registered.

·        Once title to the property is vested in the transferee, it cannot be divested unto the transferor by execution and registration of deed of cancellation even with the consent of the parties.  The proper course is to re-convey.

·        A fraudulent transfer can be cancelled by transferor by obtaining a decree from a Civil Court.

 A curative remedy has been made by Registration department of Tamil Nadu Government which prescribes a procedure regarding complaints related to fraudulent registration through impersonation or by producing false documents and evidences.

It is clearly stated in the recital of the procedure that a normal response of the Registration department to petitions relating to fraudulent registration is to direct the aggrieved parties to approach Civil Court. But this reply shall double jeopardize the petitioners.

Similarly, sections 82 and 83 of Registration Act provide grounds and quantum of punishment for the offences. The purpose of these sections is to punish the involved in frauds. However, mere punitive action shall not suffice and serve the objective of the Act which aims at elimination of frauds.

Thus a curative remedy is necessary not only to provide relief to the aggrieved party but also to prevent further fraud and cheating of innocent future purchasers.

In light of the above, a mandatory procedure was prescribed which confers power on District Registrar (Administrations) to make inquiry and to pass orders to annul the fraudulent registration.

The procedure prescribes that the aggrieved party shall lodge a complaint to Sub Registrar concerned, who shall forward the same to District Registrar.

The District Registrar shall issue notices to the executants(s) and witness(s) of the document challenged as fraud to appear for an inquiry. Once the inquiry is completed and if it is proved that the subject registration has taken place through impersonation or false representation, statements and admissions, the DR shall pass orders to this effect that the registration is annulled.

The DR shall complete the enquiry within two months and if the parties are not appearing for two summons, ex-parte order shall be passed.

In light of the above procedure, it is advised that the aggrieved party may prepare a detailed petition, preferably with the help of a property lawyer, giving all the facts and evidences showing the title of the petitioner and give full details about the fraudulently registered documents and clearly evidencing the fact of fraud of impersonation, false representation, admission, etc.

The recital of the petition shall be precisely prepared so as to enable the authority to form an idea about the fraud happened. All the relative documents, deeds, patta, EC are to be enclosed as exhibits which would lead to the right decision at an early stage.

As the DR deals with the cases specific to the fraudulent registrations alone, the number of cases are less as compared to that in Civil Courts. As such, a speedy recovery can be expected and ensured at a cheaper cost.

But at the same time, one shall not forget that it shall increase the work load of District Registrar and Sub Registrars too. As the cost of initiating procedure is low, it may result in increased number of complaints, most of which may become baseless and worthless.

A fee along with a refundable deposit amount may reduce the number of false claims. The deposited amount may be refunded if the claim is proved.

for further reference, suggestion, opinion, visit

www.vishalassociates.net

www.propertychennai.webs.com

To get legal opinion on Title and other aspects, mail to

legal@vishalassociates.net

Enforceable Unregistered Agreement

Registration of Agreement

It helps the innocents from being cheated; On the other side, it strangles the honest promoters, sellers and buyers too. The feasibility of having legally enforceable unregistered agreement and its validity is discussed here

Amendments to Registration Act, 1908 has been made by Tamil Nadu Government which makes the Agreements and Power of Attorney are to be compulsorily registered.

We shall discuss about its impact on real estate business, problems that may be faced by ethical and honest business men, innocent buyers and try to find solution to it.

Reasons behind the Amendment

The expenditure required for making an agreement or power of attorney is/ was very low. Moreover these were optionally registrable. It became the root cause for land grabbing and bogus registrations.

As the property disputes and frauds rose in an exponential degree, the government made the amendment to the Act by appending these documents in section 17 of the Act thus effecting compulsory registration.

Banks/Financial Institutions

Now, the banks and FIs advancing Housing Loans are at confusion whether to process HL application and advance money without unregistered agreement; if done so what will be its effects.

Moreover in Tamil Nadu, because of heavier power cut scanning of documents in SRO is getting delayed which will further delay the execution and registration of sale deed.

Builders & Promoters

On the other side, real estate business men are at problems. If their buyers planned to avail loan, the agreement for sale/ purchase has to be first registered and then HL application shall processed which may take a lead time of about 2 to 3 months; while the agreement period might be less than this time. This may frustrate the contract and thus the business.

Buyers

The buyers have to go to SRO more times which makes them uncomforted and sometimes may discourage the process of buying the property.

Effects of Non-Registration

Section-68 of Evidence Act says that a document shall not used as evidence until at least one attesting witness has given the testimony and Section-92 indirectly says that compulsorily registrable document shall not used as evidence if it is not registered.

Section-49 of Registration Act says that the un-registered document, listed in Sec-17, shall not be received/ admissible in Courts.

That is to say, if the vendor does not ready to sell the property as agreed, the buyer cannot approach Court for specific performance of the agreement on the basis of unregistered agreement. In other words, the unregistered agreement cannot be enforced in a Court of Law as such it becomes invalid.

We see that the proviso helps the innocents from being cheated; On the other side, it strangles the honest builders, promoters, real estators who are doing business with ethics and buyers too.

Valid unregistered Agreement

In this circumstance, we shall discuss the possibility of having legally enforceable unregistered agreement and its validity.

Under Section-23 of Registration Act, an agreement can be registered within 4 months from the date of its signing. It means that it can be allowed to be in the condition of “Un-Registered” or “To be Registered” and is valid. That is an unregistered agreement can be enforceable in any Court within 4 months.

If the period of agreement is less than 4 months, it can be enforced and as such does not require any registration. It safe guards all/ both the parties of agreement.

If Banks/ FI have good opinion about the promoter/ seller, it is at the discretion to advance the HL to buyer/ borrower keeping the agreement unregistered. To further safe guard the interest, the bank can get it affidavited and indemnified by the promoter/ seller. I have personally suggested the above to officials of two banks and as a result, HL have been disbursed.

Besides, a stringent scrutiny of documents is suggested. Regarding construction, a MoU can be made along with the agreement for sale of land. The Courts have considered the unregistered documents as a collateral evidences and the attesting witnesses shall prove its trueness.

Conclusion

It can be said that the agreement, even unregistered, shall be enforceable in Court of Law within four months and after 4 months also valid as collateral evidence but is week in nature.

It is suggested to have a thorough and stringent scrutiny of all deeds and documents in all aspects and particularly with a view of probable disputes and challenges.

Promoters can execute Affidavit and Indemnity bond in favour of Banks

for further reference, suggestion, opinion, visit

www.vishalassociates.net

www.propertychennai.webs.com

To get legal opinion on Title and other aspects, mail to

legal@vishalassociates.net