Eleven Months Lease Deeds also need registration !

L:ease
L:ease

Eleven Months Lease Deeds also need registration

It is a common misconception that Lease Deeds for a period less than a year need not be registered, per Indian Law for properties in India. Hence, many Landlords and Tenants  proceed accordingly since in the process savings can be made on Stamp Duty. Besides, the time and hassle of going to the Registrar’s Office is avoided. The confusion arises since the provisions of the Transfer of Property Act are NOT understood properly since those relevant have to be read ALONG WITH that of the Registration Act

The Courts are increasingly clarifying and elaborating this. As in the case hereunder.

Case :

Abdul Rasheed S/O Meeran Sab vs Srinivas S/O Kashinathrao on 16 April, 2014

( Karnataka High Court Judgement )

Issue :

Whether a lease deed, where the term of lease stated therein does not exceed one year, requires to be registered under the provisions of the Registration Act, 1908 is the question that needs an answer in this writ petition.

The question is answered in the affirmative. In law, the lease deeds of the aforesaid kind also require to be registered and therefore, such unregistered lease deeds cannot be received as evidence of any transaction affecting the property.

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3.1 Sections 4 & 107 of the Transfer of Property Act, 1882 read as follows:

S.4. Enactments relating to contracts to be taken as part of Contract Act and supplemental to the Registration Act.

The Chapters and sections of this Act which relate to contracts shall be taken as part of the Indian Contract Act, 1872 (9 of 1872) And section 54, paragraphs 2 and 3, and sections 59, 107 and 123 shall be read as supplemental to the Indian Registration Act, 1908 (16 of 1908).

S.107. Leases how made.

A lease of immovable property from year to year, or for any term exceeding one year or reserving a yearly rent, can be made only by a registered instrument.

All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.

3.2 Sections 17(1) & 49 of the Registration Act, 1908 read as follows:

S.17. Documents of which registration is compulsory.

(1) The following documents shall be registered, if the property to which they relate is situate……..namely:-

(a) instruments of gift of immovable property;

(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property;

(c) non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest; and

(d) leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent;

S.49. Effect of non-registration of documents required to be registered

No document required by section 17 or by any provision of the Transfer of Property Act, 1882 (4 of 1882), to be registered shall-

(a) affect any immovable property comprised therein, or
(b) confer any power to adopt, or
(c) be received as evidence of any transaction

affecting such property or conferring such power, unless it has been registered:

Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (3 of 1877), or as evidence of any collateral transaction not required to be effected by registered instrument.

4. As could be seen from the above quoted provisions, all leases not covered by first para of S.107 of the T.P. Act may be made either by a oral agreement accompanied by delivery of possession, or by a registered instrument. A lease, the registration whereof is not compulsory under S.17(1)(d) of the Registration Act, becomes compulsorily registrable, if reduced into writing in view of second para of S.107 of the T.P. Act read with para 2 of S.4 thereof. A written unregistered lease of immovable property, even though the term of lease stated therein does not exceed one year, is inadmissible in evidence in view of S.49 of the Registration Act, 1908 read with second para of S.107 of the Transfer of Property Act, 1882 & second para of S.4 thereof. A lease for a period of one year falls within the expression ‘All other leases’ stated in para 2 of S.107 of the T.P. Act and may be made by a oral agreement accompanied by delivery of possession.

……….

6. At this stage, learned counsel for the petitioner by relying on the proviso to S.49 of the Registration Act, submits that the proviso permits the petitioner to produce the lease deeds as evidence of any collateral transaction not required to be effected by a registered instrument. The counsel is right in his submission. Accordingly, the petitioner is at liberty to apply to the trial Court by specifically stating the collateral purpose for which he wants to produce the lease deeds. If such an application is made, the trial Court shall consider the same in accordance with law.

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So, if you have an ORAL AGREEMENT of one year or less that is fine but the moment you reduce it in writing for evidentiary purposes it will require registration !! And for what ” collateral purposes” will that  UNRegistered Lease Deed be valid is not clarified !!

So, BETTER to get all Lease Deeds registered !