Thursday 9 April 2015

RELAXATION ON BAN WILL HELP INDUSTRY




Registration of all the properties has commenced in all the sub-registrar offices again by virtue of the judgment delivered by the High Court of Karnataka.
           
            Government of Karnataka issued a notification on 23/04/2005 thereby classifying certain documents as opposed to public policy, which includes sites on agricultural lands not converted, properties coming under BMP revenue area, CMC area having Katha, Betterment and Tax paid receipts and sites not formed without obtaining approved layout plan from the competent authority. Further, one more notification was issued by the Joint Secretary to Government of Karnataka, Department of Revenue bearing No.RD 174 MUNOMU 2005 dated 23/08/2005 in the guise of some frequently asked questions.

            The above said two notifications were challenged by one Sri.Pavanesh before the High Court of Karnataka, Bangalore, by initiating Public Interest Litigation, seeking quashing of the above two notifications, in WP No.24309/2005.

            The Petitioner contended that the Impugned Notifications  are baseless, illegal and issued under the arbitrary state action for the reason that said notifications have classified the registration of all the properties coming under the jurisdiction of City Corporation established under the Karnataka Municipal Corporations Act or Municipalities under the Karnataka Municipalities Act or within the jurisdiction of Grama and Taluk Panchayat as opposed to public policy, which affects the statutory powers envisaged under the statutes and any such declaration can be done only by the Court of Law.

Deemed Conversion:
           
            The petitioner has relied on the decision delivered in the case including Special Deputy Commissioner Vs Narayanappa, reported in ILR 1988 Kar 1398, which has declared that the jurisdiction of the Deputy Commissioner to convert the land for non-agricultural purpose is ousted in respect of the lands falling within the area of the Outline Development Plan or CDP. Further in the case of BDA Vs Vishwa Bharathi House Building Co-operative Society Limited, reported in ILR 1991 Kar 4401, it is held that lands which come within the jurisdiction of the Corporation are deemed to be converted for that purpose. In another case, reported in ILR 2005 Kar 60, the Division Bench has held that the Land Revenue Act would cease to be applicable to the lands which come within the jurisdiction of the Corporation.

            In this context, the Petitioner has contended that various layouts in the State of Karnataka were formed over hundred years ago and now insisting for obtaining conversion of such lands does not arise at all. On these grounds, the said notifications were termed as the one issued without application of mind and only for extraneous considerations.

Government contention

            On the other hand, the Government, substantiating its stand over the impugned notifications, strongly contended that the Government has passed the above notifications under section 22-A of the Registration Act, which empowers the Government to declare the registration of any document or class of documents as opposed to public policy by notification in official Gazette. Further, the public policy of the State cannot be questioned if the same is founded on data, statistics, factual position and in furtherance of public interest and that the notifications were issued only to stop large scale violation of the special statutes resulting in a chaotic situation and disorderly growth of the cities and towns and affecting the public interest, in as much as poor and hapless aspirants of sites being victimized and opposed the said petition as hopelessly misconceived.

Judgement

            After hearing the arguments, the High Court considered the law laid down by Apex Court, wherein, it was held that the Executive, acting upon the powers vested on them under section 22-A of the Registration Act, cannot sub delegate the powers which would control the transactions which fall out of its scope. The Court further held that the essential functions of the legislature cannot be delegated and that the subordinate legislation, which is not backed up by any statutory guideline under the substantive law and opposed to the enforcement of a legal right, would be invalid. It is also held by the Apex Court that so long as the statute itself is not amended, any notification issued by the Government prohibiting few of the documents from registration, is not sustainable. The High Court, relying upon the ratio laid down in the case mentioned above, held that a transaction between two persons capable of entering into a contract, which does not contravene any of the statute would be valid in law and such transactions cannot be illegal. Consequently, the impugned notifications were quashed.
           
Revenue loss to the Govt

            Consequent to the issuance of the above said notifications, the Government has suffered huge loss of revenue, wherein direct loss to the department by way of stampduty and registration charges, is estimated nearly 600 crores in addition to indirect income which will be multiples of 600 crores. For the investors who plan to invest in Karnataka to start their business will have to firstly acquire the property and subsequently have to construct the building which requires cement, steel and other construction materials apart from labour skill, which again attracts sales tax, service tax, excise duty and cess, which are some of the sources of revenue to the government. Due to issuance of the said notifications, various projects have been dropped since the investors were not able to acquire the property for the development in Bangalore and Karnataka. Infact the investors are now avoiding to invest and are not ready to take any kind of risk to invest in Karnataka due to constant changes in the rules by way of circular and the Government is not taking proper decision on such important aspects. Various developers and industrialist who had planned to start their project earlier to issuance of the said notifications have been forced to shift their place of business to other States. 
Public problem
           
            Because of the ban on the registration, the public incurred lot of inconvenience. The purchaser, who had already paid advance sale consideration, could not complete the transactions due to the ban. Further, the Banks are reluctant to release money due to the ban on registrations. The vendors who want to sell the property for urgent necessity, such as to meet their medical, marriage expenses or expenses incurred for construction of alternative house, had to suffer. The public also had to suffer since the demand for land was increasing along with the prices due to scarcity of land and the people belonging to middle class could not cope up with the mounting prices made them owning a house as an unfulfilled dream.

Powers of the Registering Officers

            The Registering Officers act in the ministerial capacity and have no power to decide the title of the executor.  The Sub-Registrar is entrusted with a duty of registering the documents in accordance with the provision of the act and do not have power to probe into the genuiness or legal aspects of the documents presented before him. If the documents are bogus or false, the party affected by it will have the right to initiate proceedings in the court of law, which is the competent authority to decide and declare the validity of the title.

Approved layouts

            Of course the said ban on registrations has enlightened the public about the legal impediments involved in buying the sites formed in agricultural or revenue or converted private layout without approval or Residential sites formed in the layout not approved by BDA or BMRDA. After this notification, public has starting thinking twice to purchase any revenue land or Gramathana land, which is available as form no.9 and 10 Village Panchayat Khatha and also apartment constructed on the property  approved by the Village Panchayat.

Purchaser duty

            Generally, the purchasers are investing the money for owning a property once in their lifetime from the money saved during their life time or borrow from the financial institutions. So abundant caution will have to be  exercised by purchasers while purchasing the property since valid and marketable title of the property is very important, which can be verified with the help of an Advocate, having very good experience in such matters.
           
Selection of the property

            No one can give a better title than what they themselves have. This is the basic principle envisaged in Transfer of Property Act. The vendor having a valid title can transfer his title by way of sale deed and register in the office of Sub-Registrar in favour of the purchaser. Even if the document is registered, the vendor who do not have marketable title cannot transfer proper title.
Generally, site allotted by BDA, KHB is the safest property to invest. However, BMP revenue jurisdiction properties, converted land in the municipal area having proper Khatha and tax paid receipt is also comparatively good properties. Nevertheless, in any such properties, title should be traced with the proper care.

Revenue sites formed in the agricultural land without conversion or site formed in the converted land without proper sanction of the layout is a dangerous area to invest.

While buying Flats, it is advisable for the purchaser should select the property which comes within the limits of BMP, BDA Layouts, CMC areas with approval of the BDA or BMP or CMC. The apartments coming on the revenue belt with the sanction of the village Panchayat is not advisable to buy. Further, it is advisable for the purchasers to probe into the previous history of the promoter in the field of construction in person and then to decide, in addition to tracing the title of the property.

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