Marsans The Expert Opinion on Indian Property

Marsans was invited by a court in United Kingdom, to provide an Expert Opinion on the subject and particulars of a transfer of property in India.

The point of dispute requiring expert opinion concerned the alleged breach of a court order for a transfer of a property in Goa, India, and the consequent date of the registration of the sale of that property at the registrar office.

Mr Kumar Subramani, Marsans partner and a highly experienced professional in the area of property laws in India was invited to provide an Expert Opinion by the Defendants in the proceedings.

Background

The Defendants and the Claimants were embroiled in a dispute in the English courts. In the course of the proceedings the parties agreed to settle the case by consent. Amongst other terms, the consent order recorded that the Defendant would be transferring a property in a sought-after area in Goa to the Claimant by a date as per the consent order of the court.

Pursuant to the consent order, the Defendants proceeded to complete the sale as per the timeline set by the court. As the Defendants were based in the UK, they executed a power of attorney authorizing their representative in India (‘the Constituted Attorney’) to sign the deed of sale to transfer the property on their behalf.

The sale deed was duly presented to the sub registrar for registration, but the registration was refused on the ground that the Defendants’ power of attorney in the words of the sub registrar was ‘not valedictory executed’. The Defendants appealed this refusal before the relevant appellate authority, the district registrar, who at the end of the appeal proceedings gave directions to the sub registrar to take cognisance of the deed of sale, the power of attorney and conclude the registration process.

The expert’s views:

The Appeal before the District Registrar delayed the registration process and resulted in the failure of the date as set by the consent order complied with. The questions therefore before the experts were to analyse what constitutes a valid transfer of property according to India’s Transfer of Property Act, 1882 and whether the Defendants’ actions were reckless so as to cause the delay on purpose and thereby resulting in a breach of the terms of the court order.

Mr Subramani formed a view that there was nothing irregular about the Defendants being represented by their Constituted Attorney to deal with the registration of the property in India and that the power of attorney was in order. It was further submitted that executing a deed of transfer by a Constituted Attorney in the course of registering that deed is valid and accepted under the Indian Registration Act, 1908 (‘Registration Act’). In this case, the Defendants residing outside India, had acted properly in appointing their Constituted Attorney in accordance with the power of attorney that was duly executed and stamped by a Notary as well as High Commission of India based in London.

The sub registrar refused to register the property, because he considered the power of attorney to have been “not valedictory executed”. While the grounds of the provision of such a Refusal Order are not exclusive to the reasons given in the Registration Act, the legal basis of the term “not valedictory executed” was analysed and interpreted by the experts. In this case the reason for refusal was not clearly explained in the sub-registrar’s order for the benefit of parties concerned and the term “not valedictory executed” did not provide clear grounds or reasons to rectify any apparent defect in the power of attorney. The option available to the defendants at that time was therefore to execute a fresh power of attorney and submit it again to the sub registrar. But in the absence of any full and proper explanation as reasons to refuse or accept the power of attorney, the only option left to the defendants was to appeal the decision to the district registrar which they exercised.

The Defendants in our expert opinion had acted rationally by filing the appeal and district registrar did not find any issues with the power of attorney and directed the sub registrar to complete the registration process. Therefore, the delay in the registration of the sale deed was not due to any fault of the Defendants but was rather due to the actions of third parties (primarily the Sub-Registrar) over which the Defendants did not have any reasonable control or authority.

Mr Subramani was also asked what constitutes a valid sale. The Transfer of Property Act, 1882 states that a transfer of ownership is concluded upon the sale deed being stamped, registered, and transferred for a consideration. The date of the registration of the property’s sale, therefore, forms a key ingredient in the transfer of ownership. However, relying on Section 72(2) of the Registration Act, the registration of the sale deed would have taken effect when the deed was first duly presented before the sub registrar and therefore submissions were made that the Defendant did not breach the terms of the consent order. Unfortunately, the court found in favour of the Claimant’s as it felt that the sub registrar was right in following local customary laws and rejected the power of attorney as it did not contain the defendant’s signature in each of the pages of the document. This was in spite of the power of attorney attested as a valid document by the District Registrar on an appeal, the High Commission of India as well as the local authorities in Goa before it was submitted to the sub registrar along with the sale deed.

Conclusion

The property and customary laws in India vary to each state/region and at times very complex as well. There are several forms and documents that are required and executed correctly before they are accepted as valid by the authorities in India. Another important aspect of property transaction in India are the presence of the transferor and transferee which is mandatory unless they appoint a Constituted Attorney with capacity and by executing a valid power of attorney document.