Registration of documents

DIPAN DAVE (Querist) 06 March 2012 This query is : Resolved
Dear Sir,

Please be informed that I have booked the property (flat) in Ahmedabad, Gujarat with 20% payment and it is under construction by the developer.

To get the home loan from the bank, I have to submit "Agreement to Sale" (In Gujarati it is called Banakhat where as other names are 'Souda Pawati' or ' Bayana Pawati'). Builder informed me that first we have to execute "Agreement to Sale" now and later we have to execute "Sale Deed" at the time of taking possession of the flat and stamp duty to be paid while executing the sale deed.

To ensure the legal requirements, I have visited the SHCIL website - http://www.shcilestamp.com/estamp_stateguj.html

There are two lists provided on the website. Screenshots are attached.

1. List of Registrable Documents - Gujarat State

2. List of Non- Registrable Document

Thankful if you can provide guidance on my following quarries.

What is the defination of "Agreement to Sale" and "Sale Deed" as per the said Act.

Whether "Agreement to Sale" of the flat/property (Banakhat / Souda Pawati / Bayana Pawati) is mandatory to register in Ahmedabad, Gujarat? If yes then any stamp duty to be paid while registering such "Agreement to Sale" (Banakhat) of the flat/property?

If "Agreement to Sale" of the flat/property is registered then whether "Sale Deed" of the flat/property is mandatory to register? If yes then any stamp duty to be paid again (if paid with Agreement to Sell) while registering such "Sale Deed" of the flat/property?

You are requested to provide your esteemed help to clarify my doubts.

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Deepak Nair (Expert) 06 March 2012
1. "Agreement to sale" is the agreement between the vendor and purchaser by which hte vendor agrees to sell the property to the purchaser within a specific time period on condition of payment of full consideration. This is with regards to future transaction.(intention to sell and purchase)

2. "Sale Deed" is the instrument/agreement by which the property is actually transferred by vendor to the purchaser after the receipt of the full consideration amount. (Actually sold and purchased)

3. Both Agreement to Sale and Sale Deed shall be registered after paying the applicable stamp duty. It is not necessary to pay the entire stamp duty at the time of registration of agreement to sale. Whatever stamp duty paid will be adjusted to the actual stamp duty which is to be paid while registration of sale deed.

DIPAN DAVE (Querist) 06 March 2012
Dear Deepak,
Thanks for Clarifications and prompt reply.

ajay sethi (Expert) 06 March 2012
builder has guided you well .
both are required to be compulsory registered .

The amendment dated 24.09.2001 made to Sec.17(1) of Registration Act -1908 had added a Clause "A" to Sec.17(1) of the said Act, which now makes the registration of an agreement to sell an immovable property , mandatory one, so that the purchaser gets the protection available U/s 53A of T.P.Act (doctrine of part performance

DIPAN DAVE (Querist) 06 March 2012
Dear Mr. Sethi,
Thanks for the feedback.

Ghanshyam Prasad (Expert) 06 March 2012
Agreement for sale is not compulsory Regdable document.It can be executed on Rs100/-stamp paper.Sale deed is compulsory document.

Raj Kumar Makkad (Expert) 07 March 2012
#Ghanshyam! After the pronouncement of Apex Court judgment in Suraj Lamp company, every agreement to sale is now registrable otherwise no claim under specific performance can be got made.

Deepak Nair (Expert) 07 March 2012
You are always welcome Mr.Dave

V R SHROFF (Expert) 08 March 2012
Sale Deed is final. Agreement to sell is like engagement to marry, whereas sale deed is marriage in simple term , ok. but both must be registered.

Anirudh (Expert) 08 March 2012
Dear Mr. Dipan Dave,

Your builder has correctly said. The Agreement to Sell which is only the intention of the parties to buy and sell (and not actual transfer of property) need not be compulsorily registrable. ONLY THE SALE DEED (which is actual conveyance of the property) needs to be compulsorily registrable.

Ghanshyam Prasad is quite right in his answer to your query.

Mr. Deepak Nair (Para 3) is correct as applicable to Maharashtra and certainly not to Gujarat where you are buying the property. Therefore, as for as Gujarat legal position is concerned, Mr. Deepak is not correct. Mr. Shroff also correct only from Maharashtra legal position and not with reference to Gujarat legal position.

Mr. Ajay Sethi will be right while saying that According to Sec. 17(1-A) of the Registration Act, an Agreement to sell is compulsorily registrable ONLY WHEN possession of the property is being handed over by the seller at the time of Agreement to Sell. OTHERWISE there is no requirement for compulsory requirement. IN YOUR CASE, THE BUILDING IS UNDER CONSTRUCTION, NO POSSESSION IS BEING GIVEN SIMULTANEOUSLY AT THE TIME OF ENTERING INTO AGREEMENT TO SELL. Therefore I will differ with the views of Mr. Sethi.

Mr. Rajkumar Makkad, is confusing the issue. Your query is whether Agreement to Sell is Compulsorily Registrable or not. Mr. Makkad instead of answering the same, has confused the decision of the SC in Suraj Lamp case - which only reiterates the existing legal position that one cannot transfer the immovable property by way of GENERAL POWER OF ATTORNEY / SPECIAL POWER OF ATTORNEY. This decision of the SC is necessitated, because in most of the northern States, especially in Delhi, Haryana people used to give only GPA/SPA plus WILL in favour of the purchaser and avoid payment of stamp duty. Based on such GPA/SPA plus Will, the purchaser will further sell to a new vendor again by granting GPA/SPA + Will. ALL these transactions used to be done in such a chain of GPA/SPA without payment of stamp duty. It is in those circumstances, SC held that granting of GPA/SPA is not the proper way of sale/transfer/conveyance of immovable property. The only mode known for such transfer as per the Registration Act is the registered Sale Deed as envisaged in Section 17 of the Registration Act. Therefore, MR. MAKKAD's answer is not at all relevant to your query.

Let me reiterate that in your case, the Agreement to Sell does not require registration.

DIPAN DAVE (Querist) 08 March 2012
Dear Mr. Anirudh,
I appreciate your further clarifications and Thanks for cristal clear explanation in the matter. Infect, title of the draft document provided by the builder is "Agreement to Sell (Without Possession)" and he is institing to register it. He also confirmed that no stamp duty to be paid with ATS registration. It will be paid only during Sale Deed registration at the time of possession.

Sir, I have read the section 17(1) but could not clearly make out the requirement of registration of ATS only when executing ATS while taking the possession of the property. As ready ref. it is given below. Thankful if you can celarly mark the section/subsection/clause in the Act saying registration requirement of ATS at the time of possession only.

Section 17 - Indian Registration Act, 1908
(1) The following documents shall be registered, if the properties to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act No. XVI of 1864, of the Indian Registration Act 1866, or the Indian Registration Act 1871, or the Indian Registration Act 1877, or the this Act came or comes into force, namely:-

(a) instruments of gift of immoveable 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 immoveable 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 immoveable property from year to year, or for any term exceeding one year, or reserving a yearly rent;

(e) non-testamentary instruments transferring or assigning any decree or order of a court or any award when such decree or order or award purports or operates 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 immoveable property (Added by Act No. 21 of 1929);

PROVIDED that the State Government may, by order published in Official Gazette, exempt from the operation of this sub-section any leases executed in any district, or part of a district, the terms granted by which do not exceed five years and the annual rent reserved by which do not exceed fifty rupees.

Section 17 - Indian Registration Act, 1908
(1) The following documents shall be registered, if the properties to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act No. XVI of 1864, of the Indian Registration Act 1866, or the Indian Registration Act 1871, or the Indian Registration Act 1877, or the this Act came or comes into force, namely:-

(a) instruments of gift of immoveable 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 immoveable 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 immoveable property from year to year, or for any term exceeding one year, or reserving a yearly rent;

(e) non-testamentary instruments transferring or assigning any decree or order of a court or any award when such decree or order or award purports or operates 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 immoveable property (Added by Act No. 21 of 1929);

PROVIDED that the State Government may, by order published in Official Gazette, exempt from the operation of this sub-section any leases executed in any district, or part of a district, the terms granted by which do not exceed five years and the annual rent reserved by which do not exceed fifty rupees.

Section 17 - Indian Registration Act, 1908
(1) The following documents shall be registered, if the properties to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act No. XVI of 1864, of the Indian Registration Act 1866, or the Indian Registration Act 1871, or the Indian Registration Act 1877, or the this Act came or comes into force, namely:-
(a) instruments of gift of immoveable 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 immoveable 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 immoveable property from year to year, or for any term exceeding one year, or reserving a yearly rent;
(e) non-testamentary instruments transferring or assigning any decree or order of a court or any award when such decree or order or award purports or operates 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 immoveable property (Added by Act No. 21 of 1929);
PROVIDED that the State Government may, by order published in Official Gazette, exempt from the operation of this sub-section any leases executed in any district, or part of a district, the terms granted by which do not exceed five years and the annual rent reserved by which do not exceed fifty rupees.

DIPAN DAVE (Querist) 08 March 2012
Dear Mr. Anirudh,
The source link of Section - 17 is http://www.legalserviceindia.com/article/l408-Sec-17-of-Indian-Registration-Act,-1908.html

Anirudh (Expert) 08 March 2012
Dear Mr. Dipan Dave,
Now you are confusing - even on basic facts.

In your original post you said: Builder informed me that first we have to execute "Agreement to Sale" now and later we have to execute "Sale Deed" at the time of taking possession of the flat and stamp duty to be paid while executing the sale deed.
But in the latest post you say: "and he is institing to register it. He also confirmed that no stamp duty to be paid with ATS registration."

I do not know why this back and forth contradiction in your facts.

Any way, my stand that the Agreement to Sell is not registrable compulsorily stands. Having said, if some one wants to get it registered it voluntarily (in this case the registration by you and the builder would only be voluntary) that can be done. As rightly said by your builder, it will only involve a very very nominal stamp duty say Rs. 100 or so.

Your source article is of no use to me. In fact it does not throw any more light on the issue than what I had already indicated in my earlier post.In any case, the source article does not even touch upon the new provision Sec. 17(1A) of the Registration Act.