Reg­is­ter­ing a can­cel­la­tion deed a must

The reg­is­ter­ing of­fi­cer is bound to reg­is­ter it if pro­ce­dural re­quire­ments have been com­plied with

HT Estates - - HTESTATES - Su­nil Tyagi A can­cel­la­tion deed of a doc­u­ment re­lat­ing to trans­fer of in­ter­est/own­er­ship of im­mov­able prop­erty is re­quired to be com­pul­so­rily reg­is­tered as per the pro­vi­sions of Reg­is­tra­tion Act, 1908 (Act). The reg­is­ter­ing of­fi­cer may refuse to reg­is­ter

Our pre­vi­ous col­umns ad­dressed var­i­ous as­pects of can­cel­la­tion of sale deed of an im­mov­able prop­erty, in­clud­ing the na­ture of le­gal re­lief to be sought and court fee im­pli­ca­tions. To sum­marise, if a per­son seek­ing an­nul­ment of the sale deed is a party to the deed, he should seek the re­lief of can­cel­la­tion. On the other hand, a per­son who is not a party to the sale deed but whose in­ter­ests are af­fected by it, may seek the re­lief of dec­la­ra­tion. Fur­ther, in a suit for can­cel­la­tion of sale deed, court fee is to be cal­cu­lated on the ba­sis of the value of the prop­erty given in the sale deed, and not on the ba­sis of its cur­rent mar­ket value. In order to en­sure that the trans­ac­tion of can­cel­la­tion of sale deed is valid in the eyes of law, it is also im­por­tant to un­der­stand the stamp duty and reg­is­tra­tion as­pects.

Stamp­ing

Where trans­fer of an im­mov­able prop­erty has been made ab­so­lute by ex­e­cu­tion of a sale deed, such doc­u­ment may be sub­se­quently an­nulled or can­celled by the par­ties only by ex­e­cut­ing a con­veyance deed. In the case of Latif Es­tate Line In­dia Ltd V Hadeeja Am­mal, in­spec­tor gen­eral of reg­is­tra­tion (2011), the High Court of Madras held that if a can­cel­la­tion deed is ex­e­cuted by both buyer and seller, it is noth­ing but a con­veyance by the buyer of his right in the im­mov­able prop­erty in favour of the seller – al­though can­cel­la­tion deed may be the nomen­cla­ture used by the par­ties, such a trans­ac­tion in essence amounts to a re­con­veyance of im­mov­able prop­erty, as the in­ten­tion of the buyer is to re-trans­fer all rights, ti­tle and in­ter­est in the im­mov­able prop­erty back in favour of the seller.

Hence, once the ti­tle of own­er­ship to the prop­erty is vested in the trans­feree (buyer), the ti­tle of own­er­ship can­not be vested back unto the trans­feror (seller) by ex­e­cu­tion and reg­is­tra­tion of a can­cel­la­tion deed, even with the con­sent of the par­ties in­volved. The proper course would be to re-con­vey the prop­erty by a deed of con­veyance by the trans­feree in favour of the trans­feror. Given that such a trans­ac­tion would be treated only as sale/con­veyance, the par­ties would be li­able to pay stamp duty as is levi­able on a sale/ con­veyance deed of im­mov­able prop­erty. Par­ties can­not evade mak­ing full pay­ment of stamp duty un­der the guise that it is a mere deed of can­cel­la­tion and it at­tracts stamp duty of much lesser value.

Reg­is­tra­tion

A can­cel­la­tion deed of a doc­u­ment re­lat­ing to trans­fer of in­ter­est/own­er­ship of im­mov­able prop­erty is re­quired to be com­pul­so­rily reg­is­tered as per the pro­vi­sions of Reg­is­tra­tion Act, 1908 ( Act). When a can­cel­la­tion deed has been duly ex­e­cuted with mu­tual con­sent by all par­ties, the reg­is­ter­ing of­fi­cer is bound to reg­is­ter the doc­u­ment pro­vided other pro­ce­dural re­quire­ments have been com­plied with. The reg­is­ter­ing of­fi­cer may refuse reg­is­tra­tion of a can­cel­la­tion deed that has been ex­e­cuted uni­lat­er­ally or with­out the knowl­edge/con­sent of all par­ties or with­out hav­ing ful­filled re­quire­ments un­der the Act. In the case of Thota Ganga Laxmi V Gov­ern­ment of Andhra Pradesh ( 2010), the Supreme Court held that it is only when a sale deed has been can­celled by a com­pe­tent court, and a no­tice duly served upon the con­cerned par­ties, can a can­cel­la­tion deed be duly reg­is­tered.

In this case, the fa­ther of the ap­pel­lants had pur­chased the dis­puted prop­erty from the re­spon­dent by a reg­is­tered sale deed. Sub­se­quently, the re­spon­dent pur­ported to get the sale deed can­celled uni­lat­er­ally by ex­e­cut­ing a can­cel­la­tion deed, with­out giv­ing any prior no­tice to the ap­pel­lants.

This can­cel­la­tion deed had also been reg­is­tered. The apex court held that both the can­cel­la­tion deed as well as reg­is­tra­tion of such can­cel­la­tion deed were wholly void, in­valid and mean­ing­less.

THINKSTOCK

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