liability of allottee to pay maintenance charges, holding charges etc if he refused to take possession

      1. Judgment passed by the Hon’ble National Consumer Disputes Redressal in  Yash Bir Jaggi vs Unitech Ltd. on 3 February, 2006 reported as IV (2006) CPJ 123 NC can be relied upon for subjected purpose. Relevant part for the subjected issue is as follows :

“39. The aforesaid clause specifically provides that the allottee is liable to pay maintenance security 'as and when' and 'in the manner' demanded by the maintenance agency. In case where possession is offered the allottees are required to pay maintenance charges. Further, as these maintenance charges are taken for common facilities provided to all the allottees, any one allottee cannot take a stand that till he takes the possession of the property, he will not pay the maintenance charges. If that contention is accepted, it would be difficult to engage a maintenance agency for maintaining the apartments as a whole and provide common facilities.

40. Considering the above analysis, it is apparent that the stand taken by the complainant that he is not liable to pay the security deposit and maintenance charges as he has not taken possession of the flat is unjustified. We hold that the complainant is bound to pay the maintenance charges as demanded as well as the interest free security deposit amounting to Rs. 30,000. The above shall be paid with interest at the rate of 10% per annum from the date of demand till the date of payment.”

 2.   Whether the colonizers/owners are prohibited from recovering the amounts spent towards the maintenance charges from the plots/flats buyers was decided by the Hon’ble Supreme Court on 19 November, 2010 in a bunch of appeals against the orders of Punjab and Haryana High Court. Those appeals were filed by DLF UNIVERSAL LTD. & ANR., M/s. ANSAL PROPERTIES & Industries LTD., M/s. Ajay ENTERPRISES LTD. & ORS. agents DIRECTOR, T. &C. PLANNING HARYANA & ORS. AND STATE OF HARYANA & ORS.

The Hon’ble Apex Court framed below questions at Para 20 of the said judgment:

1.   Whether the Director of Country and Town Planning is empowered to issue any directions, directing the appellants to stop charging maintenance fee from the plot/flat holders and also “delete the relevant clauses from the agreement” and refund the amounts so far collected to the Government immediately?

2.   Whether the Act imposes any obligation upon the colonizers or owners to incur maintenance charges out of their own resources?

3.   Whether the colonizers/owners are prohibited from recovering the amounts spent towards the maintenance charges from the plots/flats buyers?

4.   Whether the clause incorporated in the sale agreement enabling the owners to collect the maintenance charges is void?

Section 3 (3) (a) (iii) of the Haryana Development and Regulation of Urban Areas Act, 1975  imposes responsibility for the maintenance and upkeep of all roads, open spaces, public parks and public health services for a period of five years from the date of issue of the completion certificate unless earlier relieved of this responsibility and thereupon to transfer all such roads, open spaces, public parks and public health services free of cost to the Government or the authority, as the case may be.

The Hon’ble Apex Court categorically said about aforesaid provision “That a bare reading of the provisions does not suggest that the owner is required to provide the said maintenance services free of cost.” At Para 22. The Hon’ble Apex Court further considered categorically “whether providing services of the kind by the owner/colonizer for which maintenance charges are imposed is a "work" of "internal development" which has to be carried out within the colony” at Para 23 and answering this question it categorically said “In our considered opinion the maintenance fee/charges levied and collected are clearly not in respect of any of the internal development works defined under clause (i) to (v) of Section 2 (i).” at Para 25.

The Hon’ble Court further considered “whether the amount of maintenance service charges was already included in the sale price of the plots/flats” at Para 28.

The Hon’ble Court said “There is no price fixation formula devised under the provisions of the Act, Rules and Regulations framed thereunder. The Statutory Authorities have no role to play in the fixation of price and costs of land and rate at which the plots/flats are to be sold. The price charged by the owner for the plot is fixed and covered by clauses (1) and (2) of plot sale agreement entered into by and between the parties. The agreed sale price of the plot includes external development charges. The payment of maintenance charges by the plot buyer is provided for in clause (14) of the said agreement. The sale price charged by the owner from the plot buyers includes maintenance of service charges at the most could be a bonafide contention between the owners/colonizers and the purchasers of plots/flats. The Act, Rules and the Regulations framed thereunder do not provide for any approval or ratification of the agreements so entered into by and between the owners/colonizers.” At Para 29 while at Para 30 it said “The sale price charged by the owner from the buyers for the sale of the plots/flats is a market driven sale price and is not based on any particular figure of cost. The provisions of the Act or the Rules in no manner impose any price control directly or indirectly in respect of plots/flats sold by the colonizer/owner. The sale and purchase of the plots/flats is between a willing vendor and a willing vendee.”

 3. National Commission on 29 Mar 2016 in PRAVEEN MEHTA v/s BENGAL UNITECH UNIVERSAL INFRASTRUCTURE PVT. LTD at Para 10

“The complainant (Consumer)  is bound by the terms and conditions of the builder- buyer’s agreement(allotment letter).  As per this agreement, if the complainant does not take the possession in spite of offer of possession, he is bound to pay holding charges as per agreement to the opposite party (builder) and in case of delay in possession there are certain charges @5 /- per sq.ft. per month that will be payable by the builder to the allottee.”

An Unstamped Instrument Is Not Admissible In Evidence Even For Collateral Purpose

·         [Yellapu Uma Maheswari vs. Buddha Jagadheeswararao] (SC, 08.10.2015) Civil Appeal No. 8441 of 2015

The consequential connected question that arose was as to whether these documents could be used for any collateral purpose. It was observed that the whole process of partition contemplates three phases i.e. severancy of status, division of joint property by metes and bounds and nature of possession of various shares. In a suit for partition, an unregistered document can be relied upon for collateral purpose i.e. severancy of title, nature of possession of various shares but not for the primary purpose i.e. division of joint properties by metes and bounds. An unstamped instrument is not admissible in evidence even for collateral purpose, until the same is impounded.

Accordingly it was held that the parties in the instant matter if wants to mark the documents in question for collateral purpose, the same would have to be impounded and requisite stamp duties would have to be paid.

·         the Hon'ble Apex Court in Avinash Kumar in Chauhan v. Vijay Krishna Mishra ((2009) 2 SCC 532)  what the Court held was that if stamp duty is not paid as per Section 35 of the Act, then it would not be looked into for any purpose, even for a collateral purpose. If stamp duty is paid then it can be looked into for a collateral purpose.

·         In Bonder Singh & Others v. Nihal Singh & Others (2004-1-L.W. 706) and in K.B. Saha & Sons Pvt. Ltd. v. Development Consultant Ltd. ((2009) 2 MLJ 526 (SC) ) the very same position of law has been stated. In these cases, the Court also explained what is meant by collateral purpose.

        29. 'Collateral' is not a magical word. It is for a limited purpose even an unregistered document which is required to be registered, which is not registered can be looked into. Under an unregistered document any right, title, interest, terms and conditions cannot be enforced. But under such a document, the manner of possession, the character of possession can be looked  into. Further, from the date of the unregistered document a person in possession may be in hostile possession to the land owner, then it can be looked into to consider the nature of possession of such a person (animus possessendi).

Law makes registration of sale agreement mandatory

Real estate laws and many judgments delivered by the Supreme Court have mandated the registration of sale agreement, ie, builder-buyer agreement, but some developers have managed to find loopholes in the legal provisions and exploited homebuyers everywhere in the NCR.

Legal experts say that had Section 17 of the Indian Registration Act (which makes registration of documents like sale agreement mandatory) been in practice in real estate, thousands of property buyers would not have become victims of property fraud and malpractice.

Registering a sale agreement is a wise move as it is also backed by various acts such as the Indian Contract Act, Specific Relief Act and various apartment acts enforced by many states. The Uttar Pradesh Apartment Act 2010 also requires all sale agreements to be necessarily registered in UP.

The downside of not registering a sale agreement was specifically highlighted by the apex court in its judgment in the TG Ashok Kumar vs Govindammal (2010) case.

“Unscrupulous property owners enter into agreements of sale and take huge earnest money deposits/advance, and then sell the property to others, thereby plunging the original agreement holder and the subsequent purchaser into litigation. Registration of agreements of sale will reduce such litigation.”

The judgment read: “If all agreements of sale are compulsorily registered that will go a long way to discourage generation and circulation of black money in real estate matters, as also undervaluation of documents for purposes of stamp duty. It will also discourage the growth of land mafias and musclemen who dominate the real estate scene in various parts of the country.”

Several Supreme Court and high court judgments have held that unregistered agreement of sale will not be recognised in a court of law. An important judgment on this issue was delivered by the Allahabad High Court in the Vijay Kumar Sharma vs Devesh Behri Saxena case in 2007. Sharma, the owner of a disputed 465 sq mt plot in Sector 15A, Noida, Uttar Pradesh, had received Rs 7 lakh as earnest amount from Saxena and had signed a sale agreement with him on January 22, 1993.

Later, Sharma had refused to honour the agreement, arguing that no completed, final, legal and binding sale agreement had been registered by the parties and the existing agreement could not be received as evidence of the alleged contract.

The court, citing legal provisions, had held that the contract for sale of immovable property in Uttar Pradesh had to be a registered document and an unregistered agreement of sell of immovable property was inadmissible as evidence.

Despite the legal provisions, however, many buyers complain that even if they want to get their sale-agreement registered, most developers are not interested. In such a situation, legal experts say that the state governments should take strict measures as they also stand to lose out on revenues.

Source http://www.hindustantimes.com/real-estate/law-makes-registration-of-sale-agreement-mandatory/story-rscP9uRIVGJ0xQrRMuNpNI.html

Lease of immovable property for a period of less than a year is compulsory registrable unless concerned State Government notifies otherwise

Lease of immovable property for a period of less than a year is compulsory registrable unless concerned State Government notifies otherwise

Transfer of property act hereinafter referred as TP Act categorically says about lease of immovable property how made at section 107 which is being reproduced herein below:

107. Leases how made. —  

A lease of immoveable 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 immoveable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.

Where a lease of immoveable property is made by a registered instrument, such instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee:

Provided that the State Government may from time to time, by notification in the Official Gazette, direct that leases of immoveable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument or by oral agreement without delivery of possession.

With regards to duration of lease section 106 of TP Act “written contract” in title and “contract” in the body. Section 4 of TP Act mandates that “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)”. The terms “contract” has a special meaning as given in section 10 of the Indian Contract Act under the heading of what agreements are contracts. As per the said section only those “agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Nothing herein contained shall affect any law in force in India, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents”. Any provision of law which intends to stipulate a special feature of to a contract will not be affected rather that will be considered a unique feature of that contract. Registration of a documents is a source of revenue for state government. Hence object of a person; who does not get the document registered which a law intended to be registered; cannot be said lawful as he wants to evade to pay revenue for state government. Second proviso of Section 107 of TP Act by using the terms “all other leases” for Lease of immovable property for a period of less than a year provides that such lease may be either by a registered instrument or by oral agreement accompanied by deliver of possession. TP Act by this provision, in clear terms, intends that leases of immovable property if not made by an oral agreement accompanied by delivery of possession then it must be by a registered instrument. Hence any unregistered lease deed of immovable property for a period of less than a year being without lawful object will not be recognised by law and such cannot be helpful to party to such lease

.

Section 4 of TP Act mandates that “Section 54, paragraphs 2 and 3, Sections 59, 107 and 123 shall be read as supplemental to the Indian Registration Act, 1908 (16 of 1980)”. Section 49 of the Registration Act under heading of Effect of non-registration of documents required to be registered mandates “No document required by Section 17 or by any provision of the Transfer of Property Act, 1882 to be registered shall (a) affect any immovable property comprised therein…”. These provisions are with respect to issue of effect of non-registration of a documents needs to be read together. It is crystal clear that a document to be registered is stipulated in section 17 of The Registration Act or any provision of the Transfer of Property Act, 1882. As such section 17 of The Registration Act alone does not provide exhaustive list of documents to be registered. Only two options have been provided by second proviso of Section 107 of TP Act section 107 for lease of immovable property for a period of less than a year i.e.

1) either by a registered instrument or

2) by oral agreement accompanied by deliver of possession.

As such leases of immovable property if not made by an oral agreement accompanied by delivery of possession, it must be by a registered instrument and not by unregistered instruments unless concerned State Government notifies otherwise. I have not came across any such notification whereby it has been directed that direct that leases of immovable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument. In absence of such notification leases of immovable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, mandatory be made only by registered instrument.

Now still some people even some advocate(s) may deny out rightly aforesaid position saying it is my own explanation as same is against the general prevailing perception. They emphasis on judicial pronouncements on the issue in hand. Below is relevant judicial pronouncement on the issue in hand.

The Hon’ble Delhi High Court in Chemical Sales Agencies vs Smt. Naraini Newar on 17 September, 2004 Equivalent citations: AIR 2005 Delhi 76, 2005 (1) ARBLR 193 Delhi, 114 (2004) DLT 272, 2004 (77) DRJ 224 http://indiankanoon.org/doc/1028412/

 “Section 107 of the Transfer of Property Act, 1882 clearly provides that 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 document. It further provides that all other leases of immovable property must be either by a registered instrument or by oral agreement accompanied by deliver of possession. Thus, only if there is a registered instrument or there is an oral agreement accompanied by delivery of possession can it be said that a relationship of Lesser and lessee is created. In the present case, I find that there is no registered instrument creating any such relationship. The purported lease agreement dated 01.05.1992 is not a registered document. It is not property stamped and by virtue of Section 49 of the Registration Act, 1908, the said document shall not effect any immovable property nor be received as evidence of any transaction affecting such property.”

The Hon’ble Karnataka High Court in Abdul Rasheed S/O Meeran Sab vs Srinivas S/O Kashinathrao on 16 April, 2014  http://indiankanoon.org/doc/59543538/ 

answering the issue of 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 said :

“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.”

Contractual Documents : Leave and License Agreement

Contractual Documents : Leave and License Agreement

Question: What is Leave and License Agreement ?

Answer:Though agreements are prepared as Leave and License Agreement but there is no statutory definition for the same in India. One of the dictionary meaning of "Leave" is permission to do something and statutory definition of License is "Where one person grants to another, or to a definite number of other persons, a right to do, or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful, and such right does not amount to an easement or an interest in the property, the right is called a license" as per section 52 of the Indian Easement Act 1882 (5 of 1882).

The word license (also Licence) should not be confused with the license issued either by the Government or any local or other authority to conduct a business, to produce or sell any article etc means permission by the the Government or any local or other authority to do a particular activity.

The License i.e. the subject mater of conveyancing is a right to do, or continue to do, in or upon the immovable property of the grantor and such right does not amount to an easement or an interest in the property. 

Section 4 of the Indian Easement Act defines An easement is a right which the owner or occupier of certain land possesses, as such, for the beneficial enjoyment of that land, to do and continue to do something, or to prevent and continue to prevent something being done, in or upon, or in respect of certain other land not his own.



Though the easement is a right of the owner and the occupier as well and further licensee after getting license becomes occupier does not get this right (easement).


So far as the  the an interest in the property is concern, the same has not been defined anywhere in the Indian Statues. Some judicial pronouncements have been delivered upon this by the Hon'ble Court in India but the same are also not elucidative. A licence is a privilege to do something in a property, otherwise not permissible. Suresh Chander Vohra v Union of India A. I. R. 1987 Delhi 154