Formalizing transfers under the TPA requires adherence to the rules of the Registration Act, 1908 and the Indian Stamp Act, 1899.
1. Compulsory vs. Optional Registration
- Compulsory Registration (Section 17 of Registration Act, 1908): Immovable property transactions must be registered if they create, declare, assign, limit, or extinguish any right, title, or interest of value Rs. 100 or upwards.
- Specifically includes: Sale Deeds, Gift Deeds of immovable property, Mortgages (except equitable mortgages), and Leases of immovable property from year to year or exceeding one year.
- Optional Registration (Section 18): Includes leases under one year, wills, and transfers of movable property.
2. Severe Consequence of Non-Registration (Section 49)
If a document compulsorily registerable under Section 17 is not registered, it:
- Does not affect any immovable property comprised therein.
- Cannot be received as evidence of any transaction affecting such property in a court of law.
- Exception: May be received as evidence of a contract in a suit for Specific Performance or as evidence of Part Performance under TPA Section 53A.
3. Indian Stamp Act, 1899: Revenue and Admissibility
Stamp Duty is a transactional tax levied by the government on legal instruments (documents) to validate their execution.
- Liability to Duty: Under Section 3, every instrument executed in India which relates to any property situated therein is liable to the prescribed stamp duty.
- Effect of Not Duly Stamping (Section 35): No instrument chargeable with duty shall be admitted in evidence for any purpose, or shall be acted upon, registered, or authenticated, unless such instrument is duly stamped.
- Impounding: Public officers and judges have a statutory duty to inspect every document presented and impound (seize) any instrument that appears to be unstamped or under-stamped until the proper duty and penalty are paid.