According to para 2 of Section 54 of The Transfer of Property Act, 1882 – Transfer by way of Sale in a Immoveable property of value exceeding Rs 100 can only be made by way of a Registered Instrument.
However, on account of Part Performance as enumerated in Section 53A of the Transfer of Property Act, 1882 a practice emerged in India for Transfer of Immoveable Property on the basis of “Possession Deed” without entering into a formal agreement of Sale to avoid payment of Stamp Duties on Registered Instruments for Transfer of Immoveable property.
It must be noted that in case of Part Performance, the Title of property vests in the name of the original Transferor, however the posession may be enjoyed by the transferee (including a subsequent transferee).
Section 2(a) of the Benami Transaction (Prohibition) Act, 1988 (prior to Amendment from 1 November 2016) defined a benami transaction to mean “any transaction in which property is transferred to one person for a consideration paid or provided by another person.”
However, there is a considerable and substantive enlargement of the phrase “Benami Transaction” by virtue of the amendment Act of 2016 w.e.f. 01 November 2016 and now Section 2(9) of The Prohibition of Benami Property Transactions Act, 1988 has excluded by way of an Explanation Section 53A transactions subject to fullfillment of condition of Registration and payment of stamp duty thereon, implicitly including transactions where such conditions are not fullfilled within the purview of Benami Transactions.
Explanation to Section 2(9) of The Prohibition of Benami Transactions Act, 1988 as amended excludes “any transaction involving the allowing of possession of any property to be taken or retained in part performance of a contract referred to in section 53A of the Transfer of Property Act, 1882, if, under any law for the time being in force –
(i) consideration for such property has been provided by the person to whom possession of property has been allowed but the person who has granted possession thereof continues to hold ownership of property;
(ii) stamp duty on such transaction or arrangement has been paid; and
(iii) the contract has been registered.”
It may also be noted that by Registration and Other Related laws (Amendment) Act, 2001, sub-section (1A) was inserted in Section 17 (Documents of which Registration is compulsory) of the Indian Registration Act, 1908 which provides that the documents containing contracts to transfer for consideration, any immovable property for the purpose of section 53A of the Transfer of Property Act, 1882 (4 of 1882) shall be registered if they have been executed on or after the commencement of the Registration and Other Related laws (Amendment) Act, 2001 (i.e., 24 September 2001) and if such documents are not registered on or after such commencement, then, they shall have no effect for the purposes of the said section 53A.
In the peculiar circumstances of different laws applicable over different time periods, the following issues arise in respect of such immoveable properties being subject to Benami Law :
- Whether the Prohibition of Benami Transactions Act, 1988 (as amended from 1 November 2016) will be applicable to Section 53A transactions between the period of 19 May 1988 to 31 October 2016, owing to the obvious enlargement of the scope / definition of “Benami Transaction” by way of amendments subsequent to parties entering such transaction or arrangement by the Parliament?
- If the Benami Law as enlarged is so applicable retrospectively, out of the period mentioned above, what will be the legal position between 24 September 2001 to 31 October 2016, where for want of Registration, Section 53A transactions are stated to have no effect by virtue of Section 17(1A) of The Indian Registration Act, 1908?
Transfer of Property Act, 1882
The Registration Act, 1908
The Benami Transactions (Prohibition) Act, 1988 (Original w.e.f. 19 May 1988 to 31 October 2016)
The Prohibition of Benami Property Transactions Act, 1988 (As amended w.e.f. 01 November 2016)