This was presented by V Law Partners for South Mumbai Realty Club's Legal Workshop - 'Towards Smoother Transactions'

1. A Legal Perspective
V Law Partners
207, Marine Chamber,
43, New Marine Lines, Mumbai
400020
Email: admin@vlawpartners.com
Tel: +91 (22) 6123 9000

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3. Movable Immovable
Tangible Intangible
 Movable Property - Sale of Goods Act 1930
 Immovable Property - Transfer of Property
Act 1882
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4.  Sale of Immovable Property ( S. 54)
 Mortgage of Immovable Property ( S. 58)
 Lease of Immovable Property ( S. 105)
 Exchange of Immovable Property ( S. 118)
 Gift of Immovable Property ( S. 122)
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5.  Sale is a transfer of ownership for a price paid
or promised or part-paid or part-promised as
a consideration
Essentials of Sale
 Competence of Parties to sale
 Sale consideration
 Passing of the title
 Handing over possession
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6.  Mortgage is a transfer of an interest in specific
immoveable property for the purpose of securing
the payment of money advanced by way of future
debt
Essentials of a Mortgage
 Specific immovable property
 Consideration
 Transfer of an interest
 Competence of Parties
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7.  Simple Mortgage - The possession of the mortgaged
property is not transferred from mortgagor to mortgagee
 Mortgage by Conditional Sale - The mortgagor apparently
sells the property to the mortgagee on certain conditions
 Usufructuary Mortgage- The possession of the mortgaged
property is transferred to the mortgagee. Mortgagee
receives rent, profit, interest, etc
 English Mortgage - Mortgagor binds himself to repay the
borrowed money on certain date and transfers the property
 Mortgage by deposit of Title Deeds - The mortgagor
delivers the title document of the property to the Mortgagee
 Anomalous mortgage – Mortgage not by any of the above
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8.  Lease is transfer of right to enjoy such property
made for a certain time in consideration of a price
paid or promised
Essentials of Lease
 Competence of Parties
 Details of property
 Duration of lease
 Consideration / Security Deposit / Rent
 Sub – lease / Assignment
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9.  Exchange is a mutual transfer of property by
two persons
Essentials of Exchange
 Ownership of one property for the ownership of other
 There must be two persons involved in the transaction
 The ownership is transferred not in exchange of money,
unlike a transaction of sale
 The principles applicable to sale transactions are also
extended to property exchange
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10.  Gift is transfer of certain existing property
made voluntarily without consideration
Essentials of a Gift
 Transfer to be voluntary and without consideration
 Gift is to be from donor and accepted by donee
 Acceptance of the gift to be made during the life time of
donor
 The donor and donee must be living persons
 Subject matter of gift must be certain existing movable or
immovable property
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11.  Land
 Flat/Office in a Co-Operative Society
 Flat / Office from a Developer/ Builder
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12. 1. Check for encumbrances at the office of
Sub-Registrar of Assurance
 Legal ownership document such as 7/12 extract, mutation entries is in
the name of the owner, issued by the Revenue Record Department
 A title report of land for last 30 yrs without encumbrances from a
reputed lawyer & public notice
 Property be transferable and heritable & not forest land
 Transfer is between competent parties
 Object or consideration for the transfer is lawful
 Transfer has been made and completed in the manner prescribed by
law
 Documents with regard to payment of taxes and other bills
 If the seller is a Company search is required in the office of the
Registrar of Companies to verify whether there is any charge on the
property /if a firm thenLaw Partners of firms
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13. ¬ Drafting &Execution of the final sale deed
i Payment of Stamp Duty on the final Sale
Deed after adjudication by stamp office
i Registration in the office of Sub-Registrar of
Assurances
t Application to the Land & Survey Office for
mutation of the sale of the property
s A board resolution is required effecting the
Sale for company as party and with the
name of the authorised signatory
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14. 1. Procedure and perusal of documents before
Purchase
 Seller’s share certificate issued by the society
 Previous chain of the Conveyance deeds in original
 Certificate of Title from an Advocate and public notice
 Receipt of the sub registrar of assurances where the conveyance has
been registered
 A NOC from the society for the transaction and induction of the
purchaser as member in the society
 A set of transfer forms duly filled by the parties in accordance to the
bye laws of the society
 Last receipt for the out goings bill paid to the Society and electricity
bills
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15.  Member shall give 15 days notice of his
intention to the Secretary of the Society in
the prescribed form
 Meeting of the Committee after the receipt
of the notice to check eligibility to transfer his
shares and interest u/s 29(2)(1)
 In event of ineligibility/eligibility secretary of
the Society to inform the member within 3
days

16.  To submit an application for transfer of his/her
shares and interest in the capital/property of the
society, in the prescribed form, along with the Share
Certificate
 To submit an application for membership of the
proposed transferee in the prescribed form
 To give valid reasons for the proposed transfer
 To discharge all the liabilities of the society
 To pay the transfer fee
 To remit entrance fee payable by the proposed
transferee

17.  To pay the amount of premium at a rate to be
fixed by the general body meeting not
exceeding Rs. 25,000/- whichever is less
 No additional amount by way of donation,
etc. will be taken unless it is paid voluntarily
by the member

18.  Settlement of dispute between society,
committee, secretary, members etc has to be
instituted in Co-operative court u/s 91 of the
Co-operative Societies Act
 Party aggrieved by the decision/order of the
Co-operative may within two months from
the date of decision appeal to Co-operative
Appellate Court u/s 97 of the Act

19.  Procedure and perusal of documents before
Purchase
 A legal opinion certifying that the land owner, builder or developer has a
clear marketable unencumbered title to the property and public notice
 The original deed of conveyance of land conveying the undivided interest
in land, common areas and facilities
 A 7x12 extract
 A copy of the latest tax paid receipt
 A completion certificate and occupation certificate
 The sanctioned building plan/license
 Verify draft agreement for sale
 Ensure the conveyance is executed in favour of society/company
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20.  M. Rent Control Act applies to any premises
let or given on license for residence or
business purpose
 Excluded premises are of govt. local
authority, banks etc.
 Act will not apply if the premises let or sub let
to banks, PSU’s, MNC’s and Pvt. or Public
Ltd. companies having paid up capital of Rs. 1
cr. or more

21.  License has been defined in Section 52 of the
Indian Easement Act 1882
 Section 7(5) of the Maharashtra Rent Control
Act, 1999, defines a "licensee"
 Licence is mere right to use and occupy the
premises for a limited duration for a paid
consideration
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22.  A license is a personal right granted to a
person to do something upon immovable
property of the grantor and does not amount
to the creation of interest in the property
itself
 It is purely a permissive right and is personal
to the grantee
 It creates no duties and obligations upon the
persons making the grant
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23.  Essentials of a License
 A license is not connected with the ownership of land / property but
creates only a personal right or obligation
 A license cannot be transferred or assigned
 License is purely permissive right arising only by permission, express or
implied, and not by adverse exercise or in any other way
 It only legalize a certain act which would otherwise be unlawful and does
not confer any interest in the property itself
 Decisions of the Supreme Court in Associated Hotels of India
Ltd. vs. R.N. Kapoor summed the concept of License as
above
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24.  A lease gives an exclusive interest in the
property whereas license does not
 A lease can be assigned to a third person
while a license being a personal right cannot
be so assigned
 A lessee can bring an action for trespass in his
own name but a licensee cannot do the same
 Licensee must do so in the name of the
licensor after obtaining his permission
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25.  Transferability is a feature of lease whereas a
License is not transferable
 A license is revocable unlike a lease
 Death of either party does not affect a lease
& legal heirs of the leaseholder can step into
shoes of the lessee
 A license is terminated by death of a party
 A leasehold creates a heritable right but not
the license
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26.  In the case Delta Int. Ltd. Vs S.S Ganeriwala the
Supreme Court has held :-
 In order to find a license or a lease the real test is to
ascertain the intention of the parties from the
document
 If absence of document a person being in exclusive
possession, a lease is construed
 Prima facie in absence of any rights or interest for
the premises it would be held as license
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27.  U/s 33 of the Act court of small causes
Mumbai has exclusive jurisdiction over the
matters relating to the Rent Act in Mumbai
 Elsewhere the court of the Civil Judge Junior
Division have the jurisdiction to entertain
suits relating to Rent Act
 Appeal u/s 34 of the Act shall lie from a
decree or order made by court of small
causes Mumbai to a division bench of the
same court

28.  U/s 38 (a) of the Rent Act a suit or
proceedings shall be heard and disposed
expeditiously within a period of 12 months
from the date of service of summon
 U/s 38 (a) of the Rent Act an appeal against a
decree or made by the court shall be heard
and disposed of within a period of 6 months
from the date of service of notice of appeal

29.  In case wherein a tenant is in breach of the
lease agreement or expiry u/s 16 of the Rent
Act a landlord may recover possession of the
premises
 On expiry or on valid termination a licensor is
entitled to recover possession of premises
given on license u/s 24 of the Rent Act
provided agreement should be in writing and
shall be a conclusive evidence

30.  A practice prevalent that a Leave & License
Agreement was/is entered for a period of 11 months
 Bombay Rent Act (old) did not provide for giving a
residential premises on Leave & License basis prior
to 1.2.1973, however the same were executed
 Lease of immovable property for a term of one year
& more is required compulsorily registered under
Section 17 (d) of the Indian Registration Act.

31.  Bombay Rent Control Act of 1947, has been
repealed and replaced by the Maharashtra
Rent Control Act, 1999
 Article 36 A dealing with stamping of Leave
and License was inserted in Bombay Stamp
Act w.e.f. 01.05.01
 Amendment was carried out in Article 36 A
of Bombay Stamp Act wherein 11 months
was substituted to 12 months and 33 months
to 60 months w.e.f 07.05.2005

32.  Maharashtra, Gujarat, Karnataka, Kerala and
Rajasthan have their own Stamp Act
 Rest of the states are governed by Indian
Stamp Act 1899
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33.  Bombay Stamp Act Schedule 1
 Article 25 – Conveyance (approx 5%)
 Article 36 Lease -(depends on term, deposit
and rent – approx 5%)
 Article 36 A – Leave and License
 The terms of the Leave and License Agreement
should not exceed 60 months with or without
renewal clause
 If the terms exceeds 60 months with/without
renewal clause stamp duty for a lease is payable
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34.  For the purpose of calculation of stamp
duty
 Any consideration in the form of premium,
advance, security deposit or by whatever
name called, shall for the purpose of market
value, be treated as consideration passed on
 The renewal period, if specifically mentioned,
shall be treated as part of the present lease
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35.  Non-payment of stamp duty does not make
the document void or otherwise invalid
 The consequences of under stamping as per
the Stamp Act are:
 the document can be impounded for enforcing the
payment of full stamp value.
 Penalty @2% per month but not exceeding twice
the amount of duty
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36.  Section 17 of the Indian Registration Act 1908 deals
with documents that require to be compulsorily
registered
 Other non testamentary instruments which
purports to operate create, declare, assign, limit or
extinguish any right, title & interest in immovable
property of value Rs. 100 or upwards
 Under Section 4 of the Maharashtra Ownership
Flats Act, 1963 promoter is responsible to execute a
written agreement and to get the agreement
registered under the Registration Act 1908
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37.  Section 55 (1) of the Maharashtra Rent
Control Act, 1999 - any agreement for Leave
and License or letting should be in writing
and registered under the Registration Act,
1908.
 Section 55 (2) imposes the responsibility on
the landlord of getting such agreement
registered
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38.  Any contravention to the provision of Section 55 of
Rent act will attract a imprisonment of 3 months or
fine of Rs.5000 or both
 Effect of Non – Registration u/s 49 of Registration
 it makes the document inadmissible in evidence
before any authority capable of receiving evidence
or before any public authority.
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39.  To facilitate a smooth deal
 Check title documents
 Clear terms of appointment, exclusivity / brokerage
 Check time to show premises and be on time
 Advise client to consult lawyer and CA
 Meet client’s requirement in a timely manner
 Check stipulated stamp duty and provide proper
registration to the instrument
 Be humble
 Don’t forget to congratulate
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40. THANK YOU