PART I INTRODUCTION

Various Laws Involved in Real Estate TransactionsThe various laws governing the real estate transactions have been abridged as follows:I. The Indian Contract Act, 1872. II. The Transfer of Property Act, 1882. III. The Indian Registration Act, 1908. IV. The Specific Relief Act, 1963. V. The Urban Land (Ceiling & regularization) Act, 1976. VI. The Land Acquisition Act, 1894. VII. The Indian Evidence Act, 1872.VIII. The Indian Stamps Act, 1899. IX. The Rent Control Act. X. The State Laws governing the real estates. XI. The Consumer Protection Act, 1986. XII. The Arbitration & Conciliation Act, 1996.XIII. Income Tax Act, 1961.XIV. The Wealth Tax Act, 1957XV. The Co-operative Societies Act, 1912XVI. The Multi-state Co-operative Societies Act, 2002

I.The Indian Contract Act, 1872There is one basic difference between the law of contracts and other laws. It does not specify the number of rights and duties, which the law protects or enforces. It rather consists of a number of limiting principles, subject to which the parties may create the right and duties for themselves, which the law will uphold. In a sense, the parties to a contract make the law for themselves. So long as they do not infringe upon legal provisions, they remain at liberty to make what rules they like regarding the subject matter of their agreement, and the law protects the parties in respect of their mutual determinations.Section 1 of Contract Act provides that any usage or custom or trade or any incident of contract is not affected as long as it is not inconsistent with provisions of the Act. In other words, provision of Contract Act will prevail over any usage or custom or trade. However, any usage, custom or trade will be valid as long as it is not inconsistent with provisions of Contract Act. The Act extends to the whole of India except the State of Jammu and Kashmir; and came into effect on 1 September 1872.a) Definition of contractAccording to Section 2 (h), the term contract means an agreement enforceable by law. Generally, the real estate transaction begins with an agreement between the parties. The legislation specifies when a party can be said to have the capacity to contract. A contract pertaining to real estate can be entered into, by an individual (who is not a minor or of unsound mind), partners of a firm, a corporate body, a trust, a sole corporation, the manager of an undivided family and a foreigner. All the requirements of a valid contract, i.e., consideration, intention to contract and validity under the law of the land must be satisfied.Definition of consideration: When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise [Section 2(d)].b) Steps involved in contractThe steps involved in the contract are:1. Proposal and its communication.2. Acceptance of proposal and its communication. 3. Agreement by mutual promises. 4. Contract. 5. Performance of Contract: All agreements are not contract. Only those agreements which are enforceable by law are contracts. Following are essential requirements of a valid contract.i. Offer and its acceptance.ii. Free consent of both parties.iii. Mutual and lawful consideration for agreement.iv. It should be enforceable by law. Hence, intention should be to create legal relationship. Agreements of social or domestic nature are not contracts.v. Parties should be competent to contract.vi. Object should be lawful.vii. Certainty and possibility of performance.viii. Contract should not have been declared as void under Contract Act or any other law.ix. Communication, acceptance and revocation of proposals Communication of proposal/revocation/ acceptance are vital to decide validity of a contract. A communication is complete only when other party receives it.x. Acceptance must be absolute - In order to convert a proposal into a promise, the acceptance must (1) be absolute and unqualified; (2) be expressed in some usual and reasonable manner, unless the proposal prescribed the manner in which it is to be accepted. If the proposal prescribes a manner in which it is to be accepted, and the acceptance is not made in such a manner, the proposer may, within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise; but if he fails to do so, he accepts the acceptance [Section 7].xi. Acceptance of offer is complete only when it is absolute and unconditional. Conditional acceptance or qualified acceptance is no acceptance. xii. Promises, express or implied. Insofar as the proposal or acceptance of any promise is made in words, the promise is said to be express. Insofar as such proposal or acceptance is made otherwise than in words, the promise is said to be implied [Section 9]. For example, if a person enters a bus, there is implied promise that he will pay the bus fare.c) Types of contractThere are five types of contract, they are:1. Void contracts2. Voidable contracts3. Valid contracts4. Unenforceable contracts5. Illegal/unlawful contracts1.Void contractsSection 2 (j) of the Indian Contract Act, 1872 defines a void contract as under:A contract which ceases to be enforceable by law becomes void, when it ceases to be enforceable. It is clear from this definition that a void contract is a contract which was valid originally, i.e., at the time of its formation, but becomes void subsequently on account of the happening of some subsequent event. In other words, it is a contract which was valid originally, but becomes void (ceases to be enforceable by law) subsequently. Thus a void contract is not void ab initio. It becomes void subsequently, when it ceases to be enforceable by law. A void contract is perfectly valid and binding on the contracting parties until it becomes void, i.e., cases to be enforceable by law. It is for this reason that void contracts are known as ex post facto void contracts.Examples of void contracts(i)Subsequent impossibilityAs per Section 56 of the Indian Contract Act, 1872 a contract becomes void by supervening impossibility i.e., by subsequent impossibility of performance. Suppose X and Y contract to marry each other. After formation of the contract, but before the time fixed for the marriage, Y becomes mad. In this case, the contract becomes void because of impossibility of performance i.e., impossibility of marriage.(ii)Subsequent illegalityAs per Section 56 of the Indian Contract Act, 1872 a contract becomes void by supervening illegality i.e., subsequent illegality. Suppose X agrees to sell Y 1000 bottles of liquor on or before a specified date, but before the delivery, the Government introduces prohibition of sale of liquor. In this case, the contract becomes void due to subsequent illegality of the business.(iii)Impossibility of contingent eventAs per Section 32 of the Indian Contract Act, 1872, a contingent contract to do or not to do something on the happening of an uncertain future event becomes void, when that event becomes impossible. Suppose, A agrees to deliver imported garments to D when the ship carrying the garments arrives at Cochin port. But the ship sinks on the way. In this case, the contract becomes void.2. Voidable contractSection 2 (i) of the Indian Contract Act, 1872 defines voidable contract as under:An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract. From this definition, it is clear that a contract is voidable if it is enforceable by law at the option of only one of the contracting parties, and not at the option of both the contracting parties. In short, it is a contract which can be enforced or which can be avoided at the option of one of the contracting parties i.e., the aggrieved party.Examples of voidable contracti)Normally, a contract becomes voidable when the essential element of free consent is not present. Such a contract is voidable at the option of the aggrieved party, i.e., the party whose consent is so obtained. For instance, if A coerces B to enter into a contract with him for the sale of Bs house at knife point. In this case, B s consent is obtained by coercion. In such a case, B can either enforce the contract or rescind the contract. A cannot enforce it against B. ii)Section 53 of the Indian Contact Act says when a contract contains reciprocal promises, and one party to the contract prevents the other party from performing his promise, then the contract becomes voidable at the option of the party so prevented. Suppose X contracts with Y to repair Ys house for Rs. 5000. X is ready to repair. But Y does not permit X to repair. In this case, the contract becomes voidable at the option of X and so, it can be avoided by X.iii)Section 55 of the Act says when one party to the contract promises to do a certain thing within a definite or specified time, but fails to do so, then, the contract becomes voidable at the option of the other party, if the intention of the parties was that time should be an essential condition of the contract. Suppose R contracts with S to whitewash Ss house for Rs 1000 within a week, but R fails to do so within the prescribed time. In this case, the contract becomes voidable at the option of S.When does a voidable contract become a void contract?A voidable contract becomes void when the party entitled to repudiate such a contract exercises his option to repudiate the contract. Suppose A forces B to sell his house to him for Rs 10,000 at knife point, in this case, the contract is voidable and it can be repudiated or avoided by B. If B decides to rescind or avoid the voidable contract, the contract becomes void.Differences between void contract and voidable contract1. A void contract is not enforceable at law at the instance of either party. But a voidable contract is enforceable at the option of the aggrieved party.2. A third party gets no right to a thing transferred by a person claiming the same under a void contract. On the other hand, a third party acquires good title to a thing transferred by a person claiming the same under a voidable contract provided the transfer takes place before the contract is voided.3.Valid contractA valid contract is an agreement enforceable by law. An agreement becomes enforceable by law only when it satisfies all the essential elements of a contract as contained in Section 10 of the Indian Contract Act. So, a valid contract is an agreement which satisfies all the essentials of a contract, as contained in Section 10 of the Indian Contract Act. For example, if A offers to sell his house to B for Rs 10 lakhs and B accepts the same, there is a valid contract. The legal rights conferred and the legal obligations imposed by a valid contract are enforceable by law against each other.4.Unenforceable contractsAn unenforceable contract is a contract which is valid in itself, but cannot be enforced in a court of law because of some technical defect, say absence of writing, absence of registration, want of requisite stamp, expiry of time, etc. ExampleAn oral arbitration agreement is unenforceable because, as per the arbitration law, an arbitration agreement is required to be in writing. Similarly, an insufficiently stamped bill of exchange or promissory note cannot be enforced in a court of law. 5.Illegal or unlawful contractsSection 23 of the Indian Contract Act deals with such contracts. An illegal or unlawful contract is one whose object or consideration i. is forbidden by law orii. is of such a nature that, if permitted, it would defeat the provisions of any law oriii. is fraudulent oriv. involves or implies injury to the person or property of another orv. is immoral orvi. is opposed to public policy.ExamplesAn agreement to commit murder, assault or robbery, etc.Illegal contracts are void ab initio. All illegal agreements are void. But all void agreements are not illegal.Further, when the main agreement is illegal, then the other incidental or collateral to the main agreement are also void. Suppose A engages B to murder C and borrows Rs 1 lakh from D to pay B. In this case, the main agreement between A and B is illegal. As such, the agreement which is collateral to the main agreement i.e., the loan agreement between A and D is also illegal. This means D cannot recover the loan from A through a court of law. However, if D is not aware of the purpose of the loan and if it can be proved, then the agreement is not tainted with illegality.d) Contract of AgencyAgency is a special type of contract. The concept of agency was developed as one man cannot possibly do every transaction himself. Hence, he should have opportunity or facility to transact business through others like an agent. The principles of contract of agency are: (a) Excepting matters of a personal nature, what a person can do himself, he can also do it through agent (e.g. a person cannot marry through an agent, as it is a matter of personal nature) (b) A person acting through an agent is acting himself, i.e. act of agent is act of Principal. Since agency is a contract, all usual requirements of a valid contract are applicable to agency contract also, except to the extent excluded in the Act. One important distinction is that as per Section 185, no consideration is necessary to create an agency. Agent and principal defined: An agent is a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the principal [Section 182].Who may employ agent? Any person who is of the age of majority according to the law to which he is subject, and who is of sound mind, may employ an agent [Section 183]. Thus, any person competent to contract can appoint an agent.Who may be an agent? As between the principal and third persons any person may become an agent, but no person who is not of the age of majority and of sound mind can become an agent, so as to be responsible to his principal according to the provisions in that behalf herein contained [Section 184]. The significance is that a Principal can appoint a minor or person of unsound mind as agent. In such case, the Principal will be responsible to third parties. However, the agent, who is a minor or of unsound mind, cannot be responsible to Principal. Thus, Principal will be liable to third parties for acts done by Agent, but agent will not be responsible to Principal for his (i.e. Agents) acts.Consideration not necessary: No consideration is necessary to create an agency [Section 185]. Thus, payment of agency commission is not essential to hold appointment of Agent as valid.Authority of agent: An agent can act on behalf of Principal and can bind the Principal. Agents duty to Principal: An agent has following duties towards principal.i. Conducting principals business as per his directions. ii. Carry out work with normal skill and diligence. iii. Render proper accounts [Section 213]. iv. Agents duty to communicate with principal [Section 214]. v. Not to deal on his own account, in business of agency [Section 215].vi. Agents duty to pay sums received for principal [Section 218]. vii. Agents duty on termination of agency by principals death or insanity [Section 209].Remuneration to Agent: Consideration is not necessary for creation of agency. However, if there is an agreement, an agent is entitled to get remuneration as per contract.

Rights of Principali. Recover damages from agent if he disregards directions of Principal. ii. Obtain accounts from Agent. iii. Recover moneys collected by Agent on behalf of Principal. iv. Obtain details of secret profit made by agent and recover it from him. v. Forfeit remuneration of Agent if he misconducts the business.Duties of Principali. Pay remuneration to agent as agreed. ii. Indemnify agent for lawful acts done by him as agent. iii. Indemnify Agent for all acts done by him in good faith. iv. Indemnify agent if he suffers loss due to neglect or lack of skill of Principal.Termination of Agency: An agency is terminated by the principal revoking his authority; or by the agent renouncing the business of the agency; or by the business of the agency being completed; or by either the principal or agent dying or becoming of unsound mind; or by the principal being adjudicated an insolvent under the provisions of any Act for the time being in force for the relief of insolvent debtors [Section 201]. In following cases, an agency cannot be revoked.i. Agency coupled with interest (Section 202). ii. Agent has already exercised his authority (Section 203). iii. Agent has incurred personal liability.e) Remedies for Breach of ContractWhen a contract is broken, the injured party has one or more of the following remedies:i. Rescission of Contract: When a contract is broken by one party, the other party may sue to treat the contract as rescinded and refuse further performance. ii. Suit for compensations. iii. Suit for specific performance. iv. Suit for injunction.

II.Transfer of Property Act, 1882This Act lays down the general principles of realty, like part-performance and has provisions for dealing with property through sale, exchange, mortgage, lease, lien and gift. A person acquiring immovable property or any share/interest in it is presumed to have notice of the title of any other person who was in actual possession of such property. Every person competent to contract and entitled to transferable property, or authorised to dispose of transferable property not his own, is competent to transfer such property either wholly or in part, and either absolutely or conditionally in the manner prescribed by any law for the time being in force. A transfer of property passes forthwith to the transferee all the interest which the transferor is then capable of passing in the property. A transfer of property may be made without writing Transfer of propertyTransfer of property means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself and one or more other living persons; and to transfer property is to perform such act. Living person includes a company or association or body of individuals, whether incorporated or not, (Section 5).Property, which cannot be transferred(a)The chance of an heir-apparent succeeding to an estate, the chance of a relation obtaining a legacy on the death of a kinsman, or any other mere possibility of a like nature, cannot be transferred.(b)A mere right of re-entry for breach of a condition subsequent cannot be transferred to anyone except the owner of the property affected thereby.(c)An easement cannot be transferred apart from the dominant heritage.(d)An interest in property restricted in its enjoyment to the owner personally cannot be transferred by him.(dd)A right to future maintenance, in whatsoever manner arising, secured or determined, cannot be transferred.(e)A mere right to sue cannot be transferred.(f)A public office cannot be transferred, nor can the salary of a public officer, whether before or after it has become payable.(g)Stipends allowed to military, naval, air-force and civil pensioners of the government and political pensions cannot be transferred.(h)Any transfer for an unlawful object or for a unlawful consideration with in the meaning of Section 23 of the Indian Contract Act, 1872 is illegal and hence void.(i)A tenant having an non-transferable right of occupancy.(j)An estate in respect of which default has been made in paying revenue.(k)the lease of an estate under the management of a Court of Wards, to assign his interest as such tenant, farmer or lessee.Transfer of title of ownershipTransfer of property refers to taking over of possession from one person to another person. The Transfer of Property Act 1882 contains specific provisions regarding what constitutes transfer and the conditions attached to it. According to the Act, transfer of property means an act by which a person conveys property to one or more persons, or himself and one or more other persons. The act of transfer may be done in present or for future. The person may include an individual, company or association or body of individuals, and any kind of property may be transferred.Every person, who is competent to contract, is competent to transfer property, which can be transferred in whole or in part. He should be entitled to the transferable property, or authorised to dispose off transferable property which is not his own. The right may be either absolute or conditional, and the property may be movable or immovable, present or future. Such a transfer can be made orally, unless a transfer in writing is specifically required under any law.A transfer of property passes forthwith to the transferee all the interest which the transferor is then capable of passing in the property, unless a different intention is expressed or implied.In case the property is transferred subject to the condition which absolutely restrains the transferee from parting with or disposing off his interest in the property, the condition is void. The only exception is in the case of a lease where the condition is for the benefit of the lessor or those claiming under him. Generally, only the person having interest in the property is authorised to transfer his interest in the property and can pass on the proper title to any other person.According to Section 6 of the Transfer of Property Act, property of any kind may be transferred. The person insisting non-transferability must prove the existence of some law or custom which restricts the right of transfer. Unless there is some legal restriction preventing the transfer, the owner of the property may transfer it. However, in some cases there may be transfer of property by unauthorized person who subsequently acquires interest in such property.According to Section 43 of the Transfer of Property Act 1882, in case a person either fraudulently or erroneously represents that he is authorised to transfer certain immovable property and does some acts to transfer such property for consideration, then such a transfer will continue to operate in future. It will operate on any interest which the transferor may acquire in such property. This will be at the option of the transferee and can be done during the time during which the contract of transfer exists. As per this rule, the rights of bona fide transferee, who has no notice of the earlier transfer or of the option, are protected. This rule embodies a rule of estoppel, i.e., a person who makes a representation cannot later on go against it.The rights of the transferees will not be adversely affected, provided they acted in good faith; the property was acquired for consideration; and the transferees had acted without notice of the defect in title of the transferor.It should be noted that these conditions must be satisfied:There must be as representation by the transferor that he has authority to transfer the immovable property. The representation should be either fraudulent or erroneous.The transferee must act on the representation in good faith.The transfer should be done for a consideration.The transferor should subsequently acquire some interest in the property he had agreed to transfer.The transferee may have the option to acquire the interest which the transferor subsequently acquires. The exercise of option must be during the period of continuation of the contract and not afterwards.When all these conditions exist, the transferee becomes entitled to the interest, which is subsequently acquired by the transferor. It is to be noted that the transferee, acting upon the representation, has no right against any subsequent bonafide transfer for consideration.SaleSale is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised (Section 54). Transfer of tangible immovable assets of value of Rs 100 or above or other intangible thing can be made only by registered instrument and in case of tangible immovable property of less than Rs 100 may be made either by registered instrument or by delivery of property Rights and liabilities of buyer and seller of immovable property (Section 55)a)Liabilities of selleri.In the absence of the contract to the contrary the seller is bound:(a)to disclose to the buyer any material defect in the property or in the sellers title thereto of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover;(b)to produce to the buyer on his request for examination all documents of title relating to the property which are in the sellers possession or power;(c)to answer to the best of his information all relevant questions put to him by the buyer in respect to the property or the title thereto;(d)on payment or tender of the amount due in respect of the price, to execute a proper conveyance of the property when the buyer tenders it to him for execution at a proper time and place;(e)between the date of the contract of sale and the delivery of the property, to take as much care of the property and all documents of title relating thereto which are in his possession as an owner of ordinary prudence would take of such property and documents;(f)to give, on being so required, the buyer, or such person as he directs, such possession of the property as its nature admits;(g)to pay all public charges and rent accrued due in respect of the property up to the date of the sale, the interest on all encumbrances on such property due on such date, and, except where the property is sold subject to encumbrances, to discharge all encumbrances on the property then existing.ii.Where the whole of the purchase-money has been paid to the seller, he is also bound to deliver to the buyer all documents of title relating to the property which are in the sellers possession or power:b)Rights of sellerThe seller is entitled:i.to the rents and profits of the property till the ownership thereof passes to the buyer;ii.where the ownership of the property has passed to the buyer before payment of the whole of the purchase-money, to a charge upon the property in the hands of the buyer, any transferee without consideration or any transferee with notice of the non-payment, for the amount of the purchase-money, or any part thereof remaining unpaid, and for interest on such amount or part from the date on which possession has been delivered.c)Liabilities of buyerThe buyer is bound:i.to disclose to the seller any fact as to the nature or extent of the sellers interest in the property of which the buyer is aware, but of which he has reason to believe that the seller is not aware, and which materially increases the value of such interest;ii.to pay or tender, at the time and place of completing the sale, the purchase-money to the seller or such person as he directs but where the property is sold free from encumbrances, the buyer may retain out of the purchase-money the amount of any encumbrances on the property existing at the date of the sale, and shall pay the amount so retained to the persons entitled thereto;iii.where the ownership of the property has passed to the buyer, to bear any loss arising from the destruction, injury or decrease in value of the property not caused by the seller;ERE-6

iv.where the ownership of the property has passed to the buyer, as between himself and the seller, to pay all public charges and rent which may become payable in respect of the property, the principal moneys due on any encumbrances subject to which the property is sold, and the interest thereon afterwards accruing d)Rights of buyerThe buyer is entitled:i.where the ownership of the property has passed to him, to the benefit of any improvement in, or increase in value of, the property, and to the rents and profits thereof;ii.unless he has improperly declined to accept delivery of the property, to a charge on the property, as against the seller and all persons claiming under him, to the extent of the sellers interest in the property, for the amount of any purchase-money properly paid by the buyer in anticipation of the delivery and for interest on such amount; and, when he properly declines to accept the delivery, also for the earnest (if any) and for the costs (if any) awarded to him of a suit to compel specific performance of the contract or to obtain a decree for its rescission.e)Mortgage, mortgagor and mortgageeA mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement that may give rise to a pecuniary liability.The transferor is called a mortgagor, the transferee a mortgagee; the principal money and interest of which payment is secured for the time being are called the mortgage-money, and the instrument (if any) by which the transfer is effected is called a mortgage-deed (Section 58).Where the principal money secured is Rs 100 or upwards, a mortgage can be effected only by a registered instrument signed by the mortgagor and attested by at least two witnesses.Rights of mortgagorAfter the principal money has become due, the mortgagor has a right, on payment of the mortgage-money, to require the mortgagee:1.to deliver to the mortgagor the mortgage-deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee,2.where the mortgagee is in possession of the mortgaged property, to deliver possession thereof to the mortgagor, and3.either to re-transfer the mortgaged property to him or to such third person as he may direct, or to execute and to have registered an acknowledgement in writing that any right transferred to the mortgagee has been extinguished:A mortgagor in possession of the mortgaged property is not liable to the mortgagee for allowing the property to deteriorate; but he must not commit any act which is destructive or permanently injurious thereto, if the security is insufficient or will be rendered insufficient by such act.Rights of MortgageeMortgagee has, at any time after the mortgage- money has become due to him, and before a redemption decree or the mortgage-money has been paid or deposited a right to obtain from the court a decree that the mortgagor shall be absolutely debarred of his right to redeem the property, or a decree that the property be sold.The mortgagee has a right to sue for the mortgage-money:1.where the mortgagor binds himself to repay the same;2.where, the mortgaged property is wholly or partially destroyed3.where the mortgagee is deprived of the whole or part of his security in consequence of the wrongful act or default of the mortgagor.Liabilities of mortgageeWhen the mortgagee takes possession of the mortgaged property, he must:1.manage the property as if it were his own;2.collect the rents and profits thereof;3.pay the government revenue, charges of a public nature and rent;4.make necessary repairs of the property;5.must not commit any act which is destructive or permanently injurious to the property;6.he must keep clear, full and accurate accounts of all sums received and spent by him as mortgagee.LeaseA lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent (Section 105).A lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months notice and a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days notice.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 instrument.All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.Rights and liabilities of the lessor1.The lessor is bound to disclose to the lessee any material defect in the property;2.The lessor is bound on the lessees request to put him in possession of the property;3.If the lessee pays the rent and performs the contracts binding on the lessee, he may hold the property during the time limited by the lease without interruption.Rights and liabilities of the lessee1.Any material part of the property destroyed and permanently unfit for the purposes for which it was let by fire, tempest or flood, or violence of an army or of a mob, the lease shall, at the option of the lessee, be void:2.If the lessor neglects to make, within a reasonable time after notice, any repairs which he is bound to make to the property, the lessee may make the same himself, and deduct the expense of such repairs with interest from the rent, or otherwise recover it from the lessor;3.Bound to pay, the premium or rent to the lessor or his agent in this behalf;4.May remove, at any time whilst he is in possession of the property leased all things which he has attached to the earth provided he leaves the property in the state in which he received it;5.Must not, without the lessors consent, erect on the property any permanent structure, except for agricultural purposes;6.On the determination of the lease, the lessee is bound to put the lessor into possession of the property.ExchangeWhen two persons mutually transfer the ownership of one thing for the ownership of another, neither thing or both things being money only, the transaction is called an exchange (Section 118).If any party to an exchange is by reason of any defect in the title of the other party deprived of the thing received by him in exchange, then such other party is liable to him for loss caused thereby or for the return of the thing transferred still in the possession of such other party from him without considerationThe rights and liabilities are same as of seller and buyer.

GiftGift is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the donor, to another, called the donor, and accepted by or on behalf of the donee (Section 112).Acceptance of the gift must be made during the lifetime of the donor and while he is still capable of giving.For making a gift of immovable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses.For making a gift of movable property, the transfer may be effected either by a registered instrument signed as aforesaid or by delivery.Where a gift consists of the donors whole property, the donee is personally liable for all the debts due and liabilities of the donor at the time of the gift to the extent of the property comprised therein.ChargeWhere immovable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property and all the provisions contained in the Transfer of Property Act which apply to a simple mortgage shall, so far as may be applicable, apply to such charge. Thus charge can be contractual or statutory.

III.The Registration Act, 1908The purpose of this Act is the conservation of evidence, assurances, title, and publication of documents and prevention of fraud. It details with the formalities for registering an instrument. Immovable propertyImmovable property includes land, buildings, hereditary allowances, rights to ways, lights, ferries, fisheries or any other benefit to arise out of land, and things attached to the earth or permanently fastened to anything which is attached to the earth, but not standing timber, growing crops nor grass (Sub-Section 6 of Section 2).Movable propertyMovable property includes standing timber, growing crops and grass, fruit upon and juice in trees, and property of every other description, except immovable property (Sub Section 9 to Section 2).Documents for which registration is compulsorya.Instruments of gift of immovable property: b.Other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent to or in immovable property: c.Non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of instruments in (2) above. d.Leases of immovable property from year to year; or for any term exceeding one year, or reserving a yearly rent. e.Non-testamentary instruments transferring or assigning any decree or order of a court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property (Section 17).Documents for which registration is optionalAny of the following documents may be registered under this Act, namely:a.instruments (other than instruments of gift and wills) which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of a value less than one hundred rupees, to or in immovable property;b.instruments acknowledging the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest;c.leases of immovable property for any term not exceeding one year, and leases exempted under Section 17;cc.instruments transferring or assigning any decree or order of a court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of a value less than one hundred rupees, to or in immovable property;]d.instruments (other than wills) which purport or operate to create, declare, assign, limit or extinguish any right, title or interest to or in movable property;e.wills.Time for presenting documentsNo document other than a will shall be accepted for registration unless presented within four months from the date of its execution. A copy of a decree or order may be presented within four months from the date on which the decree or order was made or, where it is appealable, within four months from the day on which it becomes final (Section 23).Documents executed by several persons at different timesWhere there are several persons executing a document at different times, such document may be presented for registration and re-registration within four months from the date of each execution (Section 24).Provision where delay in presentation is unavoidableIf, owing to urgent necessity or unavoidable accident, any document executed, or copy of a decree or order made, in India is not presented for registration till after the expiration of the prescribed time, the Registrar, in cases where the delay in presentation does not exceed four months, may direct that, on payment of a fine not exceeding ten times the amount of the proper registration-fee, such document shall be accepted for registration (Section 25).Documents executed out of IndiaWhen a document purporting to have been executed by all or any of the parties out of India is not presented for registration till after the expiration of the prescribed time, the registering officer, if satisfied(a)that the instrument was so executed, and(b)that it has been presented for registration within four months after its arrival in India may, on payment of the proper registration fee, accept such document for registration (Section 26).Sales, mortgages (other than by way of deposit of title deeds) and exchanges of immovable property are required to be registered by virtue of the Transfer of Property Act. Evidently, therefore, all the above documents have to be in writing. An unregistered document will not effect the property comprised in it, nor be received as evidence of any transaction affecting such property (except as evidence of a contract in a suit for specific performance or as evidence of part-performance under the Transfer of Property Act or as collateral).

Who can present documents for registration?1.Person executing the documents.2.Representative of such person authorized by power of Attorney.3.Agent of such person authorized by power of Attorney.When the Registrar can refuse to register the document?1.The registrar can refuse to register the document on the following grounds:2.If the document is in a language, which the registering officer does not understand and which is not commonly used in the district, unless it is accompanied by a true translation into a language commonly used in the district and also by true copy;3.If in the document interlineations, blank, erasure or alteration appears unless the persons executing the document attest with their signatures or initials such interlineations, blank, erasure or alteration;4.If any person by whom the document purports to be executed denies its execution;5.If any person appears to the registering officer to be a minor, an idiot, or a lunatic;6.If any person by whom the document purports to be executed is deed and his representative or assignee denies its execution;It is pertinent to mention that the Registrar can impound the document, if it contains deficient stamp duty and send the same to the collector for necessary action.IV.Special Relief Act, 1963This Act is only to enforce individual civil rights [Section 4]. A person dispossessed of immovable property without his consent (other than in due course of law) can recover possession by a suit filed within six months from the date of dispossession. In a suit for specific performance of contract, the Court shall presume that monetary compensation for its performance would not afford adequate relief. The court could also grant a permanent/ mandatory injunction preventing the breach of such contract and award damages.Specific Relief Act is complimentary to the provisions of Contract Act and Transfer of Property Act, as the Act applies both to movable property and immovable property. The Act applies in cases where Court can order specific performance of a contract or act.Meaning of Specific performance Specific performance means Court will ask the party to perform his part of agreement, instead of asking him to pay damages to other party.Recovering possession of immovable property1.A person who is entitled to possession of a specific immovable property may recover it in the manner provided in Code of Civil Procedure. (Section 5) 2.If any person is disposed without his consent, of immovable property otherwise than by course of law, he can recover possession, even if any other title is set up in such suit. Such suit shall be brought within 6 months. No suit can be filed against Government for recovery of possession [Section 6]. Even an unlawful possession of immovable property can be taken away only by lawful means and not forcefully.Specific performance of contractSpecific performance of contract can be ordered, at the discretion of Court, in the following cases (a)Where there exists no standard for ascertaining damage caused by the non-performance of act agreed to be done or (b)When the act agreed to be done is such that compensation in money for non-performance will not give sufficient relief [Section 10]. As per explanation (ii) to section 10, breach of contract in respect of movable property can be relieved (by paying damages) unless the property is not an ordinary article of commerce or is of specific value or interest to the tariff, or consists of goods which are not easily available in the market. In other words, Court may order to deliver specific article only if it is special or unique article, not available in the market. In other cases, Court will order damages but not order specific performance of contract. In case of immovable property, normally, specific performance will be ordered, as such property is usually unique. Section 12(1) states that Court shall not order performance of part of contract, except in cases specified in that section.Contracts which cannot be specifically enforcedFollowing contracts cannot specifically enforced:1.Where compensation is adequate relief.2.Contract runs into such minute or numerous details or depends on personal qualifications of parties or is such that Court cannot enforce specific performance of its material terms.3.Contract which in its nature is determinable.4.Contract, performance of which involves a continuous duty, which Court cannot supervise [Section 14]. In other words, in case of movable articles or contract of intricate nature, specific performance will normally not be ordered by Court. Specific performance of contract of personal nature cannot be ordered.Discretionary powers of CourtJurisdiction of Court to decree specific performance is discretionary. Court will not order specific performance merely because it is lawful to do so [Section 20(1)]. Court will consider various aspects before issuing decree for specific performance. Court can grant compensation in lieu of even in addition to specific performance [Section 21].Other cases when Court can order specific performance1.Order rectification of instrument if it does not reflect real intention of parties. This may happen through fraud or mutual mistake [Section 26] 2.Order rescission of contract (Section 27) 3.Cancellation of instrument by getting declared that it is void (Section 31)

V.Urban Land (Ceiling and Regulation) Act (ULCRA), 1976This legislation fixed a ceiling on the vacant urban land that a person in urban agglomerations can acquire and hold. A person is defined to include an individual, a family, a firm, a company, or an association or body of individuals, whether incorporated or not. This ceiling limit ranges from 5002000 sq. m. Excess vacant land is either to be surrendered to the competent authority appointed under the Act for a small compensation, or to be developed by its holder only for specific purposes. The Act provides for appropriate documents to show that the provisions of this Act are not attracted or should be produced to the Registering officer for registration under the Registration Act.

The objective of acquiring the excess vacant land could not be achieved because of intrinsic deficiencies in the legislation itself. The provisions under Sections 19, 20 and 21 of the Act have together proved counter-productive to the objectives of the legislation. So far, only 19020 hectares could be taken possession of by State Governments and Union Territories and the remaining land was locked up in various litigations. This has only helped to push up land prices to unconscionable levels and practically brought the housing industry to a stand-still.This legislation was repealed by the center in 1999. The Repeal Act, however, shall not affect the vesting of the vacant land, which has already been taken possession by the State Government or any person duly authorized by the State Government in this regard under the provisions of ULCRA. The repeal of the Act, it is believed, has eliminated that large amount of litigation and released huge chunks of land into the market.

VI.The Land Acquisition Act, 1894This Act authorizes governments to acquire land for public purposes such as planned development, provisions for town or rural planning, provision for residential purpose to the poor or landless and for carrying out any education, housing or health scheme of the Government, in its present form. The Act hinders speedy acquisition of land at low prices, resulting in cost overruns.Steps for Land AcquisitionBased on the Land Acquisition Act 1894, the steps currently involved in land acquisition are as under 1.A notification is published in official gazette and in two daily newspapers whenever it appears to the appropriate Government the land in any locality is needed for any public purpose. Thereupon it shall be lawful for any officer authorized by such Government to enter upon and survey and take levels of any land in such locality, to dig or bore into the sub-soil, to do all other acts necessary to ascertain whether the land is adapted for such purpose, to set out the boundaries of the land proposed to be taken and the intended line of the work (if any) proposed to be made thereon, to mark such levels, boundaries and line by placing marks and cutting trenches; 2.The officer so authorized shall at the time of such entry pay for all necessary damages.3.Declaration shall be made that land is required for public purposed under the signature of a Secretary to such Government. Every declaration shall be published in the Official Gazette and in two daily newspapers circulating in the locality in which the land is situated.4.After declaration, Collector to take order for acquisition.5.The Collector shall thereupon cause the land to be market out.6.The Collector shall then cause public notice at convenient places on or near the land to be taken, stating that the Government intends to take possession of the land, and that claims to compensations for all interests in such land may be made to him.7.The collector will make inquiry into measurements, value, claims and awards.8.The Collector shall make an award within a period of two years from the date of the publication of the declaration and if no award is made within that period, the entire proceeding for the acquisition of the land shall lapse.9.Award of Collector when to be final.8.After making an award for possession of the land, land shall vest absolutely in the Government, free from all encumbrances.

75The Land Acquisition Act, 1894

VII.The Indian Evidence Act, 1872Evidence means and includes:1.All statements which the Court permits or requires to be made before it by witnesses, in relation to matters of fact under inquiry; such statements are called oral evidence.2.All documents including electronic records produced for the inspection of the Court; such documents are called documentary evidence.Section 110 deals with the burden of proof regarding title to property when the competition is between a person in possession and the owner who is out of possession. The rule laid down in Section 110 is that the burden of proof that the person in possession is not the owner is on the person who alleges that he is not the Owner.Ownership chiefly imports the right to exclusive possession and enjoyment of a thing. The owner in possession has the right to exclude all others from possession and enjoyment of it and if he is wrongfully deprived of what he owns, he has the right to recover possession of it. Ownership also imports the power to dispose of property, to sell, mortgage or donate. Right to possession and Right to dispose of are therefore incidents of Ownership. Where there is ownership there goes with it the right to possession and the right to dispose. The law therefore holds that a person would not be in possession of property unless he was the owner and places the burden on his opponent.The principle of the Section does not apply in the following cases:(i)Where the possession is merely judicial as distinguished from actual present possession.(ii)Where possession is obtained by fraud or force.VIII.The Indian Stamp Duty Act, 1899Stamp means any mark, seal or endorsement by any agency or person duly authorized by the state government and includes an adhesive or impressed stamp for the purpose of duty chargeable under the act.Duly stamped as applied to an instrument, means that the instrument bears an adhesive or impressed stamp of not less than the proper amount and that such stamp has been affixed or used in accordance with law for time being in force in India.Stamp duty is to be paid on every instrument executed in India, which is mentioned in Schedule 1 of India Stamp Act, 1899. Schedule 1 covers 65 instruments. Some of the instruments relating to real estate on which stamp duty is payable are Affidavit, Agreement to lease, certificate of sale, conveyance in the nature of part performance and Mortgage deed. No stamp duty is payable in respect of any instrument executed by or on behalf or in favour of developer or Unit or in connection with the carrying out of purposes of Special Economic zone (SEZ).ERE-7

There is a direct link between Registration Act and Stamp Act. The Payments of Stamp duty followed by the registration of the agreement are two important acts when one enters into an agreement with a developer/seller. Both, the developer/seller and the purchaser need to be present at the Sub-Registrars office for registering the agreement.a) Power of ParliamentParliament can make law in respect of Stamp Duty. It can prescribe rates of stamp duty. The stamp duty rates prescribed by Parliament in respect of bill of exchange, cheques, transfer of shares etc. will prevail all over India. However, other stamp duty rates prescribed by Parliament in Indian Stamp Act, 1899 (e.g. stamp duty on agreements, affidavit, articles of association of a company, partnership deed, lease deed, mortgage, power of attorney, security bond etc.) are valid only for Union territories. In case of States, the rates prescribed by individual States will prevail in those States.b) Power of the StateThe Stamp duty is a State subject and hence would vary from state to state. The stamp duty in many states is paid as per the true market value as assessed by the Stamp Office. When an agreement is to be stamped, it needs to be unsigned and undated and after the Stamp Office affixes stamps on the agreement, one may execute the agreement. The Stamp Duty payable in various states could be ascertained from the Stamp Duty Calculator c) Instruments chargeable to stamp dutyInstrument includes every document by which any right or liability, is, or purported to be created, transferred, limited, extended, extinguished or recorded [Section 2(17) of Indian Stamp Act]. Any instrument mentioned in Schedule I to Indian Stamp Act is chargeable to duty as prescribed in the schedule [Section 3]. The list includes all usual instruments like affidavit, lease, memorandum and articles of company, bill of exchange, bond, mortgage, conveyance, receipt, debenture, share, insurance policy, partnership deed, proxy, shares etc. Thus, if an instrument is not listed in the schedule, no stamp duty is payable. Instrument does not include ordinary letters. Similarly, an unsigned draft of an agreement is not an instrument.d) Duty payable when there are several instrumentsIn case of sale, mortgage or settlement, if there are several instruments for one transaction, stamp duty is payable only on one instrument. On other instruments, nominal stamp duty of Re. 1 is payable [Section 4(1)]. If one instrument relates to several distinct matters, stamp duty payable is aggregate amount of stamp duties payable on separate instruments [Section 5]. However, it may happen that one instrument covering only one matter can come under more than one descriptions given in Schedule to Stamp Act. In such case, highest rate specified among the different heads will prevail [Section 6].e) Powers to reduce stamp dutyGovernment can reduce or remit whole or part of duties payable. Such reduction or remission can be in respect of whole or part of territories and also can be for particular class of persons. Government can also compound or consolidate duties in case of issue of shares or debentures by companies [Section 9(1)]. Government means Central Government in respect of stamp duties on bills of exchange, cheque, receipts etc. and State Government in case of stamp duties on other documents [Section 9(2)].f) Mode of payment of stamp dutyThe payment of stamp duty can be made by adhesive stamps or impressed stamps. Instrument executed in India must be stamped before or at the time of execution (Section 17). Instrument executed out of India can be stamped within three months after it is first received in India [Section 18(1)]. However, in case of bill of exchange or promissory note made out of India, it should be stamped by first holder in India before he presents for payment or endorses or negotiates in India [Section 19]. g) Valuation for stamp dutyIn some cases, stamp duty is payable on ad valorem basis i.e. on basis of value of property etc. In such cases, value is decided on prescribed basis.h) Adjudication as to stamp duty payableAdjudication means determining the duty payable. Normally, the person paying the duty himself may decide the stamp duty payable and pay accordingly. However, in cases of complex documents, the person paying the duty may not be sure of the stamp duty payable. In such case, he can apply for opinion of Collector. He has to apply with draft document and prescribed fees. Collector will determine the stamp duty payable as per his judgment [Section 31(1)]. i) Meaning of the term duly stampedDuly stamped means that the instrument bears an adhesive or impressed stamp not less than proper amount and that such stamp has been affixed or used in accordance with law in force in India [Section 2(11)]. In case of adhesive stamps, the stamps have to be effectively cancelled so that they cannot be used again. Similarly, impressed stamps have to be written in such a way that it cannot be used for other instrument and stamp appears on face of instrument. If stamp is not so used, the instrument is treated as un-stamped. Similarly, when stamp duty paid is not adequate, the document is treated as not duly stamped.Instrument cannot be accepted as evidence if not duly stamped An instrument not duly stamped cannot be accepted as evidence by civil court, an arbitrator or any other authority authorised to receive evidence. However, the document can be accepted as evidence in criminal court. j) Case when short payment is by mistakeIf non-payment or short payment of stamp duty is by accident, mistake or urgent necessity, the person can himself produce the document to Collector within one year. In such case, Collector may receive the amount and endorse the document that proper duty has been paid [Section 41].Stamp duty needs to be paid on all documents which are registered and the rate varies from state to state. With stamp duty rates hovering around 810% in various states, India has perhaps one of the highest levels of stamp duty. Some states even have double stamp incidence, first on land and then on its development. In contrast the maximum rate levied in most developed markets whether in Singapore or Europe is in the range of 12 per cent. Even the National Housing and Habitat Policy, 1998, recommended a stamp duty rate of 23 per cent. Most of the methods to avoid registration are basically to avoid payment of high stamp duty.Another fallout of high stamp duty rates is the understatement of the proceeds of a sale. This is also linked to payment of income tax and capital gains tax. When registration has not been effected, a transfer is not deemed to have taken place and hence capital gains tax can be totally avoided. Thus, the present provisions in various laws and their poor implementation have led to a situation where there is considerable financial loss to the exchequer on account of understatement of sale proceeds, non-registration and consequent non-payment of stamp duty and avoidance of capital gains tax.IX.Rent Control ActRent legislation in India has been in existence for a very long time. Rent control by the government initially came as a temporary measure to protect the exploitation of tenants by landlords after the Second World War. However these rent control acts became almost a permanent feature. In order to impose control over rent and unreasonable eviction of tenants, rent control orders were issued in 1941. The order was renewed periodically and ultimately Act XVII of 1960 came into force. Rent Control Act is a State subject and the State Government has the exclusive jurisdiction to legislate on the subject.Rent legislation provides payment of fair rent to landlords and protection of tenants against eviction. Besides, it effectively allows the tenant to alienate rented property. Tenants occupying properties since 1947 continue to pay rents fixed then, regardless of inflation and the realty boom. Some of the adverse impacts of the Rent Control Act are:

Negative effect on investment in housing for rental purposes1.Withdrawal of existing housing stock from the rental market. 2.Accelerated deterioration of the physical condition of the housing stock. 3.Stagnation of municipal property tax revenue, as it is based on rent. 4.Resultant deterioration in the provision of civic services. 5.Increase in litigation between landlords and tenants. The Rent Control Act, in fact, is the single most important reason for the proliferation of slums in India by creating a serious shortage of affordable housing for the low income families. Low and middle-income families typically live in rented accommodation all over the world and the need for such accommodation in our clients will only increase as the economy modernizes, labour mobility increases and urbanization takes place. It is, therefore, necessary to increase the stock of rental housing. Promotion of rental housing can have a significant impact on the economy in many ways:1.It reduces shortage of housing for a large Section of the population who cannot afford ownership 2.Housing construction being a labour-intensive activity, investment in housing generates employment for both skilled and unskilled labour. 3.Housing has backward and forward links with many other industries. 4.Rental housing helps in stabilizing real estate prices and checking speculation, thus making housing affordable for the weaker sections. 5.It helps check proliferation of slums. In the absence of rent control, dilapidated urban housing would be periodically pulled down and replaced by modern apartment buildings and other complexes leading to more rational use of prime locations and also creating a continuous process of urban renewal. This has not happened in India because rent control combined with security of tenure provides no incentive for house owners to undertake renovation work. This explains the run down appearance of many of our buildings in prime locations, which gives India cities a much more shabby appearance than their counter parts in other developing countries. Repeal of the Rent Control Act could unleash a construction boom as has happened in many major cities all over the world. This is not only necessary to meet the growing demand for housing but it would also have a highly favorable effect on employment generation.In 1992, the Central Government proposed a model rent control legislation, which was circulated in all states. The model Act proposed modification of some of the existing provisions regarding inheritance of tenancy and also defined a rent level beyond which rent control could not apply. The Delhi Rent Control Act based on this model law was passed in 1997. Punjab, Gujarat, West Bengal, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan are few of those states that have adopted this model rent control legislation.The Economic Administration Reforms Commission and the National Commission on Urbanisation recommended reform of the Rent Legislation in a way that balances the interests of both landlord and the tenant and also stimulates future construction. The Government of India then formulated a model rent control law and recommended to the State Governments to undertake amendments to existing rent control laws or enact new laws on the basis of the model law. Thus the State Governments to decided to amend their rent control laws to provide for regulation of rent and eviction in the spirit of modern economy in a manner more suited to their States, by adopting some provisions of the model rent control law and some of the existing law of Rent Control in their own state.In this context, I am going to discuss some of the provisions of Karnataka Rent Control Act, 1999:Following are some of the features of the said legislation.1.Its application is now restricted to premises,(i)To any residential building the standard rent of which exceeds rupees 3,500 per month in the areas covered by Karnataka Municipal Corporation Act, 1976 and rupees 2,000 per month in other areas and a commercial building having plinth area of not exceeding 14 square meter.(ii)Which are more than 15 years old.2.The Rent Deed is required to be in writing and registered. 3.Tenancy is made inheritable to a limited extent. 4.Provision is made,(a)for collection of standard rent in relation to the investment on property and for enhancement of rent, and for determination of Standard Rent by Rent Controllers;(b)for registration of middlemen and estate agents; (c)for adjudication of eviction application by Rent Courts, with only Right of Revision, but no appeal;(d)for immediate eviction of tenants of State or Central Government Employees, members of Armed Forces, widows, handicapped persons and persons above the age of 65 years under certain circumstances; (e)to lay down Special Procedure for trial of cases before the controllers and also the Courts so as to achieve quick disposals and negotiated settlement.(f)to impose certain Special obligations on the landlords and tenants, etc.How is standard rent calculated?Standard rent is calculated on the basis of 10 per cent per annum of the aggregate amount of the cost of construction and the market price of the land on the date of commencement of construction. The standard rent shall be enhanced according to the provisions of the Third Schedule. (a)Cost of construction shall include cost of electrical fittings, water pumps, overhead tanks, storage tank and other fixtures; (b)In case any fixture referred to in clause (a) is used by more than one occupant in a building, the cost included in the cost of construction of the premises shall be in proportion to the plinth area of the premises; (c)The cost of construction shall be the actual amount spent on construction, and where such amount cannot be ascertained the cost shall be determined according to the scheduled rates of the State Public Works Department. (d)The market price of the land shall be the price at which the land was bought as determined from the registered deed of sale, if construction commenced in the year of registration. (e)The land component in the premises shall be the plinth area of the building and the vacant land totalling 50 per cent of the plinth area as apportioned. (f)Where a building has more than one premises, the market value of the land for one premises depends on the proportion of the plinth area of the premises to the plinth area of the building. (g)Notwithstanding anything contained in clauses (c) and (d) the cost of construction and the market price of the land comprised in the premises purchased from or allotted by the Government or a local authority shall be the aggregate amount payable to such Government or the local authority, provided the controller may, in order to arrive at the cost of construction and the market price of the land, allow in addition, subject to a maximum of 30 per cent of the amount payable to the Government or local authority, any expenditure incurred for improvement, additions or structural alteration in the premises. Other charges(A)A tenant shall be liable to pay to the landlord, besides the rent, the following charges not exceeding 15 per cent of the rent for the amenities (air-conditioner, electrical heater, water cooler, geyser, refrigerator, cooking range, furniture, playground meant for exclusive use by the tenant, sun breakers and usufructs. (B)Maintenance charges 10 per cent of the rent. (C)Without prejudice to the landlords liability to pay the property tax to the local authority, the pro rata property tax in relation to the premises. In order to calculate the monthly charges payable by the tenant to the landlord towards the property tax, the amount paid or payable as property tax for the immediate preceding year or the estimated tax payable shall form the basis. The landlord shall be entitled to receive from the tenant charges for electricity or water consumed or other charges levied by a local or other authority, which is payable by the tenant. Third scheduleThe rent enhancement under clause (a) of sub-section (1) of section 6 or sub-section (1) of section 7 shall be calculated, compounding on a yearly basis, with reference to the date of agreement in the case of rental agreement and the date of commencement of construction in the case of standard rent. Provided that the enhancement, calculated till the commencement of this Act, shall be on the basis of the size of the premises to specified percentages. Provided further that the enhancement in the case of a tenancy entered into before commencement of this Act shall be effected gradually in five equal yearly instalments. ExplanationThe base calculation of rent enhancement after the commencement of this Act shall be the rent payable in the year as if the total enhancement of rent due at the commencement of this Act came into effect immediately rather than gradually over a five-year period, and such annual enhancement of rent shall be payable in addition to the graduated enhancement. Provided also that when the landlord is a widow, a disabled person or a person aged 65 or more, the rent enhancement shall not be spread over five years but come into force with immediate effect.Obligations of a middlemen or estate agent (Section 20)1.Every middleman or estate agent shall register with the Controller of the area. 2.A middleman or estate agent shall be entitled to commission at prescribed rates. 3.Every middleman or estate agent shall, within ten days from the last day of each quarter of every calendar year, file returns in the prescribed form to the Controller, giving details of transactions during the quarter and the brokerage or commission received. 4.No middleman or estate agent shall be liable to pay to his principal any rental charges exceeding the amount he is entitled to receive under this Act from the tenant. Restriction on sub-letting Where, at any time before the date of application of Part V of the Karnataka Rent Control Act, 1961 (Karnataka Act 32 of 1961), a tenant has sub-let the whole or any part of the premises and the sub-tenant is, at the commencement of this Act, in occupation of such premises, then, notwithstanding the fact that the consent of the landlord was not obtained, the premises shall be deemed to have been lawfully sub-let. After the commencement of the Act no tenant shall without the written consent of the landlord sub-let the whole or part of the premises or transfer or assign his rights in the tenancy or in any part thereof. Revision of rent in certain cases (Section 9)1.Where a landlord has at any time, before the commencement of this Act with or without the approval of the tenant or after the commencement of this Act with the written approval of the tenant incurred expenditure for any improvement, addition or structural alteration in the premises, not being expenditure on decoration or tenantable repairs necessary or usual for such premises, and the cost of that improvement, addition or alteration has not been taken into account in determining the rent of the premises, the landlord may lawfully increase the rent per year by an amount not exceeding ten percent of such cost. 2.Where, after the rent of a premises has been fixed under this Act, or agreed upon, as the case may be, there has been a decrease, diminution or deterioration of accommodation in such premises, the tenant may claim a reduction in the rent.Notice of revision of rent (Section 10)1.Where a landlord wishes to revise the rent of any premises under sub-section (1) of section 9, he shall give the tenant a notice of his intention to make the revision and, in so far as such revision is lawful under this Act, it shall be due and recoverable from the date of improvement, addition or structural alteration. 2.Every notice under sub-section (1) shall be in writing signed by or on behalf of the landlord and given in the manner provided in section 106 of the Transfer of Property Act, 1882 (Central Act 4 of 1882). Unlawful charges not to be claimed (Section 11)1.It shall not be lawful for the tenant or any other person acting or purporting to act on behalf of the tenant or a sub-tenant to claim or receive any payment in consideration of the relinquishment, transfer or assignment of his tenancy or sub-tenancy, as the case may be of any premises. 2.Nothing in this section shall apply,(a)to any payment made in pursuance of an agreement entered into before the commencement of this Act; (b)to any payment made under an agreement by any person to a landlord for the purpose of financing the construction of the whole or part of any premises on the land belonging to, or taken on lease by, the landlord if one of the conditions of the agreement is that the landlord should let to that person the whole or part of the premises when completed for the use of that person or any member of his family but not exceeding the amount of agreed rent for a period of five years, for the whole or part of the premises to be let to such person. ExplanationFor the purpose of clause (b) of this sub-section, a member of the family of a person means, in the case of an un-divided Hindu family, any member of the joint family of that person and in the case of any other family, the husband, wife, son, daughter, father, mother, brother, sister or any other relative dependent on that person.

X.State Laws Governing Real EstateWhile each state has its own set of laws, which govern planned development, rules for construction and Floor Area Ratio (FAR) or Floor Space Index (FSI) and formation of societies and condominiums, two laws that exist in every state, are the stamp duty and rent laws. The local real estate transactions are governed by the rules framed by local municipal bodies. For example, Karnataka has Bangalore Development Authority governed by Bangalore Development Authority Act, 1976. Similarly, Delhi has Delhi Development Act, 1957. The functions of these authorities/local governing bodies can be divided into categories:1.Planning Functions2.Development FunctionsThe planning functions in brief involve the following: 1.Preparation of development plan for the concerned city or area within its jurisdiction2.Preparation of Scheme Plans. 3.Approval of Development Plans for Group Housing and Layouts. 4.Approval of building plans. The Development functions in brief involve the following: 1.Planning and implementation of schemes to provide for Residential sites, Commercial sites, Industrial sites, Civic Amenity sites, Parks and playgrounds. 2.Construction of Commercial complexes. 3.Construction of houses for Economically Weaker Sections, Low Income Group, Middle Income Group, High Income Group. 4.Development of major infrastructure facilities. XI.The Consumer Protection Act, 1986The Consumer Protection Act enables a person to file a complaint against the builder for deficiency in service and claim damages from him.For the purpose of the Consumer Protection Act, the term Consumer has been defined separately for goods and services.1. For the purpose of goods, a consumer means a person belonging to the following categories:(i)One who buys or agrees to buy any goods for a consideration that has been paid or promised or partly paid and partly promised or under any system of deferred payment.(ii)It includes any user of such goods other than the person who actually buys goods and such use is made with the approval of the purchaser.Note: A person is not a consumer if he purchases goods for commercial or resale purposes However, the word commercial does not include use by consumer of goods bought and used by him exclusively for the purpose of earning his livelihood, by means of self employment.2. For the purpose of services, a consumer means a person belonging to the following categories:One who hires or avails of any service or services for a consideration that has been paid or promised or partly paid and partly promised or under any system of deferred payment;It includes any beneficiary of such service other than the one who actually hires or avails of the service for consideration, and such services are availed with the approval of such person.The construction work has been brought under the term service w.e.f. 18 June 1993. Hence, any deficiency in service on the part of the builder also will make him liable under this Act.The objective Consumer Protection Act was to protect interest of consumers regarding quality, potency, purity, standard and price of goods. It provides a right to seek redress against unfair trade practices and unscrupulous exploitation of consumers.Relief available to the consumersDepending on the nature of relief sought by the consumer and facts, the Forums may give orders for one or more of the following relief:(a)Removal of defects from the goods(b)Replacement of the goods(c)Refund of the price paid(d)Award compensation for the loss or injury suffered(e)Removal of defects or deficiencies in the services(f)Discontinuance of unfair trade practices or restrictive trade practices or direction not to repeat them;(g)Withdrawal of the hazardous goods from being offered to sale or(h)Award for adequate costs to partiesUnder the Consumer Protection Act, a three-tier redressal forum has been set up at the national, state and district levels. 1.National Consumer Disputes Redressal Forum known as National Commission established by the Central Government 2.State Consumer Disputes Redressal Forum known as State Commission established by the state government in the state 3.Consumer Disputes Redressal Forum known as District Forum established by the state government in each district.Procedure under Consumer Protection Act Section 12(1) provides that a complaint in relation to any goods sold or delivered or to be sold or delivered or any service provided or agreed to be provided may be filed with consumer forum.The Act envisages setting up of Consumer Disputes Redressal Agency at local, i.e., district level, state level and national (Central) level. District Forum has jurisdiction to decide consumer disputes where value of goods or services and the compensation claimed does not exceed Rs 20 lakh. State Commission has jurisdiction to decide the cases where value of goods and services plus compensation is over Rs 20 lakh but not over Rs 100 lakh. In addition, it decides appeals filed against order of District Forum. National Commission (HQ at New Delhi) has original jurisdiction where matter is over Rs 100 lakh. It also has appellate jurisdiction over State Commission. Appeal against order of State Commission can be filed only in case of original order by State Commission i.e. when matter was over Rs 20 lakh. No appeal can be filed to National Commission in case where State Commission has passed order in appeal against original order of District Forum. ERE-8

Appeal against order of National Commission lies with Supreme Court only in matters where it exercises original jurisdiction, i.e., when matter is over Rs 100 lakh. There is no provision of appeal in cases where National Commission decides under its appellate jurisdiction, i.e., when it decides appeal against order of State Commission.Thus, in all cases, only one appeal has been provided [However, revision petition to National Commission, which is second appeal by back door, can be filed].

XII.The Arbitration and Conciliation Act, 1996The Arbitration Act, 1996 that repealed the Arbitration Act, 1940 governs arbitration over commercial disputes. The underlying idea is that disputes may be settled between persons without recourse to a court of law.Commercial contract usually contains an arbitration clause. The Act defines Arbitration Agreement as a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not. Though arbitration must be in writing, it need not be signed by the parties nor need it be embodied in a formal document. It may be evidenced by a clause in a contract, or in correspondence.Where there is an arbitration agreement between the parties and if one of them takes recourse to a court of law without a reference to arbitration, the Act empowers the court to stay the proceedings to oblige the party to abide by the arbitration agreement.A person who has a contractual capacity may refer a dispute to arbitration. Disputes of a civil or quasi-civil nature may be referred. So far as sale or purchase contracts are concerned, all of them can be referred to arbitration.The Arbitration Act contemplates two different types of arbitration:1.By an arbitration agreement without the intervention of the Court, the proceeding take place outside the court but the court may be approached for filing the award and for a decree in terms of the award. Most of the provisions of the Act pertain to this form of arbitration. 2.Arbitration through Court where a suit is pending. Arbitration Act has over-riding effectSection 5 of Act clarifies that notwithstanding anything contained in any other law for the time being in force, in matters governed by the Act, the judicial authority can intervene only as provided in this Act and not under any other Act.Unless a contrary intention is expressed, an arbitration agreement is deemed to include the following terms:i.That the reference shall be to a sole arbitrator. ii.If the reference is to be made to an even number of arbitrators, they must appoint an umpire not later than one month form their appointment. iii.The arbitrators must make their award within four months of their entering on the reference or after having been called upon to act by a written notice from either party. The Court may, however, extend the time. iv.If the arbitrators do not make an Award within the time stated above or if they notify that they cannot agree, the umpire must forthwith enter on the reference. v.The umpire must make his award within two months or such extended time as the Court may allow. vi.The parties to the reference and those claiming under them must submit themselves for examination on oath by the arbitrators or the umpire and must also produce all documents, papers and other evidence which may be required. vii.Subject to the provisions of the Act, the Award will be binding on the parties. viii.The cost of the reference shall be at the discretion of the arbitrators or umpire. Appointment of an Arbitratori.The parties can agree on a procedure for appointing the arbitrator or arbitrators. If they are unable to agree, each party will appoint one arbitrator and the two appointed arbitrators will appoint the third arbitrator who will act as a presiding arbitrator [Section 11(3)]. If one of the parties does not appoint an arbitrator within 30 days, or if two appointed arbitrators do not appoint third arbitrator within 30 days, the party can request Chief Justice to appoint an arbitrator [Section 11(4)]. ii.The Chief Justice can authorise any person or institution to appoint an arbitrator. [Some High Courts have authorised District Judge to appoint an arbitrator]. In case of international commercial dispute, the application for appointment of arbitrator has to be made to Chief Justice of India. In case of other domestic disputes, application has to be made to Chief Justice of High Court within whose jurisdiction the parties are situated [Section 11(12)].When can the appointment of an Arbitrator be challenged?An arbitrator is expected to be independent and impartial. If there are some circumstances due to which his independence or impartiality can be challenged, he must disclose the circumstances before his appointment [Section 12(1)]. Appointment of Arbitrator can be challenged only if (a)Circumstances exist that give rise to justifiable doubts as to his independence or impartiality (b)He does not possess the qualifications agreed to by the parties [Section 12(3)]. Appointment of arbitrator cannot be challenged on any other ground. The challenge to appointment has to be decided by the arbitrator himself. If he does not accept the challenge, the proceedings can continue and the arbitrator can make the arbitral award. However, in such case, application for setting aside arbitral award can be made to Court. If the court agrees to the challenge, the arbitral award can be set aside [Section 13(6)]. Thus, even if the arbitrator does not accept the challenge to his appointment, the other party cannot stall further arbitration proceedings by rushing to court. The arbitration can continue and challenge can be made in Court only after arbitral award is made.Power and duties of arbitratorUnless a contrary intention appears in the arbitration agreement, the arbitrator (or umpire) shall have the poweri.to administer oath to parties and witnesses ii.to state a special case to the Court for opinion on a question of law iii.to make his award conditional iv.to correct any clerical error in the Award v.to administer interrogatories to the parties vi.to decide on the cost of the reference and vii.to make an interim award pending the final award. Dutiesi.He must enter on the reference. ii.He must act judicially by appointing a proper time and place for hearing parties. iii.He should not hear one party in the absence of the other. iv.He must not receive information from one side which is not disclosed to the other side v.He should be fair to both the parties and should not refuse to hear either party or shut out the evidence of either party vi.He should be impartial and must not act as an agent or advocate of either party vii.He must decide all matters referred to him for decision viii.He should not exceed his authority ix.He must discharge his duties personally and not delegate his task to any one else and x.He should make and sign his award within the prescribed time. Conduct of Arbitral ProceedingsThe Arbitral Tribunal should treat the parties equally and each party should be given full opportunity to present his case [Section 18]. The Arbitral Tribunal is not bound by Code of Civil Procedure, 1908 or Indian Evidence Act, 1872 [Section 19(1)]. The parties to arbitration are free to agree on the procedure to be followed by the Arbitral Tribunal. If the parties do not agree to the procedure, the procedure will be as determined by the arbitral tribunal.Law of limitation applicableLimitation Act, 1963 is applicable. For this purpose, date on which the aggrieved party requests other party to refer the matter to arbitration shall be considered. If on that date, the claim is barred under Limitation Act, the arbitration cannot continue [Section 43(2)]. If Arbitration award is set aside by Court, time spent in arbitration will be excluded for purpose of Limitation Act [so that case in court or fresh arbitration can start].Flexibility in respect of procedure, place and languageArbitral Tribunal has full powers to decide the procedure to be followed, unless parties agree on the procedure to be followed [Section 19(3)]. The Tribunal also has powers to determine the admissibility, relevance, materiality and weight of any evidence [Section 19(4)]. Place of arbitration will be decided by mutual agreement. However, if the parties do not agree to the place, the same will be decided by tribunal [Section 20]. Similarly, language to be used in arbitral proceedings can be mutually agreed. Otherwise, Arbitral Tribunal can decide [Section 22]. Submission of statement of claim and defenceThe claimant should submit statement of claims, points of issue and relief or remedy sought. The respondent shall state his defence in respect of these particulars. All relevant documents must be submitted. Such claim or defence can be amended or supplemented any time [Section 23]. Hearings and written proceedingsAfter submission of documents and defence, unless the parties agree otherwise, the Arbitral Tribunal can decide whether there will be oral hearing or proceedings can be conducted on the basis of documents and other materials. However, if one of the parties requests, the hearing shall be oral. Sufficient advance notice of hearing should be given to both the parties [Section 24]. [Thus, unless one party requests, oral hearing is not compulsory].Settlement during arbitrationIt is permissible for parties to arrive at mutual settlement even when arbitration is proceeding. In fact, even the Tribunal can make efforts to encourage mutual settlement. If parties settle the dispute by mutual agreement, the arbitration shall be terminated. However, if both parties and the Arbitral T