Proposed Land Titling Act, 2010-Conclusive Land Titling

Vinod Kothari and Subodh Kumar

Background

The murkiness of land deals in India as shown in recent Bollywood flick “Khosla Ka Ghosla” is just an indication of the trials and tribulations in tracking ownership of land with conclusive certainty. Not only a prospective buyer or mortgagee faces the grave uncertainty of inconclusive title documents, title disputes continue to be the dominant cause of litigation, not merely because all battles world-over have been fought for zar (wealth), joru (women) and zameen (land), but because the determination of land title in India is governed by the deed system, not by the conclusiveness of the registration with the land registry office. Adding to the confusion is the fact that land deeds in India differ based on the customs of the place – there may be a title deed, patta, kabuliyat, gift deed, habitation deed or simply a khazana  or tax receipt depending on the place. In most cases, the deeds will be in vernacular – further compounding the problem.

For a country as massive and kaleidoscopic as India, moving to a new system of land registry is a huge challenge, and land is among the most sensitive issues with the masses, it would really be interesting to see how the new system ushers over the 5 years time frame after it is legislated, but then it requires tremendous courage on the part the Department of Land Resources to even think of moving to a new system of land titling.

Land titling systems:

Land titling systems are primarily of 3 types: the deeds registration system, title registration system, and private conveyance system. The deeds registry system requires registration of every transaction pertaining to land – for example, sale, lease, charge or mortgage, but the very fact that the deed has been registered does not itself guarantee ownership. For example, I may buy land and get a deed registered, but if there exists a deed registered before mine, whereby it proved that the person who sold land to me was never the owner, my registered deed is worth no more than the paper. Hence, a conveyance deed is not an evidence of title – it is merely a document registered with the registration authority.

In countries which have adopted the title registration system, the registration records are conclusive evidence of ownership. This system originated from UK and was adopted with some modification in the 1850s in Australia – known as the Torrens system after the name of its proponent. The Torrent title system has been a great success in the Pacific and has been adopted with modifications in Malaysia, Thailand and Kenya.

The third system is private conveyance – where transactions in land are private deals. There may be informal transactions which have not been registered; unregistered deals are not invalid.

India has been following the deed registry system since the British time. Several  experts have reviewed the Indian system and compared with the systems in other countries, as also the experience of other countries that converted from the deeds system to the title registry system[1].  It seems that under the auspices of the National Land Records Modernisation Program, the Cabinet approved the shift from a system of deeds to title. The Land Titling Bill is the legislative measure of an all-round effort going on towards computerisation of land records and moving to a electronic cadastral system where electronic records will provide full geospatial and juridical records of land.

Preliminaries

Computerisation of Land Record (CLR) started way back in 1988-89 as an ambitious project of Department of Land Resources, Ministry of Rural Development, Government of India. CLR aimed to remove the inherent flaws of manual land recording system by fresh survey and settlement of land ownership and subsequent computerisation of the mutation/updation process of land records and distribution of updated copies of ownership rights, tenancy, crop, land revenue, sources of irrigation etc. Later in the year 2008 CLR was merged with another centrally sponsored scheme- Strengthening of Revenue Administration and Updating of Land Record (SRA&ULR) into a modified scheme- National Land Records Modernisation Programme (NLRMP). Many rounds of meetings, official visits of countries like Australia, MoU with China and many research and study reports are carried out before passing of the Model Land Titling Act, 2010 for approval. NLRMP set itself three broad targets viz. (i) Computerisation of Land Record; (ii) Survey/re-survey and (iii) Computerisation of Registration. A detailed set of Guidelines was prepared by the department for paving a roadmap for the new transitional system. The Guidelines discussed following main areas to be covered for achievement of the desired goal-

1.      Computerisation of Land Records (CLR)- This very function envisaged under the NRLMP is one of the most arduous task along with Survey/Re-survey part of the proposed plan. The committee has estimated a total cost of Rs. 557 Crores for the implementation of this step. The major planned areas pointed out under this step are Data entry/Re-entry/ data conversion into the new system of computerised recording, Digitisation of Cadastral maps which is necessary for integrating the spatial and textual data and adding the Cadastral layer to GIS system, constructing Tehsil, Sub-division, District and State Level Data Centre and facilitating inter-connectivity among revenue offices.

2.      Survey/re-survey & updating of Survey and Settlement Records- This is being considered as the most challenging part of the whole project and more than half of the total fund allocated is earmarked for this job alone (Rs. 3200 Crores on 50-50 sharing basis between Central and State governments)[2]. This very task is necessary not only for computerisation purpose but also for ground control network and ground truthing. This is expected to serve as a reconciliation sort of a thing between official records and the actual ground realities.

3.      Computerisation of registration- This very step is being touted as the final answer to the faulty mechanism of manual registration giving rise to inconclusive titles due to decentralised recording system. Under this computerisation of Sub-Registrar Offices (SROs), Data entry of valuation details & legacy encumbrances data for determined period, Scanning and preservation of old documents and Connectivity of SRO with Revenue offices will be taken up on broad basis. A total fund of Rs. 464 Crores is estimated out of which Rs. 116 Crores will be expended by the Central Government.

4.       Modern records rooms/land record management centres- These will be built for the purpose of continuous upkeep of the computerised records in a safe and secured medium. Total cost estimated for buiding them is estimated to be Rs. 1220 Crores out of Rs. 610 Crores (50%) will be borne by the Central Government.

5.      Core GIS- Often referred to as the system of future it is basically satellite imagery of landmass of a particular area. It is expected to facilitate the creation of core GIS (Geo Informatics Systems). The cost for completion of this job is estimated at the rate of Rs. 850 per K.m.² for an approx area of 21.60 lakh K.m.² thus totalling Rs. 180 Crores.

6.      Legal Changes and Program management- The guidelines speaks volume about the program management necessary for the proper running and planned implementation of the project. It also lays down certain legal changes in other statutes to facilitate the computerisation of records etc. which are discussed later in the article. A fund of Rs. 25 Crores is estimated for a period of five years for this step.

Salient features of the proposed Land Titling Act, 2010

The Draft Bill is divided in nine chapters dealing with the various aspects of the new titling system like preamble and definitions, land titling authority, title registry, legal services and title guarantee, land titling Tribunal, Compulsory intimation to the land titling authority and miscellaneous provisions. The draft is prepared as a model code for framing of laws by respective state governments. It is to be noted that land is a state subject and according to the Constitution of India state governments are empowered to pass legislations on the subject of land.

Let us examine and analyse some of the major aspects of the Draft Bill

1.      The Land Titling Authority

Chapter II of the Draft Bill is dedicated to the establishment, composition, powers, functions, duties, scope, administration and other matters related to the Land Titling Authority (hereinafter referred to as Authority). Let us see at a glance some of these provisions relating to the Authority-

                                i.            Functions- A total of twenty six functions are prescribed under Section 4 of the Act. These functions cover almost all the aspects relating to set up of new infrastructure of land title recording, its functioning, controlling, guidance, clarification on the new system from time to time, valuation of land, publicity and general awareness creation regarding new order etc. Apart from these purely administrative functioning, Authority is entrusted with judiciary functions of making inquiries, examining on oath, awarding penalty and issuing orders also.

                              ii.            Power- The Authority shall be having same powers as a Civil Court has under Code of Civil Procedure, 1908 in the matters relating to the land titles. Apart from this it will also be empowered to exercise all the powers of the Chief Controlling Revenue Authority under the Indian Stamp Act, 1899. Also it will have the power to issue regulations under this Act for proper functioning of new system.

                            iii.            Composition of the Authority- The Authority shall consist of a Chairperson and four members to be appointed by the Government. The qualification of Chairman and members are not prescribed however a selection committee for selecting these members are prescribed.

                            iv.            Other matters- Apart from these matters other aspects like jurisdiction, term and condition of Authority members, Divisions of Authority, Officers and Staffs of the Authority, Finance, Accounts and audit of Authority are dealt in detail.

2.      The Title Registry

This is perhaps going to be the most path breaking development of the proposed Bill. The Authority shall for the purpose of this Act establish a central Title Registry for the entire Union Territory (or the state) and may also establish sub-offices or citizen facilitation centre for the proper and hassle free receipt, recording and maintenance of the Land Titles (Section 12). Chapter III of the Act is fully devoted to the establishment of the new order in land title recording and maintenance in our country. Some of the salient features of this chapter which will go on to revolutionise the system are discussed as under-

                                i.            Registers to be maintained- The Title Authority, after survey and settlement to prepare an Index of Maps with unique property identification numbers, prepare a Register of Titles, a Register of Charges and Covenants and Register of Disputes. These registers shall be in both paper as well as in electronic form.

                              ii.            Evidence- The electronic records shall be construed the same meaning as evidence under the Indian Evidence Act, 1872.

                            iii.            Contents of the records- At any given time the record shall show all the relevant information of the land like market value, identification number, built up area, details of transfer by way of sale or succession, details of pending disputes etc.

                            iv.            Entries in the Register- Every possible point is covered for recording in the Registers prescribed under the Act like Register of Title, Register of Charges and Covenants and Register of Disputes.

3.      Survey, Settlement and Land Information System

For the facilitation of this Act, the Land Titling Authority shall establish a Survey, Settlement and Land Information division. The whole of Chapter IV of the Draft Bill is dedicated to this very purpose. The Director, Survey, Settlement and Land Information System shall prepare a record of boundaries in a notified area and give it a unique identification number after cadastral surveying and mapping of each immovable property in the area. It shall also accept request for survey of immovable property by any title holder or a third party on payment of fees as may be prescribed. It may also hire services of private licensed surveyors for the purpose of surveying of immovable property with prior approval of Government.

4.      Property Valuation Division

Chapter V of the Draft Bill deals with the establishment and functioning of Property Valuation Division for the purpose of this Act. The Division will undertake the assessment of immovable property for the purpose of its valuation under this Act. The valuation will also serve as a base for calculating the Stamp Duty payable on such immovable property. Again use of electronic media and information technology is provided for in the Draft Bill as it advocates usage of proper software for auto calculation of stamp duty, registration fees and other applicable levies & fees payable on a particular immovable property. The provision for property valuation on request is prescribed on payment of requisite fees.

5.      Legal Services and Title Guarantee Division

Chapter VI of the Draft Bill proposes to establish the Legal Services and Title Guarantee Division for the purposes of this Act. The Division shall be empowered to render the legal advice to the Land Titling Authority. It shall also maintain, monitor and supervise the Guarantee Fund established under this Act to indemnify the public for losses sustained by them due to faulty land record in the land title register.

6.      The Land Titling Tribunal

Chapter VII of the Draft Bill proposes to establish and constitute a Land Titling Tribunal by Government for the purpose of this Act. The functions of the Tribunal are to adjudicate on the claims preferred for payment of compensation out of the title guarantee fund of the Authority and of the private parties authorised by the Authority to operate such a fund. Tribunal shall hear appeals against the orders of the Land Titling Authority by an aggrieved party within three months of date of notification of such an order. The Appeal against the order of the Tribunal shall lie with the High Court. Tribunal is empowered act under laws of natural justice which provides it with necessary freedom to discharge its duties in more timely and accurate manner. Also it provides for exclusive right of Tribunal to hear on the matter related with land. This shall expedite the settlement of land dispute in our country which is typically characterised by long and harassing litigation.

7.      Compulsory Intimation to the Land Titling Authority

Chapter VIII of the Draft Bill lays down different events to be compulsorily intimated to the Land Titling Authority. These events are such which change or is potentially capable of changing the title, ownership, beneficial ownership, control, possession, usage, rights, obligations etc. relating to the immovable property and land. This very provision will help to arrive at the conclusive legal and title status of a land and an immovable property as due to single and centralised recording of all matters concerned with land like transaction and transfer of legal or substantial ownership in it or any charge, mortgage, covenant etc created on it in the country.

8.      Miscellaneous Provisions

Chapter IX is the last chapter of the Draft Bill and it deals with all the miscellaneous provisions relating to the Act. Following are some of the important provisions mentioned under this Chapter-

                                i.            Target time frame for compulsory titling- The model Draft stipulates a period of five years from the date of promulgation of this Act for every property owners to obtain a title from the Authority for each property owned in the manner as may be specified. It also aims to grade every property among small, medium and large.

                              ii.            Immunity to the employees of the Authority- Section 71 grants to the employees immunity against any legal proceedings for anything done in good faith under this Act.

                            iii.            Amendments in other Acts to make them compatible with the Act- Necessary amendments are proposed under Indian Stamp Act, 1899, Registration Act, 1908, Limitation Act, 1963 to make them consistent with the new order as proposed by the Draft Bill.

MAJOR AFTER EFFECTS OF THE PROPOSED LAW

Every new statute tries to bring about the change in the existing system. The new Bill Draft aims to weed out many flaws of the system which is currently operational in the country. Some of the major reforms in the existing system due to implementation of the new order are listed below-

1.      Costs versus benefits of moving into the Title system - Kevin Nettle’s article cited earlier provides anecdotes of experience in many countries that have shifted from the deeds system to the registry system. It mentions costs, lack of resources and litigation as the main reasons why implementation has either been stuck for years, or has costs governments hugely in different countries. It mentions experience of several countries, where after several years of moving into the title registry system, registration process has still not been completed.

Clearly, none of these countries is as sizeable and differential as India. For example, the article gives example of Hong Kong where 2.5 million titles were registered at a cost of about $ 22 million.  India will be a different experience as the number of titles will be at least 100 times that of Hong Kong. If one adds to that the number of mortgages, covenants, leases and what all, we are talking about a whopping 50 crore titles. The costs and benefits of this massive move need to be analysed. IT companies will be very happy with the move, but the resources have to come from Indian tax payers.

2.      Mandatory provisions for registration of transactions regarding land- There is provision of compulsory registration of any transactions in land- sell, purchase, lease, rental etc. The provision of compulsory registration extends to charges, covenants, mortgage and other similar and related events and transactions. Certainly this is a major development towards an era of electronic recording of a land titling in the country as it would enable the stakeholders to get the current status of a land property on the basis of point of time concept. Really a major move considering the multiplicity of recording and even non-recording which was the major causes of inconclusive and faulty recording system in the country.

3.      Necessary registration of Power of Authority in case of transactions in land- Currently much of the fraud and confusion in case of land title is due to validated dealings under the Power of Attorney. A party is currently not required to register his Power of Attorney before any legal or regulatory bodies and this becomes a major way of getting illegal or invalid possession of land giving rise to multiple claims over a single property. Now with the proposed system in place a Power of Attorney to deal in land is required to be compulsorily registered as and when it is granted otherwise it will be deemed to be an invalid deal.

4.      Expected impact on equitable mortgage- As we know that an equitable mortgage is an informal and quasi-legal way of entering into a mortgage especially in case of land and shares by the mere passing of title deed and certificate, the system is expected to become redundant with the outset of electronic record system. Non physical and dematerialised status of land titles will certainly limit and check this imperfect and faulty mortgage system if not fully abolishes it. This is imperfect because it is informally and without proper documentation entered into and faulty because this system can give rise to opaqueness of land title status. At the best the new system requires compulsory registration of equitable mortgage (it implies that the new system does not prohibit the concept of equitable mortgage).

5.      A covenant to be recorded compulsorily- A covenant is a condition tied to the use of property. Now a covenant will be compulsorily required to be recorded with the title registry under the new regime. This will move us towards yet another step closer to the greater transparency in land deals. Any conditions attached with the property will be known at any given time before entering in a deal and confidence in the land deals will certainly be at a higher level.

6.      Indefeasible Title- It means a title of land as recorded with the Authority will be deemed to be correct and undisputed. Every land titles will be made indefeasible in the registers of land maintained with the Authority to free them from fear of litigation in future.

7.      Indemnity provision- Another milestone in the new system is the guarantee taken by government for the accuracy of land records maintained by it. It also provides for compensation to those who suffer any loss (real) due to incorrect land title record of the government. This is widely being seen as a self control measure by the government.

CONCLUSION

Authors can be reached at-

vinod@vinodkothari.com

hisubodh.kumar@gmail.com