Madras High Court Recommends Constitution Of Quasi-Judicial Appellate Tribunal For Cancellation Of Registrations Arising Out Of Fraudulent Transactions

The Madras High Court on Friday observed that fraudulent registration of sale deeds in the State have only reduced and not stopped completely despite several measures undertaken by the Registration Department over the years.

Justice R. Suresh Kumar also recommended the constitution of a quasi-judicial appellate tribunal headed by a retired High Court judge and comprising two members one from the Registration Department and another from the Revenue Department which would have the final say in such matters concerning the cancellation of registered documents.

The recommendation was made after taking into account that the Legislative Assembly had passed a Bill on September 2 for amending the Registration Act of 1908 and empowering the Registrar to cancel documents registered in contravention of the Act's provisions.

The Court further opined that such a practice of fraudulent transactions may have reduced over the years due to safeguards introduced in circulars by the Inspector General of Registrations in Tamil Nadu while exercising powers under the Registration Act, 1908 but had not completed stalled.

"It cannot be said that such fraudulent transactions have been completely stopped or registration on such documents have been totally stopped," the Court observed.

Bill passed to empower registering authorities to cancel fraudulent registrations

Opining on the Bill passed to introduce the Registration (Tamil Nadu Second Amendment) Act, 2021 the Court stated that the legislation empowers the registering authority to refuse to register forged documents and prescribes three years of imprisonment for registering documents in contravention of the Act. The Court further noted that since the amendment was yet to come to force, till then the victims of fraudulent registration would have no choice but to approach civil courts and participate in a tedious process to get the deeds cancelled.

Section 77A empowers the Registrar to cancel documents registered in contravention of Section 22A (opposed to "public policy") or Section 22B. Such cancellation can be done suo motu or on complaint. The provision further stipulates that such cancellation may be done after the issuance of a show cause notice to persons likely to be affected by the cancellation and on consideration of replies received to such notice.

Furthermore, appeals against any decision taken under Section 77A can be challenged under Section 77B of the proposed law before the Inspector General of Registration or the State government.

Constitution of quasi-judicial appellate forum to adjudicate upon disputes involving fraudulent registrations

The Court also suggested the State government to introduce a quasi-judicial forum or tribunal for second appeals against decisions taken under Section 77B of the proposed law.

"In order to have an effective judicial / quasi- judicial mechanism, as against the order of cancellation of instruments by registering authorities or order of refusal of cancellation of instruments by the registering authorities, in every revenue district, the concerned District Registrar (Registration) can be conferred with the power to act as an appellate authority. As against the order to be passed by such first appellate authority / District Registrar (Registration), further appeal shall lie before one or more Appellate Tribunal to be constituted in this regard," the Court opined.

Opining on the constitution of such an Appellate Tribunal, the Court recommended that such a tribunal be headed by a High Court Judge along with two members, one from the Registration Department and not below the rank of DIG, Registration and the other from the Revenue Department not below the rank of District Revenue Officer.

It was further opined that such a tribunal could be treated as a civil court and its decisions could be considered as a declaration over the title of property. It was also suggested that the Code of Civil Procedure be made applicable to the tribunal.

"It would be a viable and effective alternative redressal forum for a number of persons who have been hitherto driven from pillar to post for retrieval of their valuable immovable properties, which they acquired either by way of inheritance or out of their legally hard-earned fortune," the Court stated further.

Aggrieved property owners not entitled to relief under Article 226

The Court opined that pursuant to the existing law aggrieved parties cannot expect any relief from the High Court under Article 226 (writ jurisdiction) of the Constitution of India.

"As of now, the only remedy open to or available to them (aggrieved parties) is either the beneficiary out of the forged or fraudulent instruments, under which the title of the property transfers in their favour, should voluntarily come forward to re-convey the property in question to and in favour of the true owners or the true owners shall necessarily approach the competent Civil Courts to get a remedy by seeking a declaratory relief", the Court observed.

In this regard, the Court placed reliance on the Madras High Court decision in Latif Estate Line India Ltd. v. Hadeeja Ammal and others and the Supreme Court's 2016 judgment in Sathya Pal Anand v. State of Madhya Pradesh.

In the Latif Estate case, the Madras High Court had ruled that a deed of sale cannot be unilaterally cancelled by one party to the transaction and that such a cancellation deed cannot be registered. The proper course would be to re-convey the property by a deed of conveyance by the transferee in favour of the transferor, the High Court had stated.

Furthermore, in the Latif Estate case, the Court had concluded that a "complete and absolute sale can be cancelled at the instance of the transferor only by taking recourse to the civil court by obtaining a decree of cancellation of sale deed on the ground inter alia of fraud or any other valid reasons."

Accordingly, the Court proceeded to dismiss the petitions before it that sought directions to the registering authorities to cancel the registration of allegedly fraudulent property transfers.

"Till the amended provisions of 1908 Act, as discussed above, comes to effect, the prayer sought for to cancel any instrument registered already by a registering authority, cannot be granted by this Court, in view of the settled legal position as discussed extensively in the earlier part of this order," the Court stated.

The other category of cases filed against the Sub-Registrar for keeping the registration of some documents pending, was directed to be posted before the appropriate High Court Bench for a decision.

Case Title: S Kanniammal @ Mangai v. State of Tamil Nadu

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