Larger Bench Decision:
Division Bench of The Madras High Court recently(2nd Aug,2004) declared the newly introduced Section 77A of the Registration Act, 1908, by the Tamil Nadu Government as unconstitutional. The court’s decision emphasized that this amendment contravened the principles of the Constitution and the objectives of the Registration Act itself.
தமிழ் நாடு அரசால் புதிதாக அறிமுகப்படுத்தப்பட்ட பதிவுச் சட்டம், 1908ன் பிரிவு 77A, அரசியலமைப்புக்கு எதிரானது என சென்னை உயர்நீதிமன்றம்அறிவித்துள்ளது. இந்தத் திருத்தம் அரசியலமைப்புச் சட்டத்தின் கொள்கைகளுக்கும், பதிவுச் சட்டத்தின் நோக்கங்களுக்கும் முரணானது என்று நீதிமன்றத்தின் தீர்ப்பு வலியுறுத்தியது.
Background:
In September 2021, the Tamil Nadu Assembly passed a bill to amend the Registration Act, 1908, to give the District Registrars of the Registration Department the power to cancel fraudulent or forged documents. This was done by inserting a new Section 77A to the Registration Act, 1908, which became operational from August 2022.
Legal Challenges and Court Proceedings:
Many individuals approached the courts challenging this new amendment with different grievances. While some were aggrieved by the District Registrar’s decisions, others, especially from the real estate industry, questioned the constitutional validity of the amendments and the legal principles behind the introduction of this section.
The cases were filed in the Madras High Court and its Madurai Bench, almost from the early days of introdcution of the new section. In at least two cases, the decisions of individual judges contradicted one another on matters of law and details. One judge interpreted that the law is effective prospectively only, while another judge said it can take retrospective effect. The amended act is silent on this crucial point.
In the background of these conflicting judgments, the matter came to be heard by a third judge on a different case of the same issue. Since the earlier conflicting judgments were brought to this third judge’s notice, he thought it fit that the matter be heard by a larger bench. The matter was appropriately referred to the Chief Justice of the Madras High Court, who in turn constituted the two-member larger bench comprising Justice S.S. Sundar and Justice N. Senthilkumar.
The Hearing and Judgment:
During the hearing before the larger bench, many crucial points, including the constitutional validity of the amendment, were raised by the learned advocates. After many rounds of hearings, the division bench adjourned the hearing in April 2024, without giving a date for the judgment. The judgment was announced on August 2, 2024, when the Madras High Court declared the amendment as unconstitutional and void.
Situation Before Section 77A:
Before the introduction of Section 77A, the power to annul a registered document was exclusively held by the civil courts. The Specific Relief Act, 1963, allowed an aggrieved party to approach a civil court seeking specific performance under the Act. This process, however, was time-consuming, often taking many years or even generations before reaching a final resolution.
Judgement details the Reasons:
Violation of Constitutional Principles:
The core argument of the Division Bench in striking down Section 77A was its violation of the constitutional principles of the separation of powers and Article 14 of the Constitution. The amendment had granted the District Registrar the authority to cancel a registered document if it was deemed to be fraudulent. By transferring this power to an executive authority, the amendment attempted to undermine the separation of powers doctrine of the constitution, opines the Court.
Lack of Guidelines and Unfettered Power:
The judiciary raised concerns over the lack of clear guidelines governing the powers of the Registrar under Section 77A. Although the provision requires a show cause notice before canceling a document, it leaves much to the discretion of the Registrar, which may lead to arbitrary decision-making.In fact, the judgement refered to a few cases where the decisions were arbitrary or contrary to law.(see below)
No Time Restrictions:
Section 77A gives scope for the District Registrar to entertain applications for document cancellation without any time restriction, potentially reopening transactions settled years and decades ago, creating uncertainty in property ownership.
Parallel Judicial Forum:
The creation of a parallel judicial forum through Section 77A was seen as an encroachment on the judiciary’s domain. The judiciary consistently held that title disputes and the validity of documents fall within the purview of civil courts, not executive authorities.
Lack of Judicial Experience:
District Registrars, typically administrative officers, lack the necessary judicial experience and legal training to determine the fraudulent nature of a document accurately, leading to arbitrary and erroneous decisions.
Case Examples of Misuse:
During the brief period when Section 77A was in effect, several instances were documented where the decisions of the District Registrars were legally untenable. The court detailed these cases in its judgment, demonstrating how the amendment had led to wrongful cancellations of documents, causing significant distress and confusion among property owners.
Registration Act’s Intent and Scope:
The Registration Act is a procedural law, not a substantive law, meant to maintain public records of transactions involving immovable property. It does not confer title or validate transactions independently. The Transfer of Property Act is the substantive law.In fact the intent of the Registration Act itself was to create public record of transactions and prevent forgery or fraud.
Endless Litigation:
Affected parties may continue to approach civil courts even after decisions by the Registrar, leading to prolonged and endless litigation.
Insecurity in Property Transactions:
The power to cancel documents long after transactions have been completed can create insecurity and reduce confidence in property transactions.
Conflict with the Objectives of the Registration Act:
The Registration Act, 1908, was established to ensure transparency and public awareness regarding property transactions. Section 77A, however, stood in direct contradiction to these objectives.
Implications of the Judgment:
Since the court has ruled that Section 77A is unconstitutional and void, it is only natural that all cancellations made by registration authorities become invalid. This will have far-reaching implications, as documents canceled by the District Registrars are now sought to be reinstated, leading to potential conflicts over property ownership. Reports indicate that there were more than 1000 cancellations in the short period Section 77A was in force.
Future Course of Action:
Decision to Appeal
The state government now faces the critical decision of whether to appeal the High Court’s ruling in the Supreme Court or to put in place any other viable alternative to address the issue. Even if an appeal is filed, the likelihood of success remains uncertain, given the detailed constitutional analysis presented in the High Court’s judgment.
The Need for Retrospective Effect
It is regrettable that the court struck down the provision for applying retrospective effect to decide cases involving fake or forged documents. This is particularly unfortunate, as a significant number of forgery and impersonation cases occurred in the past due to the absence of safeguards. While current registration practices have been tightened, significantly reducing the likelihood of fraud in new registrations, older cases remain unresolved. The retrospective application of the law was a necessary step to address past wrongs effectively.
The Responsibility of the State Government
The amendment, though introduced with the noble intention of tackling fraudulent property transactions, encountered significant legal and constitutional challenges in its implementation. The court’s decision highlights the importance of enacting legislation that not only addresses current issues but also rectifies past injustices while respecting judicial authority and constitutional principles.
Let us hope the State Government’s next steps will carefully consider the observations in the judgment, ensuring that any new measures do not overlook the need to address past frauds and forgeries in property transactions. Ultimately, the Government bears the responsibility to safeguard the rights and interests of its citizens.
