PURCHASE OF LANDED PROPERTIES IN GOA BY FOREIGNERS

PURCHASE OF LANDED PROPERTIES IN GOA BY FOREIGNERS - A FACTUAL POSITION OF LAW- SUGGESTIONS- by P.V.S. Sardessai

Sirs,
The current discussion in the media on the topic of purchase of properties in Goa by foreigners appears not to be emphasizing on the main issue i.e. the enforcing measures that are to be taken:-

(a) for ensuring that the already existing laws like the Foreign Exchange Management Act, 1999 read with the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000 are enforced in the right spirit by the authorities under those statutes or by the Home Department and

(b) Empowering other Public Officers like (i) the Sub-Registrars appointed under the Registration Act, 1908 to withhold the registration of such documents till the proper authorities under the FEMA or the Home Department etc. issue a Clearance or No Objection Certificate for the registration of such documents of foreigners or on (ii) the authorities subsequently mutating the properties in the name of the foreigners.

It is hoped that in today’s discussions, these points would be touched.

Based on my personal experiences before retirement as the Goa State level Officer in the Registration Department, I am attaching hereto some annexures to help in getting a clear and actual picture on the aspect of the registration of documents of foreigners. The same are on the following specific topics:-

Annexure A - The Nature of the Registration Process.
Annexure B - The FEMA vis a vis The Registration Act.
Annexure C - Some Gaps in the Implementation Machinery.
Annexure D - Suggested Line of Approach.

Sd/-
(Adv P.V.S. Sardessai)
Retired State Registrar of Goa.

ANNEXURE – A

A] THE NATURE OF THE REGISTRATION PROCESS:-

1) It is a well settled position in law, buttressed by uniform judicial decisions, that the Sub-Registrars appointed under the Registration Act 1908 have little discretion under that Statute of Parliament to refuse registration to documents presented for registration, when such documents happen to meet all the prescriptions under the said Act and the requirements under any other law which “has been definitely made supplemental to the Registration Act”. Section 35 of the said Act using the word ‘shall’ is also very specific ad categorical about this aspect. Moreover, Rule 40 of the G.D.D. Registration Rules 1965 further emphasizes this position when it opens up with the following words: “ (1) Before accepting any document for registration, a registering officer may not concern himself with its validity, but shall ascertain …. “ etc.

2) The supplemental laws mentioned above usually are in the format of a non obstante (notwithstanding) clause in the later Act, expressly providing that ‘notwithstanding anything in the Registration Act 1908, no Registering Officer appointed under that Act shall register a document unless’ some condition is satisfied.

Such prescriptions are normally enacted in the concerned subsequent Acts directing the Registering Officers appointed under the said Registration Act in the following manner:-

(i) ‘not to register’ till some N.O.C. or Clearance certificate from a prescribed authority is furnished. In such cases, there is no prohibition against accepting a document validly presented for registration. In such cases the Registering Officer has to accept the document presented for registration and proceed with all the registration formalities under the Act short of ordering the same for registration. The document will be kept pending till the parties remove the express impediment mentioned in the supplemental law. Some examples are : A tax clearance certificate under Sec 230-A of the Income –tax Act 1961 (now omitted) or N.O.C. under sec 49(6) of the G.D.D. Town & Country Planning Act 1974. As and when such impediment is removed, the document is necessarily to be registered without any unreasonable delay as laid down in the statutory rules.

(ii) Another type of such restraining condition is to direct that till the prior requirement is met, the document shall ‘not be accepted for registration’. In such cases the Registering Officer cannot take up any part of the registration procedure at all, including the acceptance of a presented document. Such provisions being of a more fundamental and drastic nature, they are usually embodied in the Rules or in the Act itself, some examples being: the direction to refuse to accept where a document is not accompanied by its True Copy under the 1986 Amendment to the Registration Rules, or as in the Maharashtra State, the supporting documents like clearances etc, are to necessarily accompany the documents at the time of the presentation itself and not later, so that documents are not kept pending in office indefinitely till the parties comply. (This has also relevance to the computerization of registration procedure which incidentally is going to be shortly introduced in Goa too).

3) The registering officers are quasi judicial authorities, all the proceedings before them being declared under sec 84 (3) of the said Act as “judicial proceedings” for purpose of sec 228 of he Indian Penal Code i.e. in cases of interruption (obviously without authority of some statutory provision) and insult. The officers are also statutorily required to give promptly and free of cost, copies of their orders of refusal to the affected parties, clearly and expressly mentioning therein the legal grounds and he reasons for their refusals which could in turn be challenged by the interested parties in an appeal and thereafter, if the refusal is upheld, by filing a suit in a Civil Court.

It follows that the Sub-Registrars cannot refuse registration at the request or whimsical directions of others when such directions are not founded on any express statutory powers authorizing the interruption of the registration procedure.

4) It is also a well settled position in law that “ it is no part of the duty of a Registering Officer to embark on any inquiry into the legality of a document or to consider extraneous issues like: whether the document is hit by some other law, or about the truth or falsity of any recital in the deed, the fact of payment of consideration or similar issues, while accepting a document for registration” He is not even expected to read out the document to the parties before recording their admission of execution. The statutory procedure for registration is formal and rigid and the inquiry by the registering officers is restricted to the matters prescribed within the four corners of the Act as well as in the provisions of any other law ‘made expressly supplemental to the Registration Act’. The prime object of registration is to authenticate and record documents and make available certified copies therefrom for evidentiary purposes. A Registering Officer acting outside the scope of his statutory duties by refusing documents without statutory authority would be opening himself for challenges in Court and also for possible allegations of malafides or ulterior motives.

ANNEXURE – B

B] THE FOREIGN EXCHANGE MANAGEMENT ACT & REGISTRATION

At the outset itself, it is to be made clear that the FEMA contains no restricting provisions restraining registration of documents of foreigners. So also, none of its provisions is seen to have been made ‘expressly supplemental to the Registration Act 1908, to refuse or delay the registration of the documents of foreigners. Such an act would be ultra vires his statutory mandate. Also, the present article writer, after the news reports, carried on inquiries with the Registration Department and learns that as on the date of this article, no written instructions have been issued by the Govt, or by other statutory authorities to the registering officers not to register property documents of the foreigners as mentioned in some articles or that any disciplinary action was contemplated in this matter for alleged breach of any rules by these officers while registering documents of foreigners. In fact, it is doubtful whether any action could be legally taken in the matter, when no statutory prescriptions under the law, as it stand at present, were breached.

ANNEXURE – C

C] SOME GAPS IN THE IMPLEMENTATION MACHINERY

I had been privy to some developments in the matter while in service and mention hereunder some events/facts as they actually occurred:-

1) In November 1998, the Goa Govt., under information from the Govt. of India, Ministry of Finance (Department of Economics Affairs) New Delhi, issued instructions to the Sub-Registrars to insist on the permission of the Reserve Bank of India while registering acquisition of property documents by foreigners on short tourist visas. These instructions were issued in view of Section 31 (1) of Foreign Exchange Regulation Act 1973. This was also given wide publicity in the offices of the Sub-Registrars. These instruction were logically in force till the said FERA was repealed by Sec 49 of the Foreign Exchange Management Act, 1999 which liberalized and made clear the rules in respect of the purchase and transfer of properties by foreigners.

2) However, a practical difficulty arose in that the R.B.I. would not issue any permission in writing in individual cases of sale deeds on the grounds that ‘eligibility or residential status of individuals is not decided by RBI but by the operation of law i.e. the provisions contained under FEMA, 1999’ The RBI issued replying letters against the applications by foreigners mentioning only the legal position viz. that a foreigner could buy property if he met the conditions laid down in section 2(v)(i)B of the FEMA i.e. if he were a ‘resident’ within the meaning of that section. The issue about the actual control and verification of the averments by foreigners, in keeping with the spirit of the Govt. of India instructions continued to remain in suspended animation.

3) A strange fall out of this state of affairs was that the sale deeds and other property documents of foreigners started remaining pending in the offices indefinitely, the Sub-Registrars hesitating to register the same in view of the spirit of the November 1998 instructions of the Govt. issued under the repealed FERA and also being unable to refuse or indefinitely hold back the registration in view of the clear mandatory statutory provisions of the Registration laws. Under the existing laws, the Registering Officers do not happen to be the inquiring/adjudicating authorities under section 13 of the FEMA in respect of the Foreign Exchange issues. After studying the matter from the legal angle, a practical solution was chalked out which was in harmony with the requirements of the existing Registration laws as well as with those of the FEMA r.w. the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000. This was done by way of instructing the Sub-Registrars to register the documents of foreigners after obtaining their affidavits declaring tht they fulfilled the conditions as to the requirement of residence as laid down in Section 2(v)(i)B of the FEMA. These instructions were also later approved by the RBI authorities.

ANNEXURE – D

D] SUGGESTED LINE OF APPROACH:

(1) The appropriate way to keep a watch and legal control on the illegal transactions by some unscrupulous foreigners, would be to enact a proper amendment (on the lines of the omitted section 230-A of the Income-tax Act 1961 or Sec. 49(6) of the G.D.D. Town & Country Planning Act 1974, by adding a non obstante clause to FEMA or to other relevant laws, requiring the Sub-Registrar appointed under the Registration Act, 1908, not to register the documents of foreigners till the concerned parties furnish a Clearance or a No Objection Certificate from some prescribed authority connected with the subject. Some authorities to be suggested would be : the ‘Adjudicating Authority under Sec. 13 of the FEMA’ or the Home Department. Merely issuing administrative instructions to the Sub-Registrars would not be desirable since the proceedings before these officers are quasi judicial in nature.

(2) Other public authorities like Mutation Officers also should be required to insist on a copy of such Clearance/N.O.C. while processing the mutation matter.

(3) Responsibility should be fixed on some Implementing Authority under the Foreign Exchange Regulations, like either “The Directorate of Enforcement” under Sec 36 of FEMA 1999 (or if deemed fit, on the Reserve Bank of India or on the Home Department of the Centre/State to issue such Clearances/N.O.C.s for the purpose of clearance of the foreigners’ transactions.

Sd/-
(P.V.S. Sardessai) Retired State Registrar & Head of Notary Services.

(Article from Goa Su-Raj Party website)