Guaranteeing land titles

The Constitution authorizes both Union and state legislatures to enact laws related to the transfer of property—except relating to agricultural land, which lies in the exclusive domain of the states. The state government maintains the land records, which reflect the name of the person responsible for paying the revenue; such a person is usually the owner of the land. However, at times, the land may be transferred without a consequential mutation, or alteration, in the records—so the land records may not always reflect the correct status regarding the ownership of land. Further, the time lag between registration and mutation may give rise to fraudulent transactions.

In fact, current records may mean nothing. The Supreme Court has held in various instances that entries in revenue records have only fiscal purposes and no ownership can be inferred on the basis of such entries.

What about other countries? Australia’s Torrens system is based around a central registry whereby all transfers of land are recorded in the register maintained by the government. Most importantly, the owner of the land is established by virtue of his name being recorded in the government’s register. This does away with the need for a chain of titles, or tracing titles through a series of documents. Each parcel of land is given a separate folio in the register and is identified by reference to a registered plan. Further, there also exists a provision which provides for compensation in the event of loss due to incorrect entries made in the register of titles. This system has also been adopted in countries such as England, Ireland, New Zealand, Canada, Malaysia, Kenya and certain states in the US.

In India, there have been some attempts by the Union government in the form of the computerization of land records (CLR) and the strengthening of revenue administration and updating of land records (SRA & ULR) towards guaranteeing title to land. CLR was started in 1988-89 with the objective of managing land records; it has been successfully implemented in Delhi, Haryana, Karnataka, Madhya Pradesh and Maharashtra. In recent times, the Union cabinet has approved the National Land Records Modernization Programme (NLRMP) while merging CLR and SRA & ULR. The Union urban development ministry has also suggested state governments implement a system of title insurance to insure the title against any defects.

Certain states in India are considering some measures. The Rajasthan government is all set to introduce the Rajasthan Urban Land (Certification of Title) Act. In the proposed law, it is even contemplated that in the event of a dispute where a buyer gets cheated by the seller, provisions would be made to give relief to the buyer of the land. Along similar lines, the Delhi government is in the process of drafting the Delhi Urban Property Registration and Titling Bill to inject greater transparency and accountability in property transactions. More states should enact similar laws to guarantee land titles.

This would also result in revival of interest among foreign investors to enter the real estate market; currently, there is a risk associated here due to inconclusive land titles. The implementation of the system of title insurance in India will surely lead to renewed confidence among all kinds of buyers. Such steps would also help reduce litigation. It’s time India got itself a stronger property rights regime. This can help usher in another era of high growth and investment in the real estate sector.

Mrinal Kumar is a principal associate and Shruti Garg is an associate with the Amarchand & Mangaldas & Suresh A. Shroff & Co. law firm. Views expressed here are personal. Comment at otherviews@livemint.com

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