2. 2.1 Various Laws Involved in Real Estate
Transactions :
The various laws governing the real estate transactions have
been abridged as follows:
1. The Indian Contract Act, 1872.
2. The Transfer of Property Act, 1882.
3. The Indian Registration Act, 1908.
4. The Specific Relief Act, 1963.
5. The Urban Land (Ceiling & regularization) Act, 1976.
6. The Land Acquisition Act, 1894.
7. The Indian Evidence Act, 1872.
8. The Indian Stamps Act, 1899.
9. The Rent Control Act.
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10. The State Laws governing the real estates.
3. 11. The Consumer Protection Act, 1986.
12. The Arbitration & Conciliation Act,1996.
13. Income Tax Act, 1961.
14. The Wealth Tax Act, 1957
15. The Co-operative Societies Act, 1912
16. The Multi-state Co-operative Societies Act, 2002
I. The Indian Contract Act, 1872 :
There is one basic difference between the law of
contracts and other laws. It does not specify the number of
rights and duties, which the law protects or enforces. It
rather consists of a number of limiting principles, subject to
which the parties may create the right and duties for
themselves, which Trainings the law by will Vidya uphold.
Bhagwat
4. a) Definition of contract :
According to Section 2 (h), the term contract means an
agreement enforceable by law.
b) Steps involved in contract :
The steps involved in the contract are:
1. Proposal and its communication.
2. Acceptance of proposal and its communication.
3. Agreement by mutual promises.
4. Contract.
5. Performance of Contract: All agreements are not contract.
Only those agreements which are enforceable by law are
contracts‘. Following are essential requirements of a valid
contract.
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5. 1. Offer and its acceptance.
2. Free consent of both parties.
3. Mutual and lawful consideration for agreement.
4. It should be enforceable by law. Hence, intention
5. should be to create legal relationship agreements of social
or domestic nature are not contracts.
6. Parties should be competent to contract.
7. Object should be lawful.
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c) Types of contract :
There are five types of contract, they are:
1. Void contracts
2. Voidable contracts
3. Valid contracts
4. Unenforceable contracts
5. Illegal/unlawful contracts
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1. Void contracts :
Section 2 (j) of the Indian Contract Act, 1872 defines a void
contract as under: A contract which ceases to be enforceable by law
becomes void, when it ceases to be enforceable. It is clear from this
definition that a void contract is a contract which was valid
originally.
2. Voidable contract :
Section 2 (i) of the Indian Contract Act, 1872 defines voidable
contract as under: An agreement which is enforceable by law at the
option of one or more of the parties thereto, but not at the option
of one or more of the parties thereto, but not at the option of the
other or others, is a voidable contract‖. From this definition, it is
clear that a contract is voidable if it is enforceable by law at the
option of only one of the contracting parties, and not at the option
of both the contracting parties.
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3. Valid contract :
A valid contract is an agreement enforceable by law. An
agreement becomes enforceable by law only when it satisfies
all the essential elements of a contract as contained in Section
10 of the Indian Contract Act. So, a valid contract is an
agreement which satisfies all the essentials of a contract, as
contained in Section 10 of the Indian Contract Act. For
example, if A offers to sell his house to B for Rs 10 lakhs and B
accepts the same, there is a valid contract. The legal rights
conferred and the legal obligations imposed by a valid
contract are enforceable by law against each other.
4. Unenforceable contracts :
An unenforceable contract is a contract which is valid in
itself, but cannot be enforced in a court of law because of
some technical defect, say absence of writing, absence of
registration, want of requisite stamp, expiry of time, etc.
8. 5. Illegal or unlawful contracts :
Section 23 of the Indian Contract Act deals with such
contracts. An illegal or unlawful contract is one whose object
or consideration
I. Is forbidden by law or
II. Is of such a nature that, if permitted, it would defeat the
III. Provisions of any law or
IV. Is fraudulent or
V. Involves or implies injury to the person or property of
VI. Another or
VII. Is immoral or
VIII. Is opposed to public policy.
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9. This Act lays down the general principles of realty, like
part performance and has provisions for dealing with property
through sale, exchange, mortgage, lease, lien and gift. A
person acquiring immovable property or any share/interest in
it is presumed to have notice of the title of any other person
who was in actual possession of such property.
III. The Registration Act, 1908
The purpose of this Act is the conservation of evidence,
assurances, title, and publication of documents and
prevention of fraud. It details with the formalities for
registering an instrument.
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10. IV. Special Relief Act, 1963
This Act is only to enforce individual civil rights [Section 4]. A
person dispossessed of immovable property without his consent
(other than in due course of law) can recover possession by a suit
filed within six months from the date of dispossession. In a suit for
specific performance of contract, the Court shall presume that
monetary compensation for its performance would not afford
adequate relief. The court could also grant a permanent/
mandatory injunction preventing the breach of such contract and
award damages.
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11. V. Urban Land (Ceiling and Regulation) Act (ULCRA),
1976
This legislation fixed a ceiling on the vacant urban land that
a person‘ in urban agglomerations can acquire and hold. A
person is defined to include an individual, a family, a firm, a
company, or an association or body of individuals, whether
incorporated or not. This ceiling limit ranges from 500–2000 sq.
m. Excess vacant land is either to be surrendered to the
competent authority appointed under the Act for a small
compensation, or to be developed by its holder only for specific
purposes. The Act provides for appropriate documents to show
that the provisions of this Trainings Act by are Vidya not Bhagwat
attracted or should be
produced to the Registering officer for registration under the
Registration Act.
12. VI. The Land Acquisition Act, 1894
This Act authorizes governments to acquire land for public
purposes such as planned development, provisions for town or
rural planning, provision for residential purpose to the poor or
landless and for carrying out any education, housing or health
scheme of the Government, in its present form. The Act hinders
speedy acquisition of land at low prices, resulting in cost overruns.
VII. The Indian Evidence Act, 1872
Evidence means and includes:
1. All statements which the Court permits or requires to be made
before it by witnesses, in relation to matters of fact under inquiry;
such statements are called oral evidence.
2. All documents including Trainings electronic by Vidya records Bhagwat
produced for the
inspection of the Court; such documents are called documentary
evidence.
13. VIII. The Indian Stamp Duty Act, 1899
Stamp means any mark, seal or endorsement by any agency or
person duly authorized by the state government and includes
an adhesive or impressed stamp for the purpose of duty
chargeable under the act.
Duly stamped as applied to an instrument, means that the
• instrument bears an adhesive or impressed stamp of not less
• than the
• proper amount and that such stamp has been affixed
• or used in accordance with law for time being in force in
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India.
14. a) Power of Parliament :
Parliament can make law in respect of Stamp Duty. It can
prescribe rates of stamp duty. The stamp duty rates
prescribed by Parliament in respect of bill of exchange,
cheques, transfer of shares etc. will prevail all over India.
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b) Power of the State:
The Stamp duty is a State subject and hence would vary
from state to state. The stamp duty in many states is paid as
per the true market value as assessed by the Stamp Office.
When an agreement is to be stamped, it needs to be unsigned
and undated and after the Stamp Office affixes stamps on the
agreement, one may execute the agreement.
15. c) Instruments chargeable to stamp duty :
Instrument includes every document by which any right
or liability, is, or purported to be created, transferred, limited,
extended, extinguished or recorded [Section 2(17) of Indian
Stamp Act]. Any instrument mentioned in Schedule I to Indian
Stamp Act is chargeable to duty as prescribed in the schedule
[Section 3].
d) Duty payable when there are several instruments :
In case of sale, mortgage or settlement, if there are
several instruments for one transaction, stamp duty is payable
only on one instrument. On other instruments, nominal stamp
duty of Re. 1 is payable [Section 4(1)]. If one instrument
relates to several distinct Trainings matters, by Vidya stamp Bhagwat
duty payable is
aggregate amount of stamp duties payable on separate
instruments [Section 5].
16. e) Powers to reduce stamp duty :
Government can reduce or remit whole or part of duties
payable. Such reduction or remission can be in respect of
whole or part of territories and also can be for particular class
of persons. Government can also compound or consolidate
duties in case of issue of shares or debentures by companies
[Section 9(1)]. Government‘ means Central Government in
respect of stamp duties on bills of exchange, cheque, receipts
etc. and State Government‘ in case of stamp duties on other
documents [Section 9(2)].
f) Mode of payment of stamp duty :
The payment of stamp duty can be made by adhesive
stamps or impressed stamps. Instrument executed in India
must be stamped before Trainings or by at Vidya the time Bhagwat
of execution (Section
17).
17. g) Valuation for stamp duty :
In some cases, stamp duty is payable on ad valorem basis
i.e. on basis of value of property etc. In such cases, value is
decided on prescribed basis.
h) Adjudication as to stamp duty payable :
Adjudication means determining the duty payable.
Normally, the person paying the duty himself may decide the
stamp duty payable and pay accordingly.
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18. XI. The Consumer Protection Act, 1986
The Consumer Protection Act enables a person to file a
complaint against the builder for deficiency in service and claim
damages from him.
For the purpose of the Consumer Protection Act, the term
Consumer has been defined separately for goods and services‖.
1. For the purpose of ―goods‖, a consumer means a person
belonging to the following categories:
(i) One who buys or agrees to buy any goods for a consideration that
has been paid or promised or partly paid and partly promised or
under any system of deferred payment.
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(ii) It includes any user of such goods other than the person who
actually buys goods and such use is made with the approval of the
purchaser.
19. XII. The Arbitration and Conciliation Act, 1996
The Arbitration Act, 1996 that repealed the Arbitration Act,
1940 governs arbitration over commercial disputes. The underlying
idea is that disputes may be settled between persons without
recourse to a court of law.
XIII. Income Tax Act, 1961
In India, the Constitution of India is the parent law. All other
laws should be enacted without exceeding the frame-work of the
Constitution and subject to the norms laid down therein. The
Constitution of India empowers the Central Government to levy tax
on income. By virtue of this power and to achieve this objective,
the Income Tax Act, 1961 was enacted in the place of the Income
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Tax Act, 1922 which was prevalent earlier
20. XIV. The Wealth Tax Act, 1957
There are two direct taxes in India—income tax and wealth
tax. Wealth tax Act is complex and real estate is subject to wealth
tax. Valuation of real estate, the exemptions and deductions
allowed, and so on make for an interesting study. Wealth Tax is a
tax on the value of wealth owned by a person, levied under the
Wealth Tax Act. The tax is levied @1 per cent on the amount of
wealth as on 31st March of every year, where such amount
exceeds Rs 15,00,000. This is similar to the basic exemption limit of
Rs 1,00,000 provided under the Income Tax Act.
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21. XV. The Co-operative Societies Act, 1912
Cooperative Societies Act is a Central Act. However,
Cooperative Societies‘ is a State Subject (Entry 32 of List II of
Seventh Schedule to Constitution, i.e. State List). Though the Act is
still in force, it has been specifically repealed in almost all the
States and those States have their own Cooperative Societies Act.
XVI. The Multi-state Co-operative Societies Act, 2002
Since Cooperative Societies is a State Subject (Entry 32 of List
II of Seventh Schedule to Constitution, i.e. State List), the
cooperative societies formed under State Acts have to restrict
their activities to only one State.
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22. 2.2 Legislations Administered by the Ministry of
Urban Development
A. Constitution (Seventy-Fourth Amendment) Act 1992:
This is a revolutionary piece of legislation by which
Constitution of India was amended to incorporate a separate
Chapter on urban.
B. Administration of Delhi Development Act, 1957 :
This Act replaces the Control of Building Operations Ordinance
1957 by which the DDA was constituted. The Act defines the
constitution role, powers and functions of Delhi Development
Authority.
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23. C. The Urban Land (Ceiling and Regulation) Act, 1976 :
The Urban Land (Ceiling and Regulation) Act, 1976 came
into force on 17 February 1976.
D. The Urban Land (Ceiling & Regulation) Repeal Act, 1999:
The Urban Land (Ceiling & Regulation) Act 1976 has been
repealed by the Urban Land (Ceiling and Regulation) Repeal
Act, 1999. The Repeal Act has been notified on 23 March
1999.
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