Compulsory Registration of Sale Certificate in Liquidation Process in Rajasthan

 Compulsory Registration of Sale Certificate in Liquidation Process in Rajasthan

Recently, the President assented to amendments to the Registration Act, 1908 introduced by the State of Rajasthan vide the Registration (Rajasthan Amendment) Act, 2021 (Amendment). The Amendment has been published in gazette on February 24, 2025. Now, vide letter dated March 17, 2025, the Registration and Stamps Department have issued instructions to the respective authorities in this regard. Key changes are as under:

1.      Impact on Agreements to Sell Immovable Property

Prior to the Amendments, an agreement to sell (ATS) was required to be registered only when possession of immovable property was handed over at the time or prior to the ATS. However, the Amendment requires registration of an ATS irrespective of whether possession of immovable property has been or is handed over or not.

2.      Lease Deed for Immovable Property

Further, lease deeds for a term less than a year were not required to be registered under the unamended Section 17 of Registration Act, 1908. However, the Amendment has made registration mandatory for all ‘leases of immovable property for any term’. This is a first of its kind measure adapted by the State of Rajasthan.

3.      Documents relating to Deposit of Title Deeds

The Amendment also will have a bearing on security creation by way of mortgage by way of deposit of title deeds that are generally recorded through an unregistered Memorandum of Entry (MOE). The Hon’ble Supreme Court[1] has consistently held that a document merely recording the factum of deposit of title deeds for creating mortgage is not compulsorily registrable, however, if a document/instrument records terms and conditions of the mortgage or creates rights, liabilities or interests, then such document is liable to be registered. However, the Amendment has widened the registration requirement by providing that ‘agreement or any other document relating to the deposit of title deeds’ for creation of security towards repayment of money shall be liable to be compulsorily registrable. This overturns a long-standing judicial jurisprudence and shall have major impact on the lending market in Rajasthan.

This Amendment will also have a direct bearing on the financing transactions between lenders and borrowers situated outside Rajasthan, wherein security is created to deposit the title deeds of immovable property situated in Rajasthan.

4.      Other Documents

Apart from the above key documents, the Amendment also mandates compulsory registration of following commercial documents:

• (i) Sale Certificates issued under any Central Act or State Act for the time being in force, which will involve sale certificates issued by Banks under SARFAESI Act, 2002 and also issued by liquidators under the Insolvency and Bankruptcy Code, 2016 (IBC);

• (ii) Agreement relating to giving authority or power to promoter or a developer, by whatever name called, for construction on, or development of, or sale or transfer of immovable property;

• (iii) Power of attorney (PoA) authorizing to transfer immovable property with or without consideration; and

• (iv) Concession agreements, which will include concessions for infrastructure projects in Rajasthan.

The lack of registration of the above documents and agreements in the State of Rajasthan will make them unenforceable in terms of Section 49 of the Registration Act, 1908. Accordingly, all persons entering into such agreements and documents shall seek registration to perfect the respective transactions.

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