Through a circular dated 7 March 2013, the Maharashtra Government has implemented the provisions of Registration (Maharashtra Amendment) Act, 2010 (“Act“). The Act has been made applicable on and from 1 April 2013.
The Act brings in major changes to the Registration Act, 1908 (“Registration Act“) as applicable to the State of Maharashtra.
Few of the changes brought in by the Act are discussed below.
The Act has added certain documents which are now compulsorily registrable in Maharashtra:
(a) Agreement relating to the deposit of title deeds, where such deposit has been made by way of security for the repayment of a loan or an existing or future debt;
(b) Sale certificate issued by any competent officer or authority under any recovery act; and
(c) Irrevocable power of attorney relating to transfer of immovable property in any way, executed on or after the commencement of the Act.
The Act also sets out the procedure to be followed when the immovable property is located in Maharashtra but equitable mortgage over the property is created outside Maharashtra.
In terms of the Act (Sections 89B and 89C inserted by the Act), the mortgagor creating equitable mortgage (outside Maharashtra) over an immovable property located in Maharashtra will need to send a ‘notice of intimation‘ of creation of mortgage to the Registrar within whose jurisdiction the property is located. The mortgagor sending ‘notice of intimation‘ will also need to furnish the following details to the Registrar:
(a) names and addresses of the mortgagor and the mortgagee;
(b) date of creation of mortgage;
(c) amount received under the mortgage;
(d) rate of interest payable;
(e) list of documents deposited; and
(f) description of the property.
If the mortgagor fails to send the ‘notice of intimation‘ to the Registrar as aforesaid and subsequently enters into a transaction related to or affecting the mortgaged property with a third party, in terms of the Act, such transaction will be void. In such situations the third party will be entitled to (a) refund of the amount paid with respect to such transactions; (b) interest at the rate of 12% from the date the amount was paid; and (c) compensation for any damages suffered by the third party.
Further, failure to send the aforesaid ‘notice of intimation‘ would lead to the mortgagor being imprisoned for a minimum term of 1 year which may extend upto 3 years and fine.
Maharashtra, as a state has the highest stamp duty rate in the country with loans and mortgages, subject to exorbirtant ad valorem stamp duties (capped at Rs 10,00,000 for mortgage). Further, Maharashtra is one of the few states to have extended the stamp duty payable on mortgage to any document evidencing deposit of title deeds (declaration of deposit and memorandum of entry, standard documentation in relation to equitable mortgage, are not, strictly speaking, instruments for the purpose of stamping). With the new amendment, the stamp duty net has become wider (a requirement for registration necessarily requiring that the document is also stamped) and now extends to equitable mortgage created outside Maharashtra for property in Maharashtra.
Anuj Sahay [firstname.lastname@example.org]