Introducing Guaranteed Land Titles In India

Madhumita D. Mitra explains that legislative changes to the Land Revenue Act and the Code governing maintenance of Record of Rights and other forms of property registers are necessary concomitants to the conclusive titling law

The Ministry of Rural Development’s ambitious National Land Records Modernization Programme (NLRMP) has set the stage for the development of a conclusive land title guarantee system in India which will end the present presumptive nature of recording of property titles. The “integrated programme would modernise management of land records, minimise scope of land/property disputes, enhance transparency in the land records maintenance system and facilitate moving eventually towards guaranteed conclusive titles to immovable properties in the country.”¹

The Background
Uncertainty over property titles are choking civil courts with property dispute cases² and is the primary reason for serious conflicts over land in many parts of rural India, between the State and the industry on the one side and land holders on the other. Property disputes were identified as the motive for 8.8 per cent of murders and 3.1 per cent of culpable homicides, not amounting to murder committed.³ The property market in India is beleaguered by rampant title frauds and identity frauds on property mortgages.

Since the late 1980s, the Central Government has funded efforts to computerise land records and strengthen revenue administration in the States to bring about efficiency, transparency and easy accessibility in the land records system. But these early schemes were not adequate to deal with record updations to reflect death, informal partitions, informal sale, purchase or exchange of land. They also failed to address problems related to fragmented land holdings that had not seen survey and settlement operations since the early 20th century and that of the huge backlog of mutations.⁴

The policy imperative of a comprehensive land titling system was the realisation that it is not just better physical management of land records but also legal reforms to end the presumptive character of the record of rights that was urgently required.⁵

Property Titles and the Law in India
Under the Seventh Schedule of the Constitution, all matters relating land are within the exclusive legislative and administrative jurisdiction of States. As in common law, the State holds title in all lands which are not private property. The Land Revenue Code/Act of the respective states is the substantive law which administers the record of rights (ROR) of land/property ownership and occupation.

Land records were historically maintained for the purpose of collecting land revenue. The system varied from State to State depending on the evolution of the revenue administration history and local traditions of the State. The ROR typically contains information on the holder or occupants, the nature of holding, mortgages, rents and revenue, cadastral maps, consolidation of holdings, crop and soil patterns and other such information necessary for modern day district planning.

The Land Revenue Code/Act provides for a presumption that the entries in the ROR and mutations register are correct, unless proved to the contrary or substituted by another lawfully made entry. The record presumes that a person paying the property/revenue tax shown in the land/property record is the owner of the property. Any person aggrieved by an entry in the ROR can institute a civil suit in the courts contesting the ROR.⁶

Property Titles and the Common Law
The presumptive nature of recording ownership in the land register in India reflects the common law scheme of property ownership which has to be established through a “chain of title”. By the operation of the principle of nemo dat quod non habet (no one can give what he does not have), the buyer of a property does not automatically acquire title if the seller had no ownership right to it. This general rule aims to protect the original owner of property against anyone dealing with his property without his authority, even if the buyer is innocent, that is, if he did not know that the seller had no ownership right to sell it.

The practical implication of this rule is that the buyer of property must verify the chain of title—all previous transactions of a property—to ensure that the title he wishes to acquire is valid and there is no possibility of any undetected interests. This exercise, obviously, is time consuming, expensive and complex.

The practice of registration of property or “deed registration” evolved out of the need to keep records of property to prevent fraud or mistake or loss of documents in private hands. But registration of the instrument by itself did not grant title to the property, it merely made the transaction a permanent public record and served as a notice to the general public that those interested in transfer of a parcel of property should verify whether such property has been previously encumbered.

The nemo dat rule has undergone modifications in many common law jurisdictions to afford a measure of protection to bona fide purchasers of property. Australia’s Torrens Statute is perhaps the most widely accepted reversal of this general rule.⁷ The object of this law is two-fold. It provides legal security to registered owners by enabling the enforcement of an interest as a right in rem against others and it grants economic security to persons whose property rights have been suppressed by the operation of the law, as it compensates the holders of interest for its loss.⁸

NLRMP and the Torrens Principles
The conclusive titling goals of the NLRMP are based on the three principles of the Torrens Title System.

Mirror Principle
This principle refers to the mirroring of cadastral records with the ground reality, that is, the physical descriptions of the property and holder information in the ROR will be an exact reflection of the real situation. It will be accomplished by the computerisation of all manual records—RORs, mutations register and registration records—and followed by extensive surveys/re-surveys of each property using GIS/GPS technology for cadastral mapping to match with the records.
The Mirror Principle subsumes the general rule in conveyancing, that all interests and rights over a piece of land should be recorded in the register, failing which the interests will not apply and the buyer of the property will lose his rights.⁹ Unregistered interests get left out of the records. On the registration of all interests and rights, the buyer, in the absence of fraud, obtains a title that cannot be impugned on the ground that the seller’s title was defective, or that the conveyance from the seller to the buyer was invalid for any reason.¹⁰

Curtain Principle
Records generated by the survey/re-surveys will then pass through the settlement process, as per the State Settlement Acts/Manuals, to determine the correct title of every unit of land holding. This determination will be taken as the true depiction of the ownership status and will form the basis of the conclusive title. Automatic mutation and registration will follow. This embodies the Curtain Principle of the Torrens Title System, which holds that for any future transaction, it will no longer be necessary to refer to past records to verify ownership and physical description of the property, hence drawing a curtain over past records and transactions.

The Curtain Principle overturns the common law of proving ownership through a chain of title and passes over the doctrine of notice and grants indefeasibility to the title. It sets a priority for title on registered interests and negates any unregistered interest against a person, even if he had express, implied or constructive notice. Buyers need not any longer look beyond the register to investigate ownership. The purpose is to simplify the process of title searches involving multiple interests and beneficiaries.

Indemnity Principle
The NLRMP incorporates the Indemnity Principle of the Torrens Title System by integrating Title Insurance to the guaranteed title, determined by the Mirror and Curtain principles. The State will financially compensate a person deprived of his rights by the grant of conclusive title to a bona fide buyer because of any defect in determining the guaranteed title.¹¹ This principle is based on the assumption that despite best efforts, the registered land records may contain errors, for instance, an omission to record an interest. The Land Revenue Act/Code protects public officials from any law suit over an error or omission or amendment made in any land record or register, but has no provision to undo the wrong done to a true holder of title for any mistake in the ROR that may have been committed by such public officials.

Single Window Operations
The relevant corollary to the application of these three principles towards a State-granted title guarantee is the requirement of a single window to handle land records. A uniformity of approach for a common objective through a single database for land/property records integrating the functions of various departments is expected to simplify procedures, cut out corruption and harassment, and eliminate fraudulent transactions by keeping the records updated simultaneously for every aspect of land management.¹²

Legal Changes for a Guaranteed Title
Acquisition of a title in India has so far been an inference of law arising out of certain set of facts,¹³ but the NLRMP is set to significantly overhaul the way the law of property titles has developed in this country. The model law for conclusive titling for adoption by the States will enable a registered owner of land/property to have an indefeasible State guaranteed title, which will be assumed as valid, enforceable and free from adverse prior-unregistered interests and such title will also be indemnified for its correctness. Civil courts are no longer the forum for determining titles except to the extent of adjusting rights, as between parties, before it in cases of challenge to the register.

In countries where the Torrens Title System is in operation, the indefeasible title comes with certain exceptions that are built into the statute.¹⁴ Fraud by the registered owner, omission and wrong description of property in the register and claims of a prior-registered interest can deprive the registered holder of his title. Further, the indefeasibility is subject to conditions known as overriding interests, which may include adverse possession barred by statute,¹⁵ conditions placed on state granted land, easements, public right of the way, unpaid taxes, etc. Overriding interests need not be recorded on the title to be enforceable against the registered owner as rights in rem.¹⁶

The reversal from the present system of presumptive titles also calls for legal changes in the laws governing property transactions in India. While the Transfer of Property Act, 1882 requires registration to validate a transfer of property, it does not grant title to the buyer on such transfer.¹⁷ Neither does the Registration Act, 1908, under which such registration is made.¹⁸ Though the provisions of these Acts make it nearly impossible to have a legal transaction in immoveable property without registration, the registration only refers to the documents registered and does not create any rights and interests over the property. Legislative changes to the Land Revenue Act/Code governing maintenance of ROR and other forms of property registers are necessary concomitants to the conclusive titling law to enable a convergence with the registration and mutation processes.

Conclusion
The introduction of State guaranteed titles in India is an acknowledgement that a sound title guarantee system is sine qua non for easy transfer of property and one that raises the value of property and its securitisation. The citizens will have easy access to updated, tamperproof land records. Automatic mutations will reduce the scope of fraudulent property deals, ease obtaining loans and cut down on litigation. For the government, the NLRMP will modernise and bring efficiency to the land administration and the land records data will offer a comprehensive tool for planning and development.

Department of Land Resources, Ministry of Rural Development, Government of India, The National Land Records Modernization Programme (NLRMP), Guidelines, Technical Manuals and MIS, 2008-09.
The McKinsey Quarterly, 2001 Number 4 Emerging markets, India - From Emerging to Surging, Amadeo M. Di Lodovico, William W. Lewis, Vincent Palmade and Shirish Sankhe, “Title to most land parcels in India - 90 per cent by one estimate - is unclear, and the problem might take Indian courts a century to resolve at their current rate of progress.”
National Crime Records Bureau, Ministry of Home Affairs, Crime in India 2007, Chapter 3.
For example, the Karnataka government’s much awarded Bhoomi project digitised all the State’s 20 million records of land ownership of 6.7 million farmers over a period of 10 years. But the project acknowledges that years of neglect of land records will be hard to set right and just fixing the errors in the data could take anything between 5-10 years.
On the urban property front, the Ministry of Urban Development is also promoting the introduction of a Property Title Certification System for cities covered by the Jawaharlal Nehru National Urban Renewal Mission. States are expected to ensure proper management and record of all urban property holdings to reflect authentic ownership. Rajasthan became the first state in the country to enact the Guaranteed Land Title Act in 2008, though it only covers free-hold and undisputed property in urban areas. Delhi is also ready with a Delhi Survey, Registration and Recordal of Title of Immovable Properties in Urban Areas Bill which proposes to grant title guarantees over a single window.
In Sita Ram Bhau Patil vs. Ramchandra Nago Patil (Dead) By L.Rs. and Another, (1977) 2 SCC 49, the Supreme Court observed, “Record of right is not a document of title. Entries made therein, in terms of Section 35 of the Indian Evidence Act although are admissible as a relevant piece of evidence and although the same may also carry a presumption of correctness, but it is beyond any doubt or dispute that such a presumption is rebuttable.”
The Torrens Title System named after Robert Torrens, the Prime Minister of South Australia, was introduced in 1858. The system was adopted in New Zealand and other Commonwealth countries including parts of Canada and USA, Malaysia, Singapore, Philippines and some African and Caribbean countries. Title by registration system exists in countries like England, Wales, Israel, Germany, Austria and Peru.
Pamela O’Connor, Double Indemnity – Title Insurance and the Torrens System, 2003 Vol 3 No 1 (QUTLJJ).
In State of Himachal Pradesh & Ors. v. M/s. Shivalik Agro Poly Products & Ors, 2004 (8) SCC 556, the Supreme Court citing Vol.26 Halsbury’s Laws of England Paras 701 and 705 observed that: “The legislation relating to registration of the title is directed to the manner in which the law and practice of conveyancing are to be adapted to the use of a centrally maintained register of title to land…The result…is to produce on first registration a state insured record of entitlement to legal estates in land, open to public inspection, which is to be kept up to date in respect of subsequent transactions in accordance with the conveyancing technique for which the legislation provides.”
Pamela O’Connor, Double Indemnity – Title Insurance and the Torrens System, 2003 Vol 3 No 1 (QUTLJJ).
Ibid. All Australasian Torrens statutes provide for an indemnity scheme or assurance fund, administered by the registrar and funded through contributions levied on registry transactions. See also, Section 103 read with Schedule 8 of the United Kingdom Land Registration Act 2002 provides for similar compensation.
Currently, several state government departments are involved in managing land records - the Revenue Department for textual records and mutations, Survey & Settlement (or Consolidation) Department for cadastral maps, Registration Department for verification of encumbrances and registration of transfer, mortgage, etc., the Panchayats (in some states) for mutation and the municipal authorities in case of urban land records.
M/s Kamakshi Builders v. M/s Ambedkar Educational Society & Ors, (2007) 12 SCC 27.
See for example, Section 42 of State of Victoria, Australia, Transfer of Land Act, 1958 and also, Sections 29 and 30 read with Schedule 3 of the United Kingdom’s Land Registration Act, 2002.
The Indian courts are beset with cases of adverse possession, which is a legal rule which holds that after a period of statutory limitation (as provided in the Limitations Act, 1963), not even the true owner of the property can bring action to eject an unauthorised possessor. In Hemaji Waghaji Jat v. Bhikhabhai Khengarbhai Harijan, AIR 2009 SC 103, the Supreme Court recommended changes to the law observing that “the law of adverse possession which ousts an owner on the basis of inaction within limitation is irrational, illogical and wholly disproportionate. The law as it exists is extremely harsh for the true owner and a windfall for a dishonest person who had illegally taken possession of the property of the true owner.”
Pamela O’Connor, Double Indemnity – Title Insurance and the Torrens System, 2003 Vol 3 No 1 (QUTLJJ). The existence of statutory overriding interests is believed to derogate from the ‘mirror principle’, which holds that purchasers should be able to rely on the register as an accurate and complete record of all matters affecting the title.
Section 54 of the Transfer of Property Act, 1882 provides that transfer of ownership in intangible immoveable property of the value of one hundred rupees and upwards can be made only by a registered instrument. Sections 107 require registration for leases exceeding one year and Section 123 for gifts of immoveable property.
Section 17 of the Registration Act lists instruments for which registration is compulsory and it includes non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immoveable property.

Madhumita D. Mitra is a Delhi based independent legal researcher and consultant. Her areas of interest are human rights and governance issues. Madhumita can be reached at: madhumita.mitra@gmail.com.