PROPERTY LAW

In India a person can get an estate in real property either as a free hold or as a leasehold estate. Occupation and use of real property can also be in two ways, as an owner or as a tenant. Till now there were restrictions for a foreigner to acquire rights in a real property. They still continue to exist, though in a milder form. Foreigner in India can not venture to acquire and dispose off a real property as an Indian National would be in a position to do so. Though there are no restrictions for a foreigner to acquire real property on tenancy basis there are restrictions on a foreigner to acquire real property on ownership basis.

In a transaction wherein a foreigner acquires or disposes off real property on ownership basis it would be necessary to obtain permission from the Reserve Bank of India and to comply with various provisions of the Foreign Exchange Regulations Act.
Central Laws which affect acquisition, holding of and disposal off an immovable property in India are the Transfer of Property Act, 1908, Indian Contract Act, 1872, Specific Relief Act, 1963, Urban Land (Ceiling & Regulation) Act, 1976, Land Acquisition Act, 1894, certain provisions of the Income Tax Act which obliges parties in certain metropolitan cities to obtain prior permission of the Income tax authorities for acquiring or giving up or transferring the property above a particular value. The State Acts, which would affect a real property transaction, are Stamp Laws of each State, Rent Laws of each State, etc.

Though it can be said as primitive in the age of computers, India still has a method and system of recording real properties. Each transaction of a real property whether be a sale, mortgage, gift, lease, exchange, transfer or charge, all are recorded with a registering authority and title to a property can be traced as far back as 60 years and more. The method of preparing documents connected with the real property transactions are almost akin to England and most of the documents their contents are of the same nature and language as prepared in England.

Transfer of Property

All properties either movable or immovable constantly remain in the state of transfer and no society exists without such activity. A transfer may be by way of sale, exchange, gift, lease, mortgage or actionable claim. Prior to the year 1882 no law existed which really governed activities of transfer of properties in India and in the absence of statutory enactments English Law was adopted which was not satisfactory due to entirely different social conditions prevailing in India from that of England. Since the year 1882 the law relating to the transfer of properties by the act of the parties is codified in the Transfer of Property Act, 1882. The Act contains provisions defining as to what is transfer of the property, what may be the transfer, person competent to transfer, conditions restraining the transfer, transfer for the benefit of unborn person, transfer in perpetuity for the benefit of public, vested interest, contingent interest, conditional transfer, etc. It provides for sales, mortgages, charges and leases of immovable properties, exchanges, gifts, and transfer of actionable claim. Though not exhaustive, this act encompasses important transactions of properties.

Negotiable Instruments

Law relating to promissory notes, bills of exchange, cheques and other negotiable instruments is codified in India under the Negotiable Instruments Act, 1881. It defines promissory note, bill of exchange, cheque, foreign instrument and negotiable instrument. As per the provisions of this Act, in India, every person capable of contracting, according to the law to which he is subject, may bind himself and be bound by making, drawing, accepting, endorsing, delivering and negotiating of a promissory note, bill of exchange or cheque and every person capable of binding himself or of being bound, may so bind himself or be bound by a duly authorized agent acting in his name.

The act provides for the liability of an agent, legal representative, drawer, drawee, maker and acceptor of a bill, endorser, holder in due course, suretyship, etc. As per the provisions laid down in the said act, a negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer and when a promissory note, bill of exchange or cheque is transferred to any person so as to constitute the person, the holder thereof the instrument is to be negotiated. Detailed provisions have been made in the Act concerning presentment, payment, interest, discharge from liability, notice of dishonour, noting and protest, reasonable time for payment, acceptance and payment for honour and reference in case of need, compensation, special rules of evidence, providing for certain presumptions and estoppels, cross cheques, bills in sets, etc.

CHAPTER XVI comprising of Section 134 to 137 is of an International Law and the said 4 sections read as follows:
"134. Law governing liability of maker, acceptor or endorser of foreign instrument. In the absence of a contract to the contrary, the liability of the maker of drawer of a foreign promissory note, bill of exchange or cheque is regulated in all essential matters by the law of the place where he made the instrument, and the respective liabilities of the acceptor and endorser by the law of the place where the instrument is made payable.

135. Law of place of payment governs dishonours. Where a promissory note, bill of exchange or cheque is made payable in a different place from that in which it is made or endorsed, the law of the place, where it is made payable determines what constitutes dishonour and what notice of dishonour is sufficient.

136. Instrument made, etc. out of India, but in accordance with the law of India If a negotiable instrument is made, drawn accepted or endorsed [outside India], but in accordance with the [law of India], the circumstance that any agreement evidenced by such instrument is invalid according to the law of the country wherein it was entered into does not invalidate any subsequent acceptance or endorsement made thereon [within India].

137. Presumption as to Foreign Law. The law of any foreign country [***] regarding promissory note, bills of exchange and cheques shall be presumed to be the same as that of [India], unless and until the contrary is proved. A very noteworthy amendment has been recently made with effect from 1st April 1989 in the form of Chapter XVII which provides for penalties in case of dishonour of certain cheques for insufficiency of funds in the accounts.

Under this Chapter dishonour of a cheque in certain cases is an offence. After a cheque is dishonoured, written notice is required to be given within 15 days of the receipt of information from the bank regarding the return of cheque as unpaid and if the drawer of the cheque fails to make the payment of the cheque within 15 days from the receipt of such notice, then only the dishonour of the cheque amounts to an offence. If a cheque, which is dishonoured, is issued by way of gift or loan, it does not become an offence. The cheque should have been issued for the discharge of any debt or any other liability which can be legally enforced AND the dishonour should be on account of insufficiency of funds.

The cheque should be presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier. A cheque otherwise valid does not become invalid merely by reason of its being either post dated or ante dated. The complaint with the Metropolitan Magistrate has to be filed within one month from the date on which the cause of action arose. It shall be presumed that the holder of the cheque has received it for the discharge of any debt or liability and the onus would be on the issuer of the cheque to prove otherwise. The punishment of the offence is imprisonment for a term which may extend to one year or with fine which may extend to twice the amount of the cheque or with both.