WHAT IS THE PROCESS OF PURCHASING REVERSIONARY INTEREST?

IS DEEMED CONVEYANCE A FINAL TITLE WITHOUT CONVEYANCE OF REVERSIONARY INTEREST?

DOES REVERSIONARY INTEREST EXTINGUISH AFTER GETTING DEEMED CONVEYANCE?

WHAT ARE CONSEQUENCES OF FRAUD PLAYED BY THE COMMITTEE BY FABRICATING TITLE RECORDS?

First let us see

What is Lease?

Under Transfer of Property Act 1882 its defined in Section 105

  Lease defined.

A lease of immoveable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.

Lessor, lessee, premium and rent defined. — The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent

How is Lease determined?

It is provided in the Transfer of Property Act 1882.

Section 111

  1. Determination of lease. —

A lease of immoveable property determines—(a)by efflux of the time limited thereby;(b)where such time is limited conditionally on the happening of some event—by the happening of such event;(c)where the interest of the lessor in the property terminates on, or his power to dispose of the same extends only to, the happening of any event—by the happening of such event;(d)in case the interests of the lessee and the lessor in the whole of the property become vested at the same time in one person in the same right;(e)by express surrender; that is to say, in case the lessee yields up his interest under the lease to the lessor, by mutual agreement between them;(f)by implied surrender;(g)by forfeiture; that is to say, (1) in case the lessee breaks an express condition which provides that, on breach thereof, the lessor may re-enter; or

(2)in case the lessee renounces his character as such by setting up a title in a third person or by claiming title in himself; or

(3)the lessee is adjudicated an insolvent and the lease provides that the lessor may re-enter on the happening of such event; and in any of these cases the lessor or his transferee gives notice in writing to the lessee of his intention to determine the lease;

(h)on the expiration of a notice to determine the lease, or to quit, or of intention to quit, the property leased, duly given by one party to the other.

Illustration to clause (f)A lessee accepts from his lessor a new lease of the property leased, to take effect during the continuance of the existing lease. This is an implied surrender of the former lease, and such lease determines thereupon.

DEEMED CONVEYANCE- REVERSIONARY INTEREST

Buying private reversionary rights means, purchasing the right of an original owner (Reversioner) to get their property back after a temporary interest (like a lease or life estate) ends. This process involves a formal “Deed of Conveyance” to transfer these future ownership rights, allowing the buyer to become the absolute owner once the lease expires or conditions are met, effectively converting leasehold to freehold or securing future property access. It’s common with long-term leases, especially with local authorities or old charitable grants, where the current possessor (lessee) buys the right from the landowner (lessor) to gain full control.

What are Reversionary Rights?

  • Definition: The right to resume full possession or ownership of property when a limited interest (e.g., a life estate, a specific term lease) held by someone else concludes.
  • Reversioner: The original owner or their successor who holds this right.
  • Example: A landlord retains a reversionary right over a property leased for 99 years; when the lease ends, the property reverts to the landlord.

How Buying Works

  1. Agreement: The current holder of the reversionary right (e.g., a landlord) agrees to sell it to the person currently possessing the property (the lessee/tenant).
  2. Deed of Conveyance: A legal document is drafted, transferring these rights to the purchaser.
  3. Merging Titles: Once purchased, the leasehold interest and the reversionary right merge, and the lessee becomes the absolute owner (freeholder).
  4. Conditions: The new owner gains full rights, free from the original limitations, often simplifying future sales and reducing documentation.

Why Buy Them?

  • Full Ownership: Converts leasehold property to freehold.
  • Eliminate Future Obligations: Ends recurring ground rents and lease restrictions.
  • Control: Prevents the property from reverting to the original owner or their heirs.

Key Considerations

  • Legal Framework: Governed by laws like India’s Transfer of Property Act, 1882.
  • Valuation: The price depends on the property’s value, lease terms, and time until reversion.
  • Professional Advice: Essential to involve solicitors to ensure clear title and proper documentation

IS DEEMED CONVEYANCE A FINALITY OF TITLE?

Bombay High Court in Tirupati Hopping Centre Premises Co-Op vs Shabayesha Construction Company on 22 April 2021 answered this question in negative.

Equivalent citations: AIR 2021 BOMBAY 263, AIRONLINE 2021 BOM 681

“55. In our view, the proceedings under Section 11 of the MOFA are filed in view of the default committed by the promoter to execute a Deed of Conveyance in favour of the society by complying with its application under the provisions of the MOFA by executing a Deed of Conveyance. The Competent Authority is thus empowered to pass an order of Deemed Conveyance ex-parte. Such order passed by the Competent Authority does not create title in respect of such property conclusively in favour of the society. Such an order of Deemed Conveyance is subject to the final adjudication of title in the appropriate Civil proceedings either before the Civil Court or by Arbitral Tribunal in case of their being an Arbitration Agreement between the parties. There is no such provision under MOFA that the order passed by the Competent Authority under Section 11 of the MOFA is final in all respect including on the issue of title in the property and bars the Civil Court or the Arbitral Tribunal from deciding the issue of title independently.”

IF ORIGINAL LESSOR DIED AND SUCCESSION THAN A SUIT IS MAINTAINABLE TO DECLARE ALIENATION

Achhru Ram J. in Gokal v. Haria, AIR 1949 EP 414, which are to the following effect-

“It Is well settled that till succession opens out no reversioner can claim any right to or interest in the property in the possession of the limited owner. Till succession opens put, the reversionary interest is merely in the nature of spes successions and it cannot be postulated with regard to any particular person whether at the time the estate falls into possession he would be entitled to the property. When the presumptive reversioner illegal, brings a suit for a declaration that an alienation by a limited owner should not affect his reversionary rights at the time of the succession opening out and the suit is decreed the only effect of the decree is to declare the alienation to be invalid except for the life of the alienor. The declaratory decree does not pass any title to the presumptive reversioner and does not create any right in him in the property alienated. The title still remains in the alienee.”

WHAT ARE RIGHTS OF TRANSFREE OF LESSOR

  1. Rights of lessor’s transferee.—If the lessor transfers the property leased, or any part thereof, or any part of his interest therein, the transferee, in the absence of a contract to the contrary, shall possess all the rights and, if the lessee so elects, be subject to all the liabilities of the lessor as to the property or part transferred so long as he is the owner of it; but the lessor shall not, by reason only of such transfer, cease to be subject to any of the liabilities imposed upon him by the lease, unless the lessee elects to treat the transferee as the person liable to him:

Provided that the transferee is not entitled to arrears of rent due before the transfer, and that, if the lessee, not having reason to believe that such transfer has been made, pays rent to the lessor, the lessee shall not be liable to pay such rent over again to the transferee.

The lessor, the transferee and the lessee may determine what proportion of the premium or rent reserved by the lease is payable in respect of the part so transferred, and, in case they disagree, such determination may be made by any Court having jurisdiction to entertain a suit for the possession of the property leased.

HOW SALE/PURCHASE OF REVERSIONERY INTEREST MADE? WHAT IS THE PROCESS OF PURCHASING REVERSIONARY INTEREST?

Ans:

Under Transfer of Property Act, 1882 Section 54 provides for : It says such transfer, in the case of tangible immoveable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument.

All the covenants run with the land and reversionary rights cannot be transferred without payment and registered document of conveyance to that effect.

FABRICATION OF RECORDS OF TITLE BY SOCIETY-CONSEQUENCES:

The fabrication of lease records by a society can lead to significant financial penalties, legal action, and potential criminal charges for the individuals responsible and the society itself. This action constitutes fraud, which is a serious offense under Indian law.

Key consequences include:

Legal Consequences

  • Criminal Charges: Identity theft and signature forgery are criminal offenses. Individuals found guilty of fabricating documents can face fines and imprisonment.
  • Civil Litigation: Affected parties (e.g., actual owners, tenants, or the Registrar of Societies) can file lawsuits against the society and its managing committee members.
  • Lease Invalidity: A fraudulent lease is invalid and unenforceable in court. The court can order the eviction of any tenant under such a lease and award damages to the aggrieved party.
  • Regulatory Action: The Registrar of Co-operative Societies, the Real Estate Regulatory Authority (RERA), or other governing bodies may take action. This could lead to the removal of office bearers, the appointment of an administrator, or even the cancellation of the society’s registration.

Financial Consequences

  • Hefty Fines and Penalties: Legal and regulatory bodies can impose significant fines on the society for non-compliance and fraudulent practices.
  • Damages: The society may be ordered by a court to pay substantial damages to the individuals or entities harmed by the fabricated records, including legal costs.
  • Operational Disruption: Legal battles and penalties can divert resources and management attention, leading to operational inefficiencies and potential business downtime.

Reputational Consequences

  • Loss of Trust: The society’s reputation among its members, the public, and regulatory bodies will be severely damaged, making future operations difficult.
  • Membership Issues: Members may face difficulties securing necessary permissions (e.g., for renovations) if the society’s records and management are compromised.

In India, lease documents for periods longer than one year must be registered to be valid and admissible as evidence in court. Any fabrication in these records can be challenged in the appropriate legal forum, such as a Civil Court or a RERA authority, depending on the specifics of the case

Conclusion:

A society with lease hold interest must be cautious in dealing with title. If going for redevelopment and if Owner/Lessor has not assigned the property than Society can go for Deemed Conveyance. But if there is a registered Deed of Assignment Society can’t go for Deemed Conveyance.

If society manipulates or fabricates records than flat owners though not involved in such crime will lose rights. Be careful before saying YES.

Concept of Fraud and Misrepresentation in Law

In Rameshwar Co-operative Society vs DDR Bombay High Court held that:

“33. Both in general jurisprudence and under Section 21A, fraud is a serious charge requiring strong proof. The law regards fraud as an extrinsic, collateral act that vitiates even the most solemn proceedings. Fraud involves deliberate deception – a person knowingly making false representations or concealing material facts to induce another (here, the Registrar) to do something he would not have done otherwise. Our Supreme Court has observed that fraud must be pleaded and proved with particularity; it cannot be presumed from technical violations. Minor errors or omissions do not equate to fraud. In

S.P. Chengalvaraya Naidu v. Jagannath (1994) 1 SCC 1, the Supreme Court famously stated that “a fraud is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is cheating the court or tribunal, and every such act vitiates the entire proceeding.”

 

19th December 2025

Shruti Desai