ONCE THERE IS A DEED OF ASSIGNMENT EXECUTED BY THE LESSOR IN FAVOUR OF THE LESSEES CAN THERE BE DEEMED CONVEYANCE?

Why am I writing this blog? You must be wondering! No noting without cause. Nowadays, in the name of redevelopment societies are collecting huge funds like 20-30 lakhs for Deemed Conveyance. But I am saying it’s wrong? The answer is this society already had a Deed of Assignment executed and registered in its name way back in 1970s. Now this is connivance or illiteracy of the committee that depends on documentary evidence. But this is no less serious offense. Why? It amounts to embezzlement of society funds by way of misrepresentation and fraud.

ANALYSIS

Let us analyse the question herein is to ascertain as to whether the deed in question is a deed of assignment of lease hold rights.

Article 63 of Schedule 1-B of the Indian Stamp Act or would be an outright sale so as to be termed as ‘Conveyance” and would be covered by Article 23 of Schedule 1-B of the Indian Stamp Act.

The word ‘sale’ has not been defined under the Indian Stamp Act, 1899. Section 2 (10) of the Act defines “Conveyance” as including a conveyance on sale and every instrument by which property, whether movable or immovable property is transferred inter vivos and which is not otherwise specifically provided for by Schedule 1-A or Schedule 1-B, as the case may be.

Now let us see the difference in common parlance:

Deed of Assignment:

This document transfers interest in property from one person or entity to another.

Purpose:

It’s used when someone wants to transfer their interest in a property to someone else, such as in property sales or lease assignments.

Nature of Transfer: It involves transferring existing property rights, not creating new ones. The Transfer is conditional subject to the terms of Lease Agreement and in case of breach the Lessor/Owner steps in.

Execution: It requires the consent and signature of the person or entity giving up their rights.

Stamp Duty and Registration: Depending on local laws, it may or may need to be stamped and registered with the land authority.

Deed of Conveyance:

This document transfers property ownership from a seller to a buyer.

Purpose: Confirming Agreement for Sale to establish the buyer’s legal ownership.

Nature of Transfer: It creates new property ownership and  rights, transferring everything about the property to the new owner.

Execution: Both the seller and the buyer must sign it. Requires to be stamped and registered mandatorily.

Registration: It typically needs to be registered to show the change in property ownership.

In short, Deeds of Assignment transfer existing property rights, while Deeds of Conveyance create new property rights and prove ownership.

The word ‘Sale” has been defined under Section 54 of the Transfer of Property Act, 1882 which reads as under:-

“Sale is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised.”

“Lease” has been defined under Section 105 of the Transfer of Property Act, 1882 and also in sub-section (16) of Section 2 of the Stamp Act, 1899 which read as under:-

“Section 105. A lease of immovable 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.”

“Section 2(16). “Lease” means a lease of immovable property, and includes also-

(a) a palla; .

(b) a Kabuliyat or other undertaking in writing, not being a counterpart of a lease, to cultivate, occupy, or payor deliver rent for, immovable property;

(c) any instrument by which tolls of any description are let;

(d) any writing on an application for a lease intended to signify that the application is granted;”

There is no definition of word “assign” either under the Transfer of Property Act or under the Indian Stamp Act.

As per the dictionary meaning, the word “assign” means to allocate to someone or to appoint to a particular task or to transfer legal rights or liabilities. The word “assignee” means a person to whom a right or liability is legally transferred. The meaning of “assignment” is an act of transfer of a legal right or liability or a document effecting a legal transfer of a right or liability.

As per the Black’s Law Dictionary Ninth Edition, the word “assign” means ‘To convey; to transfer rights or property’. The word “assignee” means ‘One to whom property rights or powers are transferred by another’. The word “assignment of lease” means ‘The rights or property so transferred’.

Maharashtra Stamp Act defines term Conveyance as :

[(g) “ Conveyance ” includes,—

(i) a conveyance on sale,

(ii) every instrument,

(iii) every decree or final order of any Civil Court

[(iv) every order made by the High Court under section 394 of the Companies Act, 1956 or every order made by the National Company Law Tribunal under sections 230 to 234 of the Companies Act, 2013 or every confirmation issued by the Central Government under sub-section (3) of section 233 of the Companies Act, 2013, in respect of the amalgamation, merger, demerger, arrangement or reconstruction of companies (including subsidiaries of parent company) ; and every order of the Reserve Bank of India under section 44A of the Banking Regulation Act, 1949 in respect of

amalgamation or reconstruction of Banking Companies ; ] by which property, whether moveable or immoveable, or any estate or interest in any property is transferred to, or vested in, any other person, inter vivos and which is not otherwise specifically provided for by Schedule I ;

Explanation.—An instrument whereby a co-owner of any property transfers his interest to another co-owner of the property and which is

not an instrument of partition, shall, for the purposes of this clause, be

deemed to be an instrument by which property is transferred inter-vivos ;

Schedule-1 Article 5 provides for stamp duty on Deed of Assignment. However, it doesn’t define the term Assignment.

From the plain reading of Sections 54 and 105 of the Transfer of Property Act ( discussed hereinabove) and the dictionary meaning of word “assignment”, it is gathered that in the case of a lease, there is a partial transfer and the right of reversion remains with the lessor. Whereas in case of sale, there must be an absolute transfer of ownership and not some rights only as in the case of a lease. The assignment of lease, therefore, would be a transfer by the lessee only on the terms and conditions of the lease deed for the remainder period of the lease. As with the assignment, all rights of the lessee are transferred to the assignee, the relationship of lessee with the lessor is severed and the assignee would be entitled to enjoy the property on the terms and conditions of the lease for the remainder of the term of the lease. He would be answerable to the lessor directly. The lease rent or the price periodically which the lessee would have to pay to the lessor now would be payable by the assignee. In case of reversion, the immovable property, subject matter of deed of assignment, would go back to the lessor.

DEEMED CONVEYANCE:

Can there by ex-parte Deemed Conveyance?

By now it is well settled law that certificate of unilateral Deemed Conveyance is not determinative of rights and entitlements of parties to the land in question. Reference in this regard can be made to judgments of this Court in Mazda Construction Company Vs. Sultanabad Darshan CHSL, Tirupati Shopping Centre Premises Co-operative Society Ltd. Vs. Shabayesha Construction Company Pvt.  2013 (2) All MR 278

 Once there is Deed of Assignment there cannot be Deemed Conveyance.

Summery:

The document discusses the distinction between a deed of assignment and a deed of conveyance in the context of property transfer under Indian law.

  • Definition and Purpose of Deed of Assignment: A deed of assignment transfers interest in property from one person or entity to another and is used in property sales or lease assignments.12
  • Nature of Transfer in Deed of Assignment: It involves transferring existing property rights, not creating new ones, and requires the consent and signature of the person giving up their rights.34
  • Stamp Duty and Registration for Deed of Assignment: Depending on local laws, a deed of assignment may need to be stamped and registered with the land authority.5
  • Definition and Purpose of Deed of Conveyance: A deed of conveyance transfers property ownership from a seller to a buyer, confirming the agreement for sale and establishing the buyer’s legal ownership.67
  • Nature of Transfer in Deed of Conveyance: It creates new property ownership and rights, transferring everything about the property to the new owner, and requires both parties’ signatures.89
  • Registration Requirement for Deed of Conveyance: A deed of conveyance typically needs to be registered to show the change in property ownership.10
  • Definitions of Sale and Lease: Sale is defined as a transfer of ownership for a price, while a lease is a transfer of a right to enjoy property for a certain time in exchange for consideration.1112
  • Assignment of Lease: Assignment of lease involves transferring all rights of the lessee to the assignee, who then deals directly with the lessor for the remainder of the lease term.13

CONCLUSION:

Deed of Assignment is a conveyance and transfer of interest in the property  for limited period of time mentioned in the Lease Agreement and is subject to reversion if there is breach in terms of Lease. In case of Lease Hold Land is charged stamp duty in Maharashtra as on conveyance under Article 25 Schedule 1 of the Maharashtra Stamp Act 1958.

Conveyance is absolute transfer of right, title and interest in the property forever.

Shruti Desai

19 January 2025