Meaning of “development agreement”:
The expression “development agreement” has not been defined statutorily. In a sense, it is a catch-all nomenclature which is used to be describe a wide range of agreements which an owner of a property may enter into for development of immovable property. As real estate transactions have grown in complexity, the nature of these agreements has become increasingly intricate. Broadly speaking, (without intending to be exhaustive), development agreements may be of various kinds:
(i) An agreement may envisage that the owner of the immovable property engages someone to carry out the work of construction on the property for monetary consideration. This is a pure construction contract;
(ii) An agreement by which the owner or a person holding other rights in an immovable property grants rights to a third party to carry on development for a monetary consideration payable by the developer to the other. In such a situation, the owner or right holder may in effect create an interest in the property in favour of the developer for a monetary consideration;
(iii) An agreement where the owner or a person holding any other rights in an immovable property grants rights to another person to carry out development. In consideration, the developer has to hand over a part of the constructed area to the owner. The developer is entitled to deal with the balance of the constructed area. In some situations, a society or similar other association is formed and the land is conveyed or leased to the society or association;
(iv) A development agreement may be entered into in a situation where the immovable property is occupied by tenants or other right holders. In some cases, the property may be encroached upon. The developer may take on the entire responsibility to settle with the occupants and to thereafter carry out construction; and
(v) An owner may negotiate with a developer to develop a plot of land which is occupied by slum dwellers and which has been declared as a slum. Alternately, there may be old and dilapidated buildings which are occupied by a number of occupants or tenants. The developer may undertake to rehabilitate the occupants or, as the case may be, the slum dwellers and thereafter share the saleable constructed area with the owner. Continue reading “Specific Performance of Development Agreement between Builder and Owner”
Payment of Stamp duty — Registering Authority not bound by the value of property fixed between parties but has to follow procedure as given in Stamp Act — Held that Registering Authority rightly refused to register the document.
The Urban Land (Ceiling and Regulation) Act has nothing to do with levy of stamp duty on instruments. Exemption of collection of stamp duty is provided under the Indian stamp Act, for instance proviso to Section 3 which is already noticed. Government of India, or the state of Government as the case may be in an appropriate case may direct the excess land-holder while granting exemption under Section 20(1) (a) of the Act to dispose of the said excess land to a named society at a particular rate. That condition operates as a restriction against the owner of the land from collecting any rate or price higher than the one fixed under the order of the Government. It has nothing to do with the chageability of the stamp under the Indian Stamp Act. For various reasons a vendor may dispose of his land at much lower rate than the prevailing market rate, may be due to distress, immediate financial necessity or an account of non-availability of purchasers and for a variety of other reasons. In such a situation, it cannot be said that the rate as agreed to between the parties is the market rate. Even assuming that the Government of India granted exemption from payment of stamp duty over and above Rs.20/- per sq. metre, even then the said direction cannot prevail over the provisions of the Indian Stamp Act.
The scope of Section 47-A and Andhra Pradesh Stamp (Prevention of Under-Valuation of Instruments) Rules. 1975(5) ALT 187: 1997 (3) ALD 325 (DB) observed that when the Sub-Registrar has reason to believe that the value of the property is not correctly reflected in the instrument he may keep pending registration of such instrument and refer the matter to the collector for determination of the market-value and for proper stamp duty payable thereon. The division Bench further observed as follows:
“Under sub-section (2) of Section 47-A of the Act, the collector shall , after giving the parties adequate opportunity and after holding an enquiry, determine the market- value of the property and Under sub Section (4) the aggrieved party has got a right to appeal against the order of the collector to the Civil Court. The respondent has thus adequate remedy to agitate before the Collector satisfying him about the true market value. He has also a right of further remedy of appeal before civil Court. Thus , the respondent without availing the adequate alternative remedy, has rushed to his Court. The writ petition was therefore , not maintainable and ought to have been dismissed by the learned single judge.”
The ratio of the Division bench all along governs the field.
Bhagya Lakshmi Co-operative Housing Socity Ltd. vs. Sub-Registrar, 1999 (1) LAC 56 (AP).