CONSUMER RIGHTS
Watch out for legal hassles 
Pushpa Girimaji

Buying property is serious business. Since it involves heavy investment, one has to make certain mandatory checks to protect one’s interest . And this includes the legal status of the land, land use, title deeds, tax receipts, encumbrance certificate, to name just a few essential papers that one needs to see.

Now, for the uninitiated. Let me explain briefly what an encumbrance certificate is and its importance because this particular case that I am going to write about this week revolves around this. ‘Encumbrance’ is a general term for any claim on a property In legal terms an encumbrance is a burden, an obstruction or an impediment that lessens the value of the property or makes it less marketable or restricts or impairs the transfer of the property. And this encumbrance could be a lien or a claim on the property by another party (other than the owner) that affects the transferability of the property. This might include mortgage, deeds of trust, unpaid property taxes, tax liens, or recorded abstracts of judgements. In short, any claim or restriction on a property’s title is an encumbrance. . So an encumbrance certificate is the most important document that one needs to check before buying property.

When Ms Maragatham, a resident of Dindigal in Tamil Nadu, decided to buy a plot, it was only natural for her to apply to the District Registrar’s office for an encumbrance certificate. So, she paid the necessary fee and applied for an encumbrance certificate for the property that she intended to buy. On the basis of the certificate issued, she bought the property and after some time, even sold it to a person by name Raj Kumar. The property was transferred to him and the registration done in his name. However, when he went to take possession of the land, a third party came on the scene , claiming that the property was registered in his name . Following this development, Rajkumar accused Maragatham of fraud and cheating and subsequently filed a civil suit against her and she had to settle the matter by paying a huge amount. Upset and angry by this turn of events, Maragatham decided to use the consumer court to get compensation from the Joint Sub Registrar who had given her the erroneous encumbrance certificate . She sought a compensation of Rs 3 lakh for the negligent service provided by him. The District Forum, before which she first filed the complaint, dismissed it saying that the Sub Registrar was carrying out a statutory function and it was outside the purview of the consumer court. The State Consumer Disputes Redressal Commission disagreed and awarded her a compensation of Rs 10,000. This was questioned by the Sub-Registrar before the apex consumer court. After a detailed examination of the issue, the verdict of the National Consumer Disputes Redressal Commission was that the Sub-Registrar was liable. Thus while upholding the order of the state commission, it pointed out that the main issue to be addressed in such cases was not whether the person was discharging his statutory function, but the nature of that function and whether there was any payment or consideration for that service. In this case, several factors were clear: one, that the person applying for an encumbrance certificate had to pay for that service. So it became a paid service coming under the purview of the Consumer Protection Act.

Secondly, the rules (Rule 143) framed under the Tamil Nadu Registration Act, clearly said that “a certificate of encumbrance shall contain a complete list of all acts and encumbrances affecting the property in question”.

In this case, it was very clear that by providing an erroneous certificate, the Sub-Registrar had provided a deficient service. In fact he had not provided all the details of sale and registration in the encumbrance certificate that he had issued to Maragatham. Observed the National Consumer Disputes Redressal Commission:’’ An encumbrance certificate should contain a complete list of all encumbrances affecting the property. Or else the interest of the purchaser of the property would be seriously prejudiced.

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