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Real Estate - India

May 2013 - Real Estate & Property. Legal Developments by I.L.A. Pasrich & Company.

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Real Estate - India


1    Legal system

How would you explain your jurisdiction's legal system to an investor?

The Indian legal system derives from a written constitution and a bill of rights adopted in 1950 just after independence from the British. Although the Constitution continues the general common-law system deriving from English law, today it is a hybrid of early common-law codifications (statutes or acts, many that have been revised or amended by parliament) along with post-independence enactments overlaid with a rich tapestry of judicial decision-making that continues the common-law tradition of stare decisis, while also occasionally recognising or continuing customary and traditional law. Equity still plays an important part in the usual dispute resolution process of adversarial adjudication. The Constitution maintains a separation of powers between the state, legislature and the judiciary. The Supreme Court is the apex court of India, followed by the various High Courts at the state level which also cater to  union territories administered by the central government. The district courts and several tribunals and commissions are subject to the supervisory jurisdiction of the High Courts. A unique feature of the Indian Constitution is that, notwithstanding the federal system of government, it provides for an integrated court system that administers both central and state laws. The Supreme Court and the High Courts have constitutionally mandated (and well-exercised) writ jurisdictions and all courts are empowered to grant injunctive relief (courts have discretion to grant temporary or perpetual injunctions). A unique post-independence concept of public interest litigation (PIL) has been accepted and even encouraged, subject to some safeguards, by the Supreme Court and the High Courts, mostly through exercise of the writ jurisdiction. The system also integrates administrative adjudicatory functions carried out by bureaucrats and tribunals, and these often affect real property rights. Equitable concepts such as recovery of possession, specific performance, rectification and cancellation of instruments, rescission of contracts, declarations, and injunctions are codified in the Specific Relief Act, 1963. Civil courts have inherent powers to ‚Äėmake such orders as may be necessary for the ends of justice' or ‚Äėto prevent abuse of the process of the Court'. The Supreme Court is further constitutionally empowered to pass orders ‚Äėnecessary for doing complete justice in any cause or matter pending before it'. The right to property, previously a "fundamental" (entrenched) right in the constitution's bill of rights, was downgraded to a constitutionally recognised right (in article 300A) in the 1970s, but this had little effect on the continued operation of the Transfer of Property Act, 1882 "the TPA"). The TPA is a federal law that still regulates sale, lease and other transfers of property. The Act provides that a transfer of property may be made without writing in cases where a written contract is not expressly required by law (section 9), but it also requires most transfers of immoveable property to be made by registered instrument (section 54). The contents of documents cannot be proved by oral evidence and are required to be proved either by primary or secondary evidence, that is, by producing the original documents or by proving the authenticity of a copy. However, the parol evidence rule contained in sections 91 and 92 of the Indian Evidence Act, 1872 is not strictly applied, following the four provisos to section 92, which serve to allow some exceptions to the rule. From a foreign investor's point of view, It Is relevant that foreign investment in real estate is regulated and restricted by the F.D.I. policy as also regulations/circulars of the Department of Industrial Policy and Promotion (DIPP), the Reserve Bank of India (RBI) and the Foreign Investment Promotion Board (FIPB). The relevant regulations are published twice a year as part of the Consolidated Foreign Direct Investment Policy. 

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