Received Property through POA how to transfer it

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The Supreme Court has deprecated the practice of sale of immovable properties through sale agreement/general power of attorney/will transfer, and said such sale of property is not valid.

A three-judge Bench of Justices R.V. Raveendran, A.K. Patnaik and H.L. Gokhale said such transactions “are not transfers or sales and such transactions cannot be treated as completed transfers or conveyances.” To avoid such transactions, the Bench asked the States to reduce the stamp duty to encourage registration of sale deeds.

Writing the judgment, Justice Raveendran said: “A SA/GPA/Will does not convey any title nor create any interest in an immovable property. They can continue to be treated as existing agreement of sale. Nothing prevents affected parties from getting registered Deeds of Conveyance to complete their title.”

The Bench said: “The descriptions of SA/GPA/Will are misnomers as there cannot be a sale by execution of a power of attorney nor can there be a transfer by execution of an agreement of sale and a power of attorney and will. These kinds of transactions were evolved to avoid prohibitions/conditions regarding certain transfers, to avoid payment of stamp duty and registration charges on deeds of conveyance, to avoid payment of capital gains on transfers, to invest unaccounted money [black money] and to avoid payment of unearned increases due to development authorities on transfer.”

Deed of conveyance

The Bench pointed out that these were transactions where a purchaser “pays the full price, but instead of getting a deed of conveyance gets a SA/GPA/Will as a mode of transfer, either at the instance of the vendor or at his own instance.”

The Bench said a transfer of immovable property by way of sale could only be by a deed of conveyance (sale deed). In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immovable property could be transferred.

The Bench noted that though certain measures to amend the Registration Act had some effect to plug the loss of revenue by way of evasion of stamp duty, the ill-effects continued. Further, such transaction which was only prevalent in Delhi and the surrounding areas had started spreading to other States also.

“Those with ulterior motives, either to indulge in black money transactions or land mafia, continue to favour such transactions,” the Bench said and added “reducing stamp duty on conveyance to realistic levels will encourage the public to disclose the maximum sale value and have the sale deeds registered.”

Long-run benefits

The Bench said: “Though the reduction of the stamp duty may result in an immediate reduction in the revenue by way of stamp duty, in the long run it will be advantageous for two reasons: parties will be encouraged to execute registered deeds of conveyance/sale deeds without any undervaluation instead of entering into SA/GPA/Will transactions and more and more sale transactions will be done by way of duly registered sale deeds, disclosing the entire sale consideration thereby reducing the generation of black money to a large extent.”

The Bench, however, made it clear that if the documents relating to SA/GPA/Will transactions had been accepted and acted upon by the Delhi Development Authority or other developmental authorities or by the municipal or revenue authorities to effect mutation, they need not be disturbed, merely on account of this decision.

The Bench also said that this judgment would not affect the validity of sale agreements and powers of attorney executed in genuine transactions viz., a person giving GPA to his spouse, son, daughter, brother, sister or a relative to manage his affairs to execute a deed of conveyance.

The Bench placed on record its appreciation of the former Solicitor-General, Gopal Subramaniam, for rendering assistance as amicus curiae in this case.

Advocate Siddhant Sharma LawRato