Clarification regarding general power of attorney

872 votes

A GPS holder has right to sale on behalf of person who has Give him authority to sale on his behalf.If the person who has given GPA dies GPA is over or expires.Where as registry which means registered sale deed . Registry is vage term propagated by property dealers to mislead ordinary purchaser of property.Registerd Sale deed of a property is the correct document to get ownership of property.

Advocate Amit Gaurav LawRato

709 votes

Hello!
In reference to the above mentioned query, I would advice the following:
1) A GPA holder has right to sell property to another person?
Answer: The Honble Supreme Court vide its judgment rendered in case titled as Suraj Lamp and Pvt. Ltd. v/s State of Haryana and another.
Honble Apex Court dealt with is whether immovable property can be legally transferred or conveyed through a General Power of Attorney, Agreement to Sell and a Will? Before we embark upon this question, it is very essential to know as to why such kind of indirect sales came into existence. The most dominant reasons for such kind of Indirect Sales were to avoid prohibitions/ conditions regarding certain transfers (as some deeds of conveyance contain the clauses that the property can only be sold after 15 years from the date of construction of some building on the plot/property), to avoid payment of stamp duty and registration charges on deeds of conveyance, to avoid payment of capital gains on transfers, to invest black money etc. The seller of the immovable property in these indirect sales after receiving the agreed consideration, deliver the possession of the said property and executes some or all of the following documents:

(1) An agreement of sale (containing the terms which would be similar to terms of sale) by the seller in favor of the purchaser and undertaking to execute any document as and when required in future.
(2) An agreement of sale agreeing to sell the property with the separate affidavit confirming receipt of full price and delivery of possession and undertaking to execute sale deed whenever required.
(3) An Irrevocable General Power of Attorney in favor of the purchaser or his nominee.
(4) A Special Power of Attorney either to sell or to manage the property.
(5) A Will bequeathing the property to the purchaser (as a safeguard against the consequences of death of the vendor before transfer is effected).
The Honble Apex Court noted that such kind of Indirect Sales adversely affected the economy, civil society and law and order. Firstly, it enables large scale evasion of income tax, wealth tax, stamp duty and registration fees thereby denying the benefit of such revenue to the Government and Public. Secondly, such transactions enable persons with undisclosed wealth/income to invest their black money and also earn profit/income, thereby encouraging circulation of black money and corruption.

Discussing the scope of power of attorney, the Hon'ble Supreme Court observed;
A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. The power of attorney is creation of an agency whereby the grantor authorizes the grantee to do certain acts specified therein, on behalf of grantor, which when executed will be binding on the grantor as if done by him. It is revocable or terminable at any time unless made irrevocable in a manner known to law. Even an irrevocable attorney does not have the effect of transferring title to the grantee. So, power of attorney does not convey ownership. An attorney holder may however execute a deed of conveyance in exercise of the power granted under the power of attorney and convey title on behalf of the grantor.

Concluding, the court observed;
A discussion above thus holds that immovable property can be legally and lawfully transferred/conveyed only by a registered deed of conveyance. Transactions of the nature of GPA sales or Agreement to Sell/GPA/Will transfers do not convey title and do not amount to transfer nor can they be recognized or valid mode of transfer of immovable property.

Last but not least it is further pertinent to mention herein that in the said judgment the Honble Bench has merely drawn attention to the legal position that SA/GPA/WILL transactions are not transfers or sales and that such transactions cannot be treated as completed transfers or conveyances. But they can still be treated as existing agreement of sale. Nothing prevents affected parties from getting registered deeds of conveyance to complete their title.

2) What are the differences between Registry and GPA?
Answer: In the same judgement, the court explained what registration is, and it observed;
It is very important to mention herein that the registration has many advantages. Registration provides safety and security to transactions relating to immovable property, even if the document is lost or destroyed. It gives publicity and public exposure to documents thereby preventing forgeries and frauds in regard to transactions and execution of documents. Registration provides information to people who may deal with a property as to the nature and extent of the rights which persons may have, affecting that property. As the records of the registered document is always available, people may see the record and enquire and ascertain what the particulars are and as far as land is concerned what obligations with regard to them. Registration of documents makes the process of verification and certification of title easier and simpler. It reduces disputes and litigations to a large extent.

While drawing differences between registration and power of attorney is that once the property is sold to another, such sale deed through which a property is sold requires registration so that it provides safety and security to transactions relating to immovable property, even if the document is lost or destroyed.
Whereas GPA is only an instrument for transferring limited rights pertaining to the property as well creation of an agency whereby the grantor authorizes the grantee to do certain acts specified therein, on behalf of grantor, which when executed will be binding on the grantor as if done by him.

I hope this answers your query.

Regards
Mohd Faris
Advocate

Advocate Mohd Faris LawRato

941 votes

By general power of attorney you delegate your right related to certain property to GPA holder,heir she can sell the property on your behalf but if you are asking about registry related to sale of property then documents pertaining to sale got registered in registrar office by paying requisite stamp duty and title of property got transferred in favour of buyer

Advocate Puja Shrivastava LawRato