Ruling in Suraj Lamp and Industries Private Limited and Ors v State of Haryana and Ors, the Supreme Court recently held that transfer of property through general power of attorney (GPA) sales or through a sale agreement that includes a general power of attorney and a will have no legal sanctity.
The court ruled that immovable property can be sold or transferred only through registered and duly stamped deeds.
The court went on to say that GPA sales and transfers through sale agreements enable large-scale evasion of income tax, wealth tax, stamp duty and registration fees and also encourage corruption and circulation of unaccounted money.
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It added that GPA sales or transfers through sale agreements neither convey title nor create any interest in an immovable property and cannot be recognized as deeds of title, except to the limited extent of section 53A of the Transfer of Property Act. As a result, such transactions cannot be relied upon or made the basis for mutations in municipal or revenue records.
However, the court clarified that its observations will not affect the validity of GPAs executed in genuine transactions.
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The update of court judgments is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.
