Monday, June 3, 2019

PoA Power of Attorney Not Valid for Property Transfer: SC

Supreme Court, in a Judgement dated 11 October 2011 has reiterated 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 ‘SA/GPA/WILL transfers’ don ot convey title and do not amount to transfer, nor can they be recognized orvalid mode of transfer of immoveable property" the court judgement warns.

And consequently, the court takes the stand that it "will not treat suchtransactionsas completed or concluded transfers or as conveyances as they neither convey title nor create any interest in an immovable property".

"They cannot be recognized as deeds of title, except to the limited extent of
section 53A of the TP Act," is the stand of the court.

What is stated above will apply not only to deeds of conveyance in regard to freehold
property but also to transfer of leasehold property.

The court, while declaring the above, has taken note that it's declaration of "making of GPA sales and SA/GPA/WILL transfers as not legally valid modes of transfer, is likely to create hardship to a large number of persons who have entered into such
transactions" and feels that, "they should be given sufficient time to regularize the
transactions by obtaining deeds of conveyance.

The judgement reads that, it has "merely drawn attention, to and reiterated the well-settled legal position that SA/GPA/WILL transactions are not ‘transfers’ or ‘sales’
and that such transactions cannot be treated as completed transfers or
 conveyances." The judgement further adds that, "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 ruling relaxes it's will upon the practice, if well regularized by developmental authorities viz., CMDA, DTCP or by the Municipal or revenue authorities to effect mutation.

It is made clear that the observations of the court "are not intended to in any way
affect the validity of sale agreements and powers of attorney executed in genuine transactions."

For example, the judgement reads, a person may give a power of attorney to
his spouse, ... or a relative to manage his affairs or to execute a deed of conveyance. A person may enter into a development
agreement with a land developer or builder for developing the land either by forming plots or by constructing apartment buildings and in that behalf execute an agreement of sale and grant a Power of Attorney empowering the developer to execute agreements of sale or conveyances in regard to individual plots of land or undivided shares in the land relating to apartments in favour of prospective purchasers.

Observing that, in several States, the execution of such development agreements and powers of attorney are already regulated by law and subjected to specific stamp duty, the observations of the court "regarding ‘SA/GPA/WILL transactions’ are not intended to apply to such
bonafide/genuine transactions."
Download Judgement.

I publish this, in response to an alarm raised by a group member today shocking the recipients with an undated news headline, on the topic.

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