Authors: Adv. Dhruv Kumar (Jr. Associate), assisted by Mr. Pranav Trikha (law intern)
Date: September 2021
GPA Sale in Delhi? Valid, invalid or still a controversy?
Buying and selling immovable property through General Power of Attorney is still considered a desirable and easy option by many especially in Delhi. With the passage of time, this kind of arrangement for transactions related to immovable property has become less popular, evidently because of the development in the regulatory framework and stringent process involved in transfer/ conveyance of title or interest over an immovable property.
Imagine a situation, where Ajay, a businessperson executed a General Power of Attorney with respect to his 1-acre property in Delhi in favour of a Vijay, who is a builder and entered into a development agreement with him. Under this agreement, Vijay would construct apartment buildings on the said property and would also be empowered by GPA to execute sale deed with prospective buyers. Is this arrangement valid? Does Vijay hold title over the said property?
Supreme Court’s viewpoint:
In Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana & Anr. [(2012) 1 SCC 656], the Supreme Court of India observed that transactions related to immovable property done through an Agreement to Sell (SA), a General Power of Attorney and/or a Will neither conveys title nor creates any interest in such immovable property. The Court affirmed that immovable property can lawfully be transferred or conveyed from one party to another only via a registered deed of conveyance but this would not effect the validity of sale agreements and powers of attorney executed in genuine transactions such as a power of attorney may be given by a person to his spouse, son, daughter, brother, sister or a relative to manage his affairs or to execute a deed of conveyance or to a builder for land development. Hence, proclaiming ‘GPA sales’ or ‘SA/GPA/WILL transfers’ as invalid mode of transfer or conveyance of immovable property.
GPA Sales banned in Delhi:
Placing reliance upon the aforesaid 2011 Supreme Court judgment, the Government of NCT of Delhi issued a Circular dated April 27, 2012, stating that a conveyance of an immovable property cannot be executed based on a GPA and/or a will or an agreement to sell. Hence, no transfer of property will take effect unless a proper sale deed is executed and duly registered by the executants in the office of the Registrar/ Sub-Registrar.
Delhi High Court’s Interpretation:
The circular led to a lot of controversy, speculations, and chaos amongst the general publican hence, writ petition was filed before the Delhi High Court, inter alia praying for issue of writ of certiorari quashing the Circular dated April 27, 2012. The Delhi High Court reiterated the Apex Court’s viewpoint that the powers of attorney executed in genuine transactions would be valid and the concerned government body will be open to examine the genuineness of the transactions based on the documents filed at the time of registration of conveyance. Hence, the said circular in question was set aside. [Pace Developers and Promoters Pvt. Ltd. v. GNCTD thr. Secretary, W.P.(C) 4585/2012].
Delhi Government’s take:
Based upon the order of the Delhi High Court, Circular dated July 22, 2013 was issued by the Revenue Department of the Government of NCT of Delhi stating that a person can execute a general power of attorney or a special power of attorney in the favour of his spouse, son, daughter, brother, sister or any other relative or any trustworthy person to manage the affairs of his property or to empower such person to execute a deed of transfer including conveyance, sale, gift deed etc. on his behalf. But legal and lawful transfer or conveyance of title of an immovable property can take place only through a registered deed like sale, gift conveyance etc.
Conclusion
An immovable property transferred without a registered sale deed or conveyance deed will be invalid and will not create or convey title or ownership over such property. A lease can lawfully be transferred only through a registered Assignment of Lease. What do you think now… Was the transaction between Ajay and Vijay a genuine transaction?
Note: Readers’ comments are solicited.
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