Sale of property through General Power of Attorney (GPA) does not constitute a valid sale.

SURAJ LAMP & INDUSTRIES PVT LTD v. STATE OF HARYANA & ANR [SC] Special Leave Petition (C) No.13917 of 2009- Section 54 & 55 of Transfer of Property Act,1882

Decided on : 11/10/2011

Here the Supreme court has reiterated that any contract of sale (agreement to sell) which is not a registered deed of conveyance (deed of sale) would fall short of the requirements of sections 54 and 55 of TP Act and will not confer any title nor transfer any interest in an immovable property (except to the limited right granted under section 53A of TP Act). A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property, it is only creation of an agency whereby the grantor authorizes the grantee to do the 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 it is made irrevocable in a manner known to law.

The Court has held that these kinds of transactions(GPA Sales) 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 and to avoid payment of unearned increases due to Development Authorities on transfer.

Therefore, a SA/GPA/WILL transaction does not convey any title nor create any interest in an immovable property and 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 do not convey title and do not amount to transfer, nor can they be recognized as valid mode of transfer of immoveable property.

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