Gpa sales
kunal
(Querist) 29 April 2013
This query is : Resolved
please tell
from when GPA sale was banned??
Advocate M.Bhadra
(Expert) 29 April 2013
Not yet deleted/abolish,it is statute law and now in force.
The Powers- Of- Attorney Act, 1882
THE POWERS- OF- ATTORNEY ACT, 1882
ACT No. 7 OF 1882 An Act to amend the law relating to Powers- of- Attorney.
[ 24th February, 1882.]
For the purpose of amending the law relating to Powers- of- Attorney; It is hereby enacted as follows:-
INDIA CODE, VOL- IIIA.
1. Short title.- This Act may be called the Powers- of- Attorney Act, 1882 . Local extent. It applies to the whole of India 1[ except the State of Jammu and Kashmir]; Commencement. and it shall come into force on the first day of May, 1882 .
1A. 2[ Definition. In this Act," power- of- attorney" include any instrument empowering a specified person to act for and in the name of the person executing it."
2. Execution under power- of- attorney.- The donee of a power- of- attorney may, if he thinks fit, execute or do any 3[ instrument or thing in and with his own name and signature and his own seal, where sealing is required, by the authority of the donor of the power; and every 3[ instrument and thing so executed and done, shall be as effectual in law as if it had been executed or done by the donee of the power in the name, and with the signature and seal, of the donor thereof. This section applies to powers- of- attorney created by instruments executed either before or after this Act comes into force.
But one judgement by the hon'ble supreme court
The Supreme Court has deprecated the practice of sale of immovable properties through sale agreement/general power of attorney/will transfer, and said such sale of property is not valid.
A three-judge Bench of Justices R.V. Raveendran, A.K. Patnaik and H.L. Gokhale said such transactions “are not transfers or sales and such transactions cannot be treated as completed transfers or conveyances.” To avoid such transactions, the Bench asked the States to reduce the stamp duty to encourage registration of sale deeds.
Writing the judgment, Justice Raveendran said: “A SA/GPA/Will does not convey any title nor create any interest in an immovable property. 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 Bench said: “The descriptions of SA/GPA/Will are misnomers as there cannot be a sale by execution of a power of attorney nor can there be a transfer by execution of an agreement of sale and a power of attorney and will. These kinds of transactions 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 [black money] and to avoid payment of unearned increases due to development authorities on transfer.”
Deed of conveyance
The Bench pointed out that these were transactions where a purchaser “pays the full price, but instead of getting a deed of conveyance gets a SA/GPA/Will as a mode of transfer, either at the instance of the vendor or at his own instance.”
The Bench said a transfer of immovable property by way of sale could only be by a deed of conveyance (sale deed). In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immovable property could be transferred.
The Bench noted that though certain measures to amend the Registration Act had some effect to plug the loss of revenue by way of evasion of stamp duty, the ill-effects continued. Further, such transaction which was only prevalent in Delhi and the surrounding areas had started spreading to other States also.
“Those with ulterior motives, either to indulge in black money transactions or land mafia, continue to favour such transactions,” the Bench said and added “reducing stamp duty on conveyance to realistic levels will encourage the public to disclose the maximum sale value and have the sale deeds registered.”
Long-run benefits
The Bench said: “Though the reduction of the stamp duty may result in an immediate reduction in the revenue by way of stamp duty, in the long run it will be advantageous for two reasons: parties will be encouraged to execute registered deeds of conveyance/sale deeds without any undervaluation instead of entering into SA/GPA/Will transactions and more and more sale transactions will be done by way of duly registered sale deeds, disclosing the entire sale consideration thereby reducing the generation of black money to a large extent.”
The Bench, however, made it clear that if the documents relating to SA/GPA/Will transactions had been accepted and acted upon by the Delhi Development Authority or other developmental authorities or by the municipal or revenue authorities to effect mutation, they need not be disturbed, merely on account of this decision.
The Bench also said that this judgment would not affect the validity of sale agreements and powers of attorney executed in genuine transactions viz., a person giving GPA to his spouse, son, daughter, brother, sister or a relative to manage his affairs to execute a deed of conveyance.
kunal
(Querist) 29 April 2013
sir if MR A purchased property in january 2012 on GPA. Should he convert it into registered sale deed? what you advice from legal point of view?
kunal
(Querist) 29 April 2013
thank you sir
Devajyoti Barman
(Expert) 29 April 2013
After the recent supreme court decision POA if not not executed between blood relation is not valid.
Do execute sale deed to avoid complications in title.
Anirudh
(Expert) 29 April 2013
Dear Mr. Kunal,
Please try to understand the issue in complete detail.
If the owner of the property grants a Registered GPA authorising the GPA holder to sell the property in question, and if on the basis of the said GPA, the GPA holder executes the Sale Deed, the transaction is perfectly valid.
However, in place like Delhi, where most of the property was under Leasehold and people were not able to effect sale, the seller used to take the consideration and then grant GPA and WILL in favour of the purchaser. However, after obtaining the GPA no sale deed used to be effected (especially when the registration was not possible as the property was a leasehold property). On the basis of such GPA the GPA holder used to approach organizations like DDA, Municipal Corporation etc., and used to get the change of name in favour of the purchaser in the records. THUS, WITHOUT EXECUTING THE SALE DEED BY PAYING APPROPRIATE STAMP DUTY AND REGISTRATION CHARGES, THE PEOPLE USED TO EFFECT THE SALE OF THE PROPERTY.
The Supreme Court only said that without Executing a Sale Deed, the transfer of property from one person to another cannot legally take place (provisions of Registration Act, 1908 refers). Therefore the practice of effecting sale through GPA/WILL without actually effecting Sale Deed is not correct. (Suraj Lamps vs. State of Haryana) The Supreme Court has not laid down any new law. It only reiterated the already existing legal position.
THUS, THEREFORE PLEASE UNDERSTAND THAT THERE IS NO BAN ON GPA SALE, BUT ANY SALE THROUGH HAS TO BE FOLLOWED BY EXECUTION OF REGISTERED SALE DEED BY PAYING THE APPLICABLE STAMP DUTY AND REGISTRATION CHARGES.
