SURAJ LAMP & INDUSTRIES PVT. LTD. vs STATE OF HARYANA

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2011 Supreme(UK) 546

2012 (1) UAD 152
SUPREME COURT OF INDIA
Hon’ble Mr. Justice R.V. Raveendran, Hon’ble Mr. Justice A.K. Patnaik and Hon’ble Mr. Justice H.L. Gokhale
Special Leave Petition (C) No. 13917 of 2009
SURAJ LAMP & INDUSTRIES PVT. LTD. – Petitioner
Versus
STATE OF HARYANA & ANR. – Respondents
Decided on : 11.10.2011

Headnote:(A) Transfer of Property Act, 1882, Secs. 54 and 55 — Agreement to sell — Scope — 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 Sec 54 and 55 of the Act, 1882 — And does not confer any title nor transfer any interest in an immovable property (except to the limited right granted under Section 53-A of the Act, 1882).
        (Paras 11 and 12).
       (B) Powers of Attorney Act, 1882, Secs. 1-A and 2 — A power of attorney is not an instument of transfer in regard to any right, title or interest in an immovable property — It is a 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 — Even an irrevocable attorney does not have the effect of transferring title to the grantee. (Para 13)
       (C) Indian Succession Act, 1925, Secs. 69 and 70 — Will — A will is the testament of the testator — It comes into effect only after the death of the testator — The testator can at any time revoke it — And if the testator, who is not married, marries after making the will, by operation of law, the will stands revoked — Registration of a will does not make it any more effective — It is not a transfer inter vivos.
        (Para 14)
       (D) Transfer of Property Act, 1882, Secs. 53-A, 54 & 55, Powers of Attorney Act, 1882, Secs. 1-A & 2 and Indian Succession Act, 1925, Secs. 69 & 70 — General Power of Attorney sales — Sale Agreement/ General Power of Attorney/Will transfers — Do not convey title and do not amount to transfer, nor can they be recognized or valid mode of transfer of immoveable property — Such transactions cannot be relied upon or made the basis for mutations in Municipal or Revenue Records, either for conveyance in regard to freehold property, or for transfer of leasehold property — Also that "concept of power of attorney sales have been recognized as a mode of transaction" — And such decisions to the extent they recognize or accept SA/GPA/WILL transactions as concluded transfers, as contrasted from an agreement to transfer, are not good law. (Paras 15 and 16)
        ¼v½ lEifÙk vUrj.k vf/kfu;e] 1882] /kkjk 54 vkSj 55 & foØ; dk vuqca/k vkSj mldk foLrkj & dksbZ Hkh foØ; vuqca/k] tks fd iathÑr nLrkost ugha gS] /kkjk 54 vkSj 55 vf/kfu;e 1882 dh vis{kkvksa ds vk/kkj ij viw.kZ ¼v/kwjk½ ekuk tk,xk & vkSj blds vk/kkj ij dksbZ LokfeRo izkIr ugha gksrk gS uk gh LFkkbZ lEifÙk esa dksbZ fgr LFkkukUrfjr gksrk gS ¼ctk, lhfer vf/kdkj vUrxZr /kkjk 53A vf/kfu;e 1882 ds½A

        ¼izLrj 11 vkSj 12½

       ¼c½ ikolZ vkWQ ,VkuhZ ,DV] 1882] /kkjk 1-A vkSj 2 & dksbZ ikoj vkWQ ,VkuhZ fdlh LFkkbZ lEifÙk esa fdlh vf/kdkj] LokfeRo vFkok fgr ds varj.k dk nLrkost ugha gS ;g ,d ,stsUlh dk l`tu ek= gS ftlesa ,d xkjUVj fdlh xkjUVh dks vf/kÑr djrk gS fd og xkjUVj dh vksj ls mlesa mfYyf[kr dk;Z fu"ikfnr djs tks fd tc fy[kk x;k Fkk] xkjUVj ij bl izdkj ck/;dkjh gksxk tSls fd mlh ds }kjk fd;k x;k Fkk & dksbZ okfil uk dh tkus okyh ,VkuhZ ls Hkh xkjUVh dks LokfeRo ds vUrj.k dks izHkko esa ugha yk;k tkrk gSA ¼izLrj 13½

       ¼l½ Hkkjrh; mÙkjkf/kdkj vf/kfu;e] 1925] /kkjk 69 vkSj 70 & olh;r & ,d olh;r] bPNk O;Dr djus okys dk bPNk i= gksrk gS & bl dk izHkko bPNk O;Dr djus okys dh e`R;q ds i'pkr gksrk gS & bPNk O;Dr djus okyk fdlh le; Hkh bls fujLr dj ldrk gS vkSj ;fn bPNk O;Dr djus okyk] tks fookfgr ugha gS] olh;r fy[kus ds ckn 'kknh djrk gS] dkuwu ds rgr ,slh olh;r fujLr le>h tkrh gS & olh;r dk iathdj.k bls vf/kd izHkkoh ugha cukrk gS & ;g ,d vf/kd izHkkoh varj.k ugha gSA

        ¼izLrj 14½

       ¼n½ lEifÙk vUrj.k vf/kfu;e] 1882] /kkjk 53A, 54 vkSj 55] ikolZ vkWQ ,VkuhZ ,DV] 1882] /kkjk 1-A vkSj 2 vkSj Hkkjrh; mÙkjkf/kdkj vf/kfu;e] 1925] /kkjk 69 vkSj 70 & lkekU; ikoj vkQ ,VkuhZ ¼lsYl½ & foØ; vuqcU/k@tujy ikoj vkQ ,VkuhZ@olh;r] varj.k ls LokfeRo gLrkUrfjr ugha gksrk gS vkSj blls varj.k Hkh ugha gksrk gS uk gh mls ekU;rk izkIr gksrh gS vkSj uk gh LFkkbZ lEifÙk dk ;g dksbZ oS/k rjhdk gS & ,sls O;ogkjksa ij fo'okl ugha fd;k tk ldrk vkSj uk gh mUgsa uxj ikfydk vFkok eky foHkkx ds dkxtkr esa vey njken dk vk/kkj ;k rks Ýh gksYM lEifÙk ;k yhtgksYM lEifÙk ds lEcU/k esa] cuk;k tk ldrk & vkSj ikoj vkWQ ,VkuhZ ¼lsYl½ dh vo/kkj.kk dks Hkh O;ogkj ¼VªkUtsD'ku½ dk ,d ek/;e ekuk x;k gS & vkSj ,sls fu.kZ; ekU;rk izkIr djus dh lhek rd vFkok Lohdkj djus rd SA/GPA/WILL O;ogkjksa dks vafre varj.k] tks fd varj.k ds vuqca/k ds foijhr gks] dks vPNk dkuwu ugha le>k tkrkA ¼izLrj 15 vkSj 16½

JUDGMENT

[Per: Hon'ble R.V. Raveendran J.]

By an earlier order dated 15.5.2009 [reported in Suraj Lamp & Industries Pvt. Ltd. vs. State of Haryana & Anr. - 2009 (7) SCC 363], we had referred to the ill - effects of what is known as General Power of Attorney Sales (for short 'GPA Sales') or Sale Agreement/General Power of Attorney/Will transfers (for short 'SA/GPA/WILL' transfers). Both the descriptions 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. As noticed in the earlier order, 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.

2. The modus operandi in such SA/GPA/WILL transactions is for the vendor or person claiming to be the owner to receive the agreed consideration, deliver possession of the property to the purchaser and execute the following documents or variations thereof:

(a) An Agreement of sale by the vendor in favour of the purchaser confirming the terms of sale, delivery of possession and payment of full consideration and undertaking to execute any document as and when required in future.

An agreement of sale agreeing to sell the property, with a separate affidavit confirming receipt of full price and delivery of possession and undertaking to execute sale deed whenever required.

(b) An Irrevocable General Power of Attorney by the vendor in favour of the purchaser or his nominee authorizing him to manage, deal with and dispose of the property without reference to the vendor.

A General Power of Attorney by the vendor in favour of the purchaser or his nominee authorizing the attorney holder to sell or transfer the property and a Special Power of Attorney to manage the property.

(c) A will bequeathing the property to the purchaser (as a safeguard against the consequences of death of the vendor before transfer is effected).

These transactions are not to be confused or equated with genuine transactions where the owner of a property grants a power of Attorney in favour of a family member or friend to manage or sell his property, as he is not able to manage the property or execute the sale, personally. These are 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.

III-Effects of SA/GPA/WILL transactions

3. The earlier order dated 15.5.2009, noted the ill-effects of such SA/GPA/WILL transactions (that is generation of black money, growth of land mafia and criminalization of civil disputes) as under:

"Recourse to 'SA/GPA/WILL' transactions is taken in regard to freehold properties, even when there is no bar or prohibition regarding transfer or conveyance of such property, by the following categories of persons:

(a) Vendors with imperfect title who cannot or do not want to execute registered deeds of conveyance.

(b) Purchasers who want to invest undisclosed wealth/income in immovable properties without any public record of the transactions. The process enables them to hold any number of properties without disclosing them as assets held.

(c) Purchasers who want to avoid the payment of stamp duty and registration charges either deliberately or on wrong advice. Persons who deal in real estate resort to these methods to avoid multiple stamp duties/registration fees so as to increase their profit margin.

Whatever be the intention, the consequences are disturbing and far reaching, adversely affecting the economy, civil society and law and order. Firstly, it enables large scale evasion of income tax, wealth tax, stamp duty and registration

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