 "Transfer of immoveable property via power of attorney sales: an analysis")
Transfer of Immovable Property is generally affected through two modes: One, through a sale deed executed between the buyer and seller which attracts stamp duty of 6% (approx.) of the sale price of the property, and second, through execution of a general power of attorney (GPA), agreement to sell and will by the seller in favour of the buyer, which attracts a significantly lesser stamp duty. In both cases, the executed documents are registered with the competent authorities under the provisions of the Registration Act, 1908. Transfer of Immovable Property through a GPA Sale has been a contentious subject for some time now.
In 2012, the Supreme Court of India, in the case of Suraj Lamps and Industries (P) Ltd vs State of Haryana, among other things, expressed certain reservations as regards the validity of a GPA Sale in situations where the transactions were not genuine, pursuant to which, the Delhi Government issued a circular dated 27 April 2012 directing the relevant registration authorities not to register any GPA Sales in Delhi. As a result, no transfer of immoveable property could take place in Delhi on the basis of a GPA Sale. This move witnessed a significant drop in the number of sale transactions in Delhi.
Recently, the Delhi High Court, in the case of Pace Developers and Promoters Private Limited vs Government of NCT and Others, while analysing the Suraj Lamps case, quashed the Circular and held that a transfer through a GPA Sale was permissible in genuine transactions. The court also held that it was open to the registration authorities to examine the authenticity of a transaction before registering the documents.
In case appeals are filed in the above discussed judgement before the Supreme Court, it would be interesting to note the Supreme Courts observations on this issue, since the genesis of the entire controversy revolves around the Suraj Lamps Case which was authored by the Supreme Court itself.
The author is a practicing lawyer with Krishnomics Legal, a Delhi-based corporate law firm. Views are personal
In 2012, the Supreme Court of India, in the case of Suraj Lamps and Industries (P) Ltd vs State of Haryana, among other things, expressed certain reservations as regards the validity of a GPA Sale in situations where the transactions were not genuine, pursuant to which, the Delhi Government issued a circular dated 27 April 2012 directing the relevant registration authorities not to register any GPA Sales in Delhi. As a result, no transfer of immoveable property could take place in Delhi on the basis of a GPA Sale. This move witnessed a significant drop in the number of sale transactions in Delhi.
Recently, the Delhi High Court, in the case of Pace Developers and Promoters Private Limited vs Government of NCT and Others, while analysing the Suraj Lamps case, quashed the Circular and held that a transfer through a GPA Sale was permissible in genuine transactions. The court also held that it was open to the registration authorities to examine the authenticity of a transaction before registering the documents.
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There are two aspects in the Pace Developers Case which merit consideration and deliberation. Firstly, though the above move of the Delhi High Court may witness a surge in the sale-purchase of properties in Delhi, it may result in reduction of revenue generation for the government, owing to the sharp differences between the stamp duty rates in a sale deed and GPA sale. Further, the said move may also prompt unscrupulous entities to try and take recourse to a GPA sale in order to evade payment of stamp duty. Secondly, while the Delhi High Court has upheld the ability of the registration authorities to examine the authenticity of a GPA sale prior to its registration, no parameters have been drawn up to aid the registration authorities in determining the authenticity of the transaction. Such absence of parameters may result in unguided discretionary powers on the registration authorities while deciding the genuineness of a GPA Sale.
In case appeals are filed in the above discussed judgement before the Supreme Court, it would be interesting to note the Supreme Courts observations on this issue, since the genesis of the entire controversy revolves around the Suraj Lamps Case which was authored by the Supreme Court itself.
The author is a practicing lawyer with Krishnomics Legal, a Delhi-based corporate law firm. Views are personal