Sale of Property Through Power of Attorney Not Valid - Supreme Court

 

Image Source: The Hindu

“A Power of Attorney is a legal instrument that provides ease of carrying out business to individuals who may otherwise not able to do so”

Principal/ Grantor/ Donor is the person who gives his power/ responsibility/ authority to another person to act on his behalf. 

Attorney/ Agent/ Donee is the person to whom the power/ responsibility/ authority is given.

A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. The power of attorney is 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 (Section 1 A and Section 2 of the Powers of Attorney Act, 1882). Power of Attorney is not an authentic instrument to execute transfer of property titles. Although, the practice of selling and buying property through General Power of Attorney (GPA) and Special Power of Attorney (SPA) had been really common all across Indian cities. The same was because of the monetary benefits such selling and buying offered to both the buyer as well as the seller.

Scope of Power of Attorney

In State of Rajasthan v. Basant Nehata MANU/SC/0547/2005 : 2005 (12) SCC 77 this Court held:

"A grant of power of attorney is essentially governed by Chapter X of the Contract Act. By reason of a deed of power of attorney, an agent is formally appointed to act for the principal in one transaction or a series of transactions or to manage the affairs of the principal generally conferring necessary authority upon another person. A deed of power of attorney is executed by the principal in favor of the agent. The agent derives a right to use his name and all acts, deeds and things done by him and subject to the limitations contained in the said deed, the same shall be read as if done by the donor. A power of attorney is, as is well known, a document of convenience.

Execution of a power of attorney in terms of the provisions of the Contract Act as also the Powers-of-Attorney Act is valid. A power of attorney, we have noticed hereinbefore, is executed by the donor so as to enable the done to act on his behalf. Except in cases where power of attorney is coupled with interest, it is revocable. The done in exercise of his power under such power of attorney only acts in place of the donor subject of course to the powers granted to him by reason thereof. He cannot use the power of attorney for his own benefit. He acts in a fiduciary capacity. Any act of infidelity or breach of trust is a matter between the donor and the donee."

An attorney holder may however execute a deed of conveyance in exercise of the power granted under the power of attorney and convey title on behalf of the grantor.

What did the 2011 Supreme Court judgment say?

A Three-Judge Bench of Supreme Court of India comprising of Justices R.V. Raveendran, A. K. Patnaik and H. L. Gokhale in Leave Petition (C) No. 13917 of 2009 titled  Suraj Lamp & Industries Pvt Limited vs the State of Haryana case, ruled that property transactions carried out by way of PoA do not hold legal validity. A three-judge bench presided over by Justice R. V. Raveendran said that property can be lawfully transferred only through registered sale deeds.

The Supreme Court of India in this case declared that:

“a power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property”.

 In consonance to the same the Indian Apex court directed the municipal bodies not to mutate or register properties based on such documents. The Supreme Court, however, reinstated that valid transactions that have been carried out through GPA would be legal.

The court further said, "Nothing prevents affected parties from getting registered deeds of conveyance to complete their title. The said transactions may also be used to obtain specific performance or to defend possession under Section- 53 A of the Transfer of Property Act, 1882."

Following the SC’s ruling, the Delhi government, in 2012, came up with a circular banning the sale of property through GPA, a will and agreement to sell, collectively or separately.

Comments

  1. I am grateful for this blog to distribute knowledge about this significant topic. Here I found different segments and now I am going to use these new instructions with new enthusiasm. minnesota debt collection laws

    ReplyDelete
  2. Nice content, It is definitely very helpful for my professional workers. I having many kinds of knowledge from your blog..
    If you require any information regarding Auditors in bangalore
    then plz click on it .

    ReplyDelete
  3. If you are searching for the best corporate lawyers, visit our website. Your article is so good to read waiting for the next update. Keep updating.
    Top Business Lawyers in Delhi
    Arbitration Lawyers in Delhi
    Best Corporate Lawyers in Delhi

    ReplyDelete
  4. You've shared some excellent information about SALE OF PROPERTY. I'm happy I came across this post because it contains a lot of useful information. Thank you for sharing this story.
    article 21 of the indian constitution,

    ReplyDelete
  5. This comment has been removed by the author.

    ReplyDelete
  6. I'd like to express my gratitude for writing such an informative piece on this blog. This article provided me with a variety of data certify documents near me. Continue to post.

    ReplyDelete
  7. I am thankful to this blog giving unique and helpful knowledge about this topic. San Diego Realtor Reviews

    ReplyDelete
  8. Thank you for providing me with such valuable information about Michael Phillips Attorney. This article provided me with some useful knowledge. Continue to make posts like this.

    ReplyDelete
  9. I just completed the purchase of my ideal house with the assistance of real estate agents. My realtor assisted me in contacting the seller of the home and determining the exact selling price. He also took care of all the paperwork and made the transaction simple for me to finish.

    ReplyDelete
  10. The article you've shared here is fantastic because it provides some excellent information about Persian Lawyer Sydney that will be incredibly beneficial to me. Thank you for sharing that. Keep up the good work.

    ReplyDelete
  11. You've written a very useful article about family law attorney beaufort sc.This article provided me with some useful knowledge. Thank you for providing this information. Keep up the good work.

    ReplyDelete
  12. You have shared a lot of information in this article about quick divorce in alabama. I would like to express my gratitude to everyone who contributed to this useful article. Keep posting.

    ReplyDelete
  13. I generally want quality content and I found that in your post. The information you have shared about. UK Visa Priority Service is beneficial and significant for us. Keep sharing these kinds of articles here. Thank you.

    ReplyDelete
  14. Using the services of Mortgage Intelligence, you may be able to get a low-cost mortgage that is well within your financial reach. In addition to having many lenders that guarantee the lowest mortgage rates, we also have some of the most outstanding mortgage agents in the industry working on our side. Please contact them now for exceptional assistance in acquiring or selling a new property in Oshawa.

    ReplyDelete
  15. You’ve come to the right place. Whether you are a buying or selling a house, or own property like a condo, single family residence, or commercial real estate, a real estate lawyer may help. Use Canalawrd to hire a local real estate lawyer near you to help you when you have real estate problems like a dispute with the homeowner’s association or noise from neighbors, recording issues involving your deed (e.g., an easement or encroachment), or your mortgage (e.g., a lien or mortgage fraud).

    ReplyDelete
  16. This post is so helpfull and attractive.keep updating with more information...
    Features Of Data Science
    Data Science Subjects

    ReplyDelete
  17. Our divorce lawyers Boynton Beach, Palm Beach County and Port St Lucie professional legal staff focus exclusively on family law issues such as divorce, child custody and child support. To learn your legal rights and options, contact a Florida family lawyer at Vette Law -

    ReplyDelete
  18. Hey friend, it is very well written article, thank you for the valuable and useful information you provide in this post. Keep up the good work! FYI, slice credit card review, The courage to be disliked book pdf free download,5 Lines on Tiger

    ReplyDelete
  19. Awesome blog! This is a helpful article. This blog is clear and with lots of useful information. Thanks for sharing more blogs.
    Virginia Family Laws
    Virginia Sex Crimes Lawyer
    Divorce Lawyers Near Me Virginia

    ReplyDelete
  20. I read the above article and got some knowledge from your article which is about Merchant Cash Advance Attorney Ohio It's actually great and useful data for us. Thanks for sharing it.

    ReplyDelete
  21. Starting a career in real estate begins with choosing the right real estate school in بادية بالم هيلز. While there are many real state schools to choose from, choosing the right one will go a long way in launching your new career and keeping your real estate career on the road to success.

    ReplyDelete

Post a Comment

Popular Posts