Suraj Lamp and Industries (P) Ltd. v. State of Haryana
Supreme Court of India · 11 October 2011 · 3 judges
Sale Agreement/General Power of Attorney/Will (GPA sale) transactions do not convey title or create any interest in immovable property; immovable property can be transferred only by a registered deed of conveyance.
Facts
By an earlier order of 15 May 2009 in this special leave petition, the Court had noted the ill effects of 'GPA sales', in which a purchaser pays the full price and takes possession but receives an agreement of sale, an irrevocable general power of attorney and a will instead of a registered sale deed. Such transactions were used to avoid stamp duty, registration charges and capital gains, to invest black money, and to evade restrictions on transfer. The Court sought suggestions from the Union through the Solicitor General and the views of Delhi, Haryana, Punjab and Uttar Pradesh, all of which agreed that these transactions should be curbed. With the assistance of an Amicus Curiae, the Court then examined the validity and legality of such transactions.
Questions before the Court
- Whether a Sale Agreement/General Power of Attorney/Will transaction transfers title to, or creates an interest in, immovable property.
- What effect the declaration of law should have on such transactions already entered into.
What the Court held
- Under Section 54 of the Transfer of Property Act, a sale of immovable property can be made only by a registered instrument. An agreement of sale, with or without possession, is not a conveyance and creates no interest or charge, except the limited protection under Section 53A.
- A power of attorney creates an agency and is not an instrument of transfer; even an irrevocable power of attorney does not pass title to the grantee. A will operates only after the testator's death and is revocable, so it is not a transfer inter vivos.
- SA/GPA/WILL transactions do not convey title, are not a valid mode of transfer and cannot be the basis for mutation in municipal or revenue records. Decisions accepting them as concluded transfers are not good law. The same applies to leasehold property, which can pass only by a registered assignment.
- Such transactions may still be treated as existing agreements of sale, used to seek specific performance or to defend possession under Section 53A, and, if entered before the judgment, relied on for regularisation by development authorities. Mutations already effected need not be disturbed.
- The ruling does not affect genuine powers of attorney or sale agreements, such as those given to relatives to manage property or execute a sale deed, or development agreements with builders.
Why it matters
The judgment declares that immovable property can be lawfully transferred only by a registered deed of conveyance and that 'GPA sales' are not transfers. It holds Delhi High Court decisions such as Asha M. Jain v. Canara Bank not good law to the extent they recognise such transactions as concluded transfers. It also limits the practical effect on earlier transactions, preserving their use as agreements of sale and under Section 53A, and protecting mutations already made.
In the Court's words
Copied from the official judgment; each passage links to its page.
“It is thus clear that a transfer of immoveable property by way of sale can 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 immoveable property can be transferred.”
“We therefore reiterate 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 or valid mode of transfer of immoveable property. The courts will not treat such transactions as completed or concluded transfers or as conveyances as they neither convey title nor create any interest in an immovable property.”
“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”
“We have merely drawn attention to and reiterated the well-settled legal position that SA/GPA/WILL transactions are not 'transfers' or 'sales' and that such transactions cannot be treated as completed transfers or conveyances. 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.”
Provisions interpreted
Related judgments
- Explained in Shakeel Ahmed v. Syed Akhlaq Hussain (2023)
Case and bench
- Parties
- Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana
- Case
- Special Leave Petition (C) No. 13917 of 2009
- Decided
- 11 October 2011
- Bench
- R. V. Raveendran, A. K. Patnaik, H. L. Gokhale
- Opinions
- Unanimous. Judgment delivered by R. V. Raveendran, J.