Taking serious view of a lot of “black money” being generated in the real estate business, the Supreme Court has reinforced its earlier judgment that the registration of immovable property through general power of attorney will have no legal standing and all such transactions will be illegal.
Asking the courts below to take note of its earlier verdict on the legal status of any transfer of property through general power of attorney, a three-judge bench of Justices R.V. Raveendran, A.K. Patnaik and H.L. Gokhale said sales through the GPA was resulting in investment of unaccounted money the real estate business. The property transactions through GPA 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,” the top court said. “We therefore, reiterate that immovable property can be legally and lawfully transferred only by a registered deed of conveyance.
Transactions of the nature of ‘GPA sales’ do not convey title and do not amount to transfer, nor can they be recognised as valid mode of transfer of immovable property,” the court ruled.
In view of this ruling laid down earlier on May 15, 2009 in the Suraj Lamp vs state of Haryana case, the bench asked the courts below “not to treat such transactions as completed or concluded transfers as such transfers neither convey the title of the property, nor create any interest in it” of the person who bought it through GPA sale.
The top court said in view of the rampant use of GPA mode to transfer properties in Delhi and three other states — Punjab, Haryana and Uttar Pradesh — views of the governments of these states were sought and all of them had supported the move to curb the sale through GPA. The court illustrated the generation of black money with an example that property worth `50 lakhs was being shown sold for `20 lakhs and the government is losing stamp duty on `30 lakhs.