CLAT 2024 Passage 9 by Career Leaders | Dec 7, 2023 | 0 comments “… 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 … and to avoid payment of ‘unearned increases’ due to Development Authorities on transfer. 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. Or 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) A n 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. Or 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.” [Extracted from Suraj Lamp & Industries (P) Ltd v. State of Haryana (2012) 1 SCC 656]. 1. ‘SA/GPA/WILL’ transfers for the transfer of immovable property lead to: Enabling persons with undisclosed wealth/income to invest their black money and also earn profit/income, thereby, encouraging circulation of black money and corruption. Both (A) and (B). Enabling large scale evasion of income tax, wealth tax, stamp duty and registration fees, thereby, denying the benefit of such revenue to the government and the public. None of the above. None 2. Which of the following is an incorrect proposition? A Will is a posthumous disposition of the estate of the testator directing distribution of his estate upon his death. A Will is a transfer inter vivos. The power of attorney is creation of an agency whereby the grantor authorises the grantee to do the acts specified therein, on behalf of the grantor, which when executed will be binding on the grantor as if done by him. A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. None 3. Which of the following is a correct proposition as regards an agreement to sell an immovable property? An agreement to sell, with possession, is a conveyance An agreement to sell does not, of itself, create any interest in or charge on such property. An agreement to sell does create an interest in or charge on such property An agreement to sell, whether with possession or without possession, is a conveyance None 4. Compulsory registration of certain types of documents ensures: Both (A) and (B). None of the above. Orderliness, discipline and public notice in regard to transactions relating to immovable property and protection from fraud and forgery of documents of transfer. The process of verification and certification of title easier and simpler. None 5. In relation to the sale of immovable property, in Suraj Lamp & Industries (P) Ltd v. State of Haryana, the Supreme Court held that as per the Transfer of Property Act, 1882: Transactions in the nature of ‘GPA sales’ or ‘SA/GPA/WILL transfers’ are also recognised or valid mode of transfer of immovable property. Transactions in the nature of ‘GPA sales’ or ‘SA/GPA/WILL transfers’ do convey legal title in the immovable property. An immovable property can be legally and lawfully transferred/conveyed only by a registered deed of conveyance. The Court will treat ‘GPA sales’ or ‘SA/GPA/WILL transfers’ as completed or concluded transfers (as conveyances) of immovable property. None Submit a Comment Cancel replyYour email address will not be published. Required fields are marked *Comment * Name * Email * Website Save my name, email, and website in this browser for the next time I comment.