This Supreme Court judgement of 2009 is a landmark judgement that had significant implications for property transactions in India, invalidating sale through General Power of Attorney. The case has established important guidelines for transfer of immovable property and the legal position on acceptance of sale deeds that are unregistered or inadequately stamped. It brought attention to the necessity of complying with the provisions of the transfer of Property Act, Registration Act, and the Indian Stamp Act for transfer of immovable property in India.

Introduction:
The Delhi Development Authority (DDA) introduced a housing programme in which flats could be purchased using a power of attorney. In the absence of a registered deed of conveyance, no right, title, or interest in the immovable property could be transferred to the buyer. However, in a few instances, the Delhi High Court approved a power of attorney for the purpose of establishing an "interest" in the DDA flat that was subsequently "transferred" and protecting the purchaser's interest by issuing orders prohibiting the vendor from handling the property in any other way.

This gave rise to the perception that "Power of Attorney Sales" were lawful transfer methods for which no registration was necessary. (Power of Attorney Sales as a Tool to Avoid Stamp Duty With Special Reference to Suraj Lamp Industries Case)

This type of ownership transfer became increasingly popular among those who were assigned flats in the DDA's different housing schemes through lotteries and subsequently sold them at excessive rates to interested parties. Buyers and sellers entered into an elaborate three-step plan, to carry out the sale transaction. The first step being creating an agreement for sale, then the buyer would create an irrevocable PoA, putting the buyer in absolute charge of managing the property and finally, the seller would bequeath the property to the buyer by means of will. (Suraj Lamps Pvt. Ltd. v State of Haryana, 2011 (11) SC 438)

It was in 2009, through this case that the Supreme Court was informed of this scenario, wherein to avoid payments of huge prices to be paid to DDA, Power of Attorneys were being used to deliver the possession of a flat for an agreed consideration.

In this case the petitioner i.e., Suraj Lamps & Industries is a company that bought land from Ramnath and his family through an agreement for sale, General Power of Attorney(GPA) and a will for consideration of Rs. 7,16,695/-. Following the purchase of 2.5 acres of land from Ramnath and his family, the petitioner agreed verbally to sell 1 acre of the land to Dharamvir Yadav (ex-MLA).

But before the land was sold, Dharamvir came in contact with Ramnath and his family, who had previously sold the property to the petitioner through a GPA and had again sold the same two and a half acres of property to Dharamvir through a GPA. The former GPA, which favored the petitioner, was then illegally cancelled by Dharamvir. In light of this, the petitioner filed a criminal complaint against Ramnath and his family, alleging they violated sections 406, 420, 467, 468, 471, and 120B of the Indian Penal Code by selling the same piece of land twice. (Suraj Lamps Pvt. Ltd. v State of Haryana, 2011 (11) SC 438)

The primary issue arising in this case is whether sale through General Power of Attorney and will for consideration are legal and valid?
This case deals with Section 54 of the Transfer of Property Act which states that a contract of sale, that is, an agreement of sale of immovable property that takes place on terms settled between the parties, does not, of itself, create any interest in or charge on such property. (The Transfer of Property Act,1882 (4 of 1882), s.54)
 
JUDGEMENT:
In this case, the Supreme Court held that 'Sale through GPA' and 'SA/GPA/WILL transfers' will not recognized as valid ways to transfer property because they do not convey title or amount to transfers. The courts will not recognize them as complete or concluded transfers or conveyances since these transactions neither convey title to a piece of real estate nor create any interest in it.

The Supreme Court issued a directive to the municipal organizations not to register properties based on the GPA documents in view of the aforementioned judgement. Genuine transactions made or carried out through GPA would, however, continue to be valid. (Suraj Lamps Pvt. Ltd. v State of Haryana, 2011 (11) SC 438)

Scope of Agreement of Sale:
Section 54 of the Transfer of Property Act of 1882 states explicitly that a contract of sale, that is, an agreement of sale, does not create any interest in or charge on such property in and of itself. The word transfer is defined in India in relation to the word convey. In Section 5 of the Transfer of Property Act, the word conveys is used in the broad meaning of conveying ownership, implying that ownership passes from one party to another only upon execution of the conveyance. The right to defend possession against the intended vendor may not be used against a third party.

It is evident that a sale of immovable property can only be accomplished with a conveyance deed (sale deed). No right, title, or interest in immovable property can be transferred in the absence of a deed of conveyance (duly stamped and registered as required by law). ("Sale of Property Through Power of Attorney Not Valid Supreme Court")

Any contract of sale (agreement to sell) that is not a registered deed of conveyance (deed of sale) will not confer any title or transfer any interest in an immovable property (except for the limited right granted under Section 53-A of the Transfer of Property Act, 1882). According to the Transfer of Property Act of 1882, an agreement for sale, whether with or without possession, is not a transfer. According to Section 54 of the Transfer of Property Act of 1882, a sale of immovable property can only be accomplished by a registered instrument, and a sale agreement does not generate any interest or charge on its subject matter. (Suraj Lamps Pvt. Ltd. v State of Haryana, 2011 (11) SC 438)

Scope of Power of Attorney:
When a person gives another person the legal right to present himself as his representative, to perform specific tasks on his behalf, the person performing the tasks becomes the Power of Attorney of the other person. People prefer using Power of Attorneys for transfer of property as it helps both the buyer and seller evade taxes. Also, once a sale deed is registered, the information is public and could be used any time to unearth benami transactions. (Suraj Lamps Pvt. Ltd. v State of Haryana, 2011 (11) SC 438).

It is not a means of transferring any right, title, or interest in immovable property. The establishment of an agency by which the grantor authorises the grantee to conduct the acts described therein on behalf of the grantor, which when executed will be binding on the grantor as if done by him is what a power of attorney is. It is reversible or terminable at any time unless rendered irrevocable in a legal manner. Even an irrevocable power of attorney has no effect on transferring title to the grantee. (Suraj Lamps Pvt. Ltd. v State of Haryana, 2011 (11) SC 438)

"A POA is not an instrument of transfer in regard to any right, title, or interest in immovable property," a three-judge bench led by Honorable Justice RV Raveendran stated, adding that property may only be properly transferred through a registered sale deed. (Suraj Lamps Pvt. Ltd. v State of Haryana, 2011 (11) SC 438)

Scope of Will
A will is the testator's testament. It is a posthumous disposition of the testator's assets that directs the disposal of his estate following his death. It is not an inter-vivos transfer. A will has two key characteristics: it is meant to take effect only after the testator's death and it is revocable at any moment during the testator's life. It is stated that a will is only worth the paper it is written on as long as the testator is alive, because the testator can revoke it at any time. By operation of law, the will is cancelled if the testator, who is not married, marries after making it. Registration of the will does not make it any more effective. (Suraj Lamps Pvt. Ltd. v State of Haryana, 2011 (11) SC 438)