Stop­ping mis­use of GPA, ATS, wills

The Supreme Court judg­ment on ‘GPA sales’ has made buy­ers aware of the value of prop­erly ex­e­cuted sale and con­veyance deed for prop­erty trans­fers

HT Estates - - Front Page - Vivek Kohli

The Supreme Court’s re­cent judg­ment in the case of Su­raj Lamp and In­dus­tries Pri­vate Limited Vs. State of Haryana and Another, has gen­er­ated much de­bate and dis­cus­sion. This judg­ment has high­lighted the far-reach­ing and ill-ef­fects of what are known as “GPA sales”.

Such sales re­ferred to trans­fers of im­move­able prop­er­ties ef­fected through ex­e­cut­ing a com­bi­na­tion of gen­eral power of at­tor­ney (GPA), agree­ment to sell (ATS) and will, in­stead of a sale deed/con­veyance deed.

The Supreme Court ob­served that to avoid pay­ment of stamp duty and regis­tra­tion fee on trans­fer of im­move­able prop­erty, par­ties were bla­tantly cir­cum­vent­ing the law by re­sort­ing to ex­e­cu­tion of GPA, ATS and will. So wide­spread was the phe­nom­ena that even trans­fers of free­hold prop­er­ties (where the seller was the ac­tual owner of the prop­erty and did not re­quire any prior per­mis­sion from any land-own­ing author­ity for ef­fect­ing a trans­fer) were be­ing made through GPA, ATS and will com­bi­na­tions.

The Supreme Court ob­served that on the macro level, such trans­ac­tions con­trib­uted to gen­er­a­tion and cir­cu­la­tion of black money, growth of land mafia and crim­i­nal­i­sa­tion of real es­tate dis­putes, ad­versely af­fect­ing the econ­omy, civil so­ci­ety and law and or­der sys­tem. On the in­di­vid­ual level, such trans­ac­tions made ti­tle ver­i­fi­ca­tion of im­move­able prop­erty a nightmare for the av­er­age buyer who wanted to in­vest in a prop­erty only af­ter be­ing as­sured that it had a clear, mar­ketable ti­tle.

The judg­ment re­it­er­ated that GPA sales of im­move­able prop­erty did not amount to valid ‘trans­fer’ or ‘sale’ un­der the Trans­fer of Prop­erty Act. GPA Sales were not valid sales/trans­fers/con­veyances and did not trans­fer any ti­tle of own­er­ship in favour of the buyer, for both lease­hold and free­hold prop­er­ties. The Supreme Court had clearly stated that GPA and ATS ex­e­cuted by par­ties in gen­uine trans­ac­tions would not be hit. For ex­am­ple, a hus­band may still validly ex­e­cute GPA in favour of his wife/ any other per­son to en­able his wife/rel­a­tive to man­age af­fairs with re­spect to the prop­erty on his be­half or to ex­e­cute a sale deed/con­veyance deed with buy­ers on his be­half. Sim­i­larly, a per­son may still validly

en­ter into a de­vel­op­ment agree­ment with a de­vel­oper/builder for de­vel­op­ing the land owned by him (by con­struct­ing apart­ments on the land) and ex­e­cute an ATS and GPA in favour of the de­vel­oper/ builder to en­able the de­vel­oper to fur­ther ex­e­cute sale deeds of the apart­ments in favour of prospec­tive pur­chasers.

The judg­ment also took into ac­count per­sons who had pur­chased a prop­erty through GPA sale prior to the date of the judg­ment (Oc­to­ber 11, 2011). They could still ap­ply for reg­u­lar­i­sa­tion of their al­lot­ment/lease with the de­vel­op­ment au­thor­i­ties (DDA, HUDA) on the ba­sis of ATS, GPA and will that had been ex­e­cuted in their favour. The judg­ment would also not af­fect cases in which peo­ple had ap­pealed for mu­ta­tion of prop­erty records in their favour on the ba­sis of GPA, ATS and will – which the de­vel­op­ment author­ity had ac­cepted and acted upon. How­ever, buy­ers who had pur­chased prop­erty through GPA sale but had not yet made an ap­pli­ca­tion for mu­ta­tion in mu­nic­i­pal/rev­enue records, could no longer rely on their GPA sale doc­u­ments for ap­ply­ing for muta- tion, un­less they per­fected their ti­tle of own­er­ship by hav­ing sale deed/con­veyance deed ex­e­cuted in their favour. All of this ap­plied equally to prop­erty trans­ac­tions that hade taken place in builders’ flats as well as co­op­er­a­tive/group hous­ing so­ci­eties.

Fol­low­ing this judg­ment, buy­ers who had pur­chased prop­erty through GPA sales were now re­quired to per­fect their ti­tle of own­er­ship by hav­ing a proper sale deed/con­veyance deed ex­e­cuted in their favour and by pay­ing req­ui­site stamp duty and regis­tra­tion fee. Not do­ing could di­rectly ham­per their abil­ity to fur­ther trans­fer/sell the prop­erty in ques­tion in fu­ture. Af­ter this judge­ment, buy­ers would un­doubt­edly re­alise the value of a prop­erly ex­e­cuted sale/ con­veyance deed in cases of sec­ondary sale of prop­erty. Since buy­ers would want to in­vest in a prop­erty where they would be as­sured of a clear and en­cum­brance-free ti­tle of own­er­ship, they should ver­ify whether the seller in turn also held a clear ti­tle through a validly ex­e­cuted sale deed/con­veyance deed.

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