HC al­lows ‘gen­uine’ GPA trans­ac­tions

Court strikes cir­cu­lar is­sued by Delhi gov­ern­ment to reg­is­trars to not reg­is­ter any GPA sale

HT Estates - - NEWS - Su­nil Tyagi

The re­cent case of Pace De­vel­op­ers and Pro­mot­ers Pri­vate Limited v. Gov­ern­ment of NCT dated April 30, 2013 (Pace De­vel­op­ers case) has gen­er­ated much at­ten­tion. In this case, the Delhi High Court set aside a cir­cu­lar dated April 27, 2012 (cir­cu­lar) is­sued by the gov­ern­ment of NCT of Delhi on the is­sue of GPA sales.

In com­mon par­lance, GPA sale refers to trans­fer of im­mov­able prop­erty by ex­e­cu­tion of a com­bi­na­tion of gen­eral power of at­tor­ney (GPA), agree­ment to sell (ATS) and will, in­stead of a sale deed/ con­veyance deed.

The rea­son why the cir­cu­lar was struck down by the Delhi High Court was that it was con­trary to the Hon’ble Supreme Court’s land­mark judg­ment in the Su­raj Lamp and In­dus­tries Pri­vate Limited v state of Haryana and an­other.

As per re­cent news re­ports, the rev­enue depart­ment of the Delhi gov­ern­ment has pre­pared a fresh cir­cu­lar on this is­sue, to be placed be­fore the state cab­i­net for ap­proval. To ap­pre­ci­ate the cur­rent le­gal po­si­tion, it is im­por­tant to know both the con­tents of the cir­cu­lar and the ra­tio of the Supreme Court’s judg­ment in the Su­raj Lamp case. In this case, the Supreme Court had held that a GPA sale of im­mov­able prop­erty (both lease­hold and free­hold prop­er­ties) is not a valid sale/con­veyance un­der the Trans­fer of Prop­erty Act. That is, a GPA sale does not trans­fer any valid ti­tle of own­er­ship in favour of the buyer. The court came down strongly on the prac­tice of GPA sales as they led to eva­sion of stamp duty and reg­is­tra­tion fee, cir­cu­la­tion of black money, growth of land mafia and crim­i­nal­i­sa­tion of real es­tate dis­putes.

The court also high­lighted the dif­fer­ence be­tween GPA and ATS ex­e­cuted by par­ties in gen­uine trans­ac­tions on one hand and GPA sales on the other hand. In para­graph 27 of the Su­raj Lamp case, the Supreme Court had clar­i­fied that GPA and ATS ex­e­cuted by par­ties in gen­uine trans­ac­tions would con­tinue to be valid and not be af­fected by the rul­ing. For ex­am­ple, a per­son can give GPA to his spouse, son, daugh­ter, brother, sis­ter or a rel­a­tive to man­age his af­fairs or to ex­e­cute a sale deed. A per­son may even sign an agree­ment with a de­vel­oper for de­vel­op­ing land (ei­ther by form­ing plots or by con­struct­ing apart­ments) and ex­e­cute an agree­ment of sale and grant a power of at­tor­ney em­pow­er­ing the de­vel­oper to ex­e­cute agree­ments of sale or con­veyances for in­di­vid­ual plots of land or un­di­vided shares in the land for apart­ments he (de­vel­oper) sells.

In the im­pugned cir­cu­lar, gov­ern­ment of NCT of Delhi had is­sued a di­rec­tive to all reg­is­trars and sub-reg­is­trars of Delhi, not to reg­is­ter any con­veyance vis-à-vis an im­mov­able prop­erty which is based on a GPA, will or ATS. How­ever as per Delhi High Court in the Pace De­vel­op­ers case, the cir­cu­lar had mis­con­strued the ob­ser­va­tions of the Supreme Court specif­i­cally con­tained in para­graph 27 of the Su­raj Lamp case. The lan­guage used in the cir­cu­lar had in ef­fect pro­hib­ited the reg­is­tra­tion of even those GPA that were validly ex­e­cuted by par- ties in gen­uine trans­ac­tions. To re­it­er­ate, the Supreme Court had clar­i­fied in para­graph 27 that GPA and ATS ex­e­cuted in gen­uine trans­ac­tions would not be af­fected by the rul­ing (and hence, would be reg­is­tra­ble).

There is wide­spread con­fu­sion amongst cit­i­zens re­gard­ing the ef­fect of Delhi High Court’s order in the Pace De­vel­op­ers case. The Delhi High Court has only set aside the di­rec­tions given in the cir­cu­lar, in so far as it pro­hib­ited reg­is­tra­tion of GPA ex­e­cuted in gen­uine trans­ac­tions of the na­ture de­scribed in Para­graph 27 of the Su­raj Lamp case. How­ever, this does not al­ter the po­si­tion of law laid down in the Su­raj Lamp case on GPA sales. In the eyes of law, GPA sales con­tinue to re­main a legally in­valid mode of sale/con­veyance of im­mov­able prop­erty. Reg­is­trars and sub-reg­is­trars are em­pow­ered to refuse reg­is­tra­tion of doc­u­ments that pur­port to sell im­mov­able prop­erty by GPA, ATS and will mode.

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