Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana & Anr
Bench: H.L. Gokhale, A.K. Patnaik, R.V. Raveendran; Citation: AIR 2012 SC 206, (2012) 1 SCC 656
Background: The case addressed the legal validity of property transactions conducted through General Power of Attorney (GPA), Sale Agreement (SA), and Will (WILL) transfers, commonly referred to as “GPA Sales” or “SA/GPA/WILL transactions.” These transactions were widely used to evade stamp duty, registration fees, and taxes while avoiding legal prohibitions on property transfers.
Key Issues:
1. Whether transactions involving SA/GPA/WILL constitute valid transfers of ownership.
2. The impact of such transactions on property laws, revenue loss, and black money circulation.
3. The legal consequences of such transactions and the steps needed to curb them.
Court’s Observations: Ill-Effects of SA/GPA/WILL Transactions:
- Encourages tax evasion, black money transactions, and fraud.
- Leads to disputes and legal uncertainties over property titles.
- Promotes illegal land dealings and real estate mafia activities.
Legal Position:
- Transfer of Ownership: As per Section 54 of the Transfer of Property Act, a sale of immovable property can only be effected through a registered sale deed.
- Power of Attorney: A GPA does not transfer ownership but merely grants authority to act on behalf of the owner. It cannot be considered a mode of property transfer.
- Agreement to Sell: Does not confer ownership rights but only creates a right to enforce specific performance under Section 53A of the Transfer of Property Act.
- Will: A Will operates only after the testator’s death and cannot be used as a means of immediate transfer.
Judgment: The Supreme Court declared that transactions based on SA/GPA/WILL do not transfer ownership and cannot be considered a valid mode of property transfer. It directed that property transfers must only be done through registered sale deeds.
Past Transactions: The court clarified that past SA/GPA/WILL transactions could still be used for seeking specific performance but could not be relied upon for title claims.
Exception: Genuine transactions such as family arrangements or development agreements with builders are not affected by this ruling.
Impact:
- Strengthened property laws and ensured proper title transfers.
- Reduced black money transactions in real estate.
- Increased transparency in property dealings by mandating registered sale deeds.
This judgment remains a landmark decision in property law, reinforcing the importance of legal compliance in real estate transactions.
