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2009 (5) TMI 1012 - SC - Indian LawsAvoidance of execution and registration of deeds of conveyance - Mode of transfer of freehold immovable property by increasing tendency to adopt `Power of Attorney Sales' - execution of sale agreement/ general power of attorney/will (`SA-GPA-Will transactions') - No action taken against FIR for offences punishable u/s 406, 420, 467, 468, 471 and 120B of IPC - filed an application under Right to Information Act, 2004 (`RTI Act') - Petitioner lodged a criminal complaint against Ramanath and members of his family who executed the sale agreement/ GPA/will in favour of the petitioner and another complaint against Dharambir Yadav and his son in the District Court. HELD THAT:- The `Power of Attorney Sales' as a method of `transfer' was evolved by lawyers and document writers in Delhi, to overcome certain restrictions on transfer of flats by the Delhi Development Authority (for short `DDA'). To avoid the cumbersome procedure in obtaining permission and to avoid payment of the huge part of the price to the DDA as unearned increase, a hybrid system was evolved whereby the allottee/holder of the flat, on receiving the agreed consideration would deliver the possession of the flat to the purchaser and execute the following documents: (a) An Agreement of sale confirming the terms of the sale, delivery of possession and payment of full consideration and undertaking to execute any document when required in future. (b) An Irrevocable General Power of Attorney in favour of the purchaser or his nominee authorizing him to manage, deal with and dispose of the property without reference to the vendor. (c) A will bequeathing the property to the purchaser as safeguard against the consequences of death of the vendor before transfer. The `Power of Attorney Sales', as noticed above was adopted to overcome the restrictions/prohibitions in terms of allotment and the rules of allotment of DDA governing the allotment of flats. Such transactions were obviously irregular and illegal being contrary to the rules and terms of allotment. Further, in the absence of a registered deed of conveyance, no right, title or interest in an immovable property could be transferred to the purchaser. In fact, it is stated that DDA itself ultimately recognizes `Power of Attorney Sales' by accepting applications from purchasers under `Power of Attorney Sales' for conversion from leasehold to freehold and conveyance of the flats. We will therefore presently exclude the `power of attorney sales' of DDA flats from the purview of the present exercise. Extension of the concept of such `Power of Attorney Sales' by execution of SA/GPA/Will with reference to freehold properties - Section 49 of The Registration Act, 1908, provides that no document required by Section 17 to be registered shall, affect any immovable property comprised therein or received as evidence of any transaction affected such property, unless it has been registered. Registration of a document gives notice to the world that such a document has been executed. Recourse to `SA/GPA/WILL' transactions is taken in regard to freehold properties, even when there is no bar or prohibition regarding transfer or conveyance of such property, by the following categories of persons: (a) Vendors with imperfect title who cannot or do not want to execute registered deeds of conveyance. (b) Purchasers who want to invest undisclosed wealth/income in immovable properties without any public record of the transactions. The process enables them to hold any number of properties without disclosing them as assets held. (c) Purchasers who want to avoid the payment of stamp duty and registration charges either deliberately or on wrong advice. Persons who deal in real estate resort to these methods to avoid multiple stamp duties/registration fees so as to increase their profit margin. Whatever be the intention, the consequences are disturbing and far reaching, adversely affecting the economy, civil society and law and order. Firstly, it enables 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. Secondly, such transactions enable persons with undisclosed wealth/income to invest their black money and also earn profit/income, thereby encouraging circulation of black money and corruption. This kind of transactions has disastrous collateral effects also. When the purchaser under such `power of attorney sales' comes to know about the vendors action, he invariably tries to take the help of musclemen to `sort out' the issue and protect his rights. On the other hand, real estate mafia many a time purchase properties which are already subject to power of attorney sale and then threaten the previous `Power of Attorney Sale' purchasers from asserting their rights. Either way, such power of attorney sales indirectly lead to growth of real estate mafia and criminalization of real estate transactions. We are therefore of the view that the situation warrants special measures. We are informed that sometime back in 2008, there was a proposal to amend Section 147 of Delhi Municipal Corporation Act, 1957 to check and discourage `power of attorney sales'. There was also a proposal to have special enactment relating to registration and recording of title in Delhi. But so far nothing appears to have fructified. It is the dream of every citizen to own a house or a plot of land. The citizens must be enabled by the government to do so with safety, security and without fear of litigation or defects in title. We therefore request the Solicitor General to appear in the matter and give suggestions on behalf of Union of India. We also direct notice to the States of Punjab, Haryana, Delhi, Uttar Pradesh and Maharashtra (represented by their respective Chief Secretary/Revenue Secretary) to consider issues.
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