Legal Analysis of SA/GPA/Will Transactions in India

The Legal Status of SA/GPA/Will Transactions in India: A Jurisprudential Analysis Post-Suraj Lamp

Introduction

The transfer of immovable property in India is governed by a stringent statutory framework, primarily encapsulated within the Transfer of Property Act, 1882, and the Registration Act, 1908. Despite this, a quasi-legal practice involving a combination of a Sale Agreement (SA), a General Power of Attorney (GPA), and a Will, colloquially known as "SA/GPA/Will transactions" or "GPA Sales," became a prevalent method for conveying property. This practice emerged as a mechanism to circumvent statutory requirements, such as the payment of stamp duty, registration fees, and permissions required for certain transfers. This article provides a comprehensive legal analysis of the evolution of jurisprudence concerning these transactions, examining the judicial landscape before and after the seminal Supreme Court decision in Suraj Lamp And Industries Private Limited v. State Of Haryana And Another (2012 SCC 1 656). It argues that while the Supreme Court has unequivocally invalidated these transactions as a mode of title transfer, subsequent judicial interpretations have carved out crucial nuances regarding the legal effect of the constituent documents, particularly the irrevocable GPA.

The Pre-Suraj Lamp Judicial Landscape: A Period of Ambiguity

Prior to the definitive ruling by the Supreme Court, various High Courts adopted a pragmatic, albeit legally inconsistent, approach towards SA/GPA/Will transactions. The judiciary often attempted to balance the strict requirements of property law with the need to protect bona fide purchasers who had paid full consideration and taken possession of the property. A leading example of this approach is the Delhi High Court's decision in Asha M. Jain v. The Canara Bank & Ors (2001 SCC ONLINE DEL 1157).

In Asha M. Jain, the court was faced with a situation where a purchaser, having acquired property through a power of attorney-based sale with full consideration and possession, sought protection against a bank's attachment order. The High Court recognized the "concept of power of attorney sales" as a mode of transaction that could create an enforceable interest protected under Section 53A of the Transfer of Property Act, 1882. The court reasoned that while Section 54 of the Act stipulates that a mere agreement to sell does not create an interest in the property, the doctrine of part performance under Section 53A could be invoked to shield the purchaser's possessory rights. This judgment, while aimed at delivering equity, inadvertently lent a veneer of judicial legitimacy to a practice that operated outside the statutory framework. However, as later jurisprudence would establish, this view was fundamentally flawed.

The Seminal Ruling: Suraj Lamp & Industries v. State of Haryana

The ambiguity surrounding SA/GPA/Will transactions was decisively settled by the Supreme Court in its landmark judgment in Suraj Lamp And Industries Private Limited (2) Through Director v. State Of Haryana And Another (2012 SCC 1 656). The Court undertook a thorough examination of the practice and its debilitating effects on the legal and economic fabric of the nation.

The Denunciation of SA/GPA/Will Transactions

The Supreme Court unequivocally declared that such transactions do not constitute a lawful transfer of immovable property. It reiterated that property can be legally and lawfully transferred or conveyed only by a registered deed of conveyance. The Court systematically deconstructed the SA/GPA/Will combination to demonstrate its legal insufficiency:

  • Agreement to Sell (SA): Citing Section 54 of the Transfer of Property Act and established precedents like Narandas Karsondas v. S.A Kamtam And Another (1977 SCC 3 247), the Court affirmed that an agreement of sale does not, of itself, create any interest in or charge on such property. It only creates a contractual right to obtain a registered sale deed through specific performance.
  • General Power of Attorney (GPA): A GPA was held to be an instrument of agency governed by the Indian Contract Act, 1872, and not an instrument of transfer. The Court clarified that the grantee of a GPA acts in a fiduciary capacity on behalf of the grantor and does not acquire title, even if the GPA is styled as "irrevocable."
  • Will: A Will was defined as a posthumous and revocable disposition of an estate, which only comes into effect after the testator's death. It is not a transfer inter vivos and cannot be used to effectuate an immediate transfer of title.

"We therefore reiterate that immovable property can be legally and lawfully transferred/conveyed only by a registered deed of conveyance. Transactions of the nature of ‘GPA sales’ or ‘SA/GPA/WILL transfers’ do not convey title and do not amount to transfer, nor can they be recognized or valid mode of transfer of immoveable property." (Suraj Lamp, 2012 SCC 1 656)

Socio-Economic Rationale and Public Policy

The Court's decision was not merely a technical interpretation of law but was deeply rooted in public policy considerations. In its earlier order (Suraj Lamp, 2009 SCC 7 363), the Court had identified the "ill-effects" of these transactions, including large-scale evasion of stamp duty and income tax, the investment of undisclosed "black money" in real estate, and the spawning of litigation and criminal activities by land mafias. By invalidating this practice, the Court aimed to restore transparency, enforce fiscal discipline, and curb the criminalization of civil disputes in the property sector.

Repudiation of the Asha M. Jain Approach

Crucially, the Supreme Court in Suraj Lamp directly addressed and overruled the line of reasoning adopted in Asha M. Jain. The Court held that the observations in Asha M. Jain recognizing the "concept of power of attorney sales" were "unwarranted and not justified" and declared that such decisions, to the extent they recognize SA/GPA/Will transactions as concluded transfers, are "not good law." This repudiation was subsequently reiterated in numerous judgments, including Delhi Development Authority v. Gaurav Kukreja (2015) and DARSHAN SINGH v. ROOP LAL AND ANR (2017), cementing the legal position.

Post-Suraj Lamp Jurisprudence: Nuance and Application

While Suraj Lamp laid down the primary rule, subsequent judgments from various High Courts and the Supreme Court have been instrumental in clarifying its application and exploring the residual rights that flow from the constituent documents of a failed SA/GPA/Will transaction.

The Irrevocable GPA and Section 202 of the Contract Act

A significant clarification emerged in the context of GPAs coupled with an interest. In cases like Hardip Kaur v. Kailash & Anr. (2012 SCC ONLINE DEL 2937) and Ramesh Chand v. Suresh Chand & Anr. (2012 SCC ONLINE DEL 1985), the Delhi High Court, while acknowledging the Suraj Lamp dictum that a GPA does not transfer title, held that a GPA executed for valuable consideration in favour of the purchaser creates an interest in the subject matter for the agent. Such a power of attorney is irrevocable under Section 202 of the Indian Contract Act, 1872. This means the seller (principal) cannot unilaterally revoke the authority granted to the buyer (agent) to deal with the property. The critical distinction is that while the GPA itself is not a conveyance, an irrevocable GPA empowers the holder to execute a valid, registered deed of conveyance on behalf of the principal, thereby perfecting the title legally. This interpretation provides crucial protection to bona fide purchasers against sellers who may attempt to resile from the transaction after receiving consideration.

The Scope of 'Genuine Transactions': A Judicial Safeguard

The Supreme Court in Suraj Lamp had prudently carved out an exception for genuine transactions, stating, "Our observations are not intended to in any way affect the validity of sale agreements and powers of attorney executed in genuine transactions." This includes instances where a person gives a GPA to a family member to manage affairs or enters into a development agreement with a builder. The practical import of this exception was tested in Pace Developers And Promoters Pvt. Ltd. v. Govt. Of Nct (2013 SCC ONLINE DEL 1705). The Delhi High Court struck down a circular issued by the government that imposed a blanket ban on the registration of any conveyance deed based on a GPA. The Court held that such a blanket prohibition misconstrued the Suraj Lamp judgment and that registrars must examine the genuineness of each transaction on a case-by-case basis rather than refusing registration outright.

Consequences for Subsequent Purchasers

The defective nature of title acquired through SA/GPA/Will transactions has profound consequences for subsequent purchasers. In Shiv Kumar And Another v. Union Of India And Others (2019 SCC ONLINE SC 1339), the Supreme Court held that a person who "purchases" land via such instruments after a land acquisition notification under the old Act has no locus standi to challenge the acquisition proceedings or seek benefits under the new Act. The court reasoned that since the initial transaction did not confer any valid title, the purchaser is essentially a stranger to the title and cannot claim rights that were available only to the original landowner.

Conclusion

The Indian judiciary, through the landmark pronouncement in Suraj Lamp, has brought a definitive end to the legal validity of SA/GPA/Will transactions as a mode of transferring title to immovable property. The law is now unequivocally settled that title can only be conveyed through a duly stamped and registered instrument of conveyance. The judgment served as a vital course correction, aimed at cleansing the real estate sector of pernicious practices that fostered a black-money economy and endless litigation. However, the post-Suraj Lamp jurisprudence has refined this strict position by acknowledging the contractual rights that persist. An Agreement to Sell remains specifically enforceable, and a General Power of Attorney, when coupled with an interest under Section 202 of the Contract Act, becomes an irrevocable instrument empowering the purchaser to complete the legal formalities of transfer. This balanced legal framework ensures that while illegal shortcuts to property transfer are barred, the rights of genuine parties who have acted in good faith are not entirely extinguished, thereby upholding both the sanctity of statutory law and the principles of equity.