The Legal Labyrinth of Property Conveyance via General Power of Attorney in India: An Analysis of Judicial Scrutiny and Validity

I. Introduction

The conveyance 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. These statutes mandate that the transfer of title in immovable property valued over one hundred rupees can only be effectuated through a duly stamped and registered instrument. Despite this clear legislative mandate, a parallel, quasi-legal practice of transferring property through a combination of a Sale Agreement (SA), an irrevocable General Power of Attorney (GPA), and often a Will, has been rampant. This article provides a comprehensive legal analysis of the validity of a sale deed executed by a GPA holder, tracing the evolution of judicial interpretation that culminated in the seminal Supreme Court decision in Suraj Lamp and Industries Private Limited v. State of Haryana^[1]. It examines the foundational principles of agency, the judicial proscription of "GPA Sales," the recognized exceptions for bona fide transactions, the complex issue of a GPA coupled with interest, and the definitive limitations on a GPA holder's authority.

II. Foundational Principles: Agency v. Conveyance

A. The Intrinsic Nature of a Power of Attorney

A Power of Attorney is fundamentally a document of agency, governed by the Indian Contract Act, 1872. It creates a fiduciary relationship wherein the principal grants authority to the agent (the attorney-holder) to act on their behalf. The Supreme Court has consistently held that a Power of Attorney must be strictly construed.^[2] Any authority conferred, particularly the power to alienate property, must be explicitly and unambiguously stated. As observed in Church Of Christ Charitable Trust v. Ponniamman Educational Trust, a power of attorney that does not expressly authorize the execution of a sale agreement cannot validate such a transaction.^[3] The agent derives the right to use the principal's name, and their actions, within the scope of the authority, are deemed to be the actions of the principal.^[4] A GPA is, therefore, an instrument of convenience, not an instrument of transfer in regard to any right, title, or interest in an immovable property.^[5]

B. Statutory Mandates for Property Transfer

The legal regime for property transfer is unequivocal. Section 54 of the Transfer of Property Act, 1882, defines 'sale' as a transfer of ownership in exchange for a price and mandates that for tangible immovable property of the value of one hundred rupees and upwards, such transfer can be made only by a registered instrument. Complementing this, Section 17 of the Registration Act, 1908, makes the registration of non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish any right, title or interest in immovable property compulsory. The practice of "GPA Sales" emerged as a mechanism to bypass these statutory requirements, primarily to evade stamp duty and registration fees, and to transact in properties with defective titles or under restrictive covenants.

III. Judicial Proscription of "GPA Sales": The Suraj Lamp Doctrine

A. The Prohibition on SA/GPA/Will Transactions

The Supreme Court of India, in its landmark judgment in Suraj Lamp and Industries Private Limited (2) v. State of Haryana and Another (2012), decisively addressed the legal status of SA/GPA/Will transactions. The Court deprecated this practice, observing that it spawns disputes, facilitates black money circulation, and empowers land mafias.^[6] The Court unequivocally held:

"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 recognised or valid mode of transfer of immovable property. The courts will not treat such transactions as completed or concluded transfers or as conveyances as they neither convey title nor create any interest in an immovable property."^[1]

This principle has been consistently reaffirmed in subsequent judgments, including Shiv Kumar And Another v. Union of India And Others^[7] and Delhi Development Authority v. Gaurav Kukreja^[8], solidifying the position that such transactions cannot be recognized as deeds of title.

B. Limited Utility and Bona Fide Exceptions

While invalidating "GPA Sales" as a mode of transfer, the Suraj Lamp judgment clarified that such documents are not entirely devoid of legal effect. They can be treated as existing agreements of sale and may be used to seek specific performance of the contract or to defend possession under Section 53-A of the Transfer of Property Act.^[1] Furthermore, the Court carved out crucial exceptions for genuine transactions, stating:

"We make it clear that our observations are not intended to in any way affect the validity of sale agreements and powers of attorney executed in genuine transactions. For example, a person may give a power of attorney to his spouse, son, daughter, brother, sister or a relative to manage his affairs or to execute a deed of conveyance... [or] enter into a development agreement with a land developer... and grant a power of attorney empowering the developer to execute agreements of sale or conveyances..."^[9]

The Madras High Court in Ebrahim Mohamed Kulam v. The Official Liquidator applied these exceptions, holding that GPAs executed after receipt of consideration to enable an agent to convey plots to various customers constituted a bona fide arrangement.^[10]

IV. The Authority of the GPA Holder: Scope, Duration, and Revocation

A. Pre-requisite of Valid and Subsisting Authority

For a sale deed executed by a GPA holder to be valid, the authority must be valid and subsisting at the moment of execution. The Karnataka High Court in SHRI S TAMANNA S/O SRI. SHANKRE GOWDA v. SHRI NAGARAJ S/O SRINIVAS held that a sale deed executed by a GPA holder on a date prior to the execution of the GPA itself was invalid, as the agent was not competent to transfer the property without authorization.^[11] The burden of proving due authorization under the GPA lies squarely on the party asserting rights under the consequent sale deed.^[12]

B. Termination of Authority

A GPA holder's authority can be terminated by the principal's act or by operation of law. In Amar Nath (S) v. Gian Chand And Another (S), the Supreme Court held that the revocation of a registered GPA must be done through a formal, registered document to be legally effective against third parties who act in good faith.^[13] An informal cancellation is insufficient to invalidate a subsequent registered sale deed executed by the attorney.

Crucially, the authority of an agent terminates upon the death of the principal, as per Section 201 of the Indian Contract Act, 1872. Consequently, a sale deed executed by a GPA holder after the death of the principal is void ab initio. This principle was affirmed by the Karnataka High Court in SMT RENUKA M v. SRI S RAJANNA^[14] and the Supreme Court in M.S. ANANTHAMURTHY v. J. MANJULA ETC.ETC.^[15]

C. The Irrevocable GPA: The 'Coupled with Interest' Conundrum

Section 202 of the Indian Contract Act provides that where the agent has an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest. This has been the cornerstone of arguments that a GPA executed for consideration is irrevocable and survives the principal's death. However, the Supreme Court in the recent and significant case of M.S. ANANTHAMURTHY v. J. MANJULA ETC.ETC. has provided critical clarification. The Court held that for a GPA to be considered "coupled with interest" in immovable property, thereby making it irrevocable, the document itself must create an interest in the property. For this to occur, the GPA must be compulsorily registered under Section 17(1)(b) of the Registration Act. The Court reasoned:

"Even if such an argument were to persuade this Court, the document must have been registered as per Section 17(1)(b) of the Registration Act. In the absence of such registration, it would not be open for the holder of the POA to content that she had a valid right, title and interest in the immovable property to execute the registered sale deed..."^[15]

This judgment effectively harmonizes the principles of agency with the stringent requirements of property law, establishing that an unregistered GPA, even if granted for consideration, does not create an interest in the property and thus does not grant the holder an indefeasible right to convey title.

V. Interplay with Other Legal Doctrines

A. Stamp Duty Implications

Revenue authorities have become vigilant to the misuse of GPAs as disguised sale instruments. As seen in Joginder Kumar Goyal v. Government of NCT of Delhi, where a GPA is drafted to grant extensive powers of alienation and is coupled with an agreement to sell for consideration, it may be impounded under the Indian Stamp Act, 1899. Authorities can treat such a document as a conveyance in substance and demand the ad valorem stamp duty applicable to a sale deed.^[16]

B. Doctrine of Feeding the Estoppel

Section 43 of the Transfer of Property Act, which embodies the doctrine of feeding the estoppel, can in certain circumstances protect a transferee. As held in Hardev Singh v. Gurmail Singh, if a person fraudulently or erroneously represents that he is authorized to transfer certain immovable property and professes to transfer it for consideration, such transfer shall, at the option of the transferee, operate on any interest which the transferor may acquire in such property at any time while the contract of transfer subsists.^[17] This could potentially apply where a principal had a defective title at the time their GPA holder executed a sale deed, but subsequently perfected their title.

VI. Conclusion

The jurisprudence surrounding sale deeds executed by GPA holders in India has been decisively settled by the Supreme Court. The overarching principle is that a registered deed of conveyance is the only legally valid mode for transferring title to immovable property. The practice of "GPA Sales" has been judicially invalidated, though the underlying documents may be used for limited purposes like seeking specific performance.

A sale deed executed by a GPA holder is valid only under a strict and narrow set of circumstances. The transaction must fall within the bona fide exceptions outlined in Suraj Lamp, the GPA must be valid and subsisting, the authority to sell must be explicit, and the power must not have been terminated by revocation or the principal's death. The judgment in M.S. Ananthamurthy has further tightened the legal framework by clarifying that even a GPA purportedly coupled with interest requires registration to create any right in the property itself. While the GPA remains a vital instrument of convenience in genuine agency relationships, the Indian judiciary has firmly ring-fenced its application to prevent its misuse as a surrogate for a deed of conveyance, thereby upholding the sanctity and integrity of the statutory regime governing property transfers.