[Suraj Lamp & Inds. (P) Ltd. Thru DIR v. State of
Haryana & Anr., AIR 2009 SC 3077]
This case is a typical example of an irregular process
spreading across the country.
The petitioner, a company incorporated under the Companies
Act, claims that one Ramnath and his family members sold two and half acres of
land in Gurgaon to them by means of an agreement of sale, General Power of
Attorney (for short ‘GPA’) and a ‘Will’ in the year 1991 for a consideration.
It was further alleged that the petitioner verbally agreed to sell a part of
the said property measuring one acre to one Dharamvir Yadav for Rs.60 lakhs in
December 1996. It was stated that the said Dharamvir Yadav, and his son Mohit
Yadav (an ex MLA and Minister), instead of proceeding with the transaction
with the petitioner, directly got in touch with Ramnath and his family members
and in 1997 got a GPA in favour of Dharamvir Yadav in regard to the entire two
and half acres executed and registered and illegally cancelled the earlier GPA
in favour of the petitioner. The petitioner claims that when its Director, S.
K. Chandak, confronted Dharamvir Yadav in the year 1999 in this behalf, the
said Yadav apologised and issued a cheque for Rs.10 lakhs towards part payment
and agreed to pay the balance of Rs.50 lakhs shortly, but that the said cheque
was dishonoured. It was further alleged that in the year 2001, the petitioner
lodged a criminal complaint against Ramnath 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, Gurgaon.
The petitioner claims that as no action was taken on its FIR by the
Investigation Officer, the petitioner filed an application under the Right to
Information Act, 2004 seeking the status. An appeal filed by the petitioner
was disposed of by the Chief Information Commissioner, merely directing that
the Police should re-investigate the FIR. The petitioner filed a writ petition
challenging the order of the Chief Information Commissioner and seeking
initiation of proceedings u/s.20 of the RTI Act and imposition of penalty. The
said writ petition was disposed of by the High Court by the impugned order
holding that S. 20 was directory and not mandatory.
The Court observed that the issue was in respect of
avoidance of execution and registration of deeds of conveyance as the mode of
transfer of freehold immovable property by increasing tendency to adopt ‘Power
of Attorney Sales’, that is execution of sale agreement/ general power of
attorney/will (for short ‘SA-GPA-Will transactions’) instead of execution and
registration of regular deeds of conveyance, on receiving full consideration.
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’). DDA had undertaken large-scale development by constructing of
flats. It is stated that when DDA allotted a flat to an allottee, any transfer
of the assignment by the allottee required the permission of DDA and such
permission was granted only on payment to DDA of the ‘unearned increase’, that
is the difference between the market value/sale price and the original cost of
allotment. 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 such power of attorney sales/will, etc. 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.
The Registration Act, 1908, was enacted with the intention
of providing orderliness, discipline and public notice in regard to
transactions relating to immovable property and protection from fraud and
forgery of documents of transfer. This is achieved by requiring compulsory
registration of certain types of documents and providing for consequences of
non-registration. S. 17 of the Registration Act clearly provides that any
document (other than testamentary instruments) which purports or operates to
create, declare, assign, limit or extinguish whether in present or in future
‘any right, title or interest’ whether vested or contingent of the value of
Rs.100 and upwards to or in immovable property. S. 49 of the said Act provides
that no document required by S. 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. Registration provides safety and security to transactions
relating to immovable property, even if the document is lost or destroyed. It
gives publicity and public exposure to documents, thereby preventing forgeries
and frauds in regard to transactions and execution of documents.
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.
Such power of attorney sales indirectly lead to growth of real estate mafia
and criminalisation of real estate transactions.
