Sale under Transfer of Property Act, 1882
Section 5 of the Transfer of Property Act (hereinafter called as TOPA) defines transfer of property as In the following sections transfer of property means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself [or to himself] and one or more other living persons and to transfer property is to perform such act.
Section 54 of the TOPA defines sales thus Sales is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised.
Sale : Such transfer, in the case of tangible immoveable property of the value of one hundred rupees or upwards or in the case of reversion or other intangible thing can be made only by a registered instrument.
Contract for Sale: A contract for the sale of immoveable property is a contract that a sale of such property shall take place on terms settled between the parties.
It does not of itself, create any interest in or charge on such property.
The seller of the immovable property in these indirect sales after receiving the agreed consideration, deliver the possession of the said property and executes some or all of the following documents:
(1) An Agreement of sale (containing the terms which would be similar to terms of sale) by the seller in favor of the purchaser and undertaking to execute any document as and when required in future.
(2) An agreement of sale agreeing to sell the property with the separate affidavit confirming receipt of full price and delivery of possession and undertaking to execute sale deed whenever required.
(3) An Irrevocable General Power of Attorney in favor of the purchaser or his nominee.
(4) A Special Power of Attorney either to sell or to manage the property.
(5) A Will bequeathing the property to the purchaser (as a safeguard against the consequences of death of the vendor before transfer is effected).
The Honble Apex Court noted that such kind of Indirect Sales adversely affected 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 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.
Power of Attorney
A Power of Attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. The power of attorney is creation of an agency whereby the grantor authorizes the grantee to do certain acts specified therein, on behalf of grantor, which when executed will be binding on the grantor as if done by him. It is revocable or terminable at any time unless made irrevocable in a manner known to law. Even an irrevocable attorney does not have the effect of transferring title to the grantee. So, power of attorney does not convey ownership. An attorney holder may however execute a deed of conveyance in exercise of the power granted under the power of attorney and convey title on behalf of the grantor.
Honble Supreme Court vide its judgment rendered in case titled as
Suraj Lamp and Pvt. Ltd. v/s. State of Haryana and Others
Honble Apex Court dealt with is whether immovable property can be legally transferred or conveyed through a General Power of Attorney, Agreement to Sell and a Will?
Judgment the Honble Bench has merely drawn attention to the legal position that Sale Agreement/General Power of Attorney/WILL transactions are not transfers or sales and that such transactions cannot be treated as completed transfers or conveyances. But they can still be treated as existing agreement of sale. Nothing prevents affected parties from getting registered deeds of conveyance to complete their title.