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General power of attorney has no legal sanctity: SC

                                                                                                                                             October 12 2011

The Supreme Court today ruled that sale transactions carried in the name of general power of attorney will have no legal sanctity and immovable property can be sold or transferred only through registered deeds.

A three-judge bench of justices R V Raveendran, A K Patnaik and H L Gokhale also asked the states to reduce stamp duty rates to prevent undervaluation of property and stashing of black money by vested interests.

The apex court said high stamp rates has led to rampant abuse of the general powr of attorney (GPA), sale agreements (SA) and Wills, resulting in huge loss of money to the exchequer.

“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.

“Such transactions cannot be relied upon or made the basis for mutations in municipal or revenue records,” Justice Raveendran, writing the judgement, said.

The apex court said the amendments to stamp and registration laws by various states do not address the larger issue of generation of black money and operation of land mafia and hence there was a need to reduce the stamp duty though it may result in loss or revenue.

“When high stamp duty is prevalent, there is a tendency to undervalue documents even where sale deeds are executed.

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