Holding

The Court held that SA‑GPA‑Will transactions are illegal, undermine the objectives of the Registration Act and facilitate tax evasion, and therefore the matter requires examination of state‑wise prevalence and remedial measures.

Summary

Suraj Lamp & Industries Ltd. filed a Special Leave Petition challenging a High Court order that held Section 20 of the Right to Information Act, 2005 to be merely directory. The company alleged that its land purchase in Gurugram was effected through a sale agreement, General Power of Attorney and a will (SA‑GPA‑Will) rather than a registered deed, leading to multiple disputes, criminal complaints and alleged false information from the police under the RTI Act. The Supreme Court observed that such "power of attorney sales" are a widespread, illegal practice that evades stamp duty, registration fees and income tax, fuels black‑money circulation and encourages real‑estate mafia activities. It emphasized the purpose of the Registration Act, 1908 (ss. 17, 49) to ensure public notice and prevent fraud, and noted that several states have taken inadequate steps to curb the practice. The Court directed notice to the governments of Punjab, Haryana, Delhi, Uttar Pradesh and Maharashtra to report on the prevalence of SA‑GPA‑Will transactions and the measures taken, and allowed the petition to proceed, adjourning the matter for further hearing.

Issues considered

Whether Section 20 of the RTI Act, 2005 imposes a mandatory duty on public authorities to provide accurate information regarding investigations.
Whether transactions involving sale agreement, General Power of Attorney and will (SA‑GPA‑Will) can be considered valid modes of conveyance of freehold property under the Registration Act, 1908.
What is the prevalence of "power of attorney sales" in the concerned states and what steps have those states taken to curb the practice?

Legislation cited

Companies Act, 1956
Delhi Municipal Corporation Act, 1957s. 147
Indian Penal Code, 1860s. 1208, s. 406, s. 420, s. 467, s. 468, s. 471
Negotiable Instruments Act, 1881s. 138
Registration Act, 1908s. 17, s. 49
Right to Information Act, 2005s. 20

Subjects

Power of attorney salesSA‑GPA‑Will transactionsRegistration of deedsReal estate fraudStamp duty evasionRTI ActSection 20Property conveyanceBlack moneyReal estate mafia

Judgment

[2009] 9 S.C.R. 1048
v
-f
A SURAJ LAMP & INDUSTRIES (P) LTD. THRU. DIR
v.
STATE OF HARYANA & ANR.
,_
(SLP (C) No. 13917 of 2009 @ C.C. No. 5804 of 2009)
MAY 15, 2009
B
[R.V. RAVEENDRAN AND J.M. PANCHAL, JJ.]
... --;

Registration Act, 190~:

c ss. 17 and 49 - Registration of deeds of conveyance -
Purpose of - Practice of transferring freehold properties by
means of sale agreement with General Power of Attorney and
Will (SA-GPA-Will) - Held: Consequences of transactions by
means of SAGPA Will are disturbing and far reaching,
D adversely affecting the economy, civil society and law and
order - Jt 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 -
Such transactions encourage circulation of black money and
corruption and directly lead to growth of real estate mafia and
E criminalization of real estate transactions - Some States have
· made some efforts to control such transactions by subjecting
agreements of sale involving delivery of possession and y
I,.
irrevocable powers of attorney for consideration to the same
stamp duty as deeds of conveyance or by making such
F documents compulsorily registrable - But the steps taken are
neither adequate nor properly implemented, resulting in
multiple transactions in regard to the same property and
leading to legal and other complications - Solicitor GeneraT
of India would appear in the matter and give suggestions on
G behalf of Union of.India - Notice-f~ssue to States of Punjab, <{-·-

Hazyana, Delhi, Uttar Pradesh and Maharashtra as to whether
tra(lsactions by means of SA GPA Will inste~<i of regular sales
arfi1preli,alent in their States and their view:sJn-respect of such
I •

H 1048
SURAJ LAMP & INDUSTRIES (P) LTD. v. STATE 1049
OF HARYANA
,...,, A
~ transactions as also what steps have been taken and/or and
proposed to be taken by respective States to deal with such
... transactions and their.effects - Matter adjourned.

CIVIL APPELLATE JURISDICTION: SLP (C) No. 13917/
9 @ Computer Cod~ No. 5804 of 2009. B
From the Judgment & Order dated 25.11.2008 of the High
Court of Punjab & Haryana at Chandigarh in C.W.P. No. 19864
• f- of 2008.

K.V. Vishwanathan, Jayant Kumar Mehta, Neeraj c
Chaudhari and Sandeep Phogat for the Appellants.

The following Order of the Court was delivered
---'
ORDER
D
R.V. RAVEENDRAN J. 1. Delay condoned. Issue notice.
Petitioner to file copies of correspondence with State
~
""
Information Commissioner as also its title deeds to the
disputed property. As this case is a typical example of an
irregular process spreading across the country, we propose to E
refer to some aspects of the case at this preliminary stage itself.

.. •
'{
2. 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 Wazirabad village,
Gurgoan to them by means of an agreement of sale, General
Power of Attorney (for short 'GPA') and a will in the year 1991
F

for a consideration of Rs. 716,695/-. It is 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 is stated that the said Dharamvir Yadav, G
.., )

--
and his son Mohit Yadav (an ex MLA and Minister), instead of
proceeding with the transaction with the petitioner, directly got
in touch with Ramanath and his family members and in 1997
got a GPA in favour of Dharamvir Yadav in regard to the entire

- H
1050 SUPREME COURT REPORTS [2009] 9 s.c.R.'

A · two and half acres executed and registered and illegally
cancelled the earlier GPA in favour of petitioner. The petitioner
claims that when its Director, S.K. Chandak, confronted
.Dharamvir Yadav in the year 1999 this behalf, the said Yadav
apologized and issued a cheque for Rs.10 lakhs towards part
-
, 8. payment and agreed to pay the balance of Rs.50 lakhs shortly
._ but that the said cheque was dishonoured necessitating a
complaint under section 138 of the Negotiable Instrument Act,
being filed against Dharamvir Yadav which is pending in a
criminal court at Patiala House, New Delhi. It is further alleged
c that in the year 2001, petitioner lodged a criminal complaint
against Ramanath 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, Gurgoan, for offences punishable under sections 406,
D 420, 467, 468, 471and1208 of IPC. The petitioner claims that
in December 2005 it lodged an Fl R in respect of offences
under Sec. 406,467,468,471 and 1208 of IPC against all of
·. ,..
them.

3. The petitioner claims that as no action was taken on its
E FIR by the Station House Officer/Investigation Officer ('SH0/10'
for short), petitioner filed an application under Right to
Information Act, 2004 ('RTI Act' for short) seeking the status,
in response to which the SH0/10 gave contradictory and y
....
F
misleading versions about the status of the investigation and·
about the seizure and custody -of the agreement and power of
.....
attorney from the accused. An appeal filed by the petitioner was
disposed of by the Chief Information Commissioner, HarYana,
by an order dated 27.12.2007 merely directing that Police
should re..:investigate the FIR as per the order of the court and
G the Department should give a specific proper reply about the
status of the documents, to the appellant by 25.1.2008: '( -~
According to the petitioner, the Commissioner ought to hav~
initiated action against the police for giving false and.
-
misleading information under section 20 of. the RTI Act.
H Petitioner therefore filed a writ petition challenging the order of
SURAJ LAMP & INDUSTRIES (P) LTD. v. STATE 1051
OF HARYANA [R.V. RAVEENDRAN, J.]
~
t the Chief Information Commissioner and seeking initiation of A
.,.. proceedings under section 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 section 20 was
directory and not mandatory. This SLP seeks leave to file an
appeal against the said order. B

4. We are of the view that matter involves an issue whose
>-- )- seriousness is underestimated. The issue to be addressed is
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
c
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. This method adopted has the
following variants: D
-<!
• (i) Execution of an agreement of sale,. one or two
powers of attorney, with or without a will, all
unregistered.
E
(ii) Execution of an agreement of sale, power/s of
attorney and will, registering either all of them, or
any two of them, or any one of them.

... •
·-{

5. The 'Power of Attorney Sales' as a method of 'transfer'
was evolved by lawyers and document writers in Delhi, to F
overcome certain restrictions on transfer of flats by the Delhi
Development Authority (for short 'ODA').

DOA had undertaken large scale development by constructing
of flats. It is stated that when DOA aHotted a flat to an allottee, G
" )" any transfer of the assignment by the allottee required the
- permission of DOA and such permission was granted only on
payment to ODA 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
H
1052 SUPREME COURT REPORTS {2009] 9 S.C.R.

y
A obtaining permission and to avoid payment of the huge part of -+
the price to the DOA 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 ttie
flat to the purchaser and execute the following documents :
B
(a) An Agreement of sale confirming the terms of the
sale, delivery of possession and payment of full
consideration and undertaking to execute any
document when required in future.
~· -·
c (b) An Irrevocable General Power of Attorney in favour
of the purchaser or his nominee authorizing him to
manage, deal with and dispose of the property
without reference to the vendor. """'
D (c) A will bequeathing the property to the purchaser as
safeguard against the consequences of death of )>-
the vendor before transfer. •
6. The 'Power of Attorney Sales', as noticed above was
adopted to overcome the restrictions/prohibitions in terms of
E allotment and the rules of allotment of DOA governing the
allotment of flats. Such transactions were obviously irregular
and illegal being contrary to the rules and terms of allotment.

...
y
Further, in the absence of a registered deed of conveyance, .
no right, title or interest in an immovable property could be
F transferred to the purchaser. However, the Delhi High Court in
a few cases accepted such 'Power of Attorney Sales' as
creating an 'interest' in the DOA flat which was so 'transferred'
and consequently, protected such interest of the purchaser by
issuing injunctions or decrees preventing the vendor from
G further dealing with the property. This lied to a general
l _,,
impression the ·~ower of Attorney Sales' were valid recognized
modes of transfer and the very purpose ODA prohibiting
transfers and requiring permission on payment of certain
-
difference in price was defeated by this process.
·H
SURAJ LAMP & INDUSTRIES (P) LTD. v. STATE 1053
1 0F HARYANA [RV. RAVEENDRAN, J.]
' ....
t
We ~re not presently concerned with the validity, propriety A
or wisdom of such judgments which virtually put the seal of
approval cf. the court on transactions which were irregular and
illegal. In fact, it is stated that DOA itself ultimately recognizes
'Power of Attorney Sales' by accepting applications from
purchasers under 'Power of Attorney Sales' for conversion from B
leasehold to freehold and conveyance of the flats. We will
therefore presently exclude the 'power of attorney sales' of DOA
... ;.
flats from the purview of the present exercise,.

7. What we are concerned is extension of the concept of
such 'Power of Attorney Sales' by execution of SA/GPA/Will
c
with reference to freehold properties .
..... 8. 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 D
... -./ protection from fraud and forgery of documents of transfer. This
is achieved by requiring compulsory registration of certain types
of documents and providing for con.sequences of non-
registration. Section 17 of the Registration Act clearly provides'
that any document (other than testamentary instruments) which E
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
.I>
.... and upwards to or in immovable property. Section 49 of the said
Act provides that no document required by section 17 to be . F
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
.. )I: G
transactions relating to immo'1able 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.
Registration provides information to people who may deal with
H
1054 SUPREME COURT REPORTS (2009] 9 S.C.R.
·~ ~

A a property, as to the nature and extent of the rights which
-r ' .'

t
persons may have, affecting that property. In other words, it
enables people to find out whether any particular property with
which they are concerned, has been subjected to any legal
obligation or liability and who is or are the person/s presently
B having right, title, and interest in the property. It gives solemnity
of form and perpetuate documents which are of legal
importance or relevance by recording them, where people may
see the record and enquire and ascertain what the particulars -t ~
are and as tar as land is concerned what obligations exist with
c regard to them. It ensures that every person dealing with }-

immovable property can rely with confidence upon the
statements contained in the registers (maintained under the
said Act) as a full and complete account of all transactions by ....
which the title to the property may be affected and secure
extracts/copies duly certified.
D
9. Recourse to 'SA/GPA/WILL' transactions is taken in
,.._
.
regard to freehold properties, even when there is no bar or
prohibition regarding transfer or conveyance of such property,
by the following categories of persons :-
E
(a) Vendors with imperfect title who cannot or do not
want to execute registered deeds of conveya'nce.
_,.
(b) Purchasers who want to invest undisclosed wealth/ ..
income in immovable properties without any public
.....
F record of the transactions. The process enables
them to hold any number of properties without
disclosing them as assets held.

(c) Purchasers who want to avoid . the payment .of
G., stamp duty and registration charges either :( .....
deliberately or on wrong ~dvice. Persons who deal
in real estate resort to these methods to avoid
multiple stamp dutiestregistration fees so as to
increase their profit margin.
H
SURAJ LAMP & INDUSTRIES (P) LTD. v. STATE 1055
"«(
OF HARYANA [R.V. RAVEENDRAN, J.]
t
10. Whatever be the intention, the consequences are A
.... disturbing and far reaching, adversely affecting thP 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 8
persons with undisclosed wealth/income to invest their black
money and also earn profit/income, thereby encouraging
)" ~
circulation of black money and corruption. This kind of
transactions has disastrous collateral effects also. For example,
when the market value increases, many .vendors (who effected c
power of attorney sales without registration) are tempted to

-- resell the property taking advantage of the fact that there is no
registered instrument or record in any public office thereby
cheating the purchaser. When the purchaser under such 'power
of attorney sales' comes to know about the vendors action, he
-4 D
.....
invariably tries to take the help of musclemen to 'sort out' the
issue and protect his rights. On the other hand, real estate
mafia many a time purchase properties which are already
subject to power of attorney sale and then threaten the previous
'Power of Attorney Sale' purchasers from asserting their rights.
. Either way, such power of attorney sales indirectly lead to E
growth of real estate mafia and criminalization of real estate
-4 transactions.

-
~

11. Some states have made some efforts to control such
'Power of Attorney Sales' by subjecting agreements of sale F
involving delivery of possession and irrevocable powers of
attorney for consideration, to the same stamp duty as deeds
of conveyance or by making such documents compulsorily
registrable. But the steps taken are neither adequate nor
}'. t:,· properly implemented resulting in multiple transactions in regard G
,- to the same property by greedy and unscrupulous vendors and/
or purchasers giving nightmares to bonafide purchasers
intending to buy a property with certainty regarding title. It also
makes it difficult for lawyers in tracing and certifying title. Any
process which interferes with regular transfers under deeds of H
1056 SUPREME COURT REPORTS [2009] 9 S.C.R.
,,...
-t
A conveyance properly stamped, registered and recorded in the
registers of the Registration Department, is to be discouraged
and deprecated.

12. The present case is a typical example of the
consequences of not obtaining a registered sale deed. There
B
is apparently no reason as to why a company registered under
the Companies Act should resort to such a transaction.
Execution of a will by an individual bequeathing an immovable t-
property to a company, is also incongruous and absurd. If there
was a bar and the process was adopted to overcome such bar
c regarding sale of lands, then courts should not go to their
assistance, as that would amount to perpetuating illegalities. If
there was no bar, then the questions that arise are: why should
a company hold a property in a state of suspended animation
--
from 1991? How can a company 'verbally' agree to sell a
D property to someone? What is the reason for the delay in ).-
lodging the complaints? If petitioner had purchased the property
under a registered sale deed, numerous disputes, litigations
and criminal proceedings could have been avoided. The illegal ~

and irregular process of 'Power of Attorney Sales' spawns
E several 'disputes relating to possession and title, and also ~

results· in criminal complaints and cross complaints and extra-
legal enforcement and forced settlements by land mafia. y
..
13. We are therefore of the view that the situation warrants
special measures. We are informed that sometime back in
-
F
2008, there was a. proposal to amend section 147 of Delhi
Municipal Corporation Act, 1957 to check and discourage
'power of attorney sales'. There was also a propos~I to have I,_
special enactment relating to registration and recording of title
in Delhi. But so far nothing appears to have fructified. It is the ~~ '
G dream of every citizen to own a house or a plot of land. The
--...
citizens must be enabled by the government to do so with
safety, security and without fear of litigation or defects in title.

14. We therefore request the Solicitor General to appear
H in the matter and give suggestions on behalf of Union of India.
'
I

SURAJ LAMP & INDUSTRIES (P) LTD. THRU. DIR v. 1057
STATE OF HARYANA [R.V. RAVEENDRAN, J.]

We also direct notice to the States of Punjab, Haryana, Delhi, A
Uttar Pradesh and Maharashtra (represented by their
respective Chief Secretary/Revenue Secretary) to consider the
··. following issues:

(a) Whether 'power of attorney sales' (that is 8
·transactions involving execution of Sale
Agreement/GPA/Will) instead of regular sales is
r t prevalent in their respective states?

(b) What are the views of the respective state
government in respect of such transactions? C

(c) What steps have been taken and/or proposed to be
taken by the respective states to deal with the
chaotic situation and confm~ion arising from such
transactions? D

~ List the matter in the last week of August, 2009.

R.P. Matter adjourned.