General Power of Attorney v. Agreement of Sale cum GPA
Mallika Rani Garimella
Veeravalli College of Law, Adikavi Nannayya University
This Blog is written by Mallika Rani Garimella, a Law Graduate of Veeravalli College of Law, Adikavi Nannayya University
In General, the person handling several business affairs, a popular person in society, or old man, or a person holding immovable assets in different countries, may not always be able to attend in every situation where his presence is vital, there arises the need of some agent who can act on his behalf to represent in several matters. Hence, the person authorizes some agent who might be a family member, relative, close friend, and so on who is competent to act on behalf of him for his transaction.
Power of Attorney or General Power of Attorney
It is the legal authorization in which the Principal/Grantor authorizes the agent to perform a certain task on behalf of the Principal/Grantor. The word General means the authority or power given by the principal/grantor should be general regarding the subject matter and not specific. If the subject matter is not general and is having restrictions mentioned while doing the paperwork then it will not be considered a General Power of Attorney, it will be otherwise called Limited Power of Attorney.
Parties to the Power of Attorney:
The person authorizing the powers to perform the work on his behalf is called Principal/Grantor and the person or organization to whom the powers are assigned is called Agent.
Types of Power of Attorney:
1. General Power of Attorney
2. Specific Power of Attorney
Specific Power of Attorney:
When the Principal appoints an agent only for a specific transaction or matter and on completion of such assigned work, the power of the agent expires
Registration Optional or Mandatory:
It is not mandatory to get Power of Attorney registered unless it creates an interest in any immovable property i.e. change in favour of the Power of Attorney holder.
In India, registration of Power of Attorney is optional, and as per the Indian Registration Act 1908, any immovable property valued more than INR 100, must be registered. Getting Power of Attorney registered authenticates the deed of Power of Attorney.
Cancellation:
Generally, there is no law governing how the relationship between Principal and Agent terminates in POWER OF ATTORNEY, adopting the Indian Contract Act 1882, rules have been interpreted by courts on how the agency is terminated. Likewise; 1. When the Principal himself alone can revoke the authority. 2. When either the Principal or Agent is declared to be insolvent by the competent court. 3. When the purpose of execution comes to an end. 4. On the death of either Principal or Agent. 5. When either of the parties to the deed becomes unsound.
Conclusion:
Finally, it has been concluded that any transactions by way of GPA/SPA do not convey any title nor create any interest in an immovable property. They are just valid substitutes for Sale Deed. Refer to Case Law: Asha M. Jain Vs Canara Bank.
Agreement of Sale cum GPA:
Agreement of Sale cum GPA is a legal framework used in property transactions. It combines elements of the Sale Agreement and Power of Attorney, allowing one party to act on behalf of the other in the Sale of Property. This dual nature of AGPA makes it a powerful tool in real estate, particularly in scenarios where the direct involvement of the property owner is not feasible. Agreement of Sale is merely an intention to make a sale and the same does not constitute any ownership right nor confer any right.
Sec 202 of the Indian Contract Act 1872, provides that the Power of Attorney coupled with interest is irrevocable and cannot be revoked /terminated even upon the death of the principal.
A transfer of Property using Sale Agreement with GPA is declared by the Supreme Court as Invalid and the consequent document for transfer of property has no legal sanctity at all.
Therefore, SA/GPA/WILL transactions do not convey any title nor create any interest in any immovable property,
It is concluded that there is no provision or term AGPA mentioned anywhere in the books. Nowadays Real Estate Market has created a trend in the execution of AGPA to reduce Stamp Duty which is less when compared to the Sale Deed. When there is high stamp duty prevalent, there is a tendency to undervalue documents, even where Sale Deeds are executed. Hence reduction of Stamp Duty may be advantageous in the long run for two reasons:
1. Parties will be encouraged to execute registered deeds of Conveyance/Sale deeds without any undervaluation, instead of entering into SA/AGPA/WILL transactions and
2. More and more Sale Transactions will be done by way of duly registered sale deeds, disclosing the entire sale consideration thereby reducing the generation of black money to a large extent.
References :
1. https://www.legalserviceindia.com
6. Transfer of Property Act, 1882