The Supreme Court of India, in the landmark case of Suraj Lamp & Industries Pvt. Ltd. Vs. State of Haryana [(2012) 1 SCC 656], ruled that an Agreement of Sale cum General Power of Attorney (AGPA) does not transfer ownership rights in immovable property. Such a transaction lacks legal sanctity and does not confer title to the transferee.

The Andhra Pradesh High Court reiterated this principle in Tatineni Venkata Subba Rao Vs. Kodali Jaya Laxmi Devi (2018), aligning with the Supreme Court’s ruling.

Relevant Legal Provisions

The invalidity of AGPA-based transfers is based on the following statutory provisions:

1. Transfer of Property Act, 1882
   • Section 54: Defines a Sale as a transfer of ownership for consideration through a registered deed.
   • Section 53A: Provides for the Doctrine of Part Performance, but it does not confer title—only a limited protection to the buyer against eviction.
2. Registration Act, 1908
   • Section 17(1)(b) & (c): Requires compulsory registration of documents affecting immovable property valued above ₹100.
   • An unregistered AGPA does not fulfill this requirement, rendering it legally ineffective.
3. Indian Stamp Act, 1899
   • Section 3: Mandates that a sale deed must be properly stamped.
   • AGPA transactions are often used to evade stamp duty, making them subject to legal scrutiny.
4. Power of Attorney Act, 1882
   • GPA Holder is an Agent: A GPA does not transfer ownership; it merely authorizes an agent to act on behalf of the principal.
   • If the principal dies, the GPA automatically stands revoked, making any transaction by the GPA holder invalid.
5. Supreme Court’s Rationale in Suraj Lamp & Industries Pvt. Ltd.
   • AGPA transactions are a legal loophole to avoid stamp duty and registration requirements.
   • Ownership in immovable property can only be transferred through a duly stamped and registered sale deed.
   • Even if possession is handed over and full consideration is paid under an AGPA, the buyer does not become the owner.

Key Judicial Observations in Suraj Lamp & Industries Pvt. Ltd. Case

• “A power of attorney is not an instrument of transfer in regard to any right, title, or interest in an immovable property.”
• “Such transactions cannot be recognized as valid modes of conveyance.”
• “Real estate developers and property dealers often misuse these documents to evade legal formalities and defraud buyers.”

Impact of the Judgment

1. Bank Loans & Mutation: Banks do not provide loans for properties transferred through AGPA. Authorities also do not allow property mutation based on AGPA.
2. Legal Challenges: Any interested party can challenge an AGPA-based transaction in a civil court.
3. Risk for Buyers: Buyers relying on AGPA risk losing property rights since ownership remains with the original owner.

Conclusion & Legal Recommendation

• AGPA is not a valid mode of transfer; it does not confer ownership.
• Only a registered sale deed executed under the Transfer of Property Act can legally transfer ownership of property.
• Buyers should avoid AGPA transactions and insist on registered sale deeds to ensure a clear and marketable title.

This judgment reinforces the necessity of legal compliance in real estate transactions to prevent disputes and safeguard property rights.