SURAJ LAMP & INDUSTRIES (P) LD.TR.DIR VS STATE OF HARYANA & ANR, AIR 2012 SUPREME COURT 206

Author Details:-

Anantha mounika
5th year ( 9th semester)
BA LLB 5ydc
Telangana social welfare residential law college for women, Hyderabad.

CASE DETAILS:

COURT : SUPREME COURT OF INDIA

BENCH:3 BENCH JUDGES,R.V.RAVEENDRAN,A.K. PATNAIK,H L.GOKHALE

DECIDED ON: 11 OCTOBER,2011

PARTIES:

APPELLANT:SURAJ LAMP & INDUSTRIES PVT.LTD

RESPONDENT:STATE OF HARYANA & ANR

JURISDICTION: CIVIL APPELLATE JURISDICTION

SPECIAL LEAVE PETITION (CIVIL) NO. 13917 OF 2009

CITATION: AIR 2012 SUPREME COURT 206,

ABSTRACT:

The case Suraj Lamp & Industries Pvt. Ltd. vs. State of Haryana & Anr. decided on 11th October 2011 by the Supreme Court of India is an important landmark judgement on the legality and validity of certain property transactions conducted through General Power of Attorney (GPA), Agreement to Sell, and Will.

In this judgement the court held that the SA/GPA/WILL transactions of the property will not Convey the title and the interest. This transaction of the property is not a valid sale or valid transaction. The transfer of the property can be lawfully and legally only made by the registered deed of conveyance. But it can use for the possession of the property for the legal purpose. The court mandated that such transactions must be completed through a registered sale deed to be legally valid, ensuring compliance with the Transfer of Property Act and the Registration Act.

Because the ill effects of the SA/GPA/WILL transactions impact negatively to the people and to the India laws. These transactions make the people use for their own advantage to misuse the laws wrongly to avoid taxation, fraud transfers, no owner rights and increase of black money.

FACTS OF THE CASE:

The petitioner, Suraj Lamp & Industries Pvt. Ltd., is a company who transfers the property through the SA/GPA/WILL transactions. To validate these transactions of the property was approached to the court and also made them appeal in this case. There are also questions raised that they have the right to transfer which transfers the ownership under this transaction. This dispute was raised in the state of Haryana and the state arises with the problem of these types of transactions having ill effects. Such ill effects of this transaction impacts the state as well as laws on the transfer of property and registration act.

Because of the above issues from the both parties claimed in the court for the clear judgement for the transfer of property and their transfer of ownership rights.

ISSUES:

Whether to validate the SA/GPA/WILL transactions and under this will they have the ownership right?
Whether they follow the taxation laws in these SA/GPA/WILL transactions?
Why should the transaction of the property be followed by the laws of Transfer of property act?
How the ill effects of the SA/GPA/WILL transactions affect the transaction of the property?
How are the ill effects of SA/GPA/WILL transactions impacting on the property laws?
How are the ill effects of the SA/GPA/WILL transactions affecting the population in India?

ARGUMENTS:

Petitioner: To validate the SA/GPA/WILL transactions transfer of the property by the company. Many transactions made on such a process will impact losses to the company or us.

Respondent: There is more impact by ill effects of SA/GPA/WILL transactions. Such transactions have an effect on the economy and less benefits to the government because of avoiding tax and black money. Such an action is not tolerable. The laws are made for public interest and their benefits. Because of the transactions it impacts negatively on the people. SA/GPA/WILL transactions can’t convey the title or interest. Use of precedents on the advantages of registration, scope of will and power of attorney.

RELEVANT LEGAL PROVISIONS:

Section 5 of TPA,1882 defines “Transfer of property”
Section 40 of TPA,1882 – Burden of obligation imposing restriction on use of land.
Section 49 of TPA,1882 – Transferee’s right under policy.
Section 53A of TPA,1882 – defines `part performance’
Section 54 of TPA,1882 – defines Sale
Section 55 of TPA,1882 – Rights and liabilities of buyer and seller.
Section 27 of Indian Stamp Act, 1999 – Facts affecting duty to be set forth in instrument.
Article 23 of Indian constitution – Prohibition of traffic in human beings and forced labour
Section 17 of the Registration Act, 1908 – Documents of which registration is compulsory.
Section 3 of the Specific Relief Act,1963 – Savings.
Section 91 of the Trusts Act.- Property acquired with notice of existing contract.
section 2 of the Powers of Attorney Act, 1882).- Execution under power-of-attorney.
sections 69 of Indian Succession Act, 1925 – Revocation of Will by testator’s marriage
Section 70 of Indian Succession Act, 1925- Revocation of unprivileged Will or codicil.

COURT’S DECISION:

The supreme court of India held in this case that on the issue regarding the validate the transaction of properties by SA/GPA/ WILL transactions by giving importance to use and the merits of these SA/GPA/ WILL transactions. These transactions can be used for the possession of the property to deal in legally. The merits in this case – scope of will, scope of power of attorney, possession of property, registration of will and reiterating the transfer of the property can be lawfully and legally only by the registered deed of conveyance.

The transaction of SA/GPA/WILL transactions doesn’t convey the title nor any interest of immovable property except to the extent of section 53A of TPA,1882. The SA/GPA/WILL transaction is not a valid sale. In the lease transfer of immovable property should be by the registered assignment of lease.

REASONING OF THE COURT:

No SA/GPA/WILL transactions should be used. Because these transactions are using for the purpose to avoid prohibitions/conditions regarding certain transfers, to avoid payment of stamp duty and registration charges on deeds of conveyance, to avoid payment of capital gains on transfers, to invest unaccounted money (`black money’) and to avoid payment of `unearned increases’ due to Development Authorities on transfer.
Power of attorney sales indirectly lead to growth of real estate mafia and criminalisation of real estate transactions.
These SA/GPA/WILL transactions are using genuinely for transfer of possession to the trust person or family members.
The state of Haryana reduce stamp duty on deeds of conveyance from 12.5% to 5%. This step was forward to make more registration of deed conveyance and also to encourage registrations.
There should be more use of registration of deed conveyance for reducing the generation of black money.
Preferring the advantages of registration for the protection of rights of the purchaser and verification of certificates. Save from fraud and forgery documents in future.

DISSENTING OPINIONS:

The four states have responded to the directed notice and confirmed that SA/GPA/WILL transfers are required to be discouraged as they lead to loss of revenue (stamp duty) and increase in litigations due to defective title. They also referred to some measures taken on that behalf. The measures differ from State to State.
Narandas Karsondas v. S.A. Kamtam and Anr

“In India, the word `transfer’ is defined with reference to the word `convey’. The word `conveys’ in section 5 of Transfer of Property Act is used in the wider sense of conveying ownership… …that only on execution of conveyance ownership passes from one party to another….”

The observations by the Delhi High Court, in Asha M. Jain v. Canara Bank – 94 (2001) DLT 841, that the “concept of power of attorney sales have been recognized as a mode of transaction”

IMPACT AND SIGNIFICANCE:

The kinds of transactions of SA/GPA/WILL transactions were evolved to avoid prohibitions/conditions regarding certain transfers, to avoid payment of stamp duty and registration charges on 2 deeds of conveyance, to avoid payment of capital gains on transfers, to invest unaccounted money (`black money’) and to avoid payment of `unearned increases’ due to Development Authorities on transfer. Because of the ill effects of the SA/GPA/WILL transactions impacting negative and more arise of the problems on this specific problems.

So, under this judgement not to validate the SA/GPA/WILL transactions which will not Convey the title of property. The people can only transfer the immovable property by the registered deed conveyance legally and because of this judgement may decrease the ill effects of the SA/GPA/WILL transactions.

CRITICAL ANALYSIS:

In this case it explains the importance of the registration of the property, process, possession, transfer of title and interest. SA/GPA/WILL transactions can be used for the purpose of possession of the property by trust. But such transactions can’t convey the title or interest of the property. The transaction of the property should be in legally and lawfully. Every property should be registered by deed conveyance. The SA/GPA/WILL transactions will have effects on the economy and money. Many people take advantage of those transactions to avoid taxes, use black money and fake transfers. So such transactions shouldn’t be validated because it causes more impact on people and laws.

REFERENCE

Indian kanoon, Suraj Lamp & Industries (P) Ld.Tr.Dir vs State Of Haryana & Anr on 11 October, 2011, https://indiankanoon.org/doc/1565619/ accessed 22 October 2024.
Bhumika indulia,Suraj Lamp & Industries (P) Ltd.(II) v. State of Haryana ― Lacking in Law? | A case comment,SCC times, 1 year ago, https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=https://www.scconline.com/blog/post/2023/07/29/suraj-lamp-industries-p-ltd-ii-v-state-of-haryana-lacking-in-law-a-case-comment/amp/&ved=2ahUKEwjKvpS2w52JAxXUS2wGHXuVPWoQFnoECBUQBQ&usg=AOvVaw3M0iQXQ5H1MhdR7u4ve6QA accessed 22 October 2024.