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| 'Power of attorney' sales under SC scanner |
| M J Antony / New Delhi Jun 15, 2009, 00:51 IST |
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Summons five states to devise formula to stop misuse in property transactions.
The Supreme Court has summoned the chief secretaries and revenue secretaries of Delhi, Haryana, Punjab, Uttar Pradesh and Maharashtra to evolve a formula to stop the misuse of the power of attorney facility in the sale of property.
According to the court, power of attorney sales impact government revenue and benefit the land mafia. Though this system started in the national capital to circumvent rules governing the sale of plots and flats of the Delhi Development Authority, it has spread to other states. An attempt to pass a law to control the menace was unsuccessful.
The issue arose in the case of Suraj Lamp Industries, a public limited company in Haryana, which bought land through a power of attorney. The owner then tried to transfer the same property by yet another power of attorney deed, leading to criminal cases and an application under the Right to Information Act.
Adjourning the case till the last week of August, the Supreme Court criticised the practice of selling property without registering it to save stamp duty and registration fees.
Power of attorney sales were devised by lawyers and property dealers to save expenses and overcome restrictions and prohibitions in the rules of allotment by DDA. The court observed that in the absence of a registered deed of conveyance, no right, title or interest in an immovable property could be transferred to the purchaser.
However, the Supreme Court noted that the Delhi High Court had accepted a few cases of power of attorney sales as creating an “interest” in the DDA flat that was transferred.
The Supreme Court has asked the five states concerned to respond to three queries: (i) whether power of attorney sales are prevalent in their respective states; (ii) the views of the respective governments on such transactions; and (iii) what steps have been taken and/or proposed to be taken by these states to deal with the confusion arising from such transactions.
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