By Tania Maria Joy
It is a settled proposition of law that an agreement of sale comes into existence when the vendor agrees to sell and the purchaser agrees to purchase, for an agreed consideration on agreed terms. It can be oral. It can be by exchange of communications which may or may not be signed. It may be by a single document signed by both parties. It can also be by a document in two parts, each party signing one copy and then exchanging the signed copy as a consequence of which the purchaser has the copy signed by the vendor and a vendor has a copy signed by the purchaser. It can also be by the vendor executing the document and delivering it to the purchaser who accepts it.
An agreement for sale and purchase simpliciter is a reciprocal arrangement imposing obligations and benefits on both parties and is enforceable at the instance of either. The interpretation of such a contract would be governed by the laws of contract relating to the performance of reciprocal promises. Where under an agreement an option to a vendor is reserved for repurchasing the property sold by him, the option is in the nature of a concession or privilege and it may be exercised on strict fulfilment of the conditions on the fulfilment of which it is made exercisable.
It is important to note the following
(a) Execution of sale deed does not need any attesting witness like gift deed which requires at least two attesting witnesses at the time of its execution as per Section 123 of the Transfer of Property Act, 1882; and,
(b) Section 68 of the Indian Evidence Act, 1872 which deals with examination of attesting witness to prove the execution of document, does not apply to sale deed which is governed by Section 54 of the Transfer of Property Act, 1882.
Moreover, it is intrinsic to note the difference between ‘sale’ and ‘exchange’ of property. If a property is transferred in exchange for something other than money, such a transaction would be called an ‘exchange’; the difference between a sale and an exchange is that, in the former, the price is paid in money, while in the latter it is paid in goods, by way of barter.
Suraj Lamp & Industries (P) Ltd. V/s State of Haryana
In the matter of: Suraj Lamp & Industries (P) Ltd. V/s State of Haryana, it was held that, an immovable property can legally and lawfully be transferred or conveyed only by a registered deed of conveyance and that sale vide General Power of Attorney (GPA) does not convey any title. A grant of power of attorney is essentially governed by Chapter X of the Indian Contract Act, 1872. A deed of power of attorney is executed by the principal in favour of the agent.
The agent derives a right to use his name and all acts, deeds and things done by him and subject to the limitations contained in the said deed, the same shall be read as if done by the donor. A power of attorney is executed by the donor so as to enable the donor to act on his behalf. A power of attorney is a document of convenience. Except in cases where power of attorney is coupled with interest, it is revocable.
The law relating to power of attorney is governed by the provisions of the Powers of Attorney Act, 1982. It is well settled therein that an agent acting under a power of attorney always acts, as a general rule, in the name of his principal. Any document executed or done by an agent on the strength of power of attorney is as effective as if executed or done in the name of the principal, that is, by the principal himself. An agent, therefore, always acts on behalf of the principal and exercises only those powers, which are given to him in the power of attorney by the principal.
Any act or thing done by the agent on the strength of power of attorney, is therefore, never construed or treated as having been done by the agent in his personal capacity so as to create any right in his favour but is always construed as having been done by the principal himself. An agent, therefore, never gets any personal benefit of any nature by acting as power of attorney for his principal.
Joginder Kumar Goyal V/s Government of NCT of Delhi & Ors,
In the matter of: Joginder Kumar Goyal V/s Government of NCT of Delhi & Ors, W.P. (C) No. 3012/2016 (Date of Decision: 17.05.2016, High Court of Delhi), it was held that, any general power of attorney even if it provides for power to the attorney to convey title on behalf of the grantor or is deemed to be irrevocable cannot be recognized as a deed of title.
Doctrine of Part Performance of Contract is contained in Section 53-A of the Transfer of Property Act, 1882 (hereinafter referred to as ‘TPA’). Section 53-A of the TPA was added to the statute book in the year 1929 and is a modified form of the equity principle of part performance which got developed in England in the case of: Elizabeth Maddison V/s John Alderson, (1883) 8 App. Cases 467. The following postulates are sine qua non for basing a claim on Section 53-A of the TPA:
- There must be a contract to transfer for consideration any immovable property.
- The contract must be in writing signed by the transferor, or by someone on his behalf.
- The writing must be in such words from which the terms necessary to construe the transfer can be ascertained.
- The transferee must in part performance of the contract take possession of the property, or, of any part thereof.
- The transferee must have done some act in furtherance of the contract.
- The transferee must have performed or be willing to perform his part of the contract.
It is settled law that Section 53-A of the TPA confers no right on a party who was not willing to perform his part of the contract. A transferee has to prove that he was honestly ready and willing to perform his part under the contract.
WG. CDR. (Retd.) Sh. Yeshvir Singh Tomar V/s Dr. O.P. Kohli & Ors,
In the matter of: WG. CDR. (Retd.) Sh. Yeshvir Singh Tomar V/s Dr. O.P. Kohli & Ors, CS (OS) No. 2128/2015, High Court of Delhi, Date of Decision: 03.08.2015 (Coram: Valmiki Mehta, J.), it was held that:
That by virtue of the amendment brought about to Section 53-A of the TPA with effect from 24.09.2001 by the Act 48 of 2001, an Agreement to Sell in the nature of part performance cannot create rights unless the agreement is registered and stamped at 90 percent of the duty as of the sale deed as per Article 23-A of the Schedule I of the Indian Stamp Act, 1899 as applicable to Delhi which was accordingly amended by the Act 48 of 2001.
A power of attorney which effectively gives ownership rights of a property by allowing the attorney to sell the immovable property by virtue of Article 48 (f) of the Indian Stamp Act as applicable to Delhi will have to have the stamp duty as a conveyance deed as per Article 23 of the Indian Stamp Act for the amount of consideration.
Summarizing the position of law, the Hon’ble High Court of Delhi ruled as under:
“…7. In view of the aforesaid settled position of law, this suit is not maintainable by virtue of Section 53-A of the Transfer of Property Act read with the amended Article 23-A of the Indian Stamp Act as applicable to Delhi as the Agreement to Sell is unregistered and unstamped and the Power of Attorney besides not entailing the plaintiff to indirectly achieve what cannot be directly achieved is also not stamped on the value of the conveyance deed as required by Article 48 (f) of the Indian Stamp Act as applicable to Delhi…”
It is important to note that Article 48 (f) of the Indian Stamp Act as applicable to Delhi states that power of attorney, when given for consideration and authorizing the attorney to sell any immovable property, the proper stamp duty to be paid, is the stamp duty is levied on conveyance deed for the amount of consideration.
Therefore, the necessary corollary is that, if a power of attorney is executed by X in favour of Y, and X and Y, both are relatives and the purpose of execution of the power of attorney is grant of authority by X to Y to sell off property owned by X. The contents of Article 48 (f) of the Indian Stamp Act as applicable to Delhi would not be applicable because here the power of attorney is not executed for consideration, X and Y being relatives. So, here the power of attorney needs to be stamped at Rs. 50/- only as per the Indian Stamp Act as applicable to Delhi.