Reiterating settled principles of property law, the Supreme Court has held that immovable property cannot be legally transferred on the basis of an agreement to sell, a General Power of Attorney (GPA), or even a registered Will, in the absence of a duly executed and registered sale deed.
A bench of justices Aravind Kumar and Sandeep Mehta delivered the ruling in Ramesh Chand (D) through LRs vs Suresh Chand & Anr, setting aside concurrent findings of the trial court and the Delhi High Court which had decreed a suit for possession, mandatory injunction and declaration in favour of the plaintiff.
The property dispute arose between two brothers, Ramesh Chand (appellant) and Suresh Chand (plaintiff/respondent). Suresh Chand asserted that he had 'purchased' the property from his father in 1996 by way of an Agreement to Sell, General Power of Attorney, an affidavit, a receipt and a registered Will. He contended that his brother, who was initially residing in the property as a licensee, had subsequently sold half the property to a third party illegally.
Ramesh Chand countered that the property had been orally gifted to him by their father in 1973 and he had remained in continuous possession since then. He challenged the validity of the documents relied upon by his brother, arguing that in the absence of a registered sale deed, no title could pass.
Both the trial court and the Delhi High Court accepted the Suresh’s claim and ruled in his favour, prompting Ramesh to file an appeal in the Supreme Court.
The Court reiterated that a mere agreement to sell cannot confer title or ownership in property. Citing Section 54 of the Transfer of Property Act, the Bench observed that “In the instant matter, undisputedly plaintiff claims that there is only an agreement to sell, and there is no sale deed executed in his favour by the father. As per the settled position of law, this document does not confer a valid title on the plaintiff as it is not a deed of conveyance…At best, it only enables the plaintiff to seek for specific performance for the execution of a sale deed and does not create an interest or charge on the suit property.”
The Court explained the legal distinction that a sale deed transfers ownership rights and an agreement to sell only creates a right to obtain a sale deed and does not, by itself, create proprietary interest in the property.
The Court also dismissed reliance on the General Power of Attorney. The judgement emphasised that a GPA, even if registered, is only an instrument of agency and cannot operate as a conveyance.
“A power of attorney is not a sale. A sale involves transfer of all the rights in the property in favour of the transferee but a power of attorney simply authorises the grantee to do certain acts with respect to the property including if the grantor permits…to sell the property,” reads the judgement.
In this case, the GPA granted by the father only authorised management of the property — such as letting it out on rent or creating a mortgage — but was “silent on the aspect of conveyance.” The Court, therefore, held that even a valid GPA could not vest ownership in the plaintiff.
The plaintiff further relied on a registered Will said to have been executed by his father. However, the Court found that the Will was surrounded by suspicious circumstances. The father had four children, but the Will purportedly left the entire property to one son without explanation.
“There is not even a whisper of reasoning as to why the propounder of the Will chose to exclude other three children from the bequest… It is highly unlikely that a father would grant his entire property to one of his children, at the cost of three others, without there being any evidence of estrangement.”
The Bench concluded that the suspicious circumstances had not been dispelled and, therefore, the Will could not be relied upon to establish ownership. For these reasons, the Supreme Court allowed the appeal, set aside the judgements of the trial court and the High Court, and dismissed the plaintiff’s suit.
