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Sale of property by POA holder

by | 18 May, 2016 | Property Law

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I purchased Plot in 2010 with power of attorney. The power of attorney was given to some person by the original owner. I started construction in 2016 on the plot. Now the thing is coming that the original owner is denying that he has not given power of attorney to any person and the signature done on POA is not his signature. He has decided to launch FIR in the police.

Please let me know what will be the effect on me if POA is really fake. All original documents with channels are with me. As I am the bona fide purchaser now legally, what consequences can occur? And what should I do as my advocate is telling not to fear all documents are up to date.***Please give your advice.

A POA is a formal arrangement by which one person (principal) gives another person (the attorney-agent) authority to act on his behalf and in his name. Every act performed by the attorney within the authority of the POA is legally binding on the person granting it.

Performance of act in the furtherance of POA is legal and has the legal force to execute it in the operation of law. It is apparent from your question that the seller had power of attorney, at the time of transfer, which was executed by the owner of the plot.

I think that a proper sale deed is executed in your case and appropriate stamp duty is also paid at the time of transfer of property. According to section 5 of the Transfer of Property Act, it is not mandatory that only the owner can transfer his property.

Any person can transfer if he is authorized by the owner of the property for such transfer. PoA is a legal instrument of authorization to act on behalf of the principal (maker of POA).

There must be a registered sale deed because sale deed is the only valid instrument thereby title of the property is to be transferred. In Suraj Lamp & Industries Pvt. Ltd. Vs. State of Haryana (AIR 2011 SC); it is held by the Supreme court of India that transfer of property by executing general power of attorney GPoA (instead of sale deed) in favour of purchaser is invalid. Supreme Court said that:

“We reiterated the well-settled legal position that SA/GPA/WILL transactions are not `transfers’ or `sales’ and that such transaction cannot be treated as completed transfers or conveyances. They can continue to be treated as an existing agreement of sale.”

You are a bona fide purchaser, paid valid consideration and the possession of the property is also with you. Prima facie case is in your favour. If that POA was fake then you have to compensate the owner by transferring his plot. There is a settled principle of law that no one gives what he doesn’t have (Nemo dat quod non-habet). Therefore if the seller had no right to right in the property you also cannot accrue any right in the property.

But you have the better right in the property than the seller because you are a bona fide purchaser, conducted proper examination regarding the genuineness of document etc. and there was no mala fide intention behind the execution of sale deed. If POA was registered it shall support your right in a more affirmative way because a Court is bound to presume the genuineness of POA if it is registered.

You said that “All original documents with channels are with me.” Thus if other documents support your title you should not worry about the genuineness of POA. If you have evidence to show that consideration (sale amount of property) was accepted by the real owner, it is a piece of relevant evidence to establish your title because acceptance of consideration is treated as implied consent about the contract.

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