Introduction
A recent Supreme Court ruling has provided significant clarity on the legal standing of a General Power of Attorney (GPA) in property transactions. The Court held that a GPA, unless coupled with an interest in favor of the agent, becomes revocable upon the principal’s death, thereby terminating the agency. Additionally, an unregistered agreement to sell, even when executed alongside a GPA, does not confer ownership rights unless followed by a registered sale deed.
Background of the Case
The case, M. S. Ananthamurthy & Anr. v. J. Manjula & Ors. [2025 LiveLaw (SC) 257], revolved around the ownership of a suit property. The dispute stemmed from a General Power of Attorney (GPA) and an unregistered Agreement to Sell executed by the original property owner, Muniyappa, in favor of A. Saraswathi. The key issue before the Supreme Court was whether the GPA holder had any valid right, title, or interest to transfer the property after the principal’s death.
Factual Matrix
- On April 4, 1986, Muniyappa executed an “irrevocable” GPA and an unregistered Agreement to Sell in favor of A. Saraswathi for ₹10,250, authorizing her to manage and sell the property.
- After Muniyappa’s death on January 30, 1997, Saraswathi sold the property to her son, M. S. Ananthamurthy (Appellant No. 2), on April 1, 1998, for ₹84,000.
- Meanwhile, Muniyappa’s legal heirs sold the same property to S. Sreenivasulu on March 21, 2003, for ₹76,000. The property subsequently changed hands multiple times.
- In 2007, J. Manjula, the final transferee, filed a suit for a permanent injunction against Ananthamurthy, claiming possession of the property.
- The Trial Court ruled in favor of J. Manjula, a decision upheld by the High Court, leading to an appeal before the Supreme Court.
Key Legal Issues
The Supreme Court examined two primary questions:
1. Whether a GPA holder with an Agreement to Sell has the right to execute a sale deed after the principal’s death.
2. Whether an unregistered Agreement to Sell, read with a GPA, confers ownership rights.
Supreme Court’s Findings
1. A GPA Terminates Upon the Principal’s Death Unless Coupled with an Interest
The Supreme Court reaffirmed that a GPA becomes irrevocable only if it is coupled with an interest in favor of the agent. The mere labeling of a GPA as “irrevocable” does not make it so. The Court held:
“A mere use of the word ‘irrevocable’ in a POA does not make the POA irrevocable. If the POA is not coupled with interest, no extraneous expression can make it irrevocable. At the same time, even if there is no expression to the effect that the POA is irrevocable but the reading of the document indicates that it is a POA coupled with interest, it would be irrevocable.”
Since Saraswathi’s GPA did not explicitly state that it was executed to secure her interest, it was deemed revocable. Consequently, upon Muniyappa’s death, the GPA automatically terminated, rendering Saraswathi’s sale of the property void.
2. An Agreement to Sell Does Not Confer Ownership
The Court further clarified that an agreement to sell does not transfer ownership unless it is followed by a registered sale deed. Citing Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana (2012), the Court reiterated:
“It is a settled law that a transfer of immovable property by way of sale can only be by a deed of conveyance. An agreement to sell is not a conveyance. It is not a document of title or a deed of transfer of property and does not confer ownership rights or title.”
Thus, Saraswathi’s unregistered Agreement to Sell did not grant her or her son any legal title over the property.
3. GPA and Agreement to Sell Read Together Do Not Confer Interest
The appellants argued that the GPA and the Agreement to Sell should be read together to infer an interest in Saraswathi’s favor. The Court rejected this argument, stating that even if the documents were read together, they required registration under Section 17(1)(b) of the Registration Act. In the absence of registration, no ownership rights could be claimed.
Conclusion
The Supreme Court’s decision reaffirms key principles governing property transactions in India:
- A GPA is revocable upon the principal’s death unless it is explicitly coupled with an interest in favor of the agent.
- An unregistered Agreement to Sell does not confer ownership rights.
- Even if a GPA and Agreement to Sell are executed together, they do not transfer ownership unless duly registered.
This ruling serves as a critical reminder that property transactions must adhere to statutory formalities, particularly concerning registration, to ensure legal validity. Parties engaging in property deals should ensure that their documentation is in compliance with the law to avoid legal disputes.
For legal assistance in property transactions, contract law, and other real estate matters, contact August Attorneys LLP, a trusted name in real estate and property law.