General Power of Attorney Holder Can't Claim Ownership Of Property, Must Remit Sale Proceeds To Principal: Delhi High Court
The Delhi High Court has held that a General Power of Attorney (GPA) is an instrument of agency and does not transfer right, title or interest in an immovable property to the attorney holder.
Justice Neena Bansal Krishna made the observation while dismissing an appeal against a decree directing Appellant to pay ₹1,01,78,074 to the legal heirs of his sister-in-law, towards her share of the sale consideration from a property sold through him as her GPA holder.
“A General Power of Attorney is not an instrument of transfer of right, title or interest in an immovable property, but is a document of agency. Even an irrevocable Power of Attorney does not have the effect of transferring title to the attorney,” it held.
The dispute concerned an agricultural land which one Kusum Mehta had jointly purchased with three others in 1985, acquiring a one-fourth undivided share.
In 2011, Appellant sold the property for ₹6,95,11,500 by executing the sale deed as the GPA holder of Kusum and two other co-owners.
Kusum's one-fourth share in the sale consideration came to ₹1,73,77,875. However, Appellant transferred only ₹71,99,801 to her and retained the balance of ₹1,01,78,074. After her death, her daughters initiated proceedings seeking recovery of the remaining amount.
Appellant argued that the property had actually been acquired by him and his wife and that the GPAs executed by Kusum had irrevocably conferred rights upon him.
Rejecting this contention, the High Court observed,
“The two General Powers of Attorney merely empowered the Appellant to look after, manage and supervise the undivided share of Smt. Kusum Mehta in the suit property, and to sell, transfer or gift the same on her behalf. They were not executed for any consideration, and were not coupled with any interest of the Appellant in the suit property.”
Having acted as Kusum's agent and received the sale consideration in that capacity, the Court held, Appellant was bound under Section 218 of the Indian Contract Act, 1872 to pay her the amount received on her account.
The Court also rejected Appellant's claim that the ₹72 lakh deposited into Kusum's account was an interest-free friendly loan rather than part of the sale consideration.
It noted that identical amounts had been deposited into the accounts of the other two co-owners as well.
Calling the loan defence a “moonshine defence”, the Court held that Appellant's admissions were unequivocal and justified the decree under Order XII Rule 6 CPC.
Appearance: Mr. Vikas Tiwari, Advocate for Appellant; Mr. Vikas Arora, Ms. Rashi Priya, Mr. Vansh Arora, Advocates for Respondents
Case title: Bhisham Mehta v. Mrs. Gita Vig & Ors.
Case no.: RFA 645/2022