• Legal issue regarding GPA/ATS transactions in Delhi (pre-2011) and effect on title & mortgage

Whether the widespread practice prevalent in Delhi prior to the year 2011 of transferring immovable property through General Power of Attorney, Agreement to Sell, Receipt, Affidavit and Will (“GPA/ATS transactions”) ever had the sanction of law to confer ownership or marketable title upon the transferee; or whether such transactions were, even prior to the judgment of the Hon’ble Supreme Court in Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana (2011) 11 SCC 438, legally incapable of transferring title in the absence of a registered conveyance deed under the Transfer of Property Act, 1882, thereby requiring subsequent regularization by payment of proper stamp duty and execution of a registered sale deed to perfect title.

Pursuant thereto, kindly consider and answer the following factual–legal situation:

(a) Person 1 holds valid title to Property ‘X’ by a registered sale deed and transfers the same to Person 2 by a registered sale deed.
(b) Person 2 transfers the property to Person 3 through GPA / Agreement to Sell / Receipt / Affidavit / Will.
(c) Person 3 transfers the property to Person 4 in the same manner.
(d) Person 4 transfers the property to Person 5 in the same manner.
(e) Person 5 transfers the property to Person 6 in the same manner.
(f) Person 6 transfers the property to Person 7 through GPA / Agreement to Sell transactions.
(g) In the year 2006, Person 7 executes a registered sale deed in favour of Person 8.
(h) In the year 2018, Person 8 executes a registered sale deed in favour of Person 9, who thereafter obtains a bank loan by mortgaging Property ‘X’.
(i) Person 9 subsequently defaults in repayment of the bank loan.

In the above chain of transactions, does Person 9 acquire valid and marketable title so as to lawfully mortgage Property ‘X’, and does the bank acquire a legally enforceable mortgage?
Asked 27 days ago in Property Law
Religion: Hindu

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10 Answers

Transfer of property through GPA , will , agreement for sale did not have sanction of law even prior to SC judgment 

 

to confer title you needed registered sale deed 

 

the ninth purchaser did not have clear and marketable title to mortgage the property 

Ajay Sethi
Advocate, Mumbai
100004 Answers
8163 Consultations

Person 9's title is defective since his predecessor in title, that is, Person 3 had no valid title 

Before and after the 2011 judgment the transfers by mode of GPA/Will were not in confirmity with the law

As P9 had no valid title he could not have created a mortgage in favour of the bank 

Even if the bank invokes the security,  there won't be any takers or buyers since the title of the borrower itself is defective 

Yusuf Rampurawala
Advocate, Mumbai
7929 Answers
79 Consultations

The title to the third person is defective because  the agreement to sale  orf the GPA or an affidavit or by a receipt or a Will does not confer title to him, the transfer of this immovable property only by a registered sale deed will confer clear and marketable title to the third person. The judgment though was passed by supreme court in the year 2011, it was based on the existing law only hence the law to transfer the property by a registered document only is an existing law and did not become a law after the passing of the referred judgment. Thus when the title to the third person was ab initio defective, the alleged passing of title subsequently to others in line also renders an invalid or defective title hence none of the persons from third person to the ninth person have a clear and marketable title to the property.

If the bank has granted mortgage loan then the recovery of the loan is the problem of the bank and that of the auction buyer, since the 9th person do not have clear title to the property he cannot claim any benefit towards title or any other privilege in this regard.

This is the legal position.  

T Kalaiselvan
Advocate, Vellore
90202 Answers
2506 Consultations

If person A had been in possession and enjoyment of the property by the virtue of registered title deed then the suit for permanent injunction and declaration to declare the registered transactions by whatever title are null and void and not binding on the plaintiff and a direction to concerned sub registrar to to not entertain any application to encumber the property in any manner and also to remove encumbrances already created.

T Kalaiselvan
Advocate, Vellore
90202 Answers
2506 Consultations

Yes para 9 does it as stated above

Prashant Nayak
Advocate, Mumbai
34680 Answers
249 Consultations

Since A has been in continuous ,unite rioted possession for over 30 years 

  • A suit for Permanent Injunction to protect this possession is maintainable.

  • Mandatory Injunction: A Mandatory Injunction to restrain the defendants from transferring or creating third-party interests is also maintainable to prevent further complications during the pendency of the suit. 
  • Because these documents ) contain false recitals affecting A's possession, a declaration that these documents are not binding on A is maintainable to clear the cloud on A's possessory rights. 

Ajay Sethi
Advocate, Mumbai
100004 Answers
8163 Consultations

In Delhi, the so-called GPA / Agreement to Sell / Will (“GPA/ATS”) transactions never had the sanction of substantive law to transfer ownership or confer marketable title, even before the Supreme Court decision in Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana (2011). That judgment did not create new law; it authoritatively declared the existing legal position under the Transfer of Property Act, 1882 and the Registration Act, 1908.
Under Indian property law, ownership of immovable property of value exceeding ₹100 can be transferred only by a registered conveyance (sale deed). A General Power of Attorney merely authorises acts; it does not transfer title. An Agreement to Sell creates only a contractual right, not ownership. A Will is testamentary and operates only upon death. Therefore, even prior to 2011, GPA/ATS transactions were legally incapable of transferring title. At best, they created possessory or contractual interests, not ownership. What Suraj Lamp did was to put an end to the misuse of such documents as substitutes for sale deeds and clarify that they cannot be treated as conveyances.
Applying this settled law to your factual chain: title validly passed from Person 1 to Person 2 through a registered sale deed. From Person 2 onwards (Persons 3 to 7), the transfers through GPA/ATS documents did not convey ownership. These persons did not acquire legal title; they merely held such rights, if any, as flowed from contract or agency. When Person 7 executed a registered sale deed in 2006 in favour of Person 8, the critical question is whether Person 7 had title to convey. Since Person 7 himself did not derive title through any registered conveyance, he could not pass valid title to Person 8. The principle nemo dat quod non habet (no one can give what he does not have) squarely applies.
Consequently, the registered sale deed of 2006 in favour of Person 8 did not cure the defect in title, because the vendor (Person 7) lacked ownership. The subsequent registered sale deed of 2018 from Person 8 to Person 9 also suffers from the same infirmity. Registration by itself does not validate a sale if the transferor has no title. Therefore, Person 9 does not acquire valid or marketable title to Property ‘X’. As a corollary, the bank, while granting a loan and accepting the property as security, does not acquire a legally enforceable mortgage in rem against the true owner or against the property itself. At best, the bank’s remedy would lie personally against its borrower (Person 9), subject to equities.
Now, coming to the second and equally important aspect concerning Person A’s long possession. Indian law recognises that possession itself is a substantive right, even against a true owner, except by due process of law. Where Person A has been in open, continuous, uninterrupted, settled possession since 1990, and none of Persons 1 to 9 ever took physical possession or dispossessed her in accordance with law, Person A has strong, enforceable possessory rights.
In such circumstances, Person A is fully entitled to maintain a civil suit seeking protection of possession. A decree of permanent injunction restraining interference with peaceful possession is legally maintainable, even against persons claiming paper title. A decree of mandatory injunction restraining further alienation or creation of third-party interests is also maintainable where continued transfers based on disputed or defective documents threaten possession and multiply litigation.
As regards declaratory relief, Person A is not required to seek cancellation of every document in the chain as a party to those transactions. A person in possession, who is not an executant, can seek a declaration that such documents are not binding on her rights and that false recitals of delivery of possession do not affect her settled possession. Courts have repeatedly held that a possessor is entitled to ignore void documents and only seek a declaration to quiet title or protect possession, particularly where documents are being used as a weapon against her.
Independently of declaratory relief, Person A is also entitled to seek protection of her indefeasible possessory right arising from long, open and uninterrupted possession. Even if adverse possession is pleaded only as a shield and not as a sword, the law protects such possession against everyone except a person who establishes better title and recovers possession through due process. If the statutory period has run and the true owner has slept over his rights, the possessory right crystallises into a legally protected interest.
In summary, GPA/ATS transactions never conveyed ownership in law, even prior to 2011. The registered sale deeds executed by persons who themselves lacked title do not confer valid or marketable title on subsequent purchasers. Person 9’s mortgage is legally vulnerable and unenforceable against the property. Person A, being in long, settled possession since 1990, is entitled to maintain a suit for injunction, declaratory protection against non-binding documents, and recognition of her possessory rights, and cannot be dispossessed except by due process of law.

Yuganshu Sharma
Advocate, Delhi
1122 Answers
4 Consultations

No, GPA/ATS never conferred valid title pre-2011 (Suraj Lamp 2011); chain from P2-P7 defective, so P7's 2006 deed (via GPA holder) lacks root title, rendering P8/P9's deeds/mortgage invalid—bank's charge unenforceable. Person A (possessor since 1990) can succeed in suit for injunction/declaration voiding paper chain docs (false possession recitals) and possessory title protection.

Shubham Goyal
Advocate, Delhi
2219 Answers
17 Consultations

Are you an advocate ?

A can maintain such a suit 

Seek a declaration that A has perfected her title by adverse possession/prescription 

Above would be the main prayer and then all other consequential reliefs can be sought 

Yusuf Rampurawala
Advocate, Mumbai
7929 Answers
79 Consultations

Person 9 does not acquire valid title and mortgage is void ab initio ; 

Prayers need to be fine tuned 

Gaurav Ahuja
Advocate, Faridabad
154 Answers

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