• Sale of Lease hold rights on the basis of unregistered POA

One Partnership concern, having 5 partners from one family, aquired Lease hold rights on a plot of District Industries Centre in the year 1988, After few years 4 partners of the firm gave an unregistered Notorized Power of Attorney to one partner for transferring the lease hold right to other Person/Body. One Pvt Ltd company purchased the lease hold right in the year 1998 and get it mutuated in Companies  name on the record of District Industries Centre, thereafter got the Map approved from local authority, erected the building on the said plot and applied for a Loan in the Bank.
DIC has issued NOC for creation of Mortgage but Banks Law officer says that Since POA was not registered as such transfer of lease rights of the propety can not be treated as concluded and has raised question regarding creation of a Valid EM giving the example of Hon Supreme Courts verdict in the case of Kishore chandra Singh Deo V/s Babu Ganesh Prasad Bhagar AIR 1954 (SC)316
. Whether law prohibits to create EM on such Property. As far as my knowldge is concern Hon Supreme Court has clearly directives in their judgement in 2011 in the case of Surat lamp & industries Vs State of Hariyana2009 7SCC363, that These transactions are not to be confused or equated with Genurine transactions where the owner of a property grants a power of attorney in favour of family members.
In this case unregistered Power of attorney was given to the family members more over as a partner of Partnership concern they authorized one partner for transferring the rights, further  they all are alive and ready to confirm the sale/transfer executed by one family member cum partner of the unit on their behalf.in the year 1998.
Please advise me the gorunds so that Banks lawyer can be convinced along with the an alternate to make the transaction legal.
Asked 11 months ago in Property Law from Kanpur, Uttar Pradesh
Religion: Hindu
1) registration of power of attorney was not mandatory in 1998 

2) it is only later in 2013 or so that registration of POA was mandatory 

3) POA executed by 4 partners in favour of one partner for transfer of lease hold interest of plot IN DIC would be valid 

4) Further DIC has approved mutation of property in company name 

5) EM can be created on said property . 

6) in the alternative deed of confirmation can be executed by partnership firm in favour of the company 

Ajay Sethi
Advocate, Mumbai
23155 Answers
1216 Consultations
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1) the issue involved in SC judgement was interpretation of word resides. in section 33 of registration act 

SC held that It	contemplates  not  only permanent residence but also temporary  residence.
Residence  only	 connotes  that a person  eats,	 drinks	 and  sleeps at that place and it is-not necessary that he  should   own it.
For  purposes  of s. 32(c) of the Act,	a  power-of-attorney  needs,	in  view of the provisions of s. 33 of the  Act,  no  registration but is only required to be executed before	 and  authenticated  by  the	Registrar.

2)33.Power- of- attorney recognizable for purposes of section 32.-

(1) For the purposes of section 32, the following powers- of- attorney shall alone be recognized, namely:--
(a) if the principal at the time of executing the power- of- attorney resides in any part of 2[ India] in which this Act is for the time being in force, a power- of- attorney executed before and authenticated by the Registrar or Sub- Registrar within whose district or sub- district the principal resides;

3)Registration (Maharashtra Amendment) Act, 2010:

The Registration (Maharashtra Amendment) Act, 2010 effective from 1 April 2013 has resulted in amendment of Section 17 of Registration Act, 1908 I (Act) in sub-section 1 in its application to the State of Maharashtra. As per the said amendment, an Irrevocable Power Attorney relating to transfer of immovable property in any way executed on and after the commencement of Registration (Maharashtra Amendment) Act, 2010 shall be compulsorily registered. Thus, any power granted to a person for sale of immovable property shall necessarily have to be registered with the Sub-Registrar of Assurances, failing which the same cannot be put to use.

The registration of Power of Attorney so far was optional under the Registration Act, 1908. It was only required to be notarized before the Notary Public.
Ajay Sethi
Advocate, Mumbai
23155 Answers
1216 Consultations
5.0 on 5.0
but Banks Law officer says that Since POA was not registered as such transfer of lease rights of the propety can not be treated as concluded and has raised question regarding creation of a Valid EM giving the example of Hon Supreme Courts verdict in the case of Kishore chandra Singh Deo V/s Babu Ganesh Prasad Bhagar AIR 1954 (SC)316

The compulsory registration of power of attorney deed came into force only during 2011 by a settled law by supreme court, hence this is not applicable to this case.  You may approach the higher authority of bank for the reason for rejection and this cannot be a good reason in view of the effective date of supreme court verdict.



Please advise me the gorunds so that Banks lawyer can be convinced along with the an alternate to make the transaction legal.
The panel legal adviser of the bank do not appear to go beyond the supreme court judgement especially he really do not want to go by proper interpretation of the judgement. 
You have to convince him that the notarised transaction took place well before the date of the said ruling.
T Kalaiselvan
Advocate, Vellore
13964 Answers
127 Consultations
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Please provide me the reference in which it is mentioned that Registration of POA was not mandatory in the year 1998 so that I may take up the matter appropriately. Further no comment has been given in the case of Kishore chandra Singh Deo V/s Babu Ganesh Prasad Bhagar AIR 1954 (SC)316 which pertains to the year 19554;


The purpose of relying upon a case law (judgment), is to tell the Judge, look, there is a judgment of High Court / Apex Court, which had dealt with the provision of law / proposition of law, to which we are concerned in the instant case also;. The said High Court / Apex Court had interpreted the law / proposition of law, and have held that ……
 Therefore, in any judgment relied upon, it is imperative for us to find out the discussion and explanation of law / proposition of law set out therein in the judgment, and this needs to be pointed out to the court, as, the law or the proposition of law being laid down in the said judgment.
 



This appeal, by the plaintiff, Tilakdhari Bhagat, is from the concurrent decisions of the courts below, dismissing his suit for setting aside the compromise decree, exhibit B, on the ground of fraud.
The sole question for determination, in the present appeal, is whether the grievance of the appellant that the finding of the court of appeal below that the compromise, exhibit B, was signed by the present plaintiff, then defendant 2 to the previous suit, is really based on a mere comparison of the signature of the plaintiff by the court itself and has been largely and mainly influenced by its own opinion, and, as such, it is not a legal finding which is binding in second appeal, is correct.
T Kalaiselvan
Advocate, Vellore
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127 Consultations
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Firstly, you are misinterpreting the SC judgment in Surat lamp case. Secondly, the registration of GPA as an instrument of transfer in transactions in pre-Surat Lamp case era was mandatory. I am unable to find fault with the legal opinion of the law officer. 
Ashish Davessar
Advocate, Jaipur
18083 Answers
447 Consultations
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1) registration of POA was not mandatory in 1998 . 

2) POA executed by 4 partners in favour of one partner for transfer of lease hold interest of plot IN DIC would be valid 

3) deed of confirmation would suffice 
Ajay Sethi
Advocate, Mumbai
23155 Answers
1216 Consultations
5.0 on 5.0
Each bank will be following their own procedure for granting loan.  If the legal adviser of the bank opines that the POA deed has to be a registered document, then the bank will not over rule the opinion because it is based on the legal opinion as well as the recommendation made by the legal adviser of the bank that the bank decides to grant loan.
The question is not for disputing the validity of the notarised power of attorney deed or to quote the law with regard to the mandatory registration of POA deed.  The question is about getting loan, so if the bank demands the formalities are  to be complied as per their requirement, there is no alternative than to comply them or you may choose another financial institution for loan who may be having a flexible clauses for this purpose.
T Kalaiselvan
Advocate, Vellore
13964 Answers
127 Consultations
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1. There is no conveyance of rights as GPA is not registered. The partnership firm can file a suit for declaration of the sale deed as illegal in the civil court. 

2. The law officers will continue to give a negative report. A fresh sale deed in favour of the company is the only answer.
Ashish Davessar
Advocate, Jaipur
18083 Answers
447 Consultations
5.0 on 5.0

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