ONLY ‘GPA SALES’ AND SUCH TRANSFERS ARE BANNED AND NOT LEGALLY VALID GPA

SRIDHARA BABU. N ADVOCATE TUMKUR http://www.sridharababu.weebly.com sridharababu1234@gmail.com PH:9880339764

SURAJ LAMP INDUSTRIES PVT. LTD. V. STATE OF HARYANA AND ANR. 2012 (1) SCC 656 By Justice R.V. Raveendran and Justice A.K. Patnaik, Justice H.L. Gokhale.

FACTUAL BACK GROUND OF THE CASE:- By an earlier order dated 15.5.2009 [reported in Suraj Lamp Industries Pvt.Ltd. vs. State of Haryana and Anr. - 2009 (7) SCC 363] the factual back ground of the case is being elicited as follows:- In para 2 of the order, court says “The petitioner, a company
incorporated under the Companies Act, claims that one Ramnath and his family members sold two and half acres of land in Wazirabad village, Gurgoan to them by means of an agreement of sale, General Power of Attorney (for short `GPA') and a will in the year 1991 for a consideration of Rs.716,695/-. It is further alleged that the petitioner verbally agreed to sell a part of the said property measuring one acre to one Dharamvir of proceeding with the Yadav for Rs.60 lakhs in December 1996. It is stated that the said Dharamvir Yadav, and his son Mohit Yadav (an ex MLA and Minister), instead transaction members GPA with and in 1997 got a GPA the petitioner, directly got in touch with Ramanath and his family in favour of Dharamvir Yadav in regard

to the entire two and half acres executed and registered and illegally cancelled the earlier in favour of petitioner. The petitioner claims that when its Director, S.K. Chandak, confronted Dharamvir Yadav in the year 1999 this behalf, the said Yadav apologized and issued a cheque for Rs.10 lakhs towards part payment and agreed to pay the balance of Rs.50 lakhs shortly but that the said cheque was dishonoured necessitating a complaint under section 138 of the Negotiable 2001, Instrument petitioner Act, being lodged filed a against criminal Dharamvir Yadav which is pending in a criminal court at Patiala House, New Delhi. It is further alleged that in the year complaint against Ramanath and members of his family who executed the sale agreement/ GPA/will in favour of the petitioner and another complaint against Dharambir Yadav and his son in the District Court, Gurgoan, for offences punishable under sections 406, 420, 467,

468, 471 and 120B of IPC. The petitioner claims that in December 2005 it lodged an FIR in respect of offences under Sec. 406,467,468,471 and 120B of IPC against all of them.”

In para 4 of the order, court says “………..The

issue

to be addressed is

avoidance of execution and registration of deeds of conveyance as the mode of transfer of freehold immovable property by increasing tendency to adopt `Power of Attorney Sales', that is execution of sale agreement/ general deeds This method of conveyance, adopted has on the power of attorney/will (for short `SA-GPA-Will transactions') instead of execution and registration of regular receiving full consideration. following variants: (i)Execution of an agreement of sale, one or two powers of attorney, with or without a will, all unregistered. (ii)Execution of an agreement of sale, power/s of attorney and will, registering either all of them, or any two of them, or any one of them.” In para 5 of the order, court says “The a method `Power of Attorney Sales' by the of flats. to an allottee, as

of `transfer' was evolved by lawyers and document writers in Delhi It is any (for short `DDA'). DDA by constructing a flat had undertaken

Delhi, to overcome certain restrictions on transfer of flats Development Authority large stated transfer scale that of when development

DDA allotted

the assignment by the allottee required the permission of DDA value/sale price

and such permission was granted only on payment to DDA of the `unearned increase', that is the difference between the market and the original cost of allotment. To avoid the cumbersome procedure in obtaining permission and to avoid payment of the huge part of the price to the DDA as unearned increase, a hybrid system was evolved whereby the allottee/holder of the flat, on receiving would deliver following documents : (a) An Agreement of sale confirming the terms of the sale, delivery of possession and payment of full consideration and undertaking to execute any document when required in future. the agreed consideration the possession of the flat to the purchaser and execute the

(b) An Irrevocable General Power of Attorney in favour of the purchaser or his nominee authorizing him to manage, deal with and dispose of the property without reference to the vendor. (c) A will bequeathing the property to the purchaser as safeguard against the consequences of death of the vendor before transfer.” In para 6 of the order, court says “The `Power of Attorney Sales', as noticed above was adopted to overcome the restrictions/prohibitions in irregular right, and illegal title being terms of allotment and the rules of allotment of DDA governing the allotment of flats. Such transactions were obviously contrary registered to deed of conveyance, no the rules and terms of allotment. Further, in the absence of a or interest in an

immovable property could be transferred to the purchaser. However, the Delhi High Court in a few cases accepted such `Power of Attorney Sales' as creating an `interest' in the DDA flat which was so `transferred' and consequently, protected such interest of the purchaser by issuing injunctions or decrees preventing the vendor from further dealing with the property. This led to a general impression the `Power of Attorney Sales' were purpose valid DDA recognized prohibiting modes of transfer and the very transfers and requiring permission on

payment of certain difference in price was defeated by this process.” In para 14 of the order, court says “We therefore request the Solicitor General to appear in the matter and give suggestions on behalf of Union of India. We also direct notice to the States of Punjab, Haryana, Delhi, Uttar Pradesh and Maharashtra (represented by their respective Chief Secretary/ Revenue Secretary) to consider the following issues: (a)Whether `power of attorney sales' (that is transactions execution of prevalent in their respective states? (b)What are the views of the respective state government in respect of such transactions? (c)What steps have been taken and/or proposed to be taken by the respective states to deal with the chaotic situation and confusion arising from such transactions? involving Sale Agreement/GPA/Will) instead of regular sales is

MY PERSONAL OPINION:- It can be seen from the above facts that “GPA Sales” in the form of execution of un-registered sale agreement coupled with registered or un-registered GPA/Will is encouraging Black Money transactions and creating so many litigations and land mafia. Such transactions are prevalent in the states which were issued notice by the supreme court. So the issue before the court is “GPA Sales” and not as such execution of legally valid GPA.

Later Judgment pronounced by same bench in Suraj Lamp Industries Pvt.Ltd. vs. State of Haryana and Anr. – Reported in 2012 (1) SCC 656 stated in clear words, In para 2 of the judgment, court says “These transactions are not to be confused or equated with genuine transactions where the owner of a property grants a power of Attorney in favour of a family member or friend to manage or sell his property, as he is not able to manage the property or execute the sale, personally. These are transactions, where a purchaser pays the full price, but instead of getting a deed of conveyance gets a SA/GPA/WILL as a mode of transfer, either at the instance of the vendor or at his own instance.” In para 19 of the judgment, court says “We make it clear that our

observations are not intended to in any way affect the validity of sale agreements and powers of attorney executed in genuine transactions. For example, a person may give a power of attorney to his spouse, son, daughter, brother, sister or a relative to manage his affairs or to execute a deed of conveyance. A person may enter into a development agreement with a land developer or builder for developing the land either by forming plots or by constructing apartment buildings and in that behalf execute an agreement of sale and grant a Power of Attorney empowering the developer to execute agreements of sale or conveyances in regard to individual plots of land or undivided shares in the land relating to apartments in favour of prospective purchasers. In several States, the

execution of such development agreements and powers of attorney are already regulated by law and subjected to specific stamp duty. Our observations regarding `SA/GPA/WILL transactions' are not intended to apply to such bonafide/genuine transactions. In para 2 and 5 of the judgment, court observes:- When parties resort to `SA/GPA/Will transfers', the adverse effect is not only loss of revenue (stamp duty and registration charges) but the greater danger of generation of `black' money. These transactions are not to be confused or equated with genuine transactions where the owner of a property grants a power of Attorney in favour of a family member or friend to manage or sell his property, as he is not able to manage the property or execute the sale, personally. These are transactions, where a purchaser pays the full price, but instead of getting a deed of conveyance gets a SA/GPA/WILL as a mode of transfer, either at the instance of the vendor or at his own instance. In para 5 and 10 of the judgment, court observes:- A high rate of stamp duty acts as a damper for execution of deeds of conveyance for full value and encourages SA/GPA/Will transfers. Reducing the stamp duty on conveyance to realistic levels will encourage public to disclose the maximum sale value and have the sale deeds registered. Though the reduction of the stamp duty, may result in an immediate reduction in the revenue by way of stamp duty, in the long run it will be advantageous for two reasons: (i) parties will be encouraged to execute registered deeds of conveyance/sale deeds without any under valuation, instead of entering into SA/GPA/WILL transactions; and (ii) more and more sale transactions will be done by way of duly registered sale deeds, disclosing the entire sale consideration thereby reducing the generation of black money to a large extent. Registration of documents also makes the process of verification and certification of title easier and simpler. Further, it reduces disputes and litigations to a large extent. SCOPE OF AGREEMENT OF SALE: In para 11 and 12 of the judgment, court observes:- Section 54 of TP Act makes it clear that a contract of sale, that is, an agreement of sale, does not, of

itself, create any interest in or charge on such property. A transfer of immoveable property by way of sale can only be by a deed of conveyance (sale deed). In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immoveable property can be transferred. Any contract of sale (agreement to sell) which is not a registered deed of conveyance (deed of sale) would fall short of the requirements of ss. 54 and 55 of TP Act and will not confer any title nor transfer any interest in an immovable property (except to the limited right granted under section 53A of TP Act). According to TP Act, an agreement of sale, whether with possession or without possession, is not a conveyance.*
*RELIED ON Narandas Karsondas v. S.A. Kamtam and Anr. 1977 (2)SCR341= (1977) 3 SCC 247; Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra 2004 (3) Suppl. SCR 817=2004 (8) SCC 614 -

SCOPE OF POWER OF ATTORNEY: In para 13 of the judgment, court observes:- A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. It is creation of an agency whereby the grantor authorizes the grantee to do the acts specified therein, on behalf of grantor, which when executed will be binding on the grantor as if done by him (ss.1A and 2 of the Powers of Attorney Act, 1882). It is revocable or terminable at any time unless it is made irrevocable in a manner known to law. Even an irrevocable power of attorney does not have the effect of transferring title to the grantee. An attorney holder may however execute a deed of conveyance in exercise of the power granted under the power of attorney and convey title on behalf of the grantor.*
*RELIED ON:- State of Rajasthan vs. Basant Nehata - 2005 (3) Suppl. SCR 1 =2005 (12) SCC 77

SCOPE OF WILL: In para 14 of the judgment, court observes:- A will is the testament of the testator. It is a posthumous disposition of the estate of the testator directing distribution of his estate upon his death. It is not a transfer inter vivos. The two essential characteristics of a will are that it is intended to come into effect

only after the death of the testator and is revocable at any time during the life time of the testator. If the testator, who is not married, marries after making the will, by operation of law, the will stands revoked. (ss.69 and 70 of Succession Act, 1925). Registration of a will does not make it any more effective. In para 15 of the judgment, court observes:Therefore, a SA/GPA/WILL

transaction does not convey any title nor create any interest in an immovable property. The observations by the Delhi High Court, in Asha M. Jain's case*, while dealing with transactions by way of SA/GPA/WILL, that the "concept of power of attorney sales have been recognized as a mode of transaction" are unwarranted and not justified, unintendedly misleading the general public into thinking that SA/GPA/Will transactions are some kind of a recognized or accepted mode of transfer and that it can be a valid substitute for a sale deed. Such decisions to the extent they recognize or accept SA/GPA/WILL transactions as concluded transfers, as contrasted from an agreement to transfer, are not good law.
*Asha M. Jain v. Canara Bank - 94 (2001) DLT 841 - disapproved.

In para 16 of the judgment, court observes:- Immovable property can be legally and lawfully transferred/conveyed only by a registered deed of conveyance. Transactions of the nature of `GPA sales' or `SA/GPA/WILL transfers' do not convey title and do not amount to transfer, nor can they be recognized as valid mode of transfer of immoveable property. The courts will not treat such transactions as completed or concluded transfers or as conveyances, as they neither convey title nor create any interest in an immovable property. They cannot be recognized as deeds of title, except to the limited extent of s. 53A of the TP Act. Such transactions cannot be relied upon or made the basis for mutations in Municipal or Revenue Records. This will apply not only to deeds of conveyance in regard to freehold property but also to transfer of leasehold property. A lease can be validly transferred only under a registered Assignment of Lease. It is time that an end is put to the pernicious practice of SA/GPA/WILL transactions known as GPA sales.

In para 18 of the judgment, court observes:-

SA/GPA/WILL transactions

can continue to be treated as existing agreement of sale. Parties concerned may get registered the deeds of conveyance to complete their title. The `SA/GPA/WILL transactions' may also be used to obtain specific performance or to defend possession u/s 53A of TP Act. If they are entered before this day, they may be relied upon to apply for regularization of allotments/leases by Development Authorities. It is made clear that if the documents relating to `SA/GPA/WILL transactions' have been accepted and acted upon by DDA or other developmental authorities or by the Municipal or revenue authorities to effect mutation, they need not be disturbed, merely on account of this decision. ON THE POINT OF RELEVANCY AND SCOPE OF GPA:THE ABOVE CASE RELIES ON THE JUDGEMENT OF SUPREME COURT IN State of Rajasthan & Ors. VS Basant Nahata Reported in AIR 2005 SC 3401, 2005 (3) Suppl. SCR 1 , 2005(12) SCC 77 By Justice Ashok Bhan & Justice S.B. Sinha

FACTS OF THE CASE:- The Respondent herein is a resident of town of Bikaner. He was a Khatedar tenant of agricultural lands situated at Chak No. 13 KYD, Square No. 110/24, Killa No. 1 to 25 Bighas, Tehsil Khajuwala, District Bikaner. He appointed one Sukhdeo Singh as his attorney authorizing him to look after his lands, cultivate the same and to do all other acts, deeds and things including mortgage or sell the same, get the requisite deeds and documents registered, by a deed of Power Of Attorney dated 16.7.1999. The said deed was presented before the Sub-Registrar, Bikaner on 30.7.1999 for the purpose of registration which was refused by making an endorsement on the document that the same could not be registered in terms of the Government Notification dated 26.3.1999 published in the Rajasthan Gazette dated 1.4.1999 as amended on 22.4.1999 whereby and where under registration of such documents have been prohibited as being 'opposed to public policy'. The said notifications were said to have been issued by the State of Rajasthan in exercise of its power conferred upon it under Section 22-A of the Act. The Respondent herein questioned the constitutionality of Section 22- A of the Act as inserted by the legislature of Rajasthan as also the aforementioned notifications by filing a writ petition before the Rajasthan High Court. By reason of the impugned judgment the Rajasthan High Court declared Section 22-A of the Act as inserted by the Rajasthan Amendment Act, 1976 being Act No. 16 of 1976 as unconstitutional and consequently the notifications as contained in annexures 3, 4, 6 and 7 of the writ petition were also quashed. The Sub-Registrar was also directed to register the power of attorney dated 16.7.1999 which was presented on 30.7.1999 within two weeks from the date of presentation of the copy of the order. The state of Rajasthan filed its appeal before Supreme court which was dismissed.

NOTICE GIVEN TO KARNATAKA GOVERNMENT:- Supreme Court while hearing the matter “having regard to the fact that similar amendments have been carried out by the other States and would have wide repercussions directed issuance of notice to the States of Bihar, Gujarat, Karnataka, Maharashtra and Meghalaya. Pursuant to the said directions, the intervenor States including the States of Maharashtra, Gujarat, Jharkhand, Meghalaya, etc. appeared and made their submissions.” Supreme court observed that:- Essential functions of the legislature cannot be delegated and it must be judged with touchstone of Article 14 and Article 246 of the Constitution of India. It is, thus, only the ancillary and procedural powers which can be delegated and not the essential legislative point. The contention raised on behalf of the Appellants herein that the State, being higher authority, having been delegated with the power of making declaration in terms of Section 22-A of the Act, would not be abused is stated to be rejected. Such a question does not arise herein as the provision has been held to be ultra vires Articles 14 and 246 of the Constitution of India. The contention raised to the effect that this Court would not interfere with the policy decision is again devoid of any merit. A legislative policy must conform to the provisions of the constitutional mandates. Even otherwise a policy decision can be subjected to judicial review. [30-c-d-e]*
*Referred to :- Cellular Operators Association of India and Ors. v. Union of India and Ors., [2003] 3 SCC 186 and Clariant International Ltd. and Anr. v. Securities and Exchange Board of India, [2004] 8 SCC 524

Supreme court observed that:- A doctrine which is so vague or uncertain cannot and does not provide any guideline whatsoever. Furthermore, the executive while making a subordinate legislation cannot be permitted to open new heads of public policy in its whims. Towards opposed to public policy, therefore, do not lay down any guidelines to render it constitutional. Execution of power of attorney per se is not invalid. On the other hand, it is lawful. A transaction between two persons capable of entering into a contract which does not contravene any statute would be valid in law. The State of Rajasthan does not make such transactions illegal. The Indian Contract Act or

the Power of Attorney Act has not been amended. Execution of a power of attorney per se, therefore, is not illegal. Registration of power of attorney except in cases falling under Section 17(1)(g) or 17(1)(h) is not compulsorily registrable. Sections 32 and 33 of the India Registration Act also do not bar any such registration. The Act only strikes at the documents and not at the transactions. The whole aim of the Act is to govern documents and not the transactions embodied therein. Thereby only the notice of the public is drawn. [26-g-h; 27-a; 28-a-b-c-d]*
Referred to:- M.E. Moolla Sons, Ltd. (in Liquidation) v. Official Assignee, Rangoon and Ors., AIR (1936) PC 230, K. Panchapagesa Ayyar and Anr. v. K. Kalyanasundaram Ayyar and Ors., AIR (1957) MADRAS 472 and Syed Abdullah Sahib v. Syed Rahmatulla Sahib alias Baji Sahib and Ors., AIR (1960) MADRAS 274,

IN KARNATAKA Justice B Padmaraj, Justice V Jagannathan a Division bench of Karnataka High Court in the case of D. Pavanesh vs The State Of Karnataka Reported in AIR 2006 Kant 97, ILR 2006 KAR 861, 2006 (2) KarLJ 396
FACTS OF THE CASE:- The petitioner is a practicing advocate in Bangalore. He also claims to be a public spirited person having faith in the rule of law and rendering great social and legal service by espousing causes of public nature. He has filed this writ petition under Articles 226 and 227 of the Constitution by way of public interest litigation with the prayer for issue of a writ of certiorari quashing the impugned Notification dated 23-4-2005 bearing No. RD 174 MUNOMU 2005 issued by the 4th Respondent vide Annexure-A and the consequent Circular dated 23-8-2005 bearing No. RD 174 MUNOMU 2005 issued by the 5th respondent as per Annexure-B. The Government of Karnataka has issued a Notification classifying the registration of certain documents as opposed to public policy dated 23-4-2005 which is as per Annexure-A. The Government of Karnataka has also issued a Circular dated 23-8-2005 in pursuance of the earlier notification dated 23-4-2005 which is at Annexure-B. The petitioner has presented this writ petition challenging the said notification and circular issued by the Government of Karnataka in banning registration of certain documents. It is stated that the registration of various deeds of conveyance were being carried out in the various parts of the State of Karnataka as per the provisions of the Registration Act and the Rules made thereunder. The Government of Karnataka has issued a notification dated 23.4.2005 classifying registration of certain documents as opposed to public policy and it has also issued another circular dated 23.8.2005 in pursuance of the earlier notification dated 23.4.2005, issuing certain clarifications. It is the case of the petitioner that such action on the part of the State Government is opposed to public policy and the interest of the public. The Government of Karnataka has issued a

notification dated 23-4-2005 in exercise of its powers under Section 22-A of the Registration Act, 1908, as amended by the Karnataka Act 55 of 1976 which is at Annexure-A to the writ petition.

In Para 7 of the above Judgement of Karnataka High Court it is clearly quoted the case law of Supreme court held in the case of State of Rajasthan & Ors. VS Basant Nahata Reported in AIR 2005 SC 3401, 2005 (3) Suppl. SCR 1 2005(12) SCC 77 HIGH COURT QUOTES PARA 54, 55, 59, 60, 61, 63 TO 68 of the Supreme court Judgment ,

54. We have noticed hereinbefore that the State of Rajasthan inserted Section 17(1)(f) and (g) in the Act making the registration of agreement to sale and irrevocable power of attorney relating to transfer of immovable property in any way of compulsorily registrable document. The State went further to amend Article 23 of the Second Schedule of the Stamp Act, 1899 making an agreement to sale of immovable property and irrevocable power of attorney or any other instrument executed in the course of conveyance etc. with possession to be deemed to be a conveyance and stamp duty is chargeable thereon accordingly. According to the State, despite such enactments, sales were being made by seller on the basis of a power of attorney with a right to sell the property and such powers of attorney were being executed for an unspecified period. A transaction between two persons capable of entering in to a contract which does not contravene any statute would be valid in law. The State of Rajasthan does not make such transactions illegal. The Indian Contract Act or the Power of Attorney Act have not been amended. Execution of a power of attorney per se, therefore, is not illegal. Registration of power of attorney except in cases falling under Section 17(1)(g) or 17(1)(h) is not compulsorily registrable. Sections 32 and 33 of the Indian Registration Act also do not bar any such registration. 55. The Act only strikes at the documents and not at the transactions. The whole aim of the Act is to govern documents and not the transactions embodied therein. Thereby only the notice of the public is drawn. 59. Hence, Section 22-A of the Act through a subordinate legislation cannot control the transactions, which fall out of the scope thereof. 60. We have noticed hereinbefore the effect of a power of attorney under the Indian Contract Act or the Power of Attorney Act. A subordinate legislation which is not backed up by any statutory guideline under the substantive law and opposed to the enforcement of a legal right, in our opinion, thus, would not be valid. 61. The question can be considered from another angle. A person may not have any near relative or is otherwise unable to attend the office of the Sub-Registrar or Registrar within whose jurisdictions the property is situated. He may even be out of the country. In absence of any substantive

provisions contained in a parliamentary or legislative act, he cannot be refrained from dealing with his property in any manner he likes. Such statutory interdict would be opposed to one's right of property as envisaged under Section 300-A of the Constitution of India. 63. Hence, it becomes amply clear that it is not possible to define Public policy with precision at any point of time. It is not for the executive to fill these gray areas as the said power rests with judiciary. Whenever interpretation of the concept "public policy" is required to be considered it is for the judiciary to do so and in doing so even the power of the judiciary is very limited. 64. Even for the said purpose, the part dealing with public policy in Section 23 of the Indian Contract Act is required to be construed in conjunction with other parts thereof. 65. A further question which arises is whether having regard to the doctrine of separation of powers what is essentially within the exclusive domain of the judiciary can be delegated to the executive unless policy behind the same is finally laid down. 66. A thing which itself is so uncertain cannot be a guideline for any thing or cannot be said to be providing sufficient frame work for the executive to work under it. Essential functions of the legislature cannot be delegated and it must be judged with touchstone of Article 14 and Article 246 of the Constitution of India. It is, thus, only the ancillary and procedural powers which can be delegated and not the essential legislative point. 67. The contention raised on behalf of the Appellants herein that the State, being higher authority, having been delegated with the power of making declaration in terms of Section 22-A of the Act, would not be abused is stated to be rejected. Such a question does not arise herein as the provision has been held to be ultra vires Articles 14 and 246 of the Constitution of India. 68. The contention raised to the effect that this Court would not interfere with the policy decision is again devoid of any merit. A legislative policy must conform to the provisions of the constitutional mandates. Even otherwise a policy decision can be subjected to judicial review.

HIGH COURT HELD THAT:- Having given our anxious consideration to the entire matter in issue, we find that the question involved in the instant writ petition is no longer res integra and on the other hand it is squarely covered by the aforesaid decision of the Apex Court. Having regard to the law laid down by the Hon'ble Supreme Court in the above cited decision, the impugned notification at Annexure-A and the consequent Circular at Annexure-B cannot be sustained in law and they are liable to be quashed.

MY PERSONAL OPINION:- In view of above decisions the GPA transactions done in genuine cases are not banned either by Supreme court or through amendment of law. The Supreme court’s observations are not applicable to Karnataka’s genuine transactions of GPA, if it is so it might have issued notice to Karnataka Government eliciting its reply as done in 2005 case. The genuine transactions of GPA disclosing sale amount, with registered sale agreements and paying appropriate stamp duty as per law prevailing in Karnataka can be done provided it does not violate any statutory rule.
GENERAL POWER OF ATTORNEY AS DISCUSSED IN CRIMINAL CASE 2009 SC JUSTICE Arijit Pasayat, JUSTICE Lokeshwar Singh Panta, JUSTICE P. Sathasivam of Supreme court of India in the case of CHAMAN LAL & ORS. VS STATE OF PUNJAB & ANR. Reported in AIR 2009 SC 2972 , 2009(11) SCC 721 FACTS OF THE CASE:- In February, 1987 the complainant and his five family members executed General Power of Attorney (in short the `GPA') at Canada in favour of Manvinder Singh and subsequently the said GPA was registered with the Commissioner of Ferozepur, Punjab. The GPA stated that the GPA holder can do anything on behalf of the complainant which he can lawfully do. The GPA does not contain any condition or restriction. In August, 1989 the GPA holder met the appellants with a proposal to sell a plot of land of the complainant admeasuring 4840 square yards comprised in Khasra No. 1085 situated at Village Barewal Awana, Ludhiana. The GPA holder demanded a price of Rs.5 lakhs for the said property. On 4.10.1989 the appellants by an oral agreement-agreed to purchase the said property and paid Rs.1 lakh by way of four demand drafts to the GPA holder. On 4.10.1989 the appellants by an oral agreement-agreed to purchase the said property and paid Rs.1 lakh by way of four demand drafts to the GPA holder. On 7.11.1989 the aforesaid oral agreement was reduced into writing and the balance sum of Rs.4 lakh was also paid (Rs.1 lakh in cash and Rs.3 lakhs by bank drafts). Upon receipt of entire consideration, the GPA holder executed four SPAs in favour of appellant Nos.1 (Chaman Lal) 2 (Daljander Kaur) 3 (Narinder Kaur) and 7 (Balwant Singh). On 5.12.1989 by virtue of the aforesaid 5 SPAs dated 7.11.1989 appellant Nos.1, 2, 3 & 7 executed and registered 5 sale deeds in favour of appellant Nos.2 to 6. In the middle of December, 1989 the appellants suddenly came to know that the complainant had filed a suit No.120/89 dated 28.11.1989 against Petitioner Nos.1, 2, 3 and 7 for declaration that the said GPA holder (Manvinder Singh) had no authority to sell the said property and/or to permanently alienate and dispose of the said property. The appellants also came to know that in the said suit for declaration, an ex-parte injunction order/status quo was granted on 02.12.1989, though the appellants in the absence of knowledge- of such ex-parte injunction order had already executed the sale-deeds and got them registered on 05.12.1989.

On 14.06.1990 the learned Senior Subordinate Judge passed an order in the aforesaid suit, restraining the appellants from dispossessing the complainant from the said property and to maintain status quo with regard to ownership of the said property pending disposal of the suit, whereas in fact the appellants were already in possession of the said property since 07.11.1989. On 20.8.1990 and 21.11.1990 the appellants preferred an Appeal No. 274/67 in the Court of the learned Additional District Judge, Ludhiana praying, inter alia, to maintain the status quo with regard to the ownership and possession of the said property and vide order dated 21.11.1990, the parties were ordered, during pendency of the main suit, to maintain status quo with regard to ownership and possession of the property. On 30.6.1995 the complainant lodged a complaint with the Deputy Commissioner, Ludhiana - Shri S.S. Channi, I.A.S., who summoned the appellants at his residence and asked them to cancel the sale-deeds and concede to the claim of the complainant in the civil suit. The Commissioner also threatened the appellants with dire consequences by implicating them in false criminal cases. The said officer is related to the complainant. On 31.08.1995 after a period of about 6 years, on a complaint lodged by the complainant, an FIR No. 183, Police Station Division No.5 District Ludhiana was registered only against Shri Sadhu Singh, Naib Tehsildar, Ludhiana and Shri Banta Singh, Patwari of Village Barewal Awana under Sections 420, 468,, 471, 120 B IPC. On 13.3.1996 on application of the complainant, an inquiry was initiated and marked to the SP City, Ludhiana. On 29.5.1996 the SP City, Ludhiana submitted his Report to the SSP, Ludhiana stating therein that the FIR was the handiwork to pressurize the appellants and further that no such offence had been committed by the appellants. On 14.10.1996 despite the aforesaid report of the SP City, Ludhiana and in spite of the note of the A.D.A. (Legal) that no criminal case was made out against the appellants, a charge sheet under Section 173 Cr.P.C. was filed against the appellants for commission of alleged offences under Sections 420, 468, 467, 471,120B IPC. On 11.12.1999 the Ld. ACJM, Ludhiana framed charges under Sections 120B read with Section 409 IPC and under Sections 120B/420 IPC against the appellants. The appellants preferred a Criminal Revision No. 512 of 2000 in the Punjab & Haryana High Court challenging the maintainability of the charges framed against them and the learned Single Judge of the High Court dismissed the prayer of the appellants by the impugned order holding that there was sufficient ground to presume that the unrebutted evidence of the complainant constitute triable offences. HIGH COURT OBSERVATIONS:- The High Court has found that the acts are not in dispute, the power of attorney is the central document in the case. The High Court noted that significantly, too many details of the property in respect of which it was executed were missing. The High Court observed that the power of attorney was embossed with the stamp of Commissioner, Firozepur on 19th March, 1987 prima facie on making it a valid document. But nevertheless a plain reading of the power of attorney leaves one with the

uncertain feeling as regards its true import. The High Court observed that it is possible that the appellants were duped by the attorney who had known that his power has been revoked but concealed the fact. Thereafter having coming to this conclusion the High Court noted as follows: “Such an argument could have been validly advanced by the petitioners to establish their bonafides if the power of attorney itself had mentioned the details of the property in dispute and had also mentioned specifically that the attorney had the power to alienate the property through sale, mortgage and lease etc. The petitioners must have examined the document because it was from the document that the power to enter into the agreement to sell had come to vest in Manvinder Singh. If even after examining the document the petitioners went ahead with the transaction they did so at their own peril. They lacked bonafides and were out to deprive the owner of his property by a series of transactions.” SUPREME COURT HELD THAT:- “We are in agreement with the view expressed by the High Court. However, we make it clear that the observations made by the High Court while dismissing the petition before it shall not be considered to be conclusive and determined. It has been rightly noted that Manvinder accepted the factum of cancellation but thereafter executed the special power of attorney.”

STAMP DUTY AMENDMENT TO TAX GPA DEED WITH STAMPO DUTY WHEN IT IS MADE WITHOUT CONSIDERATION IS VALID 2012 SC

Justice R.M. Lodha, and Justice H.L. Gokhale in the case of State Of

M.P. vs Rakesh Kohli & Anr. Decided on 11 May, 2012
FACTS OF THE CASE:- Two writ petitions came to be filed before the Madhya Pradesh High Court. In both writ petitions initially it was prayed that Clauses (f) and (f-1), Article 48, Schedule 1- A brought in the 1899 Act by Section 3 of the Indian Stamp (Madhya Pradesh Amendment) Act, 1997 (for short, ‘M.P. 1997 Act’) be declared ultra vires. During the pendency of these petitions, the 1899 Act as applicable to Madhya Pradesh was further amended by the M.P. 2002 Act. The respondents, referred to as writ petitioners, amended their writ petitions and prayed that Clause (d), Article 45 of Schedule 1-A of the 1899 Act as substituted by M.P. 2002 Act be declared ultra vires. The writ petitioners set up the case that original Article 48 of the 1899 Act, Schedule 1-A prescribed stamp duty payable at Rs. 10/- if attorney was appointed for a single transaction. By M.P. 1997 Act, Article 48 Clause (f) was substituted by Clauses (f) and (f-1). Clause (f-1) provided that where power of attorney was executed without consideration in favour of person who is not his or her spouse or children or mother or father and authorizes him to sell or transfer any immovable property, the stamp duty would be leviable as if the transaction is conveyance under Article 23. Explanation II

inserted by M.P. 1997 Act provided that where under Clauses (f) and (f-1), duty had been paid on the power of attorney and a conveyance relating to that property was executed in pursuance of power of attorney between the executant of the power of attorney and the person in whose favour it was executed, the duty on conveyance should be the duty calculated on the market value of the property reduced by duty paid on the power of attorney. By M.P. 2002 Act, stamp duty relating to power of attorney has been prescribed in Article 45 of Schedule 1-A. Clause (d) thereof prescribes stamp duty at two per cent on the market value of the property which is subject matter of power of attorney when power of attorney is given without consideration to a person other than father, mother, wife or husband, son or daughter, brother or sister in relation to the executant and authorizing such person to sell immovable property situated in Madhya Pradesh. HIGH COURT HELD THAT:- The Division Bench of the High Court has accepted the constitutional challenge to Clause (d), Article 45 of Schedule 1-A brought in the 1899 Act by M.P. 2002 Act and held that the said provision was violative of Article 14 of the Constitution of India. SUPREME COURT HELD THAT:- By creating two categories, namely, an agent who is a blood relation, i.e. father, mother, wife or husband, son or daughter, brother or sister and an agent other than the kith and kin, without consideration, the Legislature has sought to curb inappropriate mode of transfer of immovable properties. Ordinarily, where executant himself is unable, for any reason, to execute the document, he would appoint his kith and kin as his power of attorney to complete the transaction on his behalf. If one does not have any kith or kin who he can appoint as power of attorney, he may execute the conveyance himself. The legislative idea behind Clause (d), Article 45 of Schedule 1-A is to curb tendency of transferring immovable properties through power of attorney and inappropriate documentation. By making a provision like this, the State Government has sought to collect stamp duty on such indirect and inappropriate mode of transfer by providing that power of attorney given to a person other than kith or kin, without consideration, authorizing such person to sell immovable property situated in Madhya Pradesh will attract stamp duty at two per cent on the market value of the property which is subject matter of power of attorney. In effect, by bringing in this law, the Madhya Pradesh State Legislature has sought to levy stamp duty on such ostensible document, the real intention of which is the transfer of immovable property. The classification, thus, cannot be said to be without any rationale. It has a direct nexus to the object of the 1899 Act. The conclusion of the High Court, therefore, that the impugned

provision

is

arbitrary,

unreasonable

and

irrational

is

unsustainable.

Consequently, these appeals are allowed and the judgment of the Madhya Pradesh High Court passed on September 15, 2003 is set aside.
OTHER IMPORANT CASE LAW ON THE MATTER
1. EVEN AFTER EXECUTING A POWER OF ATTORNEY THE PRINCIPAL CAN ACT ON HIS OWN 2011 SC
DEB RATAN BISWAS & ORS .Vs. MOST. ANAND MOYI DEVI & ORS JUDGEMENT, POWER OF ATTORNEY -EXECUTION PRINCIPAL -POWER Citation(s) 2011 AIR 1653 = 2011 SCR 303 = 2011 (4 ) JT 244 = 2011 (4 ) SCALE 656

The trial court rightly held that `S' was only an attorney and he cannot claim any independent capacity in the proceedings. The principal `P' and `A' signed the compromise for partition of the property, which in law amounts to implied revocation of power of attorney in favour of `S' vide Illustration to Section 207 of the Indian Contract Act. `P' and `A' cannot be allowed to say that their own act of signing the compromise petition was collusive and fraudulent. [Para 9] The High Court observed that `P' and `A' should have consulted the power of attorney `S' before signing the compromise petition. This is a strange kind of reasoning. The principal is not bound to consult his attorney before signing a compromise petition. The High Court also held that if `S' was not willing to sign the compromise petition his unwillingness should have been mentioned in the compromise petition. This also is a strange reasoning. It is well-settled that even after execution of a power of attorney the principal can act independently and does not have to take the consent of the attorney. The attorney is after all only an agent of the principal. Even after executing a power of attorney the principal can act on his own. [Paras 11, 12] 2. REGISTERED POWER OF ATTORNEY CANNOT BE CANCELLED BY MERE FILING OF POLICE COMPLAINT 2010 SC
SHANTI BUDHIYA VESTA PATEL & ORS .Vs. NIRMALA JAYPRAKASH TIWARI & ORS JUDGEMENT, CIVIL LAW -CONSENT DECREE -POWER OF ATTORNEY -FRAUD Citation(s) 2010 AIR 2132 = 2010 (4 ) SCR 958 = 2010 (5 ) SCC 104 = 2010 (4 ) JT 196 = 2010 (4 ) SCALE 182

The allegation of appellants that they had revoked the Powers of Attorney executed by them in favour of the respondent no. 9 by filing complaints with the police is devoid of merit. Although there is no denying the fact that three complaints were filed on three different dates with the police against the alleged harassment and threats by respondent nos. 8 and 9, it is difficult to understand how the Powers of Attorney executed by the appellants or their predecessor-in-interest stood revoked. The record of the case would reveal that each of the complaints was filed by a separate person - the first complaint was filed by the appellants themselves, the second by an Advocate and the third by one `NMP', who was himself a builder. All these complaints came to be filed when said `NMP' came into the picture. Further, all the Powers of Attorney executed in favour of respondent no. 9 as also all the deeds and documents entered into between the predecessor-in-interest of the appellants and respondent no. 9 were duly registered with the office of the Sub-Registrar. Neither any document nor any of the Powers of Attorney was ever got cancelled by the appellants. The stand taken by the appellants throughout that they had, by executing a Power of Attorney in favour of `NMP', revoked the Powers of Attorney executed in favour of respondent no. 9 is found to be baseless. In fact, a look at the terms of the Power of Attorney executed in favour of `NMP' would show to the contrary. 3. GPA TO SELL PROPERTY TO BE EXECUTED BEFORE SUB-REGISTRAR AND GET IT DULY AUTHENTICATED 2009 SC
RAJNI TANDON .Vs. DULAL RANJAN GHOSH DASTIDAR & ANR DOJ : REGISTRATION -POWER OF ATTORNEY -ACTUAL EXECUTANT -ENTITLEMENT Citation(s) 2009 (11 ) SCR 686 = 2009 (14 ) SCC 782 = 2009 (11 ) JT 666 = 2009 (10 ) SCALE 402

Section 32 of the Registration Act deals with persons who are eligible to present documents for registration before the proper registration office. Section 32 specifies three categories of persons who

can present documents for registration. The use of the word "or" betweenthe clauses of Section 32 demonstrates that the legislature intended the said clauses to be read disjunctively and not conjunctively. It is settled law that the use of the word `or' is used to signify the disjunctive nature of a provision. [Para 20] Clause (a) of Section 32 specifies that a document can be presented for registration (i) by the person executing the document; (ii) any person claiming under the document presented for registration and (iii) in the case the said document is a copy of a decree or order, any person claiming under the decree or order. Clause (b) and (c) deal with cases where the document is presented not by any person mentioned in (i), (ii) and (iii) of sub clause (a) but by their agent, representative or assign. This is so because the use of the words "such person" in clause (b) and (c) can be understood to mean only persons as referred to in (i), (ii) and (iii) above. In so far as clause (c) of Section 32 is concerned, the agents, representative or assigns of the persons referred to in (i), (ii) and (iii) can present the said document for registration only if they are duly authorized by power-of-attorney and executed and authenticated. The words "executed and authenticated in Section 32 (c) would mean the procedure specified in Section 33. This is clear from the opening words of Section 33 which reads "for the purposes of Section 32, the following power-of- attorney shall alone be recognised". Section 32 refers to documents presented for registration by a holder of "power-of-attorney" in Clause (c) and it therefore follows that the procedure specified under Section 33 would be attracted where a document is presented by a person holding a "powers-of-attorney" of the persons mentioned in Clause (a) of Section 32. [Paras 21 and 22] Section 32 of the Act requires the documents sought to be registered, to be presented by the person executing it. The said expression requires presence of the actual person executing the document. The basic principle underlying this provision of the Act is to get before the Sub-Registrar the actual executant who, in fact, executes the document in question. The expression "person executing" used in Section 32 of the Act, can only refer to the person who actually signs or marks the document in token of execution, whether for himself or on behalf of some other person. Thus, "person executing" as used in Section 32 (a) of the Act signifies the person actually executing the document and includes a principal who executes by means of an agent. Where a person hold a power of attorney which authorises him to execute a document as agent for some one else, and he executes a document under the terms of the power of attorney, he is, so far as the registration office is concerned, the actual executant of the document and is entitled under Section 32 (a) to present it for registration and get it registered. [Paras 23 and 24] In the facts of the present case, it is quite clear that Indra Kumar Halani, was given the full authority by Nandalal Tantia under the power of attorney to transfer the suit property and to execute the necessary document. The said document was executed by Indra Kumar Halani in the name and on the behalf of Nandalal Tantia thereof. Therefore, for the purposes of registration office under Section 32 (a) of the Act Indra Kumar Halani is clearly the "person executing" the document. Therefore, it follows that the said sale deed which was executed and authenticated by Indra Kumar Halani could be presented for registration by him. Indra Kumar Halani acted in the manner mandated under Section 32 (a) of the Act.

[Para 26] The object of registration is designed to guard against fraud by obtaining a contemporaneous publication and an unimpeachable record of each document. The instant case is one where no allegation of fraud was raised. In view thereof the duty cast on the Registering Officer under Section 32 of the Act was only to satisfy himself that the document was executed by the person by whom it purports to have been signed. The Registrar upon being so satisfied and upon being presented with a document to be registered had to proceed with the registration of the same. [Para 27] Where a deed is executed by an agent for a principal and the same agent signs, appears and presents the deed or admits execution before the Registering Officer, that is not a case of presentation under Section 32 (c) of the Act. The provisions of Section 33 will come into play only in cases where presentation is in terms of Section 32 (c) of the Act. In other words, only in cases where the person signing the document cannot present the document before the registering officer and gives a power of attorneyto another to present the document that the provisions of Section 33 get attracted. It is only in such a case, that the said power of attorney has to be necessarily executed and authenticated in the manner provided under Section 33 (1) (a) of the Act. [Para 29] In the instant case, Indra Kumar Halani executed the document on behalf of Shri N. L. Tantia under the terms of this power of attorney. He then presented it for registration at the Registration Office and it was registered. The plea taken by the respondents that in order to enable him to present the document it was necessary that he should hold a power of attorney authenticated before the Sub-Registrar under the provisions of Section 33 is thus not supported by the language of Section 32. The provisions of Section 33 therefore only apply where the person presenting a document is the general attorney of the person executing it, and not where it is presented for registration by the actual executant, even though he may have executed it as agent for some one else. In this case, the presentation is by the actual executant himself and is hence is entitled under Section 32 (a) to present it for registration and to get it registered. [Para 30] 4. BHATORI
Citation(s) ) SCALE 752 .Vs. RAM PIARI DOJ : DEEDS & DOCUMENTS -POWER OF ATTORNEY -FRAUD -SUIT 1996 AIR 2754 = 1996 ( 4 ) Suppl. SCR 180 = 1996 (11 ) SCC 655 = 1996 ( 7 ) JT 210 = 1996 ( 5

FRAUD ON GPA UNRAVELS THE CONTRACT AND IT IS VOID 1996 SC Respondent-2 having had power of attorney in his favour from appellant played fraud upon her and got lands transferred in the name of his wife-Having been defrauded appellant is entitled to lay the suit for declaration of title and other reliefs-Fraud unravels the contract and it is void-Suit decreed with exemplary costs. Held, fraud unravels the contract and it is void.* *Mithilesh Kumar & Anr. v. Prem Behari Khare, [1989] 2 SCC 95 and R. Rajagopala Reddy v. Padmini Chandrashekharan, [1995] 2 SCC 630,

TOTAL CONCLUSION:- Only “GPA SALES” which is being treated SA(sale agreement)/GPA/Will as completed sale transaction in several states is banned and declared illegal by Supreme Court. The right of a party to execute GPA as per law is still legal.

PRECEDENTS OR CASE LAW AND ITS IMPORTANCE - COLLECTED (2002)3 SCC 496, Haryana State Financial Corporation v. Jagdamba Oils Ltd . Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are not to be read as Euclid's theorems nor as provisions of the statute. These observations must be read in the context in which they appear. Judgments of courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statues, they do not interpret judgments. They interpret words of statutes, their words are not to be interpreted as statutes. The rule of precedent is not without exceptions. It has its own limitations. Besides that, the law changes with the changed circumstances and even good law may be rendered ineffective or unconstitutional because of passage of time, as reflected in the principle "cessante ratione cessat ipsa lex". Adopting this Maxim, the Supreme Court in the case of State of Punjab and Anr. v. Devans Modern Breweries Ltd. and Anr. ,AIR 1979 SC 1158 stated that, with changes that are bound to occur in an evolving society, the judiciary must also keep abreast of these changes in order that the law is considered to be good law. This is extremely pertinent especially in the current era of globalisation where the entire philosophy of society, on the economic front, is undergoing vast changes. Besides this well accepted precept, there are exceptions to the rule of precedent. There are judiciously accepted exceptions to the rule of precedent and they are decisions per incuriam, subsilentio and stare decisis. These principles explain when and where a precedent, which is otherwise a good law, necessarily need not be accepted in subsequent judgments if it fully satisfies essentials of these exceptions. In the case of Commissioner of Customs (Fort) v. Toyota Kirloskar Motor (P) Ltd. , (2007) 5 SCC 371 the Supreme Court stated the law relating to precedents and held that a decision, as is well known, is an authority for what it decides and not what can logically be deduced therefrom. The ratio of a decision must be culled out from the facts involved in a given case and need not be an authority in generality without reference to the reasons, discussions and facts of the case. 2002 (3) SCC 533 (Padma Sundara Rao (Dead) and others vs State of T.N and Others), wherein, the Apex Court held thus: "There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case, ………………….. Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases."

In General Electric Co. v. Renusagar Power Co., 1987 SCR (3) 858, 1987 SCC (4) 137 . it was held: "As often enough pointed out by us, words and expressions used in a judgment are not to be construed in the same manner as statutes or as words and expressions defined in statutes. We do not have any doubt that when the words "adjudication of the merits of the controversy in the suit" were used by this Court in State of U.P. v. Janki Saran Kailash Chandra , the words were not used to take in every adjudication which brought to an end the proceeding before the court in whatever manner but were meant to cover only such adjudication as touched upon the real dispute between the parties which gave rise to the action. Objections to adjudication of the disputes between the parties, on whatever ground are in truth not aids to the progress of the suit but hurdles to such progress. Adjudication of such objections cannot be termed as adjudication of the merits of the controversy in the suit. As we said earlier, a broad view has to be taken of the principles involved and narrow and technical interpretation which tends to defeat the object of the legislation must be avoided."

In Rajeshwar Prasad Mishra v. The State of West, Bengal and Anr. reported in AIR 1965 SC 1887, it was held: "Article 141 empowers the Supreme Court to declare the law and enact it. Hence the observation of the Supreme Court should not be read as statutory enactments. It is also well known that ratio of a decision is the reasons assigned therein." Bhavnagar University vs- Palitana Sugar Mills Pvt. Ltd., 2003(2) SC 111 cautions that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision. In Director of Settlement, A.P. vs- M.R. Apparao, (2002) 4 Supreme Court Cases 638 , a Three Judge Bench has opined that Article 141 of the Constitution unequivocally indicates that the law declared by the Supreme Court shall be binding on all courts within the territory of India. The aforesaid Article empowers the Supreme Court to declare the law. It is, therefore, an essential function of the Court to interpret a legislation. The statements of the Court on matters other than law like facts may have no binding force as the facts of two cases may not be similar. But what is binding is the ratio of the decision and not any finding of facts. It is the principle found out upon a reading of a judgment as a whole, in the light of the questions before the Court that forms the ratio and not any particular word or sentence. To determine whether a decision has declared law it cannot be said to be a law when a point is disposed of on concession and what is binding is the principle underlying a decision. A judgment of the Court has to be read in the context of questions which arose for consideration in the case in which the judgment was delivered. An obiter dictum as distinguished from a ratio decidendi is an observation by the Court on a legal question suggested in a case before it but not arising in such manner as to require a decision. Such an obiter may not have a binding precedent as the observation was unnecessary for the decision pronounced, but even though an obiter may not have a binding effect as a precedent, but it cannot be denied that it is of considerable weight. The law which will be binding under Article 141 would, therefore, extend to all observations of points raised and decided by the Court in a given case. The Constitution Bench has also reiterated this view in Islamic Academy of Education vsState of Karnataka, (2003) 6 SCC 697 = 2003(6) Scale 325, viz. that the ratio decidendi of a judgment can be obtained only from a reading of its entirety. The opinion of the Apex Court in Bharat Petroleum Corporation Ltd. vs- N.R. Vairamani, AIR 2004 SC 778 is in similar vein. Their Lordships observed that Observations of Courts are neither to be read as Euclids theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes.

This is also the opinion of the Court in Punjab National Bank vs- R.L.Vaid, (2004) 7 SCC 698. In State of Gujarat vs- Akhil Gujarat Pravasi, AIR 2004 SCC 3894, the Hon'ble Supreme Court has observed that any observation made during the course of reasoning in a judgment should not be read divorced from the context in which they were used. In Zee Tele Films vs- Union of India, AIR SCW 2005 2985, the Apex Court has unequivocally declared that a decision is not an authority for the proposition which did not fall for its consideration. In M/s A-One Granites vs- State of U.P., AIR 2001 SC 1203: (2001) 3 SCC 537 it had been contended that the controversy was covered on all fours by a previous decision of the Court. The contention was rejected in these words- This question was considered by the Court of Appeal in Lancaster Motor Co. (London) Ltd. v. Bremith Ltd., (1941) 1 KB 675, and it was laid down that when no consideration was given to the question, the decision cannot be said to be binding and precedents sub silentio and without arguments are of no moment.

Following the said decision, this Court in the case of Municipal Corporation of Delhi v. Gurnam Kaur, (1989) 1 SCC 101: (AIR 1989 SC 38) observed thus (at p. 43 of AIR): In Gerard v. Worth of Paris Ltd. (K), (1936) 2 All ER 905 (CA), the only point argued was on the question of priority of the claimant's debt, and on this argument being heard, the Court granted the order. No consideration was given to the question whether a garnishee order could properly be made on an account standing in the name of the liquidator. When, therefore, this very point was argued in a subsequent case before the Court of Appeal in Lancester Motor Co. (London) Ltd. v. Bremith Ltd., (1941) 1 KB 675, the Court held itself not bound by its previous decisions. Sir Wilfrid Greene, M.R., said that he could not help thinking that the point now raised had been deliberately passed sub silentio by counsel in order that the point of substance might be decided. He went on to say that the point had to be decided by the earlier Court before it could make the order which it did; nevertheless, since it was decided without argument, without reference to the crucial words of the rule, and without any citation of authority, it was not binding and would not be followed. Precedents sub silentio and without argument are of no moment. This rule has ever since been followed. In State of U.P. v. Synthetics and Chemicals Ltd., (1991) 4 SCC 139, reiterating the same view, this Court laid down that such a decision cannot be deemed to be a law declared to have binding effect as is contemplated by Article 141 of the Constitution of India and observed thus: A decision which is not express and is not founded on reasons nor it proceeds on consideration of issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141. In the case of Arnit Das v. State of Bihar, 2000 (5) SCC 488 : (2000 AIR SCW 2037 : AIR 2000 SC 2264 : 2000 Cri LJ 2971), while examining the binding effect of such a decision, this Court observed thus (Para20): A decision not expressed, not accompanied by reasons and not proceeding on a conscious consideration of an issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141. That which has escaped in the judgment is not the ratio decidendi. This is the rule of sub silentio, in the technical sense when a particular point of law was not consciously determined. The frequently quoted opinion of the House of Lords in Quinn vs- Leathem, 1901 AC 495 : (1900-3) All ER Rep 1 is to the effect that every judgment must be read as applicable to the particular facts proved or assumed to be proved .... The other is that a case is only an authority for what is actually decides. These quotations have been reiterated in Goodyear India Ltd. -vs- State of Haryana, (1990) 2 SCC 71 and State of Orissa -vs- Sudhansu Sekhar Misra, AIR 1968 SC 647. In the latter case, the Court explicitly opined that a decision on a question which has not been argued cannot be treated as a precedent. Their Lordships, in turn, referred back to the previous opinion in Rajput Ruda Meha -vs- State of Gujarat, 1980 SC 1707 in which it had similarly been stated that where an issue has neither been raised nor argued any decision by the Court, even after 'pondering over the issue in depth', would not be a binding precedent. Similar observations have been made by the Constitution Bench in Padma Sundara Rao -vs- State of T.N., 2002(3) SCC 533, as is evident from the following extract: Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case, said Lord Morris in Herrington v. British Railways Board, (1972) 2 WLR 537. Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases. A profound and perspicuous analysis of the principle of stare decisis is to be found in State of Gujarat vs- Mirzapur Moti Kureshi Kassab Jamat, AIR 2006 SC 212. We cannot do better than to extract the relevant portions thereof in order to buttress and justify the approach we propose to adopt: Stare decisis is a Latin phrase which means ``to stand by decided cases; to uphold precedents; to maintain former adjudication'`. This principle is

expressed in the maxim ``stare decisis et non quieta movers'` which means to stand by decisions and not to disturb what is settled. This was aptly put by Lord Coke in his classic English version as ``Those things which have been so often adjudged ought to rest in peace'`. However, according to Justice Frankfurter, the doctrine of stare decisis is not ``an imprisonment of reason'` (Advanced Law Lexicon, P. Ramanatha Aiyer, 3rd Edition 2005, Volume 4, p. 4456). The underlying logic of the doctrine is to maintain consistency and avoid uncertainty. The guiding philosophy is that a view which has held the field for a long time should not be disturbed only because another view is possible. The trend of judicial opinion, in our view, is that stare decisis is not a dogmatic rule allergic to logic and reason; it is a flexible principle of law operating in the province of precedents providing room to collaborate with the demands of changing times dictated by social needs, State policy and judicial conscience. According to Professor Lloyd concepts are good servants but bad masters. Rules, which are originally designed to fit social needs, develop into concepts, which then proceed to take on a life of their own to the detriment of legal development. The resulting ``jurisprudence of concepts'` produces a slot- machine approach to law whereby new points posing questions of social policy are decided, not by reference to the underlying social situation, but by reference to the meaning and definition of the legal concepts involved. This formalistic a priori approach confines the law in a strait-jacket instead of permitting it to expand to meet the new needs and requirements of changing society (Salmond on Jurisprudence, Twelfth Edition, at p. 187). In such cases Courts should examine not only the existing laws and legal concepts, but also the broader underlying issues of policy. In fact presently, judges are seen to be paying increasing attention to the possible effects of their decision one way or the other. Such an approach is to be welcomed, but it also warrants two comments. First, judicial inquiry into the general effects of a proposed decision tends itself to be of a fairly speculative nature. Secondly, too much regard for policy and too little for legal consistency may result in a confusing and illogical complex of contrary decisions. In such a situation it would be difficult to identify and respond to generalized and determinable social needs. While it is true that ``the life of the law has not been logic, it has been experience'` and that we should not wish it otherwise, nevertheless we should remember that ``no system of law can be workable if it has not got logic at the root of it'` Consequently, cases involving novel points of law, have to be decided by reference to several factors. The judge must look at existing laws, the practical social results of any decision he makes, and the requirements of fairness and justice. Sometimes these will all point to the same conclusion. At other times each will pull in a different direction; and here the judge is required to weigh one factor against another and decide between them. The rationality of the judicial process in such cases consists of explicitly and consciously weighing the pros and cons in order to arrive at a conclusion. In case of modern economic issues which are posed for resolution in advancing society or developing country, the court cannot afford to be static by simplistically taking shelter behind principles such as stare decisis, and refuse to examine the issues in the light of present facts and circumstances and thereby adopt the course of judicial ``hands off'`. Novelty unsettles existing attitudes and arrangements leading to conflict situations which require judicial resolution. If necessary adjustments in social controls are not put in place then it could result in the collapse of social systems. Such novelty and consequent conflict resolution and ``patterning'` is necessary for full human development. Stare decisis is not an inexorable command of the Constitution or jurisprudence. A careful study of our legal system will discern that any deviation from the straight path of stare decisis in our past history has occurred for articulable reasons, and only when the Supreme Court has felt obliged to bring its opinions in line with new ascertained fact, circumstances and experiences. Given the progressive orientation of the Supreme Court, its creative role under Article 141 and the creative elements implicit in the very process of determining ratio decidendi, it is not surprising that judicial process has not been crippled in the discharge of its duty to keep the law abreast of the times, by the traditionalist theory of stare decisis. Times and conditions change with changing society, and, ``every age should be mistress of its own

law'` - and era should not be hampered by outdated law. ``It is revolting'`, wrote Mr. Justice Holmes in characteristically forthright language, ``to have no better reason for a rule of law than it was so laid down in the time of Henry IV. It is still more revolting if the grounds upon which it was laid down have vanished long since, and the rule simply persists from blind imitation of the past'`. It is the readiness of the judges to discard that which does not serve the public, which has contributed to the growth and development of law. The doctrine of stare decisis is generally to be adhered to, because well settled principles of law founded on a series of authoritative pronouncements ought to be followed. Yet, the demands of the changed facts and circumstances dictated by forceful factors supported by logic, amply justify the need for a fresh look. In Municipal Corporation of Delhi vs- Gurnam Kaur, AIR 1989 SC 38 the Three-Judge Bench had to decide the legal propriety of a High Court order which applied Supreme Court direction, with the consent of parties, for grant of alternate site to persons who had encroached on pavements. Their Lordships observed that the High Court could not have passed similar orders as it would have been contrary to the provisions contained in Sections 320 and 322 of the Delhi Municipal Corporation Act, 1957. In that context it was observed thus- Quotably as law applies to the principle of a case, its ratio decideni. The only thing in a Judges decision binding as an authority upon a subsequent Judge is the principle upon which the case was decided. Statements which are not part of the ratio decidendi are distinguished as obiter dicta and are not authoritative. The Seven-Judge Bench in A.R. Antulay vs- R.S. Nayak, AIR 1988 SC 1531 defines per incuriam as those decisions given in ignorance or forgetfulness of some inconsistent statutory provision or of some authority binding on the Court concerned, so that in such cases some part of the decision or some step in the reasoning on which it is based, is found, on that account to be demonstrably wrong. In Bharat Sanchar Nigam Ltd. vs- UOI, (2006) 3 SCC 1 the Supreme Court has clarified that a Bench can take a different view by distinguishing it or where the earlier view is per incuriam. These fetters apply only to Coordinate Benches which, if either of the gateways cannot be traversed, must refer the point of controversy to a Bench of superior strength or of superior jurisdiction.

Sign up to vote on this title
UsefulNot useful