1st MANIPAL RANKA NATIONAL MOOT COURT COMPETITION - 2016

PREAMBLE
Entering into Sale Agreement / General Power of Attorney / Will
transactions is rampant by the following categories of persons:
(a)
Vendors with imperfect title who cannot or do not want to
execute registered deeds of conveyance.
(b)
Purchasers who want to invest undisclosed wealth/income in
immovable properties without any public record of the transactions.
The process enables them to hold any number of properties without
disclosing them as assets held.
(c)
Purchasers who want to avoid the payment of stamp duty and
registration charges either deliberately or on wrong advice. Persons
who deal in real estate resort to these methods to avoid multiple stamp
duties/registration fees so as to increase their profit margin.
Whatever be the intention, the consequences are disturbing and
far reaching, adversely affecting the economy, civil society and law and
order. Firstly, it enables large scale evasion of income-tax, wealth tax,
stamp duty and registration fees thereby denying the benefit of such
revenue to the government and the public. Secondly, such
transactions enable persons with undisclosed wealth/income to invest
their black money and also earn profit/income, thereby encouraging
circulation of black money and corruption.
This kind of transactions has disastrous collateral effects also.
For example, when the market value increases many vendors (who
affected power of attorney sales without registration) are tempted to
resell the property taking advantage of the fact that there is no
registered instrument or record in any public office thereby cheating
the purchaser. When the purchaser under such 'power of attorney
sales' comes to know about the vendors action, he invariably tries to
take the help of musclemen to 'sort out' the issue and protect his
rights. On the other hand, real estate mafia many a time purchases
properties which are already subject to power of attorney sale and
then threaten the previous 'Power of Attorney Sale' purchasers from
asserting their rights. Either way, such power of attorney sales
indirectly aggrandize the real estate mafia and trigger criminalization
of real estate transactions. Hence its a national issue of great
importance.

MOOT PROPOSITION
STATEMENT OF FACTS, PLEADINGS, FINDINGS & ORDER
Case of the Plaintiff / Appellant
JDC Ltd., the plaintiff, appellant a company incorporated under
the Companies Act, 2013, claim that one Ramanath and his family
members sold two and half acres of land in Jagatpura village, Jaipur
to them by means of an agreement of sale, General Power of Attorney
(for short "GPA") and a Will executed on 01.08.2013 for a

1st MANIPAL RANKA NATIONAL MOOT COURT COMPETITION - 2016

consideration of Rs.50.00 lacs. A sum of Rs. 45 lacs was paid in cash
against possession u/s 53-A. Balance of Rs. 5 lac was payable before
02.01.2014. Amount was offered on 10.1.2014 but not accepted by the
seller. The agreement is unregistered but signed and executed by the
vendor. It is unilateral. The petitioner verbally agreed to sell a part of
the said property measuring one acre to one Shri Yadav for Rs.40.00
lacs on 15.10.2013. Shri Yadav got in touch with Ramnanath and his
family members and on 16.10.2013 got a GPA in favour of Dharamvir
Yadav, and Sale Agreement in regard to the entire two and half acres
executed and registered. Additional Rs. 50 lacs were paid. The earlier
GPA in favour of the plaintiff / appellant Company was cancelled
illegally. It was mentioned in the agreement that possession to be
taken by Mr. Yadav from JDC Ltd. Suit for specific performance was
filed by the Company on 01.04.2014.
The plaintiff also claimed that the purchaser may be liable to tax
on the differential value, u/s. 56(2) (vii) (b) (ii) of the I.T. Act, 1961.
Claim of the Respondent Ramnath
Agreement of sale, General Power of Attorney and Will were duly
executed and a consideration of Rs.45.00 lacs was paid and
possession was transferred u/s. 53-A. Possession is with the
Company. The agreement is unregistered and unilateral. The plaintiff
is not the signatory and hence claim is unsustainable in law. Balance
of Rs.5.00 lacs was not received by the stipulated date 02.01.2014,
through tendered later. The property was sold to Mr. Yadav and he
was advised to take possession from the plaintiff. Suit is bad. The
facts as narrated by the plaintiff are disputed and unproved. The
plaintiff is not entitled to any relief and the suit deserves to be
summarily dismissed with costs and damages.
The respondent also pleaded that he enquired about the stamp
duty and registration charges and was informed by the Registering
Authority that fair market value on the date of registration and not the
date of Sale Agreement, would be payable. Thus the stamp duty would
be payable on Rs. 1.50 Crore, which should be borne by the plaintiff.
The seller further claimed that on account of Section 50C of the
Income-Tax Act, 1961, the seller would be required to pay capital gain
tax on Rs. 1.50 Crore against real sale consideration of Rs. 50 Lacs,
which would be additional liability for no fault on his part.
Shri Dharamvir Yadav claims that earlier General Power of
Attorney is having been cancelled and General Power of Attorney in his
favour being registered subsists. He has authority and competence to
sell and not Ramnath. Rs. 50 lacs have been paid to Ramnath, owners
apart from Rs. 40 lacs to the plaintiff.
Issues Framed:
1.
Whether the Agreement of sale, General Power of Attorney and
the Will executed in favour of the plaintiff is valid?
2.
Whether when a sum of Rs.45 lacs having been paid out of
Rs.50.00 lacs and possession given u/s.53A of the Transfer of Property
Act, Ramanath and his family members had no power, competence
and authority to execute second General Power of Attorney in favour of
Mr. Yadav and cancel the earlier GPA in favour of the plaintiff, is valid?

1st MANIPAL RANKA NATIONAL MOOT COURT COMPETITION - 2016

3.
Whether the plaintiff was ready, willing and prepared and
tendered Rs.5.00 lacs after 02.01.2014 and requested Ramanath and
his family members to execute sale deed and to get it registered. What
was the effect of non-payment of balance amount on 02.01.2014?
4.
Whether the Stamp Duty Registering Authority was right in
demanding stamp duty on the fair market value of Rs. 1 Crore and 50
lacs as on 01.08.2014 and not at recorded value / fair market value on
01.08.2013 i.e. Rs. 50 lacs? If the stamp duty would be payable on
additional 1 crore, who would bear such amount?
Order of the District Judge:
The suit is liable to be dismissed as the agreement to sell with
possession is unregistered; the balance consideration of Rs. 5 lacs was
not paid and tendered before 02.01.2014; the agreement/GPA was
cancelled and the plaintiff is entitled to refund for Rs. 45 lacs on
handing over possession to the owners. Suit for specific performance is
dismissed. If the plaintiff succeeds, the differential stamp duty of the
recorded value and fair market value on the actual date of registration
would have to be paid by the plaintiff apart from the capital gain on
the differential amount.
Order of the Rajasthan High Court:
The appellant Purchaser plaintiff is not entitled to any relief as the
sale Agreement is not registered,: GPA has been cancelled: the
appellant failed to pay the balance of Rs.5 lacs by 02.01.2014: is
liable to return possession on payment of Rs.45 lacs by the
respondent-owner . The respondent owner is directed to pay within 15
days of this order and the appellant is directed to handover vacant
possession simultaneously. As the sale is not fructified question of
income tax would not arise and so the stamp duty. Both issues are
academic.
Appeal /SLP before the Supreme Court :
The appellant plaintiff wants to file an appeal/SLP before the
Honble Supreme Court. Kindly draw the appeal/SLP along with reply
by the respondent and brief arguments on behalf of the parties. The
memorial to reach by 15.02.2016. Appeal to be heard by the Supreme
Court on 27.02.2016.
Relevant Sections
1.

Sections 5, 53-A, 54 of the Transfer of Property Act, 1882

2.

Section 1A & 2 of the Power of Attorney Act, 1882

3.

Indian Succession Act, 1925

4.

Section 2(12), 3, 17, 27, 47A of Stamp Act (2 of 1899) &

Rajasthan Stamp Law (Adaptation) Act

5.

Section 17 & 49 of the Registration Act, 1908

6.

Contract Act, 1872

7.

Specific Relief Act, 1963

1st MANIPAL RANKA NATIONAL MOOT COURT COMPETITION - 2016

8.

Civil Procedure Code, 1908

9.

Section 50C and 56(2) (vii) of the Income-Tax, 1961;

10.

Any other relevant Act and rules.