Can an NRI Recover Property Sold on a Forged POA?

Basant Nahata lived in Bikaner. He was the Khatedar tenant of agricultural lands at Chak No. 13 KYD, Square No. 110/24, Killa No. I to 25 Bighas, Tehsil Khajuwala, District Bikaner. On July 16, 1999, he appointed Sukhdeo Singh as his attorney. The deed let Singh look after the lands, cultivate them, do all other acts, deeds and things, mortgage or sell the lands, and get the necessary deeds and documents registered.

On July 30, 1999, Nahata presented the deed before the Sub-Registrar, Bikaner. Registration was refused. The Sub-Registrar endorsed the document to say it could not be registered under a Government Notification dated March 26, 1999, published in the Rajasthan Gazette on April 1, 1999 and amended on April 22, 1999. Those notifications, made under Section 22-A of the Indian Registration Act, 1908, treated certain powers of attorney as 'opposed to public policy'.

Nahata challenged both Section 22-A, inserted by the Rajasthan Amendment Act, 1976 (Act No. 16 of 1976), and the notifications in a writ petition. The Rajasthan High Court declared Section 22-A unconstitutional and quashed the notifications in annexures 3, 4, 6 and 7. It held that only a court can decide whether a transaction is opposed to public policy, and that the law invaded a citizen's right to deal with property. It ordered the Sub-Registrar to register the July 16, 1999 deed within two weeks.

The State of Rajasthan appealed. It argued that a statute enjoys a presumption of constitutionality, that registration policy was for the legislature and executive to regulate, and that the words 'opposed to public policy' had a precise meaning because other statutes used them. Because other States had carried out similar amendments, the Supreme Court issued notice to them.

The contested provision let the State Government declare by Gazette notification that registration of any document or class of documents was 'opposed to public policy'. A second clause then obliged the registering officer to refuse that document despite anything else in the Act. Rajasthan's notifications changed their own limits. One notice first barred powers of attorney authorising transfer for more than six months, irrevocable powers, or powers with no term. A later notice replaced six months with three years. Another barred powers presented outside the district or sub-district of the property, then exempted powers of attorney executed in favour of brother or sister or son or daughter or father or mother or husband or wife or grandsons or granddaughter.

The legal deadlock was whether that arrangement crossed constitutional limits. The State relied on the presumption of constitutionality, but the Court treated it as a burden-shifting rule that works only until a transgression becomes clear beyond reasonable doubt. It also held that the preamble and statement of objects and reasons can help only when the language is ambiguous. The words 'public policy' were not capable of a precise meaning, and nothing in those materials supplied a morality or public-policy guideline.

Because several States had made similar amendments, the Supreme Court issued notice to Bihar, Gujarat, Karnataka, Maharashtra and Meghalaya. Intervenor States including Maharashtra, Gujarat, Jharkhand and Meghalaya appeared. The Court had to decide whether the executive could be given an uncertain public-policy power at all.

The Supreme Court dismissed the appeal. Section 22-A failed because it handed the State executive an uncanalised and unguided power to decide what is 'opposed to public policy', and the Court said essential legislative functions cannot be delegated without standards. It tested the provision against Articles 14 and 246 of the Constitution. It also reminded the State that a legislative policy must conform to constitutional mandates and that a policy decision remains open to judicial review.

• The delegation defect: Section 22-A let the executive open new heads of public policy in its whims, although the executive cannot fill grey areas that belong to the judiciary.
• The document-versus-transaction defect: the Registration Act governs documents and gives public notice; it does not strike at transactions. Execution of a power of attorney is lawful, and a transaction between two persons capable of entering into a contract that contravenes no statute remains valid.

The Bench added that, so far as amendments made by other States are concerned, "any order passed by a Sub-Registrar or Registrar refusing to register a document pursuant to any notification issued under Section 22-A of the Act would not be reopened."

• Gather the power of attorney deed, the Sub-Registrar's endorsement or refusal entry, the Gazette notification relied on for the refusal, and the land records showing the owner's holding. In Nahata's case, those were the July 16, 1999 deed, the July 30, 1999 presentation before the Sub-Registrar, Bikaner, and the March 26, 1999 notification as amended on April 22, 1999.
• In Nahata's case, the route taken was a writ petition before the Rajasthan High Court. The High Court declared Section 22-A unconstitutional and directed registration within two weeks.
• Keep documents and transactions apart. The judgment holds that the Registration Act strikes at documents, not transactions, and that a power of attorney outside Sections 17(1)(g) and 17(1)(h) is not compulsorily registrable.
• Do not treat a Gazette notification as a final public-policy ruling. The Supreme Court said the executive cannot fill those grey areas. Also note the Bench's closing direction on other States' amendments: "any order passed by a Sub-Registrar or Registrar refusing to register a document pursuant to any notification issued under Section 22-A of the Act would not be reopened."