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Monday,
December 24, 2001, Chandigarh, India
  
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Purchasing property on
GPA
Pushpa Girimaji
Safety
should be the top priority |
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UTI
offers 12% on equity schemes
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Purchasing property on GPA FOR an intending purchaser, while purchasing a property, widely there are two ways to get the property rights transferred in his name. One, by the execution of sale deed duly registered in the office of the subregistrar of the area concerned on the non-judicial stamp papers of requisite amount. Second, the alternate process of transferring the property rights through indirect documents, pertaining to sale of the property in question, viz., GPA, WILL, Sale agreement etc., is nosily adopted in two cases, one, for underhand sale and second in the cases of those nontransferable properties which are barred from any transfer sale under the provisions of the byelaws governing real estate of the area concerned. Although a due diligence is required to be exercised while purchasing property in either of the case but extra caution is needed while purchasing a property through GPA documents. In the list of main documents required to be taken at the time of full and final payment includes Sale agreement, GPA, WILL, Affidavit, Affidavit of specimen signatures of the seller’s and an indemnity bond indemnifying the purchaser/s against any loss incurred due to the invalidity of any of the above documents. All the documents in the above list are correlated with each other giving support to one or the other under different eventualities.
Sale agreement The document, having full details of both the seller and the purchaser such as their names, parentage and their respective addresses, is signed and executed by both the parties i.e., seller/s and the purchaser/s in the presence of marginal witnesses. Besides giving denials of the property under sale viz., identification number, orientation, total area of the plot, detail of construction thereupon etc., and details of the total consideration money of the property under sale agreed between both the parties, it also details the transactions made at different level with complete details of instruments through which the transactions were held with date/s, number/s and name/s of the bank/s where instrument/s is/are drawn. The body of the sale agreement also contains the terms and conditions agreed by both the parties while transacting the deal. A receipt of receiving the total consideration money by the seller also forms a part of the body of this sale agreement. The seller besides giving detail list of other documents executed by him in favour of the purchaser also certifies the property under sale to be free from any encumbrance and without any lien, change such as sale, gift mortgage etc.
GPA As the title of the property transacted through this process continue to stand in the name of the previous seller in the revenue records of the concerned revenue authorities, general powers to govern the property on behalf of the owner are assigned by executing a General Power of Attorney in the name of the purchaser or any other person of the choice of the purchaser. In case of an underhand sale where otherwise a legal sale is permitted under provisions of the byelaws of the concerned area, powers to further sell/transfer, gift, mortgage etc., are clubbed in the single GPA. In case of existence of any embargo in the byelaws governing the property under sale not permitting the direct sale, the power to sell/transfer is assigned through a Special General Power Of Attorney executed separately in the favor of the person assigned by the purchaser. The document/s is/are duly registered in the office of the sub-registrar of the area. It is worth noting here that the special power of attorney having sale powers must be executed in favor of the person other than the actual purchaser so that in the event of the embargo being lifted at the later stage, the special power of attorney holder may transfer the property rights legally in the name of the actual purchaser. One most important aspect of this document is that it becomes a scrap of paper after the dealt of its executant i.e., the seller. Under this eventuality the purchaser may get the property rights transfer in his own name through the Will of the seller executed in his favor at the time of purchase.
Will A document bequeathing the ownership title rights of the property in the favor of the purchaser by the seller after his death is called a Will. The document is also duly registered in the office of the subregistrar of the area. Through this document the purchaser has the full right to get the rights of the property transferred in his name after the death of the seller.
Specimen signatures The seller executes both these documents. In the first, he affirm and declare of having sold his property to the purchaser against the consideration money as per sale agreement and also take oath that he shall only be a benami owner in the records of the concerned revenue authorities till the purchaser get it transferred in his name. The seller also undertakes to not to revoke any of the documents he has executed in favor of the purchaser, at any later stage. He also undertakes that he and his legal heirs shall have no lien/right whatsoever on the property sold. In the second affidavit, the seller attests and testifies his own signatures, as the original while declaring being absolute owner of the property under sale.
Resale aspect As discussed above all the documents are co-related to each other and are drafted and executed in a way to legally bound the seller to safeguard the interest of the purchaser against any fraudulent transaction still there remain a few drawbacks in the transaction through this process. One of the major drawbacks is the resale aspect of the property. The purchaser while further selling his property is not empowered to execute the same set of papers as seller in favor of his subsequent purchaser. He shall either have to seek help of the original seller to get the fresh set of documents executed in favour of the new purchasers after getting the previous documents revoked with prior written permission of the first purchaser or he has the option of selling this property on sub-general power of attorney that too if his GPA has the provision of appointing/assigning subsequent or Sub Attorney.
Sub-general
power of attorney case While purchasing property from a GPA holder of the original owner, the purchaser gets Sub General Power of Attorney and other above documents except the WILL. The case has an evident drawback that in the eventuality of the death of the original owner, the general power of attorney and the subsequent attorneys automatically get powerless and of no used. The WILL being in favor of the first purchaser shall be of no use for the second/subsequent purchasers. The end purchaser and his legal heirs thus can only enjoy the physical possession of the property and the ownership title shall always remain either with the legal heirs or the beneficiaries of the will. The case eventually becomes disputed in the due course of time. One of the most important instruction drives out of this discussion that the subsequent purchaser while purchasing any piece of property from a General Power of Attorney holder must ensure that the executant of the GPA is alive and the documents executed by him have not yet been revoked. Efforts should be made to get the documents registered afresh from the original owner after getting the previous documents cancelled. Before striking the deal with the GPA holder, the subsequent purchaser is strongly advised to ensure that the original owner is alive by meeting him personally in addition to verifying the validity of the GPA from him. To sum up, a bargain through GPA documents is best for short time investors as a considerable amount of stamp duty is saved but otherwise the fate of such a bargain is dicey as the purchasers/subsequent purchasers shall always remain at the mercy of the original owner till the property is not virtually transferred in the name of the person/s those have invested in the deal. Hence the antecedents of the seller/s i.e., their social status, reputation in public life etc., must be got verified before going in to such bargain.
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Pushpa Girimaji IRDA: pay interest on delayed claims WHEN an insurance company settles the claim of a widow after a delay of 26 months, one would expect from the insurer, some expression of remorse, an apology, and payment of reasonable interest on the insured amount. None of these, however, came Ms Gurbachan Kaur’s way when United India Insurance Company finally paid her Rs 7,45,000 due on the two policies of her husband and got her to sign the printed receipt saying that this was in full and final settlement of her claim. Subsequently, when her letters to the insurer demanding interest on the amount brought forth the response that having signed the ‘discharge’ voucher she had no further claims on the insurer, Ms Kaur decided to seek the intervention of the consumer court. The consumer courts at the district and the state level held that she should be paid interest from June 1, 1991 (the insured had died on April 1, 1991) till the date of payment. While the District Forum awarded 18 per cent interest, the State Commission brought it down to 12. The National Commission agreed with the State Commission. I think it is appropriate to give some background on the two main issues involved here. The first issue is the inordinate delay on the part of the insurer in settling the claim. Now, consumer courts have time and again condemned such delays and held that the insurer should pay interest for the delayed period. Even the Supreme Court, in the case of United India Insurance Vs MKJ Corporation (August 21, 1996), agreed with this view. Given this background, the insurer should have voluntarily paid the interest on the amount due to the widow. Instead, the company got her to sign the discharge voucher and used that to prevent further claims from her. Now this brings us to the second issue here. Whenever an insurer settles a claim, he gets the signature of the insurer or the nominee on a printed voucher, saying that the amount being received is in ‘full and final settlement’ and that there are no further claims on the insurer. Normally, this discharges the insurer from any further liability under the terms of the contract and extinguishes the right of the insured or the nominees to make further claims. However, in certain circumstances, even though the consumer is unhappy with the settlement of the loss or the amount being paid, he or she is forced to accept the amount because of financial constraints, particularly where it takes a long time for the insurer to settle the claim. In such situation, the person signing the discharge note is supposed to write on the voucher that the money is being accepted under protest and without prejudice to the right to represent the case. But this is easier said than done because unless you accept the amount without protest, the insurer will not give you the cheque. The apex consumer court considered this problem in several cases filed before it and eventually held that the execution of the discharge voucher without protest did not take away the right of the insured to claim compensation under the Consumer Protection Act for damages, loss or injury caused as a result of deficient service rendered by the insurer. The Supreme Court in the case of United India Insurance vs Ajmer Singh Cotton and General Mills (August 12, 1999) agreed with the view, expect to say that the consumer however has to satisfy the court in such cases that the discharge voucher was obtained by the insurer by fraud, misrepresentation, under influence, or the like, or coercive bargaining compelled by circumstances. Now coming back to the case of Gurbachan Kaur, the insurer’s contention before the National Commission was that the widow had not satisfied the conditions laid down by the Supreme Court in the case Ajmer Singh. The National Commission, however, disagreed and said when an insurance company decides to settle a widow’s claim after a delay of two years and asks her to sign the printed voucher before handling over the cheque, it could be said that it was obtained by coercion. This view is further fortified by her letters to the insurer claiming interest on the amount, the Commission said. (R.P No. 1196 of 1997, decided in October 2001). So remember, the insurer is liable to pay interest on delayed settlement of claims. If the insurer refuses to do so or if you are dissatisfied with the amount being offered towards the settlement of your claim, record your protest in writing. Remember, you can also seek the help of the insurer Ombudsman for redress of your grievances against an insurer. I must also add here that the draft regulation of the Insurance Regulatory and Development Authority on the “protection of policy holder’s interest” makes it mandatory for insurer to pay interest on delayed settlement of claims. It also defines delay. So once the regulation is finalised and notified, insurers will have no option but to comply. |
Safety should be the top priority WHEN it comes to enterprise, Mr P.S. Arora, Director, Micromeg Enterprises Private Ltd., is at his risky best, but intelligent enough, he is highly conservative when it comes to investment of his savings. Whatever has been earned should be kept secure, but enterprising spirit is a must when it comes to the source of income, he justifies his strategy. A qualified engineer, he started his career with Phillips India, three years after which he joined another company following which came the setting up of a small scale manufacturing unit. He set up another unit after few years and today he is into distribution of engineering products of companies like Larsen and Toubro and several others. Initial investments Between 1971, when I started my career, and 1978, when I started my own unit the only thing I did was get an insurance policy and put the remaining amount in bank. That I did as I didn’t want to lock my money anywhere else and because of liquidity , which I knew were essential as starting a business was what I was planning then. During this period, I made a few investments in shares like Hindustan Lever Limited, Kelvinator et al which I kept for a long term. However, it was later that I got into Mutual Funds, which I believe is the best place to invest, National Saving Certificates, insurance and also real estate. Equities Though initially I did invest in the equities, but currently, I am not . I believe only if one is keeping a regular tab of the share market and is capable enough to do thorough analysis of the market and the companies, should one go in for shares. Mutual funds Mutual Funds (MFs) are the best option because not only can one get good returns, it is easier to decide a good MF company than the company of which you can buy shares. Moreover, MF managers are experts and investment by them is definitely backed by sound analysis. I, at present have invested in debt funds of Canara Bank, Bank of Baroda, and ICICI. Of these, ICICI has been giving me returns of almost 13 per cent whereas in the other two cases it has been an annual return of nine to 10 per cent, which still are higher than what one would get from banks and ofcourse, these returns are more or less assured. Tax saving is another benefit investment in MFs provide. Real estate Though I am not indulged in active real estate trading, but I keep looking for opportunities . For instance, I bought a house in 1990 and sold it off in around 1998, thereby , reaping good returns. In the long term, property at the right location would definitely be a profitable venture. Though the current period is witnessing a comparative recession, but in the coming days, real estate would surely pick up again. I believe if the location is good, one can never loose in this sector. Insurance Insurance has the triple benefit- risk coverage, returns and tax saving. I have been regularly buying policies of LIC like money back policy and have also bought another policy of ICICI Prudent Life . Most of the new insurance companies have a sound financial background and are offering products with attractive riders. Going in for policies with multiple benefits is a good option. Other investments With safety having assumed primary importance in the current uncertain market scenario, banks are the safest. Of the 20 per cent of my earnings which I save, I put one-fifth in banks . Earlier I used to put most of my money in the bank due to liquidity advantage. Moreover, Fixed Deposits (FDs) can offer regular returns during the later years of one’s life. I opened a PPF account around eight years back and I think it is a must for everyone. I have also regularly been investing in NSCs, for the tax benefit they offer. Where to invest The most important thing while investing your money should be safety. Mutual Funds (debt related) and conventional investment areas like banks and insurance would be the right choice. (As told to Shveta Pathak- TNS) |
R.N. Lakhotia Gift Q:
I am a woman and an Income Tax assessee for the last many years. I would like to make a gift of some amount through A/c payee cheque to my unmarried daughter, who is a college student and major now. A gift deed or course will be executed. 1. Whether the bank interest received by my daughter from the amount of above gift will be assessed in the hands of donor (i.e. myself) or the donee (My daughter)? 2. Whether I am required to furnish the details of gift in my income tax return for the relevant year? — C.R. Sharma (Mrs), Ludhiana Ans:
The bank interest received by your daughter consequent to the gift made by you will be treated as income of the daughter. You will not be required to make payment of income-tax on the bank interest so received on the gifted amount by your daughter. It is not compulsory to mention the details of the gift in the Income-tax return, but it is always better to enclose a copy of the gift letter/gift deed with the income-tax return.
House-building loan Q:
I got house building advance from my office of Punjab State Electricity Board during February, 1995 and has paid the same in 79 equal instalments. As per procedure and office order, only principal amount is recovered in the first instance and interest amount is calculated and recovered only on recovery of principal amount. In view of this, I have not taken any benefit on account of interest on accrual basis during recovery of principal amount in my Income Tax returns earlier. As such, seek clarification if benefit of payment of interest can be availed by me now in view of the fact that payment on account of interest on HBA is being made by me presently. — Suraj Bhan, Chandigarh. Ans:
You can avail the benefit of tax deduction in respect of the interest paid by you on the residential property.
LIC premium Q: I had subscribed to an LIC policy in the name of my son way back in 1995 when he was minor and dependent on me. The annual premium is Rs 1517. I have been claiming the rebate in income tax since then. No he has become major. This year he has been employed in some MNC. He does not want to claim rebate on this LIC premium in his income tax. Can I claim rebate on it in my income tax? Please clarify. — Dr N.K. Rana, Panchkula. Ans:
In respect of the Life Insurance premium payment on the policy of your son you can claim tax rebate. |
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UTI offers
12% on equity schemes New Delhi, December 23 According to sources, UTI has set the record date for income distribution of the three equity schemes MEP-99, Index Select Equity Fund and Mastergrowth-93 on January 10, 2002. In case of the close-ended MEP-99 scheme, UTI has decided to distribute 12 per cent (Rs 1.20 per unit of Rs 10) compared to 15 per cent dividend twice in January and October 2000. The double digit dividend in MEP-99 is despite a meagre 0.64 per cent growth is net asset value (NAV). The NAV, however, was up by 20.63 per cent in last quarter and 28.22 since its inception in April 1999. MEP-99 has outperformed the benchmark BSE sensex most of the time. UTI has also offered a 12 per cent return on the Index Select Equity Fund despite a negative 10 per cent growth in its NAV in the last one year. The fund had offered 15 per cent return in March 2001 when the NAV was growing at about 12 per cent. The Index Select Equity had a NAV of Rs 13.63 per unit in December 19 and has over Rs 24 crore worth of assets under management. Despite the muddle and dwindling equity market, the fund has outperformed both Sensex and Nifty in the last few months. UTI, however, offered a lower 11 per cent dividend on its Mastergrowth-93 scheme on account of a negative 0.99 per cent growth in its NAV since July 2001. A close-ended equity scheme, Mastergrowth-93 had declared 15 per cent dividend in December 1999 and 12 per cent in February 2001. The NAV of the scheme was at Rs 13 per unit in December 19, 2001 and had mopped up Rs 249 crore. The fund’s NAV appreciated to 19.71 per cent over the previous quarter but was growing at 4.57 per cent since its inception.
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