Fraudulent Power Of Attorney | Onus Of Due Diligence Before Entering Into Sale Transaction Is On Property Purchaser: Gujarat High Court

The Gujarat High Court has reiterated that the onus of performing due diligence with respect to a property before entering into any transaction is on the intending purchaser.

The observation was made while deciding the anticipatory bail application moved by one such property purchaser, who was booked for Cheating under IPC, for purchasing the subject property on the basis of a fraud power of attorney.

It was alleged that the other accused, misusing the signature of the first informant, had prepared a fraudulent power of attorney whereby the authority with regard to properties of the first informant were given one Shaktisinh Zala. The present applicant had purchased the property from said Mr. Zala upon a "sizable sum" of consideration.

The prosecution said that since a sizable sum was parted by the present applicant, it could not be presumed that the applicant did not know about the fraudulent nature of the transaction.

At the outset, Justice Nikhil Kariel observed that the onus of due diligence before entering into any transaction of the like nature, would be upon the purchaser. However, in the facts and circumstances of the case, the Court observed that the present applicant has also shown his bonafides by withdrawing his rights from the properties.

The Applicant had submitted that he had no information about the fraudulent nature of the property and was ready to execute a declaration declaring that he had no right, title or interest in the property. The declaration had been submitted to the office of Sub-Registrar and the Applicant assured that though it was not yet approved, he was ready to abide by the declaration. He would voluntarily enter into a cancellation deed, as well. Consequently, due to such bonafides, pre-arrest bail was sought.