Sale How Made:

Such transfer, in the case of tangible immovable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument. In the case of tangible immovable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property. Section 54 lays down a specific method for the execution of a sale deed with respect to immovable property and completion of sale.

Generally speaking, in a sale of immovable property, the three requirements of law are that transfer of property by sale must take place with the help of a validly executed sale deed, by the transferor in writing, is properly attested, and registered (Munnalal v. Armaram, 2008).


Contract of Sale of Immovable Property:

A contract of sale is different from a sale, as it does not require registration. However, it does not create a charge or an interest in the property. It is merely a document or an agreement that gives a right to obtain another document, i.e., a sale deed. Therefore, it does not require registration (Dave Ramushankar v. Bai Kailasgoure, 1974). However, some equities do arise in favour of the transferee. For instance: where, despite an agreement of sale, the property is transferred to another person, the subsequent transferee with notice of the earlier transaction holds the property in trust for the prior agreement holder (Kondapalli Satyanarayan v. Kondapalli mayullu, 1999).

In the case of Ramesh Chand Ardavatiya v. Anil Pangwani (2003), decided by Supreme Court the owner of a piece of land entered into an agreement for its sale with B. On payment of the advance amount, he handed, over the possession to B but failed to execute a sale deed in his favour. B constructed a boundary wall, but this land was encroached upon by the trespassers on behest of A.B. filed a suit in a court of law for a declaration that he was in peaceful possession of property and sought a permanent injunction from the court restraining the trespassers from interfering with his peaceful possession of the property.

The court held that B is entitled to protect his possession. Directions were issued that A should assert his title through due process of law and was restrained from taking the law his own hands. The court observed that as,

A contract for sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties; it does not of itself create any interest in or charge on such immovable property. However, still if a person who entered into possession over immovable property under a contract for sale and is in peaceful and settled possession of the property with the consent of the person in whom the title vests, he is entitled to protect his possession against the whole world, excepting a person having a title better than what he or his vendor possesses. If he is in possession of the property in part performance of the contract for sale and the requirements of Section 53 A are satisfied, he may protect his possession even against the true owner.”

Mortgage: Justice Mahmood in Gopal v. Parsotam (1883) has defined mortgage as under: Mortgage as understood in this country cannot be defined better than by the definition adopted by the Legislature in section 58 of the Transfer of property Act (IV of l882).

In the case of Santley v Wilde (1899), it was observed that, a mortgage is a conveyance of land or an assignment of chattels as a security for the payment of a debt or the discharge of some other obligation for which it is given. T

he Supreme Court in Kedar Lal v. Hari Lal (1952), has observed that the whole law of mortgage in India, including the law of contribution arising out of a transaction of mortgage, is now statutory and is embodied in the Transfer of Property Act read with the Code of Civil Procedure. The court cannot travel beyond these statutory provisions.

Essential Elements of Sale of Immovable Property

Parties: in a sale there has to be a seller and buyer. The seller has to be competent to transfer the immovable property to the buyer. Both parties i.e. the seller and the buyer have to be competent to contract under the Indian Contract Act. In the case of Misabul Emterprises v. Vijaya Srivastava (2003), it was observed that a contract of sale must be based on a mutual agreement between the seller and the buyer. The transferor should either be the owner of the property or should have an authority to dispose of it.

For example, the karta of a joint family property is authorized to transfer the property under certain specified circumstances (Biswanath Sahu v. Tribeni Mohan, 2003). Similarly, the guardian of the property of a minor is empowered to sell it with the permission of the court, and without such permission the sale would be invalid (Sarup Chand v. Surjit Kaur, 2002). An agent having a power of attorney to sell the property can also sell it without being the owner of the property.

Where the sale is executed after getting a general power of attorney; without obtaining the requisite permission of the court, the sale deed is invalid and would not confer any title on the transferee (Lakhwinder Singh v. Paramjit Kaur, 2004), but if the Power of Attorney executed in favour of the holder expressly authorizes him to transfer the property he would be a competent seller (A Bhagyamma v. Bangalore Development Authority, Bangalore 2010).


Subject Matter of Sale of Immovable Property:

Section 54 only governs the sale of immovable property. Immovable property can be tangible or intangible. Tangible property is one that can be touched, such as a house, a tree etc., while intangible property refers to property that cannot be touched such as a right of fishery, a right of way etc. If there is no sale, there is no need for an agreement to be executed to that effect on the stamp papers.

In Rail Vihar Kalyan Sahkari Awas Samiti v. State of Uttar Pradesh(2005), a cooperative group housing society and its members filed a writ against additional chief-executive officer, Noida, by which the Noida directed the individual members to execute a tripartite agreement with the welfare societies/co-operative society as lessee and NOIDA as lessor for sale of superstructure and sublease deed for respective flats, apartments, residential accommodation allotted by the society to its individual members and restraining them from charging stamp duty on execution of tripartite-deed.

Noida had issued a notice to flat owners to execute the-deed through their respective bodies by a specific date, failing which, the flat owners were to be declared unauthorised occupants, on whom penalty was to be charged. While allowing the writ petition filed by the flat owners, the court held that the societies do not have corpus and the entire consideration for lease was paid by the contributions received from the members.

They constructed these flats/apartments under the self-finance arrangement in which the amount was paid by allotted member in instalments. There was no sale of land or superstructure in their favour and thus, the direction to execute a tripartite transfer deed which includes sale of superstructure and the payment of stamp duty on the said document, was grossly arbitrary and violative of Art 14 of the Constitution.


Transfer of ownership:

There has to be a transfer of ownership by the seller to the buyer.

Price: price is the essence of the contract of sale. It may be paid in a lump sum or in instalments as agreed between the parties. A compromise, a decretal amount, an advance made by one person to another, or an agreement to protect and defend the property at the purchaser‘s cost is a good consideration for sale. Likewise, a family settlement is a valid consideration for an agreement to sell.

Where a son- in-law executed an agreement for sale in favour of his mother-in-law in consideration of a family settlement, it was held that it amounted to a valid consideration for the sale. The ordinary rule governing sale is that payment of consideration is simultaneous with the time when the conveyance is executed by the seller. This rule can be deviated from in case of an agreement to the contrary by the parties (Chandra Shankar v. Abhia, 1952; Prasanta v. IC Ltd., 1955).

For example, A agrees to sell the land to B, and executes a sale deed for the same. Ordinarily, the buyer would pay the consideration on the same day. However, if they agree to pay the entire consideration or part of it at the time of the registration of the document, and partly at the time of the execution or even subsequent to registration, this would be a valid sale.

The term “paid or promised to be paid” also suggests that this promise to pay must be genuine. The buyer cannot escape his primary liability to pay the consideration and if he tries to evade payment by dubious means, no title would pass from the seller to the buyer. For instance, if the buyer pays money through a cheque which is dishonoured, the sale would not take effect (Inder Kaur v. Tara Singh, 1978).The same rule would apply if there is an intention to the contrary expressly incorporated in the contract, that the title would not pass unless the payment has been made in full, or if consideration is paid in advance. This would entitle the purchaser to sue for possession (Vidhyadhar v. Manikro, 1999).

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