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PAYMENT OF PRICE IS AN ESSENTIAL PART OF A SALE COVERED UNDER SECTION 54 OF TRANSFER OF PROPERTY ACT

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PAYMENT OF PRICE IS AN ESSENTIAL PART OF A SALE COVERED UNDER SECTION 54 OF TRANSFER OF PROPERTY ACT
By: Mr.†M. GOVINDARAJAN
December 6, 2021
All Articles by: Mr.†M. GOVINDARAJAN       View Profile
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Transfer of property

Transfer of property means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself, or it himself and one or more other living persons; and ‘to transfer property’ is to perform such act.

Sale

Section 54 of the Transfer of Properties Act, 1882 defines the term ‘sale’ as a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. Such transfer, in the case of tangible immoveable property of the value of ₹ 100/- 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 immoveable property of a value less than ₹ 100/-, such transfer may be made either by a registered instrument or by delivery of the property. Delivery of tangible immoveable property takes place when the seller places the buyer or such person as he directs, in possession of the property.

Contract for sale

A contract for the sale of immoveable 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 property.

Hence, a sale of an immovable property has to be for a price. The price may be payable in future. It may be partly paid and the remaining part can be made payable in future. The payment of price is an essential part of a sale covered by section 54 of the Transfer of Properties Act,1882.

Sale without price

If a sale deed in respect of an immovable property is executed without payment of price and if it does not provide for the payment of price at a future date, it is not a sale at all in the eyes of law. It is of no legal effect. Therefore, such a sale will be void. It will not effect the transfer of the immovable property.

The Supreme Court, in KEWAL KRISHAN VERSUS RAJESH KUMAR & ORS. ETC. [2021 (12) TMI 147 - SUPREME COURT], that the payment of price is an essential part of a sale covered section 54 of the Transfer of Properties Act, 1882.

In the above case the appellant and his elder brother namely Sudarshan Kumar acquired the properties vide sale deeds dated 12.08.1976 and 19.10.1976. The appellant executed a Power of Attorney to his elder brother on 28.03.1980. On the basis of power of attorney Sudarshan Kumar sold a part of the said property to his minor sons for ₹ 5,500/- and the remaining to his wife for ₹ 6875/-.

The appellant filed two separate suits, one against Sudarshan Kumar and his minor sons and the other against Sudarshan Kumar and his wife. Both the suits were filed for injunction restraining the defendants from interfering with the possession of the property and from alienating the share of the appellant in the said property.

On 23.10.1985 the appellant amended the plaints in two suits by incorporating the relief of declaration to treat the power of attorney executed by the appellant to his elder brother as null and void. A prayer was also incorporated for a money decree for the share of the appellant in the compensation awarded in respect of tube well on the suit properties.

The respondent submitted the following-

  • He was employed in Muscat and earned huge money.
  • He remitted amount to the account of the appellant from time to time from his own earnings.
  • The suit properties were purchased only in his name.
  • The appellant was a benamidar.
  • The appellant accepted the ownership on the property by the respondent vide his letter 15.04.1980.
  • The sale deeds are legal and valid.
  • The prayers of the appellant for a declaration incorporated subsequently by way of amendment in relation to the two sale deeds and the power of attorney were barred by limitation.
  • The prayer for the grant of the share of the appellant in the compensation in respect of the tube well is also barred by limitation.

The suits filed by the appellant were dismissed by the Court. It was held that the suit properties were purchased only in the name of his elder brother. The original deeds were in possession of his elder brother. The Court held that Sudarshan Kumar was the only owner of the suit property and the appellant was disentitled to any relief. The claim of the compensation of tube well by the appellant is also barred by limitation.

The appellant filed appeals against the order of Trial Court before the District Court. The District Court observed that Sudarshan Kumar did not step into the witness box. Nothing was place on record that the entire sale consideration for acquiring the suit properties was paid by him. Sudarshan Kumar also did not produce evidence to show that he had sent money to his brother while he was working in a foreign country. The District Court partly allowed the appeal filed by the appellant holding that the properties are belonged to both the brothers. In the sale deed in favor of his wife the name of his wife is mentioned as daughter of Mehar Chand and not as his wife. The District Court decreed the suit by granting joint possession by setting aside the sale deeds dated 10.04.1981. However the District Court rejected the claim of the appellant in tube well compensation.

The respondents filed appeal against the order of District Court before High Court. The High Court held that-

  • Sudarshan Kumar has failed to give evidence to prove that he remitted money from foreign country to the appellant.
  • The appellant and Sudarshan Kumar are the joint owners of the suit property.
  • The power of attorney was valid.
  • The suits for the invalidity of sale deeds are barred by limitation.
  • The sale considerations of the two properties are not out of reach of the sons and wife of Sudarshan Kumar.

The High Court directed Sudarshan Kumar to pay the share of the appellant in the consideration with 12% interest from the date of execution of sale deeds.            

The said judgment of the High Court was challenged by the appellant before the Supreme Court. The appellant submitted the following before the Supreme Court-

  • The High Court accepted that the sons and wife of Sudarshan Kumar did not pay the consideration of the two sale deeds.
  • The finding of the High Court that the consideration amounts were not out of reach of the purchasers without any base since the sons and wife of Sudarshan Kumar had no source of income at the relevant time.
  • Even in the unamended petition it has been indicated that the sale deeds were null and void as the same were without consideration.
  • The High Court committed a manifest error while recording a finding on bar of limitation.
  • The High Court has erroneously disturbed the decree passed by the District Court.

The respondent submitted the following before the Supreme Court-

  • In his letter dated 05.04.1980 addressed to the respondent, the appellant accepted that the suit lands were purchased out of the amounts remitted by Sudarshan Kumar.
  • The appellant agreed to transfer the suit properties in the name of Sudarshan Kumar.
  • The appellant, for the above said reasons, has no right, title and interest in the suit properties.
  • In the suits filed in May 1983, the appellant did not pray for any declaration regarding the sale deeds and the power of attorney.
  • In November 1985 the appellant amended the plaint in which he prayed for the declaration which was barred by limitation.
  • Without getting a declaration regarding the invalidity or nullity of sale deeds, the appellant cannot claim any relief.
  • The appellant did not discharge initial burden on him by stepping into a witness box.

Therefore the respondent contended that no interference of the Supreme Court is called for with the impugned judgment and order.

The respondent considered the submissions of the parties to the appeal. The Supreme Court observed that the High Court proceeded on the finding that the appellant and Sudarshan Kumar were joint owners of the suit properties as Sudarshan Kumar failed to establish him claim that he was the sole proprietor of the suit properties. Sudarshan Kumar did not file appeal against the said order. Therefore the order of High Court finding that the appellant and respondent were joint owners of the suit properties became final. Sudarshan Kumar also failed to establish that his minor sons and his wife were having sources of income at the relevant time and the money for consideration has been paid. Before District Court Sudarshan Kumar contended that the money was brought by his wife from her parents but for the same he has not produced any evidence. By taking advantage of the power of attorney Sudarshan Kumar transferred the properties in his son’s name and wife’s name.

The Supreme Court held that the sale is void as no consideration has been paid. The sale deeds did not affect in any manner one half of the share of the appellant in the suit properties. The transaction made by Sudarshan Kumar is a sham one. The sale deed will not confer any right, title and interest on Sudarshan Kumar’s wife and his two minor sons as the sale deeds have to be ignored being void.

The Supreme Court further held that the issue of bar of limitation of the prayers for declaration incorporated by way of an amendment does not arise at all. The Supreme Court set aside the orders of High Court and restored the order of District Court.

 

By: Mr.†M. GOVINDARAJAN - December 6, 2021

 

 

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