CENTER FOR LEGAL STUDIES

GITARATTAN INTERNATIONAL
BUSINESS SCHOOL

Lecture No. 38- REVISION- SALE

Release of Assignment: 26.3.2020

Submission of assignment: 27.3.2020 by
8:00 am
 SALE

Section 54 of the price Transfer of Property

Act defines “Sale” as “sale is a transfer of
ownership in exchange for a price paid or
promised or part-paid and part-promised.

Sale how made – Such transfer, in case of

tangible immovable property of the value of
one hundred rupees and upwards or in the
case of revision or other intangible things,
can be made only by 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 of by delivery of the
property.
Delivery of tangible immovable property
takes place when the seller place the buyer
or such person as he directs, in possession of
the property.”

Essentials of a Valid Sale

According to Section 54, following are the
essentials of a valid sale—
i. the parties, i.e., the seller and the purchase,
must be competent. They are also called
vendor and vendee, respectively. They must
be competent to contract, i.e., must of sound
mind and have attained the age of majority.
The seller must also have right to sell the
property and purchase may be any person
not disqualified to purchase a property under
any law enforced in India.
ii. There must be a subject-matter of sale.
Transfer of Property Act deals with sale of
immovable property. The transfer of
ownership of immovable property is dealt
with under this Act while sale of movable
are dealt with under the Sale of Goods Act,
1930.
Immovable property may be either tangible,
such as land, house, things attaches to earth,
etc., or it may be intangible immovable
property, such as right of ferry or fisheries,
or right to a mortgage debt etc. But the
immovable property must be in existence on
the date of execution of sale.
iii. Price or money consideration—Price is
an essential ingredient of a sale. A sale is a
transfer of ownership in exchange of money.
Payment of price is not necessary for
completion of the transfer but its reference
is necessary. It may be paid at the time of
execution or promised to pay or same part
of it may paid at the time of execution and
rest may be promised to be paid in future.
iv. Conveyance—In sale, property must be
transferred from seller to purchaser.
According to Section 54 there must be a
registered conveyance in the case of—
(a) tangible immovable property of the value
of Rs. 100 and upwards; or
(b) a reversion of an intangible thing of any
value.
In case of tangible immovable property of a
value less than Rs. 100, there must either be,
(a) a registered conveyance, or
(b) delivery of property.

Sale and Contract for Sale

Section 54 of the Act defines ‘sale’ as a
transfer of ownership in exchange for a price
Paid or promised or part paid and part
promised.
Section 54 also defines ‘contract for sale’ as,
“a contract for the sale of immovable
property B a contract that a sale of such
property shall take place on terms settled
between the parties,”
Thus a sale may be preceded by a contract
for sale. A contract for sale is merely a
document creating a right to obtain another
document namely, a duly executed sale
deed. On the Other hand, a sale of
immovable property is a transfer of
ownership.
A sale passes an absolute interest in the
property to the purchaser, but a contract for
sale does not of itself create any interest in,
or charge upon the property in favour of the
buyer. It does not convey any little to the
purchaser.
A sale must be registered, if it deals with the
conveyance of tangible immovable property
of the value of Rs. 100 or more, or a
reversion or any intangible things.
A contract for sale need not be registered at
all.

Sale and Exchange

According to Section 54 of the Act, a sale is
a transfer of ownership in a property in
exchange for a price. On the other hand
exchange is a transfer of ownership in
property in exchange of ownership of
another property. Section 118 of the Act
defines exchange as, “when two persons
mutually transfer the ownership of one thing
for the ownership of another, neither thing
or both thing being money only, the
transaction is called exchange.
Thus in both, there is transfer of absolute
interest in the property, but real difference is
that in sale, the consideration is money,
whereas in exchange, it is another property
or anything of value.
Sale and Gift
In both sale and gift, there is transfer of
ownership of an immovable property.
However the difference between the two is
that where in sale, the ownership is
transferred in exchange for a price, in gift,
the immovable property is transferred with
any consideration.
In sale, if the valuation of immovable
property is Rs. 100 or more, than it is to be
effected only by registered instrument. But
in case of a gift of an immovable property, it
must be made only by registered instrument
irrespective of the valuation of the property.

Sellers Duties and Rights

1. Sellers duties before sale—
(a) the seller is bound to disclose to the
buyer any material defect in the property
or title, of which seller is, and buyer is not
aware, and which buyer could not with
ordinary case discover. [Section 55(1)(a)]
(b) The seller is bound to the buyer on his
request for examination of all documents of
title relating to the property which are in the
seller’s possession or power. [Section 55(1)
(b)]
(c) the seller is bound to answer to the best
of his information all relevant question put it
him by him by the buyer in respect to the
property or the title there. [Section 55(1) (2)]
(d) The seller’s next duty is to execute the
conveyance. He is bound on payment or
tender of the amount due in respect of the
price, to execute a proper conveyance of the
property when the buyer tenders it to him for
execution at proper time of place. [Section
55 (1) (d)]
(e) Seller is bound to take care of the
property and documents of title. Between
the date of contract of sale and the delivery
of the property, he is bound to take as much
case of the property and all documents of
title relating thereto which are in his
possession as an owner of ordinary prudence
would take of such property and documents.
[Section 55(1) (c)]

(f) It is the seller’s duty before the

completion of sale to pay all the outgoings.
Before completing of sale, the seller
continues to the owner of the property, thus
the Government dues, etc., are to be paid by
him. [Section 55(1)(g)]
2. Seller duty after sale—
(a) After completion of the sale, it is the
seller’s duty to gave possession to the buyer.
The seller is bound to give, on being so
required, the buyer or such person as he
directs, such possession of the property as its
nature admits. [Section 55(1)(f)1
(b) It is the seller duty to covenant for title.
Section 55(2) of the Act provides that—
“The seller’s be deemed to contract with the
buyer that the interest which the seller
professes to transfer to the buyer subsist and
that he has power to transfer the same. (This
is also known as implied covenant for title):
Provided that, where the sale is made by a
person in a fiduciary character, he shall be
deemed to contract with the buyer that the
seller has done no act whereby the property
is encumbered or whereby he is hindered
from transferring it.
The benefit of the contract mentioned in this
rule shall be annexed to, and shall go with,
the interest of the transferee as such, and
may be enforced by every person in whom
that interest is for the whole or any part
thereof from time to time vested.”

(c) It is the seller duty to deliver title-deeds

on receipt of the price. Section 55(3) of the
Act provides that, where the whole of the
purchase-money has been paid to the seller,
he is also bound to deliver to the buyer all
documents of title relating to the property
which is in the seller’s possession or power.
However, he proviso to Section 55(3) lays
down that:
▪ Where the seller retains that part of the
property with him, which of greatest
value and, such property is included in
 the documents, the seller is entitled to
retain all the documents with him.
▪ Where the whole of such property is sold
to several buyers the persons who
purchase the largest part of the property
would be entitled to retain all the
documents.
▪ Seller’s Right before Sale—Section
55(4)(a) provides that ‘the seller is
entitled to the rents and profits of the
property till the ownership thereof passes
to the buyer’. ‘Thus, before completion
of the sale, the seller is entitled to all the
rents, profits or another benefit. interests
of the property’.
▪ Seller’s Right after Sale—If after
completion of sale, the price or any part
of it remain unpaid, the seller acquires a
lien or charge on property. Accordingly
to Section 55(4)(b) if price remains
unpaid, the seller cannot refuse delivery
 of possession for can claim back the
possession if already given to buyer, but
he (seller) is given a right to recover
unpaid purchase money from and out of
the property.

Buyer’s Duties and Rights

1. Buyers duties before sale—
(a) Before completion of sale, it is the duty
of the buyer to disclose, facts which
materially increases the value of property,
Section 55(5)(a) of the Act provides that,
“the buyer is bound to disclose to the seller
any fact as to the nature or extent of the
seller’s interest in the property of which the
buyer is aware, but of which he has reason
to believe that the seller is not aware, and
which materially increases the value of such
interest.
(b) The buyer is bound to pay or tender the
purchase money to seller [Section 55(5)(b)].
 2. Buyer’s Duties after Sale—(a) where
the ownership of the property has passed
to the buyer, the buyer is bound to bear
any loss arising from the destruction,
injury or decrease in value of the
property not caused by the seller.
[Section 55(5) (c)].
(b) According to Section 55(5) (d) after the
completion of sale, the buyer is liable to pay
the outgoings, e.g., Government dues, rents,
revenue or taxes, as the buyer becomes the
owner of the property.
3. Buyer’s Right before Sale—
Section 55(6)(a) of Act provides that the
buyer is entitled to (unless he has
improperly declined to accept delivery of
property):
▪ A charge on the property for the purchase
money properly paid by him in
anticipation not the delivery.
▪ (ii) Interest on such purchase money.
▪ The earnest, and cost awarded to him in a
suit to compel specific performance of
the contract or to obtain a decree for its
recession in case he properly declines to
accept delivery.
4. Buyer’s Right after sale—After sale,
the buyer is entitled to the benefits of any
improvement in, or increase in value of,
the property, and to the rents and profits
thereof, [Section 55(6)(a)].
NOTE
ASSIGNMENT for 26.3.2020 is to be
submitted through google form as address
given below. If any student face any
problem, please inform the subject
teacher
(garima.singh@gitarattan.edu.in).
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