Chapter 3

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1. SALE
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SALE
Poonam Pradhan Saxena: Property Law, 3rd ed
Dr Poonam Pradhan Saxena
Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd
ed > Chapter 3 Of Sales of Immovable Property
Chapter 3 Of Sales of Immovable Property
SALE
[s 54] “Sale” defined.—”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 the case of tangible immoveable 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.
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.
End of Document
DEFINITION OF A SALE
Sale is defined under the Act as a transfer of ownership1 in exchange for a price paid or promised or part paid and
part promised. As said earlier, an owner has three basic rights over his property, a right of title, an exclusive right to
possess and enjoy the property and an exclusive right to alienate it. In a sale of property, all these rights are
conveyed by the owner with his free consent2 in favour of the transferee who is called a buyer. No rights remain
with the seller, and the transfer of this totality of rights is called an absolute transfer. A conveyance to be a sale
involves intention of the parties to transfer the property for a consideration,3 and vesting of all rights in the
properties sold in the buyer and divesting of all rights as far as the transferor is concerned.4 In contrast, a lease and
a mortgage are transfer of a right in the property, but not absolute transfers. For instance, in a lease, there is a
transfer of a right to possess and enjoy the property, but the title and a right of alienation remain with the owner.
Similarly, in a mortgage, what is transferred is a right to cause the property to be sold in the event of non-payment
of loan by the mortgagor in favour of the mortgagee. In a sale, all the rights are transferred in favour of the
transferee. Whether a transaction amounts to sale or not would depend on the substance of the transfer. The
transaction may be described as a sale but if it does not convey all the rights in favour of the buyer, it would not be
a sale. For instance, the intention of the parties in a transaction, which, though described as a sale with
consideration, is in fact a security for the money, the transaction is not a sale but a mortgage.5
A sale simpliciter is when a piece of immovable property is transferred by way of a sale with all advantages and/ or
disadvantages on “as is where is” basis and so any assurance of the development of the property amounts to be a
“service” under the Consumer Protection Act.6
General Power of Attorney
A power of attorney is not a sale.7 A sale involves transfer of all the rights in the property in favour of the transferee
but a power of attorney simply authorises the granteee to do certain acts with respect to the property including if the
grantor permits an authority to sell the property. It is revocable unless made irrevocable and therefore a grantee
may not maintain a writ against the order terminating right of his management by the grantee, i.e., the fisherman co-
operative society. GPA Sales or Sale Agreement or Will transfers cannot be used to transfer immovable property.2
Both the descriptions are misnomers as there cannot be a sale by execution of a power of attorney nor can there be
a transfer by execution of an agreement of sale and a power of attorney and will. Immovable property can be legally
and lawfully transferred/conveyed only by a registered deed of conveyance under sections 5 and 53A of TP Act. A
General power of Attorney; Deed of Agreement, Will receipt and Affidavit do not confer title as a sale can be
effected under section 54 of the Transfer of Property Act (TPA) only by a registered sale deed. Where the owner of
the property first executes a power of attorney in favour of the developer but revokes it subsequently, the remedy of
specific relief is not lost to the developer who can still seek specific enforcement of the development agreement.8
Sale and a Hire-purchase Agreement
A transaction of a sale is different from a hire-purchase agreement. A hire purchase agreement may culminate in a
sale, but till it does so, there exists a right in favour of the transferor to rescind the agreement and take back the
possession of his property. Secondly, while payment through instalment is an accepted feature of a hire purchase
agreement, the terms of payment of consideration in a sale are purely dependent upon the agreement between the
parties.
Sale and Exchange

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Sale is the transfer of ownership in a property in exchange for a price that is generally understood as money, but in
an exchange there is a transfer of ownership in exchange for something that is not money. For instance, A, sells a
house to B for Rs 90,000. This would be a sale. But, if A exchanges his house for the land of B, this would be an
exchange. Therefore, a transfer of a land in return for work done or for a person’s maintenance or a claim for betel
expenses would be an exchange, as the consideration here cannot be termed as money. The distinguishing feature
between a sale and an exchange is that in a sale a right of pre-emption may exist, but it cannot exist in case of an
exchange.9
Sale with a Condition of Repurchase and a Conditional Mortgage
A sale with a condition of repurchase is different from a conditional mortgage, in the former the parties are a seller
and a buyer and the consideration for the transfer is the price paid or promised to be paid, but in the latter the
relationship of a creditor and a debtor is present. The mortgagor is a borrower and undertakes to repay a loan and
his remedy is to file a suit for redemption of the property when he is ready to repay the loan. Further, in a sale with a
condition of repurchase, the sale and an option of repurchase is part of one single document. Where the
reconveyance clause was inserted in an unusual manner at foot of deed above signatures but interlineations were
neither signed nor attested by appellant vendor at the time of execution but were made after execution and before
registration. As this reconveyance clause was inserted without consent and knowledge of respondent buyer at time
of registration when he put his thumb impression, it was held that such additions are not binding as such insertion
had been made to convert the absolute sale deed into a conditional sale deed.10
Sale and Lease
In case of a lease, there is a partial transfer and the right of reversion remains with the lessor, whereas in case of a
sale, there must be an absolute transfer of ownership and not some rights only as in the case of a lease. Therefore,
where a document was presented for registration and the issue was whether the document in question was a partial
transfer and accordingly, a lease, or whether it involved any outright sale therein, it was held that it was a lease
deed was executed by the lessor in favour of the co-operative societies and its members.11
Essentials of a Valid Sale
The essential elements of a sale are:
(i) Parties to a sale;

(ii) Subject matter of sale;
(iii) Price;
(iv) Mode of executing a sale.
Parties to a Sale
The parties to a sale are—the transferor who is called a seller, and the transferee who is referred to as the buyer. A
contract of sale must be based on a mutual agreement between the seller and the buyer.12 The transferor or the
seller must be a person competent to contract, i.e., he must be major and of sound mind, and should not be legally
disqualified to transfer the property. A minor or a person of unsound mind is incompetent to transfer his own
property despite being its owner, but a transfer by a mentally challenged person during lucid intervals is valid.
Statutory incompetency refers to an incompetency imposed under law or a statute. When a person is declared as
an insolvent, his property vests in the official receiver, and he is incompetent to transfer the same. Similarly, a
judgment debtor is not capable to sell his property that is to be sold in execution under the order of the court. The
property cannot be sold when it is under the management of the Court of Wards.
Authority to Dispose/Competency of Seller
The seller must be competent to sell the property, as a purchaser cannot have a better title than what his vender
had. Ramdas v Sitabai.13 He should either be the owner of the property or should have an authority to dispose it. A
sale deed executed by any other person in presence of the owner would not be valid.14 For instance, the karta of a
joint family property is authorised to transfer the property under certain specified circumstances.15 Similarly, the
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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.16 In Sachida Nand Sharma v State of Bihar,17 the property belonged to A but
was sold four years after his disappearance by his brother as the guardian of the minor son during the life time of
the natural guardian, i.e., the mother. The mother was of sound mind and there was no evidence that the sale was
for the benefit of the minor, it was held that the sale would be void as having been executed by a person who had
no right or title to the property. 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 was 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,18 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.19 In case a Power of Attorney executed by the owner empowers the holder to transfer
property, the term transfer would include all kinds of transfers including sale and thus, the power of attorney holder
would be competent and entitled to sell the property.20 The fixing of different rates of stamp duty when a Power of
Attorney is executed in favour of blood relative as against in favour of outsider as agent is not unconstitutional and
is to curb tendency of transferring immovable properties through Power of Attorney and inappropriate
documentation and levy of stamp duty on such ostensible documents whose real intention is to transfer immovable
property.21
In Aqeel Ahmad v Mohd Moin,22 a Muslim lady, executed a Will of her property expressly revoking the earlier two
Wills in which she had dedicated her property to Allah giving reasons for the same, and through this last Will she
declared that after her death, the property would go solely to the beneficiary, and upon the death of the beneficiary,
her son in the capacity of her heir would be the owner. In a challenge to the validity of the sale executed by the son,
it was held that the sale executed by such son would be valid and the title in the property would be validly
transferred in favour of the transferee. Similarly, in Husna Bano v Munni Bano,23 it was held that when a person is
the beneficiary under the Will, and he conveys property after the death of the testator, in absence of any provision
in the Will that the property should be held back to pay out the debts, the conveyance of property by the legatee or
his constituted attorney is proper. Where a woman inherits the property of her husband, the fact that she had
converted to Christianity would not be material due to protection available under the Caste Disabilities Removal Act,
1850, and she would be competent to transfer the property through sale having right, and title to the property.24 On
the other hand, a person purchasing the entire property despite being fully aware that the transferor was the owner
of only half portion of the property, cannot later claim to be a bona fide purchaser without notice and his claim of
absolute title over the entire property would be rejected.25 Similarly, a person who is not the sole owner of the
property cannot claim the complete sale proceeds and would be entitled to only a portion of it.26 The change in the
plaint for a relief of declaration of title must be allowed along with the original prayer of cancellation of lease deeds if
it doesn’t change the basic nature of the suit.27
A statutory bar on alienation will override the provisions of the TP Act.28
Buyer
The transferee must be a person competent to receive a transfer in his favour. He should not be subject to a legal
disqualification. For instance, an actionable claim under section 136 cannot be purchased by a judge, legal
practitioner or an officer connected with the court. Similarly, an officer performing an official duty in connection with
the sale of the property cannot purchase the same.
A minor is a competent transferee in a transaction of a sale. Similarly, a mortgage or a gift can be executed in
favour of a minor, but a minor cannot take a lease in his favour, as a lease has to be executed by both the parties.
A lease in favour of a minor is therefore, void.29
Even if the acceptance of the papers and the possession is by a person other than the transferee mentioned in the
document, though with an endorsement, the sale would not be vitiated on this account. In Jagtar Singh v State of
Punjab,30 the recitals in agreement and sale deed showed that the transferee was the state government. The land
was recorded in favour of the ownership of state government c/o Baba Farid University of Health Sciences and
acceptance of the sale deed was by the Vice Chancellor of University The sale was held as valid and in favour of
state government as a transferee.
Subject Matter of a Sale
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 land, 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.
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The property must be sufficiently identified. For that, the plot number, the street and the area must be clearly
mentioned, but a mistake in the plot number would not prove to be fatal if other particulars are correctly mentioned.
In Ram Jiwan Rai v Deoki Nandan Rai,31 the issue was whether the property that was the subject of transfer was
sufficiently identified. The controversy arose as the plot number mentioned in the documents was incorrect. The
court held that as both boundaries and plot number were given in the sale certificate, a mistake in the plot number
must be treated as a mis-description which did not affect the identity of the property sold. Rather, it was intrinsic
evidence in proving that seller wanted to convey the right and title in the suit property to the buyer.
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,32 a co-operative 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. Deciding the writ petition in the favour of 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 allottee
member in installments. 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 Article 14 of the Constitution.
Price
Price,33 that is fixed by the contract antecedent to the conveyance is the essence of a contract of sale,34 and in the
ordinary sense connotes money consideration for the sale of property.35 Where, instead of price, some other
valuable consideration is kept, the transaction is not a sale but can be an exchange or a barter.36 Where the
consideration is money but is not specific, the transaction would still be a sale. If the transaction on the face of it is
complete, it cannot be regarded as a mere agreement only on the ground that the price is unascertained at that
time.37
A compromise,38 a decretal amount,39 an advance made by one person to another,40 or an agreement to protect
and defend the property at the purchaser’s cost,41 is a good consideration for sale. Likewise, a family settlement is a
valid consideration for an agreement to sell.42 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.43
An agreement to maintain the transferor,44 or not to contest a suit,45 or to file a suit for redemption and bear all its
costs,46 cannot be called price as is understood under this section, and therefore, if these are the considerations,
the transaction would not be a sale. Similarly, a transfer effected where the consideration is the work done in
clearing and sinking a well,47 or for the satisfaction of charge of maintenance,48 or in lieu of kharcha-e-pandan49 is
not a sale, but a transfer of immovable property in lieu of dower of a Muslim woman, can be a sale.50
Price Paid or Promised
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.51 For instance, 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, but 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. Price is the essence of the contract of sale, but the time for payment of it is not the
essence of the sale, unless the contract stipulates so.52 Therefore, it is not mandatory that payment of the price
should be at the time of the execution of the sale. Price can be paid even before, at the time or even subsequent to
the completion of the sale. It is also not necessary that the whole of the consideration or price should be paid at one
time. This would depend purely on the terms and conditions agreed upon as between the parties. If the recitals are
indecisive, surrounding circumstances or conduct of parties are a relevant factors53 to decide the validity of the sale.
The term “paid or promised” shows that a sale is complete on registration even though price has not been paid but
is promised to be paid.54 Payment of price, therefore, is not a sine qua non to the completion of sale.55 A promise
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that price will be paid within a year is valid,56 but if it is not paid the seller cannot set aside the sale57 or sue for
getting the possession back.58 His only remedy would be to sue the buyer for the price.59 Where the intention of the
parties was clear that the title in the property would pass in favour of the transferee only after the payment of
complete consideration, then notwithstanding the fact that the sale deed has been registered, the transfer of
ownership would not take place till the payment of the total price.60
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, or if there is an assertion in the sale deed that the sale consideration is already paid and this assertion
is false,61 the sale would not take effect.62 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.63 Notwithstanding an
admission in the sale deed that consideration has been received, it is open to the seller to prove that no
consideration has actually been paid.64 A seller may retain the deed pending payment of price; and in that case the
ownership will not pass, and no transfer would take place until the price is paid and the deed delivered.65
The purchaser is free to pay the entire sale consideration to the seller in advance or at the time of taking the
possession and even if there is sufficient consideration to be paid at the time of the possession without executing
the sale deed to enable the purchaser to enjoy the usufruct, the transaction would be valid.16 In absence of specific
pleading to the effect, the courts should not decide the justness or fairness of agreements entered into by the
parties.66
Price Mandatory for Sale
Price is of the essence of the contract for sale.67 In absence of price there cannot be a valid sale. Price should
either have been paid or promised to be paid. Adequacy of price is not mandatory. It can be lower68 or higher than
the market value, yet the sale would be valid, but evidence can be adduced that in fact the transaction is not a sale
but a gift,69 or even a mortgage, more so where the price, on the face of it, appears to be grossly inadequate. When
sale deed is relied upon for determination of market value, the consideration mentioned in the sale deed cannot be
ignored. In absence of proof for undervaluation or proof that sale was a distress sale, it is not possible to ignore sale
price mentioned in sale deed.70 There is no enforceable contract unless the price is fixed and despite the
registration of the sale deed, no title would pass. A transfer merely to enhance the status without any price is not a
valid sale.71 A purchase of 33 years net income by way of price is valid.72 Where no price is paid but the transfer is
a reward for past or future cohabitation, it is not a valid sale.73 Evidence is also admissible to show that a deed in
the form of sale was, in fact, intended to operate as a gift.
Formalities for Effecting a Sale
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, 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.74 Till all three formalities are complied with, no right passes from the seller to the buyer but in case the
property is of nominal value, the sale of property can be completed by a simple delivery of possession of such
property. In such cases, due to the small value of property, the formality of writing, attestation and registration is
dispensed away with, but this does not mean, that immovable property whose value is less than Rs 100 cannot be
transferred by adhering to these three requirements. It is only that writing, attestation and registration in such cases
is optional.75 The test is the value of the property and not the amount of consideration or the price. If the property is
worth more than hundred rupees, but is being sold for less than this value, the modalities of writing, attestation and
registration would be necessary.
The above-mentioned requirements of executing a formal sale deed so as to confer a valid title in favour of the
transferee are not applicable in case of sale of property at a court auction and a certificate of sale issued by the
court is enough as the purchaser’s document of title.76
Rules governing only Immovable Property
The rules specified in section 54 govern the transfer of immovable property only by sale and not movable
property.77
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Registration
Sale of tangible immovable property of the value of Rs 100 and upwards or in case of a reversion or other intangible
things as aforesaid, can be made only78 in writing. The deed must be properly attested and should also be
registered.79 Compulsory80 affixing of photographs, finger prints, sign etc. purport to restrict or minimize forgery or
fraud.81 If by a single document, both movable and immovable properties are transferred, and the value of the
immovable property is more than Rs 100, such transfer must take place with the help of a written, attested and
registered instrument.82 Rights and title to the property cannot pass by an admission of the seller, when the statute
requires a deed.83 Similarly, recitals in the deed, or references in petitions to the officials,84 or even a mutation of
names85 is not helpful and a properly executed and registered document must be shown. Where the original
registered sale deed is lost, then, in such cases, secondary evidence is admissible to prove registration and the
contents of the deed.86 An agreement to reconvey property need not be registered.87 Where the property is situated
in one area, a person cannot avail the jurisdiction of a registering authority in another area by simply including a
yard of land in the latter’s area without any real intention of selling it.88 The onus of proving that it is a fraudulent
registration is on the one who alleges it.89
Since sale of immovable property becomes complete and effective only when it stands registered in a written
instrument, there may be issues for determination of the market value of the property where the land also has a
building over it, but the owner of the land does not own the building. Both the title in the land and the building over
the land are separable and vest in two different persons. In Ashok Kumar v Chief Controlling Revenue Authority,90
the owner sold the land. The land had a hotel constructed over it and the owner of the land was not the owner of
this hotel. It was held that while affixing stamps, the value of the land only would be included and not that of the
hotel. Further, in such a sale of land, the title with respect to the land only will pass and not in the property
constructed over the land, as the owner had no title in the hotel.
Where Value of Property is Less than Hundred Rupees
In the case of tangible immovable property of the value of less than Rs 100, transfers may be made either by a
registered instrument91 or by delivery of the property.92 In such cases the transfer is completed by the delivery of
possession of the property.93
Registration and Transfer of Ownership
As aforesaid, writing, attestation and registration are the mandatory requirements for the completion of a valid sale
of property, whose value is more than Rs 100. Transfer of ownership cannot take place without registration,94 and it
concludes on registration unless there is a contrary intention expressed in the contract. Therefore, a suit for pre-
emption that can be filed only after the conclusion of the sale, if filed before registration, will be premature.95 Where
the sale deed was executed on 28 July 1989, but was registered on 22 June 1992, a pre-emption suit filed on 18
June 1992, was held by the Calcutta High Court as premature.96 Once registration takes place, the ownership
passes with effect from the date of the execution of the sale deed,97 unless there is an intention of the parties to the
contrary.98 Ownership under a deed for sale executed before but registered after a suit was filed with respect to this
property, will not be hit by lis pendens.99 Similarly, a subsequently registered deed will not affect a former executed
sale deed, though registered later.1 As the title to the property operates from the date of execution and not from the
date of registration of document concerned, hence, the property registered on same date as execution of Will, but
sale in respect of which had been executed prior thereto, could be properly bequeathed.2 In spite of the fact that the
registration of the sale deed would relate back to the date of execution, the sale cannot be termed as complete until
its registration and it becomes effective only once it stands registered. The fiction created by section 47 does not
come into play before the actual registration of the document takes place.3
A unilateral cancellation of sale deed once it is complete is not allowed by registrar.4
Date of Execution not the Determining Criteria
In case of parallel claims over the ownership of the property, the date of execution of the sale deed is not the sole
determining criteria for determining the ownership issues. In a case from Gujarat,5 A claimed to purchase a land on
25 July 2002. B also had a parallel claim, through a written deed dated 16 July 1999. The court held that the
ownership issues cannot be decided merely from the dates of the execution of the sale deeds.
Intention of the Parties

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The general rule of passing of ownership on registration is subject to the intention of the parties expressed in the
contract. A document must be construed in its entirety for it to satisfy all the requirements of a conveyance of sale
as envisaged under section 54 of the Transfer of Property Act.6 Where the intention cannot be gathered from the
document or appears ambiguous, extraneous evidence is admissible for clarity.7 An intention that the deed would
be void unless the price is paid in a fixed time is valid, and accordingly, if the price is not paid within a specific time,
the sale would become invalid.8 Similarly, if in accordance with the intention of the parties a contract of sale is to be
treated as a sale deed if certain conditions are fulfilled, it will be so treated on the fulfillment of those conditions9 or if
the intention was that transfer of ownership is to take place on the registration, the ownership in the property passes
on such registration even though the possession has not been delivered10 or the price has not been paid.11 Where
the property stood transferred by a genuine registered GPA sale/ conveyance to transferee, as it was no longer the
property of transferor, it cannot be attached as against judgment debtor.12
Consequences of Lack of Registration
If there is no registration of the sale deed, no property passes as there is no transfer.13 Execution of a mere power
of attorney or an agreement of sale without a registered conveyance would not transfer ownership in the property.14
An admission that the land has been sold will not operate as an estoppel so as to do away with the necessity for a
registered conveyance.15 Title to the land does not pass by mere admission when the Act requires a conveyance,
and the law gives no protection to a person claiming a right under an unregistered alleged sale.16 An unregistered
sale deed can be used as evidence as to character of possession of the property,17 despite its value,18 such as
adverse possession19 or of co-ownership.20 Where an unregistered sale deed was accompanied by a money receipt
stating that the transferor had received a specific amount as consideration for the land that he had sold to B, without
any registration or revenue stamp, it was held that the document did not affect a valid sale in favour of B. In such
cases even if possession were delivered to B, he would not be entitled to the benefit of the doctrine of part
performance.21
Delivery of Tangible Immovable Property
Delivery of tangible immovable property takes place when the seller places the buyer or such person as he directs,
in possession of the property.22 Possession of house can be given by delivery of keys,23 and that of land by going
over to the land.24 An equity of redemption of the value of less than Rs 100 can be delivered by showing the
boundaries25 or some other overt act signifying the change in possession.26 Where the purchaser is already in
possession of the property then delivery of possession is complete if the seller by appropriate acts or declarations
converts permissive possession into possession as an owner.27 In case of a usufructuary mortgagee in possession,
possession can be delivered by the seller, by doing all he can under the circumstances by indicating finally and
unambiguously his intentions to pass the title.28
Unregistered Sale Deeds
If there is an unregistered sale deed, transfer of tangible immovable property worth less than Rs 100 can be validly
effected by delivery of possession,29 which may be subsequent to the execution of the deed.30 Since transfer of
immovable property worth less than Rs 100 is statutorily permissible without a registered document, such
unregistered sale deed is admissible in evidence.31 In absence of delivery of property effecting a transfer of tangible
immovable property worth less than Rs 100, the transfer must be effected by a registered instrument.32 An
unregistered instrument unaccompanied by possession is of no avail,33 and would not support a suit on title,34 but
the party is not precluded from proving the sale from delivery of the property.35
Where there is a sale of property worth less than Rs 100 with delivery of possession of property the effect of the
transaction is not destroyed because an unregistered sale deed was executed at the same time, the unregistered
sale can be referred to in order to ascertain the nature of the possession of the purchaser.36 In Davendra Singh v
State of Rajasthan,37 the land was purchased in 1950 vide an unregistered sale deed and in furtherance of such
sale, possession was delivered to the purchaser. It was held that though the value of the land was shown in the
document as Rs 90 only, the said document was required to be registered and would therefore, not be admissible in
evidence. As per section 54, a document for sale of immovable property having value less than Rs 100, if written,
must be registered failing which the said document cannot be admitted in evidence. In determining the requirement
of registration, the courts should dwell upon the issues of change of user of land, valuation of land and such other
ancillary aspects in a proper perspective.38 In the case of unregistered sale deeds, the priority between buyers
under interest, if any created by the unregistered sale deed is that the effect of possession under the first
Page 8 of 17
unregistered sale deed would terminate and prejudice the second buyer.39
Completion of oral sales
Tangible immovable property transferred through an oral contract of sale is complete when either the possession is
delivered40 or the price has been paid.41 Delivery of possession will complete the sale even if the price has not been
paid.42 Law recognises only two modes of transfer by sale, one by registered instrument and the other by delivery of
possession of property. An oral sale that is not accompanied by delivery of possession of property therefore is not
permitted under the TP Act.43 The necessary ingredient for completion of sale is the handing over of the properties
to the purchaser. In Manickam v Chinnammal,44 A claimed that he had purchased the property as early as in the
year 1976, but did not file any scrap of paper to show that he was put in possession, patta changed in his name and
he paid the kist and that his name finds place in the Adangal. The sale was held as invalid
Contract of sale
There can be an agreement of sale before the execution of a sale deed.45 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.46 While a sale is a
transfer of ownership, a contract for sale is merely a document creating a right to obtain another document, namely
a registered sale-deed to complete the transaction of sale of an immovable property. Section 54 in its definition of
sale, does not include an agreement of sale and neither confers any proprietary rights in favour of the transferee
nor by itself, create any interest in or charge on the property.47 There is a conflict of judicial opinion on the issue,
whether a contract for sale, which is not in writing nor signed by the parties, is valid. The Jammu and Kashmir High
Court has held that it is not valid,48 but, the Andhra Pradesh High Court has held that an agreement of sale can be
even oral49 and would be as valid as a written agreement. In another decision, the same court has also held that
even if it is in writing but is not signed by the purchaser, it does not mean that there is no concluded contract.50 The
Delhi High court has held that any contract/agreement of sale which is not a registered deed of conveyance (deed
of sale) would fall short of the requirements of sections 54 and 55 of TP Act and will not confer any title nor transfer
any interest in an immovable property (except to the limited right granted under section 53A of TP Act).51
A contract of sale is different from a sale, as it need not be registered.52 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. A sale operates by itself and without delivery to transfer property in goods sold. The word “sale” connotes
both contract and conveyance or transfer of property. The distinction between contract of sale and agreement to
sell lies in the transfer of property in a thing from one person to another, for a price. A registered sale deed alone
conveys a valid title over the property, but a sale agreement does not create any valid title. As a contract for sale is
not the same as a sale and is not required to be compulsorily registered and title remains with the vendor, but if an
agreement of sale is coupled with delivery of possession in part performance of conveyance, rights created under
this document requires compulsory registration as this agreement of sale partakes the character of a conveyance
and would require both registration and stamp duty.53 However, some equities do arise in favour of the transferee.
For instance:
(i) 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.54
(ii) A suit for specific performance can be granted on the basis of an agreement of sale.55 But if the contract of
sale is subject to future negotiations for finalisation of more terms of contract for sale,56 such a suit cannot
be granted.
(iii) A contract for sale does not create a title in immovable property, but if in furtherance of this contract,
possession has been delivered to the transferee, and if other conditions laid down in section 53A are
satisfied, the transferee is entitled to protect his possession and is also empowered to restrain a trespasser
from interfering with his peaceful possession of the property.
In Ramesh Chand Ardavatiya v Anil Pangwani,57 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 the 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 was entitled to protect his possession. They directed that A should assert his title
through due process of law and was restrained from taking the law in his own hands. The court observed,
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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 S. 53A are satisfied, he may
protect his possession even against the true owner.
A contract of sale can be completed and would be valid upon execution by the seller and it is not necessary that the
agreement to sell must have been signed by the purchaser.58
In some cases, the document of a sale deed may be termed differently, yet would operate as a sale deed. In Udai
Sapkota v Laxmi Prasad Sapkota,59 document used the words “Chinti Bikri”. This was a Nepali term that meant a
complete sale. The content of the document stated that the seller was giving a written money receipt, after finally
selling the dry field and that he shall register the land. It was held that the document would be a sale deed and not
merely a money receipt. In the context of an agreement for sale of a flat, where the receipt did not contain a
covenant to the effect that any formal Agreement to Sell would have to be executed, even a document styled as a
“Receipt”, can operate and be enforceable as a contract.60
Contract of Sale does not Create a Charge
An agreement of sale does not of itself create any interest or charge on such property61 even after a decree for
specific performance has been passed with respect to it.62 All that a person gets is a right of litigation on this
basis.63 A person who has contracted to buy the land is not entitled to mense profits64 or to apply to set aside an
execution sale of the same property.65 Where the land is compulsorily acquired and the person who has entered
into a contract to purchase it sues for specific performance of the contract, he is not entitled even to
compensation.66 Where there is a contract for sale of unascertained goods the requisite permission for cutting and
felling trees can be obtained only by the owner of the trees, and not by a person who has entered into an
agreement to fell them.67 In absence of a registered sale deed, no one can call himself an owner on the basis of an
agreement to sell,68 but an obligation can be annexed to the property, which is enforceable against a voluntary
transferee.69
An agreement to sell will prevail over attachment before judgment made subsequent to such agreement to sell.70
Agreement to Sell and Suit for Specific Performance
Since an agreement to sell is primarily a contract between two parties, they must follow the terms and conditions
laid down in the contract and if after entering into a contract for sale of property, the seller without any reasonable
excuse avoids executing a sale deed, the buyer can proceed to the court and file a suit for specific performance of
the contract. The court would award his suit and direct the seller to execute a sale deed in his favour. But for that it
must be established by the buyer, that he has fulfilled his part of the bargain, be it payment of price or any other
condition. In addition he must state the facts clearly and truthfully before the court. His intentions must be bona fide.
In a suit for specific performance of alleged agreement of sale, the admission of unregistered sale deed as
evidence is allowed.71 Whether an agreement of sale concluded or remained an offer is a question of fact. When an
agreement deed is executed whereby the seller agrees to sell immovable property to buyer for consideration, and
the buyer pays the consideration in part, it would be a concluded contract of sale. If either he is not ready and
willing to perform his part of the bargain or he wants execution of sale deed after stipulating some conditions that
did not form part of the agreement to sell, or misquotes the terms of the agreement and set up a false claim merely
to create a basis for specific performance such as that the land would be converted into Lal Dora and that the
payment of the balance amount was to be dependent on such event, he would not be entitled to a decree of
specific performance.72 In an agreement to sell and a decree for specific performance of the contract, the contract
between parties is not extinguished upon passing of the decree, and this passing of the decree does not modify or
abrogate any of the express or implied terms of the contract. Parties to the contract continue to bear the rights and
obligations to complete the contract in accordance with the terms and conditions of the contract. It does not confer
an indefeasible right upon the decree holder to get the property straightway in his own name as the decree for
specific performance, merely recognizes the claim for specific performance of contract. The Court shall presume
unless and until the contrary is proved that breach of contract to transfer immovable property cannot be adequately
Page 10 of 17
relieved by compensation in money. This presumption is a rebuttable one.73The consequences of an agreement to

sell includes the creation of right in respect of the property being sold in favour of vendee when the agreement to
sell had been executed in favour of a person, he gets right to get that property transferred in his favour by filing a
suit for specific performance.74
In Mohd Hafizullah v Javed Akhtar,75 an agreement to sell the property was executed by A, B and C, in favour of X
and Y. The property comprised of a residential house and the share of all three sellers constituted 3/4th of the
house. 1/4th was under the ownership of W. She prayed that the buyers be directed to purchase her share as well,
as nobody else would be interested to buy virtually an undivided small share in a house. The court granted her
prayer and directed that she be permitted to sell her share to either X or Y or to their nominee. W was approached
by Q as the nominee of X and Y but offered to purchase the share of W in her own right and not as a nominee of
X/Y. The property was sold to her. When X and Y came to know that the property had been sold to somebody else,
without informing them, they approached the court for cancellation of the sale deed in favour of Q as the same
according to them was procured by fraud and for a suit for specific performance of the contract of sale in their
favour. Upholding their claim, the court ordered for cancellation of the sale deed executed by W in favour of Q as
the same was procured by fraud and without giving any notice to X and Y, and decreed specific performance in
favour of X and Y.
When a decree for specific performance of agreement of sale of immovable property is passed in favour of
transferee under prior contract for sale, resulting in cancellation of sale with subsequent purchaser, seller cannot
retain sale consideration received from subsequent purchaser.76
Contract to Reconvey the Property
The executant of the sale deed may incorporate an agreement for reconveyance of the property, but that depends
purely on the terms and conditions agreed upon as between the parties. Therefore, in absence of any such clause,
no inference can be drawn that the contract for reconveyance of land is included in any contract.77 If there are two
separate deeds and it is stipulated in the subsequent deed, it can be proved as genuine.78 In D R Rathna Murthy v
Ramappa,79 after the execution of the sale deed, a clause relating to reconveyance was inserted without the
knowledge of the buyer in unusual manner to convert the character of the deed. On the issue of the validity of the
reconveyance clause, the court said that in determination of whether a sale is absolute or conditional, the Act
provides the complete code in property law and held that the deed would continue to remain an absolute sale and
the reconveyance clause inserted post execution of an absolute sale fraudulently would be totally invalid. Similarly,
in Vitthal Maharu Patil v Fakira Bhavsing Patil,80 a sale deed was executed in favour of the transferee and
possession was also delivered but the deed did not contain any stipulation of re-conveyance and/or recovery of the
suit house to the transferor on receipt of the consideration, there was no endorsement to the effect of reconveyance
nor stipulation of time either in the deed or in the sale receipt that was unregistered, the mere allegation that a deed
of reconveyance was executed on the same day, would be ineffective more so when the notice for reconveyance of
the property was given after a long gap of 12 years.
Cancellation of Sale Deed
After execution of sale deed, once the owner divests himself of his ownership of property, he retains no control or
right over the said property including one of cancellation of the sale deed, and the purchaser becomes the absolute
owner. Such sale deed cannot be nullified by executing a deed of cancellation, even by consent or agreement
between the purchaser and vendor. Such a deed of cancellation of sale cannot be accepted for registration and
cancellation can be ordered only under section 31 of the Specific Relief Act.81 In K Raju v Bangalore Development
Authority,82 it was held that even if the seller happens to be the state development authority, (in this case the
Bangalore Development Authority) it can neither execute a cancellation deed unilaterally nor determine its validity,
as the power to annul it is with the court. As the cancellation deed can be registered only after declaration of
competent court, if there is no declaration by competent court, such deed would be null and void. If seller wants to
cancel a sale deed subsequently, then he has to file a civil suit for cancellation or he can ask the buyer to sell back
that property. An execution of the cancellation deed may not be done unilaterally by the seller, and cancellation of
sale deed and registration of the same would be wholly void and non est and can be ignored altogether.83 Thota
Ganga Laxmi v Govt of Andhra Pradesh, (2010) 15 SCC 207.
Proof of Execution
The execution of a sale deed in cases of conflict and doubts can be testified by the witnesses. In Udai Sapkota v
Laxmi Prasad Sapkota,84 the scribe entered the witness box and testified the contents of the document and verified
Page 11 of 17
the same along with the son of the executants who also unequivocally corroborated the execution of the document.
It was held that execution of the sale deed was duly proved and the fact that executants himself did not testify
would not be material. Mere change of purpose of sale, land use would not invalidate the sale deed,85 but when the
execution of sale deed is allegedly based on cheating, the party must bring it to the notice of the court at the
earliest86. The method of transfer of property i.e., acquiescence by delay and laches to be optional mode to transfer
must be expressly stipulated in the contract.87. There is a priority of mortgage over a sale made during the
subsistence of the mortgage88 and likewise, a right of pre-emption recognized by statute would be treated as
mandatory.89
1 A transfer of ownership does not include a grant of an easement, see Bhagwan Sahai v Narsingh Sahai, (1907) 31 All
612; Kondayya v Yandru Veeraanna, AIR 1926 Mad 543; Musunoori Satyanarayana Murti v Chekka Lakshmayya, AIR
1929 Mad 79. An assignment of fruits of action is not a sale, see Abdul v Shaluka Bibi, (1894) ILR 21 Cal 496; Kalyan v
Desrani, AIR 1927 All 361. A hire purchase transaction is not a sale, see Hameed v Jayabharat Credit and Investment
Co Ltd, AIR 1986 Ker 206 [LNIND 1985 KER 332].
2 Ratan Bai v Basanti Bai, AIR 2008 (NOC) 1172 (MP).
3 Iqbal Singh v State of Haryana, (2011) 3 Ren CR (Civil) 365; Surinder Pal v Rainbow Promoters Pvt Ltd, (2011) 2 Ren
CR (Civil) 762 : (2011) 99 AIC 583.
4 Surinder Pal v Rainbow Promoters Pvt Ltd, (2011) 2 Ren CR (Civil) 762 : (2011) 99 AIC 583.
5 Ramlal v Phagua, (2006) 1 SCC 168 [LNIND 2005 SC 820]; Chennamal v Manimalayalam, AIR 2005 SC 4397 [LNIND
2005 SC 819]; Umabai v Neelakanth D Chavan, (2005) 6 SCC 243 [LNIND 2005 SC 368]; Shanti Devi v Nand Lal, AIR
2005 Raj 218: Raj LW 2005 (2) Raj 1249; Abdul Sami Qureshi v Sardar Kuldeep Singh, AIR 2008 (NOC) 840 (All):
2008 (1) All LJ 395; Tulsi v Chandrika P Prasad, AIR 2006 SC 3359 [LNIND 2006 SC 658]: (2006) 8 SCC 322 [LNIND
2006 SC 658]; Bhagwan Devi v Beni Bai, AIR 2006 All 251 [LNIND 2006 ALL 23]; Jankiraman v State, (2006) 1 SCC
697 [LNIND 2006 SC 12]; Shankerlal Ganulal v BS Bharuka, AIR 1999 SC 260.
6 Narne Construction Pvt Ltd v UOI, (2012) 5 SCC 359 [LNIND 2012 SC 313] : 2013 (29) STR 3 (SC).
7 Jayanta Ghosh v State of West Bengal, AIR 2008 (NOC) 303 (Cal).
8 Sudhir Tyagi v Subhash Tyagi, (2011) 179 DLT 780 (Del); Ashok Kumar Jaiswal v Ashim Kumar, AIR 2014 Cal 92
[LNIND 2014 CAL 152]. see also Suraj Lamp and Industries (P) v State of Haryana AIR 2009 SC 3077 [LNINDORD
2009 SC 574]: 2009 (76) ALR 792 : 2010 (6) ALT11(SC) : 2010 (3) BomCR 808; 2011(6) KarLJ 62 : 2009 (6) MhLJ
11(SC) : 2009 MPLJ 315 (SC) : 2009 (9) Scale 36 [LNINDORD 2009 SC 574] : (2009) 7 SCC 363 [LNINDORD 2009
SC 574] : [2009] 10 SCR 1048 [LNINDORD 2009 SC 574].
9 Ismail Shah v Saleh Muhammad, AIR 1925 Lah 326.
10 DR. Rathna Murthy v Ramappa, (2011) 1 SCC 158 [LNIND 2010 SC 985].
11 As per section 54 and section 105 of the Transfer of Property Act, see Residents Welfare Association, Noida v State of
UP, (2009) 14 SCC 716 [LNIND 2009 SC 858].
12 Misahul Enterprises v Vijaya Srivastava, AIR 2003 Del 15 [LNIND 2002 DEL 670], 100 (2002) DLT 290.
13 JT 2009 (8) SC 224 [LNIND 2009 SC 1367].
14 Anu Dutta v Lolit Kalita, AIR 2013 Gau 179.
15 Biswanath Sahu v Tribeni Mohan, AIR 2003 Ori 189 [LNIND 2003 ORI 191].
16 See Church of Christ Charitable Trust & Educational Charitable Trust v Ponniamman Educational Trust, (2012) 8 SCC
706 [LNIND 2012 SC 381]; Sarup Chand v Surjit Kaur, AIR 2002 P&H 54.
17 AIR 2013 Pat 89 [LNIND 2013 PAT 595].
18 Lakhwinder Singh v Paramjit Kaur, AIR 2004 P&H 6.
19 A Bhagyamma v Bangalore Development Authority, Bangalore, AIR 2010 Kar 63 : 2009 (4) Kar LJ 509 [LNIND 2009
KANT 90] (Kar).
20 A Bhagyamma v Bangalore Development Authority, Bangalore, AIR 2010 Karn 63 : 2009 (4) Kar LJ 509 [LNIND 2009
KANT 90] (Kar).
21 State of MP v Rakesh Kohli, (2012) 6 SCC 312 [LNIND 2012 SC 326].
22 AIR 2014 (NOC) 303 (All).
23 AIR 2013 Cal 111 [LNIND 2013 CAL 121].
Page 12 of 17
24 K Sivanandam v Maragathammal, AIR 2013 Mad 30 [LNIND 2012 MAD 1767].

25 V Ethiraj v S Sridevi, AIR 2014 Karn 58.
26 Harminder Khullar. v Swaran Kant Juneja, AIR 2014 (NOC) 6 (Del).
27 Abdul Rehman v Mohd Ruldu, (2012) 11 SCC 341 [LNIND 2012 SC 597].
28 Ram Karan v State of Rajasthan, (2014) 8 SCC 282.
29 See section 107 of the TP Act.
30 AIR 2012 P&H 145.
31 AIR 2005 Pat 23 : 2004 (2) BLJR 1062.
32 AIR 2005 All 86 [LNIND 2006 AP 831]: 2005 (1) AWC 682.
33 The term price has not been defined in The Transfer of Property Act, 1882, but is used in the same sense as in the
Indian Contract Act, 1872, section 77; see Subbireddy v KN Srinivasa Murthy, AIR 2006 Kant 4 [LNIND 2005 KANT
406]: 2005 (6) KLJ 489; Jagir Singh v Ranjeet Singh, AIR 2006 Raj 105 : Raj LW 2005 (4) RAJ 2941; Inder Chand v
Sethi, AIR 2006 Raj 251 [LNIND 2006 RAJ 32]; Ramlal v Phagua, (2006) 1 SCC 168 [LNIND 2005 SC 820] : 2006 AIR
SC 623; Kedar Nath v Emperor, (1903) ILR 30 Cal 921; Queen Empress v Appavu, (1886) ILR 9 Mad 141;
Samartalmal v Govind, (1901) ILR 25 Bom 696.
34 Surinder Pal v Rainbow Promoters Pvt Ltd, (2011) 2 Ren CR (Civil) 762 : (2011) 99 AIC 583.
35 CIT v Motor and General Stores, AIR 1967 SC 200; Madan Pillai v Badrakali, AIR 1922 Mad 311 [LNIND 1922 MAD 5];
Rajjko v Lajjo, AIR 1928 All 204; Bashir Ahmed Khan v Zubeida Khatun, AIR 1926 Oudh 204; Abadi Begum v
Mohamad Khalil, AIR 1930 Oudh 481.
36 State of Madras v Gannon Durkerley, AIR 1958 SC 560 [LNIND 1958 SC 39]; CIT v Motor and General Stores, AIR
1967 SC 200.
37 Unnao Commercial Bank v Kailash Nath, AIR 1955 All 393 [LNIND 1954 ALL 38].
38 Alagappa Chettyar v Chettyar Firm, AIR 1934 Rang 287. A compromise, it has been held, is an existing right and
cannot be regarded as a sale, see Krishan Tanjahi v Aba, (1910) ILR 34 Bom 139.
39 Sura Reddy v Ram Sarasa, AIR 1937 Mad 714 [LNIND 1937 MAD 59].
40 Ashok Chandra v Chota Nagpur Banking Corp, AIR 1948 Rang 294.
41 Berni Madho v John, AIR 1947 All 110.
42 Ram Charan v Giriga Nandini, AIR 1996 SC 323.
43 K Lakshaman Rao v G Ratna Manikyamba, AIR 2003 AP 241 [LNIND 2003 AP 125].
44 Rati Ram v Mam Chand, AIR 1959 Punj 117.
45 Mahima v Dinabondhu, AIR 1960 Ori 16 [LNIND 1958 ORI 57]; Mohan v Badarkali, AIR 1922 Mad 311 [LNIND 1922
MAD 5]; Arumugham v Subramaniam, AIR 1937 Mad 882 [LNIND 1936 MAD 369]; Zamindar of Polavaram v Maharaja
of Pittapuram, AIR 1931 Mad 140 [LNIND 1930 MAD 103].
46 Sahadeo Singh v Kubernath, AIR 1950 All 632 [LNIND 1950 ALL 132].
47 Ghulam Mohamad v Tek Chand, AIR 1921 Lah 82.
48 Rajjo v Lajja, AIR 1928 All 204; see also Madan Pillai v Badrakali, AIR 1922 Mad 311 [LNIND 1922 MAD 5], wherein it
was held that the a transfer of a life interest in land in discharge of a claim for maintenance is neither a sale nor an
exchange nor a gift.
49 Malik Mohamad Shujaaqt v Salim Jahan, AIR 1949 All 204.
50 It has been held that extinction of dower debt is equivalent to price, see Saburannessa v Mohiuddin, AIR 1934 Cal 693;
Gopal Das v Sakina Bibi, AIR 1936 Lah 307; Saiful v Abdul, AIR 1932 All 596. In some cases it has been treated as a
Hiba bil iwaz i.e., a gift for consideration, see Basir v Zubaida, AIR 1926 Oudh 186; Chaudhary Talib Ali v Kaniz Fatima
Begum, AIR 1927 Ouhd 204; Abdul v Abdul, AIR 1934 Oudh 163; Gul Bibi v Mimsani, (1955) NUC Assam 622; Masum
v Iluri, (1952) ILR Mad 1010; Ghulam v Razia, AIR 1951 All 86 [LNIND 1950 ALL 300]; it has been held in some cases
that the consideration of dower would not be a price, see Ghulam Abbas v Razia Begum, AIR 1951 All 86 [LNIND 1950
ALL 300]; Mohamad Hashim v Aminabi, AIR 1952 Hyd 5; Basir v Zubaida, AIR 1926 Oudh 186.
51 Chandra Shankar v Abhia, AIR 1952 Bom 56 [LNIND 1951 BOM 30]; Prasanta v IC Ltd, AIR 1955 Cal 101 [LNIND
1954 CAL 103].
52 Nalamathu Venkaiya v BS Neelkanta, AIR 2005 AP 535 [LNIND 2005 AP 645]; Ranjana Nagpal v Devi Ram, AIR 2002
HP 166 [LNIND 2001 HP 76].
Page 13 of 17
53 Hara Bewa v Banchandilal, AIR 1957 Ori 243.

54 Premanarayana v Kuwarji, AIR 1993 MP 164; G Hampamma v V Kartigi, AIR 1990 Kant 128 [LNIND 1989 KANT 113];
Balabhadra Misra v Nirmala Sundari, AIR 1954 Ori 23; Michhu Kaur v Raghu Jena, AIR 1961 Ori 19 [LNIND 1960 ORI
121]; Sukalop v Puanu, AIR 1961 MP 176 [LNIND 1960 MP 21]; Kashidas v Chaithru, (1914) 19 Cal LJ 289; Baijnath v
Paltu, (1908) 30 AH 125; Ponnayya Goundan v Muttu, (1894) ILR 17 Mad 146.
55 Shiva Narain Sab v Baidya Nath Tewari, AIR 1973 Pat 386.
56 Kamleshwar Prasad v Abadi, (1915) ILR 37 All 631.
57 Govindammal v Gopalachariar, (1906) 16 Mad LJ 524; Bai Devmani v Ravi Shankar, AIR 1929 Bom 147; Subbayar v
Moniem, (1913) ILR 36 Mad 8; Ponnayya Goundan v Muttu, (1894) ILR 17 Mad 146.
58 Lakshmi Narain Barnwal v Jagdish Singh, AIR 1991 Pat 99.
59 Sahadeo Singh v Kubernath, AIR 1950 All 632 [LNIND 1950 ALL 132]; Bai Devmani v Ravi Shankar, AIR 1929 Bom
147.
60 Kaliaperumal v Rajagopal, AIR 2009 SC 2122 [LNIND 2009 SC 416].
61 Bhartu v Nawal, AIR 2012 All 91 [LNIND 2012 ALL 6]: 2012 (3) All LJ 309.
62 Inder Kaur v Tara Singh, (1978) 80 Punj LR 41.
63 Vidhyadhar v Manikrao, AIR 1999 SC 1441 [LNIND 1999 SC 260]; Ananda Chandra v Nilakanta, AIR 1972 Ori 99
[LNIND 1971 ORI 66].
64 Shah Lalchand v Indrajit, 27 IA 93.
65 Sheo Narain Singh v Darbari Mahton, (1897) 2 Cal WN 207; Hira Bewa v Bunchanihdi, AIR 1957 Ori 243; Bihari v
Rohini, (1908) 13 Cal WN 692; Mauladan v Raghunandan, (1900) ILR 27 Cal 7; Sangu Ayyar v Cumaraswami, (1895)
ILR 18 Mad 61.
66 Matadin Yadav v Midas Lids Pvt Ltd, AIR 2014 (NOC) 295 (Del).
67 Bombay Tramways Co v Bombay Municipal Corp, (1902) 4 Bom LR 384.
68 Hakim Singh v Ram Sanehi, AIR 2001 All 231 [LNIND 2001 ALL 243].
69 Hanifunissa v Faizunnissa, 38 IA 85.
70 Executive Engineer (Electrical) Karnataka Power Transmission Corp Ltd v Assistant Commissioner and Land
Acquisition Officer, Gadag, (2010) 15 SCC 60.
71 Munrankhan v Ashrafunissa, AIR 1983 All 363.
72 Ram Sunder Saha v Raj Kumar Sen, AIR 1927 Cal 889.
73 Subana v Yamanappu, AIR 1933 Bom 209.
74 Munnalal v Atmaram, AIR 2008 (NOC) 843 (MP); Subbireddy v KN Srinivasa Murthy, AIR 2006 Kant 4 [LNIND 2005
KANT 406]; Jagir Singh v Ranjeet Singh, AIR 2006 Raj 105; Inder Chand v Sethi, AIR 2006 Raj 251 [LNIND 2006 RAJ
32]; Arjuna Reddy v Arjuna C Thanga, (2006) 7 SCC 756 [LNIND 2006 SC 644]; Ramlal v Phagua, (2006) 1 SCC 168
[LNIND 2005 SC 820].
75 Arjuna Reddy v Arjuna C Thanga, (2006) 7 SCC 756 [LNIND 2006 SC 644].
76 Megha Enterprises Pvt Ltd v Official Liquidator, Jaipur, AIR 2008 Raj 138 [LNINDORD 2008 RAJ 217].
77 Saheb Ram Surajmal v Purushottam Lal, AIR 1950 Ngp 89. The principles are inapplicable to a sale under the Sale of
Goods Act, 1930.
78 Except as herein provided, there is no other mode of transfer of property by way of sale, see Narayan Swami v
Lakshmi, AIR 1939 Mad 1220; Ma Mya v VPRVSA Annamalai Chettiar, AIR 1934 Rang 127; Sheo Narain Singh v
Darbari Mahton, (1897) 2 Cal WN 207; Papireddi v Narasareddi, (1893) ILR 16 Mad 464; Makhan Lal v Bunku Behari,
(1892) ILR 19 Cal 623.
79 Tandonbi Devi v Kalamu Singha, AIR 2009 (NOC) 587; Dayal Fuel Industry v Bihar State Financial Corp, AIR 2009
(NOC) 592 (Pat); Vijay Kumar Sharma v Devesh Behari Saxena, AIR 2008 All 66 [LNIND 2007 ALL 90]; Godhan v Ram
Bilas, AIR 1995 All 357 [LNIND 1994 ALL 151].
80 See section 32A, the Indian Registration Act, 1908 as amended by the Amendment Act 48 of 2001.
81 Latif Estate Line India Ltd v Hadeeja Ammal, AIR 2011 Mad 66 [LNIND 2011 MAD 658].
82 Bhabhi Dutt v Ramlal Byamal, AIR 1934 Rang 303.
83 Mathura Mohan v Ram Kumar, (1916) ILR 43 Cal 790.
Page 14 of 17
84 Immitidipattam Thirugnanna v Periya Dorasami, (1901) ILR 24 Mad 377.

85 Nirman Singh v Lal Rudra, AIR 1926 PC 100; Ram Sarup v Charitter Rai, AIR 1927 All 338; Ram Prasad v Beod, 13 IC
436.
86 Ramchandra Majhi v Hambai Majhi, AIR 1989 Ori 27 [LNIND 1988 ORI 92].
87 Dave Ramshanker v Bai Kailasgauri, AIR 1974 Guj 69 [LNIND 1972 GUJ 47].
88 Inunganta Venkataraman Rao v Appa Rao, AIR 1936 PC 91.
89 Bhingarpur Debotter Estate v Brahman Nijan, AIR 1990 Ori 190 [LNIND 1989 ORI 18].
90 AIR 2011 All 142 [LNIND 2011 ALL 61].
91 The formality of registered instrument is not considered necessary in view of the small value, see Bhaskar Gopal v
Padman Hira, (1916) ILR 40 Bom 313; Mohinuddin v President Municipal Committee, Khargone, AIR 1993 MP 5
[LNIND 1992 MP 142]; see, however, Mokhan Lal v Bunku Bihari, (1892) ILR 19 Cal 623; Biswanath Prasad v
Chandra Narayan, AIR 1921 PC 8, wherein it was held that even in case of tangible immovable property of the value of
less than Rs 100, lack of registration would not result in the transfer of ownership even though there is a delivery of
deed of the property.
92 Immamuddin v Ramzan, (1885) All WN 201; Tribhovan v Shankar Lal, AIR 1943 Bom 431; Daya Ram v Sita Ram, AIR
1925 All 206; Gunga Narain v Kali Churn, (1895) ILR 22 Cal 179; Kathari v Bhupati, (1916) 29 Mad LJ 721; Bhagabati
Swarnakar v Sazhi, 2 IC 413.
93 Raj Bahadur v Babu Lal, AIR 2011 All 48 [LNIND 2011 ALL 3]; Ram Chandra v Hari Kirtan, AIR 2004 All 345.
94 Lakshmi Narain Bamwal v Jagdish Singh, AIR 1991 P,at 99; Harbans Singh v Takamani Devi, AIR 1990 Pat 26;
Venkataramaiya v CIT, AIR 1966 SC 115 [LNIND 1965 SC 106].
95 Ram Saran Lall v Domini Kuer, AIR 1961 SC 1747 [LNIND 1961 SC 215].
96 Tapan Krishna Das v Hazi Ali Khan, AIR 2005 Cal 60 [LNIND 2004 CAL 392].
97 Amol v Deorao, AIR 2011 (NOC) 215 (Bom); S Venkoji Rao v The Bangalore Development Authority, ILR 2011 Karn
408; Kameshwar Choudhary v State of Bihar, AIR 1998 Pat 141; Ganesh Prasad v Bhaiya Lal, AIR 1938 Ngp 253.
98 See Kaliaperumal v Rajagopal, AIR 2009 SC 2122 [LNIND 2009 SC 416], wherein it was held that despite registration
the ownership would pass only on payment of complete consideration to the seller; Sheo Narain Singh v Darbari
Mahton, (1897) 2 Cal WN 207; Hira Bewa v Bunchanihdi, AIR 1957 Ori 243; Bihari v Rohini, (1908) 13 Cal WN 692;
Mauladan v Raghunandan, (1900) ILR 27 Cal 7; Sangu Ayyar v Cumaraswami, (1895) ILR 18 Mad 61.
99 Venkataramana v Rangiah, AIR 1922 Mad 249 [LNIND 1921 MAD 90].
1 Chander Singh v Jamuna Prasad, AIR 1958 Pat 193; Santaya v Narayanan, (1883) 8 Bom 182.
2 Ittianam v Cherichi alias Padmini, (2010) 8 SCC 612 [LNIND 2010 SC 658]. Har Narain v Mam Chand 2011-1. LW 402
: 2010 (83) ALR 716 : (2011)52 GLR 601(SC) : JT 2010 (11) SC 641 [LNIND 2010 SC 987]: 2010 (4) Ker LT 359 (SC)
: (2011)1 Mad LJ 723 (SC) : 2011 112 RD184 : 2010 (10) Scale 617 [LNIND 2010 SC 987] : (2010) 13 SCC 128
[LNIND 2010 SC 987].
3 Har Narain v Mam Chand, 2011-1. LW 402 : 2010 (83) ALR 716 : (2011) 52 GLR 601 (SC) : JT 2010 (11) SC 641
[LNIND 2010 SC 987]: 2010 (4) Ker LT 359 (SC) : (2011)1 Mad LJ 723 (SC) : 2011 112 RD184 : 2010 (10) Scale 617
[LNIND 2010 SC 987] : (2010) 13 SCC 128 [LNIND 2010 SC 987].
4 M Manikandan v The Sub Registrar, Thamaraipatti, WP(MD) No. 10833 of 2011 and MP(MD) No. 1 of 2011, decided
on 20 January 2017, High Court of Madras (Madurai Bench).
5 Kanta Ben Chandulal Shah v Gajiben, AIR 2005 Guj 49 [LNIND 2004 GUJ 411].
6 Vimal Chand Ghevarchand Jain v Ramakant Eknath Jajoo, 2009 (5) Scale 59 [LNIND 2009 SC 646] : (2009) 5 SCC
713 [LNIND 2009 SC 646].
7 Bishnudeo Narain Rai v Anmol Devi, AIR 1998 SC 3006 [LNIND 1998 SC 781]: (1998) INSC 428; Prem Singh v Distt
Board of Rawalpindi, AIR 1934 Lah 917.
8 Bakhtawar Ram v Naushad, 55 IC 659.
9 Konda v Vishnu, (1913) ILR 37 Bom 53.
10 Ponayya Goundan v Muttu, (1894) ILR 17 Mad 146.
11 Shib Lal v Bhagwan, (1888) 11 All 244; Velayutha v Govindasami, (1911) ILR 34 Mad 543; Govindammal v
Gopalachariar, (1906) 16 Mad LJ 524; Amrithathammal v Periasamy, (1909) 32 Mad 325; Chinnaswami Reddiar v
Krishna, (1906) 16 Mad LJ 146; Sagaji v Namdeo, (1899) ILR 23 Bom 525.
12 Maya Devi v Lalita Prasad, (2015) 5 SCC 588 [LNIND 2014 SC 301].
Page 15 of 17
13 Numaanab v Hara Prasad, (1913) 17 Cal WN 1161; Kaliram v Dula Ram, AIR 1933 Cal 544.
14 G Ram v Delhi Development Authority, AIR 2003 Del 120 [LNIND 2002 DEL 510].
15 Maung Po Yin v Maung Tel Tu, AIR 1925 Rang 68.
16 Nachhitar Singh v Jagir Kaur, AIR 1986 P&H 197, 200; Mathura Mohan v Ram Kumar, (1916) ILR 43 Cal 790.
17 Varatha Pillai v Jeevarathammal, (1919) 43 Mad 244; Abdul Alim v Abdul Sattar, AIR 1936 Cal 130.
18 Kemam Kandaswamy v Chinappa, AIR 1921 Mad 82 [LNIND 1920 MAD 110].
19 Dawal v Dhanna, (1917) ILR 41 Bom 550; Nailamuttu Pillai v Betha, (1900) ILR 23 Mad 37.
20 Tarini Kamal v Prafulla Kumar, AIR 1979 SC 1165 [LNIND 1979 SC 145].
21 Bishnu Kumar v Mahendra, AIR 2005 Sk 33.
22 See The Transfer of Property Act, 1882, section 54.
23 Guest Homfray, (1901) 5 Ves 818.
24 Hanmanta v Mir Ajmodin, (1904) 6 Bom LR 1104.
25 Sonai Chutia v Sonaram Chutia, (1916) 20 Cal WN 195; Santokhi Misser v Siro Jha, 151 IC 55.
26 Muthukaruppan v Muthu, (1915) 38 Mad 1158; Ram Nath v Gajadhar, AIR 1926 All 300; Sheikh Dawood v Moideen,
AIR 1925 Mad 566 [LNIND 1924 MAD 522]; Bhanwari lal v Dhulilal, AIR 1959 Raj 218 [LNIND 1958 RAJ 167];
Swaminatha Udayar v Mottayya Padayachi, AIR 1957 Mad 209 [LNIND 1956 MAD 99]; Dinanath v Manbodhi, (1916)
12 Ngp LR 139.
27 Maung Mya Maung v Ma Khine, AIR 1936 Rang 497; Mahbub v Kalekhar, AIR 1936 Lah 756; Kulachandra Ghose v
Jogendra Chandra Ghose, AIR 1933 Cal 411; see Sibendra v Secretary of State, (1907) 34 Cal 207, wherein it was
held that if on the date of the sale the vendee gets in possession of the property with the assent express or implied of
the vendor, it may be held that there has been delivery of the property but the principle has no application where the
intended transferee had been in occupation before the date of the transfer.
28 Suraj Prasad v Aguta Devi, (1958) 37 Pat 577; Trilochan v Bamdeo, AIR 1972 Ori 136 [LNIND 1971 ORI 91]; see
however Sohan Lal v Mohan Lal, (1928) ILR 50 All 986; Patel v Bhikabhai v Shah Chimanlal, AIR 1953 Bom 437
[LNIND 1953 BOM 2]; Chinna Nagaih v N Baliga, AIR 1956 Hyd 170, wherein it was held that delivery of possession in
such cases can be effected by the mortgagee simply by giving up possession as a mortgagee.
29 Om Prakash v Shanti Devi, (2015) 4 SCC 601 [LNIND 2015 SC 4]; Nagayya v Sayamma, AIR 1951 Mys 42; Daya Ram
v Sita Ram, AIR 1925 All 206; Kathari v Bhupati, (1916) 29 Mad LJ 721; Immamuddin v Ramzan, (1885) All WN 201.
30 Mahomad Yagoolally v Chottey Lal, AIR 1939 Pat 218.
31 Punchha Lal v Kunj Bihari Lal, (1913) 18 Cal WN 445; Brajaballav v Akhoy Bagdi, AIR 1926 Cal 705; Sheikh Juman v
Mohamad, (1917) 21 Cal WN 1149; see also Kuppuswami v Chinnaswami, AIR 1928 Mad 546 [LNIND 1927 MAD 317],
wherein it was held that the execution of an unregistered sale deed invalidates the oral sale by delivery.
32 Biswanath Prasad v Chandra Narain, AIR 1921 PC 8.
33 Mackhanlal v Bankubehari, (1892) 19 Cal 623 (FB).
34 Ko Yan v Ma Mai Ni, AIR 1933 Rang 4.
35 Tribhovan v Shankar, AIR 1943 Bom 431.
36 Habibur v Rasul, 19 All LJ 376; Jhampu v Kutramoni, 15 All LJ 761; Dayaram v Sitaram, AIR 1925 All 206; Keshwar v
Sheonandan, AIR 1929 Pat 620; Chinnnaswami v Manickamal, AIR 1937 Mad 265 [LNIND 1936 MAD 289]; Shankry v
Mikha, AIR 1941 Lah 407.
37 AIR 2002 Raj 66.
38 Neeraj Jain v State of UP, 2014 SCC OnLine SC 1091.
39 Ramesh Vajabhai Rabari v Pratiksha Real Estate, (2014) 12 SCC 190 : AIR 2014 SC 2962 [LNIND 2014 SC 579].
40 Raj Bahadur v Babu Lal, AIR 2011 All 48 [LNIND 2011 ALL 3]; An inference to that effect can be drawn if on the date of
the sale the buyer gets the possession, see Ganga Narain v Kali Churn, (1895) ILR 22 Cal 179; Tukaram v Atma Ram,
AIR 1939 Bom 31; Ammani v Jagannath, (1915) Mad WN 442.
41 Sampatlal v Poker, AIR 1955 Raj 70.
42 Moidin v Avaran, (1888) ILR 11 Mad 263.
43 Pankajakshy v Devaki Ramakrishnan AIR 2011 Ker 30 [LNIND 2010 KER 557].
Page 16 of 17
44 S.A.(MD) Nos. 24 of 2011, 352 of 2012 and M.P.(MD) No. 1 of 2011, decided on 24 February 2017, High Court of
Madras (Madurai Bench).
45 Munna Scrap Traders Bhavanagar v UOI, AIR 1999 Guj 240.
46 Munnalal v Atmaram, AIR 2008 (NOC) 843 (MP); Subbireddy v K N Srinivasa Murthy, AIR 2006 Kant 4 [LNIND 2005
KANT 406]; Jagir Singh v Ranjeet Singh, AIR 2006 Raj 105; Inder Chand v Jethi, AIR 2006 Raj 251 [LNIND 2006 RAJ
32]; Arjuna Reddy v Arjuna C Thanga,(2006) 7 SCC 756 [LNIND 2006 SC 644]; Ramlal v Phagua, (2006) 1 SCC 168
[LNIND 2005 SC 820]; Satya Prakash Goel v Ram Krishna Mission, AIR 1991 All 343 [LNIND 1990 ALL 338].
47 Ningappa Bharamappa Sogi v Govt of Karnataka, AIR 2011 Kar 115 : (2012) 1 ICC 621; Baboo Lal v Nathi Lal, AIR
2014 (NOC) 201 (All); Kumaran v Kumaran, AIR 2011 Ker 75 [LNIND 2010 KER 747].
48 Gh Mohd Matoo v Gh Rasool Sofi, AIR 2005 J&K 48.
49 Moturi Seeta Ramabrahaman v Bobba Rama Mohana Rao, AIR 2000 AP 504 [LNIND 2000 AP 995].
50 B Rajamani v Azhar Sultana, AIR 2005 AP 260 [LNIND 2004 AP 1466].
51 Kashi Nath Sah v Shri Nath, RSA 399/2015 decided on 22 February 2017, High Court of Delhi.
52 Dave Ramushankar v Bai Kailasgoure, AIR 1974 Guj 69 [LNIND 1972 GUJ 47].
53 State of Uttaranchal v Khurana Brothers, (2010) 14 SCC 334 [LNIND 2010 SC 1056]; Mohammad Siddique Khan v
Balakdas Bairagi, (2011) 2 MP LJ 130; Vakil v Sakir, 2010 SCC OnLine All 704; Joseph Kantharaj v Attharunnisa
Begum S, (2010) 2 SCC 619 [LNINDORD 2010 SC 131] : 2010 AIR SCW 1411; Association of Leasing and Financial
Service Cos v UOI, (2011) 2 SCC 352 [LNIND 2010 SC 1047].
54 Kondapalli Satyanarayana v Kondapalli Mayullu, AIR 1999 AP 170 [LNIND 1998 AP 874].
55 Ram Swarup Gour v Rati Ram, AIR 1984 All 369 [LNIND 1984 ALL 195], see also the Specific Relief Act, 1963,
section 10.
56 Satya Prakash Goel v Ram Krishna Mission, AIR 1991 All 343 [LNIND 1990 ALL 338].
57 (2003) 7 SCC 350 [LNIND 2003 SC 504].
58 Aloka Bose v Parmatma Devi, (2009) 2 SCC 582 [LNIND 2008 SC 2460].
59 AIR 2013 Sik 21.
60 Sanjay Puri v Radhey Lal, (2011) 121 DRJ 507 [LNIND 2010 DEL 1869] (DB) : (2011) 179 DLT 218 (DB) (Del).
61 See The Transfer of Property Act, 1882, section 54. Majidan v Ishaq, AIR 2008 (NOC) 1135 (UP); Basant Kaur v
General Public, AIR 2008 (NOC) 1406 (P&H); Ramesh Chandra v Prem Lata Sinha, AIR 2008 Pat 155 [LNIND 2008
PAT 96]; Raghunath Rai v Jogeshwar Prashad Sharma, AIR 1999 Del 383 [LNIND 1999 DEL 493]; Mural Viniyog Ltd v
Registrar of Assurance, AIR 1989 Cal 85; Gopal Singh v The State, AIR 1984 Raj 174; Ram Baran v Ram Mohit, AIR
1967 SC 744 [LNIND 1966 SC 173]; Indira Fruits v Bijendra Kumar Gupta, AIR 1995 All 316 [LNIND 1995 ALL 96];
Dewan Investments v DDA, AIR 1997 Del 388 [LNIND 1997 DEL 212]; Jayshree Oza v Rakesh Mohun, 74 (1998) DLT
11; see however Rabindra Nath v Haredra Kumar, AIR 1956 Cal 462 [LNIND 1956 CAL 16], wherein it was held that
though a contract of sale does not of itself create an interest in the property there is a transfer of ownership when in
addition a part of the purchase money has been paid.
62 Govinda Chandra v Parvati Ghose, AIR 1956 Cal 147 [LNIND 1955 CAL 68].
63 Mohinder Kaur v Sudarshan Krishnamurthy, DRJ (1992) 23 179.
64 Ramalingam v GR Jagadammal, AIR 1957 AP 960 [LNIND 1956 AP 23].
65 Mahadeo v Vasudeo, (1899) ILR 23 Bom 181.
66 Sujan Singh v Mokhan Chand Jain, AIR 1983 P&H 180.
67 State of Himachal Pradesh v Motilal Pratap Singh, AIR 1981 HP 8 [LNIND 1980 HP 27].
68 Imtiaz Ali v Nasim Ahmed, AIR 1987 Del 36 [LNIND 1986 DEL 318].
69 Dorabai v Mathuradas Govinddas, AIR 1980 SC 1334 [LNIND 1980 SC 201].
70 Vannarakkal Kallalathial Sreedharan v Chandramaath Balakrishnan, (1990) 3 SCC 291 [LNIND 1990 SC 137]; see
also Mohinder Singh v Nanak Singh, AIR 1971 P&H 381.
71 S Kaladevi v VR Somasundaram, (2010) 5 SCC 401 [LNIND 2010 SC 340].
72 Matadin Yadav v Midas Lids Pvt Ltd, AIR 2014 (NOC) 295 (Del) : (2015) 5 SCC 650 [LNIND 2014 SC 509].
73 Shanker Singh v Narinder Singh, 2013 (4) AJR 456 : 2012 (90) ALR 698 : 2012 2 AWC1826 SC : 2012(1) CGBCLJ 48 :
[2012 (2) JCR 44 (SC)] : JT 2011(14) SC 106 [LNIND 2011 SC 2242]: 2012-1-LW231 : 2012(1) Pat LJR 189 :
2012(1)RCR (Civil) 576 : 2011(13) Scale 574 [LNIND 2011 SC 2242] : 2012(1)U J 80.
Page 17 of 17
74 Sanjeev Lal v CIT, Chandigarh, (2015) 5 SCC 775.

75 (2015) 5 SCC 650 [LNIND 2014 SC 509].
76 Rathnavathi v Kavita Ganashamdas, (2015) 5 SCC 223 [LNIND 2014 SC 918].
77 Babu Ram v Indra Pal Singh, AIR 1998 SC 3021 [LNIND 1998 SC 750].
78 SVR Mudaliar v Rajababu Buhari, AIR 1995 SC 1607 [LNIND 1995 SC 513].
79 (2011) 1 SCC 158 [LNIND 2010 SC 985] : AIR 2011 (NOC) 292 (Bom)
80 AIR 2011 (NOC) 292 (Bom).
81 Latif Estate Line India Ltd v Hadeeja Ammal, AIR 2011 Mad 66 [LNIND 2011 MAD 658].
82 AIR 2011 (NOC) 341 (Karn).
83 Thota Ganga Laxmi v Govt of Andhra Pradesh, (2010) 15 SCC 207.
84 AIR 2013 Sik 21.
85 Jagtar Singh v State of Punjab, AIR 2012 P&H 145.
86 Suresh Kumar Dagla v Sarwan, (2014) 14 SCC 254 [LNIND 2014 SC 944].
87 State of Jharkhand v KN Farms and Industries Pvt Ltd, (2012) 5 SCC 297 [LNINDU 2012 SC 1].
88 Pradeep Kumar Sharma v Uttar Pradesh Finance Corp, (2012) 10 SCC 424 [LNIND 2012 SC 691].
89 Suresh Prasad Singh v Dulhin Phulkumari Devi, (2010) 6 SCC 441 [LNIND 2010 SC 499].
End of Document
RIGHTS AND LIABILITIES OF BUYER AND SELLER

[s 55] Rights and liabilities of buyer and seller.—In the absence of a contract to the contrary, the buyer and the
seller of immovable property respectively are subject to the liabilities, and have the rights, mentioned in the rules
next following or such of them as are applicable to the property sold:
(1) The seller is bound—

(a) to disclose to the buyer any material defect in the property or in the seller’s title thereto of which the
seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover;
(b) to produce to the buyer on his request for examination all documents of title relating to the property
which are in the seller’s possession or power;
(c) to answer to the best of his information all relevant questions put to him by the buyer in respect to the
property or the title thereto;
(d) 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 a proper time and place;
(e) between the date of the contract of sale and the delivery of the property, to take as much care 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;
(f) to give, on being so required, the buyer, or such person as he directs, such possession of the property
as its nature admits;
(g) to pay all public charges and rent accrued due in respect of the property up to the date of the sale, the
interest on all encumbrances on such property due on such date, and, except where the property is
sold subject to encumbrances, to discharge all encumbrances on the property then existing.
(2) The seller shall be deemed to contract with the buyer that the interest which the seller professes to transfer
to the buyer subsists and that he has power to transfer the same:
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.
(3) 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 are in the seller’s possession or power:
Provided that, (a) where the seller retains any part of the property comprised in such documents, he is
entitled to retain them all, and, (b) where the whole of such property is sold to different buyers, the
Page 2 of 3
buyer of the lot of greatest value is entitled to such documents. But in case (a) the seller, and in case
(b) the buyer, of the lot of greatest value, is bound, upon every reasonable request by the buyer, or by
any of the other buyers, as the case may be, and at the cost of the person making the request, to
produce the said documents and furnish such true copies thereof or extracts therefrom as he may
require; and in the meantime, the seller, or the buyer of the lot of greatest value, as the case may be,
shall keep the said documents safe, uncancelled and undefaced, unless prevented from so doing by
fire or other inevitable accident.
(4) The seller is entitled—

(a) to the rents and profits of the property till the ownership thereof passes to the buyer;
(b) where the ownership of the property has passed to the buyer before payment of the whole of the
purchase-money, to a charge upon the property in the hands of the buyer, any transferee without
consideration or any transferee with notice of the non-payment, for the amount of the purchase-money,
or any part thereof remaining unpaid, and for interest on such amount or part from the date on which
possession has been delivered.
(5) The buyer is bound—
(a) 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) to pay or tender, at the time and place of completing the sale, the purchase-money to the seller or such
person as he directs: provided that, where the property is sold free from encumbrances, the buyer may
retain out of the purchase-money the amount of any encumbrances on the property existing at the date
of the sale, and shall pay the amount so retained to the persons entitled thereto;
(c) where the ownership of the property has passed to the buyer, to bear any loss arising from the
destruction, injury or decrease in value of the property not caused by the seller;
(d) where the ownership of the property has passed to the buyer, as between himself and the seller, to pay
all public charges and rent which may become payable in respect of the property, the principal moneys
due on any encumbrances subject to which the property is sold, and the interest thereon afterwards
accruing due.
(6) The buyer is entitled—
(a) where the ownership of the property has passed to him, to the benefit of any improvement in, or
increase in value of, the property, and to the rents and profits thereof;
(b) unless he has improperly declined to accept delivery of the property, to a charge on the property, as
against the seller and all persons claiming under him, to the extent of the seller’s interest in the
property, for the amount of any purchase-money properly paid by the buyer in anticipation of the
delivery and for interest on such amount; and, when he properly declines to accept the delivery, also
for the earnest (if any) and for the costs (if any) awarded to him of a suit to compel specific
performance of the contract or to obtain a decree for its rescission.
An omission to make such disclosures as are mentioned in this section, paragraph (1), clause (a) and paragraph
(5), clause (a), is fraudulent.
The buyer and the seller of immovable property respectively are subject to certain liabilities and have the rights or
such of them as are applicable to the property sold. The primary aim of laying down the rights and duties of the
seller and the buyer in case of sale is to ensure fair dealings, and as far as possible, to minimise fraud and waste of
the property. A contract to execute a sale deed containing the necessary stipulations is a contract for sale on
conditions implied by the Act.90
This section is applicable only in absence of a contract to the contrary.91 Conditions incorporated in the contract by
mutual consent bind both the parties. In the absence of a clause in the contract requiring the seller to obtain a
certificate from the Endowment department before effecting the purchase, his liability under section 55 would not be
attracted and there would be no obligation on his part to get the clearance of permission or exemption from the
Endowment department of state for purposes of transferring the title of the property in question.92
Page 3 of 3
90 Ram Sunder Saha v Raj Kumar Sen, AIR 1927 Cal 889.
91 Haradhone v Bhagabati, 41 Cal 852; Webb v Macpherson, (1904) 31 Cal 57 PC.
92 AK Lakshmipathy v Rai Saheb Pannalal H Lahoti Charitable Trust, AIR 2010 SC 577 [LNIND 2009 SC 1934].
End of Document
DUTIES OF SELLER
DUTIES OF SELLER
Law imposes seven duties on the seller, six prior to the passing of ownership, and one after the title has passed in
favour of the buyer, which are as follows:
(i) Disclosure of material defects relating to property;

(ii) Allowing the buyer to examine documents relating to property on request;
(iii) To answer the related queries or questions of buyer;
(iv) Execute a proper conveyance in favour of buyer;
(v) To take care of property and related documents in between the date of contract to sell and actual execution
of sale deed;
(vi) To give possession to the buyer;
(vii) To pay rent or public charges due on the property till the date of the sale.
Duty of Disclosure
The seller is bound to disclose to the buyer any material defects (in the property or in the seller’s title thereto), of
which the seller is aware and the buyer is not; and which the buyer could not, with ordinary care, discover. If the
buyer either knows about these defects or could have known about it if he had acted as a reasonable prudent man,
then there is no such duty on the seller.93 A failure to do that would be treated as fraudulent or a deliberate
omission. For instance, A has a house that he professes to sell to B. The house has an underground drain, which
makes the foundations weak. It would be a material defect, and if the seller fails to disclose it to the buyer, the buyer
has a right to rescind the contract. Similarly, A has the title to a house X, but only as a trustee. He professes to sell
the property to B. A is under a duty to disclose the fact that the property that he is trying to sell, though is in his
name, is in fact, the property of a trust. It is a material defect in the title and must be disclosed to the buyer. A failure
to do that would be fraudulent. The buyer’s omission to ask questions does not relieve the seller of his liability to
disclose material defects.94 If the seller fails to do so, it would entitle the buyer to refuse to complete the sale.95
There is no duty to disclose such defects of which the buyer has actual96 or constructive notice,97 but a mistake with
respect to a fact material to the property will make the agreement void.98 In Haryana Financial Corp v Rajesh
Gupta,99 the property was to be sold by way of an auction and for this purpose B had deposited the earnest amount
with the seller A, on a clear understanding by way of repeated correspondence indicating that A must ensure an
independent approach road to the unit. A informed B that a clear cut passage/rasta has been provided to the unit.
The passage in fact was not direct and was too narrow. Since A failed to provide the direct and independent
adequate passage to the factory, B did not pay the rest of the consideration and A after forfeiting the earnest money
invited fresh bids for the same. A Division Bench of JM Punchi and Surinder Singh Nijjar JJ, of the Apex Court held
that in light of section 55 (1) (a) there was a clear duty on part of the seller to disclose a material defect, i.e., lack of
an independent passage to the factory and they cannot be allowed to take advantage of their own wrong by
forfeiting the earnest money deposited by B.
Material Defect
The defect must be such that if it was known to the buyer, his decision to purchase the property would have been
Page 2 of 10
DUTIES OF SELLER
fundamentally affected. Such defect may also hamper the enjoyment of the property. Non disclosure of a street
alignment,1 a defect in title,2 or non-existence of independent passage to the property,3 or a right of way of public on
the property that is not visible from a mere inspection is a material defect. The fact that rooms and flats constructed
were not authorized and were illegal is a material fact, a nondisclosure of which would attract the application of this
section.4 In Sukhdev Kaur v Gurdev Singh,5 at the time of execution of an agreement to sell, a proposal for
notification for acquisition of the land for establishment of military Cantonment was pending before the government,
but was not issued. The seller is not bound to disclose the same, and a failure of disclosure of this information at
the time of conclusion of the agreement to sell would not amount to non disclosure of a material defect. If the buyer
later resiles from the contract on this issue and refuses to execute the sale deed, the seller would not be liable to
refund the earnest money deposited. A litigation pending in the court with respect to the property that is proposed to
be sold is a material fact. The rights of a bona fide purchaser who purchased the property in ignorance of the
pending litigation in its regard ought to be protected, but the purchaser must be a bona fide purchaser who bought
the property for adequate price.6
Defect in Title
The primary duty of the seller is to convey a good title to the buyer and therefore, he is bound to disclose a defect in
title, if any.7 The onus of showing a failure to disclose a defect in title is on the purchaser.8 For instance, a notice
received by the seller for the demolition of the building that was the subject matter of sale as it was illegally
extended, is a material defect both in property as well as of title. Similarly, a notice of acquisition of the property
under the Land Acquisition Act, 1894, or titles saddled with an encumbrance,9 an easement,10 a party wall notice
and award making owner liable for reconstruction of building,11 are material defects. A defect does not include a
clear case of fraud or sale of property not belonging to the transferor.12
Productions of Documents of Title
Generally, the law imposes a duty on the buyer to satisfy himself with respect to the competency of the transferor,
and also whether there is a charge due over the property or not. In order to get good value for his money, he has to
be vigilant, and the facility of inspection of all documents relating to the property is mandatory. Law recognises this
and the seller is therefore, in law bound to produce to the buyer, on his request for examination all documents of
title relating to the properties, which are in the seller’s possession or power.13 The term “possession or power”
suggests that he is under a duty to produce all documents that he possesses and can produce when the buyer
requests it. Such documents should be made available within a reasonable time period.14 Law imposes a duty on
the seller to produce documents for inspection by the buyer and not to give them to the buyer for good. He is not
bound to deliver them to the buyer till he pays him the whole of the purchase money.15 Production of documents not
in possession of the seller can be insisted upon only by an express term of the contract.16
Where, on the sale and purchase of the land the description in the contract affords a sufficient and satisfactory
identification of the property sold without a plan, the buyer cannot, require at the expense of the seller, a plan to
supplement the description.17
Seller Bound to Answer all Relevant Questions
With or even without inspection of the documents relating to the property, if the buyer raises reasonable questions
with respect to the property, the title of the seller or the encumbrances over the property, the seller is bound to
answer the same. In fact he must answer to the best of his information all relevant questions18 put to him by the
buyer in respect to the property or the title thereto.19 Failure to do so would entitle the buyer to rescind the contract.
The contract may give a power even to the seller to expressly rescind the contract if such questions are put up to
him that he is unwilling to comply with, yet the duty to make up his title is attached to him.20
Seller to Execute Conveyance
The sale deed has to be executed by the seller. It is he who has to sign the deed. It is his signatures that are to be
attested properly, and it is at his behest that the document has to be registered. Normally, till registration takes
place, the ownership does not pass and therefore, upon the payment or tender of the amount due in respect of the
price, the seller is under a duty to execute a proper conveyance of the property when the buyer tenders it to him for
execution at a proper time and place. An auction purchaser can seek issuance of the sale certificate in favour of his
nominee and the vendor has to oblige.21 The payment of purchase money and the execution of the conveyance are
presumptively contemporaneous acts.22 If the time is fixed and an unreasonable delay occurs, the proper course is
to give notice, making time the essence of the contract.23 Both, the obligations to tender a conveyance24 and to pay
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DUTIES OF SELLER
the price at the time of the execution,25 are subject to a contract to the contrary. A vendor is under an obligation to
oblige the purchaser and execute conveyance in favour of the assignee of the purchaser where the conditions of
the tender/bid do not so prohibit, where the contract is not one of personal service or where the purchaser is not to
discharge any obligation to the seller after the execution of the sale deed when the whole of the bid amount has to
be deposited. However recognizing right of assignment prior to deposit of the whole of the consideration and
confirmation of sale would not defeat the entitlement of the applicant.26
Seller to Take Care of the Property before Conveyance
Once the contract of sale has been entered into and the seller knows that the property is going to be sold to the
buyer, still he cannot be negligent towards the property. He is bound between the date of the contract of sale and
the delivery of the property, to take as much care 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. The position
of the seller is like that of a trustee.27 He must keep the property in reasonable repair and protect it from injury by
trespassers.28 The duty extends to protect the title deeds as well.29 Neglect to perform this duty will entitle the buyer
to a claim of compensation.
Seller to Deliver Possession
Once the formalities from the side of the buyer are complied with, the seller has to give, on being so required, the
buyer or such person as he directs such possession of the property as its nature admits. It is the duty of the seller
and he cannot leave the buyer to get the possession himself,30 notwithstanding a condition in the sale deed that if
no possession is given, the buyer may get it himself.31 In a sale through the court, it is the court that has to ensure
delivery of possession of property even if there was no prayer to that effect by the buyer.32
There are four classes of possession: possession in consequence of proprietary interest, possession in
consequence of licensory or contractual right and gratuitous or purely permissive possession. In the case of
gratuitous or permissive possessee, a suit of injunction against dispossession by owner of premises is not
maintainable as such person holds the property on behalf of the owner and acquires no right or interest irrespective
of long possession. The protection of the court may be granted only if there is a valid subsisting rent agreement,
lease deed or licence agreement in his favour.33 The buyer can institute a suit for specific performance to get
possession34 as the relief is inherent in a suit for specific performance of contract,35 but he is not entitled to
compensation for the expenses incurred in obtaining the possession subsequent to the sale.36 The nature of
possession to be given would depend on the nature of property in each case, unless any specific delivery is agreed
to.37 If the seller is not in a position to give the possession of the property sold, the buyer is entitled to rescind the
contract.38
When Possession has to be given
Possession has to be given when the property passes39 to the buyer, which would generally be at the time of the
execution of the sale deed40 though it may vary from case to case.
Payment of Price and Handing over of Possession
Ordinarily, it is understood that the seller can retain possession till the money is paid by the buyer, but it has been
held that the transferor is not entitled to retain possession even where the purchase money has not been paid.41
The right of the purchaser to get possession and the right of the seller to get the purchase money may be enforced
as part of a single action,42 and if the buyer sues for possession he may be required to deposit the balance amount
in the court failing which his suit will be dismissed.43 The forfeiture of money paid as part payment of purchase price
and not as earnest money is impermissible. The justification of the forfeiture of advance money being a part of
“earnest money” should be clear and explicit in the contract.44 In a suit for specific performance of the contract for
delivery of possession of the property by the purchaser, if the seller takes the plea that the remaining money had
not been paid, the purchaser must show that he is willing to pay the rest of the consideration. The court can ask for
proof of this intention on part of the purchaser. If besides the averment in the plaint the purchaser gives no evidence
to show that the amount was kept ready and available, it would be presumed that she was not ready and willing to
fulfil her part of the contract.45
Nature of Possession
Delivery of possession of the property would depend on the nature of possession, i.e., if the property is in
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DUTIES OF SELLER
possession of the seller, he should vacate it and hand over the vacant possession to the buyer. Where the property
is in occupation of any other person, then, as far as possible, the seller must get it vacated and give vacant
possession to the buyer more so in case of agricultural land46 or even where the land is in occupation of a
trespasser.47 The buyer is entitled to only symbolic possession and not an actual personal occupation when the
property is in occupation of a tenant48 or a usufructuary mortgagee.49
Seller’s Duty to Pay Public Charges
The seller is bound to pay all public charges and rent50 accrued that are due in respect of the property up to the
date of the sale or up to the date of possession, if the parties so agree.51 He is also under an obligation to pay the
interest on all encumbrances on such property due on such date except where the property is sold subject to the
encumbrances, or to discharge all encumbrances on the property then existing.
Public Charges
Public charges literally refer to financial or other liabilities such as tax liabilities to the statutory authorities52 and
include government revenue53 and municipal taxes.54 The public authority levying the charge levies it on the owner,
and the property and is not concerned with the rights of buyer and the seller inter se.55 The obligation, unless there
is a contract to the contrary, is absolute.56 Such a contract to the contrary must be express and not implied, as a
result whereof the meaning of the term encumbrance would be expanded.57 These statutory charges cannot be
enforced against a buyer who purchases the property without notice of the same.58
Seller’s Duty to Deliver Property Free from Encumbrances
Conveyance of a clear and a good title and delivery of property free from encumbrances, is the basic duty of the
seller. If the sale deed contains a declaration that the property is sold free from encumbrances, the buyer takes it
free from burdens.59 If an encumbrance which ought to have been paid by the seller, was paid by the buyer, the
seller is liable to repay the same60 irrespective of whether the buyer was aware of such encumbrance or not,61
unless the buyer has expressly agreed to discharge it himself.62 The buyer is not bound to accept an indemnity from
the seller and if he is dispossessed by the encumbrances he can sue for damages.63 The seller cannot take
advantage of his own wrong, if, due to non-payment of interest since the contract of sale on the mortgage already
created on the property the dues considerably increase, and he is not in a position to pay them.64 If it is not
specifically mentioned in the sale deed that the property is sold subject to encumbrances, the seller is liable for all
past encumbrances65 but this covenant does not run with the land.66 Where the buyer has to pay a higher amount to
clear an encumbrance, he cannot recover the difference from the seller.67
A purchaser of property of a company under liquidation is entitled to get a clear title free of charges or
encumbrances, and even if there was an attachment by a statutory authority, recovery of dues from purchaser
would not be proper. As the purchaser had purchased the property on as is where is basis and had applied for a
fresh connection and not transfer of service connection to its name, he is not liable to pay arrears dues of erstwhile
company for availing supply.68. In Carbon Resources Pvt Ltd v The Assam Electricity Regulatory Commission,69 the
property was sold under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. For the recovery
of the outstanding electricity dues of previous consumers of property sold by the bank it was held that the distributor
is not entitled to proceed against the seller of hypothecated property, i.e, bank but against purchaser who is the new
consumer of same premises in terms of notified conditions. Further, if electricity is disconnected for non-payment of
dues, the distributor cannot be compelled to give electricity connections to purchaser without making recovery from
him.
Seller’s Duty to Obtain Permission for Sale from the Statutory Authority
Alienation is a basic incident of ownership. In certain cases, an owner may have to seek necessary permission of
the relevant authorities before he can sell the property. If the seller is required to obtain permission from the
relevant statutory authority before effecting a sale, he is under a duty to obtain such permission70 or apply for such
sanction.71 A failure to do that would entitle the buyer to rescind the contract.72
Covenant for Title
The buyer has a right to receive a good title to the property and the seller shall be deemed to contract with the
buyer that the interest which he professes to transfer to the buyer subsists, and he has power to transfer the same.
A transferor cannot enforce for specific performance of the contract as against the buyer unless he gives him a title
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DUTIES OF SELLER
free from reasonable doubt73 and which a court would also accept as serious or sufficient.74 Refusal of the seller to
give a title with an absolute guarantee entitles a buyer also from claiming specific performance of the contract of
sale.75 If it turns out that the seller has no saleable interest in the property, he is liable for damages even if he is not
guilty of fraud.76 Mere existence of contract for sale or a decree for specific performance would not confer a title on
the buyer and even if the buyer has been put in part performance of the contract in terms of section 53A of the Act,
such claim does not confer any title to buyer. The transfer of title occurs only when execution and registration of
document takes place. Any charge or attachment created over the property of seller prior to the contract of sale
would stand with priority over and above transfer of property.77 The questions regarding the validity of an agreement
and enforceability without redemption of mortgage by transferor in the case of an agreement for sale of property
mortgaged with bank are therefore required to be determined by courts.78
Representation of a Higher Title
A seller cannot give a higher title than what he has.79 If he professes to transfer personal occupancy rights, he is not
liable if the buyer is evicted by the title paramount,80 but if he represents an absolute entitlement while he does not
have it, he is liable in damages for breach of contract.81 Sale of non-transferable cantonment land as if he is
absolutely entitled,82 or a land subject to an encumbrance sold as free from encumbrances,83 or sale of a mortgage
debt under an invalid mortgage84 will make the seller liable for damages.
Improper Description of the Property
A covenant of title does not extend to the mis-description of property,85 but if a mis-description is discovered before
the conveyance is executed, the purchaser is entitled to rescind the contract or claim damages86 where the mis-
description is substantial and claim compensation only if it is minor.87 There may be a special covenant in the deed
for compensation of errors which entitles a purchaser and even a sub-purchaser for damages.88
Buyer’s Duty to Inquire into the Title
The courts have held that there is no duty cast on the buyer to inquire into the vendor’s title89 and mere knowledge
or suspicion of the buyer about the defect in the title in his vendor does not prevent an express or implied covenant
from operating.1 He may claim a return of the purchase money or sue for damages if he is dispossessed by reason
of the defect in title.2 The strict rule of English law of the application of the doctrine of caveat emptor does not
apply,3 and a buyer gets a further remedy in case of defects discovered after the conveyance.4 This covenant has
nothing to do with the buyer’s incapacity to buy and there is no indemnity where a third person claims pre-emption.5
Two persons purchasing as co-tenants will have separate interests with reference to the implied covenant and can
file separate suits.6
Contract to the Contrary
An implied covenant may be superseded7 by a contract to the contrary8 with clear and unambiguous expressions.9
Such a contract cannot be oral as that is inadmissible in evidence.10 The onus of proving a contract displacing
presumption of contract for title is on the seller.11 An express stipulation to compensate the purchaser for defect in
title does not exclude implied covenant for title and the buyer is entitled to maintain a suit for refund of the purchase
money.12 Where a suit for money is based on an express covenant contained in the deed,13 or in case of an
agreement to sell by a mortgagee when it does not extinguish the equity of redemption, the buyer is not liable for
damages, but only to return of purchase money.
Covenant for Quiet Enjoyment
An express covenant for quiet enjoyment does not wipe out the statutory covenant for title14 but the usual express
covenant for title includes a covenant for quiet enjoyment.15 A covenant to refund the purchase money in case of
subsequent dispossession does not apply to an eviction by a pre-emptor.16 There is no breach of quiet enjoyment
covenant where no possession was delivered and no subsequent dispossession.17
In case of express covenant for quiet enjoyment, limitation will run from the date of the disturbance.18
Sale by a Person in a Fiduciary Capacity
Where a person makes the sale in a fiduciary character, he shall be deemed to contract with the buyer that the
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DUTIES OF SELLER
seller has done no act whereby the property is encumbered or whereby he is hindered from transferring it. An
implied covenant does not apply in case of a guardian selling on behalf of the minor.19
Benefit of the Covenant to Run with Land
The benefit of the implied covenant annexes to and goes 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. The
covenant for title runs with the land20 and is also enforceable by a pre-emptor in whom the property vests.21
Consequences of Breach
Any omission to make disclosure is fraud,22 and where a person discovers the material defect after the conveyance,
he has to make out a case for fraud to set aside the sale.23
The measure of damages for breach of covenant of title is the market value of the land on the date of eviction.24
Delivery of Title Deeds
Where the whole of the purchase money has been paid to the seller, he is bound to deliver to the buyer all
documents of title relating to the property, which are in the seller’s possession or power.25 The right to the deeds
goes with the land, which includes a right to kabuliyat and counterpart leases.26 If the property is subject to an
unregistered mortgage by deposit of title deeds, and the purchaser does not make any demand for the title deeds
the purchaser would be guilty of gross negligence. He would be imputed with constructive notice of the prior
mortgage and even an encumbrance certificate showing no mortgage does not help him.27
Delivery of Title Deeds in Case of Multiple Transferees
In case the property is sold to more than one person, or the seller sells part of the property and retains part of it
himself, a question may arise, as to whom should the title deeds be delivered. The law is that if the seller retains
any part of the property comprised in such documents he is entitled to retain them all and where the whole of the
property is sold to different buyers the buyer of the lot of greatest value is entitled to such documents. But the seller,
and the buyer of the lot of the greatest value is bound upon every reasonable request by the buyer or by any of the
other buyers as the case may be and at the cost of the person making the request, to produce said documents and
furnish true copies thereof or extracts therefrom as he may require. In case the sales are at different times, the last
purchaser will be entitled to all the documents.28 In the meantime, the seller or the buyer, as the case may be, of the
lot of the greatest value, shall keep the said documents safe, uncancelled and undefaced unless prevented from
doing so by fire or other inevitable accident.
93 Godrej & Boyce Manufacturing Co Ltd v State of Maharashtra, (2014) 3 SCC 430 [LNIND 2014 SC 70].
94 Ratanlal v Nanabhai, AIR 1956 Bom 175 [LNIND 1955 BOM 88].
95 Lallubhai Rupchand v Mohanlal Sarkarchand, AIR 1935 Bom 16.
96 Gondu Ramasubbu Iyer v Muthiah Kone., AIR 1925 Mad 968.
97 Harilal v Mulchand, AIR 1928 Bom 427; Ganapat Ranglal v Mangilal Hiralal, AIR 1962 MP 144 [LNIND 1961 MP 87].
98 Meghi v Tyeballi, AIR 1925 Bom 64; Nursing Das v Chuttoo Lal, AIR 1923 Cal 641.
99 AIR 2010 SC 338 [LNIND 2009 SC 2106].
1 Ram Lal v Suradhani, 63 Cal 124; Ratanlal v Nanabhai, AIR 1926 Bom 175.
2 Baljit Singh v Improvement Trust Ludhiana, AIR 2009 SC 1254 [LNIND 2009 SC 13]; Haji Essa v Daya Bhai, (1896) ILR
20 Bom 522; Mohamad Siddiq v Li Kan Shoo, AIR 1925 Rang 372; Gondu Ramasubbu Iyer v Muthiah Kone., AIR 1925
Mad 968.
3 Haryana Financial Corp v Rajesh Gupta, AIR 2010 SC 338 [LNIND 2009 SC 2106].
4 Dilip Kumar Mukherjee v Kolkata Municipal Corp, (2013) 5 SCC 336 [LNIND 2012 SC 1041].
5 AIR 2011 P&H 122.
6 BS Oberoi v PS Oberoi, (2010) 117 DRJ 257(Del).
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DUTIES OF SELLER
7 A purchaser can compensate for any loss or damage which the seller has sustained in the course of such a transaction
for which even the purchaser was liable; see RL Pinto v FF Menezes, AIR 2001 Kant 141 [LNIND 2000 KANT 616].
8 Ratanlal v Nanabhai, AIR 1926 Bom 175.
9 Mohamad Siddiqi v Li Kan Shoo, AIR 1925 Rang 372; see also Madan Mohan v Jwala Prasad, AIR 1950 East Punj
276.
10 Lallubhai Rupchand v Chimanlal Nandlal, AIR 1935 Bom 16.
11 Carlish v Salt, (1906) 1 Ch 335.
12 Shaikh Buddan Sah v Nigamma, AIR 1979 AP 90.
13 If the buyer does not make any request there is no obligation to produce the deeds, see Maung Po Te v Maung Shew
Ko., 35 IC 373.
14 Jitendra Nath v Maheshwari Bose, AIR 1965 Cal 45 [LNIND 1964 CAL 152].
15 Molly Ajithkumar v Vimala Sasidharan, AIR 2012 Ker 87 [LNIND 2012 KER 16]: 2012 (1) Ker LT 555 [LNIND 2012
KER 16]; Jyoti Prosad Singh Deo v HV Law & Co Ltd, AIR 1930 Cal 561.
16 Rathna Bai v AR Barrass, AIR 1943 Mad 593.
17 Re Sharman’s Contract, (1936) 2 All ER 1547.
18 Such relevant information would include questions relating to income or rental of the property, see Prem Chand v Ram
Sahai, AIR 1932 Ngp 148.
19 See the Transfer of Property Act, 1882, section 54(1)(c).
20 Lakshmidas v DJ Tata, AIR 1927 Bom 195.
21 Umrah Developers, Bangalore v Deputy Commissioner, Bangalore Urban District, AIR 2010 Kar 186.
22 Nilmadhav v Haroprasad, 17 Cal WN 1161.
23 Jamshed v Burjorji, (1916) ILR 40 Bom 289.
24 Prabodh Kumar Das v Gillanders Arbuthnot, AIR 1934 Cal 699.
25 Ram Krishna v Mukund Shanker, AIR 1963 All 47 [LNIND 1962 ALL 118].
26 Re Rathi Alloys and Steels Ltd, [2015] 191 Comp Cas 475(Raj).
27 Shashi Bhushan v Rai Chand, AIR 1950 Cal 333 [LNIND 1949 CAL 32].
28 Royal Bristol Permanent Building Society v Bomash, (1887) 35 ChD 390.
29 Homby v Matcham, (1848) 16 Sim 325; Brown v Sewel, (1853) 11 Hare 49; on completion he must deliver the sale
deeds to the buyer, see Re Duthy and Jesson, (1898) 1 Ch 419.
30 Darpan v Kedar Nath, (1916) 1 Pat LJR 140.
31 Barisal Loan Officer v Satesh Chandra, AIR 1936 Cal 12.
32 Sunita Devi v Dinbandhu Shah, AIR 2010 Jhar 151 [LNIND 2010 JHAR 368].
33 Maria Margarida Sequeira Fernandes v Erasmo Jack de Sequeira, (2012) 5 SCC 370 [LNIND 2012 SC 194]; A
Shanmugam v Ariya Kshatriya Rajakula Vamsathu Madalaya Nandhavana Paripalanai Sangam, (2012) 6 SCC 430
[LNIND 2012 SC 259].
34 Sundara v Shivalingam, AIR 1924 Mad 360 [LNIND 1923 MAD 127]; see also Babu Lal v Hazari Lal Kishori Lal, (1982)
1 SCC 525 [LNIND 1982 SC 31].
35 Prataprai Trambaklal Mehta v Jayant Nemchand Shah, AIR 1996 Bom 296 [LNIND 1987 MP 308]; Uttam International
v Jogender Pal Singh, 78 (1999) DLT 254.
36 U Mya v Chettyar Firm, AIR 1937 Rang 31.
37 Suryasubha v Vasudeva, AIR 1956 AP 113 [LNIND 1955 AP 107].
38 Sohanlal v Balkishan, AIR 1960 Punj 275.
39 Subbaroyar v Kottava, (1916) Mad WN 284.
40 Sri Ram v Kidari Prashad, AIR 1925 Lah 481.
41 Nilmadhab v Haroprasad, 17 Cal WN 1161; Kutcherlakota Vijaylakshmi v Radimeti Rajuratnamba, AIR 1991 AP 50
[LNIND 1990 AP 71]; Krishnamma v Mali, (1920) ILR 43 Mad 712; Sagaji v Namdev, (1899) ILR 23 Bom 525.
Page 8 of 10
DUTIES OF SELLER
42 Syed Noor v Qutubuddin, AIR 1956 Hyd 114.

43 Shib Lal v Bhagwan, (1888) 11 All 244; Dhuri v Kishan Prasad, AIR 1965 Pat 29; Pran Dei v Sat Deo, AIR 1929 All 85;
Utin v Chettyar Firm, AIR 1933 Rang 401; Baijnath v Paltu, (1908) ILR 30 All 125; see also Krishnamma v Mali, (1920)
43 Mad 712; Velayutha v Govindaswami, (1907) 30 Mad 524, wherein it was held that the buyer is entitled to
possession despite non-payment of price and cannot be put to equitable terms with respect to payment of price; see
also Basalingava v Chinnava, AIR 1932 Bom 247, wherein it was held that in a suit for recovery of possession the court
is not competent to pass a decree for possession conditional upon payment of the unpaid price.
44 Satish Batra v Sudhir Rawal, (2013) 1 SCC 345 [LNIND 2012 SC 665].
45 B Rajamani v Azhar Sultana, AIR 2005 AP 260 [LNIND 2004 AP 1466].
46 Panchapagesa Ayyar v M Arunachala Mudaliar, (1932) Mad WN 122; Hyam v ME Gubbay, AIR 1916 Cal 1; Anandilal v
Abdul Hussain, AIR 1964 Raj 240 [LNIND 1964 RAJ 41].
47 Sashi Bhusan v Rai Chand, AIR 1950 Cal 333 [LNIND 1949 CAL 32].
48 Raj Kumar v Shanti Swaroop Gandhi, AIR 1992 P&H 18; Purna Chand v Official Liquidator, AIR 1960 Punj 51.
49 Mumtazunnissa v Bhagirath, 6 IC 114.
50 The seller of the leasehold property is bound to pay rents accruing due up to the date of the sale, see Phus Kuer v
Rambhajan Singh, AIR 1924 Pat 822.
51 By agreement the parties may agree that the vendor may pay all public charges due at the date of the delivery of
possession instead of the date of the sale, see, Govindram v State of Gondal, AIR 1950 PC 99.
52 Diamond Infotech Pvt Ltd v Kolkatta Municipal Corp, AIR 2010 (NOC) 910 (Cal).
53 Dantaluri v Kanjuluri, 8 IC 435.
54 Nawal Kishore v The Municipal Board Agra, AIR 1943 All 115 (FB); Chandu Ram v Municipal Commissioner of
Kurseong Municipality, AIR 1951 Cal 398; MC v Ramjilal, AIR 1941 Oudh 305; Municipal Board, Cawnpore v Roop
Chand Jain, AIR 1940 All 459.
55 Nellore Municipality v Dwarapally Kottamma, (1907) ILR 30 Mad 423.
56 State of Gondal v Gobindram, AIR 1945 Bom 187.
57 Special Officer (Commerce) NESCO v Raghunath Paper Mills Pvt Ltd, 2010 SCC OnLine Ori 495 : AIR 2011 Ori 52.
58 Ahmedabad Municipality v Haji Abdul Gafur Haji Hussenbhai, AIR 1971 SC 1201 [LNIND 1971 SC 183].
59 Nathu v Burtonath, AIR 1922 PC 176; existence of a covenant in the deed guaranteeing non existence of an
encumbrance will entitle the seller to indemnity, see Imam Din v Bhag Sing, AIR 1936 Lah 746; the Allahabad High
Court denied indemnity on the ground of non existence of such provision under the contract Act see Dost Mohamad v
Sangad, (1884) ILR 6 All 67.
60 Manishanker v Ramkrishna, (1906) 6 Bom LR 832; Gouri Shanker v Munnu, AIR 1935 Oudh 142; Rinsa Ansa v
Mohanlal, AIR 1938 Ngp 257; Nathu v Burtonath, AIR 1922 PC 176; Bhagwati v Banarasi, AIR 1928 PC 98; Ramgopal
v Thakur, AIR 1922 All 508; Ganpat v Mangilal, AIR 1962 MP 144 [LNIND 1961 MP 87].
61 Chendrayya v Hanumanayya, AIR 1927 Mad 193 [LNIND 1926 MAD 214]; Ram Chunder Dutt v Dwarkanath, (1889)
ILR 16 Cal 330; Subbayya v Rajgopala, (1915) ILR 38 Mad 887; Mohamad Ali v Venkatapathi, (1920) 39 Mad LJ 449;
Lakhpat Kuer v Durga Prasad, AIR 1929 Pat 338. In such a case though there is no fraud the statutory liability of the
seller to deliver property free from encumbrances remains, see Basaraddi Sheikh v Enajaddin, (1898) ILR 25 Cal 298.
62 R Muninarayana v CP Chimanswami, AIR 1952 Mys 120.
63 Arun Prakash v Tulsi, AIR 1949 Cal 510; see also Lookmanji v Mangal Singh, AIR 1938 Lah 743, wherein the buyer
was not allowed any damages on the ground that in defending a suit for mortgage he did not show sufficient diligence.
64 Gobardhan Das v Afzal Hussain, AIR 1932 All 553.
65 Jugal Kishore v Banwarilal, AIR 1929 All 791; Alagappa v C Firm, AIR 1937 Rang 287; M Mahamood Mamuna Lebbai v
National Bank of India Ltd Tuticorin through Manager, AIR 1944 Mad 572 [LNIND 1944 MAD 142]; Harcharan Lal v
Nurul Hasan Khan, AIR 1934 Oudh 492; if the sale is subject to an encumbrance, the seller, in addition to the price of
his interest, gets an implied indemnity against encumbrances affecting the property, see Izzatunnisa v Kunwar Pertab
Singh, (1909) ILR 31 All 583; Parshottam v Taiwar Ali, AIR 1945 All 39; Ram Barai Singh v Sheodeni, (1912) 16 Cal
WN 1040.
66 Venkataranga v Ramaswami, AIR 1926 Mad 173 [LNIND 1925 MAD 232]; Visalakshmi v Veeraswami, AIR 1927 Mad
1072 [LNIND 1927 MAD 236].
67 Bidhubhushan Pal v Umesh Chandra, AIR 1930 Cal 568.
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DUTIES OF SELLER
68 Special Officer (Commerce) NESCO v Raghunath Paper Mills Pvt Ltd, AIR 2011 Ori 52 : 2010 SCC OnLine Ori 495.
69 AIR 2010 Gau 131 [LNIND 2010 GAU 120].
70 Kishan Lal v Suryadatta, AIR 1958 MP 239; Mtilal v Nanhelal, AIR 1930 PC 287.
71 Rattan Lal v S N Bhalla, (2012) 8 SCC 659 [LNIND 2012 SC 463]; Nathulal v Phool Chand, AIR 1970 SC 546 [LNIND
1969 SC 408]; Errammma v Parwatamma, AIR 1972 Mys 121; Chandnee Widya Vati Madden v CL Katial, AIR 1964
SC 978 [LNIND 1963 SC 77].
72 see however, AK Lakshmipathy v Rai Saheb Pannalal H Lahoti Charitable Trust, AIR 2010 SC 577 [LNIND 2009 SC
1934], wherein it was held that in absence of a clause in the contract requiring the seller to obtain a certificate from the
Endowment department before effecting the purchase, his liability under section 55 would not be attracted and there
would be no obligation on his part to get the clearance of permission or exemption from the Endowment department of
state for purposes of transferring the title of the property in question.
73 See the Specific Relief Act, 1882, section 17(b).
74 Rajendrakumar v Poosammal, AIR 1975 Mad 379 [LNIND 1974 MAD 221].
75 Deepchandra v Sajjan Ali Khan, AIR 1951 All 93 [LNIND 1949 ALL 44](FB); see also Babu Bindeshri v Mahant Jairam,
(1887) ILR 9 All 705, wherein the buyer had filed a suit for specific performance of the contract as the seller had
refused to give him an absolute guarantee of title. The court dismissed the suit and held that the buyer was not entitled
to an absolute guarantee of title.
76 Basaraddi v Enajaddi, (1898) ILR 25 Cal 289; Haji Mohamad v Musaji, AIR 1929 All 358.
77 Kumaran v Kumaran, AIR 2011 Ker 75 [LNIND 2010 KER 747].
78 Shamsher Singh v Rajinder Kumar, (2015) 5 SCC 531.
79 Mani J Meenattoor v Amy Homi Calabawalla, AIR 1986 Ker 149 [LNIND 1985 KER 110](DB), wherein it was held that
if the title was subject to a statutory charge then plaintiffs preventing the defendants from cutting and removing the
trees is not in breach of the covenant.
80 Kulla Mal v Umra, 61 IC 604; Shankaran Nair v Ramaswami, 27 IC 889.
81 Shaligram v Narain, 45 IC 669.
82 Thomas v Hanuman Prasad, AIR 1929 All 837.
83 Gobardhan Das v Afzal Hussain, AIR 1932 All 553.
84 Balagurumurthy v Ramakrishna, AIR 1921 Mad 277 [LNIND 1921 MAD 75]; Samu Pathan v Chidambara, (1916) 29
Mad LJ 454.
85 Abdullah Khan v Abdul Rahman Beg, (1896) ILR 18 All 322; RN Dawar v Ganga Saran Dhama, AIR 1993 Del 19
[LNIND 1992 DEL 463]; Delhi Gramani v Ramchandra, AIR 1953 Mad 769 [LNIND 1951 MAD 379]; Janga Venkata v
Jamal Ahmed, (1915) 29 Mad LJ 122.
86 Flight v Booth, (1834) 1 Bing NC 370.
87 Administrator General of Bengal v Aghore Nath, (1902) ILR 29 Cal 420; Hussonally v Tribhowandas, AIR 1921 PC 40.
88 Kishen Lal v Kinloch, (1881) All WN 164.
89 Ram Swarup v Fattu, AIR 1960 All 367 [LNIND 1959 ALL 125]; Sohanlal v Balkishan, AIR 1960 Punj 275.
1 Adikesavan v Gurunatha, 40 Mad 338; Gauriamma Kanakamma v Kasavan Govindan, AIR 1986 Ker 30 [LNIND 1985
KER 136]; Saraswati Bai v Madhukar, AIR 1950 Ngp 229; Ramachandra v Dwarkanath, (1889) ILR 16 Cal 330; Sheo
Kumar Tewari v Central Co-op Bank, AIR 1947 Pat 477; Ram Swarup v Faltu, AIR 1960 All 367 [LNIND 1959 ALL 125];
Nannapaneni v Ankineedu, AIR 1962 AP 192 [LNIND 1960 AP 86]; Avadesh v. Zakaul, AIR 1944 All 243; Kalka Singh v
Namdhar Khan, AIR 1933 All 389; Rinsa Ansa v Mohanlal, AIR 1938 Ngp 257; Subayya v Rajagopala, (1915) ILR 38
Mad 887; Parasurma v Muthuswami, AIR 1925 Mad 1209 [LNIND 1925 MAD 246]; Muhamad Ibrahim v Nakched,
(1910) 7 All LJ 752; Lakhpat Kuer v Durga Prasad, (1929) ILR 8 Pat 432; Nawal Kishore v Sarju, AIR 1932 All 546.
2 Kali Din v Madho, AIR 1923 All 169.
3 Basaraddi v Enajaddi, (1898) ILR 25 Cal 289; Kanshi Ram v Jai Singh, AIR 1922 3 Lah 590; Raghava v Samachariar,
(1914) Mad WN 57; Muhamad Ibrahim v Nakched, (1910) 7 All LJ 752; Mehdi Hassan v Jafar Khan, (1905) 8 OC 345.
4 Bapu v Kashi Ram, AIR 1929 Bom 361; Harilal v Mulchand, AIR 1928 Bom 427; Vishvanath v Bala, (1916) 18 Bom LR
292.
5 Ghulam v Imdad, 4 All 337; cont Kaliyan v Fazal, AIR 1926 Lah 455, 94 IC 1055.
6 Chidambaram v Sivathasamy, (1905) 15 Mad LJ 396.
Page 10 of 10
DUTIES OF SELLER
7 Kahsirao v Zabu, AIR 1932 Ngp 5 (FB).

8 Chandrayya v Manduva, AIR 1972 Mad 193; Saraswathibai v Madhukar, AIR 1950 Ngp 229; Subramania v
Swaminatha, (1898) ILR 21 Mad 69; see also Ram Chunder v Bhagwati, AIR 1914 All 937, wherein it was held that as
the implied covenant was excluded by the express covenant the vendees paying a sum exceeding the purchase money
have no remedy; but see Bhagwati v Banarasi Das, AIR 1928 PC 98, wherein it was held that the covenant for quiet
enjoyment does not exclude the implied covenant for title.
9 Gwasha Lal v Kartar Singh, AIR 1961 J&K 66; Digambar Das v Nishibala Debi, 8 IC 91; Mahomad Ali v Venktapathi,
(1920) 39 Mad LJ 449.
10 Muhammad Siddiq v Muhammad Nuh, AIR 1930 All 771; Ragahava v Samachariar, (1914) Mad WN 57.
11 Sri Ram v Kedari, AIR 1925 Lah 481.
12 Nathuni Sah v Satyanarain Prasad, (1961) AP 11.
13 L Dugar Mal v Gobind Swaroop, AIR 1950 East Punj 74.
14 Bhagwati v Banarasi, AIR 1928 PC 98.
15 Nagardas v Ahmad Khan, (1897) ILR 21 Bom 175.
16 Ishro v Naubat Rai, AIR 1933 Lah 522; with reference to a covenant for quiet enjoyment a general covenant to
indemnify the purchaser against any loss that might accrue in connection with sale has been held to apply to eviction by
a pre-emptor, see Khanmon Bibi v Shah Mali, (1908) PR 111; Hanwant Rai v Chandi Prasad, AIR 1929 All 293; Kalyan
Singh v Fazal Din, AIR 1926 Lah 455; Sita Ram v Nank Chand, AIR 1926 Lah 182.
17 Vishvanath v Deokabai, AIR 1948 Ngp 382.
18 Ram Jaggi Rai v Kauleshwar Rai, (1908) ILR 30 All 405; Ratan Bai v Ghasiram, AIR 1932 Bom 36; Mangaladha v
Gandamal, AIR 1929 Lah 388; Mul Kunwar v Chattar Singh, (1908) ILR 30 All 402; Ramchandra v Tohfah, (1904) 26
ILR All 519; Hanwant Rai v Chandi Prasad, AIR 1929 All 293.
19 Maida v Kishan Bahadur Singh, AIR 1934 All 645.
20 Bapu v Kashi, AIR 1929 Bom 361; Hanwant v Chandi, AIR 1929 All 293; Ramayya v Kotayya, AIR 1930 Mad 748
[LNIND 1929 MAD 226]; Kishen Lal v Kiinloch, (1881) All WN 164.
21 Abdul v Kisan, AIR 1931 Ngp 166.
22 Jhamaklal v Mishrialal, AIR 1957 MB 23.
23 Eastern Mortgage and Agency Co Ltd v Fuzhul, (1925) 52 Cal 914: AIR 1926 Cal 385.
24 Siddiq v Nur, AIR 1930 All 771.
25 See the Transfer of Property Act, 1882, section 55(3); Bhavani v Devrao, (1887) ILR 11 Bom 485.
26 Bhavani v Devrao, (1887) ILR 11 Bom 485.
27 Aranachalam Asari v Sivan Perumal Assari, AIR 1970 Mad 226 [LNIND 1968 MAD 118].
28 Khanderao v Romer, AIR 1941 Bom 48; Re Lowe Capel v Lowe, (1901) 36 LJ 73.
End of Document
RIGHTS OF SELLER
RIGHTS OF SELLER
The corresponding rights of the seller are as follows:
(i) To rents and profits till passing of ownership; and

(ii) To payment of money in case the ownership passes before such payment.
Rent and Profits
Where the property is in occupation of the tenants or otherwise yielding income, the seller is entitled to the rents
and profits of the property till the time ownership thereof passes to the buyer, despite an agreement to sell the
property which passes no title to the prospective purchaser.29 Possession is to be given to the buyer when
ownership passes.30 If buyer takes possession before completion of sale he will take rents and profits, but pay
interest on the unpaid purchase money.31 The new owner has the use and possession of the property, and the
former parting with this property has an interest on the price,32 but if the ownership passes and the seller retains the
possession, he is not entitled to interest33 on the unpaid money,34 and must account to the purchaser for the rents
and profits of the land.35 The same person cannot enjoy both the rent and profits of the land as also the interest on
the money.36 The rule that possession and interest are mutually exclusive is applicable to a case of compulsory
acquisition, and owner is allowed interest on price from the date on which he is dispossessed.37
Payment of Money and Charge over the Property
The seller is entitled to the full consideration as agreed upon as between the parties. The money must be paid
within a reasonable time period unless a specific time has also been stipulated in the contract. It must be
remembered that time is the essence of the contract if the contract says so, and a buyer would commit a breach of
contract if he does not pay within the specified time. In a case from Andhra Pradesh,38 in an agreement to sell, it
was stipulated that the buyer would pay the first installment of money by a specific date. The transferee made an
oral assurance for the payment of money, but did not make any deposit. The court held that this oral assurance was
not sufficient, and even a deposit of money after a court order does not indicate that he was willing to fulfil his part
of the contract. Accordingly, a prayer for specific performance of the contract was denied to the transferee.
Where the ownership of the property has passed to the buyer, but before the payment of the whole of the purchase
money, the seller is entitled to a charge upon the property in the hands of the buyer. If the buyer transfers the
property, even then this charge can be enforced against any transferee without consideration or any transferee with
notice of non-payment for the amount of the purchase money or any part thereof remaining unpaid. The seller is
also entitled for the interest on such amount or part of it from the date on which the possession has been delivered.
A seller’s charge for unpaid purchase money comes into existence not at the date of contract for sale, but on the
completion of the conveyance.39
The rule does not apply in case of oral sales40 or to lease41 and a transferor has no charge on the unpaid part of the
consideration.
A seller’s charge is not extinguished by execution of a promissory note for unpaid money.42 A sum of money kept
with the buyer under a sale deed,43 or an agreement to pay an additional amount to be paid to the vendor if the
property yielded higher income,44 or the reconveyed village by the mortgagee who has purchased the entire
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RIGHTS OF SELLER
mortgaged property to the mortgagor,45 is a portion of the unpaid money and a charge on the property. A seller is
not entitled to the interest on the unpaid purchase price if he does not deliver possession,46 but if the buyer accepts
an alternative property in substitution to the original, the seller must be paid the interest on the unpaid money.47
The seller is not empowered to forfeit the earnest amount paid by the buyer without notice in case of non-payment
of the balance amount by him, and without there being a clause in the contract to that effect. The court may direct
the seller, to return the earnest with interest in such cases to the buyer.48
Lien Non-possessory
The lien for the unpaid money is non-possessory,49 which means that a seller cannot retain possession in lieu of
unpaid price.50 This lien is not personal and is transferable. It can be transferred to an assignee51 only through a
registered deed.52 The charge enures in favour of the unpaid vendor’s assignee also.53 In case of several
purchasers, the charge is on the whole of the property and the seller is not concerned with the portions that each
purchaser has to pay.54
Persons Claiming under the Buyer
The seller can enforce the claim for the unpaid money not only against the property in the hands of the buyer but
also against all other persons claiming under him, if they had notice of the sale.55 The seller cannot cause the
property purchased by a third party to be sold for the recovery of the unpaid purchase money to which, he, as a
decree holder, is not entitled.56 An admission by seller of receipt of consideration in the sale deed will operate as an
estoppel in enforcement of the charge against a transferee for value57 as such a recital may give rise to a
presumption of payment,58 but if the price was in fact not paid, there would be no estoppel.
Charge when Excluded
If the seller of an immovable property himself endorses a receipt for purchase money on the sale deed, he cannot
later set up a lien for unpaid purchase money as against a mortgagee for value without notice under the
purchaser.59 A lien is not lost merely by taking a personal security such as a promissory note, or a bond, or a
memorandum of agreement or a mortgage, unless it is not intended to be a collateral security but is to be treated as
the price itself. If the buyer under the direction of the seller executes a promissory note in favour of a third party with
respect to the unpaid purchase price, the charge of the seller is lost and the buyer becomes liable to the third party.
Even an agreement to pay the balance of purchase money in installments,60 or to pay the whole or part of the
purchase money to a third party on behalf of the seller,61 or to his creditor,62 does not imply abandonment of lien,
but where the seller leaves a part of the purchase money with the buyer to be paid by him to his illegitimate son
when he attains majority, his lien is lost.
Purchaser’s Right to Possession Against Unpaid Seller
Although payment of consideration is one of the primary duties of the buyer, in absence of a contract to the
contrary, mere non-payment of money does not prevent the passing of ownership of the purchased property. The
situation would be different if the parties intended to postpone the operation of conveyance till consideration has
been actually paid. Despite non-payment of price, the purchaser can sue for possession of the property.63 The
unpaid seller cannot retain possession to enforce payment of the money due to him.64
Even if there is an admission in the sale deed that the payment of the purchase money has been made, the seller is
entitled to lead evidence that the buyer has not paid the money either in full or part of it.65
The lien or charge may be enforced by a sale of the property,66 but it cannot be enforced by a creditor,67 by a
judgment creditor,68 or against a bona fide purchaser for value.69
The seller may also obtain an injunction against the purchaser if the sale is complete, as apart from his lien, he also
has a personal remedy against him.70
Duties of the Buyer
The corresponding duties imposed on the buyer are as follows:
(i) Disclose material facts, increasing the value of property;

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RIGHTS OF SELLER
(ii) To pay purchase money;

(iii) Bear loss or destruction of property if any after ownership passes to him, and;
(iv) To pay charges and rent due on the property after ownership passes to him.
Buyer’s Duty of Disclosure
The buyer is bound to disclose to the seller any fact as to the nature and 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.
Payment of Price
One of the primary duties of the buyer is to pay the consideration. He is bound to pay or tender at the time and
place of completing the sale, the purchase money to the seller or such person as he directs. This liability of the
buyer is personal71 in nature and if the seller refuses to accept it, it is open to the buyer to deposit the money in the
court.72
Encumbrances on the Property
Normally, the property that is the subject matter of sale should be sold as free from encumbrance. If the buyer is
given an assurance that there is no encumbrance on the property, but before payment of the price he discovers
there are charges due on the property, he has a right to retain part of the purchase money for the amount of any
encumbrances on the property existing at the date of the sale.73 He can pay this amount so retained to the person
entitled thereto. He can also, in the alternative, discharge it himself and set off the amount against the purchase
money,74 or recover it from the seller by filing a suit.75 If the amount is greater than the purchase money, he can
keep the purchase money as security.76 In case the seller gives him some money to discharge the encumbrance,
the buyer should discharge it by using the money and return the excess to the seller.77
Liability to Bear Losses
Where the ownership of the property has passed to the buyer, any loss arising from the destruction, injury or
decrease in the value of the property not caused by the seller is to be borne by the buyer. The rule applies even in
cases where the possession is yet to be delivered to the buyer, or the payment of the price has not been made by
the buyer. The relevant time for shifting of the liability to bear losses is the passing of ownership of the property, and
not its delivery of possession.
Payment of Public Charges and Rent
The obligation to pay public charges is also transferred along with the ownership of the property. The rule is that
when the ownership of the property has passed to the buyer as between himself and the seller, it is the buyer who
is liable to pay all public charges and rent which may become payable in respect of the property. The obligation
extends to pay the principle money due on any encumbrance subject to which the property is sold and the interest
thereon after accruing due. Public charges include taxes to be paid to the municipality,78 and where a mortgagee
brings the property to sale, the amount of such taxes due to the municipality till the date of the sale are to be
deducted from the sale proceeds.79 The body levying public charges does it on the property and not against the
buyer or the seller in particular,80 but as a rule they are paid by the seller or the buyer accordingly, as they accrue
before the sale by the seller,81 and after it by the buyer.82 Once the sale is complete, the seller cannot claim a
benefit which the buyer derives from the property,83 and correspondingly has a right of indemnity against the buyer
for a charge levied after the completion of sale.84 Where electricity is disconnected for non-payment of dues,
distributor cannot be compelled to give connection to buyer without making recovery from him,85 but where the
property of a company under liquidation is purchased on as is where is basis and the buyer applies for fresh
connection in its names, the buyer will not be liable to pay arrear dues of erstwhile company for availing supplies.86
Rights of Buyer
The buyer is entitled to:
(i) Benefits of improvements;

Page 4 of 7
RIGHTS OF SELLER
(ii) Charge for pre-paid purchase money.
Benefits of Improvements
If the value of the property increases in between the time when the ownership in the property has passed but the
price has not been paid by the buyer, the seller cannot demand a higher price than the one agreed before, and the
buyer would be entitled to the increase in the value of the price of the property. He is also entitled to the benefit of
any improvement or increase in value of the property and to the rents and profits thereof,87 including the repairs
carried out by the seller after the completion of the sale.88 The seller cannot participate in any benefit that purchaser
derives from his purchase.89
Charge for the Pre-paid Purchase Money
In many cases the seller demands and takes an advance amount from the buyer before the completion of the sale.
It is usually done at the time of an agreement to sell the property and its quantum may vary from case to case. It
may be the full consideration or even a part of it. The buyer is entitled to90 a charge on the property as against the
seller and all persons claiming under him, to the extent of the seller’s interest in the property for the amount of any
purchase money properly paid by the buyer in anticipation of the delivery and for interest on such amount, and
when he properly declines to accept the delivery, then also he is entitled for the earnest (if any) and for the cost (if
any) awarded to him of a suit to compel specific performance on the contract or to obtain a decree for its rescission.
It creates a statutory charge91 that arises immediately on payment of the purchase money,92 and can be enforced
by the buyer against the property and even against a subsequent transferee without notice.1 If an immovable
property is charged and converted into another property or money then the charge will fasten on that converted
property or money. The charge would be available not only against the seller but also as against all people claiming
under him.2
The rule embodies principles of equity, justice and good conscience.3 Even the vesting of the property in the
Central Government under the order of compulsory purchase cannot defeat the buyer’s lien.4 Interest on the
purchase money is to be paid from the date of the payment to the date of delivery of possession.5 Even insertion of
a clause like “for any cause whatsoever” will not permit the seller to take advantage of his wrong,6 but the charge is
not available when the sale is invalid,7 not genuine,8 is in contravention of a statutory provision9 or the buyer
commits a default.10 The buyer’s charge would never be lost to the vendor even though he has not filed a suit for
specific performance on the basis of agreement of sale. Subsequent compromise entered into between seller and
buyer and that too at time when seller had lost title would not efface statutory charge available to the buyer under
section 55(6)(b).11
Buyer’s Refusal to Accept Delivery
If the buyer’s refusal to accept the delivery of the property is not justified, this improper refusal will result in the
negation of the charge over purchase money but the seller still has to account for it,12 even if the buyer declines to
complete the sale due to seller’s refusal to secure a charge over the price paid by the buyer.13
29 BR Mulani v AB Aswathanarayana, AIR 1993 Kant 257; see also Malikajappa v Bhimappa, AIR 1966 Mys 86.
30 National Insurance Co v Life Insurance Corp, AIR 1963 SC 1171 [LNIND 1962 SC 421]; Kishanlal v Chandrabala Devi,
AIR 1990 AP 72 [LNIND 1989 AP 179]; Subbaroyar v Kottaya, (1916) Mad WN 284.
31 Moung Shwe Goh v Maung Inn, (1917) ILR 44 Cal 542; Fludyer v Cocker, (1805) 12 Ves 25.
32 Govindraju v CIT, AIR 1968 SC 129 [LNIND 1967 SC 142]; Satinder Singh v Umrao Singh, AIR 1961 SC 908 [LNIND
1961 SC 41]; National Insurance Co v Life Insurance Corp, AIR 1963 SC 1171 [LNIND 1962 SC 421].
33 Narasingerji v Panuganti, AIR 1921 Mad 498; Puliyadi Ellarayan v Nagendra, 42 IC 509.
34 Subbarao v Vesudevsastry, AIR 1956 AP 113 [LNIND 1955 AP 107].
35 Ramalingam v Jadammal, (1956) Andh WR 528.
36 Suryaprakasa Rao v Venkata Dikshitulu, AIR 1933 Mad 844 [LNIND 1932 MAD 288]; Muthia Chetty v Sinna, (1912)
ILR 35 Mad 625.
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RIGHTS OF SELLER
37 Ratanlal v Municipal Commissioner, (1919) ILR 43 Bom 181; Malikajappa v Bhimappa, AIR 1966 Mys 86; Pandurang v
Mahadeva, AIR 1922 Bom 186; Dinkar Rao v Ayub, AIR 1923 Ngp 37.
38 Nalamathu Venkaiya v BS Neelkanta, AIR 2005 AP 535 [LNIND 2005 AP 645].
39 Sohanlal v Sidhelal, AIR 1939 Ngp 210.
40 Munugamuru Lakshmidewamma v Land Acquisition Officer, AIR 1985 AP 200 [LNIND 1984 AP 301].
41 Venkatacharyulu v Venkatasubba, AIR 1926 Mad 55 [LNIND 1925 MAD 23].
42 Sonu Achari v Singara Achari, AIR 1945 Mad 407.
43 Kesho Das v Jiwan, AIR 1941 Lah 10.
44 Rajaram v Chedda, AIR 1952 Cal 93.
45 Kocharlokota Venkata v Ravu Venkata Kumara, AIR 1936 PC 204.
46 Subbarao v Vesudevsastry, AIR 1956 AP 113 [LNIND 1955 AP 107].
47 Mathura Prasad v Ram Swaroop, AIR 1934 All 617.
48 Nalamathu Venkaiya v BS Neelkanta, AIR 2005 AP 535 [LNIND 2005 AP 645].
49 Velayutha v Govindaswamy, (1907) ILR 30 Mad 524; Krishnamma v Mali, (1920) ILR 43 Mad 712.
50 Sagaji v Namdev, (1899) ILR 23 Bom 525; Raj Lingam v Somanna, AIR 1967 AP 7 [LNIND 1965 AP 56]; Nilmadhab v
Haroprasad, 17 Cal WN 1161; Kutcherlakota Vijaylakshmi v Radimeti Rajuratnamba, AIR 1991 AP 50 [LNIND 1990 AP
71]; Krishnamma v Mali, (1920) ILR 43 Mad 712; the right of the purchaser to get possession and the right of the seller
to get the purchase money may be enforced as part of a single action, see Syed Noor v Qutbuddin, AIR 1956 Hyd 114,
and if the buyer sues for possession he may be required to deposit the balance amount in the court failing which his
suit will be dismissed; see Shib Lal v Bhagwan, (1888) 11 All 244; Dhuri v Kishan Prasad, AIR 1965 Pat 29; Pran Dei v
Sat Deo, AIR 1929 All 85; Utin v Chettyar Firm, AIR 1933 Rang 401; Baijnath v Paltu, (1908) ILR 30 All 125; see also
Krishnamma v Mali, (1920) ILR 43 Mad 712; Velutha v Govindswami, (1900) 30 Mad 524, wherein it was held that the
buyer is entitled to possession despite non payment of price and cannot, be put to equitable terms with respect to
payment of price; see also Basalingava v Chinnava, AIR 1932 Bom 247, wherein it was held that in a suit for recovery
of possession the court is not competent to pass a decree for possession conditional upon payment of the unpaid price.
51 Akhoy Kumar v Corp of Calcutta, (1915) 42 Cal 625, 27 IC 621.
52 Rajagopala v Ranganatha, AIR 1934 Mad 615.
53 Dulchand v Ganpat, AIR 1972 Ngp 332.
54 Bhag Mal v Shiromani Gurudwara, AIR 1934 Lah 348.
55 Gurdayal v Karan Singh, (1916) ILR 38 All 254; Ramchand v Sheodas, (1921) ILR 43 All 314; Akhoy Kumar v Corp of
Calcutta, 21 Cal LJ 177; Tehtiram v Kashibai, (1909) ILR 33 Bom 53; Meghraj v Abdullah, (1914) 12 All LJ 1034; Syed
Hasan Bagar v Sheo Narain Singh, AIR 1926 Oudh 81; Alliance Bank of India v Walsh, (1883) PR 66.
56 Motilal v Bhagwan Das, (1909) 31 All 443: 3 IC 497.
57 Tehitram v Kashibai, (1909) ILR 33 Bom 53.
58 Bai Devmani v Ravishanker, AIR 1929 Bom 147; Goli Ramaswami v Naria Jagannadha Rao, AIR 1962 AP 94 [LNIND
1960 AP 154]; Raghavendra v Venkataswami, AIR 1930 Mad 251 [LNIND 1929 MAD 190].
59 Tehliram v Kashibai, (1909) 33 Bom 53: 1 IC 64.
60 Bashir v Nazir, (1921) ILR 43 All 544.
61 Sivasubramania v Subramania, (1916) Mad WN 306.
62 Harchand v Kishori, 7 IC 639; Meghraj v Abdullah, (1912) 12 All LJ 1034; Daulatram v Indrajit, AIR 1933 Oudh 33;
Subramania Mudaliar v Gnana Sambanda, (1911) 21 Mad LJ 359; Kunchithapatham v Palamalai, (1917) 32 Mad LJ
347; Kesho Das v Jiwan, AIR 1941 Lah 10; Shanker Bala v Gotiram Pandurang, AIR 1942 Bom 67; Mela Ram v Ram
Das Joshi, AIR 1942 Lah 275; where part of the purchase money is left with the buyer to pay off the creditors of the
seller, the seller is entitled to a charge from the amount left with the buyer if the latter omits to pay it to the creditors;
see Daulat Ram v Indrajit, AIR 1933 Oudh 33; Gangaram v Raghubans, (1948) ILR 27 Pat 898.
63 Sagaji v Namdev, (1899) 23 Bom 525; Baijnath v Paltu, (1908) 30 All 125; Velayuth v Govinda, (1907) 30 Mad 524;
Nilmadhab v Haroprasad, (1913) 17 Cal WN 1161.
64 Basalingava v Chinnova, AIR 1932 Bom 247.
65 Shah Lal v Indrajit, (1900) 22 All 370.
66 Bashir v Nazir, (1921)43 All 544.
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RIGHTS OF SELLER
67 Mela Ram v Ram Das Joshi, AIR 1942 Lah 275; Hari Ram v Denapat Singh, (1883) ILR 9 Cal 167.
68 Moti lal v Bhagwan Das, (1909) ILR 31 All 443.
69 Gurdayal v Karan Singh, (1916) ILR 38 All 254; Tehtiram v Kashibai, (1909) ILR 33 Bom 53.
70 Raghukul v Pitram, AIR 1931 All 99.
71 Shiva Narain Sah v Baidya Nath Prasad Tiwary, AIR 1973 Pat 387.
72 Raghukul Tilak v Pitam Singh, AIR 1931 All 99.
73 The seller has to convey a valid title free from encumbrances in the property sold, see Raghunath v Jogeshwar
Prasahad Sharma, AIR 1999 Del 383 [LNIND 1999 DEL 493].
74 Ranganayya Kamma v SR Subhidhi, AIR 1955 Ori 20; Munirunissa v Akbar Khan, (1908) ILR 30 All 172.
75 Mahtab Singh v Collector of Saharanpur, AIR 1932 All 454.
76 Muhammad Sadiq v Nasirullah, (1899) ILR 21 All 223; Veerabhadra v Subbarayudu, AIR 1942 Mad 650 [LNIND 1942
MAD 114]; Badri Das v Jivan, (1912) 10 All LJ 480.
77 Ram Ratan v Abdul Wahid, 81 IC 503; Ram Lal v Harihar Prasad, AIR 1955 Pat 254; Satyanarayan Murthy v Sathiraju,
AIR 1942 Mad 525 [LNIND 1941 MAD 304]; Subba Rao v Varadiah, AIR 1943 Mad 482 [LNIND 1942 MAD 387].
78 Nawal Kishore v The Municipal Board Agra, AIR 1943 All 115 (FB); Chandu Ram v Municipal Commissioner of
Kurseong Municipality, AIR 1951 Cal 398; MC v Ramjilal, AIR 1941 Oudh 305; Municipal Board Cawnpore v Roop
Chand Jain, AIR 1940 All 459.
79 Bhibhuti Bhushan Majumdar v Mujihar Rehmwi, AIR 1934 Cal 842.
80 Nollore Muncipality v Dwarapally Kotamma, (1907) ILR 30 Mad 423.
81 Raghunath v Jogeshwar Prasahad Sharma, AIR 1999 Del 383 [LNIND 1999 DEL 493].
82 Izattunnissa Begum v Pertab Singh, (1909) ILR 31 All 583.
83 Kunjikavu Asmma v Janaki Amma, AIR 1957 Ker 98 [LNIND 1957 KER 27]; for the rights and liabilities of seller and the
buyer in a sale subject to encumbrances, see Waman Martand Bhalerao v The Commissioner, Central Division, AIR
1924 Bom 524.
84 Arunachala v Rangiah, (1906) ILR 29 Mad 519.
85 Carbon Resources Pvt Ltd v The Assam Electricity Regulatory Commission, AIR 2010 Gau 131 [LNIND 2010 GAU
120].
86 Special Officer (Commerce) NESCO v Raghunath Paper Mills Pvt Ltd, AIR 2011 Ori 52.
87 See The Transfer of Property Act, 1882, section 55(6)(a); after completion of the sale all rights of ownership and its
incidents pass to the buyer, see The Transfer of Property Act, 1882, section 8.
88 Achutan v Parameshwara, AIR 1951 TC 195.
89 Rani Kaniz v Murtaza, AIR 1937 Oudh 159; Izatunnissa v Partab Singh, (1909) ILR 31 All 583, PC.
90 Unless he has improperly declined to accept delivery of the property, see The Transfer of Property Act, 1882, section
55(6)(b).
91 Delhi Development Authority v Skipper Construction Co Pvt Ltd, AIR 2000 SC 573 [LNIND 1999 SC 346]; Chettiar Firm
v Chettiar, AIR 1941 PC 47.
92 Jibahaoo Harising v Ajabsing, AIR 1953 Bom 145 [LNIND 1952 BOM 15].
1 Videocon Properties Ltd v Balchandra Laboratories, AIR 2004 SC 1787 [LNIND 2003 SC 1144]; Nagammal v Ayyavu
Thevar, AIR 1973 Mad 353 [LNIND 1972 MAD 189]; Abdul Hamid v Mohamad Ali, AIR 1952 Bom 67 [LNIND 1951
BOM 19]; Hari Bapuji v Bhagu Sadhu, AIR 1937 Bom 142; see also Mannad Koya v Ismayil, (1979) Ker LT 9; Madhava
Kamathi v Gopala Pai, (1965) Ker LT 877; Meppallipoyil Ibravi v Poolakkadiyil Pokkari, AIR 1990 Ker 169 [LNIND 1989
KER 18]; Pushkanarayan v Kubrabai, (1969) 71 Bom LR 769.
2 Delhi Development Authority v Skippers Constructions Pvt Ltd, AIR 2000 SC 573 [LNIND 1999 SC 346].
3 Shankri v Milkha Singh, AIR 1941 Lah 407.
4 Asgar s Patel v UOI, AIR 2000 SC 2222 [LNIND 2000 SC 728]; see also CB Gautam v UOI, (1993) 1 SCC 78 [LNIND
1992 SC 833].
5 Juggo v Harihar Prasad, AIR 1940 All 41.
6 Subhadra Bai v Mahomedbhai, AIR 1924 Bom 187.
Page 7 of 7
RIGHTS OF SELLER
7 Sundaramier v Krishnamachary, AIR 1966 Mad 330 [LNIND 1965 MAD 95]; Balvanta v Bira, (1899) ILR 23 Bom 56;
Adari v Nookalamma, AIR 1931 Mad 592 [LNIND 1930 MAD 195]; Kesar v Munna, (1917) 13 Ngp LR 19; see also
Anchi v Maida Ram, AIR 1987 Raj 11.
8 Pancham Pal v Nirode Kumar, AIR 1962 Cal 12 [LNIND 1960 CAL 153]; see also Kapadvanj v Ochhavlal, AIR 1928.
9 TN Hardas v Babudas, AIR 1973 SC 1363.
10 Dhanu Baba v Gulab Eknath, (1960) 62 Bom LR 940.
11 Molly Ajithkumar v Vimala Sasidharan, AIR 2012 Ker 87 [LNIND 2012 KER 16]: 2012 (1) Ker LT 555 [LNIND 2012
KER 16].
12 Cornell v Henson, (1900) 2 Ch 298.
13 Income Tax Officer v KA Goundaswamy, AIR 1978 Mad 186 [LNIND 1977 MAD 134].
End of Document
EARNEST
EARNEST
Earnest is a part of the purchase money kept as a security14 when the transaction goes forward. It is forfeited and
the seller is entitled to keep it15 if the buyer commits default. On the other hand, the buyer gets a refund of this
amount by filing a suit16 if the seller is at default.17 If the seller, who himself is at fault, keeps it, then he would be
asked to pay for the expenses incurred in pursuance of the contract to the buyer.18 A delay on part of the buyer is
not a default.19 The seller is at default if he fails to make out a good title,20 obtain renewal of leases in time,21 or to
deliver the possession,22 or obtain planned permission.23 Earnest differs from an advance,24 but generally the
amount paid on the date of agreement for the performance of contract is presumed to be an earnest.25
If the contract has already been rescinded due to buyer’s default and the amount is forfeited, a subsequent
discovery of defect in title of the seller does not help the buyer in recovery of earnest.26 Mere use of the word
earnest will not give rise to a presumption of a contract to the contrary.27 The justification of the forfeiture of
advance money being a part of “earnest money” should be clear and explicit in the contract as the forfeiture of
money paid as part payment of purchase price and not as earnest money is impermissible in law.28
Non-disclosure amounting to Fraud
An omission on part of the seller to declare such disclosures as are required by the law to be disclosed is
fraudulent. If the purchaser discovers the defect before conveyance, he can rescind the contract29 or claim
compensation, but if the fraud is discovered after the completion of the sale, in order to rescind the contract, he has
to establish that either there was a fraud,30 or he had no notice of the defect,31 or that the contract has not been
substantially performed.32 When the sale deed on account of fraud or common mistake fails to represent the true
intention of the parties, the court will rectify it in conformity with the contract.33
Claim for Compensation
The buyer can also claim compensation in cases of an express contract,34 agreement35 or an implied warranty36
contained in the contract to that effect or for breach of express covenants of quiet enjoyment,37 collateral warranty,38
covenant for title,39 or condition to take care of the property.
Other Remedies Available with the Buyer
Other remedies available with the buyer are that he may sue for recovering the possession of the property,40 or he
can enforce his charge for the price pre-paid.41 He can sue for delivery of title deeds,42 or for an indemnity against
encumbrance discharged in case of land free from encumbrance.43
General principles regarding rights and liabilities relating to the buyer and seller can apply only in case there is no
contract to the contrary. Such contract must be strictly construed more specifically when it is in restraint of the
rights,44 but it does not apply in case where the parties consciously negotiated but failed with respect to any terms
and conditions as a result of which the agreement could not be settled.45 The contract may stipulate that the buyer
Page 2 of 3
EARNEST
should accept the title of the seller and if the buyer knows that the title is questionable, and he accepts it he will be
held to his bargain.46
Time is not of the essence of the contract unless the contract specifically provides so.47 If the time is fixed by the
contract, it must be reasonable.
A direction given in the deed that the amount retained by the buyer is to be paid to a simple creditor of the seller
and the covenant on part of the seller to pay off an outstanding mortgage and giving liberty to the purchaser to pay
the same in case the seller himself failed to pay, is not a contract to the contrary and the purchaser is competent to
retain the sum reserved for payment to the simple creditor.48
14 Krishan Chundra v Khan Mamud, AIR 1936 Cal 51; Narendra v Nipendra, AIR 1948 Cal 208.
15 Bishen Chand v Radha, (1897) ILR 19 All 489; Kunwar Charanjit v Har Swarup, AIR 1926 PC 1; Verrayya v Sivayya,
(1914) 27 Mad LJ 482; Natesa v Appavu, (1915) ILR 38 Mad 178.
16 Shankerji v Ratilal, AIR 1956 Bom 443 [LNIND 1955 BOM 92].
17 Ibrahim Bhai v Fletcher, (1897) ILR 21 Bom 827; Habib Ali v Rafikuddin, AIR 1968 Assam & Nagaland 26. Where the
title of the seller is clear the buyer is not entitled to the refund, see Tulsidas v Prahlad, AIR 1943 Sau 92.
18 Karsandas v Gopaldas, AIR 1924 Bom 282.
19 Alokeshi v Harachand, (1897) ILR 24 Cal 897; Balvanta v Bira, (1899) ILR 23 Bom 56; Ibrahim Bhai v Fletcher, (1897)
ILR 21 Bom 827.
20 Dwarkaprasad v Kathleen Florence, AIR 1955 Ngp 38.
21 Aberfoyle Plantations v Cheng, (1968) 3 All ER 552.
22 Ganpati Ram v Baliram Raghunath, AIR 1974 Bom 155 [LNIND 1973 BOM 21].
23 Re Longwal Farms, (1968) All ER 552.
24 Sardarilal v Shakuntala Devi, AIR 1961 Punj 378.
25 Letita Castelino v Jerome D’Silva, AIR 1972 Mys 28; KCN Gowda v Molakram, AIR 1958 Mys 10; see also Naresh
Chandra v Ramchandra, AIR 1952 Cal 93.
26 Soper v Arnold, (1887) 37 Ch D 96.
27 Saidun Nisssa Hoque v Calcutta Vyapar Pratishthan, AIR 1978 Cal 285 [LNIND 1977 CAL 323].
28 Satish Batra v Sudhir Rawal, (2013) 1 SCC 345 [LNIND 2012 SC 665].
29 Eastern Mortgage v Muhamad Fuzlul, AIR 1926 Cal 385; Jhamaklal v Mishrilal, AIR 1957 Madh Bharat 23.
30 See Delli Gramani v Ramachandran, AIR 1953 Mad 769 [LNIND 1951 MAD 379]; Abdullah Khan v Abdur Rahman Beg,
(1896) ILR 18 All 322; Permanand Bhojraj v Matumal Phatumal, AIR 1933 Sau 144; The buyer has aright to set aside
the sale for fraud, see Sadashiv v Dhakubai, (1881) ILR 5 Bom 451; Moula Buksh v Dharamchand, (1960) 65 Cal WN
881; Re Sheo Thakur Mahton, 58 IC 529.
31 Ramasubbu v Muthiah, AIR 1925 Mad 968; Harilal v Mulchand, AIR 1928 Bom 427.
32 Seddon v North Eastern Salt Co, (1905) 1 Ch 326.
33 Dagdu v Bhana, (1904) ILR 28 Bom 420; Nathu v Hamid, AIR 1926 Oudh 344.
34 Eastern Mortgage v Muhamad Fuzlul, AIR 1926 Cal 385; Champalal v Roopa, AIR 1963 Raj 38 [LNIND 1962 RAJ 192];
Udho Das v Mehr Baksh, AIR 1933 Lah 262.
35 Desikhacharyulu v Narsinghacharyulu, AIR 1958 AP 278.
36 Suleman Vadu v Trikamji Velji, (1875) 12 Bom HCR 10; Delli Gramani v Ramachandran, AIR 1953 Mad 769 [LNIND
1951 MAD 379]; Janga Venkata Reddy v Jamal Ahmed Saheb, (1915) 29 Mad LJ 611.
37 Raghava v Samachariar, (1914) Mad WN 57.
38 Vishvanath v Bala, (1916) 18 Bom LR 292.
39 Basaraddi v Enjaddi, (1898) ILR 25 Cal 298; Harilal v Mulchand, AIR 1928 Bom 427.
Page 3 of 3
EARNEST
40 Sundara v Sivalingam, AIR 1924 Mad 360 [LNIND 1923 MAD 127]; Krishnamma v Mali, (1920) ILR 43 Mad 712.
41 Delhi Development Authority v Skipper Construction Co Pvt Ltd, AIR 2000 SC 573 [LNIND 1999 SC 346]; Sultan Kani v
Mahomad, AIR 1929 Mad 189 [LNIND 1928 MAD 258]; Ibrahim Bhai v Fletcher, (1897) ILR 21 Bom 827; Balwanta v
Bira, (1899) ILR 23 Bom 56.
42 Bhavani v Devrao, (1887) ILR 11 Bom 485.
43 Nathu Khan v Burtonath, AIR 1922 PC 176; Manishankar v Ramkrishna, (1904) 6 Bom LR 832.
44 Subayya v Garikapati, AIR 1957 AP 307.
45 Brij Mohan v Sugra Begum, (1990) 4 SCC 147.
46 Motivahaoo v Vinayak, (1888) 12 Bom 1; Indra Narain v Baadan Charan Das, 47 IC 340; Hiranand v Mahia, (1876) PR
90.
47 Jamshed v Burjorji, (1916) ILR 40 Bom 289; Suryanarayanamurthy v Satyanarayanamurthy, AIR 1925 Mad 211;
Mahdeo v Narain, (1920) 24 Cal WN 330.
48 Janaki v Ambalavasi, AIR 1942 Mad 583.
End of Document
MARSHALLING
MARSHALLING
[s 56] Marshalling by subsequent purchaser.—If the owner of two or more properties mortgages them to one
person and then sells one or more of the properties to another person, the buyer is, in the absence of a contract to
the contrary, entitled to have the mortgaged-debt satisfied out of the property or properties not sold to him, so far as
the same will extend, but not so as to prejudice the rights of the mortgagee or persons claiming under him or of any
other person who has for consideration acquired an interest in any of the properties.
Essentials of Marshalling
(i) The owner of two or more properties mortgages them to one person;
(ii) He then sells one or more of the properties to another person;
(iii) The buyer is, in the absence of a contract to the contrary entitled to have the mortgaged debt satisfied out
of the property or properties not sold to him so far as the same will extend;
(iv) But not so as to prejudice the rights of the mortgagee or persons claiming under him;
(v) Or of any other person who has for consideration acquired an interest in any of the properties.
Marshalling can be understood with the following example.
A owns two or more properties and mortgages49 both of them to one person X. Subsequently, he sells one or more
of the properties to another person, B. B is, in the absence of the contract to the contrary, entitled50 to have the
mortgage debt51 satisfied out of the property or properties not sold to him. He can require X to proceed against the
properties that are not mortgaged to him. This entitlement is only so far as the same will not be to the prejudice of
the rights of the mortgagee52 or persons claiming under him, or of any other person who has for consideration
acquired an interest in any of the properties.53
Similarly, A mortgages his properties X, Y and Z in favour of B for a loan of Rs. 50,000. A later sells property X to C
for a consideration of Rs 50,000. A does not repay the loan to B and B causes the property to be sold with the help
of the court. Here, C can claim that the debt of Rs 50,000 that A owes to B, should be satisfied out of the sale of the
properties Y and Z, that property X that has passed to him should not be made the subject matter of sale. This is
despite the fact that property X was also the security kept with the mortgagee. Further, marshalling is possible
where the debt can be satisfied out of the other properties. But if it cannot be so satisfied with the help of the other
properties, then marshalling will not be permissible. Marshalling cannot arise unless there is a common debtor54
and more than one property is kept as a security for the repayment of the loan.
Who can avail Marshalling
An execution purchaser cannot avail marshalling55 though the principle is applicable to involuntary sales.56 The rule
of marshalling does not apply as between two purchasers and both are to contribute rateably to the satisfaction of
the original charge.57 But where, out of the two mortgaged properties, one is sold to a purchaser free from mortgage
and then second is sold to another purchaser subject to the mortgage, the first purchaser can marshall and require
the mortgagee to proceed against the property in the hands of the second purchaser.58 In Muhammad Rafeeq v
Bank of Baroda,59 A, borrowed money from the Bank, B, by securing some items of the property. C was a stranger
Page 2 of 2
MARSHALLING
to this loan transaction between A and the bank. He later purchased one item of property from A over which
security interest was created. It was held that he would not be eligible to have the property spared under section 56
of the Transfer of Property Act as the provisions of SARFAESI Act, would override the provisions of Transfer of
Property Act.
The charge on the unsold property may be excluded by an express or even an implied60 contract to the contrary,61
not only as between a mortgagor and a mortgagee, but also as between a mortgagor and a purchaser.62
49 Though the term used is mortgage but the rule applies also to a charge, see Mohamad Yunus Khan v Court of Wards,
Balrampur Estate, AIR 1937 Oudh 307; see also Nilkanthrao v Satyabhamabai, AIR 1944 Ngp 25. It does not however
apply to leases, see Low & Co v Hazarimull, AIR 1926 Cal 525.
50 This principle confers a statutory right on the buyer of one property sold to him out of several mortgaged properties and
cannot be extinguished unless the intention was to extinguish the entire mortgage, see Tulsi Ram v Manku Ram, AIR
1952 All 153.
51 Mortgage debt is a charge on the property under The Transfer of Property Act, 1882, section 56 and it remains
subsisting on the property till duly discharged, see VP Mahambra v Maria Alcina De Menezes E Gonsalves, AIR 1995
SC 973 [LNIND 1994 SC 965].
52 A mortgagee under the unamended section had a right to proceed against whatever property he chose and could not
be compelled to split his security unless he represented the seller and the courts using their discretion under the the
Code of Civil Procedure 1908, O XXXIV, rule 5 adjusted the equities by requiring the mortgages to proceed first against
the unsold properties. Under the amended section, the purchaser can proceed as of right, see Narayanaswami v
Vellayya, AIR 1924 Mad 366 [LNIND 1923 MAD 222]; Bhikari Das v Dilip Singh, (1895) ILR 17 All 434; Lala Dilawar v
Dewan Balakiran, (1885) ILR 11 Cal 258; Tara Prasanna v Nilmont, (1914) ILR 41 Cal 418; Sambandam v
Ramaswamy, AIR 1964 Mad 547 [LNIND 1964 MAD 35]; Subraya v Ganpa, (1911) ILR 35 Bom 395; Rajkeshwar
Prasad v Mohammad, (1924) ILR 3 Pat 522; Raghavachariar v Krishna, AIR 1924 Mad 509.
53 See The Transfer of Property Act, 1882, section 56. Marshalling arises under this rule when the property is sold free
from encumbrances which is different from the case where property is sold, subject to a mortgage and contribution is
applicable, see Rama Shanker v Ghulam Hussain, AIR 1921 All 323.
54 Kasuri Koteshwar Rao v KV Rao, AIR 1973 AP 46 [LNIND 1971 AP 136].
55 Timmappa v Lakshmamma, (1882) ILR 5 Mad 385; Ram Shanker v Gulam Husain, AIR 1921 All 323; Upendra Nath v
Kali Charan, AIR 1930 All 634; Naubat Lal v Mahadeo Prasad, AIR 1929 All 309; Rama Raju v Subbarayudu, (1882)
ILR 5 Mad 387.
56 Lachminarayan v Janmaijai, (1953) AP 193.
57 Magni Ram v Mehdi Hossein, (1904) ILR 31 Cal 95; Ramlochan v Ram Narain, (1898) 1 Cal LR 296; Din Dayal v Gur
Saran Lal, (1920) ILR 42 All 336.
58 Kampta Singh v Chaturbhuj Singh, AIR 1934 PC 98.
59 AIR 2010 Ker 149 [LNIND 2010 KER 139]: ILR 2010(2) Kerala.
60 Achanta Venkata v Manna Venkayyamma, AIR 1946 Mad 59.
61 Pritiviraj v Rukmin, AIR 1926 All 415.
62 Mangayya v Achchaymma, AIR 1954 Mad 224.
End of Document
DISCHARGE OF ENCUMBRANCES ON SALE

[s 57] Provision by Court for encumbrances and sale freed therefrom.—(a) Where immoveable property
subject to any encumbrances, whether immediately payable or not, is sold by the Court or in execution of a decree,
or out of court, the Court may, if it thinks fit, on the application of any party to the sale, direct or allow payment into
Court,—
(1) in case of an annual or monthly sum charged on the property, or of a capital sum charged on a
determinable interest in the property—of such amount as, when invested in securities of the Central
Government, the Court considers will be sufficient, by means of the interest thereof, to keep down or
otherwise provide for that charge, and
(2) in any other case of a capital sum charged on the property—of the amount sufficient to meet the
encumbrance and any interest due thereon.
But in either case there shall also be paid into Court such additional amount as the court considers will be sufficient
to meet the contingency of further costs, expenses and interest, and any other contingency, except depreciation of
investment not exceeding one-tenth part of the original amount to be paid in, unless the court for special reasons
(which it shall record) thinks fit to require a large additional amount.
(b) Thereupon the Court may, if it thinks fit, and after notice to the encumbrance, unless the Court, for reasons to be
recorded in writing, thinks fit to dispense with such notice, declare the property to be freed from the encumbrance,
and make any order for conveyance, or vesting order, proper for giving effect to the sale, and give directions for the
retention and investment of the money in Court.
(c) After notice served on the persons interested in or entitled to the money or fund in Court, the Court may direct
payment or transfer thereof to the persons entitled to receive or give a discharge for the same, and generally may
give directions respecting the application or distribution of the capital or income thereof.
(d) An appeal shall lie from any declaration, order or direction under this section as if the same were a decree.
(e) In this section “Court” means (1) a High Court in the exercise of its ordinary or extraordinary original civil
jurisdiction, (2) the Court of a District Judge within the local limits of whose jurisdiction the property or any part
thereof is situate, (3) any other Court which the State Government may, from time to time, by notification in the
Official Gazette, declare to be competent to exercise the jurisdiction conferred by this section.
The object of this section is that property should be, as far as possible, sold free from encumbrances. If an
immovable property that is subject to any encumbrance is sold by the court or in execution of a decree or out of
court, the court63 may, if it thinks fit, on the application of any party to the sale, direct or allow payment into the
court.64
In case there is a charge over the property that is to be paid periodically, the court may allow the deposit of such
sum of money in the court, which, if invested in government securities, would yield an income from which the
charge can be met with. They may also call upon the party to deposit an additional amount to meet the cost of
contingent expenses arising in future. After such deposit has been made, the court may declare the property as free
from encumbrance.
Page 2 of 2
63 See The Transfer of Property Act, 1882, section 57. In this section court means (1) a High Court in the exercise of the
ordinary or extraordinary original civil jurisdiction; (2) the court of a District Judge within the local limits of whose
jurisdiction the property or any part thereof is situated; (3) any other court which the state government may from time to
time, by notification in the Official Gazette declare to be competent to exercise the jurisdiction conferred by this section.
64 The principle has no application in cases of an adjustment of a decree out of court; see Mallikarjun A Sastri v
Narasimha, (1901) ILR 24 Mad 412.
End of Document

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3. RIGHTS AND LIABILITIES OF BUYER AND SELLER

8. DISCHARGE OF ENCUMBRANCES ON SALE

Chapter 3 Of Sales of Immovable Property

It does not, of itself, create any interest in or charge on such property.

Chapter 3 Of Sales of Immovable Property

General Power of Attorney

Sale and a Hire-purchase Agreement

Sale and Exchange

Sale with a Condition of Repurchase and a Conditional Mortgage

Sale and Lease

Essentials of a Valid Sale

The essential elements of a sale are:

(i) Parties to a sale;

Authority to Dispose/Competency of Seller

A statutory bar on alienation will override the provisions of the TP Act.28

Subject Matter of a Sale

Price Paid or Promised

Price Mandatory for Sale

Formalities for Effecting a Sale

Rules governing only Immovable Property

Where Value of Property is Less than Hundred Rupees

Registration and Transfer of Ownership

A unilateral cancellation of sale deed once it is complete is not allowed by registrar.4

Date of Execution not the Determining Criteria

Intention of the Parties

Consequences of Lack of Registration

Delivery of Tangible Immovable Property

Unregistered Sale Deeds

Completion of oral sales

Contract of Sale does not Create a Charge

Agreement to Sell and Suit for Specific Performance

relieved by compensation in money. This presumption is a rebuttable one.73The consequences of an agreement to

Contract to Reconvey the Property

Cancellation of Sale Deed

24 K Sivanandam v Maragathammal, AIR 2013 Mad 30 [LNIND 2012 MAD 1767].

53 Hara Bewa v Banchandilal, AIR 1957 Ori 243.

84 Immitidipattam Thirugnanna v Periya Dorasami, (1901) ILR 24 Mad 377.

74 Sanjeev Lal v CIT, Chandigarh, (2015) 5 SCC 775.

Chapter 3 Of Sales of Immovable Property

RIGHTS AND LIABILITIES OF BUYER AND SELLER

(1) The seller is bound—

(4) The seller is entitled—

Chapter 3 Of Sales of Immovable Property

(i) Disclosure of material defects relating to property;

Productions of Documents of Title

Seller Bound to Answer all Relevant Questions

Seller to Execute Conveyance

Seller to Take Care of the Property before Conveyance

Seller to Deliver Possession

When Possession has to be given

Payment of Price and Handing over of Possession

Seller’s Duty to Pay Public Charges

Seller’s Duty to Deliver Property Free from Encumbrances

Covenant for Title

Representation of a Higher Title

Improper Description of the Property

Buyer’s Duty to Inquire into the Title

Contract to the Contrary

Covenant for Quiet Enjoyment

Sale by a Person in a Fiduciary Capacity

Benefit of the Covenant to Run with Land