Name of faculty: Faculty Of Law

Name of student: Kashish Fatma

Student ID: 202003947

Programme: BaLLB (hons)

Term: 2nd year, 3rd Semester

Subject: Property Law

Assignment topic: Law Relating to Sale

Submitted to: Dr. Qazi Mohd. Usmaan

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 TABLE OF CONTENT

Chapter 1 - Transfer of Immovable Property

1.Introduction

2.Modes of Transfer of Immovable Property

2.1 Sale

1. Sale How Made

2. Contract For sale

2.1.2.1 The essential element of a sale are

a) Parties of sale

b) Subject matter of a sale

c) Price or consideration

d) Condition of a valid sale

2.2 Ownership transfer and registration

2.3 Advantages of Registration

2.4 Contract of sale

3.Conclusion

4.Bibliography

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Transfer of Immovable Property
Introduction

Property is any physical or virtual entity that is owned by an individual or jointly

by a group of individuals. Depending on the nature of the property, an owner of
property has the right to consume, sell, rent, mortgage, transfer, exchange or
destroy their property, and/or to exclude others from doing these things.

According to Section 3 of the Transfer of Property Act, 1882 "Immovable

Property" does not include standing timber, growing crops or grass. It is also
defined under General Clauses Act as “Immovable property” shall include land,
benefits to arise out of land, and things attached to the earth, or permanently
fastened to anything attached to the earth.

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Land is a subject falling within the powers of the State Governments under the
Constitution of India1 and hence, property laws in India may differ from State to
State. Besides the local laws, several laws enacted by the Central Government also
govern acquisition and ownership of property (including an interest in property)
through purchase/sale, transfer, mortgage, inheritance or gift. Transfer of property
other than agricultural land, registration of deeds and document fall in the
Concurrent List.

When a person acquires or owns an immovable property, the law also give him/her
the right to use, lease, sell, rent or transfer/gift of the land. The owner also has a
right to mortgage his immovable property as a security for loans. However, there
are some laws which restrict the type of use a land can be put to, e.g., a land may
be used only for residential or commercial purposes to prevent
haphazard/unorganized growth of cities and towns. Laws in some of the States
prevent/restrict outsiders from acquiring property within the State. Restrictions are
also placed on non-agriculturists from acquiring agricultural land.

There are also other laws which prescribe rules and regulations for protection of
environment or which provide for approval of building plans/designs so as to
protect people from natural or manmade hazards. Some laws like the Registration
Act, 1908, also lay down provisions governing registration of property transactions
so as to keep proper records of ownership of property in the public domain. Some
laws relating to taxation like the Income Tax Act, 1956 lay down certain provisions
and procedures to be observed while undertaking property transactions so as to
ensure tax compliance of an owner before disbursal of property. In India,
transactions for purchasing/selling/transferring/creating an interest in immovable
property and transmission of title in respect of a property are governed by several
laws, rules and regulations.

As matters relating to land fall within the legislative powers of State Governments
under the Constitution of India, these may differ from state to state. The Transfer of
Property between any two parties is governed by the Transfer of Property Act,
1882. Both these parties need to be alive for transfer under the Act. In case of
transfer of a property of a deceased person, Succession Laws as per the religion of
the deceased will be applicable.

1
Constitution of India, Seventh Schedule, List II, Entry 18 and Article 246 (3)
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Modes of Transfer of Immovable Property

There are different modes by virtue of which immovable property can be

transferred. Property can be transferred by different modes or ways viz. Sale,
mortgage, lease, gift, exchange etc. Transfer of immovable property by each of the
aforesaid modes has its own significance, advantages and disadvantages.

I). SALE

Section 54 of the Transfer of Property Act, 1982 defines sale as under:

"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.

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 In the case of tangible immoveable 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.

• Sale How Made :

Such transfer, in the case of tangible immovable property of the value of one
hundred rupees and upwards, or in the case of a reversion or other intangible thing,
can be made only by a registered instrument.

In the case of tangible immovable property of a value less than one hundred rupees, such
transfer may be made either by a registered instrument or by delivery of the property.

Delivery of tangible immovable 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 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 property.

 The essential elements of a sale are:

 parties to a sale;
 subject matter of sale;
 price or consideration;
 Mode of execution of sale.

a) Parties to Sale

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The parties to a sale are–the transferor who is called a seller, and the transferee
known as the buyer. A contract of sale must be based on a mutual agreement
between the seller and the buyer2 .

The transferor or the seller must be a person who is competent to enter into a
contract i.e., he must be a 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 sell his property that is to be sold in execution under the order of the court.

The transferor should either be the owner of the property or should have an
authority to dispose of it. For example, the karta of a joint family property is
authorized to transfer the property under certain specified circumstances3.

Similarly, the guardian of the property of a minor is empowered to sell it with the
permission of the court, and without such permission the sale would be invalid 4. An
agent having a power of attorney to sell the property can also sell it without being
the owner of the property.

Where the sale is executed after getting a general power of attorney; without
obtaining the requisite permission of the court, the sale deed is invalid and would
not confer any title on the transferee, but if the Power of Attorney executed in favor
of the holder expressly authorizes him to transfer the property he would be a
competent seller5.

2
Misabul Enterprises v. Vijaya Srivastava, AIR 2003 Del. 15
3
Biswanath Sahu v. Tribeni Mohan, AIR 2003 Ori 189
4
Sarup Chand v. Surjit Kaur, AIR 2002 P & H 54
5
Lakhwinder Singh v. Paramjit
Kaur, AIR 2004 P & H 6. 6 Sec.
107,Transfer of Property Act
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The transferee must be a person competent to receive a transfer in his favor and he
should not be subject to a legal disqualification. A minor is a competent transferee
in a transaction of a sale. Similarly, a mortgage or a lease can be executed in favor
of a minor, but a minor cannot take a lease in his favor, as a lease has to be
executed by both the parties. A lease in favor of a minor is therefore, void6.

b).Subject Matter of a Sale

Section 54, Transfer of Property Act only governs the sale of immovable
property. Immovable property can be tangible or intangible. Tangible property is
one that can be touched, such as a house, a tree etc., while intangible property
refers to property that cannot be touched such as a right of fishery, a right of way
etc.

The property must be properly and sufficiently identified. In a suit for declaration of
title of the property, the controversy was with respect to the identity of the property6.

There was a mistake in the plot number. 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 misdescription which did not affect the identity of the property sold.
Rather, it is intrinsic evidence in proving that seller wanted to convey the right and
title in the suit property to the buyer

(c) Price or Consideration

Price7, in the ordinary sense connotes money consideration for the sale of
property9.Where the consideration is money but is not specific, the transaction would
still be a sale.

A compromise, a descretal amount, an advance made by one person to another, or

an agreement to protect and defend the property at the purchaser‘s cost, is a good
consideration for sale. Likewise, a family settlement is a valid consideration for an

6
Ram Jiwan Rai v. Deoki Nandan Rai, AIR 2005 Pat 23
7
The term price has not been defined in The Transfer of Property Act, 1882, but is used is the
same sense as in
The Indian Contract Act, 1872. Arjuna Reddy v. Arjuna C.
Thanga, (2006)7 SCC 756 9 Comm. of Income Tax v. Motor
and General Stores, AIR 1967 SC 200
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agreement to sell. Where a son-in-law executed an agreement for sale in favor of
his mother-in-law in consideration of a family settlement, it was held that it
amounted to a valid consideration for the sale8.

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. For example,
A agrees to sell the land to B, and executes a sale deed for the same. Ordinarily, the
buyer would pay the consideration on the same day.

However, if they agree to pay the entire consideration or part of it at the time of the
registration of the document, and partly at the time of the execution or even
subsequent to registration, this would be a valid sale. 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 so9.

Therefore, it is not mandatory that payment of the price should beat 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 the relevant factors
to decide the validity of sale.

d) Conditions of a Valid Sale

Section 54, Transfer of Property Act 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.

Unless, the all three conditions are complied with, no right passes from the seller
to the buyer or in other words, there can be no sale. However, in case where 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
8
K. Lakshaman Rao v. G. Ratna Manikyamba., AIR 2003 AP 241
9
Nalamathu Venkaiya v. B.S. Neelkanta, AIR 2005 AP 535
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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 above mention these three requirements. It
is only that writing, attestation and registration in such cases is optional 10. The test
is the value of the property and nor the amount of consideration or the price.

Ownership Transfer and Registration:

Writing, attestation and registration are the essential 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, and it concludes on
registration unless there is a clause contrary in the contract. Therefore, a suit for
preemption that can be filed only after the conclusion of the sale, if filed before
registration, will be premature.

The general rule of passing of ownership on registration is subject to the intention

of the parties (i.e. buyer and seller) explicitly expressed in the contract. Where the
intention cannot be gathered from the document or appears ambiguous, extraneous
evidence is admissible for clarity.

Scope of an Agreement of sale

Section 54 of the Transfer of Property Act, 1882 makes it clear that a contract of
sale, that is, an agreement of sale does not, of itself, create any interest in or charge
on such property.

Supreme Court in Narandas Karsondas v/s S. A. Kamtam & Anr11, observed,

A contract of sale does not of itself create any interest in, or charge on, the
property. This is expressly declared in Section 54 of the Transfer of Property Act,
1882.

10
Arjuna Reddy v. Arjuna C Thanga, (2006) 7 SCC 756.
11
(1977) 3 SCC 247
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See Rambaran Prosad Vs Ram Mohit Hazra,12. The fiduciary character of the
personal obligation created by a contract for sale is recognised in Section 3 of the
Specific Relief Act, 1963, and in Section 91 of the Trusts Act. The personal
obligation created by a contract of sale is described in Section 40 of the Transfer of
Property Act as an obligation arising out of contract and annexed to the ownership
of property, but not amounting to an interest or easement therein.

In India, the word transfer is defined with reference to the word convey. The word
conveys in Section 5 of Transfer of Property Act is used in the wider sense of
conveying ownership....that only on execution of conveyance ownership passes
from one party to another....

In Rambhau Namdeo Gajre v/s Narayan Bapuji Dhotra, [2004 (8) SCC 614] the
Supreme Court held:

Protection provided under Section 53-A of the Act to the proposed transferee is a
shield only against the transferor. It disentitles the transferor from disturbing the
possession of the proposed transferee who is put in possession in pursuance to such
an agreement. It has nothing to do with the ownership of the proposed transferor
who remains full owner of the property till it is legally conveyed by executing a
registered sale deed in favour of the transferee.

Such a right to protect possession against the proposed vendor cannot be pressed in
service against a third party.

It is thus clear that a transfer of immoveable property by way of sale can only be by
a deed of conveyance (sale deed). In the absence of a deed of conveyance (duly
stamped and registered as required by law), no right, title or interest in an
immoveable property can be transferred.

Any contract of sale (agreement to sell) which is not a registered deed of

conveyance (deed of sale) would fall short of the requirements of Section 54 and
55 of Transfer of Property Act, 1882 and will not confer any title nor transfer any
interest in an immovable property (except to the limited right granted under Section
53-A of Transfer of Property Act, 1882). According to Transfer of Property Act,
1882 an agreement of sale, whether with possession or without possession, is not a

12
[1967] 1 SCR; 293
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conveyance. Section 54 of Transfer of Property Act, 1882 enacts that sale of
immoveable property can be made only by a registered instrument and an
agreement of sale does not create any interest or charge on its subject matter.

Advantages of Registration

The Registration Act, 1908, was enacted with the intention of providing
orderliness, discipline and public notice in regard to transactions relating to
immovable property and protection from fraud and forgery of documents of
transfer. This is achieved by requiring compulsory registration of certain types of
documents and providing for consequences of non-registration.

Section 17 of the Registration Act, 1908 clearly provides that any document (other
than testamentary instruments) which purports or operates to create, declare,
assign, limit or extinguish whether in present or in future any right, title or interest
whether vested or contingent of the value of Rs. 100 and upwards to or in
immovable property.

Section 49 of the said Act provides that no document required by Section 17 to be

registered shall, affect any immovable property comprised therein or received as
evidence of any transaction affected such property, unless it has been registered.

Registration of a document gives notice to the world that such a document has been
executed. Registration provides safety and security to transactions relating to
immovable property, even if the document is lost or destroyed. It gives publicity
and public exposure to documents thereby preventing forgeries and frauds in regard
to transactions and execution of documents. Registration provides information to
people who may deal with a property, as to the nature and extent of the rights
which persons may have, affecting that property

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In other words, it enables people to find out whether any particular property with
which they are concerned, has been subjected to any legal obligation or liability
and who is or are the person/s presently having right, title, and interest in the
property.

It gives solemnity of form and perpetuate documents which are of legal importance
or relevance by recording them, where people may see the record and enquire and
ascertain what the particulars are and as far as land is concerned what obligations
exist with regard to them. It ensures that every person dealing with immovable
property can rely with confidence upon the statements contained in the registers
(maintained under the said Act) as a full and complete account of all transactions
by which the title to the property may be affected and secure extracts/copies duly
certified.

Contract of Sale:

There can be an agreement of sale before the execution of a sale deed. 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 terms settled between the parties.

A contract of sale is different from a sale, as it does not require registration.

However, it does not create a charge or an interest in the property. It is merely a
document or an agreement that gives a right to obtain another document, i.e., a sale
deed. Therefore, it does not require registration.

However, some equities do arise in favor of the transferee. For instance: where,
despite an agreement of sale, the property is transferred to another person, the
subsequent transferee with notice of the earlier transaction holds the property in
trust for the prior agreement holder13.

A suit for specific performance can be granted on the basis of an agreement of sale.
But if the contract of sale is subject to future negotiations for finalization of more
terms of contract for sale, such a suit cannot be granted14.

Supreme Court in the case of Ramesh Chand Ardavatiya v. Anil Pangwani15 held that,
13
Kondapalli Satyanarayan v. Kondapalli mayullu, AIR 1999 AP 170.
14
Ram Swarup Gour v. Rati Ram, AIR 1984 All 369, Also Sec 10,
Specific Relief Act, 1963 15 (2003) 7 SCC 350
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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

It create any interest in or charge on such immovable property. However,

still if a person who entered into possession over immovable property
under a contract for sale and is in peaceful and settled possession of the
property with the consent of the person in whom the title vests, he is
entitled to protect his possession against the whole world, excepting a
person having a title better than what he or his vendor possesses. If he is
in possession of the property in part performance of the contract for sale
and the requirements of Section 53 A are satisfied, he may protect his
possession even against the true owner”.

The Apex Court in the case of Aloka Boase v. Parmatma Devi15, held that,

“A contract of sale can he 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”.

Conclusion:

When a person acquires or owns an immovable property, the law also give him/her the right to
use, lease, sell, rent or transfer/gift of the land. The owner also has a right to mortgage his
immovable property as a security for loans. However, there are some laws which restrict the
type of use a land can be put to, e.g., a land may be used only for residential or commercial
purposes to prevent haphazard/unorganized growth of cities and towns. Laws in some of the
States prevent/restrict outsiders from acquiring property within the State. Restrictions are also
placed on non-agriculturists from acquiring agricultural land.

15
(2009) 2 SCC 582
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Bibliography

 The Transfer of Property Act 5th Edition, Dr. Avatar Singh

 Textbook on The Transfer of Property Act 6th Edition

 Dr. R.K Sinha’s, The Transfer of Property Act – 21st Edition (2021)

 Research Paper on TPA – 1982, Volume 2, Issue 6, June 2017, Saveetha

University, Saveetha School of Law, Under Graduate Department, Chennai

 Legal Service India, E-Journal

(https://www.legalserviceindia.com/legal/article-1482-sale-of-property-
through-power-of-attorney-not-valid-supreme-court.html)

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