ASSIGNMENT

OF

PROPERTY LAW

TOPIC: SALE OF IMMOVABLE PROPERTY

Submitted to: Submitted by:

Mohd Asif belal Shabir

Assistant Prof BA,LLB(8th sem)

Glocal university GU16R0026.

Saharanpur
Sale of Immovable Property: Explained as Under Transfer Of Property Act, 1882

Sale simply means buying and selling of goods and services, under Transfer of Property Act,
1882 the Sale is of immovable property. Before jumping into further details regarding the sale
of immovable property.

Let us first understand the meaning of a few keywords which are necessary in order to
understand and interpret the Transfer of Property Act.

Section 3 of the Act is the Interpretation-clause, which provides for the meaning of key
terminologies –

Immovable property – does not include standing timber, growing crops or grass,

Instrument – means a non-testamentary instrument. The instrument is a written document, a

formal or legal document in writing, such as a contract, deed, bond or lease or anything
reduced to writing.

Registered – register is a book containing a record of facts as they occur, kept by public
authority. A document cannot be said to have been duly registered if the registration has been
made in contravention of the provisions of the Registration Act.1

Attached – is a term describing the physical union of two otherwise independent structures or
objects, o the relation between two parts of a single structure, each having its function. 2

Section 5 – Transfer of property defined

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

Some of the means of transfer of property from one person to another are – by sale, or by
exchange, or by gift, or by adverse possession, and in some cases, even by a decree of the
Court.

Section 54 of the Act defines ‘sale’ and specifies how a sale of immovable property may be
made. Herein, sale refers to the sale of immovable property whether tangible or intangible
(example – easement rights)

Sale is a transfer of ownership for a money consideration. It implies an absolute transfer of all
rights in the property sold. No rights in the property sold are left in the transferor.
1
Nahar Lal v. Brijnath 1928 AC 385

2
National Brake & Electric Co. v. Christensen, CCA Wis. 229 F 564, 570
Section 54 ‘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 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 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 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.

 Elements of Sale
1. Transfer of ownership – ownership is the aggregation of all the rights and liabilities in a
property. When there is the transfer of ownership, the aggregation or total of all rights
and liabilities in a property are transferred from transferor to the transferee.
2. Money consideration – the ‘price’ that is referred to in section connotes to money
consideration. Where the ownership of property is transferred in consideration for
money it amounts to sale but if it is transferred for anything else it amounts to
exchange.

Section 54 Provides that contract for sale of itself does not create any interest in or charge on
such property.3

 Essentials of a sale
1. Parties In a sale, there must be in the least two parties. The person who transfers
his/her property is known as the transferor/seller/vendor and the person to whom the
property
2. Competency For a valid sale both the buyer and seller have to be competent on the
date of the sale.
 Seller

3
Bhabani Sarma v. Narayan Sarma, AIR 2003 Gau 171.
 1. The seller must have the ownership of the property which he is going to sell.
2. The seller must have a legal title to it only then he can sell the property.
3. The seller must be competent to contract.
4. He must not be a minor
5. He must not be of unsound mind.

He must not be statutorily incompetent – This refers to incompetency under the law for
example when a person is declared insolvent his property bestowed on the person who
recovers he is indebted to in this case the property is legally reserved for the recovery of debt.

The seller may be a natural person/juristic person, for example, corporations or another legal
person.

 Buyer
1. The buyer must be competent to receive the ownership of the property.
2. The buyer should not be disqualified from buying the immovable property by any law in
force at the time of the sale – for example under section 136 of the Act, a judge, e legal
practitioner or an official of the court is incompetent to purchase actionable claims.
3. The seller may be a natural person/juristic person, for example, corporations or other
legal person.
 Subject – matter

Sale under Transfer of Property Act, 1882 specifically deals with sale of immovable property.
Immovable property includes the benefits arising out of the land and the things attached to the
earth except for standing timber, growing crops and grass.

The right to catch and carry away fish is a ‘profit pendre’ and construed as immovable property.

 Money consideration

Price is an essential element of the sale.

Where, by the transfer, the vendor is getting rid of the liability to pay a certain sum, it cannot
be said that there is no consideration for the sale.4

An agreement between the parties cannot be rendered nugatory on the ground that the
consideration was not adequate.5

4
Alama Chand v. Chhajju, AIR 1923 All 530, 531, Col. 2 : ILR 45 All 559 : 74 IC 339.

5
Sheo Shankar Kr. Khetan v. Widow of Late A. Prasad, (2007) 3 BLJR 2936 (Pat).
The price paid and price promised to stand on equal footing as regards the transaction of a sale.
There is nothing illegal, or contrary to public policy if the parties agree that the payment of the
consideration shall be postponed in certain events, or that it shall not be paid at all if the
property is lost.

Therefore, a stipulation in a sale-deed that the price will be paid within one year, provided that
possession is obtained within that time, and that if possession is not so obtained then the
payment of the price will be postponed, or that in the event of the vendee not getting the
property, the price will not be paid at all. In all the above cases, the deed is a sale-deed within
the meaning of the section.6

If from the recitals in the sale deed it appears that title would pass after payment of full
consideration, the inference would be that until the consideration is paid, there is no transfer.

 Conveyance

Section 54 provides for two modes for transfer of property –

1. Delivery of possession – Where the property us the tangible immobile property of the
value of one hundred rupees and upwards transfer can be made only by a registered
instrument. Where the property is tangible immovable property of a value of less than
one hundred rupees, its transfer may be made either by a registered instrument or by
delivery of property. Delivery of tangible immovable property takes place when the
seller puts the buyer or such person as the buyer directs in possession of the property.
2. Registration of sale deed – Where the value of the tangible immovable property is Rs.
100 or more, the sale of such property requires registration of the deed. Where the
property is intangible immovable property of any valuation, it will require registration
for completion of sale.
 Registration

A combined reading of section 8 and 54 of the Transfer of property act, 1882 suggests that
through execution and registration of a sale deed, the ownership and all interests in the
property pass to the transferee, yet that would be on terms and conditions embodied in the
deed indicating the intention of the parties. The intention of the parties can be gathered from
the averments in the sale deed itself or by other attending circumstances.

Registration is the prima facie proof of the intention of the seller that he wanted to transfer the
ownership on the date of the execution.

6
Umakanta Das v. Pradip Kumar Ray, AIR 1983 Ori 196
Where the sale is to be completed only by the registered instrument, the ownership is deemed
to pass on the execution of the sale deed, not on the registration of the deed. The sale deed
transferring immovable property of the value of 100 or more requires registration under Indian
Registration Act 1908.

 Contract for Sale

A contract of sale must be based on a mutual agreement between the seller and the buyer. 7

Section 54 states that a contract for sale of immovable property or an agreement to sell 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. 8

This is different in English law, wherein a contract for sale transfers an equitable estate to the
purchaser, but this rule is not applicable in India. A contract for sale does not confer any title in
immovable property.

 What are the rights and duties of Seller

The rights and duties of seller are subject to the contract. In the absence of any contract to the
contrary, the rights and duties of seller and buyer are governed by section 55, Transfer of
Property Act. The rights and duties of seller and buyer under the provisions of section 55 of
Transfer of Property Act are as under:

Duties of Seller Before Sale

1. The seller is bound to disclose all the material defacts to the buyer of the property
which the buyer is not aware of and cannot find in ordinary course of action.
2. The seller is bound to produce all documents relating to property to the buyer if he ask
for those documents which are in the possession or power of seller.
3. The seller is bound to give answer of all the question to the best of his knowledge which
are put before him by the buyer in respect to property,
4. The seller 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.
5. The seller is bound to pay all the charges and rent, dues or government fees up to the
date of sale.

7
Misabul Enterprises v. Vijaya Srivastava, AIR 2003 Del. 15.

8
Raheja Universal Ltd. v. NAC Ltd., 2012 4 SCC 148
Duties of seller after sale

1. After completion of the sale, it is the seller’s duty to gave possession to the buyer. The
seller is bound to give, on being so required, the buyer or such person as he directs,
such possession of the property
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.
3. Where the whole of the purchase money has been paid by the buyer, Seller is bound to
deliver to the buyer all documents of title relating to the property which are in the
seller’s possession or power;

Seller’s Rights before Sale

Section 55 (4) (a) - Seller has right to receive all the rents and profits out of property.

Seller’s right after sale

Seller has the right to Lien or charge on the property , if any amount is unpaid by the seller.
According to Section 55(4) (b) if price remains unpaid, the seller cannot refuse delivery of
possession for can claim back the possession if already given to buyer, but he (seller) is given a
right to recover unpaid purchase money from and out of the property.

 What are the Rights and Duties of Buyer ?

The rights and duties of buyer are subject to the contract. In the absence of any contract to the
contrary, the rights and duties of seller and buyer are governed by section 55, Transfer of
Property Act. The rights and duties of buyer under the provisions of section 55 of Transfer of
Property Act are as under:

Duties of Buyer before Sale:

1. The buyer bound to disclose, facts which materially increases the value of property,
Section 55(5)(a) of the Act provides that, “the buyer is bound to disclose to the seller
any fact as to the nature or extent of the seller’s interest in the property of which the
buyer is aware, but of which he has reason to believe that the seller is not aware, and
which materially increases the value of such interest”
2. Section 55(5) (b).- Buyer is bound to pay the price of property to Seller

Duties of buyer after Sale :

 1. Section 55 (5) (c) - The buyer is bound to bear any loss arising from the destruction,
injury or decrease in value of the property not caused by the seller where the ownership
of the property has passed to the buyer.
2. Section 55(5) (d) - The buyer is liable to pay the outgoings, e.g., Government dues, rents,
revenue or taxes

Buyer’s right before sale-

1. Section 55(6) (a) - Buyer is entitled to (unless he has improperly declined to accept
delivery of property):
2. A charge on the property for the purchase money properly paid by him in anticipation
not the delivery.
3. Interest on such purchase money.
4. The earnest , and cost awarded to him in a suit to compel specific performance of the
contract or to obtain a decree for its recession in case he properly declines to accept
delivery.

Buyer’s right after Sale-

Section 55 (6) (a) - Buyer is entitled to receive any benefit of any appreciation of the property or
increase in its value and to the rents and profits thereof.

 Conclusion

A sale occurs between two living persons be it natural or artificial. Under the Act, Sale connotes
to that of immovable property which encompasses tangible and intangible property, as well as
rights arising out of the land. For the sale, the parties must be competent. If the sale is of
immovable property of more than Rs. 100, it has to be registered.

The transfer of ownership is the transfer of all the rights and liabilities surrounding the
property, this transfer along with price paid results in a sale. Sale and contract for sale are two
very distinct documents. Contract of sale is merely a document signifying the willingness to sell,
and sale is the actual transaction that takes place.