Sale of Immovable Property under Transfer of Property Act, 1882

1. Sale of
Immovable
Property – U/S
54 OF TPA, 1882
BY
DR. VIJAY SRIVASTAVA
ASSOCIATE PROFESSOR
ALS-AUMP

2. What is sale?
Property can be transferred through different
modes, that is through sale, mortgage, lease,
gift, exchange etc. Under the Transfer of
Property Act 1882, section 54 states that
sale is defined as the transfer of ownership
of a property in exchange for a price paid or
promised or partly paid or part promised.

3. To understand the word sale U/S 54 , some words are necessary to
interpret ….
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.(Nahar Lal
v. Brijnath 1928 AC 385)
 Attached – is a term describing the physical union of two
otherwise independent structures or objects, or the relation
between two parts of a single structure, each having its
function.(National Brake & Electric Co. v. Christensen, CCA
Wis. 229 F 564, 570)

4. 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.

5. WHAT MAY BE TRANSFER U/S 6
The immovable property can be tangible or intangible. Under section 6 a property
of any kind may be transferred except the following-
 1. A transfer of spes succession
 2. The right of re-entry
 3. Easement
 4. Restricted interest which could be right to future maintenance
 5. A right to sue
 6. Public office
 7. Pension or stipends allowed to the military, air force, naval and civil
pensioners of the government
 8. A transfer for an unlawful purpose or consideration
 9. Statutory prohibitions on transfer of interest
The Official Assignee Of Madras vs Sampath AIR 1933 Mad. 795
the court held that when a mortgage is executed by a heir is void eventhough the
heir subsequently acquires the property as spes succession. Hence a transfer of
property subject to spes succession is void.

6.  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.
 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.

7. 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.

8. 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.

9. Elements of Sale
 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.
 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
(Bhabani Sarma v. Narayan Sarma, AIR 2003 Gau 171.)

10. . Essentials of a sale
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 is transferred is known as the transferee/buyer/vendee.
Competency
 For a valid sale both the buyer and seller have to be competent on the date of
the sale.
 a. Seller
 The seller must have the ownership of the property which he is going to
sell.(Gangotri Bai v. Jeevarkhan Lal, AIR 2006 Chh. 88)
The seller must have a legal title to it only then he can sell the property.[Arjuna
Subramanya Reddy v. Arjuna China Thangavelu AIR 2006 AP 362)
 The seller must be competent to contract.[N. Ramchandran v. M.
Nayanamalai, (2007) 3 MLJ 910)
 He must not be a minor
 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.

11.  Buyer
 The buyer must be competent to receive the ownership of the
property.
 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.
 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.

12. 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.[.[Alama Chand v. Chhajju,
AIR 1923 All 530, 531, Col. 2 : ILR 45 All 559 : 74 IC
339.
 An agreement between the parties cannot be rendered
nugatory on the ground that the consideration was not
adequate. 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.

13.  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.[Umakanta Das v. Pradip
Kumar Ray, AIR 1983 Ori 196)
 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.

14. The consideration for the sale must be paid,
promised, part paid or part promised
 Price is a consideration paid for the transfer of
property. Therefore price is money but not
necessarily money immediately paid in notes and
coins, it includes money which might be already
due or payable at a future date.
 A transfer is not a sale if no price is paid or
promised or partly paid or promised. The
transaction under sale without consideration will
not amount to gift unless evidence is adduced for
it nor can it be an exchange if the transferor does
not transfer ownership of the property.

15.  A sale can be executed orally, there is no
mandatory requirement of being transferred
through a written document.[Official Assignee Of
Madras vs Sampath AIR 1933 Mad. 795)
 In the case of Nalamathu Venkaiya v. B.S.
Neelkanta,[AIR 2005 AndhPra 535) The court
held that payment of consideration is of the
essence when a transfer of property is made
through a sale. The time of payment of
consideration is not material. Consideration may
be promised or paid at a future date.

16. Conveyance
 Section 54 provides for two modes for transfer of
property –
 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.
 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.

17. 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.
 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.

18. Mode of execution of sale
A property must be transferred by sale when it is
executed by the transferor in writing and is attested and
registered. When a property is of a lower value the sale
can be completed by delivery of the property.
Due to minimal value, the formality of registration and
attestation is not mandatory, however, in a sale a property
of a value less than rupees hundred the formalities
required are optional. [Arjuna Reddy v. Arjuna C
Thanga, (2006) 7 SCC 756)
Hence a sale under the Act only pertains to immovable
property and not movable property.
Once registration, attestation and a document in writing
called as the sale deed is executed the transfer of
immovable property in form of sale is completed and will
be binding on both the parties to the sale.

19. Contract for Sale
 A contract of sale must be based on a mutual agreement
between the seller and the buyer. Misabul Enterprises v.
V. Srivastava, AIR 2003 Del. 15.
 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.[Raheja Universal Ltd. v. NAC
Ltd., 2012 4 SCC 148)
 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.

20. Sale Contract for sale
There is a transfer of ownership
There is merely an agreement
for the sale of property in terms
agreed between parties.
Conveys a legal title to the
buyer.
Does not create any interest in
the property.
Creates a right in rem Creates a right in personam
Mandates registration where
sale is of immovable property of
Rs. 100 or more.
Does not require registration.
/

21. Rights of the buyer [Section 55(6)]
 Under section 55 (6)(b) before the completion of the sale the
buyer is entitled to the charge on the property for the
consideration paid by him in anticipation of the delivery.
 He is further entitled to interest on the purchase money and also
to the earnest cost awarded to him in a suit to compel specific
performance of the contract or to obtain a decree for its
rescission in case he properly declines to accept the decree.
 The buyer’s charge is a statutory charge and not
contractual.[P.Muthusamy vs K.Arumugam AIR 2016)
 The agreement should be genuine to obtain a charge on the
property.[T.N. Hardas Vs. BabulalAIR 1973 SC 1363)
 Such a charge is enforceable not only against the seller but
against all the people that are claiming under it.
 Under section 55 (6)(a) after the completion of the sale, the
buyer is entitled to the benefit of any improvement or increase in
the value of the property. He is also entitled to the rents and
profits resulting from the property.

22. Rights of the seller [Section 55 (4)]
 Under section 55(4)(a) before the completion
of the sale, the seller is entitled to all the rents
and profits before the ownership of the
property passes to the buyer.
 However, after the completion of the sale, the
seller is entitled to charge upon the property
when the whole or a part of the purchase
money is unpaid and the ownership of the
property has passed to the buyer under
section 55(4)(b).

23. Liabilities of the buyer [Section 55 (5)]
 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 and the seller is not aware
and which materially increases the value of such interest.
However, the omission to make such disclosure amounts
to fraud.
 The buyer is entitled to pay the purchase money to the
seller or anyone else as he directs.
 After the completion of the sale, the buyer is liable for the
loss arising from destruction, injury or decrease in the
value of the property.
 The buyer is liable to pay public charges and rents arising
from the property. He is also liable to pay any principal
money due to any encumbrances subject to which the
property is sold and the interest resulting thereon.

24. Liabilities of the seller [Section 55]
 The seller is bound to disclose any material defect in the
property or the title of which the buyer is not aware or with
ordinary care cannot discover.
 The seller is liable to produce all documents of title
relating to the property to the buyer for examination.
 The seller is further liable to answer all relevant questions
put to him by the buyer with respect to the property and its
title, and give answers to the best of his information.
 The seller on receiving the purchase price from the buyer
has to execute a proper conveyance of the property at a
proper time and place.
 The seller is liable to take proper care of the property and
all relating documents as a man of ordinary prudence
would take between the date of the contract of sale and
the delivery of the property.

25.  Seller is also liable to pay all public charges, rents and
interests due up to the date of sale. He is also liable to
discharge all encumbrances on the property existing on
the property.
 After the completion of the sale, the seller is liable to give
to the buyer the possession of the property.
 Seller is further liable to deliver to the buyer all documents
of title relating to the property after the receipt of the
purchase money. However, when the seller retains the
part of a property he entitled to retain all documents.
When the property is sold in parts to different buyers, the
buyer of the highest value is entitled to retain the property
documents.
 The seller is deemed to contract with the buyer that the
interest which the seller professes to transfer to the buyer
subsists and he has the power to transfer the same. That
is he is bound to give a covenant for the title of the
property.

26. In the case of Nathu Khan v. Burtonath Singh,[AIR
1922 PC 176) the court held that under section
55(1)(g) if a sale deed contains a declaration stating
the property is free from any encumbrances, when
the property is subject to a mortgage charge, the
buyer will be compelled to discharge the mortgage
debt to protect his property from the charge holders,
which is purchased by him. However, the seller will
be liable to pay the money paid by the buyer in lieu
of the charge.

27. Hence a sale of an immovable property
between competent parties is executed by a
registered instrument for a consideration in the
form of money which is paid, part paid,
promised or partly promised. There as several
rights and liabilities of the buyer and the seller
resulting from the sale of immovable property.