SALE

INTRODUCTION

Section 54 of Transfer of Property Act, 1882 defines the sale of immovable property.

SALE:

“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 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

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.

EXPLANATION:

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.

For a sale of immovable property, for example, a building, there will be a contract between the parties
requiring the seller to transfer the ownership in the building for a price in cash. The contract will
provide the terms of the sale, including the time of passing of the ownership, delivery of the property
and payment by the buyer. In the performance of the contract, when the seller transfers the ownership
in the property, the sale is done. At some point of time, the seller will give possession of the property to
the buyer. A sale of immovable property is done through a registered instrument.

DEFINATION OF SALE
Sale is transfer of ownership for money consideration

a. Transfer of ownership
b. Money consideration
THE ESSENTIAL ELEMENTS OF A SALE:

According to Section 54, the following are the essentials of a valid sale

● Parties to a sale;
● The subject matter of sale;
● Price or consideration;
● Registration;
● Conveyance.

A. Parties to Sale:

The parties to a sale are the transferor who is called a seller or vendor, and the transferee known as the
buyer or vendee. A contract of sale must be based on a mutual agreement between the seller and the
buyer Thus there are two parties to a sale.

I. Competency of Transferor or Vendor:

The transferor or the seller must be a person who is competent to enter into a contract on the date of
sale (Section 7 of the Act) i.e., he must be a major (completed 18 years of age) 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 considered valid.

Incompetency imposed under law or a statute is called statutory incompetency. 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 property cannot be sold when it is under the management of the Court of
Wards The transferor must be the owner of the property and he must have a legal title to it. The
transferor or seller may be a real person or a legal person.

Case Laws:

● In Biswanath Sahu v. Tribeni Mohan, AIR 2003 Ori 189 case, the Court held that the transferor
should either be the owner of the property or should have an authority to dispose of it. For
example, the Karta of joint family property is authorized to transfer the property under certain
specified circumstances.
● In Misahul Enterprises v. Vijaya Srivastava, AIR 2003 Del 15 case, the Court opined that a
contract of sale like other contracts must be based on a mutual agreement (mutuality) between
the seller and the buyer

II. Competency of Transferee or Vendee:

The transferee must be a person competent to receive a transfer in his favour

He should not be disqualified by any law for time being in force for purchasing a property. For example,
Under Section 136 of this Act, an actionable claim 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.

The transferee or buyer may be a real person or a legal person.

Case Law:

In Ram Jiwan Rai v. Deoki Nandan Rai, AIR 2005 Pat 23 case, the Court held that a minor is a
competent transferee in a transaction of a sale. Similarly, a mortgage or a lease 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.

B. Subject Matter of a Sale:

Section 54 only governs the sale of immovable property which is transferable (Section 6 of the Act). The
Sale of Goods Act, 1930 deals with the sale of movable properties

Characteristic of Transferable Immovable Property:

Immovable property can be tangible or intangible. Tangible property is one that can be touched, such as
a land, a house, a tree, things attached to earth, etc., while intangible property refers to property that
cannot be touched such as a right of ferry, a night to mortgage, a night of fishery, a night of way, etc.

The property must be properly and sufficiently identified.

Case Law:

In Ram Jiwan Rai v. Deoki Nandan Rai, AIR 2005 Pat 23 case, a suit for declaration of title of the
property, the controversy was with respect to the identity of the property. There was a mistake in the
plot number. The court held that as both boundaries and plot number was 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 the seller wanted to convey the right and
title in the suit property to the buyer

C. Price or Consideration:

The price is an essential element of a sale. At the time of the contract of a sale, a price must be
ascertained at which the property is going to be transferred.

The definition of "Sale" in Section 54 specifies that there is an exchange of ownership for a price paid or
promised or part paid and part-promised. Thus price can be paid at the time of sale or before the sale in
advance or after the sale.

At the same time, it can be paid in a lump sum or in part. If the price is not ascertained then the
contract of sale is incomplete and void because it is not enforceable.
Thus the payment of the price is not necessary for the completion of the transfer but its reference is
necessary. It may be paid at the time of execution or promised to pay or the same part of it may be paid
at the time of execution and rest may be promised to be paid in future. Thus payment of the price is not
a sine qua non for completion of the sale.

● In Ramlal v. Phagua (2006)1 SCC 168 case, the Court held that 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, S 77;
● In Commissioner of Income Tax v. Motor and General Stores, AIR 1967 SC 200 case, the Court
opined that the price, in the ordinary sense connotes money consideration for the sale of the
property. In the same case the Court further observed that where, instead of price, some other
valuable consideration is kept, the transaction is not a sale but can be an exchange or barter.

D. Registration:

According to S.54 of the Act, writing, attestation, and registration are the essential requirements for the
completion of a valid sale of the property, whose value is more than Rs 100 (see phrases only by in the
S54) For sale of property whose value is less than Rs 100 the registration is optional (see the phrase may
be in S. 54).

● In Arjuna Reddy v Arjuna C Thanga, (2006) 7 SCC 756 case, the Court held that the property of a
value less than Rs. 100 can be transferred. It is only that writing, attestation, and registration in
such cases are optional. The test is the value of the property and nor the amount of
consideration or the price
● In Lakshmi Narain Bamwal v. Jagdish Singh, AIR 1991 Pat 99, case, the Court held that Transfer of
ownership of property whose value is more than Rs. 100 cannot take place without registration
and it concludes on registration unless there is a clause contrary in the contract.
E. Conveyance of Property:

Conveyance’ refers to the act of transferring the title, ownership, rights and interests in a
property, from one entity to another.

● In Kameshwar Choudhary State of Bihar, AIR 1998 Pat 141 case, the Court held that once
registration takes place, the-ownership passes with effect from the date of the execution of the
sale deed unless there is an intention of the parties to the contrary

Difference between Sale and Exchange.

1. Sale refers to immovable property only, whereas exchange refers to both

movable and immovable properties.
2. The consideration in sale is price paid or promised and partly paid or partly
promised, exchange on the other hand has the consideration for transfer of
one property in exchange for another property.
3. The seller has the charge from unpaid purchase-money in the case of sale and
in exchange there can be no seller’s charge for unpaid purchase money.