define sale and explain its ingredients.
ans: Sale has been defined under section 54 of the TPA as a transfer of
ownership in exchange for a price paid or promised or part paid and part
promised. Therefore sale is transfer of ownership for money consideration. 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 consent in
favour of the transferee who is called a buyer. No rights remain with the seller,
thus, the transfer of this totality of rights is called an absolute transfer. 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.
The essential elements of sale are discussed below:
a) Parties: the parties to a sale are the transferor who is called a seller and the
transferee who is referred to as the buyer. It has been held in Mirahul
Enterprises v. Mrs. Vijaya Sirivastava, that a contract of sale must be based on a
mutual agreement between the seller and buyer.
For constituting a valid sale, the transferor or the seller must be a person
competent to contract, i.e., he must be a major and of sound mind, and should
not be legally disqualified to transfer the property. It is also necessary that the
seller is either the owner of the property which he is going to sell or he has
authority to dispose of the property. For example, a tenant cannot sell the
tenanted property because he is not the owner of the property and neither does
he have the authority to dispose the property but an agent having a power of
attorney to sell the property can also sell it without being the owner of the
property. In A. Bhagyamma v. Bangalore Development Authority,
Bangalore, the court held that when a General Power of Attorney expressly
authorizes the holder to "transfer" a property, the term cannot be given a
restricted meaning. The word "transfer" carries a broad legal connotation,
encompassing various forms of conveyance, including lease, gift, mortgage,
will, and sale. Therefore, in this case, the authority granted under the General
Power of Attorney was sufficient to authorize a sale. Consequently, the holder
of the power of attorney was deemed competent to sell the property.
Likewise, 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 s. 136 cannot be purchased by a judge, legal practitioner
or an officer connected with the court.
b) Subject matter of sale: A property that is not in existence cannot be
transferred by sale under the Transfer of Property Act. Further, the property
must be in existence at the date of transfer.
c) money consideration: The definition indicates that the transfer of ownership
has to be for a ‘price paid or promised to pay or part-paid and part-promised’.
Price or money consideration, thus constitutes an essential ingredient of the
transaction of sale. At the time of contract of sale the price must be ascertained
for which the property is going to be transferred. The price may be paid at the
time of execution of sale, before it in advance or after the sale. It is also not
necessary that the whole of the consideration or price should be paid at one
time. Even if the whole of the price is not paid but the document is executed and
registered, the sale would be complete, if it is promised to be paid.
The real test is the intention of the parties. In order to constitute a ‘sale’,
the parties must intend to transfer the ownership of the property. They must also
intend that the price would be paid either in present or in future. The intention is
to be gathered from the recital in the sale deed, conduct of the parties and the
evidence on record.
The inadequacy of consideration does not affect the validity of the sale.
But such inadequacy may be a ground to presume fraud, coercion or mistake in
the transfer of property, which may lead the court to decide against the validity
of the sale. The consideration must however not be illusory. Price is the essence
of sale and in the absence of price there cannot be a valid sale. Here price
includes money only, thus in Madam Pillai v. Badrakali Ammal it was observed
that a transfer not made in exchange for a money consideration, e. g., a transfer
made in pursuance of a compromise of a family dispute, would not be a sale. In
this case, since no price was paid or promised, the transaction held to not be a
sale.
D) conveyance: Section 54 has provided two modes of transfer of immovable
property:
i) Delivery of possession: Where the property is tangible immovable
property of a value less than one hundred rupees, its 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 puts the buyer or such
person as he directs in possession of the property.
ii) registration of sale deed: 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 only by a registered instrument. Section 3 of this Act
defines ‘registered’ as registered under the law for the time being in force
regulating the registration of documents.
Section 47 of the Registration Act makes it clear that after the
registration, the document will relate back to the date of execution of the sale
deed. According to Section 23 of the Registration Act, a document of the nature
of sale deed shall be accepted for registration within four months from the date
of its execution. A sale agreement should be registered within the period of four
months. Section 49 of the Registration Act deals with the effect of non-
registration of documents required to be registered. It shall not
(a) affect any immovable property comprised therein, or
(b) confer any power to adopt, or
(c) be received as evidence.
However, this section provides the unregistered document may be received as
an evidence of a contract in a suit for specific performance or as evidence of
any collateral transaction not required to be effected by registered instrument
