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 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.

I. Elements of Sale
1. Transfer of ownership – ownership is the aggregation or totality of all
the rights and liabilities in a property. When there is the transfer of
 ownership, the 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.[iv]

II. 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 is transferred is known as the transferee/buyer/vendee.

2. 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.[v]
 The seller must have a legal title to it only then he can sell the
property.[vi]
 The seller must be competent to contract.[vii]
 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.[viii]
b. 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.[ix]
c. 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.

3. 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.[x]
An agreement between the parties cannot be rendered nugatory on the
ground that the consideration was not adequate.[xi]
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.[xii]
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.

4. 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.
5. 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.

III. Contract for Sale

A contract of sale must be based on a mutual agreement between the seller
and the buyer.[xiii]
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.[xiv]

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.

IV. Sale and Contract for Sale – Differences

Sale Contract for sale

There is merely an agreement for the sale

of property in terms agreed between
There is a transfer of ownership parties.

Does not create any interest in the

Conveys a legal title to the buyer. 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.
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.

REFERENCES:-

[iv] Bhabani Sarma v. Narayan Sarma, AIR 2003 Gau 171.

[v] Gangotri Bai v. Jeevarkhan Lal, AIR 2006 Chh. 88
[vi] Arjuna Subramanya Reddy v. Arjuna China Thangavelu AIR 2006 AP
362
[vii] N. Ramchandran v. M. Nayanamalai, (2007) 3 MLJ 910
[viii] Dr. Avatar Singh, Prof. (Dr.) Harpreet Kaur, Textbook on the
transfer of property Act, 6th Edn. Lexis Nexis, pg, 185
[ix] Ibid.
[x] Alama Chand v. Chhajju, AIR 1923 All 530, 531, Col. 2 : ILR 45 All
559 : 74 IC 339.
[xi] Sheo Shankar Kr. Khetan v. Widow of Late A. Prasad, (2007) 3
BLJR 2936 (Pat).
[xii] Umakanta Das v. Pradip Kumar Ray, AIR 1983 Ori 196
[xiii] Misabul Enterprises v. Vijaya Srivastava, AIR 2003 Del. 15.
[xiv] Raheja Universal Ltd. v. NAC Ltd., 2012 4 SCC 148