SUPREME COURT RECOGNISES REGISTERED SALE DEED CHALLENGED BY SELLER
In a recent case of Yogendra Prasad Singh (Dead) through LRs vs Ram Bachan Devi and Others, Civil Appeal No. 10412 of 2013, a two Judge Bench of the Supreme Court comprising of Justice Abhay S. Oka and Justice Rajesh Bindal passed a Judgment dated 31-07-2023 and observed that in terms of Section 54 of the Transfer of Property Act 1882 (TP Act) (“Sale” defined; “Sale how made” and “Contract for sale”), the right, title, interest and possession in respect of the Suit Property is deemed to have been transferred in favor of the Plaintiff, upon execution and registration of the Sale Deed by the owner of the Suit Property, i.e. the Defendant No. 1.
List of Main Parties
| SN | Parties | Status before Trial Court | Status before Apex Court |
| 1 | Mr. Yogendra Prasad Singh | Plaintiff; | Appellant (Deceased) |
| 2 | Mr. Yogeshwar Singh | Defendant No. 1;
Plaintiff’s Father-in-Law |
— |
| 3 | Mrs. Sachita Devi | Defendant No. 1’s 2nd Daughter;
Plaintiff’s Wife |
Appellant’s Legal Representative (L.R.) |
| 4 | Mrs. Ram Bachan Devi | Defendant No. 2;
Defendant No. 1’s 4th Daughter |
Respondent No. 1 |
Facts
i) In the present case, Mr. Yogendra Prasad Singh (Plaintiff) filed a Title Suit No. 142 of 1977 before Ld. Sri G. Mahton, Sub Judge 10th, Patna (Trial Court) seeking declaration of title in respect of the Suit Property and delivery of possession from Mr. Yogeshwar Singh (Defendant No.1) and Mrs. Ram Bachan Devi (Defendant No. 2).
ii) The Plaintiff claimed that the Defendant No. 1 was in need of money, so he took loan amounts by executing several mortgage deeds etc in respect of the Suit Property and later, sold the said Suit Property in favor of the Plaintiff for a consideration of Rs. 10,000/-, vide Registered Sale Deed dated 04-02-1963. In terms of the Sale Deed, the Plaintiff paid off the debts to the creditors of the Defendant No. 1 and redeemed most of the mortgage. Further, the Defendant No. 1 also borrowed money from the Plaintiff to repay other debts in respect of the Suit Property. In that manner, the Plaintiff paid the entire consideration amount to the Defendant No. 1 and obtained title transfer in his favor.
iii) However, the Defendant No. 1 cancelled the Sale Deed and executed a Gift Deed dated 11-01-1968 in favor of his 4th Daughter, Mrs. Ram Bachan Devi, the Defendant No. 2 herein.
iv) Aggrieved, the Plaintiff initiated criminal proceedings against the Defendant No. 1 and 2 under Section 145 of the Code of the Criminal Procedure 1973 (CrPC) (Procedure where dispute concerning land or water is likely to cause breach of peace), however, he was advised to file a civil suit. Hence, the aforementioned Title Suit No. 142 of 1977 was filed by the Plaintiff before the Trial Court.
v) The Trial Court, vide Order dated 30-01-1988, decreed the Suit on the grounds that the Plaintiff had proved payment of consideration under the Sale Deed, hence, the Plaintiff has the right, title and interest and possession in respect of the Suit Property soon after execution of the Sale Deed. However, after Sale Deed was registered, the Plaintiff was wrongly dispossessed by the Defendants. Further, the Deed of Cancellation dated 15-06-1967 executed by the Defendant No. 1 was a unilateral document and hence, cannot be held valid. If at all, the Defendant wished to cancel the Sale Deed, he ought to have sought the said relief under Section 31 of the Specific Relief Act 1963 (When cancellation may be ordered), which the Defendant did not. Thus, the Suit was decreed in favor of the Plaintiff-Buyer.
vi) Aggrieved by the Trial Court Order dated 30-01-1988, the Defendant-Seller filed First Appeal No.334 of 1988 before the High Court of Bihar, at Patna, which reversed the Trial Court decision, vide Order dated 17-08-2010, on the ground that some part of the consideration was pending to be paid on the part of the Plaintiff in the form of cash, hence, the possession cannot be awarded to the Plaintiff. Moreover, upon execution and registration of the Sale Deed, the Plaintiff never tried to get the mutation of the Suit Property done in his favour. As per the Sale Deed, the High Court held that “passing of title was dependent on payment of consideration amount” and as the payment was not complete, hence, the title is not deemed to have been transferred in favor of the Plaintiff.
Supreme Court
Aggrieved by the High Court Order dated 17-08-2010, the Plaintiff-Buyer through Legal Representatives, filed Civil Appeal No. 10412 of 2013 before the Supreme Court. The Apex Court, vide Order dated 31-07-2023, made the following observations:
(1) That as per Section 54 of the Transfer of Property Act 1882 (TP Act) (“Sale” defined; “Sale how made” and “Contract for sale”), upon execution of a registered sale deed by the owner of a property, the title in the said property stands transferred in favor of the purchaser. However, the seller would have a charge over the property to the extent of the unpaid consideration, that was made subject matter of sale and the seller can enforce the charge by filing a suit.
(2) However, there is an exception to the aforesaid rule, which is the practice of ta khubzul badlain in Bihar, “which recognises that a duly executed sale deed will not operate as a transfer in praesenti but postpones the actual transfer of title, from the time of execution and registration of the deed, to the time of exchange of equivalents, that is, registration receipt and the sale consideration, if the intention of the parties was that title would pass only on payment of entire sale consideration.” But the parties have to agree to follow the said practice in the Sale Deed document.
(3) That in the present case, the recitals to the Sale Deed do not specifically refer to the aforesaid practice. Moreover, the Defendant No. 1 has clearly agreed that upon execution of the Sale Deed, the possession is deemed to have been transferred to the Plaintiff and that the Defendant would not have any right, title and interest in the said Property. Hence, the aforesaid exception would be of no help to the Defendant No. 1.
(4) Further, the unilateral Deed of Cancellation would not be binding on the Plaintiff and that if at all the Defendant wished to cancel the Sale Deed on the ground that there was no transfer of possession in favor of the Plaintiff, he ought to have proceeded under Section 31 of the Specific Relief Act, which he failed to do so.
(5) Furthermore, in the present case, the Plaintiff had taken over the Suit Property along with its liabilities as mentioned in the Sale Deed. Hence, if any pending amount is payable to the creditors of the Defendant No. 1, the latter can proceed against the Plaintiff directly. Thus, as the title and ownership of the Plaintiff in respect of the Suit Property is deemed to have been proved, the Bench refused to deal with the question whether the Plaintiff has discharged its liabilities towards the creditors or not.
(6) Hence, upon execution of the registered Sale Deed, once the title got transferred in favor of the Plaintiff, the Defendant No. 1 no longer had any title over the Suit Property. Thus, the Bench held that the Gift Deed executed by the Defendant No. 1 in favor of the Defendant No. 2 cannot be upheld in law.
Conclusion
Thus, based on the aforesaid observations, the Supreme Court held that the right, title, interest, ownership and possession was deemed to have been transferred in favor of the Plaintiff, upon execution and registration of the Sale Deed. Hence, the Apex Court allowed the Appeal filed by the Plaintiff and thereby, set aside the High Court Order dated 17-08-2010 and restored the Trial Court Order dated 30-01-1988.
Editor’s Comments
Under the Transfer of Property Act 1882, Section 54 deals with how a sale of immovable property is deemed to be completed. If the contract for sale that has been entered between the parties is registered, the sale would be deemed to have been completed. In the eye of law, a registered instrument is sufficient proof of the sale of immovable property, even if the parties allege otherwise. In the present case, the seller claimed part-performance of the contract, but as the Sale Deed was already registered, his contention was not accepted. It is therefore advisable for all sellers of immovable property to take the full consideration in advance or during the registration of the sale. In the event that there is a bank loan and the banker pays the draft at the time of registration, a buyer is advised to ensure that there is a clause in the sale deed that says the sale will be deemed to be complete, subject to realisation of the banker’s cheque / cheque value. It is also important to note that once a registration of an immovable property is done at the office of the sub-registrar, the sale cannot be set aside by the sub-registrar in the event of non-realisation of money and the same has to be taken up in a litigation and in the court having jurisdiction.
Harini Daliparthy
Senior Associate
The Indian Lawyer
Edited by
Sushila Ram Varma
Chief Consultant
The Indian Lawyer