1. Registered sale of immovable property — subsequent unilateral cancellation by vendor — gift of property to third party — suit for declaration of title and possession. (Para 1 , 2 , 3 , 4 , 5 )
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2023 Supreme(SC) 670
SUPREME COURT OF INDIA
ABHAY S. OKA, RAJESH BINDAL, JJ.
Yogendra Prasad Singh (Dead) through LRs - Appellants
Versus
Ram Bachan Devi & Ors. - Respondents
Civil Appeal No.10412 of 2013
Decided on : 31-07-2023
Advocates appeared:
For the Appellant(s) : Mr. Kumar Parimal, Adv. Mr. P. V. Yogeswaran, AOR
For the Respondent(s): Mr. T. Mahipal, AOR Mr. Smarhar Singh, AOR Ms. Shweta Kumari, Adv. Mr. Chinmay Kumar, Adv. Mr. Mohd. Asim, Adv. Mr. Manoj Kumar, Adv.
For the Appellant(s) : Mr. Kumar Parimal, Adv. Mr. P. V. Yogeswaran, AOR
For the Respondent(s): Mr. T. Mahipal, AOR Mr. Smarhar Singh, AOR Ms. Shweta Kumari, Adv. Mr. Chinmay Kumar, Adv. Mr. Mohd. Asim, Adv. Mr. Manoj Kumar, Adv.
Important Points
IMPORTANT POINT
Agreement to sell – Normally, on execution and registration of a sale deed containing recitals regarding payment of consideration and delivery of possession, sale is complete even if sale price is not paid and it will not be possible to cancel sale deed in its entirety.
Agreement to sell – Normally, on execution and registration of a sale deed containing recitals regarding payment of consideration and delivery of possession, sale is complete even if sale price is not paid and it will not be possible to cancel sale deed in its entirety.
Subject
Property Law - Sale of Immovable Property
Act Referred
Headnote
Transfer of Property Act, 1882 – Sections 54 and 55(4)(b) – Agreement to sell – Normally, on execution of a registered Sale Deed by owner of property, title in property subject matter of Sale Deed stands transferred to purchaser – In view of principles laid down in sub-section (4)(b) of Section 55 of 1882 Act, seller will have a charge over property subject matter of sale for unpaid consideration and he can enforce charge by filing a suit – Normally, on execution and registration of a sale deed containing recitals regarding payment of consideration and delivery of possession, sale is complete even if sale price is not paid and it will not be possible to cancel sale deed in its entirety – However, exception to said rule is practice of ta khubzul badlain – Use of expression ta khubzul badlain in a sale deed by itself will not be determinative of true nature of transaction – It cannot be read in isolation – All terms and conditions and recitals in document will have to be considered to decide real nature of transaction – Unilateral cancellation deed was not binding on plaintiff as he was not a consenting party – Decree passed by Trial Court in Title Suit restored. (Paras 12, 13, 17 and 18)
Facts of the case:
Case of plaintiff is that though he was all along in possession on the basis of the order passed in proceedings under Section 145 of Code of Criminal Procedure, 1973 he was illegally dispossessed from the suit property. Therefore, plaintiff filed a Suit for declaration of title. Plaintiff also claimed a declaration that Gift Deed is forged. The plaintiff prayed for a decree for possession of the suit property.
Findings of Court:
Impugned judgment and order passed by High Court of Patna in First Appeal No.334 of 1988 is quashed and set aside and decree passed by Trial Court in Title Suit No.142 of 1977 is restored.
Result : Appeal allowed.
Legal Category Hierarchy
Table of Contents
2. Whether title passed upon registration of sale deed or was postponed due to the practice of exchange of equivalents pending full payment of consideration. (Para 6 , 9 , 10 , 11 )
3. Recitals of title and possession transfer in a registered deed are crucial; the practice of exchange of equivalents cannot be read in isolation from the document. (Para 13 , 14 , 15 )
4. Registered sale deeds generally transfer title immediately; unpaid consideration grants the seller a charge under Section 55(4)(b) of the Transfer of Property Act, not unilateral cancellation rights. (Para 12 , 13 , 16 )
5. High Court order quashed and Trial Court decree restoring ownership and possession to the plaintiff restored. (Para 18 , 19 )
6. Does the execution and registration of a sale deed automatically transfer title even if the full price is not paid?
Yes, normally a registered sale deed containing recitals of consideration payment and delivery of possession completes the sale and transfers title, even if the price is unpaid. In such cases, the deed cannot be cancelled unilaterally. (Para 12 , 13 )
7. What is the legal effect of the ta khubzul badlain practice in Bihar regarding property transfers?
This practice recognizes that a registered sale deed may not operate as a transfer in praesenti, postponing the transfer of title until the exchange of equivalents, provided the parties intended title to pass only upon full payment. (Para 13 )
8. What is the legal remedy available to a seller when the purchaser fails to pay the full consideration after a registered sale?
Under Section 55(4)(b) of the Transfer of Property Act, 1882, the seller has a charge over the property for the unpaid consideration and may enforce this charge by filing a suit. (Para 12 , 16 )
9. Can a vendor unilaterally cancel a registered sale deed if the purchaser fails to pay the consideration?
No, a unilateral cancellation deed is not binding on the purchaser if they were not a consenting party, as the sale is generally complete upon registration. (Para 13 , 17 )
JUDGMENT :
Abhay S. Oka, J.
FACTUAL BACKGROUND
1. The appellants are the legal representatives of the original plaintiff. For the sake of convenience, parties are hereinafter referred to with reference to their status before the Trial Court. The Trial Court decreed the Suit which has been reversed in appeal.
2. The plaintiff is the son-in-law of the first defendant. The first defendant has four daughters. One of the daughters, Sachita Devi has been married to the plaintiff. The second defendant is another daughter of the first defendant who is married to one Komal Singh.
3. The first defendant was heavily indebted. He had borrowed money from various persons by executing mortgage deeds, hand notes, etc. As the first defendant was unable to pay debts, he decided to sell the suit property. Accordingly, he executed a registered Sale Deed on 04th February 1963 in favour of the plaintiff for consideration of Rs.10,000/. According to the case of the plaintiff, he was placed in possession of the suit property and started cultivating the same. His contention was that there was an absolute sale under the Sale Deed dated 04th February 1963 (for short, ‘the Sale Deed’).
4. Even according to the case of the plaintiff, a part of the consideration was to be paid by him to the creditors of the first defendant. In the plaint, the plaintiff has described the steps taken by him to clear the loans repayable by the first defendant and money paid by him from time to time to various persons in that behalf. His contention is that he paid off the debt as mentioned in the Sale Deed. The plaintiff has contended that the first defendant being his father-in-law, collected the registered Sale Deed from the office of the Sub Registrar and has kept the same in his custody.
5. The first defendant executed a registered Deed of Cancellation dated 15th June 1967 in respect of the cancellation of the Sale Deed. The plaintiff was admittedly not a signatory to the said Deed of Cancellation. Thereafter, the first defendant purported to execute a Gift Deed dated 12th January 1968 (for short ‘the Gift Deed’) in respect of the suit property in favour of the second defendant. The case of the plaintiff is that though he was all along in possession, on the basis of the order passed in proceedings under Section 145 of the Code of Criminal Procedure, 1973 he was illegally dispossessed from the suit property. Therefore, the plaintiff filed a Suit for declaration of title. The plaintiff also claimed a declaration that the Gift Deed is forged. The plaintiff prayed for a decree for possession of the suit property.
6. The basic contention of the first defendant in his written statement was that by the Sale Deed, absolute sale was not effected. It is contended that out of the consideration of Rs.10,000/, the plaintiff had agreed to pay a sum of Rs.6,875/for redeeming the 10 mortgages made by the first defendant. The balance amount of Rs.3,125/was to be paid on the exchange of equivalents (ta khubzul badlain). The contention of the first defendant is that in fact the mortgages were redeemed by him and therefore, he was in possession of the mortgage deeds. His contention is that as no consideration was passed under the Sale Deed, the plaintiff has not acquired any right, title or interest in the suit property.
7. The Trial Court after indepth consideration of the evidence on record, concluded that the plaintiff had acquired ownership in respect of the suit property on the basis of the Sale Deed. It was held that the Deed of Cancellation dated 15th June 1967 being a unilateral document was not valid. The Trial Court held that the remedy of the first defendant was to invoke Section 31 of the Specific Relief Act, 1963 and seek cancellation of the Sale Deed. The Trial Court also held that the second defendant did not acquire any right, title or interest on the basis of the Gift Deed executed by the first defendant. The Trial Court accepted the case made out by the appellant that the liabilitie
