Non-payment of sale consideration does not invalidate a registered sale deed. Title transfers upon registration, and the unpaid vendor's appropriate legal remedy is a suit for recovery of the consideration price, rather than a suit for the cancellation of the sale instrument.

Headnote:(A) Property Law - Transfer of Property Act, 1882 - Section 54 - Sale of immovable property - Completion of sale - Held, actual payment of entire consideration at the time of execution is not a sine qua non for completion of sale; title passes upon registration. (Paras 45, 46)

(B) Contract Law - Indian Contract Act, 1872 - Section 25 - Agreement without consideration - Held, non-payment of sale consideration does not render a registered sale deed void; the appropriate remedy is recovery of consideration, not cancellation of the instrument. (Paras 47, 50, 51)

(C) Evidence Law - Indian Evidence Act, 1872 - Sections 91 and 92 - Exclusion of oral evidence - When terms of a contract are reduced to writing, oral evidence to the contrary is inadmissible. (Para 49)

Facts of the case:
The vendor of a property executed a registered sale deed in favour of the defendants for a specified amount. The property was transferred on the expectation that payment would be made via financial instruments. The vendor later filed a suit seeking cancellation of the sale deed, alleging non-receipt of the sale consideration. The trial court decreed the suit, declaring the deed null and void. The current appeal challenges that decision on the ground that the trial court erroneously interpreted the validity of the transfer based on the status of payment.

Findings of Court:
The court determined that the execution and registration of the sale deed established the transfer of ownership despite the alleged non-payment. Following established jurisprudence, the court concluded that non-payment does not nullify a transfer of title. The appropriate legal recourse for a vendor in such instances is to seek recovery of the consideration amount, not to secure the cancellation of the registered instrument. The trial court's reference to the invalidity of agreements without consideration was found to be an incorrect application of law in the context of completed real estate transfers.

Issues: Whether the non-payment of the total sale consideration provides a valid legal basis for the cancellation of a registered sale deed, or whether the vendor's only remedy lies in seeking the recovery of the unpaid amount.

Ratio Decidendi: Building upon established judicial principles, the court held that absolute payment is not a prerequisite for the validity of a sale deed once it is registered. Because property title passes upon the formal registration of the document, the underlying transaction remains legally effective. Consequently, the court held that the vendor's rightful claim is restricted to the recovery of the unpaid consideration with interest, rather than the annulment of the property conveyance.

Result: Appeal allowed; trial court judgment set aside; sale deed declared valid; mandate issued for payment of consideration along with interest.

Judgement Key Points

Key Points: - (!) Dahiben v. Arvindbhai Kalyanji Bhanusali held that non-payment of entire sale consideration cannot alone cancel a Sale Deed; remedy is recovery of balance consideration, not cancellation. - (!) Vidyadhar v. Manikrao clarifies that non-payment of part of the price does not void the sale where the deed is executed and registered; title passes; remedy is to seek payment. - (!) The court held that the appropriate remedy for non-payment is recovery of the sale consideration, not avoidance of the Sale Deed. - (!) Sections 91 and 92 IPC (IInd) of the Indian Evidence Act render oral evidence contrary to written covenants inadmissible when the sale deed contains covenants about payment. - (!) The District Judge's finding that the agreement lacked consideration was erroneous; there was an agreement to pay Rs 7,25,000, and the issue is non-payment, not absence of consideration. - (!) Impugned judgment cancelling the Sale Deed is set aside; the suit is dismissed, with direction to pay/deposit Rs 7,25,000 plus interest. - (!) The appellate order directs payment/deposit of the full sale consideration with interest from the date of the deed until payment. - (!) It is admitted that the sale deed was registered and possession handed over, with sale consideration claimed via two cheques not encashed. - (!) Plaintiff alleged non-receipt of sale consideration; Defendants alleged cheques were handed over but not encashed. - (!) Appeal allowed; pending applications disposed of.

How to determine whether non-payment or non-receipt of sale consideration can be a ground to cancel a registered Sale Deed under the Transfer of Property Act?

What is the correct remedy when sale consideration is not fully paid, according to the Supreme Court precedent cited (Dahiben v. Arvindbhai Kalyanji Bhanusali)?

How to apply Sections 91 and 92 of the Indian Evidence Act with regard to written covenants in a sale deed when there is a dispute about payment of sale consideration?

J U D G M E N T

NEENA BANSAL KRISHNA, J.

1. Regular First Appeal under Section 96 of CPC has been preferred by the Appellants i.e., Akhilesh Gupta and Smt. Vijay Gupta against Judgment and Decree dated 15.05.2024 passed by learned DJ-07, Delhi, whereby the Suit of the Plaintiff / Respondent has been decreed and the Sale Deed dated 07.10.2016, has been declared as null and void.

2. Plaintiff / Respondent had filed Suit bearing No. CS DJ 621274/2016 for Declaration, Recovery of Possession and Permanent Injunction.

3. The facts in brief, as stated in the Plaint, are that Plaintiff / Respondent was the registered owner of the Suit Property, i.e. one shop on Ground Floor, bearing Municipal No.3451, Ward No.9, Gali Bajrang Bali, Chawri Bazar, Hauz Qazi, Delhi-11000, (hereinafter referred to as the ‘Suit Property’). He agreed to sell the Property to the Defendants / Appellants for a total Sale Consideration of Rs.7,25,000/-. Defendants tendered two cheques for a total amount of Rs.7,25,000/-, (one cheque for Rs.4,00,000/- and other for Rs.3,25,000/-) at the time of Registration of Sale Deed, in their favour.

4. Since the Defendants and Plaintiffs were known to each other for more than 25 years, being neighbours, the Sale Deed was drawn by the Plaintiff and the payment of consideration amount of the Suit Property by the Defendants, was duly recorded. However, at the time of Registration of Sale Deed, Defendants expressed their inability to deliver the cheques but requested him to get the Sale Deed registered in their favour.

5. The Defendants assured that even though the cheques were not received, they would in due course of time, hand over the cheques to the Plaintiff. The Defendants further assured that after receiving the Registered Sale Deed from the Office of Sub-Registrar, they would hand over the original Sale Deed to the Plaintiff and shall take it back only after making payment of the consideration amount.

6. Since the parties were maintaining cordial relationship since long, the Plaintiff had no reason to apprehend any mischief from the Defendants. Accordingly, the Sale Deed was registered in the Office of Sub-Registrar on 07.10.2016, even though the cheques for the consideration amount were not received by the Plaintiff. Therefore, the Plaintiff did not hand over the possession of the Suit Property and retained the same with him, till the consideration amount was paid to him.

7. The Defendants / Appellants received the registered Sale Deed from the Office of Sub-Registrar; however, they failed to deliver the cheques towards the consideration amount. Therefore, they handed over the original Registered Sale Deed to the Plaintiff with the assurance that they would soon hand over the cheques towards the sale consideration amount and take back the Registered Sale Deed. However, despite their assurances, the Defendants failed to deliver the cheques to the Plaintiff.

8. To the utter shock and dismay of the Plaintiff, he received the communication dated 14.12.2016 from the Defendants, wherein they alleged that the Plaintiff had not encashed the two cheques of Rs.4,00,000/- and Rs.3,25,000/- respectively, which had allegedly been given to him as the sale consideration for the sale of Suit Property.

9. The Plaintiff immediately contacted the Defendants and enquired as to when they had delivered the two cheques to the Plaintiff and if they had delivered the cheques, why did not they take back the Sale Deed from the Plaintiff, but the Defendants gave an evasive reply.

10. On 22.12.2016, the Plaintiff visited the Suit Property, but was shocked to see that the Defendants had forcibly taken the possession of the Suit Property and had put their own locks on the shutter, by removing the locks of the Plaintiff. The Plaintiff immediately made a Complaint dated 22.12.2016 to P.S. Hauz Qazi, but the Police refused to intervene in the matter.

11. The Plaintiff claimed that the sale of the Suit Property had never been crystallised under the Sale

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2026 Supreme(Online)(Del) 6269

Non-payment of sale consideration does not invalidate a registered sale deed. Title transfers upon registration, and the unpaid vendor's appropriate legal remedy is a suit for recovery of the consideration price, rather than a suit for the cancellation of the sale instrument.

How to determine whether non-payment or non-receipt of sale consideration can be a ground to cancel a registered Sale Deed under the Transfer of Property Act?

What is the correct remedy when sale consideration is not fully paid, according to the Supreme Court precedent cited (Dahiben v. Arvindbhai Kalyanji Bhanusali)?

How to apply Sections 91 and 92 of the Indian Evidence Act with regard to written covenants in a sale deed when there is a dispute about payment of sale consideration?

Cases Referred (2)