Definition:

Transfer of Property Act, 1882 deals with sale of immovable property. Section 54 of the
transfer of Property Act (IV of 1982) defines sale as
“Sale” is a transfer of ownership in exchange for a price paid or promised or part-paid and
part-promised.
The party who transfers or sells the property is called seller; and to whom the transfer is
made or buys the property is called buyer.

Essential elements of a valid Sale

1.Parties: In a sale there must be at least two parties. The person who transfers his
property is known as transferor/seller/vendor. The person to whom the property is
transferred is known as transferee/buyer/vendee

2.Competency: The parties must be competent to contract. [Section 7] Both parties i.e.
the seller and the buyer have to be competent to contract under the Contract Act. In the
case of Misabul Emterprises v. Vijaya Srivastava (2003), it was observed that a
contract of sale must be based on a mutual agreement between the seller and the buyer.
The transferor should either be the owner of the property or should have an authority to
dispose of it [Section 7]. For example, the karta of a joint family property is authorized to

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transfer the property under certain specified circumstances (Biswanath Sahu v. Tribeni
Mohan, 2003).

3.Subject-Matter: Section 54 only governs the sale of immovable property. Immovable

property can be tangible or intangible. Tangible property is one that can be touched, such
as a house, things attached to earth, a tree etc., while intangible property refers to
property that cannot be touched such as a right of fishery, a right of way, a right to
mortgage etc.

The property must be properly and sufficiently identified.

4.Transfer of ownership: there has to be a transfer of ownership by the seller to the

buyer.

5.Price: price is the essence of the contract of sale. It may be paid in a lump sum or in
instalments as agreed between the parties. A compromise, a decretal amount, an
advance made by one person to another, or an agreement to protect and defend the
property at the purchaser’s cost is a good consideration for sale. Likewise, a family
settlement is a valid consideration for an agreement to sell. Where a son- in-law executed
an agreement for sale in favor of his mother-in-law in consideration of a family settlement,
it was held that it amounted to a valid consideration for the sale. For example, A agrees
to sell the land to B, and executes a sale deed for the same. Ordinarily, the buyer would
pay the consideration on the same day. However, if they agree to pay the entire
consideration or part of it at the time of the registration of the document, and partly at the
time of the execution or even subsequent to registration, this would be a valid sale.

The term “paid or promised to be paid” also suggests that this promise to pay must be
genuine. The buyer cannot escape his primary liability to pay the consideration and if he
tries to evade payment by dubious means, no title would pass from the seller to the
buyer. For instance, if the buyer pays money through a cheque which is dishonored, the
sale would not take effect (Inder Kaur v. Tara Singh, 1978).The same rule would apply
if there is an intention to the contrary expressly incorporated in the contract, that the title
would not pass unless the payment has been made in full, or if consideration is paid in

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advance. This would entitle the purchaser to sue for possession (Vidhyadhar v.
Manikro, 1999).

6.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.

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.

7. 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 Taka and upwards transfer can be made only 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
TK. 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.

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Sale how effected:
Such transfer, in the case of tangible immovable property of the value of one hundred
taka 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 taka, such
transfer may be made either by a registered instrument or by delivery of the property.
Section 54 lays down a specific method for the execution of a sale deed with respect to
immovable property and completion of sale.
Generally speaking, in a sale, the three requirements of law are that transfer of property
by sale must take place with the help of a validly executed sale deed, by the transferor
in writing, is properly attested, and registered (Munnalal v. Armaram, 2008).

Contract for sale:

A contract of sale is different from a sale, as it does not require registration. However, it
does not create a charge or an interest in the property. It is merely a document or an
agreement that gives a right to obtain another document, i.e., a sale deed. Therefore, it
does not require registration (Dave Ramushankar v. Bai Kailasgoure, 1974).
However, some equities do arise in favor of the transferee. For instance: where, despite
an agreement of sale, the property is transferred to another person, the subsequent
transferee with notice of the earlier transaction holds the property in trust for the prior
agreement holder (Kondapalli Satyanarayan v. Kondapalli mayullu, 1999).

Difference between Sale and Contract for Sale:

Sale Contract for Sale

There is a transfer of a ownership There is merely an agreement for sale of
property in terms agreed between parties.
Conveys a legal title to the buyer Does not create any interest in the

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 property.
Creates a right in rem Creates a right in personam.

Mandates registration where sale is of Does not require registration.

immovable property of taka 100 or more.

Rights and liabilities of buyer and seller:

Section 55 and sub-sections of the “Transfer of Property Act, 1882” confer certain
Duties, Rights and Liabilities on the Seller and the Buyer. Rights and liabilities of the
buyer and seller can be categorised into two –

1.Before completion of sale

2.After completion of sale.

I. Before completion of sale

A. Seller liabilities

 To disclose material defects [S. 55(1)(a)]

the seller is bound to disclose to the buyer any material defect which is present either in
the property or in the title of the seller to the property. About such a defect only the
seller is aware but not the buyer and the buyer could not discover that defect with
ordinary care. It is necessary that the defect must be a material defect about which if the
buyer had known he would not have purchased that property.

The material defect must be of such a nature that it might be reasonably supposed that
if the buyer had been aware of it he might not have entered into the contract at all, for
he could be getting something different from what he contract to buy. (Flight v. Booth,
(1834) 131 ER 160)

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  To produce title-deeds [Section 55 (1)(b)]

The seller is bound to bring all the documents of title relating to the property in his
possession or power for the inspection of the buyer. The seller is bound to produce all
the documents demanded by the buyer for his examination. The buyer should examine
all the documents relating to the property for his own protection.

 To answer questions as to Title [Section 55 (1)(c)]

The seller is bound to answer to the best of his information all the relevant questions put
to him by the buyer in respect of the property or its title. Since the buyer is getting the
ownership of the property it is in his interest that he must be fully satisfied about the
ownership rights of the seller and his authority to make the transfer.

 To execute a proper conveyance [Section 55(1)(d)]

Conveyance means the transfer of ownership. This is done by the signing of the sale
deed or putting thumb-impression on the sale deed by the seller. The duties of both the
seller and the buyer under this clause are reciprocal. When the buyer makes the
payment, the seller has to execute the conveyance. It must be in proper place and
proper time. But what is proper place and time, it has not been specified in the Act.

In case there is no stipulation fixing the time of execution and the seller makes
unreasonable delay in executing conveyance, the proper course is to give notice
making time the essence of the contract. [Jamshed v. Burjorji, AIR 1934 Bom 1]

 To take care of property and title-deeds [Section 55(1)(e)]

This clause lays down the duty of the seller between the contract of sale and delivery of
property. Within this time, the property remains with the seller but only in trust for the
buyer. He holds the property as a trustee of the buyer because he has already executed

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the conveyance, only the delivery of the property is to be made. The seller has to
preserve the property as well as title-deeds.

The extent of care required by this clause is such care as an owner of ordinary
prudence would take of his own property. This duty continues till the possession of the
property is given to the buyer. If the seller fails in performing his duty, he will have to
compensate the buyer for the loss occasioned to him.

 To pay outgoings [Section 55 (1)(g)]

This clause says that the seller is bound to pay all public charges and rent accrued due
in respect of that property up to the date of sale, the interest on all encumbrances, to
discharge all encumbrances on the property then existing.

The buyer has a right to require the seller to produce evidence that the property is free
from encumbrances. The liability exists before the completion of sale and continues
thereafter whether the existence of such charges is discovered before or after the
completion of sale [Abdul Hameed v. Shahajahm Gegum, AIR 2008 (NOC) 640 (MP)]

B. Seller’s Right before sale

*Right to take rents and profits [Section 55(4)(a)]

The seller is entitled to the rents and profits of the property till the ownership of it passes
to the buyer. Sale is completed when the ownership is transferred to the buyer. Till the
ownership is transferred the seller continues to be the owner of the property and in that
capacity, he becomes entitled to the rents and profits of the property. Till that time the
seller has every right to enjoy the profits of the property.

C. Buyer’s liabilities before completion of sale

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To disclose facts materially increasing value of property [Section 55(5)(a)]

The buyer is bound to disclose to the seller any fact as to the nature or extent of the
seller’s interest in the property of which the buyer is aware but of which he has reason
to believe that the seller is not aware, and which materially increases the value of such
interest.

In Summers v. Griffiths [(1866) 35 Beav 27] an old lady, contracted to sell a property
at much less price believing that her rights in the property were not absolute. The buyer
ha d knowledge of the fact that the lady’s interest in the property was perfect and
absolute but he did not disclose it to the lady. He was held liable for fraud and sale was
set aside.

To pay the price [Section 55(5)(b)]

The buyer is bound to pay or tender, at the time and place of completing the sale, the
purchase-money to the seller or to such person as he direct; provided that where the property
is sold for free from encumbrances, the buyer may retain out of the purchase-money the
amount of any encumbrances, the buyer may retain out of the purchase money the amount of
any encumbrances on the property existing at the date of the sale, and shall pay the amount so
retained to the persons entitled thereto.

D. Buyer’s rights before completion of sale

To charge for price prepaid [Section 55(6)(b)]

When the buyer properly declines to accept delivery, he becomes entitled to refund of earnest
(if any) and for the costs (if any) also awarded to him in a suit to compel specific performance of
the contract or to obtain a decree for its recession.

The principle underlying this section is a trite principle of justice, equity and good
conscience. The charge would last until the conveyance is executed by the seller and
possession is also given to the purchaser and ceases only thereafter.

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II. After completion of Sale

A. Duties of seller

To give possession [Section 55(1)(f)]

The seller is bound to give, on being so required, the buyer or such person as he
directs, such possession of the property as its nature admits. The seller is to give
possession of property either to the buyer or his authorised person whenever the buyer
so requires.

In case of tangible immovable property, the physical control is to be given over property.
In the case of intangible immovable property, the possession is symbolic.

Implied covenant for title [Section 55(2)]

The seller shall be deemed to contract with a buyer that the interest which the seller
professes to transfer to the buyer subsists and that he has the power to transfer the
same. Such a covenant is implied in every sale of immovable property and it is not
required to be expressly mentioned in a sale deed.

To deliver title-deeds on receipt of price [Section 55(3)]

Where the whole of the purchaser-money has been paid to the seller, he is bound to
deliver to the buyer all documents of title relating to the property which are in the seller’s
possession or power.

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After the completion of sale when the ownership of property passes on to the buyer, and
he pays the price of the property, the seller becomes bound to deliver all the title deeds
relating to that property to the buyer which are in his possession or power.

The proviso to this clause lays down that –

 Where the seller retains any part of the property comprised in such documents,
he is entitled to retain them all, and
 Where the whole of such property is sold to different buyers, the buyer of a lot of
greatest value is entitled to such documents.

B. Seller’s rightafter-sale

1. Charge upon property for unpaid price [Section 55(4)(b)] –This clause says,
that where the ownership of the property has passed to the buyer before
payment of the whole of the purchase-money, the seller becomes entitled to a
charge upon the property –
 In the hands of the buyer,
 Any transferee without consideration, or
 Any transferee with notice of non-payment,
 For the amount of the purchase money or if any part of the purchase money
remaining unpaid, and
 For interest on such amount of purchase money or any part unpaid from the date
on which the possession has been delivered

C. Buyer’s liability after completion of sale

To bear loss to the property [Section 55(5)(c)]

where the ownership of the property has passed to the buyer, the buyer is bound to
bear any loss arising from the destruction, injury or decrease in value of the property not
caused by the seller. Therefore, if any loss occurs to the property either by way of

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accidental destruction or deterioration after the ownership has vested in the buyer, the
buyer will bear the loss.

To pay outgoings [Section 55(5)(d)]

Where the ownership of the property has passed to the buyer, as between himself and
the seller, the buyer is bound to pay all the public charges and rent which may become
payable in respect of the property, the principal money due on any encumbrances
subject to which the property is sold and interest thereon afterwards accruing due.

After the completion of the sale, the buyer becomes the owner of the property and he
becomes liable to pay the outgoings, for example, Government dues, taxes, rents and
revenue etc. This liability is in between the seller the buyer.

D. Buyer’s Right after completion of sale

Benefit of increment [Section 55(6)(a)]

Where the ownership of the property has passed to the buyer, the buyer is entitled to
the benefit of any improvement in the property or increase in the value of the property
and to the rents and profits thereof. The buyer is not only entitled to the rents and profits
of the property but also the increase in the value of the property and any improvement
in the property.

Marshalling by subsequent purchaser

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Section 56 states that If the owner of two or more properties mortgages them to one
person and then sells one or more of the properties to another person, the buyer is, in
the absence of a contract to the contrary, entitled to have the mortgaged-debt satisfied
out of the property or properties not sold to him, so far as the same will extend, but not
so as to prejudice the rights of the mortgagee or persons claiming under him or of any
other person who has for consideration acquired an interest in any of the properties.

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