THE ICFAI UNIVERSITY

STUDENT NAME- RIYA SINGH

ENROLLMENT ID- 19FLICDDN01106

SECTION- “B”

BATCH AND YEAR- 2019-2024 & 02 YEAR

SEMESTER- FIFTH

TOPIC – SALE OF IMMOVABLE PROPERTY

SUBMITTED BY SUBMITTED TO

RIYA SINGH MR.VAGISH UPADHYAY

1. Introduction

2. How sale is made

3. Contract for sale

4. Elements of sale

5. Rights , duties and liabilities of seller

6. Rights , duties and liabilities of buyer

7. Section 118 of transfer property act.

Property can be transferred through different modes that is through sale, mortgage, lease, gift,
exchange etc. Under the transfer of property act 1882.Section 54 of the Transfer of Property
Act defines the term 'sale' and proclaims the formalities necessary for effecting a sale. The
relevant Sections in the Act are Sections 54 to 57.

The transfer of ownership for a price is defined as 'sale'. The word 'ownership' means
'ownership of a right' and not the right of ownership'. The words 'transfer of ownership' stand
in contrast with the words 'transfer of an interest' occurring in Section 58 in the definition of
mortgage and with transfer of a right to enjoy property' in the definition of lease. Thus, in a
mortgage or in a lease, there is a partial transfer of rights while in a sale; all the rights of a
property are transferred absolutely.

Transferor is not entitled to any other right. A transfer of property passes immediately to the
transferee of a sale all the interest, which the transferor is then capable of passing in the
property and in the legal incidents such as the easements, annexed thereto and the rents and
profits accruing after the transfer in case of land and house.

Section 54 further lays down the manner in which a sale of immovable property should be
effected. In case of tangible immovable property of value rupees hundred and upwards or in a
case of reversion or any other intangible thing , a sale can be made only by a registered
instrument. When the tangible immovable property is of value less than rupees hundred the
sale can be made by registered instrument or the delivery of a tangible immovable property is
said to have taken place when the seller places the buyer or another person on the direction
given by the buyer , in possession of the property.

Meaning of sale

The ordinary meaning of the word ‘sale’ is a transaction entered into voluntarily between two
parties known as the buyer and seller by which buyer acquires the property of the seller for an
agreed consideration known as price.

Definition of sale

Section 54 of the transfer property act 1882 defines ‘sale’

HOW SALE IS MADE?

Such transfer, in the case of tangible immovable property of the value of the hundred rupees
and upwards, or in the case of a reversion or other intangible thing can be made only by a
registered instrument. Delivery of tangible immovable property takes place, when the seller
places the buyer or such person as he directs in the possession the property.

CONTRACT FOR SALE

A contract for the sale of immovable property is contract that a sale of property shall take
place on terms settled between the parties. It does not, of itself creates any interest in or
charges on such property.

A sale may be preceded by a contract for sale. A contract for the sale of immovable property
is a contract that a sale of such property shall take place on the terms settled between the
parties. It does not, of itself create any interest in or charge on such property.

There is a difference between a contract for the sale of immovable property and a sale of
goods. In the former case, the Court will grant specific performance of the contract, while in
the latter; the aggrieved party can claim only damages, unless the damage cannot be
ascertained. There should be a valid contract concluded between the parties. The contract for
sale does not result in any transfer of ownership. However, a sort of obligation is created in
respect of the ownership of the property.

The contract for sale need not be in writing. It can also be an oral transfer. But in such case,
the burden of proof is very heavy on the party relying on the oral agreement to prove that all
the essential elements of a valid sale were concluded between the parties orally and any
subsequent written agreement would only be a formality incorporating the terms agreed upon.

This Section lays down the principle of Indian Law that title in property can be transferred
only by a conveyance and not by mere agreement between the parties. A person having an
agreement to sell in his favour does not get any right in the property except the right of
litigation on that basis.
ELEMENTS OF SALE

 Transfer of ownership – ownership is the aggregation of all the rights and liabilities in
a property. When there is the transfer of ownership, the aggregation or total of all
rights and liabilities in a property are transferred from transferor to the transferee.
 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.
 Parties: in a sale there has to be a seller and buyer. The seller has to be competent to
transfer the immovable property to the buyer. Both parties i.e. the seller and the buyer
have to be competent to contract under the Indian 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.
For example, the karta of a joint family property is authorized to transfer the property
under certain specified circumstances (Biswanath Sahu v. Tribeni Mohan, 2003).
Similarly, the guardian of the property of a minor is empowered to sell it with the
permission of the court, and without such permission the sale would be invalid (Sarup
Chand v. Surjit Kaur, 2002). An agent having a power of attorney to sell the property
can also sell it without being the owner of the property. Where the sale is executed
after getting a general power of attorney; without obtaining the requisite permission of
the court, the sale deed is invalid and would not confer any title on the transferee
(Lakhwinder Singh v. Paramjit Kaur, 2004), but if the Power of Attorney executed in
favour of the holder expressly authorizes him to transfer the property he would be a
competent seller (A Bhagyamma v. Bangalore Development Authority, Bangalore
2010).
 Competency : For a valid sale both the buyer and seller have to be competent on the
date of the sale.

a. Seller

i. The seller must have the ownership of the property which he is going to sell.

ii. The seller must have a legal title to it only then he can sell the property.
iii. He must not be a minor.

iv. He must not be of unsound mind.

v. He must not be statutorily incompetent.

vi. The seller may be a natural person / juristic person, for example, corporations or another
legal person

b. Buyer

i. The buyer must be competent to receive the ownership of the property.

ii. The buyer should not be disqualified from buying the immovable property by any law in
force at the time of the sale.

iii. The seller may be a natural person / juristic person, for example, corporations or another
legal person

 Subject matter of sale

Sale under Transfer of Property Act, 1882 specifically deals with sale of immovable property.
Immovable property can be tangible or intangible. Tangible property is one that can be
touched, such as a land, a house, a tree, things attached to earth, etc., while intangible
property refer to a property that cannot be touched such as a right of ferry, a right to
mortgage, a right of fishery, etc.

 Registration :

According to the Section 54 of the Act, writing, attestation and registration are the essential
requirements for the completion of a valid sale of the property, whose value is more than Rs.
100. For sale of property whose value is less that Rs. 100, the registration is optional.

 Conveyance:

Section 54 provides two modes for transfer of property –

i. Delivery of possession

ii. Registration of sale deed

Section 55 of the Transfer of Property Act, 1882 describes right and liabilities of buyer and
seller. In any property transaction, buyers and sellers are subject to Right and liabilities. In
the absence of a contract to the contrary, the buyer and the seller of immovable property
respectively are subject to the liabilities, and have the rights, mentioned in the rules next
following or such of them as are applicable to the property sold.

Rights, Duties and Liabilities of Seller in case of Sale of Immovable Property:

Duties of Seller:

 To disclose any material defect: a seller is bound to inform the buyer of any material
defect in the property or the title of the property.
 To produce documents of title: a seller has to provide for the examination of all
documents of title that are in his possession.
 To answer questions about the property or title thereto: a seller is bound to give
relevant information and satisfy the buyer on any questions raised by the buyer or his
advocate.
 To execute conveyance: The seller is bound to execute the sale deed after sale price is
paid to him
 To pay outgoings: the seller is bound to pay all public charges, tax and rent that may
be due on the property before date of sale.
 Lis pendens: a seller is bound to inform the buyer of any legal proceedings that are
pending on said property and that may come in the way of the sale or transfer on said
property.
 To deliver possession of the property: a seller is bound to hand over the possession of
the property at the time of the execution of the sale. Generally before the execution of
the sale deed the buyer and seller enter into an agreement of sale either orally or in
writing. After entering into this agreement to sell, the buyer would be advised to take
all the necessary information that has been listed above.

Rights of Seller:

According to section 55(4) of the Transfer of Property Act, 1882, it can be stated as follows:
  Right to get Rent and Profit: – to the rents and profits of the property till the
ownership thereof passes to the buyer.
 Right to get Interest on Unpaid buying money:-where the ownership of the property
has passed to the buyer before payment of the whole of the purchase-money, to a
charge upon the property in the hands of the buyer, any transferee without
consideration or any transferee with notice of the non-payment, for the amount of the
purchase-money, or any part thereof remaining unpaid, and for interest on such
amount or part from the date on which possession has been delivered.
 In Subba Rao V/s Vasudev Shastri (1951), the Court decided that the seller is entitled
to get interest on selling-money only when the possession of sold property is given to
buyer.

Liabilities of Seller:

According to section 55(1) of the Transfer of Property Act, 1882 can be stated as follows:

 Liability to Reveal Fault: – to disclose to the buyer any material defect in the property
1[or in the seller’s title thereto] of which the seller is, and the buyer is not, aware, and
which the buyer could not with ordinary care discover; In the Case Ganpat Ranglal
V/s Mangilal Hiralal (1961), Court held that the seller is not bound to disclose such
faults which is really known by buyer or otherwise he is in know of the information.
 Liability to Submit Document: – to produce to the buyer on his request for
examination all documents of title relating to the property which are in the seller’s
possession or power.
 Liability to Submit Document as to Entitlement: – to answer to the best of his
information all relevant questions put to him by the buyer in respect to the property or
the title thereto; in the case of Laxmidas & Company V/s D.J. Tata (2019) it has been
held by the Mumbai high court that if the seller does not answer for such questions
then the contract may be rescinded by the buyer.
 Liability to Execute Conveyance:- on payment or tender of the amount due in respect
of the price, to execute a proper conveyance of the property when the buyer tenders it
to him for execution at a proper time and place;
  Liability to Protect Document:- between the date of the contract of sale and the
delivery of the property, to take as much care of the property and all documents of
title relating thereto which are in his possession as an owner of ordinary prudence
would take of such property and documents.
 Liability to Deliver up Occupation:- to give, on being so required, the buyer, or such
person as he directs, such possession of the property as its nature admits; in the case
Darpan V/s Kedar Nath(1969), it has been held that if Seller does mistakes in
delivering up to possession the buyer can file a suit against seller.

Rights and Duties of Buyer in case of Sale of Immovable Property::

Rights of Buyer:-

According to section 55(6) of the Transfer of Property Act, 1882, these can be stated as
follows:

 Right to get Benefits, Rents- where the ownership of the property has passed to him,
to the benefit of any improvement in, or increase in value of, the property, and to the
rents and profits thereof; in Achtak V/s Parmeshwar it was decided that the buyer is
entitled to get benefits of the maintenance done by seller.
 Right to get Interest-unless he has improperly declined to accept delivery of the
property, to a charge on the property, as against the seller and all persons claiming
under him, to the extent of the seller’s interest in the property, for the amount of any
purchase-money properly paid by the buyer in anticipation of the delivery and for
interest on such amount; and, when he properly declines to accept the delivery, also
for the earnest (if any) and for the costs (if any) awarded to him of a suit to compel
specific performance of the contract or to obtain a decree for its rescission.
 An omission to make such disclosures as are mentioned in this section, paragraph (1),
clause (a), and paragraph (5), clause (a), is fraudulent.

Liabilities of buyer:-

According to section 55(5) of the Transfer of Property Act, 1882, it was stated as follows:
 Liability to disclose facts– 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 the case of Hazi isha V/s Daya Bhai (1896), it has been held that it
is the duty of the buyer that he should provide all information related to ownership
which he is in know, to the seller. This arrangement is based on the principle of equity
and relations of believe between buyer and seller.
 Liability of payment of purchase money- To pay or tender, at the time and place of
completing the sale, the purchase-money to the seller or such person as he directs:
provided that, where the property is sold free from 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.
 Liability to bear damages– where the ownership of the property has passed to the
buyer, to bear any loss arising from the destruction, injury or decrease in value of the
property not caused by the seller.
 Liability to pay due amount- where the ownership of the property has passed to the
buyer, as between himself and the seller, to pay all public charges and rent which may
become payable in respect of the property, the principal moneys due on any
encumbrances subject to which the property is sold, and the interest thereon
afterwards accruing due. In the case of Gangi V/s Govinda (1924), it was held that the
buyer is liable to pay all the charges after sale. Due amount includes revenue,
principal, interest etc.

It is advisable that the buyer’s advocate should investigate the title of the property
after entering into an agreement for sale. The title should be traced for at least 30
years. Besides, the title deed search should be also done in the office of the Sub
Registrar or relevant revenue authority to investigate whether there is any
encumbrance on the property whether there is any defect in the title and whether the
property stands in the name of the seller in the land revenue and municipal records. It
is also advisable that the buyer’s advocate should enquire from the relevant authorities
and gather information on whether a notification has been issued for acquisition of the
property.
 In major property deals the buyer through his advocate should give a public notice in
the newspaper stating his interest in purchasing the property. The sale deed is
chargeable with stamp duty under Article 23 of Schedule 1 to the Indian Stamp Act
and it has to be executed on stamp paper equal to that of conveyance or else attracts
duty penalty of 10 times that of actual stamp duty. The sale deed transferring
immovable property of the value of 100 or more requires registration under Indian
Registration Act 1908.

SECTION 118 OF TRANSFER OF PROPERTY ACT, 1882

Defines as “when two persons mutually transfer ownership of one thing for the ownership of
another, neither thing or both things being money only, the transaction is called an
“Exchange”. From above it can understand that for being an “Exchange”;

i. There must be two person transferring ownership of one thing for the ownership of another;

ii. Neither thing or both things being money only.

Transfer of any property against consideration is called “Sale”, and transfer without
consideration is called “Gift”. Now when a property has been exchanged with another
property it is called “Exchange”. There may be both immovable or movable property, which
can be transferred through exchange. In some cases where transfer of ownership of a property
along with some money against some ownership of another property happen, it also comes
under definition of exchange.

Example: Suppose Mr. A is transferring his residential property in Patna, valued Rs. 30.00
Lakhs against property of Mr. B in Gaya of Rs. 27.00 Lakhs. Now in this case Mr. B is
transferring ownership of his property and giving cash of Rs. 3.00 Lakhs against ownership
of property belong to Mr. A. This case also falls under definition of “Exchange”, and not
“Sale”.

Oral exchange is not permissible in view of the amendment of Section 49 of the Registration
Act, 1908 brought about by Act No. 21 of 1929 , which by inserting in Section 49 of the
Registration Act, 1908 the words” or by any provision of the Transfer of Property Act, 1882”
, has made it clear that the documents of which registration is necessary under the Transfer of
Property Act, 1882 but not under the Registration Act, 1908 fall within scope of Section 49 of
the Registration Act, 1949. And if not registered they are not admissible as an evidence of
any transaction affecting any immovable property comprised therein and do not affect any
such immovable property. Transaction by Exchange which requires to be affected through
registered instrument is if it was to affect any immovable property worth of Rs. 100 or more.
[ Satyvan Vs. Raghuvir, AIR 2002 P&H (2002) (3) ICC112(Punj)LR467].

FEATURES OF EXCHANGE;

1. Transfer of ownership; Exchange involves transfer of ownership in some existing property.

2. Property need not be immovable property; In Exchange properties may be immovable or

3. Exchange includes “Barter”; Exchange of one immovable property with another

4. Mode of Transfer;

i. Section 118 provides that a transfer of property in completion of an exchange can be made
only in a manner prescribed for transfer of such property by “Sale”. The formalities of
Section 54 (dealing with sale of properties) will be complied with;

ii. Where both properties are of movable, then exchange may be affected by delivery of
properties and registration is not essential;

iii. Where properties are immovable, but value is less than Rs. 100, then registration is
optional;

iv. Where the properties exchange are immovable properties and their value are more than
Rs. 100/- then registration of exchange of ownership through instrument is necessary.