SALE

“Sale” is a transfer of ownership in exchange for a price paid or promised Or part-paid and part-
promised. Such a transfer, in the case of tangible immoveable property of the value of one hundred
rupees 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 immoveable property, of a value less than one hundred
rupees, such transfer may be made either by a registered instrument or by delivery of the property.

Delivery of tangible immoveable property takes place when the seller places the buyer, or such person
as he directs; in possession of the property. A contract for the sale of immoveable property is a contract
that a sale of such property shall take place on terms settled between the parties. It does not, of itself,
create any interest in or charge on such property.

Definition of Sale —Sale is defined as being a transfer of ownership for a price. In a sale there is an
absolute transfer of all rights in the property sold. No rights are left in the transferor. In a lease there is a
partial transfer or demise and the rights left in the transferor are called the reversion (cr). In a mortgage
there is a transfer of an interest to the extent stated in sec. 58 below. A sale is however distinguishable
from a hire-purchase agreement. If the transferee has eventually to pay the entire purchase price, it may
be a circumstance indicating that the transaction was meant to be a sale. On the other hand, if the
transferee is given a right to terminate the agreement, that may be a circumstance indicating that the
transaction is a hire-purchase agreement (b). The essential elements of a sale are— (1) the parties; (2)
the subject-matter; (3) the transfer or conveyance, (discussed under sec. 55); (4) the price or
consideration.

Rights and Liabilities of Buyer and seller:

In the absence of a contract to the contrary the buyer and the seller Rights and liabilities of immoveable
property respectively are subject to buyer and seller. the liabilities, and have the rights, mentioned in
the rules next following, or such of them as are applicable to the property sold:

(1) The seller is bound —

(a) to disclose to the buyer any material defect in the property 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.

(b) 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.

(c) 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.

(d) 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,

(e) 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.
(f) to give, on being so required, the buyer, or such person as he directs, such possession of the property
as its nature admits.

(g) to pay all public charges and rent accrued due in respect of the property up to the date of the sale,
the interest on all incumbrances on such property due on such date, and, except where the property is
sold .subject to incumbrances, to discharge all in- cumbrances on the property then existing.

(2) The seller shall be deemed to contract with the buyer that the interest which the seller professes to
transfer to the buyer subsists and that he has power to transfer the same. Provided that, where the sale
is made by a person in a fiduciary character, he shall be deemed to contract with the buyer that the
seller has done no act whereby the property is incumbered or whereby he is hindered from transferring
it. The benefit of the contract mentioned in this rule shall be annexed to, and shall go with, the interest
of the transferee as such, and may be enforced by every person in whom that interest is for the whole
or any part thereof from time to time vested.

(3) Where the whole of the purchase-money has been paid to the seller, he is also bound to deliver to
the buyer all documents of title relating to the property which are in the seller’s possession or power:
Provided that,

(a) where the seller retains any part of the property comprised in such documents, he is entitled to
retain them all, and,

(b) where the whole of such property is sold to different buyers, the buyer of the lot of greatest value is
entitled to such documents. But in case (a) the seller, and in case (b) the buyer of the lot of greatest
value, is bound, upon every reasonable request by the buyer, or by any of the other buyers, as the case
may be, and at the cost of the person making the request, to produce the said documents and furnish
such true copies thereof or extracts therefrom as he may require; and in the meantime, the seller, or the
buyer of the lot of greatest value, as the case may be, shall keep the said documents safe, uncancelled
and undefaced, unless prevented from so doing by fire or other in- evitable accident.

(4) The seller is entitled —

(a) to the rents and profits of the property till the ownership thereof passes to the buyer.

(b) 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. ,

(5) The buyer is bound -

( a) 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.

(b) 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 incumbrances, the buyer
may retain, out of the purchase-money, the amount of any incumbrances on the property existing at the
date of the sale, and shall pay the amount so retained to the per- sons entitled thereto.

(c) 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. (

d) 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 incumbrances subject to which the property is sold, and the interest thereon
afterwards accruing due.

(6) The buyer is entitled —

(a) 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.

(b) 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.

Contract for sale.—

A contract for the sale of immovable property differs from a contract for the sale of goods, in that the
Court will grant specific performance of it unless special reasons to the contrary are shown (j). It is not
within the competence of the guardian of a minor to bind the minor by a contract for the purchase of
land. And as there is want of mutality the minor on attaining majority cannot obtain specific
performance of the contract. Otherwise a contract for the sale of land is subject to the general rules
applicable to all contracts; and this and other sections of the Act are taken as part of the Contract Act,
see sec. 4 above. A contract for sale by a minor is void, but a contract for sale to a minor is valid. See
note under sec. 6(h) ‘Minor as transferee.’ Incidents peculiar to the sale of land are the subject of sec.
55.

Rule of Marshalling
Marshalling means “to arrange” and the Rule is first introduced in TOPA under
Section 56. Section 56 may be explained in the following manner:

1. There must be an owner of two or more properties, 

2. He must mortgage two or more of his properties to any person,
 3. Thereafter, he must sell one or more of these properties to any person
other than the one he mortgages the properties to. The sale must
include at least one property that has been mortgaged by the owner,
4. The buyer of such properties is entitled to have the owner satisfy the
mortgage-debt out of the property or the properties not sold him
before he purchases the property. This can be subject to a contract
stating the contrary,
5. The rule of marshalling should not be so exercised so as to prejudice
the rights of the mortgagee, any persons claiming under the
mortgagee, or any person who has acquired an interest with
consideration in any of the properties.
In short, the Rule of Marshalling provides the buyer, in the above case, the right
to demand from the owner that the property be free from any and all
encumbrances before the buyer purchases the property. 

Section 81 also adopts the Rule of Marshalling but in cases of Mortgages.

Section 81 may be understood in the following manner:

1. There must be an owner of two or more properties. He must mortgage

two or more of these properties to any person,
2. He must then mortgage one or more of these properties to another
person,
3. The subsequent mortgagee is entitled to have the mortgage-debt of
the prior mortgagee satisfied out of the properties not sold to him. This
can be subject to a contract stating the contrary too,
4. Similar to Section 56, the rule of marshalling here too should not be so
exercised so as to prejudice the rights of the mortgagee or any person
who has acquired an interest with consideration in any of the
properties.
Marshalling, in this context, may be explained by an illustration. If the
mortgagor mortgages three of his properties X, Y and Z to A and then
mortgages X to B, B is entitled to have the mortgagor satisfy his debt from the
sale proceeds of the properties Y and Z and only if the said sale proceeds fall
short, can property X be sold. 

In Barness v. Rector, W mortgaged two of his properties A and B to X. W then

mortgaged property A to Y and property B to Z. Here, the court held that X’s
mortgages will be apportioned proportionately between properties A and B and
the surplus of A will go to Y and surplus of B will go to Z.
Rule of Contribution
The Rule of Contribution relates to the collective contribution towards a
mortgage debt by mortgagors. It gives one mortgagor the right to have the
other’s property contribute to the discharge of the mortgage debt. When a
creditor has a single claim against several debtors, he can realize the debt from
any one of them, but as per the rule of contribution he can claim contribution to
the debt by the other debtors, so that the burden might fall on all equally.  The
rule is encapsulated under Section 82 of TOPA and may be divided as per the
following:

Mortgaged Property Belonging to two or more persons

This is based on the following essentials:

1. A mortgaged property must belong to two or more persons based on a

common loan,
2. Each mortgagor, in absence to a contrary contract, is liable to
contribute as per his share of the mortgage,
For example, X, Y and Z mortgaged their properties to D mortgaging a common
debt. Now if D can recover the entire debt from the properties mortgaged by X,
X is entitled to demand Y and Z to contribute their portion of the debt out of
their mortgaged properties. The Privy Council has lucidly explained it in Kampta
Singh  v.  Chaturbhuj. The Privy Council held that if a person owns one property
subject, with the property of other persons, to a common mortgage, and has
paid off the mortgage debt, he is entitled to call upon the owners of the other
property to bear their proper proportion of the burden. 

When One Property is Mortgaged First and then again mortgaged with another
Property

When the mortgagor has two properties and he mortgages one to secure one
debt and then mortgages both to secure another debt, if the former debt is paid
out of the former property, each property is then liable to contribute to the
latter debt after deducting the amount of the former debt from the value of the
property from which it has been paid. 
In Bohra Thakur Das  v. Collector of Aligarh,the mortgagor mortgaged the
village of Kachaura to one, Nand Kishore. He again mortgaged
villages, Kachaura  and Agrana,  to Nand Kishore. The Plaintiffs purchased the
equity of redemption from Agrana. The first mortgagees purchased Kachaura by
a decree. The plaintiffs sued and contended that the first mortgagees were
liable to pay the proportionate share of the debt for redemption of the second
mortgage. The court held that since the whole of Kachaura was swallowed up by
the first mortgage by the decree,  the entire burden of the second mortgage fell
entirely on Agrana. The Privy Council, in appeal, overruled the decision of the
court and held that the first mortgagees would have to contribute to the second
mortgage, as they purchased Kachaura. 

However, in Sesha Iyer  v. Krishna Iyenger, the situation was quite different.

Two properties X and Y were mortgaged to R and properties X and Z were
mortgaged to P. R executed his decree on the mortgage by sale of X. P then
sued to enforce his mortgage. However, X had already been sold. P sought to
sell Z and also demanded contribution against Y. The Court held that if the
plaintiffs had bought part of the mortgaged property subsequently sold under
R’s decree, they might by paying off the debt and saving the property from sale,
have acquired a right to contribution by securing a lien on the other property.
However, since the plaintiffs did nothing, no right to contribution arose. 

Conclusion
Marshalling is the right of subsequent mortgagees whereas contribution is with
respect to mortgagors. Marshalling is if a creditor has multiple funds to realize
his debt, he must first pursue the multiple funds instead of prejudicing the
creditor who is secured only by one fund. Whereas in contribution all the co-
mortgagors who have taken a debt by mortgaging their properties have to
make contributions towards debt proportionately according to their respective
shares. The Proviso to Section 82 of TOPA gives precedence to the former over
the latter.