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I. CONCEPT OF SALE UNDER TRANSFER OF PROPERTY ACT,1882

Section 54 of Transfer of Property Act, 1882 defines the sale of immovable property as: A
transfer of ownership in exchange for a price paid or promised or part-paid and part-
promised.

1. Sale how made? - Such 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.
2. Definitions-
 Tangible property has a physical existence and can be touched as opposed to
intangible property, which has no obvious and assigned value and can’t be physically
held such as copyrights, patents, intellectual property, investments, digital assets etc.
 Black’s Law Dictionary defines reversion as the right, especially of the original owner
and their heirs, to possess or succeed to property on the death of the present possessor
or at the end of a lease.

II. CONTRACT FOR SALE

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.

I. Explanation:
 Property can be transferred by different modes or ways viz. Sale, mortgage, lease,
gift, exchange, etc. Transfer of immovable property by each of the aforesaid modes
has its own significance, advantages, and disadvantages.
 For a sale of immovable property, for example, a hotel, there will be a contract
between the parties requiring the seller to transfer the ownership in the hotel for a
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price in cash. The contract will provide the terms of the sale, including the time of
passing of the ownership, delivery of the property and payment by the buyer. In the
performance of the contract, when the seller transfers the ownership in the property,
the sale is done. At some point of time, the seller will give possession of the property
to the buyer. A sale of immovable property is done through a registered instrument.

III. THE ESSENTIAL ELEMENTS OF A SALE:

According to Section 54, the essentials of a valid sale are as follows-

 Parties to a sale;
 The subject matter of sale;
 Price or consideration;
 Registration;
 Conveyance.

1. Parties to Sale:

The parties to a sale are the transferor who is called a seller or vendor, and the transferee
known as the buyer or vendee. A contract of sale must be based on a mutual agreement
between the seller and the buyer. Free consent of parties sec 14 ICA

COERCION , UNDUE INFLUENCE, FRAUD MISREPRESENTATION AND MISTAKE

UNDER 15, 16, 17, 18, AND 20,21,22Thus, there are two parties to a sale.

a) Competency of Transferor or Vendor:

 The transferor or the seller must be a person who is competent to enter into a contract
on the date of sale (Section 7 of the Act) i.e., he must be a major (completed 18 years
of age);
 He must be of sound mind- A person of unsound mind is incompetent to transfer his
own property despite being its owner, but a transfer by a mentally challenged person
during lucid intervals is considered valid.
 He should not be legally disqualified to transfer the property - Incompetency imposed
under law or a statute is called statutory incompetency.
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 When a person is declared as an insolvent, his property vests in the official

receiver and he is incompetent to transfer the same.
 Similarly, a judgment debtor is not capable sell his property that is to be sold
in execution under the order of the court.
 The property cannot be sold when it is under the management of the Court of
Wards.
 The transferor must be the owner of the property and he must have a legal title
to it.
 The transferor or seller may be a real person or a legal person.
b) Case Laws:
 In Sola Bara Bora v. Jyotirindra Bhatacharjee 1, the Hon’ble Supreme Court
observed, “A person who is incapable of judging the consequences of his act is and of
unsound mind, need not be a lunatic. Unsoundness of mind, need not be proved only
by medical evidence, can be proved by conduct also. Burden of proof lies on the party
who sets up the plea of unsoundness of mind. Burden is discharged by proving at least
by balance of probabilities that the action of executing the deed of transfer was the
outcome of an unsound mind. Once that burden is discharged, onus then shifts on the
transferee to show that the ostensibly irrational conduct of the transferor had a rational
explanation.”
 In Umadevi Nambiar v. Thamaraserri Roman Catholic Diocese 2, the Apex Court
w.r.t competence to transfer property elucidated, “Where in Section 7 power of
attorney clause merely provides for power to execute a document and presenting the
same for registration i.e. as opposed to an express power to sell the property cannot be
construed as conferring power to sell property.”
 In Biswanath Sahu v. Tribeni Mohan3, the Orissa High Court held that the transferor
should either be the owner of the property or should have an authority to dispose of it.

c) Competency of Transferee or Vendee:

 The transferee must be a person competent to receive a transfer in his favour.
 He should not be disqualified by any law for time being in force for purchasing a
property.
1
Sona Bala Bora v. Jyotirindra Bhatacharjee, (2005) 4 SCC 501
2
Umadevi Nambiar v. Thamarasseri Roman Catholic Diocese, (2022) 7 SCC 90
3
Biswanath Sahu v. Tribeni Mohan, 2003 SCC OnLine Ori 36
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 For example, Under Section 136 of this Act, an actionable claim cannot be
purchased by a judge, legal practitioner or an officer connected with the court.
 Similarly, an officer performing an official duty in connection with the sale of
the property cannot purchase the same.
 The transferee or buyer may be a real person or a legal person.

d) Case Law:

In Ram Jiwan Rai v. Deoki Nandan Rai 4, the Patna High Court held that a minor is a
competent transferee in a transaction of a sale. Similarly, a mortgage or a lease can be
executed in favour of a minor, but a minor cannot take a lease in his favour, as a lease has to
be executed by both the parties. A lease in favour of a minor is, therefore, void.

2. Subject Matter of a Sale:

Section 54 only governs the sale of immovable property which is transferable (Section 6 of
the Act). The Sale of Goods Act, 1930 deals with the sale of movable properties.

a) Characteristic of Transferable 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 refers to property that cannot be touched such as a right of ferry, a
right to mortgage, a right of fishery, etc.
 Section 6 of Transfer of Property Act, 1882 dictates an exclusive definition whereby
any property except mentioned hereunder may be transferred-
 The chance of an heir apparent to succeed to an estate;
 An easement cannot be transferred apart from the dominant heritage;
 A mere right to sue cannot be transferred;
 A public office cannot be transferred, nor can the salary of a public officer;
 Stipends allowed to military and civil pensioners of the government and
political pensions cannot be transferred etc.

3. Price or Consideration:

4
Ram Jiwan Rai v. Deoki Nandan Rai, 2004 SCC OnLine Pat 390
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 The price is an essential element of a sale. At the time of the contract of a sale, a price
must be ascertained at which the property is going to be transferred.
 The definition of "Sale" in Section 54 specifies that there is an exchange of ownership
for a price paid or promised or part paid and part-promised. Thus price can be paid at
the time of sale or before the sale, in advance or after the sale. Sec 2(10) soga
 At the same time, it can be paid in a lump sum or in part.
 If the price is not ascertained then the contract of sale is incomplete and void because
it is not enforceable.
 Thus the payment of the price is not necessary for the completion of the transfer but
its reference is necessary. It may be paid at the time of execution or promised to pay
or the same part of it may be paid at the time of execution and rest may be promised
to be paid in future. Thus payment of the price is not a sine qua non for completion of
the sale.

● In Ramlal v. Phagua(2006)5, the Hon’ble Supreme Court held that the term price has

not been defined in the Transfer of Property Act, 1882, but is used is the same sense
as in Section 2 of the Sale of Goods Act, 1930- “Price means the money consideration
for a sale of goods.”

● In Commissioner of Income Tax v. Motor and General Store6, a 3 judge bench of the

Hon’ble Supreme Court opined that the price, in the ordinary sense connotes money
consideration for the sale of the property. In the same case the Court further observed
that where, instead of price, some other valuable consideration is kept, and the
transaction is not a sale but can be an exchange or barter.

● In Dahibhen v. Arvindbhai Kalyanji Bhanusali7, the Hon’ble Supreme Court

observed, “Actual payment of entire sale price at time of execution of sale deed is not
an essential for completion of sale. Sale deed can be registered even upon part-
payment of sale price whereupon title would pass to transferee. Non-payment of
remaining part of sale price would not invalidate sale. Vendor would have other
remedies for recovery of balance consideration, but not cancellation of sale for non-
payment of balance consideration.
5
Ramlal v. Phagua, (2006) 1 SCC 168
6
CIT v. Motors and General Stores (P) Ltd., (1967) 3 SCR 876
7
Dahiben v. Arvindbhai Kalyanji Bhanusali, (2020) 7 SCC 366
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4. Registration:

 According to 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 (see phrase only by in the S54) For sale of property whose value is less than Rs 100 the
registration is optional (see the phrase may be in S. 54).

● In Arjuna S. Reddy v Arjuna C. Thangavelu8, the Andhra Pradesh High Court held that the

property of a value less than Rs. 100 can be transferred. It is only that writing, attestation, and
registration in such cases are optional. The test is the value of the property and not the amount
of consideration or the price.

● In Lakshmi Narain Bamwal v. Jagdish Singh 9, the Court held that Transfer of ownership of

property whose value is more than Rs. 100 cannot take place without registration and it
concludes on registration unless there is a clause contrary in the contract.
5. Conveyance of Property: (do from conveyance under essentials to transfer of property

 Conveyance’ refers to the act of transferring the title, ownership, rights and interests in a
property, from one entity to another.
 In Kameshwar Choudhary v. State of Bihar 10 the Court held that once registration takes
place, the-ownership passes with effect from the date of the execution of the sale deed unless
there is an intention of the parties to the contrary.

IV. DIFFERENCE BETWEEN SALE AND EXCHANGE

1. Sale refers to immovable property only, whereas exchange refers to both movable and
immovable properties.
2. The consideration in sale is price paid or promised and partly paid or partly promised,
exchange on the other hand has the consideration for transfer of one property in exchange for
another property.
3. The seller has the charge from unpaid purchase-money in the case of sale and in exchange
there can be no seller’s charge for unpaid purchase money.

8
Arjuna Subramanya Reddy v. Arjuna China Thangavelu, 2006 SCC OnLine AP 488
9
Lakshmi Narain Bamwal v. Jagdish Singh, AIR 1991 Pat 99
10
Kameshwar Choudhary v. State of Bihar, AIR 1998 Pat 141