The topic prescribes rules, definitions, etc., related to the sale of immovable property and not related to movable property. We have already discussed rules relating to the sale of movables, i.e. goods, in the Sale of Goods Act of 1930.

The sale is a transfer of ownership for a money consideration.

In Dahiben v. Arvindbhai Kalyanji Bhanusai (Laws (SC) 2020-7-3)

The Supreme Court observed that the definition of sale requires a transfer of ownership from one person to another, i.e., a transfer of all rights and interests in the property; otherwise, it would not be a sale.

It means in the sale all rights (bundle of rights) are transferred from the seller to the buyer. The seller cannot reserve rights.

Characteristics of sale:-

(i) Transfer of ownership:-

Ownership is a bundle of all rights. When ownership is transferred, everything related to the property, and every right and liability related to it, is transferred to the purchaser. No right remains with the seller.

(ii) Money Consideration:-

The consideration must be paid in the form of money. The money in exchange for ownership is called ‘price’. How much is to be paid is not a question to be determined in the sale; there must be some money price in the eye of the law.

When one property is transferred in consideration of another property, the transfer becomes ‘exchange’. When it is transferred without consideration, the transaction becomes a ‘gift’.

Other essentials of a valid sale:-

iii) Parties:-

There are two parties to the contract of ‘sale’. The person who sells the property is known as the ‘transferor’, ‘seller’ or ‘vender’. The person who purchases the property is known as the ‘transferee’, ‘purchaser’ or ‘vendee’.

Both seller and purchaser must be competent to contract, as mentioned U/s.7 of the Transfer of Property Act. i.e. they shall be of sound mind and shall not be minor. The seller shall be the owner of the property and shall have legal title to the property.

iv) The subject matter, ‘immovable property’:-

The subject matter of a sale is immovable property. The immovable property may be tangible, such as land, a house or things attached to the earth. It may be intangible, immovable property such as the right to ferry or fishery or the right to a mortgage, debt, etc. However, the property shall be in existence on the date of transfer by way of sale. The property shall be transferable within the meaning of S.6 of the Transfer of Property Act.

v) The transfer or conveyance:-

Part two of S. 54 provides two modes of transfer of property. Viz.

a) Delivery of possession:-

Where the property is tangible immovable property of a value less than Rs. 100, the sale may be made by delivery of possession. In such a case, writing and registration is not necessary but is optional. But in all other cases, writing and registration are necessary.

b) Registration of sale deed:-

Registration in the following cases is necessary, viz.

(i) Where tangible immovable property is of value of Rs. 100 or more, and

(ii) Where the property is intangible immovable property of any valuation.

II Contract for sale / Agreement to sale:-

The last part of S. 54 defines a ‘contract for the sale of immovable property’ as 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.

‘Contract for sale’ is called an ‘agreement to sale’. After a contract of sale, the actual ‘sale’ takes place. In the ‘contract for sale’ of immovable property, the parties decide the terms and conditions as to when the ‘actual sale’ shall take place.

The contract for sale itself does not create any right in the property. It is merely a document creating a right to obtain another document, i.e., the sale deed.

In Jagan Nath V Jagdish Rai[1]

Facts A person entered into an agreement to sell immovable property to one person. But ‘actually sold it to another person.

Held – The Supreme Court held that the sale deed is valid because the purchaser purchased the property for the price without notice of the earlier fact.

However, the person without whom ‘agreement to sale’ or ‘contract for sale’ is entered into has the following rights relating to the property, viz.

(i) He may file suit for the specific performance of a contract; under the Specific Relief Act.

(ii) He may file suit and acquire a charge upon sold property for a portion of the price if he has paid earlier.

III. Rights and liabilities of buyer and seller (S. 55):-

In fact, parties are free to determine their rights and liabilities (duties) in a contract. However, if no such rights and liabilities are determined in the contract, S. 55 provides them. S. 55 has laid down rights and liabilities in the absence of its mention in the contract.

These rights and liabilities can be categorised into (i) Rights and liabilities before the sale and (ii) Rights and liabilities after the sale. These rights are somehow reciprocal.

A) Sellers Rights and Liabilities (Duties):-

a) Seller’s Rights:-

The seller has the following rights, viz

1) Seller’s Rights before completion of sale:-

Right to take rents and profits:-

The seller is entitled to the rents and profits of the property till the ownership of it passes to the buyer. The sale completes when the property is transferred from the seller to the buyer. The actual transfer owner remains the owner and is entitled to rent and profits.

2) Seller’s right after sale:-

Where the ownership of the property has passed to the buyer before payment of the whole or part of the purchase money or interest thereon, the seller has no right to get the property delivered back, but he has the right of charge upon the property

i) in the hands of the buyer;
ii) any transferee from the buyer without consideration.

iii) any transferee from a buyer with notice of non-payment (by the buyer to seller).

iv) the charge creates a right of payment out of the specific property

B) Seller’s liabilities (duties):-

1) Seller’s liabilities before completion of sale[2]:-

A seller has the following liabilities (duties) before a sale, viz.

i) Seller’s duty of disclosure:-

The seller is bound to disclose to the buyer any defect present either in the property or in the seller’s title that the seller is aware of but the buyer is not and cannot, with ordinary care, discover.

The defect must be a material one about which, if the buyer had known, he would not have purchased it.

ii) To produce documents of title:-

If the buyer demands it, 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. If not demanded by the buyer, the seller is not duty-bound to produce them.

iii) To answer a question relating to property or title:-

Seller is bound to answer to the best of his information all relevant questions put to him by the buyer with respect to property or title thereof.

Therefore, in addition to inspecting documents, the buyer may also ask questions relating to property and title.

iv) To execute a proper conveyance:-

On payment or tender of the purchase money, the seller is duty-bound to execute a proper conveyance of the property when the buyer tenders documents to him for execution at a proper time and place.

v) To take care of property and title deeds:-

Seller is duty bound 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 his property and documents.

vi) To pay all public charges, rent and interest thereon:-

The seller is duty-bound to pay all public charges and rent accrued due and interest thereon in respect of the property up to the date of sale. The seller is also duty-bound to discharge all existing encumbrances if the property is not sold with encumbrances.

2) Seller’s Liabilities (duties) after completion of the sale[3]:-

After the sale, the seller has the following liabilities, viz.

1. To give possession of the property[4]:-

The seller is bound to give (on being so required) by the buyer or such person as he directs such possession of the property as its nature admits.

2. Implied covenant as to title and right of transfer[5]:-

The seller shall be deemed to contract with the buyer that the interest which the seller professes to transfer (i.e. title) 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 the sale deed.

3. To deliver title deeds:-

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

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 a lot of greatest value is entitled to such documents.

However, in both of the above cases, the seller and the buyer of greatest value are duty bound to provide true copies or produce documents at the request of others at their cost.

C) Buyer’s rights and liabilities:-

Buyer’s Rights:-

a) Buyer’s rights before completion of sale[6]:-

To charge for price prepaid[7]:-

The buyer is entitled to a charge on the property unless he has improperly declined to accept delivery of the property as against the seller and all other 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.

When the buyer properly declines (i.e. entitled by law or contract to decline) to accept delivery, he becomes entitled to a refund of earnest money (if any) and for the costs (if any) awarded to him in a suit against others for specific performance of a contract or to obtain a decree for rescission.

b) Buyer’s rights after completion of the sale:-

To get the benefit of the increase[8]:-

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.

c) Buyer’s Liabilities/Duties after completion of sale[9]:-

i) To bear a loss of property:-

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.

ii) To pay public charges and rent:-

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 the interest thereon afterwards accruing due.

IV. Distinction between ‘Sale’ and other agreements:-

1) Distinction between ‘Sale’ and ‘Gift’:-

The similarity between ‘Sale’ and ‘Gift’ is that in both of these two, there is a transfer of ownership of immovable property. However, there are the following distinctions, viz.

a) As to consideration:-

In a sale, there is a transfer of property for consideration in terms of money.

However, in gift, there is a transfer of ownership of immovable property without any consideration (i.e. neither in terms of money nor anything of value).

b) As to registration:-

Where the valuation of immovable property is Rs. 100 or more, the ‘sale’ is to be effected only by the registered sale deed.

However, ‘gift’ needs compulsory registration irrespective of the valuation of the property.

2) Distinction between ‘sale’ and ‘exchange’:-

In both, there is a transfer of ownership. However, in ‘sale’, the consideration is paid in terms of money, whereas, in ‘exchange’, there is a transfer of ownership of a property in consideration of exchange for another property. In an ‘exchange’, there is a consideration in kind, not money.

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[1] [ AIR 1996 SC 2028]

[2] बिक्री पूरी होने से पहले विक्रेता की देनदारियां [fodzsR;kaps fodzhiqoZ vf/kdkj]

[3] बिक्री के पूरा होने के बाद विक्रेता की देनदारियां (कर्तव्य)

[fodzhi’pkr fodzsR;kph drZO;]

[4] संपत्ति का कब्जा देनk [feGdrhpk rkck ns.ks]

[5] शीर्षक और हस्तांतरण के अधिकार के बारे में निहित करार. [ekydh o gLrkarjuklaca/kh fughr djkj]

[6] बिक्री के पूरा होने से पहले खरीदार के अधिकार

[Xkzkgdkaps fodzhiwfoZ vf/kdkj]

[7] खरीदार संपत्ति पर cks> j[kusdk का हकदार है।

[blkjkps jDdespk feGdrhoj ckstk]

[8] वृद्धि का लाभ पाने का अधिकार [ feGdrhr >kysy;k o`/nhpk Qk;nk]

[9] बिक्री के पूरा होने के बाद खरीदार की देनदारियां / कर्तव्य [ fodzhi’pkr [kjsnhnkjkph drZO;]