SUPREME COURT HOLDS THAT SALE DEED EXECUTED WITHOUT PAYMENT OF CONSIDERATION HAS NO LEGAL EFFECT

A Two Judge Bench of the Hon’ble #SupremeCourt of India comprising of Justices Ajay Rastogi and Abhay S. Oka passed a #Judgment dated 22-11-2021 in the case of Kewal Krishan v. Rajesh Kumar {Civil Appeal Nos. 6989-6992 Of 2021(Arising out of SLP (C) Nos. 2033-2036 of 2016)} and held that payment of #price is an essential part of a ##sale and that Sale Deed executed without payment of #consideration would not have any legal effect.

In the present case, one, Mr. Kewal Krishan (Appellant) and his elder brother, Mr. Sudarshan Kumar (one of the Respondents) had acquired Properties (Suit Properties) under the Sale Deeds dated 12-08-1976 and 19-10-1976. On 28-03-1980, the Appellant executed a Power of Attorney in favour of his elder brother, Mr. Sudarshan Kumar. Subsequently, on the basis of the said Power of Attorney, two Sale Deeds were executed by Mr. Sudarshan Kumar on 10-04-1981. The first Sale Deed was executed by him by which he purported to sell part of the Suit Properties to his minor sons and the sale consideration was shown as Rs.5,500/-. The other Sale Deed was executed by Mr. Sudarshan Kumar in favour of his wife in respect of the remaining part of the Suit Properties and the sale consideration for the same was shown as Rs.6,875/-. In the instant case, Mr. Sudarshan Kumar, his Wife and his Sons were the Respondents.

On 10-05-1983, two separate Suits were instituted by the Appellant before the Trial Court, Punjab. One Suit was filed against Mr. Sudarshan Kumar and his two Sons and the other Suit was against Mr. Sudarshan Kumar and his Wife. Both the Suits were filed for seeking injunction and for restraining the Defendants from interfering with the possession of the Appellant and from alienating the share of the Appellant in the Suit Properties. Also, a prayer was made for passing a Decree for possession. On 23-11-1985, the Plaints in both the Suits were amended to incorporate the relief sought for declaration that the Power of Attorney and the Sale Deeds that were executed by Mr. Sudarshan Kumar on 10-04-1981 in favour his two Sons and Wife, were null and void.

It is the case of Mr. Sudarshan Kumar that while getting the Sale Deeds executed on 12-08-1976 and 19-10-1976, the Appellant got his name incorporated as a purchaser along with Mr. Sudarshan Kumar. According to the Respondent, the Appellant was a benamidar. The contention of the Respondent is that he was the sole owner of the Suit Properties and had paid the entire consideration for acquiring the Suit Properties under the Sale Deeds of 1976. Furthermore, the Appellant vide Letter dated 15-04-1980 had accepted the sole ownership of the Respondent and in pursuance of the said Letter, the Power of Attorney dated 23-03-1980 was executed by the Appellant. The same was duly registered under the Indian Registration Act, 1908 whereby, Mr. Sudarshan Kumar was appointed as the Appellant’s Attorney in respect of the Suit Properties. Therefore, Mr. Sudarshan Kumar contended that the Sale Deeds 10-04-1981 are legal and valid.

Before the Trial Court

The Suits filed by the Appellant herein were dismissed by the Trial Court. It was held that the lands were intended to be purchased only by Mr. Sudarshan Kumar and that is how the original Sale Deeds were in possession of Mr. Sudarshan Kumar. The Trial Court accepted the contention of the Respondent that he was the sole owner and the Appellant was the benamidar. Thus, the Sale Deeds and the Power of Attorney were held to be legal and valid. (The date of the Trial Court Orders is not known to us, as it is an old case)

Before the District Court

Aggrieved by the Trial Court Orders, two Appeals were preferred by the Appellant before the Additional District Judge, Ropar, Punjab (District Court) in Civil Appeal bearing No.31/256/23.07.1986 and Civil Appeal bearing No.34/257 /23.07.1986. The Appeals were partly allowed. The District Court observed that no evidence was placed on record to show that the Respondent had solely paid the entire sale consideration for acquiring the Suit Properties in 1976. The District Court thus, observed that both the Appellant and Mr. Sudarshan Kumar were the joint owners of the Suit Properties. Further, the District Court observed that the Respondent and his Wife had knowledge about the Appellant’s share in the Suit Properties. Moreover, they were also not able to adduce any evidence that sale consideration was paid by the Respondents, as mentioned in the Sale Deeds dated 10-04-1981. Hence, the District Court held that the Sale Deeds dated 10-04-1981 were not valid. Therefore, the District Court passed an Order dated 21-05-1988 and thereby, decreed the Suit by granting joint possession to the Appellant and the Respondent-Mr. Sudarshan Kumar and further, set aside the Sale Deeds dated 10-04-1981.

Before the High Court

Aggrieved by the District Court Order dated 21-05-1988, the Respondents filed Appeals before the High Court of Punjab and Haryana. The High Court also observed that the Appellant and the Respondent-Mr. Sudarshan Kumar were the joint owners of the Suit Properties and that the Power of Attorney was valid. The High Court further observed that the Appellant was the owner of the half share in the Suit Properties. However, the High Court held that the Suits for Declaration of Invalidity of the Sale Deeds dated 10-04-1981 were barred by limitation as the said prayers were belatedly incorporated on 23-11-1985. Hence, the High Court did not set aside the Sale Deeds dated 10-04-1981 and directed the Respondent-Mr. Sudarshan Kumar to pay the Appellant’s share in the sale consideration under the Sale Deeds dated 10-04-1981 with 12% interest from the date of execution of the Sale Deeds. (The date of the High Court Orders is not known to us, as it is an old case)

Before the Hon’ble Supreme Court of India

The Appellant herein filed Appeals before the Supreme Court challenging the High Court Judgment to the extent that the Suits for Declaration of Invalidity of the Sale Deeds dated 10-04-1981 were barred by limitation and hence, the Sale Deeds dated 10-04-1981 were not set aside.

While placing reliance on Section 54 of the Transfer of Property Act, 1882, (Act) the Bench observed as follows:

“Hence, a sale of an immovable property has to be for a price. The price may be payable in future. It may be partly paid and the remaining part can be made payable in future. The payment of price is an essential part of a sale covered by section 54 of the TP Act. If a sale deed in respect of an immovable property is executed without payment of price and if it does not provide for the payment of price at a future date, it is not a sale at all in the eyes of law. It is of no legal effect. Therefore, such a sale will be void. It will not effect the transfer of the immovable property.”

Section 54 of the Act is reproduced below for easy reference:

54. “Sale” defined.—‘‘Sale” is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised.

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.

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.

The Apex Court further added that no evidence was produced by the Respondent about the payment of the price mentioned in the Sale Deeds as well as the earning capacity of his Wife and the Sons at the relevant time. Hence, the Sale Deeds dated 10-04-1981 were declared as void as they were executed without consideration and as a result, these Sale Deeds won’t confer any right, title and interest on the Respondent’s Wife and Children.

Therefore, while allowing the Appeals and restoring the District Court Order dated 21-05-1988, the Bench observed that as no title was transferred under the Sale Deeds dated 10-04-1981 to the Respondent’s Wife and Children, the Appellant continues to remain the owner of his undivided half share in the Suit Properties. Consequently, the Impugned Judgment and Order of the High Court have been set aside.

 

Suchitra Upadhyay

Associate

The Indian Lawyer & Allied Services

Edited by

Sushila Ram Varma

Chief Consultant

The Indian Lawyer & Allied Services