Supreme Court: Agreement of sale signed by the vendor alone is valid

All agreements of sale are bilateral contracts as promises are made by both - the vendor agreeing to sell and the purchaser agreeing to purchase. On the other hand, the observation in S.M. Gopal Chetty (supra) that unless agreement is signed both by the vendor and purchaser, it is not a valid contract is also not sound. An agreement of sale comes into existence when the vendor agrees to sell and the purchaser agrees to purchase, for an agreed consideration on agreed terms. It can be oral. It can be by exchange of communications which may or may not be signed. It may be by a single document signed by both parties. It can also be by a document in two parts, each party signing one copy and then exchanging the signed copy as a consequence of which the purchaser has the copy signed by the vendor and a vendor has a copy signed by the purchaser. Or it can be by the vendor executing the document and delivering it to the purchaser who accepts it. Section 10 of the Act provides all agreements are contracts if they are made by the free consent by the parties competent to contract, for a lawful consideration and with a lawful object, and are not expressly declared to be void under the provisions of the Contract Act. The proviso to Section 10 of the Act makes it clear that the section will not apply to contracts which are required to be made in writing or in the presence of witnesses or any law relating to registration of documents. Our attention has not been drawn to any law applicable in Bihar at the relevant time, which requires an agreement of sale to be made in writing or in the presence of witnesses or to be registered. Therefore, even an oral agreement to sell is valid. If so, a written agreement signed by one of the parties, if it evidences such an oral agreement will also be valid. In any agreement of sale, the terms are always negotiated and thereafter reduced in the form of an agreement of sale and signed by both parties or the vendor alone (unless it is by a series of offers and counter-offers by letters or other modes of recognized communication). In India, an agreement of sale signed by the vendor alone and delivered to the purchaser, and accepted by the purchaser, has always been considered to be a valid contract. In the event of breach by the vendor, it can be specifically enforced by the purchaser. There is, however, no practice of purchaser alone signing an agreement of sale.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 6197 of 2000

Decided On: 17.12.2008

 Alka Bose  Vs.  Parmatma Devi and Ors.

Hon'ble Judges/Coram:

R.V. Raveendran and P. Sathasivam, JJ.

Citation: AIR 2009 SC. 1527 

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Whether sale deed not signed by purchaser is valid?

This is obviously because the said document is executed by the vendor in their favour. In this context, the question that arises for consideration is, as to whether it is mandatory that purchasers need to sign on sale deeds that are executed in their favour by the vendor. In the context of agreement of sale, the Hon'ble Supreme Court in its judgment in the case of Aloka Bose (supra) has held as follows:-

"16. On the other hand, the observation in S.M. Gopal Chetty, MANU/TN/0069/1997 : AIR 1998 Madras 169 that unless agreement is signed both by the vendor and purchaser, it is not a valid contract is also not sound. An agreement of sale comes into existence when the vendor agrees to sell and the purchaser agrees to purchase, for an agreed consideration on agreed terms. It can be oral. It can be by exchange of communications which may or may not be signed. It may be by a single document signed by both parties. It can also be by a document in two parts, each party signing one copy and then exchanging the signed copy as a consequence of which the purchaser has the copy signed by the vendor and a vendor has a copy signed by the purchaser. Or it can be by the vendor executing the document and delivering it to the purchaser who accepts it."

In the context of execution of sale deed, the Andhra Pradesh High Court in the case of Fazal Ullah Khan vs. State of Andhra Pradesh and others (supra) has held as follows:-

"11. A party to a transfer can certainly cancel it in case necessary ingredients as provided for under law, are established. Such transaction can be sale or for that matter any conveyance including gift, mortgage, exchange and the like. Though transactions such as sale and gift are brought into existence with unilateral acts of execution of the documents, the legal effect thereof is that the title in respect of the property stands transferred in favour of the transferred name therein, notwithstanding the fact that the transferee may not have subscribed his signature in the documents. From this point of view, the sale deed on the one hand and the gift deed on the other, stand on the same footing."

14. It appears that in transactions like the sale deed at Exh. 31 in the present case, in the context of sale and purchase of immovable property, it is the signature of the vendor being a person who executes the document that is crucial and absence of signature of purchasers does not render the document defective in any manner.

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Second Appeal No. 324 of 2002

Decided On: 23.03.2018

Hemant  Vs. Naresh and Ors.

Hon'ble Judges/Coram:

Manish Pitale, J.

Citation: 2018(5) MHLJ 246

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Whether Sale deed signed by only vendor is valid?

Indian Evidence Act, 1872 – Sections 91 and 92 – It is not open to a party to a document to prove by oral evidence a variation in the terms of the document or as to the amount of consideration shown in the document. 

Indian Evidence Act, 1872 – Sections 91 and 92 – Parole evidence given for the purpose of proving variation in the amount of consideration shown in the document would be inadmissible under S.92 of the Evidence Act. 

Indian Evidence Act, 1872 – Sections 91 and 92 – The bar under S.91 and S.92 of the Evidence Act will not apply for proving want of consideration or failure of consideration. 

Transfer of Property Act, 1882 – Sections 5 and 54 – Indian Contract Act, 1872 – Section 10 - Sale deeds only contain the signature of the vendors thereunder and not the respective vendees - That will not render those sale deeds invalid as contracts for want of mutuality on the ground that they are only unilateral instruments. All that is necessary is to ensure that the essential parts of a modern conveyance namely, the “parties, the recitals, testatum, operative words, parcels, habendum and testimonium” are present in the instrument. 

Transfer of Property Act, 1882 – Sections 5 and 54 – Indian Contract Act, 1872 – Section 10 - There is no scope any more for anybody to contend that an agreement for sale or a sale deed (deed of conveyance) executed by the prospective vendor or the vendor, as the case may be, is a unilateral document or instrument and is not a contract which can be enforced in law. 

Transfer of Property Act, 1882 – Sections 5 and 54 – Indian Contract Act, 1872 – Section 10 - An agreement of sale signed by the vendor alone and delivered to the purchaser, and accepted by the purchaser, has always been considered to be a valid contract. In the event of breach by the vendor, it can be specifically enforced by the purchaser. There is, however, no practice of purchaser alone signing an agreement of sale.

IN THE HIGH COURT OF KERALA

A.F.A. No. 59 of 1994

Decided On: 13.01.2012

 Vasu @ Bhaskaran Vs.  Parukutty Amma & Anr.

Hon'ble Judges/Coram:
V. Ramkumar and K. Harilal, JJ.

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