Supreme Court: Plaintiff is not entitled to get cancellation of sale deed on the ground of non-payment of the part of sale consideration

The Plaintiffs have made out a case of alleged nonpayment

of a part of the sale consideration in the Plaint,

and prayed for the relief of cancellation of the Sale Deed on

this ground.

Section 54 of the Transfer of Property Act, 1882

provides as under :

“54. ‘Sale’ defined.—‘Sale’ is a transfer of ownership in

exchange for a price paid or promised or part-paid and part promised.”

The definition of “sale” indicates that there must

be a transfer of ownership from one person to another i.e.

transfer of all rights and interest in the property, which

was possessed by the transferor to the transferee. The

transferor cannot retain any part of the interest or right in

the property, or else it would not be a sale. The definition

further indicates that the transfer of ownership has to be

made for a “price paid or promised or part paid and part

promised”. Price thus constitutes an essential ingredient

of the transaction of sale.

In Vidyadhar v. Manikrao & Anr. (1999) 3 SCC 573. this

 Court held that the words “price paid or promised or part paid and part promised” indicates that actual payment of the whole

of the price at the time of the execution of the Sale Deed is

not a sine qua non for completion of the sale. Even if the

whole of the price is not paid, but the document is

executed, and thereafter registered, the sale would be

complete, and the title would pass on to the transferee

under the transaction. The non-payment of a part of the

sale price would not affect the validity of the sale. Once the

title in the property has already passed, even if the balance

sale consideration is not paid, the sale could not be

invalidated on this ground. In order to constitute a “sale”,

the parties must intend to transfer the ownership of the

property, on the agreement to pay the price either in

praesenti, or in future. The intention is to be gathered from

the recitals of the sale deed, the conduct of the parties, and

the evidence on record.

In view of the law laid down by this Court, even if

the averments of the Plaintiffs are taken to be true, that

the entire sale consideration had not in fact been paid, it

could not be a ground for cancellation of the Sale Deed.

The Plaintiffs may have other remedies in law for recovery

of the balance consideration, but could not be granted the

relief of cancellation of the registered Sale Deed.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 9519 OF 2019

DAHIBEN  Vs ARVINDBHAI KALYANJI BHANUSALI

(GAJRA)(D) THR LRS & ORS.

INDU MALHOTRA, J.

Dated: July 09, 2020.

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Whether purchaser in suit for specific performance of agreement can be directed to deposit sale consideration in court?

The position in law, on the subject of issuance of direction to a plaintiff /
purchaser in a suit for specific performance of an Agreement to Sale of
immovable property to deposit the balance sale consideration in Court can thus
be culled out as under:-
(i)
Section 16(c) of the Specific Relief Act, 1963 provides that
specific performance of a contract cannot be enforced in favour of
a person who fails to aver and prove that he has performed or has
always been ready and willing to perform the essential terms of the
contract which are to be performed by him. It is thus necessary for
a plaintiff in a suit for specific performance, to aver and prove that
he, on the stipulated date, was in a position to pay the balance sale
consideration and had tendered or was ready and willing to tender
the same to the seller;

(ii)
however the Explanation (i) of Section 16(c) supra provides that
where the contract involves the payment of money, it is not
essential for the plaintiff to actually tender to the defendant or to
deposit in the Court any money except when so directed by the
Court. Thus the plaintiff in a suit for specific performance, is not
required to as a matter of routine and as a condition to the
maintainability of the suit, deposit the balance sale consideration in
the Court, though the Court is empowered to direct the plaintiff to
do so;
(iii)
if as per the agreement of which specific performance is sought,
the plaintiff / purchaser was required to part with the balance sale
consideration only against delivery of title and physical possession
of the property, to make such a plaintiff / purchaser part with the
balance sale consideration without delivery of title and possession
to him would be contrary to the agreement and the jurisdiction of
specific performance thereof;
(iv)
to hold that though as per the agreement the plaintiff / purchaser is
liable to part with the balance sale consideration only against the
delivery of title and possession but to test his readiness and

willingness, he can be directed to part therewith even without
delivery of title and possession, would amount to the Court making
a new contract and which is beyond the scope of jurisdiction of
specific performance;
(v)
a direction to the plaintiff / purchaser to deposit balance sale
consideration in the Court as a condition to maintainability of the
suit for specific performance can be made only where the Court,
for reasons to be recorded, entertains a doubt about the readiness
and willingness of the plaintiff / purchaser. Only where the Court
feels that though an averment as postulated in Section 16(c) is
made, but the plaintiff may not have the money to pay the balance
consideration, can the Court, to satisfy itself about the truthfulness
about the averment, direct to deposit the money in Court. This
course is however to be adopted rarely;
(vi)
the question of payment otherwise would arise only after the trial
of the suit and when the rights of the parties are determined and
such a direction should be issued when the final decree is passed
and not at an earlier point of time; and

(vii) direction to the plaintiff / purchaser to deposit the balance sale
consideration in the Court can also be made as a condition for
granting interim relief sought of restraining the defendant / seller
from, during the pendency of the suit, dealing with the property
agreed to be sold or to balance the equities in appropriate cases but
again, not as a matter of routine i.e. only where the readiness and
willingness of the plaintiff / purchaser is in doubt and again, rarely;
the effect of non-deposit inspite of such direction in such cases will
only be vacation of the interim order or applicability of Section 52
supra and not to ipso-facto presume the plaintiff / purchaser to
have been not ready and willing.
IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 16th May, 2014

FAO(OS) 239/2014

SHRI BAL KRISHAN GUPTA  Vs  SHRI VIKAS AGGARWAL 

CORAM :-
HON’BLE THE CHIEF JUSTICE
HON’BLE MR. JUSTICE RAJIV SAHAI ENDLAW
RAJIV SAHAI ENDLAW, J.

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