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Sale under Transfer of

Property Act
 > Property Law > Sale under Transfer of Property Act

S a le under Transfer of
Property Act

 legalpaathshala@gmail.com -
 10/07/2020 -  Property Law -
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What is sale under transfer

of property act?

Meaning of Sale under Transfer of Property

Act: – Sale is defined as the transfer of
ownership of a property in exchange for a
price paid or promised or partly paid or part
promised. Sale simply means the purchase and
sale of goods and services, the sale of
immovable property is provided under Section
54 of Transfer of Property Act 1882.

Section 3 of the Act is the interpretation clause,

which provides the meaning: –

1. Immovable Property: – Immovable property

exclude standing timber, growing crops or
grass,
2. Instrument: – It means a non-testamentary
instrument. The instrument should be in
writing, a formal or legal document in writing,
such as a contract, deed, bond or lease or
anything reduced to writing.
3. Registered: – A register is a book contains
records of the facts as they are kept by the
public authority. If the registration is done in
violation of the provisions of the Registration
Act, that document cannot be said to be duly
registered.
4. Attached: – It is a term that describes the
physical union of two independent structures
or objects, which refers to the relationship
between two parts of the structure each
having its function.

Section 54 of the Transfer

of Property Act

Section 54 of the Act defines the meaning of

the ‘sale’ and also specifies how the sale of
immovable property can be done. Here, sale
refers to the sale of immovable property whether
tangible or intangible (For example: – easement
rights)

A sale under transfer of property act is a

transfer of ownership for a money consideration. 
It refers to the complete transfer of all rights in
the property sold. No rights in the property sold,
are left to the transferor.

Section 54: – Sale ownership is transferred in

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

What is contract for sale?

Meaning of Contract for Sale: – A contract for

the sale of immovable property is a contract
which takes place on the settled terms between
the parties. In this, the seller agrees to sell or
deliver something to the buyer for a fixed price
that the buyer has agreed to pay. A contract of
sale of goods is a contract whereby the seller
transfers or agrees to transfer the property in
goods to the buyer for a price. There may be a
contract of sale between one part-owner and
another.

What are the elements of

Sale?

The elements of Sale are given as follows: –

1. Transfer of Ownership: – Ownership is the

aggregation of all rights and liabilities in a
property. When transfer of ownership occurs,
all rights and liabilities in the property is
transferred from transferor to transferee.
2. Money Consideration: – Where the
ownership of the property is transferred for
money, it amounts to sale, but if it is
transferred for something else, it amounts to
exchange.
3. The seller must be a person competent to
transfer. The seller should be either the owner
of the property or should have the authority to
dispose of it.
4. The buyer must be a person competent to the
transferee.
5. The subject matter must be a transferable
immovable property which can be tangible or
intangible.
6. There must be a transfer of ownership
7. The transfer must be in exchange for a price.
‘Price’ in the ordinary sense connotes money
consideration for the sale of the property. The
price must be paid or promised or partly paid.

What are the essentials of a

Sale under Transfer of
Property Act
Act??

The essentials of a sale under transfer of

property act are given as follows: –

Parties i.e., Seller, Buyer

Competency
Money consideration
Conveyance
Registration

Explanation: –

1. Parties: – In a sale, there must be at least two

parties. The person who transfers his property
is known as the transferor/seller/vendor and
the person to whom the property is transferred
is known as the transferee/buyer/vendee.

2. Seller: –
The seller must own the property which he
is going to sell.
The seller should have legal title to it only
then he can sell the property.
The seller should be competent to
contract.
He must not be a minor person.
He should not be of unsound mind.
He must not be statutorily incompetent.
The seller may be a natural person /
judicial person, for example, a corporation
or any other legal person.

3. Buyer: –
The buyer must be competent to get the
ownership of the property.
The buyer should not be disqualified from
purchasing the immovable property under
any law at the time of sale, for example:
under section 136 of the Act, a judge, a
legal practitioner or an officer of the court
is incompetent for purchase of actionable
claim.
The seller may be a natural person /
judicial person, for example: a corporation
or other legal person.

4. Subject Matter: – The sale under Transfer of

Property Act, 1882 specifically deals with the
sale of immovable property. Immovable
property includes the benefits from the land
and the things attached to the earth and it
does not include standing timber, growing
crops and grass.

5. Competency: – A valid sale requires both the

parties i.e., the buyer and seller to be
competent on the date of sale.

6. Money Consideration: – The consideration

must only be in money to constitute a sale. If it
is for exchange or some other items then it is
not sale. The consideration for the sale must
be paid, partly paid, promised or partly
promised. Therefore price is money but not
necessarily money immediately paid in notes
and coins, it includes money which might be
already due or payable at a future date.

7. Conveyance: – Section 54 provides for two

ways for transfer of property: –
Where the property transferred is tangible
immovable property of value of one
hundred rupees and upward transfer can
only be made by a registered instrument.
Where the property is immovable property
of less than one hundred rupees, it can be
transferred either by registered instrument
or delivery of property. The delivery of
tangible immovable property occurs when
the seller puts the buyer or such person as
the buyer directs in possession of the
property.
Registration of sale deed: – Where the
value of tangible immovable property is Rs.
100 or more, the sale of such property
requires registration of the deed. Where
the property is intangible immovable
property of any valuation, it will require
registration to complete the sale.
8. Registration: – Both section 8 and 54 of the
Transfer of property act, 1882 suggests that
through execution and registration of a sale
deed, the ownership and all interests in the
property passes to the transferee, yet this will 
be on the  terms and conditions embodied in
the deed indicating the intention of the parties.
The intention of the parties can be gathered
from the averments (formal statement) in the
sale deed itself or under other attending
circumstances. Where the sale is to be
completed only by the registered instrument,
the ownership is presumed to pass on the
execution of the sale deed, not on the deed’s
registration. The sale deed transferring
immovable property of the value of 100 or
more it will require registration under Indian
Registration Act 1908.

Rights and liabilities of

Buyer and Seller

The buyer and the seller of the immovable

property respectively are subject to the liabilities,
and have the rights, mentioned in the rules
following: –

1. The seller is bound: –

To disclose to the buyer any material
defect in the property or in the seller’s
title thereto of which the seller is, and
the buyer is not, aware, and which the
buyer could not with ordinary care
discover;
To produce to the buyer on his request
for examination all documents of title
relating to the property which are in the
seller’s possession or power;
To answer to the best of his information
all relevant questions put to him by the
buyer with respect to the property or the
title thereto;
On payment or tender of the amount
due in respect of the price, to execute a
proper conveyance of the property when
the buyer tenders it to him for execution
at a proper time and place;
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 such
property and documents;
To give, on being so required, the buyer,
or such person as he directs, such
possession of the property as its nature
admits;
To pay all public charges and rent
accrued due in respect of the property
up to the date of the sale, the interest on
all encumbrances on such property due
on such date, and,except where the
property is sold subject to
encumbrances, to discharge all
encumbrances on the property then
existing.

2. The seller is entitled: –

To the rents and profits of the property
till the ownership thereof passes to the
buyer;
Where the ownership of the property
has passed to the buyer before payment
of the whole of the purchase-money, to
a charge upon the property in the hands
of the buyer, any transferee without
consideration or any transferee with
notice of the non-payment, for the
amount of the purchase money, or any
part thereof remaining unpaid, and for
interest on such amount or part from the
date on which possession has been
delivered.

3. The buyer is bound: –

To disclose to the seller any fact as to
nature or extent of the seller’s interest in
the property of which the buyer is
aware, but of which he has reason to
believe that the seller is not aware, and
which materially increases the value of
such interest;
To pay or tender, at the time and place
of completing the sale, the purchase-
money to the seller or such person as
he directs. Provided that, where the
property is sold free from
encumbrances, the buyer may retain out
of the purchase money the amount of
any encumbrances on the property
existing at the date of the sale, and shall
pay the amount so retained to the
persons entitled thereto;
Where the ownership of the property
has passed to the buyer, to bear any
loss arising from the destruction, injury
or decrease in value of the property not
caused by the seller;
Where the ownership of the property
has passed to the buyer, as between
himself and the seller, to pay all 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.

4. The buyer is entitled: –

Where the ownership of the property
has passed to him, to the benefit of any
improvement in, or increase in the value
of, the property, and to the rents and
profits thereof;
Unless he has improperly declined to
accept delivery of the property, to a
charge on the property, as against the
seller and all 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; and, when
he properly declines to accept the
delivery, also for the earnest (if any) and
for the costs (if any) awarded to him of a
suit to compel specific performance of
the contractor to obtain a decree for its
rescission.

Di!erence between Sale

under Transfer of Property
Act and Contract for Sale

S.NO. SALE CONTRACT FOR

SALE

1. There is a transfer There is an

of ownership of the agreement
property. between the
parties for the sale
of the property with
consent.

2. Gives legal title to Does not generate

buyer. any interest in the
property.

3. Creates a right in Creates a right in

rem. personam

4. Registration is Registration is not

mandatory where required.
the sale is of
immovable property
of Rs. 100 or more.

Case laws of Sale under

Transfer of Property Act

1. Nahar Lal vs. Brijnath 1928 AC 385

Judgments of the case: – In this case, the

court held that if the registration is done in
violation of the provisions of the Registration
Act, a document cannot be said to be duly
registered.

2. Umakanta Das vs. Pradip Kumar

Ray, AIR 1983 Ori 196

Judgments of the case: – In this case, the

court held that if the sale deed contains a
condition that the price will be paid within one
year, provided that possession is obtained
within that time, and if possession is not
obtained, the payment of the price will be
postponed, or in the event of the vendee not
getting the property, the price will not be paid.
In all the above cases, the deed within the
meaning of the section is the sale deed.

3. Raheja Universal Ltd. vs. NAC

Ltd., 2012 4 SCC 148

Judgments of the case: – In this case, the

court states that a contract for sale of
immovable property or an agreement to sell is
a contract that a sale of such property shall be
on the terms settled between the parties. This
in itself does not create any interest or charge
on such property.

4. Misabul Enterprises vs. Vijaya

Srivastava, AIR 2003 Del. 15.

Judgments of the case: – In this case, the

court held that a contract of sale should be
based on a mutual agreement between seller
and buyer.

TAGS: MEANING OF SALE UNDER TRANSFER OF PROPERTY

ACT, WHAT IS CONTRACT FOR SALE, MEANING OF CONTRACT
FOR SALE, CONTRACT FOR SALE, ESSENTIALS OF A SALE
UNDER TRANSFER OF PROPERTY ACT, DIFFERENCE BETWEEN
SALE AND EXCHANGE UNDER TRANSFER OF PROPERTY ACT,
DEFINITION OF SALE UNDER TRANSFER OF PROPERTY ACT,
DIFFERENCE BETWEEN SALE AND GIFT UNDER TRANSFER OF
PROPERTY ACT, ESSENTIALS OF SALE UNDER TRANSFER OF
PROPERTY ACT, SALE OF IMMOVABLE PROPERTY UNDER
TRANSFER OF PROPERTY ACT, DIFFERENCE BETWEEN SALE
UNDER TRANSFER OF PROPERTY ACT AND CONTRACT FOR
SALE, WHAT IS SALE UNDER TRANSFER OF PROPERTY ACT?,
WHAT IS SALE?, SECTION 54 OF THE TRANSFER OF PROPERTY
ACT, WHAT ARE THE ELEMENTS OF SALE?, WHAT ARE THE
ESSENTIALS OF A SALE?, NAHAR LAL VS. BRIJNATH 1928 AC
385, SALE UNDER PROPERTY ACT, SALE, SALE UNDER
TRANSFER OF PROPERTY ACT, SALE UNDER PROPERTY LAW,
DIFFERENCE BETWEEN SALE AND CONTRACT FOR SALE

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Definition of Transfer of Property

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