Supreme Court recently gave an order that can put an end to all forms of bogus transactions that take place in real estate.

By Adv Prakkash Rohira

The Hon’ble Supreme Court of India in its recent Judgement of KEWAL KRISHAN vs. RAJESH KUMAR & ORS. in CIVIL APPEAL NOS. 6989-6992 OF 2021 [Arising out of SLP (C) Nos. 2033-2036 of 2016] examined the provisions of Section 54 of the Transfer of Property act relating to sale of Immovable Property.

The case was wherein 2 sale deeds were questioned and to be declared void, of an alleged transaction of 1980, and the same were challenged in a Suit in 1983. Such deeds contained amounts at which transfer were to be made, however such consideration was not actually paid.

The court examined the Section 54 of The Transfer of Property Act, 1882:

  1. “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 and in the said case it was held:

“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.”

“Thus, the sale deeds of 10th April 1981 will not confer any right, title and interest on Sudarshan Kumar’s wife and children as the sale deeds will have to be ignored being void. It was not necessary for the appellant to specifically claim a declaration as regards the sale deeds by way of amendment to the plaint. The reason being that there were specific pleadings in the plaints as originally filed that the sale deeds were void. A document which is void need not be challenged by claiming a declaration as the said plea can be set up and proved even in collateral proceedings.”

This Judgement of the Hon’ble Supreme Court shall serve as a hindrance to bogus transactions, fraudulent transfers, where amounts are written, however not paid to vendors due to consensus of the parties. Scrutinizing receipts is an essential part of such transactions as well.

Though it is necessary under Section 17(1) of The Registration Act, 1908 and relevant portions of the Transfer of Property act that a proper transfer of an immovable property is through a Registered deed/agreement, there are other requisites to a proper sale /transfer deed as well.

It is recommended to always have the chain of documents and agreements examined by a professional prior to purchasing any property.

Note: Adv Prakkash Rohira is an advocate with the Bombay High Court, all the opinions expressed by him in this article solely belong to him.

Also Read: Worli Flat Sold For ₹51 Crore

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