Cancellation Of Sale Deed

    A sale deed is a document in which a party wants to transfer its property rights to a buyer, and then acquire ownership of the property in its entirety. The buyer must verify the title of the seller before making a sale deed.

    Introduction

    The definition of “sale” indicates that there must be a transfer of ownership from one person to another i.e. the transfer of all rights and interests to that property, which was held by the transferor to the transferee. The definition goes on to say that a transfer of ownership should be made “at a paid or promised price or a paid part and a promised part”. Price is, therefore, an important ingredient in transactions.

    The Supreme Court consisting of a two-judge bench held that non-payment of the entire sale consideration cannot be a valid ground for cancellation of the sale deed. This statement was recorded by the court in the matter of Vidyadhar v. Manikrao[1], the court held that the words “paid or promised price or part paid and the promised part” indicates that the actual payment of the full price at the time of the Deed is not a non-final sale sine qua non. The court also held that the non-payment of a certain portion of the price would not constitute the legitimacy of the sale. If the title deed has been transferred and the balance of the sale has not been paid then the title deed cannot be invalid for this reason.

    As per the Hon’ble Court[2], Section 54 of the Transfer of Goods Act, 1882 states that “Even if all the scrutiny of the sale was not actually paid, it would not be a reason for the cancellation of the deed of sale. The plaintiffs may have other legal remedies for obtaining the balance of the balance, but they have not been able to obtain assistance to cancel the Registered Sale Deed”.

    Requirement of Sale Deed

    A deed is a very important document of your real estate agreement. It is a document you must provide as proof of ownership. Also, any pending barriers, such as land taxes, water, and electricity bills currently available, must be paid in full before the deeds can be formatted.

    Drafting of Sale deed was once the work of skilled draftsmen who used to apply their education and expertise in law to draft unique documents to finalize a deed. In those days the draftsmen and lawyers used to consider every deed as separate and draft it according to the demands of the circumstance. This skillful execution is now lost mostly, with sale deeds being churned out using shoddy templates and just altering the names of the seller and buyers. 

    It is, thus, essential for the persons concerned in the deed to thoroughly examine the document, and entrust it to a legally adept expert to ensure nothing is amiss or not agreed upon. Several legal terminologies are such that only a legal expert or one with the proper qualification would be able to do justice to it and bring into notice anything which is not correct.

    The Apex court ruled on 09.07.2020 in the case of Dahiben v. Arvindbhai Kalyanji Bhanusali[3], that if the full consideration of the sale is not paid, then it will not be the basis for the cancellation of the deed of sale.

    Dahiben v. Arvindbhai Kalyanji Bhanusali

    The suit of goods was sold to defendant No. 1 by the plaintiff by a registered Deed of Dated 02.07.2009. The respondent issued 36 cheques in respect of payments for sale considerations. Defendant Number 1 also sold the suit material to Defendants No. 2 and 3 in 2013. On 15.12.2014, the plaintiff filed a lawsuit against Defendant No. 1 and later defendants. The plaintiffs are accused of not paying part of the sale transaction.

    The lower courts ruled that the case was restricted as it was filed after a three-year limitation period. The plaint was rejected under Order VII Rule 11 of the CPC. The plaintiffs therefore lodged the current complaint.

    In the above-mentioned case, the plaintiff filed a lawsuit after 5 and a half years and sought relief from the cancellation of the Sale Deed with the intention that even if they registered a Sale Deed on 02.07.2009, find a consideration of sale of Rs.1,74,02,000. After considering the facts and details of the above-mentioned case, the Apex Court stated, “If the case referred to in this appeal is true, then the estimated sale of approximately Rs.1,73,62,000 is still pending (unpaid). However, it is unthinkable that if the payments had not been made, the plaintiffs would have remained silent for more than five and a half years, without even issuing a formal notice of payment for the consideration of unpaid sales, or instituting any proceedings.

    In order to make a sale, the parties must transfer ownership of the property, to the current or future payment agreement.

    We have found that the lawsuit filed by the plaintiffs is motivated, invalid, and does not constitute a right to file a lawsuit. The appeal was considered for rejection under Order VII Rule 11 (a).

    Order VII Rule 11

    The remedy under Order VII Rule 11[4] is an independent and special remedy, in which the Court is empowered to completely remove the case at the end, without further recording the evidence, and making a route, on the basis of the evidence obtained, if satisfied that the action should be terminated.

    The basic premise of Order VII Rule 11 (a)[5] is that if at the time of the claim, there was no explanation for the alleged act or the case was restricted under Order VII Rule 11 (d)[6], the Court would not allow the plaintiff to prevent the proceedings. In such a case, it may be necessary to terminate the fraudulent case, so that the trial period will not be delayed. ”

    https://legalreadings.com/the-doctrine-of-election-under-transfer-of-property-act1882/

    The Court further clarified that under Order VII Rule 11, it is required that the Court decide whether the matter discloses the meaning of the act by looking at the standards in the plaint, reading it in conjunction with the trustworthy documents, or whether the case is prohibited by any law.

    “The powers vested in the court to overturn legal action, however, are complex, so the conditions set out as Order VII Rule 11 need to be strictly adhered to.”

    The provision of Order VII Rule 11 is by nature compulsory. It states that the appeal will be “refused” if any of the reasons set out in paragraphs (a) to (e) are complied with. If the Court finds that the appeal does not state the meaning of the action, or that the case is prohibited by any law, the Court has no alternative but to reject the appeal.

    “The Court must be wary of any concealment or oppression, and determine whether the prosecution is utterly offensive, abusive.

    After reviewing the facts of the case, SC held that if the plaintiff’s claims were true, the full sale price was not paid and therefore would not be the basis for the cancellation of the title deed. Plaintiffs may have other solutions to obtain the balance of the balance under statutory provisions but have not been able to cancel the cancellation of the registered deed of sale. The court upheld the decisions of the Trail Court and the Gujarat High Court. The plaintiff’s claim is motivated, invalid, and does not constitute a right to file a lawsuit. Charges can be filed under Order VII Rule 11 (a). In addition, the current case is restricted and restricted under Article 59[7]of the Restrictions Act, 1963. The High Court sued the taxpayers for Rs.1,00,000 for violating the Court’s order.

    Similar Cases

    In the case of Chandrashankar Manishankar v. Abhla Mathur[8] and others considered it possible that the transaction in the statement that the payment of the consideration was not true. But that doesn’t make the document invalid. To fund the sale it is not necessary for the whole price to be paid. The price can be paid or promised in whole or in part. It was also noted that if in the opinion of the document, the consideration was not actually paid, but the document indicates that there was an intention to pay, in which case the document was not made invalid due to non-payment of the consideration. If, on the other hand, the intention was not to pay any consideration, then the document does not work.

    On the other hand Baijnath Singh v. Paltu and others[9], the Court held that if the deed held that the deed was paid but the court found that no deed had been made, the non-payment of the purchase price would not prevent the transfer of ownership of the purchased property from the seller to the buyer.

    On the other hand, if the intention was not to pay for any consideration or document without consideration, this document has no effect. There is a difference between a sale where the consideration is intended to be paid and not paid, and the consideration is not intended to be paid at all. In the past, the title was passed on to the buyer, and later the seller was deceived into making a document and registering the document, the title deed does not work as a transaction. It is not necessary for every price to be paid. The price can be paid or promised in full or in part.

    In the event that the seller makes a deed of sale for the purpose of transferring the property in question but the consideration did not extend to him but he intended to transfer the said property, then the provisions of Section 55[10] of the Property Transfer Act, 1882 shall apply where the unpaid amount remains cash at But the title of the goods will be passed on to the seller. Appellants do not have the right to challenge a title deed without consideration.

    Conclusion

    After considering the facts, the referred cases, and provisions regarding the sale deed agreement and cancellation of the sale deed the Supreme Court dismissed the appeal by imposing the cost of Rs. 1 Lakh on the appellant. The court also observed that the plaintiff didn’t take any legal action over a period of 5 and half years even after the execution of the sale deed in 2009 for the balance payment of the sale consideration, it also reflected that the institution of the present suit was an after-thought. The Apex Court also held that according to Sections 58 and 59 of Limitation Act 1963, time period for the cancellation of the sale deed is 3 years starting from the date when the right to sue first arises due to which the plaintiff failed to observe and therefore the plaint filed was time-barred and dismissed.

    References:

    1. Vidyadhar v. Manikrao, (1999) 3 SCC 573.
    2. Transfer of Property Act, 1882, s. 54.
    3. Dahiben v. Arvindbhai Kalyani Bhanusali, 2020 SC 562.
    4. Code of Civil Procedure 1908, Order VII Rule 11.
    5. Code of Civil Procedure 1908, Order VII Rule 11(a).
    6. Code of Civil Procedure 1908, Order VII Rule 11(d).
    7. The Limitation Act 1963, s. 59.
    8. Chandrashankar Manishankar v. Abhla Mathur and others, AIR (39) 1952 Bom.
    9. Baijnath Singh v. Paltu and others, (1908) ILR 30 All.
    10. Transfer of Property Act, 1882, s. 55.

    BY- PANKAJ SINGH | FAIRFIELD INSTITUTE OF MANAGEMENT AND TECHNOLOGY, GGSIPU

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