By | September 16, 2016


Section 54 of the price Transfer of Property Act defines “Sale” as “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 case of tangible immovable property of the value of one hundred rupees and upwards or in the case of revision or other intangible things, can be made only by registered instrument.

In the case of tangible immovable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument of by delivery of the property.

Delivery of tangible immovable property takes place when the seller place the buyer or such person as he directs, in possession of the property.”

 Essentials of a Valid Sale

According to Section 54, following are the essentials of a valid sale—

i. the parties, i.e., the seller and the purchase, must be competent. They are also called vendor and vendee, respectively. They must be competent to contract, i.e., must of sound mind and have attained the age of majority. The seller must also have right to sell the property and purchase may be any person not disqualified to purchase a property under any law enforced in India.

ii. There must be a subject-matter of sale. Transfer of Property Act deals with sale of immovable property. The transfer of ownership of immovable property is dealt with  under this Act while sale of movable are dealt with under the Sale of Goods Act, 1930.

Immovable property may be either tangible, such as land, house, things attaches to earth, etc., or it may be intangible immovable property, such as right of ferry or fisheries, or right to a mortgage debt etc. But the immovable property must be in existence on the date of execution of sale.

iii. Price or money consideration—Price is an essential ingredient of a sale. A sale is a transfer of ownership in exchange of money. Payment of price is not necessary for    completion of the transfer but its reference is necessary. It may be paid at the time of   execution or promised to pay or same part of it may paid at the time of execution and rest may be promised to be paid in future.

iv. Conveyance—In sale, property must be transferred from seller to purchaser. According to Section 54 there must be a registered conveyance in the case of—

(a) tangible immovable property of the value of Rs. 100 and upwards; or

(b) a reversion of an intangible thing of any value.

In case of tangible immovable property of a value less than Rs. 100, there must either be,

(a) a registered conveyance, or

(b) delivery of property.

Sale and Contract for Sale

Section 54 of the Act defines ‘sale’ as a transfer of ownership in exchange for a price Paid or promised or part paid and part promised.

Section 54 also defines ‘contract for sale’ as, “a contract for the sale of immovable property B a contract that a sale of such property shall take place on terms settled between the parties,”

Thus a sale may be preceded by a contract for sale. A contract for sale is merely a document creating a right to obtain another document namely, a duly executed sale deed. On the Other hand, a sale of immovable property is a transfer of ownership.

A sale passes an absolute interest in the property to the purchaser, but a contract for sale does not of itself create any interest in, or charge upon the property in favour of the buyer. It does not convey any little to the purchaser.

A sale must be registered, if it deals with the conveyance of tangible immovable property of the value of Rs. 100 or more, or a reversion or any intangible things.

A contract for sale need not be registered at all.

Sale and Exchange

According to Section 54 of the Act, a sale is a transfer of ownership in a property in exchange for a price. On the other hand exchange is a transfer of ownership in property in exchange of ownership of another property. Section 118 of the Act defines exchange as, “when two persons mutually transfer the ownership of one thing for the ownership of another, neither thing or both thing being money only, the transaction is called exchange.

Thus in both, there is transfer of absolute interest in the property, but real difference is that in sale, the consideration is money, whereas in exchange, it is another property or anything of value.

Sale and Gift

In both sale and gift, there is transfer of ownership of an immovable property. However the difference between the two is that where in sale, the ownership is transferred in exchange for a price, in gift, the immovable property is transferred with any consideration.

In sale, if the valuation of immovable property is Rs. 100 or more, than it is to be effected only by registered instrument. But in case of a gift of an immovable property, it must be made only by registered instrument irrespective of the valuation of the property.


Sellers Duties and Rights

  1. Sellers duties before sale—

(a) the seller is bound to disclose to the buyer any material defect in the property or     title, of which seller is, and buyer is not aware, and which buyer could not with ordinary case discover. [Section 55(1)(a)]

(b) The seller is bound to the buyer on his request for examination of all documents of title relating to the property which are in the seller’s possession or power. [Section 55(1) (b)]

(c) the seller is bound to answer to the best of his information all relevant question put it him by him by the buyer in respect to the property or the title there. [Section 55(1) (2)]

(d) The seller’s next duty is to execute the conveyance. He is bound 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 proper time of place. [Section 55 (1) (d)]

(e) Seller is bound to take case of the property and documents of title. Between the date of contract of sale and the delivery of the property, he is bound to take as much case 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. [Section 55(1) (c)]

(f) It is the seller’s duty before the completion of sale to pay all the outgoings. Before completing of sale, the seller continues to the owner of the property, thus the Government dues, etc., are to be paid by him. [Section 55(1)(g)]

  1. Seller duty after sale—

(a) After completion of the sale, it is the seller’s duty to gave possession to the buyer. The seller is bound to give, on being so required, the buyer or such person as he directs, such possession of the property as its nature admits. [Section 55(1)(f)1

(b) It is the seller duty to covenant for title. Section 55(2) of the Act provides that—

“The seller’s be deemed to contract with the buyer that the interest which the seller professes to transfer to the buyer subsist and that he has power to transfer the same. (This is also known as implied covenant for title): Provided that, where the sale is made by a person in a fiduciary character, he shall be deemed to contract with the buyer that the seller has done no act whereby the property is encumbered or whereby he is hindered from transferring it.

The benefit of the contract mentioned in this rule shall be annexed to, and shall go with, the interest of the transferee as such, and may be enforced by every person in whom that interest is for the whole or any part thereof from time to time vested.”

(c) It is the seller duty to deliver title-deeds on receipt of the price. Section 55(3) of the Act provides that, where the whole of the purchase-money has been paid to the seller, he is also bound to deliver to the buyer all documents of title relating to the property which is in the seller’s possession or power. However, he proviso to Section 55(3) lays down that:

  • Where the seller retains that part of the property with him, which of greatest value and, such property is included in the documents, the seller is entitled to retain all the documents with him.
  • Where the whole of such property is sold to several buyers the persons who purchase the largest part of the property would be entitled to retain all the documents.
  1. Seller’s Right before Sale—Section 55(4)(a) provides that ‘the seller is entitled to the rents and profits of the property till the ownership thereof passes to the buyer’. ‘Thus, before completion of the sale, the seller is entitled to all the rents, profits or another benefit. interests of the property’.
  2. Seller’s Right after Sale—If after completion of sale, the price or any part of it remain unpaid, the seller acquires a lien or charge on property. Accordingly to Section 55(4)(b) if price remains unpaid, the seller cannot refuse delivery of possession for can claim back the possession if already given to buyer, but he (seller) is given a right to recover unpaid purchase money from and out of the property.

Buyer’s Duties and Rights

  1. Buyers duties before sale—

(a) Before completion of sale, it is the duty of the buyer to disclose, facts which materially increases the value of property, Section 55(5)(a) of the Act provides that, “the buyer is bound to disclose to the seller any fact as to the 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.

(b) The buyer is bound to pay or tender the purchase money to seller [Section 55(5)(b)].

  1. Buyer’s Duties after Sale—(a) where the ownership of the property has passed to the buyer, the buyer is bound to bear any loss arising from the destruction, injury or decrease in value of the property not caused by the seller. [Section 55(5) (c)].

(b) According to Section 55(5) (d) after the completion of sale, the buyer is liable to pay the outgoings, e.g., Government dues, rents, revenue or taxes, as the buyer becomes the owner of the property.

  1. Buyer’s Right before Sale—

Section 55(6)(a) of Act provides that the buyer is entitled to (unless he has improperly declined to accept delivery of property):

  • A charge on the property for the purchase money properly paid by him in anticipation not the delivery.
  • (ii) Interest on such purchase money.
  • The earnest, and cost awarded to him in a suit to compel specific performance of the contract or to obtain a decree for its recession in case he properly declines to accept delivery.
  1. Buyer’s Right after sale—After sale, the buyer is entitled to the benefits of any improvement in, or increase in value of, the property, and to the rents and profits thereof, [Section 55(6)(a)].
Mayank Shekhar
Author: Mayank Shekhar

Mayank is a student at Faculty of Law, Delhi University. Under his leadership, Legal Bites has been researching and developing resources through blogging, educational resources, competitions, and seminars.

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