SALE DEED

Sale of immovable property is defined in Sec. 54 of the Transfer of

Property Act, 1882 as a transfer of ownership in exchange for a price paid or
promised or part paid and part promised.

Sale of goods (movable property) is defined in Sec. 4 of the Sale of Goods Act,
1930 as a contract whereby property in goods is actually transferred by the
seller to the buyer for a price.

Price: Price is not defined in the transfer of property Act, but is defined in Sec.
2 (10) of the Sale of Goods Act to mean the money consideration for a sale of
goods. In the case of CITV.M. & G. Stores, (AIR 1968 SC 200) the Supreme
Court has held that in the absence of any definition in the transfer of
property Act, the word 'price' used in Sec. 54 of that Act must be construed in
the same sense in Which it is used in a See A read with Sec. 2(10) of the sale
of Goods Act that is money consideration it has further been observed by the
Supreme Court in the abovementioned case that the presence of money
consideration is an essential in a transaction of sale and that if the
consideration is an essential in a transaction of sale and that if the
consideration is not money but some other valuable consideration the
transaction may be an exchange not a sale. Money consideration does not
necessarily mean case consideration. A decretal amount, outstanding debts
and other monetary liabilities can be price in a sale. If no price is paid or
promised even a registered deed does not affect a sale.

The law does not require that the consideration should be immediately
ascertainable in money. It is sufficient if it is ascertainable at the time
when payment is made. The actual payment of prince is not essential to
the completion of a sale. The sale is complete as soon as the sale deed is
registered even if the payment of price is promised on a future date provided
it has been ascertained or made as certain able.

Immovable and Movable Property:

Immovable property is defined in Sec. 2 (26) of the General Clauses Act, 1897
thus:

"Immovable property" shall include land, and things attached to the earth,
or permanently fastened to anything attached to the earth.

In Sec. 3 of the transfer of property Act it is stated that for purposes of this
Act, "Immovable property" does not include standing timber, growing crops
or grass. Thus, in the transfer of property Act, "Immovable property" has a
slightly restricted meaning.

Movable property is defined in Sec. 2 (30) of the General clause Act to mean
property of every description except immovable property. The Sale of Goods
Act, does not define movable property but defines "goods" to mean every
kind a movable stock and shares, growing crops, grass and things
attached to or forming part of the land which are agreed to be served before
sale or under the contract of sale.

Intangible Property: The words 'tangible' means something that can be

touched, i.e., a material object. All abstract right are incapable of being
touched and are hence intangible. Some examples of intangible property
are good will of business, chooses in action, mortgagee rights, lessee
rights and the interest of a partner in a partnership.

What may be Transferred or Sold: Generally, the right to property includes

the right to transfer it to another person. Sec. 6 of the transfer of property
Act provides that property of any kind may be transferred, except as provided
buy this Act or by any other low for the time being in force. To this rule clauses
(a) to (i) of Sec. 6 constitute exceptions. These clauses read:

a. The chance of an heir-apparent succeeding to an estate, the chance of a

relation obtaining a legacy on the death of a kinsman or any other mere
possibility of a like nature, cannot be transferred

b. A mere right of reentry for breach of a condition subsequent cannot be

transferred to anyone except the owner of the property affected
thereby'

c. An easement cannot be transferred apart from the dominant heritage.

d. An interest in property restricted in its enjoyment to the owner

personally cannot be transferred by him.

(i) A right to further maintenance, in whatsoever manner arising,

secured or determined, cannot be transferred.

e. A mere right to sue cannot be transferred.

f. A public office cannot be transferred, nor can the salary of a public

officer, whether before or after it has be become payable.

g. Stipends allowed to military, naval, air force and civil pensioners of

the government and political pensions cannot be transferred.

h. No. transfer can be made.

b) Insofar as it is opposed to the nature of the interest affected thereby,

 or

c) For an unlawful objected or consideration within the meaning of

section 23 of the Indian contract Act, 1872, or

d) To a person legally disqualified to be transferee.

i) Nothing in this shall be deemed to authorize a tenant having an un

transferable right of occupancy, the farmer of and estate in respect of
which default has been made in paying revenue, or the lessee of an
estate under the management of a court of wards, to assign his
interest as such tenant, former or lessee.

Persons Competent to Transfer:

see. 7 at the Transfer of Property Act deals with the competency to be a

transfer. The transfer must be:

(i) Competent to contract, and

(ii) Have title to the property, or authority to transfer if not his own.

Who is competent to contract is laid down in Sec. 110f the contract Act,
Sec. 11, reads:

Every person is competent to contract who is of the age of majority

according to the law to which he is subject, and who is of sound mind, and is
not disqualified from contracting by any law to which he is subject.

Consequences of Transfer and Rights and Liabilities of Buyer and Seller:

Section 8 lays down the consequences which follow from the transfer of
property. All interests which the transferor is capable of passing passes
forthwith to the transferee, if the property is land, the easements annexed,
the rents and profits accruing after the transfer and all things attached to
the earth pass to the transferee and if the property is machinery attached to
the earth, the movable parts thereof. In the case of a house, the casements
annexed to it. The rent the locks, keys, bars, doors, windows and all other
things provided for permanent use there in pass to the transferee. It the
property is a debt or other actionable claim, the securities therefore but
not arrears of interest accrued before the transfer. And if the property is
money or other property yielding income, the interest or income accruing
after the transfer passes to the transferee. But it is open to the parties to
provide, expressly or by necessary implication that consequences other than
those mentioned above will flow from the transfer.

The rights and liabilities of the buyer and seller are set out in detail in
section 55 of the transfer of property Act. These conditions are implied in
every transfer and it is not necessary to mention them in the deed of
transfer. But it is open to the parties, by agreement, to supplement these
or to vary them or anyone or more of. When this is done specific mention
must be made in the deed of the added condition or of the varied
condition.

Unlawful Conditions which may not be Included in Deeds of Transfer:

Sec. 10 makes void a condition absolutely restraining the transferee from

parting with or disposing of his interest in the property. Sec. 11 provides
that in cases of transfers of absolute: interest a condition restricting the
enjoyment of the property will be ignored. Sec. 12 enacts that a condition
making the interest of the transferee determinable on insolvency or
attempted transfer shall be void. This section doesn't apply to a condition
in a lease for the benefit of the lesser. By Sec. 13 an interest created for
the benefit of an unborn person subject to an interest created by the same
transfer, shall not take effect unless the interest created for the benefit of
the unborn person extends to the whole of the remaining interest of the
transferor in the property. Sec. 14 lays down the rule against perpetuity.

It makes inoperative a transfer which postpones the power of alienation to

one or more lives in existence and the period of minority of a person who
shall be in existence at the expiration of those lives.

It is advisable for the draftsman to study these provisions before in

cooperating conditions in a deed of transfer.

Sale how effected: Registration

There are only two modes of transfer by sale and these are: -

(1) By registered instrument, and

(2) By delivery of possession.

(i) Tangible immovable property of the value of RS.1 00 and

upwards,

(ii) A reversion, and

(iii) Other intangible thing can be made only by a registered
instrument. A sale of tangible immovable property a value less than
Rs. 100/- can be made either by a registered instrument or by delivery
of property.

Sec. 54 of the Transfer of Property Act has been amended in Utter Pradesh
with the result that a sale of immovable property or whatever description
and of whatever valuation can be made only by a registered instrument. A
contract for the sale of immovable property can also be made only by a
registered instrument.

Form and Content of a Sale Deed :

A sale deed is usually executed as a deed poll by the vendor and written in the
first person. The law does not require execution by the purchaser also.
Sometimes it is executed as a deed between the ' vendor and the
purchaser, particularly when it contains covenants binding on the
purchaser.

A sale deed must contain, apart from the description of the deed and the
date, details of the following elements:

(i) The parties,

(ii) The capacity and capability of the vendor to transfer the property,

(iii) The vendor title to the property,

(iv) The property and its capability of being transferred,

(v) The encumbrances and charges, if any, upon the property and
whether the sale is subject to the encumbrance and charges, and
whether any money was being left with the purchaser to payoff the
encumbrance and charges.
(vi) The price settled, how and when paid or to be paid, (earnest money if
paid to be set-off).
(vii) The other terms agreed upon (the implied terms and conditions set
out in section 55 of the Transfer of Property Act. need not be
mentioned unless there is a variation in any of them).
(viii) Delivery of possession, actual or constructive.

Though not so required by any law, a sale deed is usually attested by two
witnesses.
Sale and agreement to sell movable goods may be made either in writing,
or by word of mouth or partly in writing and partly by word of mouth, or
may be implied by the conduct of the parties. Writing is not necessary in
any case whatever may be the nature or value of the property. An
agreement to sell is generally drawn up in writing when the property is or
large value or it is not in existence at the time of the agreement.

Stamp Duty:

Stamp duty in a sale deed is chargeable under Art. 23 schedule I of the Stamp
Act. Transfers covered by Art 62 and assignment of copy right under the
copy right Act, 1957 are not covered by this article. The duty chargeable is
advalorem.

Effect of Non-registration :

If a sale deed which is required to be registered, there is no transfer and

property does not pass. This is so even if the sale deed is executed in
respect of tangible immovable property of value less than Rs.100 though
the sale is not required to be effected by a registered instrument, but if
such a sale deed is accompanied by delivery of possession the sale would
be effective in spite of non-registration. An unregistered sale deed maybe
used as evidence of the character of possession. Twelve years possession
under an unregistered sale deed of immovable property, of whatever
value will create title by adverse possession.