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Is A Sale Deed Void, If The Payment Of Price Isn’t Paid? Hon’ble Supreme Court Answers [READ JUDGMENT]

The Hon’ble Supreme Court in Kewal Krishan vs Rajesh Kumar held that payment of the purchase price is an essential part of the sale covered by Section 54 of the Transfer of Property Act, 1882

By: Likivi K Jakhalu, Campus Law Centre, Delhi University

In the instant case, one Kewal Krishan executed a power of attorney in favor of Sudarshan Kumar and executed two sale deeds based on the aforementioned power of attorney on 10th April 1981.

Sudarshan signed two sales deeds, one in favor of his minor sons and one in favor of his wife.

Kewal filed two lawsuits. One was filed against Sudarshan and his two sons, and the second against Sudarshan and his wife. Both suits sought an injunction prohibiting the defendants from interfering with his possession and alienating his share of the property. 

The Trial Court dismissed Kewal’s lawsuits. The District Court partially dismissed the suits on appeal. 

The High Court ruled that the suits for declaration of invalidity of the sale deeds were barred by limitation because they were incorporated belatedly. The matter thus reached the Hon’ble Apex Court.

The Hon’ble Apex Court pointed out that the District Court had recorded a categorical finding that Sudarshan had transferred the suit lands to his wife and minor sons without consideration by taking advantage of his power of attorney. The High Court had observed that the sale consideration was not exorbitant and out of reach of Sudarshan’s wife and sons.

The Hon’ble Apex Court remarked that perhaps, the High Court has ignored that it was considering a case of sale deeds of the year 1981 and that the purchasers under the two sale deeds were wife and minor sons of Sudarshan who had not even claimed that they had any source of income.

The undisputed factual position is that Sudarshan provided no evidence as to the payment of the price stated in the sale deeds as well as his wife’s and sons’ earning capacity at the relevant time.

Section 54 of the Transfer of Property Act, 1882 (for short “the TP Act”) reads thus: 54. “Sale” defined. —

“Sale” is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised.

Hence, a sale of immovable property has to be for a price. The price may be payable in the future. A part may be paid, and the remaining part may be payable in the future.

If a sale deed in respect of immovable property is executed without payment of the price and if it does not provide for the payment of the 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 affect the transfer of the immovable property.

Thus, the sale deeds will be held void as they were executed without consideration, and they did not affect in any way the one-half share of the appellant in the suit properties.

Sudarshan’s sale of the suit properties by power of attorney issued by the appellant to his wife and minor sons are sham transactions. 

Thus, the sale deeds of 10th April 1981 will not confer any right, title, and interest on Sudarshan’s wife and children as the sale deeds will have to be ignored being void.

A void document need not be challenged by claiming a declaration as the said plea can be set up and proved even in collateral proceedings. Hence, the issue of a bar of limitation of the prayers for declaration incorporated by way of an amendment does not arise at all. 

Thus, for the reasons outlined above, the District Court’s decree granting the appellant joint possession of the suit properties along with Sudarshan deserves to be restored.

Accordingly, the judgment of the High Court was set aside.

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