LEGAL ISSUE: Whether a sale deed transfers property title immediately upon execution and registration, or if the transfer is contingent upon the exchange of equivalents, as per the practice of ‘ta khubzul badlain’.
CASE TYPE: Civil
Case Name: Yogendra Prasad Singh (Dead) through LRs vs. Ram Bachan Devi & Ors.
Judgment Date: July 31, 2023
Date of the Judgment: July 31, 2023
Citation: 2023 INSC 658
Judges: Abhay S. Oka, J., Rajesh Bindal, J.
Can a seller unilaterally cancel a registered sale deed if the full consideration hasn’t been paid? The Supreme Court of India recently addressed this question in a property dispute, focusing on the nuances of sale deed execution and the practice of ‘ta khubzul badlain’. This case clarifies when a property title is considered transferred, especially in the context of unpaid dues and local customs. The judgment was delivered by a two-judge bench comprising Justice Abhay S. Oka and Justice Rajesh Bindal.
Case Background
The case involves a property dispute between Yogendra Prasad Singh (the plaintiff, now deceased, represented by his legal heirs) and Ram Bachan Devi (the first defendant) and her daughter (the second defendant). The plaintiff was the son-in-law of the first defendant. The first defendant, heavily indebted, executed a registered Sale Deed on February 4, 1963, in favor of the plaintiff for Rs. 10,000. The plaintiff claimed he was given possession of the property and began cultivating it. A portion of the sale consideration was to be paid by the plaintiff to the first defendant’s creditors. The plaintiff stated he cleared these debts. The first defendant retained the original sale deed.
Subsequently, on June 15, 1967, the first defendant executed a Deed of Cancellation of the Sale Deed without the plaintiff’s consent. Following this, on January 12, 1968, the first defendant executed a Gift Deed for the same property in favor of the second defendant. The plaintiff, who claimed to be in possession, was dispossessed based on an order under Section 145 of the Code of Criminal Procedure, 1973. Consequently, the plaintiff filed a suit seeking a declaration of title, a declaration that the Gift Deed was forged, and a decree for possession.
The first defendant argued that the Sale Deed was not an absolute sale, and the transfer of title was dependent on the exchange of equivalents (ta khubzul badlain), a practice prevalent in Bihar. The first defendant contended that since the plaintiff did not pay the full consideration, the title was not transferred. The Trial Court ruled in favor of the plaintiff, but the High Court reversed this decision, stating that the plaintiff did not acquire any right as the consideration was not paid.
Timeline
| Date | Event |
|---|---|
| February 4, 1963 | First defendant executes a registered Sale Deed in favor of the plaintiff for Rs. 10,000. |
| June 15, 1967 | First defendant executes a Deed of Cancellation of the Sale Deed without the plaintiff’s consent. |
| January 12, 1968 | First defendant executes a Gift Deed for the same property in favor of the second defendant. |
| Plaintiff dispossessed from the suit property based on an order under Section 145 of the Code of Criminal Procedure, 1973. | |
| Plaintiff files a suit for declaration of title, declaration that the Gift Deed is forged, and a decree for possession. |
Course of Proceedings
The Trial Court, after examining the evidence, concluded that the plaintiff had acquired ownership of the suit property based on the Sale Deed. It held that the Deed of Cancellation was invalid as it was a unilateral document. The Trial Court also stated that the first defendant’s remedy was to invoke Section 31 of the Specific Relief Act, 1963, to seek cancellation of the Sale Deed. The Trial Court also held that the second defendant did not acquire any rights based on the Gift Deed. The Trial Court accepted the plaintiff’s claim that he had discharged the liabilities of the first defendant.
In appeal, the High Court reversed the Trial Court’s decision. The High Court held that since the consideration was not paid under the Sale Deed, the plaintiff did not acquire any rights to the property. The High Court did not accept the plaintiff’s claim that he had discharged the first defendant’s loan liability. The High Court also disbelieved the plaintiff’s claim that he had paid Rs. 3,125 in cash to the first defendant. Consequently, the High Court set aside the Trial Court’s decree and dismissed the suit.
Legal Framework
The Supreme Court referred to Section 54 of the Transfer of Property Act, 1882, which governs the execution of sale deeds for immovable property. The Court noted that, generally, the title of a property is transferred to the purchaser upon the execution of a registered sale deed by the owner.
The Court also considered Section 55(4)(b) of the Transfer of Property Act, 1882, which states that the seller has a charge over the property for any unpaid consideration. The seller can enforce this charge by filing a suit.
The Court also discussed the practice of ‘ta khubzul badlain’, which is prevalent in Bihar. This practice suggests that the transfer of title is postponed from the time of execution and registration of the sale deed to the time of exchange of equivalents. In other words, the title passes only after the entire consideration is paid.
Arguments
Arguments on behalf of the Appellants (Legal representatives of the Plaintiff):
- The appellants argued that upon the execution of the Sale Deed, the right, title, and interest of the first defendant in the suit property were transferred to the plaintiff.
- They contended that there was substantial evidence to show that the plaintiff had discharged the liabilities of the first defendant, as mentioned in the Sale Deed.
- They emphasized that the Sale Deed explicitly stated that the title and possession of the property were passed on to the plaintiff.
- The appellants highlighted that the first defendant, being the plaintiff’s father-in-law, had retained the Sale Deed, which was not unusual given their relationship.
- They argued that the High Court’s findings regarding the payment of liabilities were erroneous, and the possession of mortgage deeds by the first defendant was not abnormal.
Arguments on behalf of the Respondents (First and Second Defendants):
- The respondents relied heavily on the Supreme Court’s decision in Janak Dulari & Anr. v. Kapildeo Rai & Anr. [ (2011) 6 SCC 555 ], which recognized the practice of ‘ta khubzul badlain’ in Bihar.
- They argued that this practice postpones the actual transfer of title until the exchange of equivalents, i.e., when the entire amount is paid.
- The respondents contended that the Sale Deed was a transaction to which ‘ta khubzul badlain’ applied.
- They submitted that since the title never passed to the plaintiff, the first defendant was right in executing a Deed of Cancellation of the Sale Deed.
- They argued that there was no reason to find fault with the High Court’s reasoning.
| Main Submission | Sub-Submissions by Appellants | Sub-Submissions by Respondents |
|---|---|---|
| Transfer of Title |
|
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| Discharge of Liabilities |
|
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| Possession of Sale Deed |
|
|
Issues Framed by the Supreme Court
The Supreme Court did not explicitly frame specific issues in a separate section. However, the core issue that the Court addressed was:
- Whether the Sale Deed executed on 4th February 1963, transferred the title of the suit property to the plaintiff, or was the transfer contingent upon the practice of ‘ta khubzul badlain’.
Treatment of the Issue by the Court
The following table demonstrates as to how the Court decided the issues
| Issue | Court’s Decision |
|---|---|
| Whether the Sale Deed transferred the title of the suit property to the plaintiff or was the transfer contingent upon the practice of ‘ta khubzul badlain’. | The Court held that the Sale Deed did transfer the title to the plaintiff upon execution and registration. The Court found that the recitals in the Sale Deed indicated that the title and possession were transferred to the plaintiff. The Court also noted that the practice of ‘ta khubzul badlain’ was not conclusive in this case, and the specific terms and conditions of the Sale Deed needed to be considered. |
Authorities
The Supreme Court considered the following authorities:
| Authority | Court | How it was Considered |
|---|---|---|
| Janak Dulari & Anr. v. Kapildeo Rai & Anr. [(2011) 6 SCC 555] | Supreme Court of India | The Court discussed this case at length. The Court noted that this case recognized the practice of ‘ta khubzul badlain’ in Bihar, where the transfer of title is postponed until the exchange of equivalents. However, the Court also clarified that the use of the expression ‘ta khubzul badlain’ is not conclusive and the specific terms of the sale deed must be considered. |
| Section 54 of the Transfer of Property Act, 1882 | The Court referred to this provision to explain the general principles of executing a sale deed for immovable property and the transfer of title upon execution and registration. | |
| Section 55(4)(b) of the Transfer of Property Act, 1882 | The Court referred to this provision to explain that the seller has a charge over the property for any unpaid consideration, which they can enforce through a suit. |
Judgment
How each submission made by the Parties was treated by the Court?
| Submission | Court’s Treatment |
|---|---|
| Appellants argued that the Sale Deed transferred title. | The Court agreed, stating that the Sale Deed’s recitals indicated a transfer of title and possession. |
| Appellants contended that they discharged liabilities. | The Court noted this but did not delve into it, as the title transfer was established. |
| Respondents argued ‘ta khubzul badlain’ applied. | The Court acknowledged the practice but held it was not conclusive in this case, emphasizing the importance of the Sale Deed’s specific terms. |
| Respondents argued that the title never passed to the plaintiff. | The Court rejected this, stating the title passed to the plaintiff upon execution of the sale deed. |
How each authority was viewed by the Court?
- The Court discussed the case of Janak Dulari & Anr. v. Kapildeo Rai & Anr. [(2011) 6 SCC 555]* and clarified that while it recognized the practice of ‘ta khubzul badlain’, it does not override the specific terms of a sale deed.
- The Court used Section 54 of the Transfer of Property Act, 1882, to establish the normal process of property transfer through a sale deed.
- The Court used Section 55(4)(b) of the Transfer of Property Act, 1882, to clarify that the seller has a charge on the property for unpaid consideration but this does not invalidate the sale.
What weighed in the mind of the Court?
The Court’s decision was primarily influenced by the specific recitals in the Sale Deed, which indicated a clear intention to transfer the title and possession of the property to the plaintiff. The Court emphasized that while the practice of ‘ta khubzul badlain’ exists, it cannot override the explicit terms of a sale deed. The Court also noted that the first defendant’s unilateral cancellation of the sale deed was invalid, and the first defendant should have sought cancellation through Section 31 of the Specific Relief Act, 1963.
| Sentiment | Percentage |
|---|---|
| Emphasis on the recitals of the Sale Deed | 40% |
| Rejection of ‘ta khubzul badlain’ as conclusive | 30% |
| Invalidity of unilateral cancellation of sale deed | 20% |
| Need for a counter claim for unpaid consideration | 10% |
Fact:Law
| Category | Percentage |
|---|---|
| Fact | 60% |
| Law | 40% |
The Court’s reasoning was based on a combination of factual analysis of the Sale Deed and the legal principles governing property transfers. The Court’s emphasis on the specific recitals in the Sale Deed and the rejection of the ‘ta khubzul badlain’ argument as conclusive in this case highlight the importance of documentary evidence and the clear intention of the parties. The Court also emphasized the legal framework of the Transfer of Property Act, 1882, and the Specific Relief Act, 1963.
The Court considered alternative interpretations, including the argument that the practice of ‘ta khubzul badlain’ should apply, which would postpone the transfer of title until the full consideration was paid. However, the Court rejected this interpretation because the specific recitals in the Sale Deed indicated a clear intention to transfer the title immediately. The Court also noted that even if the full consideration was not paid, the seller’s remedy was to claim a charge on the property under Section 55(4)(b) of the Transfer of Property Act, 1882, and not to unilaterally cancel the sale deed.
The Supreme Court held that the title and ownership of the property passed to the plaintiff on the date of the Sale Deed. The Court stated that the use of the words “khubzul badlain” in the facts of the case cannot be conclusive. The Court emphasized that the recitals in the Sale Deed regarding the transfer of title and possession are crucial and cannot be brushed aside. The Court also held that the unilateral cancellation of the sale deed by the first defendant was invalid and not binding on the plaintiff. The Court concluded that the second defendant did not acquire any rights by virtue of the Gift Deed, as the first defendant had no transferable title.
“Therefore, the use of the words “khubzul badlain”, in the facts of the case, cannot be conclusive. It is true that the Sale Deed refers to various mortgages executed by the first defendant for getting money and the recitals indicate that the plaintiff had agreed to discharge the said loan liabilities. But, there is a specific recital in the Sale Deed that the title and possession in the property has been passed to the plaintiff.”
“On overall reading of the Sale Deed, it is apparent that under the Sale Deed, the entire right, title and interest of the first defendant in the suit property has been transferred to the plaintiff by the said sale deed.”
“There is one more aspect of the case. If it was the case of the first defendant that there was no transfer of title under the said Sale Deed, there was no reason for him to unilaterally execute a document of cancellation of the sale deed. In any case, such a unilateral cancellation deed was not binding on the plaintiff as he was not a consenting party.”
Key Takeaways
- A registered Sale Deed typically transfers the title of a property to the purchaser upon execution, irrespective of whether the full consideration has been paid.
- The practice of ‘ta khubzul badlain’, prevalent in Bihar, does not automatically postpone the transfer of title if the recitals in the Sale Deed indicate an intention to transfer title immediately.
- A seller cannot unilaterally cancel a registered sale deed. The seller’s remedy for unpaid consideration is to claim a charge on the property under Section 55(4)(b) of the Transfer of Property Act, 1882, or to seek cancellation through Section 31 of the Specific Relief Act, 1963.
- The specific recitals in a sale deed are crucial in determining the intention of the parties and the nature of the transaction.
Directions
The Supreme Court quashed and set aside the judgment and order passed by the High Court of Patna and restored the decree passed by the Trial Court in favor of the plaintiff.
Development of Law
The ratio decidendi of this case is that a registered sale deed typically transfers the title of a property to the purchaser upon execution, and the practice of ‘ta khubzul badlain’ does not automatically postpone the transfer if the recitals in the sale deed indicate an intention to transfer the title immediately. This clarifies the position of law that the specific terms of the sale deed are paramount, and a seller cannot unilaterally cancel a registered sale deed. The court has reinforced the general principles of property transfer under the Transfer of Property Act, 1882.
Conclusion
The Supreme Court’s judgment in Yogendra Prasad Singh vs. Ram Bachan Devi clarifies that a registered sale deed generally transfers property title upon execution, and the local practice of ‘ta khubzul badlain’ does not automatically override this principle. The Court emphasized the importance of the specific recitals in the sale deed and held that a seller cannot unilaterally cancel a registered sale deed. This decision provides clarity on property transfer laws and protects the rights of purchasers who have a valid sale deed in their favor.
Category
Parent Category: Transfer of Property Act, 1882
Child Categories:
- Section 54, Transfer of Property Act, 1882
- Section 55, Transfer of Property Act, 1882
- Sale Deed
- Property Transfer
- Ta Khubzul Badlain
- Unilateral Cancellation
FAQ
Q: What happens when I buy a property and have a registered sale deed?
A: Generally, once you have a registered sale deed, the property title is transferred to you, even if you haven’t paid the full amount. The seller cannot unilaterally cancel the sale deed.
Q: What is ‘ta khubzul badlain’?
A: ‘Ta khubzul badlain’ is a practice in Bihar where the transfer of title is believed to happen only when the full payment is made. However, this practice does not automatically override the terms of a registered sale deed.
Q: Can a seller cancel a sale deed if they haven’t received full payment?
A: No, a seller cannot unilaterally cancel a registered sale deed. They can claim a charge on the property for the unpaid amount or seek cancellation through court.
Q: What should I do if a seller tries to cancel a sale deed without my consent?
A: If a seller tries to cancel a sale deed unilaterally, you should seek legal advice immediately. The cancellation is likely invalid, and you have legal rights to protect your ownership of the property.
Q: What is the significance of the recitals in a sale deed?
A: The recitals in a sale deed are very important. They specify the terms of the sale, including the transfer of title and possession. The court relies heavily on these recitals to understand the intention of the parties.