Sometimes, we come across sale deeds which are executed in respect of immovable properties without any consideration. A Question arises whether such a sale deed is legally valid & tenable. A transfer deed which is in the nature of a Gift Deed, Exchange Deed, Relinquishment Deed or a deed of family settlement can undoubtedly be executed validly without any consideration but payment of price/consideration is an essential/ mandatory ingredient for a sale deed of an immovable property.

The Courts have categorically held that if a sale deed in respect of an immovable property is executed without payment of price/consideration and if it does not provide for the payment of price at a present or future date, it is not a sale at all in the eyes of law.

It would be trite to refer to Section 54 of the Transfer of Property Act 1882 which reads as under:

54. "Sale" defined."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 the case of tangible immoveable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument.

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

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

Contract for sale:
A contract for the sale of immoveable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest in or charge on such property.

From the plain reading of the said section it transpires that it is mandatory that in order to constitute Sale there must necessarily be price paid or promised or part-paid and part-promised. Thus, a sale is valid only if the price is paid or if it is not paid, it ought to be promised. Alternatively, it could be part paid and part promised. Thus, sale on the basis of post dated cheques is also valid. But it is mandatory that one of the clause of the sale deed should mention the consideration of the transaction.

It would be relevant to refer to the Apex Court judgment in the case of Kewal Krishan vs Rajesh Kumar AIR 2022 SCC 564 wherein the Court referring to Section 54 of the Transfer of Property Act, 1882 observed thus:

Hence, a sale of an immovable property has to be for a price. The price may be payable in future. It may be partly paid and the remaining part can be made payable in future. The payment of price is an essential part of a sale covered by section 54 of the TP Act. If a sale deed in respect of an immovable property is executed without payment of price and if it does not provide for the payment of 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 effect the transfer of the immovable property.

The dictum of Kewal Krishan (supra) has been unreservedly followed by the Madras High Court in R.Shanmuganathan (Died) vs Thirupparankundram Arumuga decided on 22 December, 2023. The Court held thus:

ii) The Hon'ble Supreme Court in Kewal Krishan V. Rajesh Kumar & Ors. Etc, Livelaw 2021 SC 670 has held that a sale of an immovable property has to be for a price. The price may be payable in future or partly paid and the remaining payable in future. The payment of price is an essential part of a sale covered by section 54 of the Transfer of Property Act.

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

It would be apropos to refer to Telangana High Court judgment in the case of P. Ramachandra Reddy vs The Debts Recovery Appellate Tribunal decided recently on 27 June, 2024 wherein the Court following Kewal Krishan (supra) observed thus:

In Kewal Krishan (supra), the Supreme Court in paragraph 17 of the order has held that payment of price is an essential part of a sale covered by Section 54 of the Transfer of Property Act. It has further been held that if a sale deed in respect of an immovable property is executed without payment of price and if it does not provide for the payment of price at a future date, it is not a sale at all in the eyes of law. Thus, a property can be sold subject to payment of a price or subject to the price which has been promised.

The Telangana High Court in the case of M.Sundarraj vs P.Savithramma And (2013) 2 Mwn (Civil) decided on 8 March, 2024 following Kewal Krishnan reiterated the said dictum and also categorically held that since a sale deed without consideration was void ab initio, there is no legal requirement of declaration of the said sale deed as null & void by a Court. The Court observed thus:

In another case of the Hon'ble Supreme Court reported as Kewal Krishnan vs. Rajesh Kumar and others – 2021 SCC Online SC 1097, the learned Judges had observed that where the power agent had sold the property to his wife / minor sons who had no earning capacity and where passing of consideration has not been proved such a transaction would be a sham transaction. In such a case the Principal need not seek to declare the sale deed as null and void. These facts would apply squarely to the case on hand. Therefore, point for consideration (ix) is answered in favour of the plaintiff.

The Delhi High Court in Rajiv Sareen vs M/S Divyanshu Enterprises & Ors decided on 2 February, 2022 asserted that a sale deed without consideration is no sale deed in the eyes of law and observed thus:

(ii) Reliance is placed on the judgment of the Supreme Court in Kewal Krishan Vs. Rajesh Kumar & Ors, 2021 SCC OnLine SC 1097, to contend that if a sale deed in respect of an immovable property is executed without payment of price and if it does not provide for the payment of price at a future date, it is not a sale at all in the eyes of law. Therefore, such a sale will be void and it will not effect the transfer of the immovable property.

The Himachal Pradesh High Court in Ram Rattan vs Rajesh Kumar And Others Etc. decided on 10 December, 2021 applied the dictum of Kewal Krishan and held thus:

In support of the above submissions, reliance was placed upon a decision of Hon'ble Apex Court dated 22.11.2021 in Civil Appeal Nos. 6989-6992 of 2021, titled Kewal Krishan Vs. Rajesh Kumar and others etc. wherein it was held that a sale of an immovable property has to be for a price. The price may be payable in future. It may be partly paid and the remaining part can be made payable in future.

The payment of price is an essential part of a sale covered by section 54 of the TP Act. If a sale deed in respect of an immovable property is executed without payment of price and if it does not provide for the payment of 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 effect the transfer of the immovable property.

The Rajasthan High Court in the case of Devendra Ranka S/O Shri Ummed Singh Ji vs Smt. Mamta Pipada W/O Shri Rajesh Ji decided on 13 October, 2022 followed Kewal Krishan and observed thus :

3. Per contra, learned counsel for respondents has placed reliance on the recent judgment of Hon'ble Supreme Court in case of Kewal Krishan Vs. Rajesh Kumar and Ors. [AIR(2022)SC 564], where the Hon'ble Supreme Court has observed that if a sale deed in respect of an immovable property is executed without payment of price and if it does not provide for the payment of price at a future date, it is not a sale at all in the eyes of law. In view of above, the matter requires consideration.'

It would be relevant to refer to a recent judgment in C.V.Ahamed Kutty (Died) vs Https://Www.Mhc.Tn.Gov.In/Judis decided most recently on 21 June, 2024 wherein the Madras High Court observed thus:
24.4 In this context, the learned counsel appearing for the respondents 2, 37 and 41 would contend that the sale deeds in the name of 9th to 11th defendants have not been supported by consideration and they have to pay adequate consideration and still the 9th to 11th defendants have not paid the sale consideration therefore the sale deeds are void. To support his contention he relied on the judgment of Hon'ble Supreme Court in the case of Kewal Krishnan Vs. Rajesh Kumar and others reported in AIR 2022 SCC 564 wherein the Hon'ble Supreme Court in Para No.15 held as follows......

It is worth mentioning that a void document is non- est in the eyes of law and there is no legal requirement of cancellation of such void document. The Apex Court in Prem Singh & Ors vs Birbal & Ors AIR 2006 SUPREME COURT 3608 dealt with this proposition and held thus:
When a document is valid, no question arises of its cancellation. When a document is void ab initio, a decree for setting aside the same would not be necessary as the same is non-est in the eye of law, as it would be a nullity.

From the above deliberation, it is settled law that it is mandatory that a sale deed must include the clause stating the sale consideration/amount as agreed between the seller and the buyer which has to be paid by the buyer to the seller for the execution of sale deed in respect of the sale/transfer of the immovable property else the sale deed would be void/nullity.

Written By: Inder Chand Jain
Ph no: 8279945021, Email: [email protected]