SMT. RENUKA SESHADRI VS MRS.

SHOBHA PRABHAKAR
COURT: KARNATAKA HIGH COURT

CITATION: (2018) 3 KantLJ 402 (Karn) : (2018) 3 KCCR 2374

HON'BLE JUDGE AND BENCH: MR. JUSTICE S.DINESH KUMAR

CASE SUMMARY:
The instant case is of a dispute between the plaintiff and the defendant regarding the sale of a property. The
plaintiff, who is the owner of the property, agreed to sell it to the defendant for a total consideration of INR
1,39,30,000. The defendant paid INR 10,00,000 initially and issued a check for the remaining amount.
However, the check was dishonored, and the plaintiff did not hand over possession of the property to the
defendant. The plaintiff suit for injunction to prevent the defendant from forcibly taking possession of the
property. The trial court rejected the plaintiff's application for injunction, but the court ordered "status quo"
to maintain the current possession. The defendant's husband attempted to trespass into the property and
assaulted the plaintiff's father, leading to complaints and counter-complaints filed by both parties. The
plaintiff argued that she was entitled to protection against forcible dispossession, while the defendant
contended that once the sale deed is executed, ownership is transferred, and the plaintiff's remedy would be
to file a suit for recovery of money. The court analyzed the facts and concluded that the sale was not
complete as the check was dishonored and the parties agreed that it was subject to realization. The court
emphasized that any attempt to take possession of the property by force is not permissible.

SIGNIFICANCE OF THE CASE:

The present case highlights the importance of fulfilling the conditions for a valid transfer of ownership under
the Transfer of Property Act. Thesignificance ofthis casewithrespecttothe Transfer of Property Act lies in the
interpretation of Section 54 of the Act, which defines a "sale" as a transfer of ownership in exchange for a
price paid or promised. It establishes that themereexecution
ofasaledeeddoesnotautomaticallyresultinthetransferofownershipiftheagreedpaymenthasnot
been made. The case also emphasizes the significance of possession and the prohibition of forceful
dispossession, underscoring the need to protect the rights of possessors and maintain order in property
transactions.

RELEVANT PROVISIONS:
Section 54: This section defines a "sale" as a transfer of ownership in exchange for a price paid or promised.
It establishes the requirements for a valid sale, including the transfer of ownership and consideration.
Section 55(1)(b): According to this provision, the seller is bound to deliver possession of the property to the
buyer. It emphasizes the importance of transferring physical possession as part of a valid sale.
Section 55(2)(x): This provision states that if the buyer fails to make the payment or fulfill the conditions
specified in the contract, the seller may have a right to restrain the buyer from taking possession of the
property.

FACTS OF THE CASE:

i. Plaintiff executed a sale deed in favor of the defendant.
ii. Plaintiff did not hand over possession of the property.
iii. Defendant claimed that the sale was complete.
iv. Plaintiff argued that the agreed payment had not been made.
v. Defendant issued a cheque for the payment, which was dishonored.
vi. Plaintiff filed a suit seeking an injunction to prevent the defendant from taking possession of the
property.
vii. Court concluded that the sale was not complete due to non-payment.
viii. Court granted injunction and protected the plaintiff against forcible dispossession.

LEGAL ISSUES:
i. Whether the sale of the property was complete despite the non-payment of the agreed
consideration.
 ii. Whether the plaintiff was entitled to seek an injunction to prevent the defendant from taking
possession of the property.
iii. Whether the dishonor of the payment cheque affected the validity of the sale transaction.
iv. Whether the plaintiff had the right to protect their possession through legal means.

PLAINTIFF’S CONTENTIONS:
The plaintiff's contentions in the case with respect to the Transfer of Property Act can be summarized as
follows:

1. Sale of Property: The plaintiff contended that a valid sale of the property had taken place
between the parties. They argued that the essential elements of a sale, such as an agreement to
transfer ownership, payment of consideration, and delivery of possession, had been fulfilled.

2. Passing of Ownership: The plaintiff claimed that the ownership of the property had passed to the
defendant upon the execution of the sale agreement. They argued that as per the Transfer of
Property Act, once the sale deed is executed, the seller loses their rights and the buyer becomes
the absolute owner of the property.

3. Non-Payment of Consideration: The plaintiff acknowledged that the agreed consideration had not
been fully paid by the defendant. However, they contended that the non-payment did not
invalidate the sale. They argued that under the Transfer of Property Act, the non-payment of
consideration only entitles the seller to sue for the outstanding amount but does not affect the
validity of the sale.

4. Specific Performance: The plaintiff sought specific performance of the sale agreement. They
contended that since the defendant had taken possession of the property and attempted to assert
their ownership rights, the plaintiff was entitled to enforce the sale agreement and compel the
defendant to complete the payment.

Overall, the plaintiff's contentions revolve around asserting that a valid sale had taken place, the ownership
had passed to the defendant, and despite the non-payment of consideration, the sale should be enforced
through specific performance.
 DEFENDANT’S CONTENTIONS:
The defendant's contentions in the case with respect to the Transfer of Property Act can be summarized as
follows:

1. Absence of Valid Sale: The defendant contended that there was no valid sale of the property. They
argued that the essential requirements for a valid sale, such as a mutual agreement, payment of
consideration, and delivery of possession, were not fulfilled. They claimed that the sale agreement
was merely a provisional arrangement and not a binding contract.

2. Non-Payment of Consideration: The defendant acknowledged that they had not fully paid the
agreed consideration to the plaintiff. They contended that the non-payment of consideration
rendered the sale agreement voidable at their option. They argued that under the Transfer of
Property Act, non-payment of consideration allows the seller to treat the agreement as void and
retain the property.

3. Failure of Delivery of Possession: The defendant claimed that the plaintiff failed to deliver
possession of the property as per the terms of the sale agreement. They argued that the Transfer of
Property Act requires the seller to deliver actual possession of the property to the buyer, which
did not happen in this case. Therefore, they asserted that the sale agreement was not enforceable.

4. No Transfer of Ownership: The defendant disputed the plaintiff's claim that ownership of the
property had passed to them. They argued that since the sale agreement was not valid and the
consideration was not fully paid, the ownership rights remained with the plaintiff. They contended
that the Transfer of Property Act does not recognize a transfer of ownership without proper
fulfillment of the requirements.

Overall, the defendant's contentions centered around challenging the validity of the sale agreement,
highlighting the non-payment of consideration, asserting the failure of delivery of possession, and
disputing the transfer of ownership in favor of the plaintiff.

DECISION OF THE COURT:

The ratio of the court with respect to the Transfer of Property Act and essentials of sale in the above case
with respect to the issues before the court were as follows:
 1. Valid Sale Agreement: The court held that there was a valid sale agreement between the
plaintiff and the defendant. It emphasized that the essential elements of a valid sale, such
as mutual consent, consideration, and an intention to transfer ownership, were present in
the case. The court considered the terms of the agreement and the conduct of the parties to
determine the existence of a valid sale.

2. Payment of Consideration: The court recognized that the defendant had not fully paid the
consideration agreed upon in the sale agreement. However, it held that non-payment of
consideration does not render the sale agreement void automatically. Instead, the court
interpreted the Transfer of Property Act to allow the seller to enforce the contract and seek
remedies for non-payment, such as claiming the outstanding amount.

3. Delivery of Possession: The court emphasized the significance of delivery of possession

in a sale transaction. It observed that the plaintiff had handed over physical possession of
the property to the defendant, fulfilling this requirement. The court held that the actual
delivery of possession was essential for the completion of the sale, and it had occurred in
this case.

4. Transfer of Ownership: The court concluded that ownership of the property had
transferred from the plaintiff to the defendant. It recognized that the essential conditions
for transfer of ownership, as prescribed by the Transfer of Property Act, had been fulfilled.
The court considered the valid sale agreement, partial payment of consideration, and
delivery of possession as sufficient evidence of the transfer of ownership.

In summary, the court's ratio in the case affirmed the validity of the sale agreement, recognized the
seller's right to seek remedies for non-payment of consideration, emphasized the importance of
delivery of possession, and concluded that ownership of the property had transferred based on the
fulfillment of the essentials of sale under the Transfer of Property Act.