Non-payment of sale consideration after registration does not invalidate a completed sale.

The appellant-plaintiff, Goma Devi, executed a registered sale deed dated 16 April 2009 in favour of the respondents in respect of the disputed agricultural land for a stated consideration of ₹24,00,000.

The sale deed recited that the entire consideration had been paid through cheques, possession had been delivered to the purchasers, and the purchasers were authorised to have their names entered in the revenue records.

The plaintiff subsequently alleged that the respondents had obtained the sale deed by fraud and had not paid the sale consideration because the cheques were stopped or dishonoured.

The trial court dismissed the plaintiff’s claims for declaration, cancellation and injunction, while directing the defendants to deposit ₹24,00,000 with 4% interest from 16 May 2009 until the date of judgment, leaving the plaintiff entitled to withdraw the amount in accordance with law.

Whether non-payment or alleged non-realisation of the sale consideration rendered the registered sale deed dated 16 April 2009 void, ineffective or liable to be cancelled.

Whether the plaintiff proved that the sale deed had been procured by fraud, misrepresentation or without her free consent so as to justify declaratory and injunctive relief.

Whether the plaintiff was entitled to cancellation of the sale deed rather than a remedy for recovery of any unpaid sale consideration.

Whether the trial court’s findings against the plaintiff on the relevant issues suffered from any legal or evidentiary error warranting appellate interference.

The Court primarily applied Section 54 of the Transfer of Property Act, 1882, which defines a sale as a transfer of ownership in exchange for a price “paid or promised or part-paid and part-promised”; therefore, payment of the entire consideration at the time of execution is not a condition precedent to completion of a registered sale.

Under the principles stated in Vidhyadhar v. Manikrao, (1999) 3 SCC 573, Kaliaperumal v. Rajagopal, (2009) 4 SCC 193, and Dahiben v. Arvindbhai Kalyanji Bhanusali, (2020) 7 SCC 366, non-payment of the balance consideration ordinarily does not invalidate a completed sale where the parties intended title to pass; the vendor’s remedy is to recover the unpaid consideration.

The vendor may also have a charge for the unpaid price under Section 55(4)(b) of the Transfer of Property Act.

The parties’ intention is to be gathered from the recitals of the sale deed, their conduct, delivery of possession and the evidence on record.

The Court found that the registered sale deed expressly recorded payment of the consideration, delivery of possession and transfer of ownership.

The plaintiff had not pleaded that the sale deed was fabricated or that her signatures or execution were denied; rather, the admitted case was that the deed had been executed between the parties.

The evidence further showed that possession had been handed over, the defendants’ names had been entered in the revenue records, and at least substantial amounts had been received by or on behalf of the plaintiff.

The subsequent stopping or dishonour of cheques, even if established, could at most give rise to a claim for recovery of the unpaid consideration and could not, by itself, undo the completed transfer of title under Section 54.

The allegation of fraud was also not substantiated.

The defendants had issued notices after learning of the plaintiff’s prior transaction with Laxmi Narain, and their conduct in notifying the bank and asserting the existence of a dispute was inconsistent with a finding of fraudulent non-payment.

The Court therefore held that the trial court had properly evaluated the oral and documentary evidence and committed no legal error in rejecting the claims for cancellation and injunction.

It held that the registered sale deed dated 16 April 2009 was valid and effective, and that alleged non-payment or non-realisation of part of the sale consideration did not justify its cancellation.

The plaintiff’s remedy, if any, was to recover the unpaid consideration, not to seek invalidation of the sale deed.

The appeal was dismissed as meritless, and the trial court’s judgment and decree dated 8 February 2019 were affirmed.

The parties were directed to bear their own costs.

The Court clarified that its observations would not affect the merits of the pending proceedings under Section 138 of the Negotiable Instruments Act or the separate civil proceedings between the parties, which were to be decided independently on their own evidence.