Non-payment of sale consideration does not invalidate a registered sale intended to transfer ownership.

Usha Garg instituted CS DJ 829/2018 seeking declaration that the sale deed dated 2 June 2017, executed by Amarjeet Kaur in favour of Surender Singh in respect of the third floor with terrace rights of property bearing Municipal No. RZ-265, Gali No. 19, Tughlakabad Extension, New Delhi, was null and void; she also sought possession, arrears/damages and permanent injunction.

Garg claimed that Kaur had previously sold her the first, second and third floors with terrace rights for ₹28,50,000 by registered sale deed dated 12 September 2016, and had thereafter occupied the premises as a tenant under a registered six-month lease.

After expiry of the lease, Kaur allegedly failed to vacate or pay rent, while Surender Singh attempted to take possession on the basis of the subsequent sale deed dated 2 June 2017.

Kaur’s written statement was not taken on record and she was proceeded against without a defence on record; the relevant procedural orders were upheld by the High Court.

The Trial Court declared the subsequent sale deed void, decreed possession and awarded rent/damages against Kaur and Surender Singh.

Kaur appealed, principally contending that Garg had failed to prove payment of the entire sale consideration because only two of the five alleged cheques were reflected in Kaur’s bank account.

1. Whether the registered sale deed dated 12 September 2016 in favour of Usha Garg was valid and effective despite the appellant’s allegation that the entire sale consideration had not been paid or proved.

2. Whether Amarjeet Kaur, having previously transferred the property to Usha Garg, could validly execute the subsequent sale deed dated 2 June 2017 in favour of Surender Singh.

3. Whether Usha Garg was entitled to possession and recovery of rent/damages against the defendants, and whether the apportionment of ₹14,000 per month against Kaur and ₹6,000 per month against Surender Singh was sustainable.

The Court applied Section 54 of the Transfer of Property Act, 1882, under which a sale is a transfer of ownership in exchange for a price that may be paid, promised, or partly paid and partly promised; payment of the entire consideration at the time of execution is not a sine qua non for completion of a registered sale.

Relying on Vidyadhar v. Manikrao & Anr., (1999) 3 SCC 573, the Court held that the decisive consideration is the parties’ intention to transfer ownership, which may be gathered from the sale deed, their conduct and the evidence on record; non-payment of the whole price does not, by itself, invalidate an otherwise completed sale.

The Court also applied the principle that once ownership has been transferred, the transferor retains no title enabling a subsequent valid conveyance of the same interest.

The Court found that execution of the registered sale deed dated 12 September 2016 in Garg’s favour was established, and that the contemporaneous registered lease deed supported Garg’s case that Kaur had transferred ownership and thereafter remained in possession only as a tenant.

Although Kaur alleged that three of the five cheques were not credited, her written statement and the bank statements filed with it were not part of the record, and she led no evidence establishing non-payment.

Even assuming partial non-payment, Section 54 and Vidyadhar established that such non-payment would not render the registered sale deed void; Kaur’s remedy, if any, was to pursue recovery in accordance with law.

Consequently, Kaur had no subsisting title when she executed the sale deed dated 2 June 2017 in favour of Surender Singh, making the latter instrument void as against Garg.

The award of possession and apportioned rent/damages was upheld because Kaur retained possession after expiry of the lease, while Surender Singh occupied the third floor and terrace from July 2017.

It affirmed that the sale deed dated 12 September 2016 validly transferred ownership to Usha Garg, that the subsequent sale deed dated 2 June 2017 in favour of Surender Singh was null and void, and that Garg was entitled to possession and the decreed rent/damages of ₹14,000 per month against Kaur and ₹6,000 per month against Surender Singh from June 2017 until possession was handed over.

Pending applications were also disposed of.