Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

Civil Appeal No. 5800 OF 2002

Kaliaperumal ... Appellant

Versus

Rajagopal & Anr.    ... Respondents  

J U D G M E N T

J.M. Panchal, J.

1. The instant appeal is directed against judgment

dated  November  27,  2001,  rendered  by  the

learned  single  Judge  of  the  High  Court  of

Judicature at Madras in Second Appeal No. 1435

of 1990 by which the decree dated January 23,

1987, passed by the learned Subordinate Judge

of Villupuram declaring the appellant to be owner

of  the  disputed  property  and  directing  the

respondents to hand over possession of the same

to the appellant with mesne profits at the rate of

Rs.2000/-  per  month  with  proportionate  costs,

and  affirmed  (subject  to  the  modification  that

appellant  will  be  entitled  to possession only  on

deposit  of  Rs.40,000/-)  by  the  learned  District

Judge,  South  Arcot  District  at  Cuddalore  vide

judgment dated December 15, 1988, rendered in

Appeal No. 55 of 1987, is set aside.

2. The facts emerging from the record of  the case

are as under: -

The  suit  properties  originally  belonged  to  the

family  of  the  respondents.   First  respondent  (for

himself  and  his  minor  sons)  and  the  second

respondent sold the properties to the appellant for a

consideration of Rs.43,000/- by a deed dated June 26,

1983.  Out of the sale consideration of Rs.43,000/- a

sum of Rs.3,000/- was to be appropriated towards the

discharge of the mortgage executed by the respondents

in favour of the appellant.  The balance of Rs.40,000/-

was to be paid before the Sub-Registrar at the time of

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registration  of  the  sale  deed.   It  is  the  case  of  the

appellant that before the document could be presented

for registration, he paid to the respondents a sum of

Rs.25,000/-  on  21.7.1983  as  they  required  that

amount for purchasing a lorry, therefore, at the time of

registration of  the sale  deed he was required to pay

only the balance of Rs.15,000/- to the respondents.  It

is the case of the appellant that as the respondents

had denied payment of Rs.25,000/- to them, he was

left with no other option but to present the document

for  registration  before  the  Sub-Registrar  on

21.10.1983.   On  presentation  of  the  document  for

registration, the Sub-Registrar issued summons to the

respondents  pursuant  to  which  the  first  respondent

appeared before him.  The first respondent admitted

execution of  the deed but refused to put his thumb

impression or to sign the endorsement to be made on

the  deed  in  token  of  admitting  execution,  on  the

ground  that  the  respondents  were  not  paid  the

remaining consideration of Rs.40,000/- as stipulated

in  the  deed.   The  Sub-Registrar  registered  the

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document  on  October  26,  1983.   According  to  the

appellant, ever since the date of the execution of the

sale deed and the date of its registration, he was ready

to tender the balance of consideration of Rs.15,000/-

but  the  respondents  were  unreasonably  refusing  to

receive  the  same  and,  therefore,  he  served  a  legal

notice calling upon them to hand over possession of

the properties sold and pay mesne profits.  It  is the

case of  the appellant that after receiving part of  the

consideration,  the  respondents  did  not  deliver

possession of the properties to the appellant nor paid

mesne profits.  Therefore, the appellant instituted O.S.

No.  144  of  1985  in  the  Court  of  learned  District

Munsiff  of  Villupuram seeking  declaration  of  title  to

the suit properties.  The appellant also prayed to direct

the respondents to hand over possession and to pay

past mesne profits of  Rs.3,000/- and for an enquiry

into future mesne profits.

3. On  service  of  summons  the  respondents

appeared  and  contested  the  suit  filed  by  the

appellant.   They  denied  having  received

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Rs.25,000/-  as  advance.   In  short  the  stand

taken  by  the  respondents  was  that  as  the

appellant had not paid the balance consideration

of Rs.40,000/-  as mentioned in the  deed dated

June  26,  1983,  the  title  never  passed  to  the

appellant and , therefore, the suit for declaration

of  title  to  the  suit  properties  and  possession

thereof was not maintainable.

4. Necessary issues for determination were framed

by the  trial  court.   The  parties  led  evidence  in

support  of  their  respective  claims.   On

appreciation of evidence adduced by the parties

the trial court held that the appellant had failed

to prove that he had paid a sum of Rs.25,000/-

to the respondents on 21.7.1983.  The trial court,

however,  held  that  the  appellant  had  acquired

title  to  the  suit  properties  when  the  sale  deed

dated June 26, 1983 was duly registered and was

entitled  to  declaration  of  his  title  as  well  as

possession  of  the  suit  properties  with  mesne

profits.   According to the trial  court,  remedy of

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the respondents was only to sue the appellant for

recovery  of  the  consideration  mentioned  in  the

deed  but  they  were  estopped  from denying  his

title.  Therefore, the trial court decreed the suit

by judgment dated January 23, 1987.

5. Feeling  aggrieved  the  respondents  preferred

Appeal No. 55 of 1987 in the District Court South

Arcot District at Cuddalore.  The learned District

Judge also held that title of the appellant to the

suit  properties  was  established  in  view  of  the

execution of sale deed and its registration, but he

was not entitled to mesne profits.  After holding

that  the  appellant  had  failed  to  prove  the

payment  of  Rs.25,000/-  he  held  that  the

appellant  was  due  in  respect  of  the  balance

consideration of Rs.40,000/- to the respondents.

The  learned  District  Judge  clarified  that  the

appellant would be entitled to possession of the

suit  properties  only  after  he  deposited  the said

Rs.40,000/-  and  that   the  respondents  will  be

entitled to draw the said amount from the court.

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Thus  the  learned  District  Judge  partly  allowed

the appeal of the respondents by judgment and

order dated December 15, 1988.

6. Thereupon the respondents invoked jurisdiction

of the High Court by way of filing second appeal

under Section 100 of the Code of Civil Procedure,

1908.  The High Court was of the view that the

intention of the parties was that title would not

pass  to  the  appellant  till  the  full  consideration

was paid by him to the respondents and that title

to  the  suit  properties  never  passed  to  the

appellant as he had not paid full consideration to

the respondents.  Therefore, the High Court set

aside  the  decree  passed  by  the  trial  court,  as

confirmed  by  the  first  appellant  court,  and

dismissed the suit filed by the appellant, by its

judgment dated November 27, 2001 giving rise to

the instant appeal by special leave.

7. We have heard the learned counsel for the parties

at length and considered the evidence – oral and

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documentary,  forming  part  of  the  record.   The

question posed for our consideration is whether

title  to  the  disputed  properties  passed  to  the

appellant  when  the  sale  deed  dated  26.6.1983

was  registered  on  October  26,  1983,  though

admittedly  no  amount  was  paid  towards

consideration to the respondents.   

8. Sale is defined as being a transfer of ownership

for a price.  In a sale there is an absolute transfer

of all rights in the properties sold.  No rights are

left in the transferor.   The price is fixed by the

contract antecedent to the conveyance.  Price is

the essence of a contract of sale.  There is only

one  mode  of  transfer  by  sale  in  regard  to

immovable  property of the value of Rs.100/- or

more and that is by a registered instrument.  It is

now well  settled that payment of entire price is

not a condition precedent  for completion of the

sale by passing of title, as Section 54 of Transfer

of Property Act, 1882 (‘Act’ for short) defines ‘sale’

as a transfer of ownership in exchange for a price

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paid or promised or part paid and part promised.

If  the  intention of  parties  was that title  should

pass  on  execution  and  registration,  title  would

pass  to the  purchaser  even if  the sale  price  or

part  thereof  is  not  paid.   In  the  event  of  non-

payment  of  price  (or  balance  price  as  the  case

may be) thereafter,  the remedy of the vendor is

only  to  sue  for  the  balance  price.   He  cannot

avoid  the  sale.   He  is,  however,  entitled  to  a

charge upon the property for the unpaid part of

the  sale  price  where  the  ownership  of  the

property has passed to the buyer before payment

of the entire price, under Section 55(4)(b) of the

Act.   Normally,  ownership  and  title  to  the

property  will  pass  to  the  purchaser  on

registration of the sale deed with effect from the

date of execution of the sale deed.  But this is not

an invariable rule, as the true test of passing of

property  is  the  intention  of  parties.   Though

registration is prima facie proof of an intention to

transfer the property, it is not proof of operative

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transfer  if  payment  of  consideration (price)  is  a

condition precedent for passing of the property.

The answer to the question whether the parties

intended that transfer of the ownership should be

merely by execution and registration of the deed

or  whether  they  intended  the  transfer  of  the

property to take place,  only after  receipt  of  the

entire  consideration,  would  depend  on  the

intention  of  the  parties.   Such  intention  is

primarily to be gathered and determined from the

recitals of the sale deed.  When the recitals are

insufficient  or  ambiguous  the  surrounding

circumstances  and  conduct  of  parties  can  be

looked into for ascertaining the intention, subject

to  the  limitations  placed  by  Section  92  of

Evidence Act.

9. In  this case,  the execution of  the sale  deed  on

June  26,  1983  is  not  in  dispute.   The  said

instrument  was  presented  for  registration  on

October 21, 1983 and registered on October 26,

1983,  as  the  first  respondent/vendor  appeared

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before  the  Sub-Registrar  and admitted  that  the

vendors  had  executed  the  documents,  but

refused to make an endorsement to that effect on

the  deed  as  the  vendors  had  not  received  the

balance consideration of Rs.40,000/-.  Applying

the  above  mentioned  principles  to  the  facts  of

this case, we find that the parties intended that

ownership of the property would be transferred to

the  appellant  only  after  receipt  of  the  entire

consideration  by  the  vendors,  as  a  condition

precedent.  The operative portion of the sale deed

clearly  states  that  the  vendors  have  agreed  to

receive Rs.40,000/- in the presence of the Sub-

Registrar  on the  date  of  the  registration  of  the

sale deed and that in consideration of payment to

be so made, the property was being conveyed to

the purchaser.  This makes it clear that the title

was  intended  to  pass  only  on  the  payment  of

balance  consideration  of  Rs.40,000/-  in  the

presence  of  the  Sub-Registrar.   This  is  also

supported by the evidence of DW-1 to DW-4.  The

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Sub-Registrar  has also clearly  recorded that no

amount was tendered or paid by the purchaser to

the  vendors  in  his  presence.   Therefore  title  in

fact  did  not  pass  either  on  execution  or

registration of the sale deed.  There is yet another

circumstance to show that title was intended to

pass only after payment of full price.  Though the

sale deed recites that the purchaser is entitled to

hold, possess and enjoy the scheduled properties

from the date of sale,  neither the possession of

the properties nor the title deeds were delivered

to  the  purchaser  either  on  the  date  of  sale  or

thereafter.  It is admitted that possession of the

suit properties purported to have been sold under

the sale deed was never delivered to the appellant

and continued  to  be  with  the  respondents.   In

fact, the appellant, therefore, sought a decree for

possession  of  the  suit  properties  from  the

respondents  with  mesne  profits.   If  really  the

intention of the parties was that the title to the

properties  should  pass  to  the  appellant  on

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execution  of  the  deed  and  its  registration,  the

possession of the suit properties would have been

delivered to the appellant.

10. All the three courts have also concurrently found

that the appellant had pleaded a false case that

he had paid a part of the balance consideration,

that  is,  Rs.25,000/-  on  July  21,  2003  to  the

respondents  to  enable  them  to  purchase  lorry.

This case of the appellant was disbelieved by the

trial  court  as  well  as  the  first  appellate  court

which is the final court of facts.  That finding was

not challenged by the appellant before the High

Court.  From the averments made in the plaint it

is  evident  that  the  appellant  was  ready  and

willing to make payment of only Rs.15,000/- and

not  Rs.40,000/-.   He  had  never  shown  his

readiness  or  willingness  to  make  payment  of

Rs.40,000/-  which  was  the  balance  of  the

consideration and which had to be paid only in

the presence of the Sub-Registrar, as mentioned

in the deed.  Therefore, the first respondent who

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was present before the Sub-Registrar on behalf of

the  respondents  on  October  26,  1983,  was

justified  in  not  signing  or  affixing  his  thumb

mark  in  the  endorsement  of  registration  to  be

made on the deed, by the Sub-Registrar.

11. Therefore, on the facts and in the circumstances

of the case, we are of the considered view that the

parties really intended that title of ownership to

the suit properties would pass to the purchaser,

only  after  payment  of  full  consideration  by  the

purchaser to the vendor as a condition precedent.

Parties  did  not  intend  that  there  should  be

transfer  of  ownership  merely  on  execution  and

registration of the deed.  The trial court and first

appellate  court  having  misinterpreted  the  legal

position,  the  High  Court  rightly  set  aside  the

decree  passed  in  favour  of  the  appellant  and

dismissed the suit.   No ground is made out by

the appellant to interfere with the decision of the

High  Court.   Therefore,  the  appeal,  which  is

devoid of merits, deserves dismissal.

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12. For the foregoing reasons the appeal fails and is

dismissed.  There shall be no order as to costs.

……………………….J. [R.V. Raveendran]

……………………….J. [J.M. Panchal]

New Delhi; February 20, 2009.

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