CASE LAW ON SALE AGREEMENTS AND SALE

An agreement of sale does not creates any interest in the property, but it creates an obligation that is inherent to ownership. Soni Lalji case AIR 1967 SC 978. Bai Dosa bai case: AIR 1980 SC 1334.


Sale of property transfers ownership. Inderjit Singh case: AIR 1996 SC 247.


As a consequence of an agreement to sell, land was transferred under an unregistered sale deed. The transferor becomes owner even if he is not put into possession. State of A.P case: AIR 1982 SC 913.



Unless there is a written agreement for sale is executed, the vendee cannot defend his possession merely on the basis of oral agreement and certain correspondence with the vendor. M.C.Bakhru case: AIR 2002 SC 812.



A contract for sale or an agreement for sale does not create any title in favour of the transferee. But the provision section 53A of T.P.Act creates a bar on the transferor to seek possession from the transferee. Patel Natwarlal Rupji case: AIR 1996 SC 1088.

The person who acquired the property with notice that another person has entered into a contract affecting that property does not acquire title to that property but imposes on him the obligation to hold the property for the benefit of the other person to the extent necessary to give effect to the contract provided that the contract is one of which specific performance can be enforced. Khaja Bi and Others case: AIR 1964 Mys 269 (275). (FB).{ see section 40 of T.P.Act and Section 91 of Indian Trusts Act }

Way to transfer to non agriculturist:- Bar under Kar Land Reforms Act sec 80, Kar Land Revenue act sec 95(2) and Registration Act sec 22A operates only if under deed of transfer, possession of agriculture land is delivered to purchaser, who is not agriculturist. Where deed is only agreement to sell agricultural land after getting necessary permission to divert for non- agricultural use, and agreement does not involve delivery of possession, agreement cannot be construed as one opposed to public policy or contrary to law. Township Enterprises case before Karnataka High Court, Decided on 16-11-2004. Reported in 2005 (1) KarLJ 385.

Consequence of possession given in Sale agreements: It has to be executed with stamp paper equal to that of Conveyance or else it attracts duty penalty of 10 times that of actual stamp duty. In this case property agreed to be bought at Rs 18 lakhs with delivery of possession on stamp paper of Rs 200=00. Rs 19 Lakhs duty penalty imposed to enforce the same. Kapoor Constructions Bangalore case before KHC decide on 03-03-2005. Reported in 2005 (5) KarLJ 602.
NOTE: After the amendment of Registration act in 2001 such agreements coupled with delivery of possession needs to be compulsorily registered.

Limitation Act, art. 59
Whether provision of art. 59 would be attracted in a suit filed for setting aside a Deed of Sale?- Held, if a deed was executed by the plaintiff when he was a minor and it was void he could either file the suit within 12 years of the deed or within 3 years of attaining majority - Plaintiff did not either sue within 12 years of the deed or within 3 years of attaining majority - Suit was rightly held to be barred by limitation. FOR FULL CASE CLICK HERE