Sale Not A Contract; No Bar To Transfer Immovable Property To Minor : Supreme Court

The Supreme Court observed that there's no bar to transfer immovable property in favour of aminor by way of a sale deed.

According to the Court, the minor can become the transferee/owner by way of a sale deed and the conditions stipulated under Section 11 of the Indian Contract Act, 1872 (persons competent to contract) would not come in the way of challenging the minor's capacity to contract because a sale can't be termed as a contract.

“Though an agreement to sell is a contract of sale, going by its definition under Section 54 of the Transfer of Property Act, a sale cannot be said to be a contract. Sale, going by the definition thereunder, is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. The conjoint reading of all the aforesaid relevant provisions would undoubtedly go to show that they would not come in the way of transfer of an immovable property in favour of a minor or in other words, they would invariably suggest that a minor can be a transferee though not a transferor of immovable property.”, the bench comprising Justices CT Ravikumar and Sanjay Kumar observed.

To clarify, as per Section 11 of the Contract Act, a minor person is not competent to contract. The Court said that since a sale cannot be said to be a contract, therefore, the requirement of Section 11 becomes redundant in cases where the sale is made to the minor.

Accordingly, the Court held that once the property is transferred to a person being a minor, then on attaining majority, he would be competent to transfer the said property to any other person.

The Court said that the transfer made by the person upon attaining majority cannot be challenged just because he happened to be a minor when the property was transferred to him.

It was the case where the plaintiff's/respondent's ownership and possession over the suit property was disputed by the defendants/appellants on the ground that the transfer of the suit property to the plaintiffs by one Sitaram (when he was 22 years old) in the year 1968 cannot be termed as a valid transfer. According to the respondents, since Sitaram was a minor (when he was 17 years old) in the year 1963 when the property was transferred to him, therefore, he lacked the competence to transfer the same to the plaintiffs in the year 1968 as he didn't hold good title over the suit property.

The trial court as well as the First Appellate Court held in the defendant's/appellants' favor, whereas the High Court in a Second Appeal reversed the said findings leading to the impugned judgment.

Affirming the High Court's decision, the judgment authored by Justice CT Ravikumar noted as follows:

“In such circumstances, it can only be said that Sh. Sitaram had no legal disability or disqualification at the time of purchase of suit land on 15.03.1963 in his name as also the plaintiff, as a transferee, at the time of execution of Ext.P1/C - sale deed on 04.06.1968. It is nobody's case that at the time of execution of Ext.P1/C Sitaram had not attained majority.”

The Court also touched upon the defendant's/appellants' un-assailed contention of benami transaction by observing that the High Court was justified in holding that as per Section 4 of the Benami Transaction Act, 1988 “no suit, claim or action to enforce a right in respect of any property held benami shall lie against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be the real owner of such property because of the prohibitory nature therefor.”

Ultimately, the court held that the transfer of the suit property by Sitaram via the sale deed executed on 04.06.1968 cannot be disputed by the appellants/defendants on the ground that Sitaram doesn't hold good title over the suit property.

The appeal was dismissed.

Case Title: Neelam Gupta & Ors Versus Rajendra Kumar Gupta & Anr., Civil Appeal Nos.3159-3160 of 2019

Citation : 2024 LiveLaw (SC) 796

Click here to read/download the judgment

Appearance:

For Appellant(s) Ms. Pratibha Jain, AOR Mr. N.K. Mody, Sr. Adv. Mr. Divyakant Lahoti, AOR Ms. Praveena Bisht, Adv. Ms. Vindhya Mehra, Adv. Mr. Kartik Lahoti, Adv. Ms. Garima Verma, Adv.

For Respondent(s) Mr. Puneet Jain, Adv. Ms. Christi Jain, Adv. Mr. Umang Mehta, Adv. Mr. Abhinav Gupta, Adv. Mr. Yogit Kamat, Adv. Mr. Manav Arora, Adv. Ms. Shruti Singh, Adv. Ms. Akriti Sharma, Adv. Mr. Harsh Jain, Adv. Ms. Pratibha Jain, AOR Mr. Divyakant Lahoti, AOR Mr. Sumeer Sodhi, AOR Mr. Soumit Ganguli, Adv.