Sale Deed Executed Without Payment Of Price Is Void; Has No Legal Effect: Supreme Court

The Supreme Court observed that the payment of price is an essential part of a sale.

If a sale deed in respect of an immovable property is executed without payment of price and if it does not provide for the payment of price at a future date, it is not a sale at all in the eyes of law, the bench comprising Justices Ajay Rastogi and Abhay S. Oka said.

The court also observed that a document which is void need not be challenged by claiming a declaration as the said plea can be set up and proved even in collateral proceedings.

In this case, one Kewal Krishan executed a power of attorney in favour of Sudarshan Kumar on 28th March 1980. Acting on the basis of the said power of attorney, two sale deeds were executed by Sudarshan Kumar on 10th April 1981. The first sale deed was executed by him by which he purported to sell a part of the suit properties to his minor sons. The sale consideration was shown as Rs.5,500/-. The other sale deed was executed by Sudarshan Kumar in favour of his wife in respect of remaining part of the suit properties. The consideration shown in the sale deed was of Rs.6,875/-. 

Kewal Krishan filed two separate suits. One was against Sudarshan Kumar and his two sons and the other one was against Sudarshan Kumar and his wife. Both the suits, as originally filed, were for injunction restraining the defendants from interfering with his possession and from alienating his share  in the suit properties. In the alternative, a prayer was made for passing a decree for possession. The Trial Court dismissed the suits filed by Kewal Krishan. In appeal, the District Court partly decreed the suits. The High Court held that the suits for declaration of invalidity of the sale deeds were barred by limitation as the said prayers were belatedly incorporated on 23rd November 1985.

In appeal, it was contended that there was no evidence adduced to show that the purchasers under the sale deeds dated 10th April 1981 had paid consideration to Sudarshan Kumar, and that the minor sons of Sudarshan Kumar and his wife had no source of earning

Referring to Section 54 of the Transfer of Property Act, 1882, the bench observed:

Hence, a sale of an immovable property has to be for a price. The price may be payable in future. It may be partly paid and the remaining part can be made payable in future. The payment of price is an essential part of a sale covered by section 54 of the TP Act. If a sale deed in respect of an immovable property is executed without payment of price and if it does not provide for the payment of price at a future date, it is not a sale at all in the eyes of law. It is of no legal effect. Therefore, such a sale will be void. It will not effect the transfer of the immovable property.

The court noted that no evidence was adduced by Sudarshan Kumar about the payment of the price mentioned in the sale deeds as well as the earning capacity at the relevant time of his wife and minor sons. Hence, the sale deeds will have to be held as void being executed without consideration, the court added. On the issue of limitation, the bench said:

"It was not necessary for the appellant to specifically claim a declaration as regards the sale deeds by way of amendment to the plaint. The reason being that there were specific pleadings in the plaints as originally filed that the sale deeds were void. A document which is void need not be challenged by claiming a declaration as the said plea can be set up and proved even in collateral proceedings. Hence, the issue of bar of limitation of the prayers for declaration incorporated by way of an amendment does not arise at all."

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