Case Law Details
Dahiben Vs Arvindbhai Kalyanji Bhanusali (Gajra)(D) Thr Lrs & Ors (Supreme Court)
Non Payment of part of Sale Consideration does not make a Sale Deed ‘Void’ nor constitutes a valid ground for Cancellation
The Apex Court in the case of Dahiben vs. Arvindbhai Kalyanji Bhanusali (Gajra)(D) Thr Lrs decided on July 9, 2020 has categorically held that non-payment of a part of sale consideration does not make the registered Sale Deed ‘void’ nor does it constitute a valid ground for its cancellation. It is common knowledge that in Real Estate transactions, cheques are given as a part of sales consideration at the time of execution of sale-deed, which areduly mentioned in the said sale-deed. The seller feels assured as he has a conviction that the sale deed executed by him is conditional, subject to encashment of the said cheques and in the event of the cheques being dishonoured the sale deed would automatically become ‘void’ & infructuous but the legal position does not conform to his belief. The matter has come up before the various High Courts and the Apex Court who have categorically held that, in such a case, the seller has to move to the civil courts by filing a suit for recovery of his balance consideration but can neither claim the said sale deed as invalid nor can file a suit for cancellation of the said sale deed on this ground.
The brief facts of the said case are that agricultural land situated in District Surat owned by the Plaintiffs were transferred by them through a registered sale deed dated 02-07-2009 to Respondent No. 1 for a consideration of Rs. 1,74,02,000/-. The Respondent No. 1 – purchaser issued 36 cheques for Rs. 1,74,02,000 towards payment of the sale consideration in favour of the Plaintiffs, the details of which were set out in the said registered Sale Deed. The Respondent No. 1 subsequently sold the said land to Respondent Nos. 2 and 3 herein vide registered Sale Deed dated 01.04.2013, for a sale consideration of Rs. 2,01,00,000/-. The Plaintiffs thereafter filed Special Civil Suit before the Principal Civil Judge, Surat against the original purchaser i.e. Respondent No. 1, and also impleaded the subsequent purchasers i.e. Respondent Nos. 2 and 3 as defendants praying that the Sale Deed dated 02.07.2009 be cancelled and declared as being illegal, void, ineffective and not binding on them, on the ground that the sale consideration had not been paid in entirety by Respondent No. 1. The Plaintiffs contended that they were totally illiterate and were not able to read and write and had put their thumb impressions on the Sale Deed dated 02.07.2009 without due understanding of its contents. According to the Plaintiffs, the Sale Deed was obtained without payment of full consideration & the Respondent No.1 had paid only Rs. 40,000 through 6 cheques, and remaining 30 cheques for Rs.1,73,62,000 were “bogus” cheques, which remained unpaid. The Plaintiffs prayed for restoring the physical possession of the said lands to them. The Respondents pleaded that the Plaintiffs was barred by limitation and that no cause of action had been disclosed in the plaint. The Gujarat High Court upheld the order of the trial court holding that the suit filed by the Plaintiff was barred by limitation.
The Apex Court bench summarized the law applicable for deciding an application under Order VII Rule 11 CPC. The Court referred to the judgment in Vidyadhar v. Manikrao (1999) 3 SCC 573 and Section 54 of the Transfer of Property Act, 1882, the court said that the words “price paid or promised or part paid and part promised” indicates that actual payment of the whole of the price at the time of the execution of the Sale Deed is not a sine qua non for completion of the sale. The Court held thus:
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