Case Overview
The case involves a pair of old sale deeds dated in 1975, and where the seller did not receive the whole price for the lands. Later the sellers asked the court to cancel the deeds as the remaining money had not been paid. The trial court and first appeal court ruled the deeds valid while the High Court ruled otherwise and cancelled the deeds. At last Supreme Court has restored the trial court’s finding that non-payment of the balance price does not make a sale deed void. The heirs of the buyer are still liable for the unpaid amount and interest.
Facts
The original sellers were owing money to government departments and banks. A man consented to purchase their two lots and to settle these debts. Two sale deeds were signed for the sum of Rs. on 10 March 1975. 7,000 each. Only Rs. Each property cost Rs. 2500 up front and the buyer retained Rs. 4,500 each, taking it out to settle the debts of the sellers. These sellers insisted he sign two other agreements, assuming the dues, when he refused to pay the fees. But he still didn’t pay. The sellers then went to court in 1984 and sought to cancel both sale deeds and to be declared full owners in 1984 and also asked the court to put a stop to the buyer from disturbing their ownership.
Court’s Observations/Reasoning
The trial court and the first appellate court held that the sale deeds did not provide that in the event of failure to pay the balance the sale of the land would be cancelled. They stated that the owners could only be reimbursed for the amount of money that was not paid but not for the cancelation of the sale. In the second appeal, the High Court has taken a different view and set aside the sale deeds holding that the unpaid balance rendered the deeds to be null and void. The Supreme Court took the view of disapproving the High Court. The Court relied on its previous decisions in the cases of Vidhyadhar v. Manikroo and Dahiben v. Arvindbhai Kalyanji Bhanusali, and explained that a sale is deemed to be complete upon execution of the deed, irrespective of the fact that the entire amount has not been paid. If you fail to pay the balance, the seller does not have a right to cancel the transaction but rather only has a right to collect the balance. The Court also observed that the sellers should have pleaded for the repayment of the unpaid portion and not for the cancellation but the sale deeds clearly mentioned that the unpaid portion of the sale consideration was to be paid to the sellers by the buyer.
Decision
The buyer’s legal heirs filed an appeal, which was granted by the Supreme Court. It superseded the High Court’s verdict and reinstated the verdict of the first appellate court and trial court. The Court decided that the heirs of the buyer are obliged to pay the remainder of the sale consideration as well as the interest rate from 10 March 1975 at the rate at which the sellers were charged by their creditors. Neither lower court had interfered with the sellers’ possession of the properties, so that gave them the chance to stay in the properties.
Obiter Dicta
Beyond the main ruling, the Supreme Court made a few passing observations. It remarked that the trial court’s refusal to disturb the sellers’ possession was better explained by the fact that the buyer had never filed a counter-claim for possession, rather than by the absence of a suit for specific performance or reconveyance as the trial court had stated. The Court also noted, without deciding the point formally, that since the agreements were made in 1975 and 1976 but the sellers filed their suit only in 1984, a serious question of limitation arose on the sellers’ claim.
Conclusion
This principle of property law has been well established, namely that a sale deed once validly executed and registered cannot be set aside on the ground that part of the purchase money is not paid. In such a case, the proper remedy for the seller is for the buyer to pay the balance amount with interest, not to have the sale cancelled.
Judgment link: 13874_2010_6_1501_72907_Judgement_07-Aug-2026.pdf
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