Sale Deed Executed Without Payment of Price Is Not Valid: Supreme Court Reiterates Law Under Section 54 TPA

The Supreme Court of India has once again clarified a crucial principle under the Transfer of Property Act, 1882 (TPA)—a sale deed executed without the payment of consideration is not a valid sale in the eyes of law. The judgment, delivered in Shanti Devi (Since Deceased) Through LRs. Goran v. Jagan Devi & Ors., Citation: 2025 LiveLaw (SC) 900, highlights the legal requirement that a sale of immovable property must involve payment of price, either immediately or in the future. Without this essential element, such a deed becomes void and non-enforceable.

A bench comprising Justice JB Pardiwala and Justice R Mahadevan ruled in favour of the plaintiff, upholding that the disputed sale deed was void ab initio as the defendant failed to prove payment of consideration.

Background of the Case

The case revolved around a contested sale deed in which the defendant claimed that:

• ₹9,000 was paid earlier, and
• ₹6,000 was paid at the time of registration of the sale deed.

However, these payments could not be substantiated with credible evidence.

• The defendant’s husband, who allegedly made the payment, did not step into the witness box.
• One attesting witness had passed away, while the other was the defendant’s brother, whose testimony was deemed unreliable.
• The original sale deed was not produced before the Court, inviting an adverse inference against the defendant.

Given these factors, the Court found that the essential requirement of sale consideration was not fulfilled, thereby rendering the deed void.

Key Legal Principle: Section 54 of the Transfer of Property Act, 1882

Section 54 TPA defines a sale as:

“A transfer of ownership in exchange for a price paid or promised or part-paid and part-promised.”

Thus, three elements are essential to a valid sale deed:

1. Transfer of ownership of immovable property.
2. Consideration (price) paid or promised.
3. Execution and registration (where required).

The Supreme Court stressed that without price, there is no sale at all in the eyes of law. This principle was earlier upheld in Kewal Krishnan v. Rajesh Kumar (2022) 18 SCC 489, where it was categorically stated that:

• Payment of price is not just a formality but an essential component.
• A sale deed without consideration is void ab initio.
• If the deed does not even provide for payment in the future, it fails to qualify as a valid transfer.

Why the Sale Deed Was Declared Void

In the present case, the Supreme Court observed:

• The burden of proof to establish payment of consideration lies on the transferee (buyer).
• Mere recitals in the sale deed are not enough when challenged—independent evidence must corroborate payment.
• Since the defendant failed to prove payment, the transaction was a sham sale deed, devoid of legal sanctity.

The Court concluded that the deed was void ab initio. When a deed is void, it does not require a separate prayer for cancellation—it simply has no effect in law.

Consequence: Limitation for Possession Suit

One of the significant clarifications in this judgment relates to the period of limitation for filing a suit for possession when a void sale deed is involved.

• If a sale deed is valid but challenged on grounds like fraud or misrepresentation, the limitation is governed by Article 59 of the Limitation Act, 1963 (three years).
• However, when the sale deed itself is void ab initio, the limitation is governed by Article 65 (12 years).

Thus, in this case, the plaintiff was entitled to recover possession based on her ownership rights within 12 years from the date of knowledge of adverse possession by the defendant.

This distinction is crucial for litigants—knowing whether a deed is void or voidable determines how much time they have to approach the courts.

Court’s Observations

The bench held:

• “The sale of an immovable property would have to be for a price and such a payment of price is essential, even if it is payable in the future.”
• “If a sale deed is executed without the payment of the price, it is not a sale at all in the eyes of law, specifically, under Section 54 of the Transfer of Property Act.”
• “Such a sale without consideration would be void and would not affect the transfer of the immovable property.”

Further, the Court clarified:

• When the deed is void, the plaintiff can maintain an action to recover possession based on title.
• There is no need to seek cancellation of a void deed since it is treated as non-existent in the eyes of law.

Impact of the Ruling

This judgment has significant implications in property law disputes:

1. Reinforces Buyer’s Burden of Proof:

• Buyers must ensure documentary evidence and credible witnesses to prove payment of consideration.
• Oral claims without proof may not sustain.

1. Clarifies Void vs. Voidable Deeds:

• A deed without consideration is void, not merely voidable.
• Parties cannot rely on technical defences when the basic requirement of law is not met.

1. Guides Limitation Period:

• Helps litigants understand whether Article 65 (12 years) or Article 59 (3 years) applies.
• Prevents dismissal of genuine suits on limitation grounds.

1. Strengthens Seller’s Protection:

• Protects rightful owners from losing property through sham transactions.
• Provides clarity that possession can be recovered based on ownership if consideration was never paid.

Comparative Perspective

Courts across India have consistently reiterated that price is the heart of a sale transaction. Similar rulings include:

• Kewal Krishnan v. Rajesh Kumar (2022) – No sale without price.
• Smt. Shrimati v. Shankar (1993 Supp (1) SCC 525) – Non-payment of price nullifies transfer.
• Kaliaperumal v. Rajagopal (2009) 4 SCC 193 – Payment of consideration is an essential element.

The present judgment aligns with this jurisprudence, ensuring uniform application of Section 54 TPA.

Conclusion

The Supreme Court’s decision in Shanti Devi v. Jagan Devi provides much-needed clarity on the validity of sale deeds under Section 54 of the TPA. By holding that a sale without consideration is void, the Court has reaffirmed the foundational principle that ownership in property cannot pass without a valid exchange of price.

This ruling serves as a strong reminder to both buyers and sellers to ensure compliance with statutory requirements in property transactions. It also reassures rightful owners that sham or fraudulent deeds without payment cannot deprive them of their title.

For legal practitioners, this judgment is a vital reference point in handling property disputes, especially where sale deeds are challenged for lack of consideration.

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