Transfer Of Property Act | Agreement To Sell Does Not Create Interest In Property: Allahabad High Court Reiterates

The Allahabad High Court has reiterated that as per Section 54 of the Transfer of Property Act, an agreement to sell would not create an interest in the property to be sold.Justice Manish Kumar Nigam relied on judgments of the Apex Court in State of U.P. v. District Judge & Ors., Rambhai Mandeo Gajre v. Narayan Bapuji Dotra through LRS, to draw the distinction between an agreement to sell and a deed of sale. “A contract for sale does not, by itself, create any interest in or charge on such property. Such contract is merely a document creating a right to obtain another document in the form of sale deed to be registered in accordance with law. In other words, a contract for sale is a right created in personam and not in estate,” held the Court. The property in dispute was passed to the plaintiff's mother on the death of his father. However, he contended that ownership was to be held jointly by the pair. To this end, the plaintiff filed an original suit in the year 2020, seeking partition and other reliefs. Subsequently, respondents No. 4 and 5 claimed impleadment on the ground that the plaintiff's mother had executed an agreement to sell in their favour. The application was allowed and aggrieved, the plaintiff filed the present revision.The court held that as per Section 54 of the Transfer of Property Act, an agreement to sell would not create an interest in the suit property but only an enforceable right amongst the parties. “An agreement for sale is not the same as sale and the title to the property agreed to be sold vests in the vendor in case of an agreement to sell but in the case of sale, title of property vests with the purchaser. An agreement for sale is a executory contract wherein a sale is a executed contract,” held Justice Manish Kumar Nigam. The Court held that Indian law did not recognize equitable estates and the English rule that contracts make the proposed vendee an owner in equity of the state would not find application here. Relying on the decision of the Apex Court in Bibi Zubaida Khatoon v. Nabi Hassan Saheb & Anr., it was held that an agreement to sell would not result in any right in law on equity with regard to the property in dispute. The Court thus held that the respondents were not a proper party to be impleaded in the suit. Accordingly, the revision was allowed. Case Title: Deependra Chauhan v. Phool Kumari Chauhan and 4 Ors. [CIVIL REVISION No. - 12 of 2024]Click Here To Read/Download Order

Transfer Of Property Act | Agreement To Sell Does Not Create Interest In Property: Allahabad High Court Reiterates

Upasna Agrawal

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