The Supreme Court recently ruled that an actual payment of the sale consideration at the time of execution is not necessary for completion of the sale; and the remedy against the non-payment of the balance consideration would be to file a money recovery suit rather than seeking a cancellation of sale deed.

“When a sale deed is registered, even upon part payment of the sale price, title would pass to the transferee. The non-payment of remaining part of the sale price would not invalidate it and the remedy would be to recover the balance sale consideration, but not cancellation of sale deed for non-payment of balance sale consideration.”, observed a bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran.

The Court set aside the Bombay High Court's Nagpur Bench judgment passed in a second appeal, which had interfered with the concurrent findings of the First Appellate Court and trial court, approving the execution of a sale deed merely on a part payment of sale consideration.

The dispute arose from two sale deeds executed by the original plaintiffs in favour of the original defendant. The total consideration fixed for each property was Rs. 7,000, out of which Rs. 2,500 was handed over at the time of execution. The defendant retained Rs. 4,500 for each property to settle the dues remaining against the plaintiffs in various financial institutions and government departments.

The plaintiffs filed a suit seeking a declaration that the sale deeds were void and inoperative, cancellation of the deeds, and declaration of ownership. They also sought a permanent injunction against the defendant.

The trial court decision to dismiss the suit was affirmed by the First Appellate Court, aggrieved by which the plaintiffs filed a second appeal before the High Court.

Aggrieved by the High Court's decision to reverse the concurrent findings of the First Appellate Court and trial court, the defendants appealed to the Supreme Court.

Allowing the appeal, the judgment authored by Justice Chandran restored the trial court's decision, approving the execution of a sale deed on a part-payment. The Court said that an appropriate remedy for the plaintiff against the non-payment of the balance consideration was to file a money recovery suit, rather than seeking a cancellation of the sale deed.

“The sale deed executed with full knowledge of the part consideration alone having been passed, cannot be rendered void or inoperative merely because the balance consideration promised to be paid, which promise was incorporated in the sale deed, had not been complied with. The right of the plaintiffs was to file for recovery of balance sale consideration and not to seek declaration that the sale deeds were null and void; which they are not.”, the Court observed.

The Court clarified that the appellants-defendants would have to pay the balance sale consideration with interest, and seek possession of the property, if they so desire.

The Trial Court and First Appellate Court had refused to interfere with the possession of the Respondent-plaintiffs, which the Court refused to interfere with.

Cause Title: Raziya Begum & Ors. Versus Nafisa Begum Abdul Hamid & Ors.

Citation : 2026 LiveLaw (SC) 780

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Appearance:

For Appellant(s) : Mr. Satyajit A. Desai, Adv. Mr. Sachin Patil, Adv. Mr. Pratik Kumar Singh, Adv. Mr. Sachin Singh, Adv. Mr. Shashank Upadhyay, Adv. Ms. Anagha S. Desai, AOR

For Respondent(s) : Mr. Farrukh Rasheed, AOR Ms. Shifa, Adv. Ms. Harshita Singhal, Adv.