Section 54& 118 of TPA

TOPIC 13
SALE OF IMMOVABLE PROPERTY : DEFINITION AND MODE OF

SALE AND EXCHANGE (SECTION 54 AND 118 OF TPA)
Section 54 of Transfer of Property Act, 1882 defines the sale as “Sale” is a

transfer of ownership in exchange for a price paid or promised or part-paid and part-
promised.
Sale how made - Such transfer, in the case of tangible immovable property of value
of one hundred rupees and upwards, or in the case of a reversion or other intangible
thing, can be made only by a registered instrument. In the case of tangible
immovable property of a value less than one hundred rupees, such transfer may be
made either by a registered instrument or by delivery of the property. Delivery of
tangible immovable property takes place when the seller places the buyer or such
person as he directs, in possession of the property.
Contract for Sale – A contract for the sale of immoveable property is a contract that a
sale of such property shall take place on terms settled between the parties. It does
not, of itself, create any interest in or charge on such property.
Mode of execution of Sale
For a sale of immovable property, e.g. a building, there will be a contract between
the parties requiring the seller to transfer the ownership in the building for a price in
cash. The contract will provide the terms of the sale, including the time of passing of
the ownership, delivery of the property and payment by the buyer. In the
performance of the contract, when seller transfers the ownership in the property, the
sale is done. At some point of time, the seller will give possession of the property of
the buyer. A sale of immovable property is done through a registered instrument.
Essentials of Sale
According to Section 54 of TPA, the following are the essentials of a valid sale:
 Parties to sale :
In a sale, there must be at least two parties. The person who transfers
his / her property is known as the transferor / seller / vendor and the
person to whom the property is transferred is known as the transferee /
buyer / vendee.
 Competency :
For a valid sale both the buyer and seller have to be competent on the date of
the sale.
a. Seller
i. The seller must have the ownership of the property which he
is going to sell.
ii. The seller must have a legal title to it only then he can sell
the property.
iii. He must not be a minor.
iv. He must not be of unsound mind.
v. He must not be statutorily incompetent.
vi. The seller may be a natural person / juristic person, for
example, corporations or another legal person
b. Buyer
i. The buyer must be competent to receive the ownership of
the property.
ii. The buyer should not be disqualified from buying the
immovable property by any law in force at the time of the
sale.
iii. The seller may be a natural person / juristic person, for
example, corporations or another legal person
c. Subject matter of sale
Sale under Transfer of Property Act, 1882 specifically deals with
sale of immovable property. Immovable property can be
tangible or intangible. Tangible property is one that can be
touched, such as a land, a house, a tree, things attached to
earth, etc., while intangible property refer to a property that
cannot be touched such as a right of ferry, a right to mortgage, a
right of fishery, etc.
 Price or consideration :
Price is an essential element of the sale. At the time of the contract of
a sale, a price must be ascertained at which the property is going to be
transferred. The price can be paid at the time of sale or before the sale
in advance or after the sale. At the same time, it can be paid in a lump
sum or in part.
 Registration :
According to the Section 54 of the Act, writing, attestation and
registration are the essential requirements for the completion of a valid
sale of the property, whose value is more than Rs. 100. For sale of
property whose value is less that Rs. 100, the registration is optional.
 Conveyance :
Section 54 provides two modes for transfer of property –
i. Delivery of possession
ii. Registration of sale deed
SECTION 118 OF TRANSFER OF PROPERTY ACT, 1882 defines as “when two
persons mutually transfer ownership of one thing for the ownership of another,
neither thing or both things being money only, the transaction is called an
“Exchange”.
From above it can be understand that for being an “Exchange”;
i. There must be two person transferring ownership of one thing for the ownership of
another;
ii. Neither thing or both things being money only.
Transfer of any property against consideration is called “Sale”, and transfer without
consideration is called “Gift”. Now when a property has been exchanged with
another property it is called “Exchange”.
There may be both immovable or movable property, which can be transferred

through exchange. In some cases where transfer of ownership of a property along
with some money against some ownership of another property happen, it also comes
under definition of exchange.
Example: Suppose Mr. A is transferring his residential property in Patna, valued Rs.
30.00 Lakhs against property of Mr. B in Gaya of Rs. 27.00 Lakhs. Now in this case
Mr. B is transferring ownership of his property and giving cash of Rs. 3.00 Lakhs
against ownership of property belong to Mr. A. This case also falls under definition of
“Exchange”, and not “Sale”.
Note: Oral exchange is not permissible in view of the amendment of Section 49

of the Registration Act, 1908 brought about by Act No. 21 of 1929 , which by
inserting in Section 49 of the Registration Act, 1908 the words” or by any provision of
the Transfer of Property Act, 1882” , has made it clear that the documents of which
registration is necessary under the Transfer of Property Act, 1882 but not under the
Registration Act, 1908 fall within scope of Section 49 of the Registration Act, 1949.
And if not registered they are not admissible as an evidence of any transaction
affecting any immovable property comprised therein and do not affect any such
immovable property.
Transaction by Exchange which requires to be affected through registered

instrument is if it was to affect any immovable property worth of Rs. 100 or
more. [ Satyvan Vs. Raghuvir, AIR 2002 P&H (2002) (3) ICC112(Punj)LR467].
FEATURES OF EXCHANGE;
1. Transfer of ownership; Exchange involves transfer of ownership in some
existing property. In transfer of ownership, absolute interest of the owner is
transferred. A partition of immovable property is not considered as exchange.
2. Property need not be immovable property; In Exchange properties may be

immovable or movable. An immovable property can be transferred against a
movable property and vice versa.
3. Exchange includes “Barter”; Exchange of one immovable property with

another immovable property is known as “Barter” and same in case of transfer of
one movable property against another moveable property.
4. Mode of Transfer;
i. Section 118 provides that a transfer of property in completion of an

exchange can be made only in a manner prescribed for transfer of such
property by “Sale”. The formalities of Section 54 (dealing with sale of
properties) will be complied with;
ii. Where both properties are of movable, then exchange may be affected by
delivery of properties and registration is not essential;
iii. Where properties are immovable, but value is less than Rs. 100, then
registration is optional;
iv. Where the properties exchange are immovable properties and their value
are more than Rs. 100/- then registration of exchange of ownership
through instrument is necessary.
Note:
1. It is necessary that Deed of Exchange is a valid contract and not void under
Contract Act. Suppose persons are exchanging ownership of their properties
to hide act of crime or financial crime or benami properties then the instrument
of exchange become void. [ Srihari Jena Vs. Khetramohan Jena, AIR
(2002) Orissa 195; 2002 (4) Civ LJ 279].
2. When in an exchange of properties one party did not get possession of the
property he was entitled to receive in exchange, he was held entitled to return
property transferred by him. Hari Shankar Mishra Vs. Vice Chairman,
Kanpur Development Authority, AIR 2001 All 139 ;2001(42) ALL LR 839.
3. Balakrishnan Bhagwanji Lodi Vs. Prakash Sheshrao Lodi, AIR 2005 NOC
89(Bombay); It was held that in case of partition of joint family property, once
partition is affected, whether by way of family arrangement or deed of
partition, there is severance of jointness of properties. Two brothers thereafter
exchanged properties which were held by them separately. The properties
being worth more than Rs. 100/- in value. They could exchange them only
through registered instruments.
CHITRA KUNDAN
ASSITANT (GUEST) PROFESSOR
PATNA LAW COLLEGE

Section 54& 118 of TPA

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TOPIC 13

SALE OF IMMOVABLE PROPERTY : DEFINITION AND MODE OF

Section 54 of Transfer of Property Act, 1882 defines the sale as “Sale” is a

Mode of execution of Sale

From above it can be understand that for being an “Exchange”;

There may be both immovable or movable property, which can be transferred

Note: Oral exchange is not permissible in view of the amendment of Section 49

Transaction by Exchange which requires to be affected through registered

2. Property need not be immovable property; In Exchange properties may be

3. Exchange includes “Barter”; Exchange of one immovable property with

i. Section 118 provides that a transfer of property in completion of an

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