The Supreme Court has observed that the use of the term ‘Ta Khubzul Badlain’ in a sale deed does not determine the true nature of a transaction. This term cannot be analysed in isolation but has to be read with the recitals and conditions to decide the true nature of a sale deed.

The two-judge Bench of Justice Abhay S. Oka and Justice Rajesh Bindal observed, “Thus, this Court held that normally, on the execution and registration of a sale deed containing recitals regarding the payment of consideration and delivery of possession, the sale is complete even if the sale price is not paid and, therefore, it will not be possible to cancel the sale deed in its entirety. However, the exception to the said rule is the practice of ta khubzul badlain. The use of the expression ta khubzul badlain in a sale deed by itself will not be determinative of the true nature of the transaction. It cannot be read in isolation. All the terms and conditions and recitals in the document will have to be considered to decide the real nature of the transaction”.

Advocate Kumar Parimal appeared for the Appellant and Advocate T. Mahipal appeared for the Respondent.

In this case, the Plaintiff/Appellant, who was the son-in-law of the First Defendant/ Respondent, purchased a property from him through a registered Sale Deed. The Appellant claimed to have paid off the debts owed by the Respondent as part of the consideration. Later, the Respondent executed a Deed of Cancellation and a Gift Deed concerning the property. The Appellant filed a lawsuit seeking a declaration of title and claimed that the Gift Deed was forged. The Trial Court ruled in favour of the Appellant, but the High Court overturned the decision, stating that the Appellant did not pay the consideration and, thus, did not acquire any right to the property. The High Court also rejected the Appellant's claim of discharging the Respondent's loan liability. Therefore, a Civil Appeal was filed before the Court challenging the impugned order and judgement of the High Court.

The Court observed that according to the Sale Deed executed under Section 54 of the Transfer of Property Act (TPA), the Appellant obtained ownership of the property from the Respondent. The use of the term “Ta khubzul badlain” in the Sale Deed doesn't conclusively determine the transaction's nature. The Sale Deed clearly states that the Appellant became the owner of the property, and the Respondent had no claim or title to it.

The Bench observed, “Therefore, the use of the words “khubzul badlain”, in the facts of the case, cannot be conclusive. It is true that the Sale Deed refers to various mortgages executed by the first defendant for getting money and the recitals indicate that the plaintiff had agreed to discharge the said loan liabilities. But, there is a specific recital in the Sale Deed that the title and possession in the property have been passed to the plaintiff. These recitals regarding the transfer of title and possession are very crucial which cannot be brushed aside”.

Additionally, the Court asserted that even if there were unpaid considerations, the Respondent cannot cancel the Sale Deed unilaterally. The Appellant’s ownership was established, and he was entitled to possession of the property. The second Defendant, who received a gift deed from the Respondent, has no right as the Respondent had no transferable title. There was no counter-claim made by the first or second defendant for alleged unpaid consideration.

“If it was the case of the first defendant that there was no transfer of title under the said Sale Deed, there was no reason for him to unilaterally execute a document of cancellation of the sale deed. In any case, such a unilateral cancellation deed was not binding on the plaintiff as he was not a consenting party. The second defendant will not get any right by virtue of the gift deed as the first defendant had no transferable title. As the ownership of the plaintiff is proved, the decree for possession must follow. There was no counter­claim made by the first or second defendant for claiming alleged unpaid consideration”, the Bench stated.

Accordingly, the Court allowed the Appeal, set aside the impugned order and restored the decree passed by the Trial Court.

Cause Title: Yogendra Prasad Singh (Dead) through LRs v Ram Bachan Devi & Ors (2023 INSC 658)

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