Sale deed executed with full knowledge of only part consideration paid, not void – SC

Sale deed executed with full knowledge of only part consideration paid, cannot be rendered void or inoperative merely for non payment of full consideration

In a recent judgment, Hon’ble Supreme Court has held that sale deed executed with full knowledge of only part consideration paid, cannot be rendered void or inoperative merely because the balance consideration promised to be paid as per sale deed, had not been paid.

ABCAUS Case Law Citation:
5203 (2026) (08) abacus.in SC

Important Case Laws relied upon by Parties:
Vidhyadhar v. Manikrao & Anr.
Dahiben v. Arvindbhai Kalyanji Bhanusali (Gajra) Dead through Legal Representatives & Ors.

In the instant case, the seller had executed two sale deeds in view of the debts accrued in his name in various financial institutions and the government departments.

The buyer as a helping hand agreed to find a purchaser for the property. However, the purchaser brought, left at the last minute, and the buyer agreed to purchase the lands. Since, at that time of the buyer was not able to pay the sale consideration, he persuaded the seller to execute the sale deeds with respect to both the lands, and paid only part of the consideration i.e. 35% approx. and retained balance amount so as to settle the dues remaining against the seller in the various institutions.

When the buyer failed to satisfy the dues, he executed an agreement with respect to one of the properties promising to handover the balance amount and with respect to the other property, another agreement was executed taking upon himself the responsibility to repay all the loans.

However, on failure of the buyer, the seller took legal recourse by filing a suit for cancellation of the sale deeds, declaration of ownership. The Trial Court after evaluating the evidence, found that the agreements related to a concluded sale and, though, there was only part payment of the sale consideration, even as per the agreement, there was no condition in the sale deed that refusal to pay the balance sale consideration would result in the cancellation of the sale deed.

It was observed that subsequent agreements only reaffirmed the obligation of the defendant to pay the balance consideration as per the sale deed.

The suit was dismissed with the finding that the seller was not entitled to cancellation of the sale deeds, declaration of ownership or the injunction as prayed for. Insofar as the possession, the Trial Court refused to interfere, since it was found that there was no claim for specific performance or reconveyance. The Trial Court dismissed the suit, and the First Appellate Court affirmed it.

Whether the sale deeds executed, without the entire sale consideration being paid was valid and binding on the seller?

The Hon’ble High Court decreed the suit declaring the seller to be the owner of the lands.

The Hon’ble Supreme Court opined that 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 seller was to file for recovery of balance sale consideration and not to seek declaration that the sale deeds were null and void; which was not the case.

The Hon’ble Supreme Court further observed that as noticed by the Trial Court, the buyer would have to pay the balance sale consideration with interest at the rate of interest charged on the seller by the Institutions.

Accordingly, the Hon’ble Supreme Court reversed the judgment of the High Court and restored judgment of the Trial Court as affirmed by the First Appellate Court. 

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