Cancellation of Sale Deed

When buying assets from an owner, the buyer needs to have a document that legalizes the transaction and acts as an acknowledgement of all parties involved of the transaction being processed with their consent. It is the most important document that acts as a proof of sale and purchase of a property, and which can be presented in case of any potential dispute related to the concerned property.

What is a Sale Deed?

A sale deed refers to a document that states the transfer of title, rights and ownership of a property from a seller to a buyer. It is a legal binding that is a record of the transaction between the transferor (seller) and the transferee (buyer). The sale or purchase of any property is not complete legally until both parties are satisfied, comply with the terms and conditions and have signed a sale deed.

Where is a Sale Deed used?

• Whenever a property like a flat or a house is sold, the deed needs to be documented on a non-judicial stamp paper of requisite value that has been set by the government.
• Different states have different predetermined values of stamp paper that the buyer needs to pay along with the registration charges to complete the transaction.
• The seller is responsible for ensuring that all loans, bills and dues are paid for the concerned property before the transaction takes place and the sale deed is signed.

What does Cancellation of Sale Deed mean?

Cancellation of sale deed refers to the revocation of the purchase and sale of property.

• A sale deed may be cancelled if any party involved is unsatisfied with the deal and makes a claim regarding the same in the court of law.
• The petitioner needs to get an order from the Civil Court and present it to the Registrar, who will then go ahead with the cancellation process. While only these entities can cancel any sale deed, they will not do so until they find a genuine reason or concern behind the request.

Sections 31 to 33 of the Specific Relief Act, 1963 mention when a sale deed can be cancelled. Any sale deed can only be cancelled within three years from the date of registration of the deed.

When can a Sale Deed be Cancelled?

A sale deed cannot be cancelled for any random reason but only for a substantially significant reason. Simply because the buyer or the seller are not interested in the transaction does not amount to a valid reason for cancellation of the sale deed. It can only be cancelled due to any of the following reasons:

• The deed is void.
• The deed was induced by undue influence.
• Deed was signed under fraud or misrepresentation of facts.
• The entire transaction and transfer are done fraudulently.
• A minor has executed the deed.
• If the court believes that the sale might cause harm or injure the petitioner.

Reasons such as delay in payments, partial payments, no more interest of the buyer in the property, and dishonoring cheques are not considered as satisfactory grounds to approve the cancellation of a sale deed.

Sale Deed Cancellation Process

• The deed that needs to be cancelled must be registered according to the laws prescribed in the Indian Registration Act, 1908.
• The process of cancellation can only be executed by the Registrar after the Civil Court gives an order for cancellation of the concerned deal.
• The petitioner seeking sale deed cancellation must carry a civil case after paying an appropriate court fee.
• After the court is satisfied and acknowledges that the reason for cancellation is valid, only then will they issue an order for the cancellation of the same.
• Cancellation can take place only after taking the mutual consent of both parties involved.
• The officer, in whose office the document had been registered will receive a copy of the court’s decree and record the details of the cancellation.
• It is vital that the municipal records show accurate details of the ownership of any property. Therefore, once the right to a property is destroyed by registering a cancellation of a sale deed, the new owner would be responsible to undertake the property mutation and ensure that the process is completed accurately.
• Once an owner transfers the ownership of any property through sale, even if the balance amount is yet to be paid or not paid due to some other reason, the transaction cannot be reversed. However, in this case, the petitioner can file a suit for recovery, or for dishonoring a cheque in the court under Section 138 of the Negotiable Instruments Act.

What happens in case of Non-Payment or Fraud?

• Once an owner transfers the ownership of any property through sale, even if the balance amount is yet to be paid or not paid due to some other reason, the transaction cannot be reversed. However, in this case, the petitioner can file a suit for recovery, or for dishonoring a cheque in the court under Section 138 of the Negotiable Instruments Act.

An example of this is the matter of Vidhyadhar v. Manik Rao AIR 1999 SC1441, wherein it was held that non-payment of a part of the sale price would not affect the validity of the sale.

 

• In case of fraud, misrepresentation or any other reason, it is the petitioner’s responsibility to prove the above-mentioned reasons to get the sale deed cancelled.

When a property is purchased jointly and one of the owners gives a buyer false information, the other owners of the property may approach the court and request for the cancellation of the sale deed. In such cases, the court examines the rights of the buyer and once satisfied with the validity of the claims, it may declare the sale deed to be partly cancelled.

 

Compensation for Cancellation of Sale Deed

If the court finds the claims of the injured party to be valid and orders for cancellation of sale deed, the defaulter may be asked to compensate the injured party the dues and for the various benefits they may have availed of. The court may force the defaulter to pay for the damages, as they have benefitted from it in several ways.

Furthermore, if the deed is not as per the laws stated in Section 11 of the Indian Contract Act, 1872, the court may decide to ask them to restore the benefits they availed of due to the deed as well.

Conclusion

There have been several instances of cancellation of sale deed which dragged on for several years in tiring legal battles, resulting in such cases gaining infamy. It is strongly advised to thoroughly go through and verify the various details associated with sale deed to avoid any potential conflicts regarding the same in the future.
 

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