Effect of exchange transaction on agreement to sell. There are notable discrepancies with regard to the place where the sale was effected and the payment of sale consideration, which is a necessary corollary for a valid sale in terms of section 54 of the Transfer of Property Act, 1882.

Case Laws June 16, 2022

Effect of exchange transaction on agreement to sell. There are notable discrepancies with regard to the place where the sale was effected and the payment of sale consideration, which is a necessary corollary for a valid sale in terms of section 54 of the Transfer of Property Act, 1882. Word "transfer" used in Section 41 of the Act, 1882 is clearly neither restricted nor confined to the sale transaction. It is an oft repeated principle of law that while interpreting a provision of law or a word used in the statute, it shall be given plenary meaning and nothing should be imported which is not specifically provided therein. In order to understand the proposition in better terms, the definitions of terms "sale" and "exchange" are to be looked into. Sale is defined in Section 54 of the Act, 1882 as under: -

54. "Sale defined." "Sale" is a transfer of ownership in exchange for a price paid or promised or part-paid part-promised. Whereas Section 118 of the Act ibid provides the definition of term "exchange" which reads as follows:- 

118. "Exchange" defined. When two persons mutually transfer the ownership of one thing for the ownership of another, neither thing or both things being money only, the transaction is called an "exchange". 

A transfer of property in completion of an exchange can be made only in manner provided for the transfer of such property by sale. From the combined definitions of both the terms ("sale" and "exchange"), it becomes evident that both the provisions deal with the transfer of ownership either through exchange for a price or mutual transfer of ownership of one thing for the ownership of another.