The Jharkhand High Court has clarified that a registered sale deed executed with recitals of payment by cheque, but where the cheques were returned and no consideration was actually paid, is void ab initio. The judgment underscores that the mode of payment stipulated in the deed is integral to its validity, and failure to fulfill that condition renders the transaction a legal nullity.
Background & Facts
The Dispute
The plaintiffs, Satyanand Mohan Raju and Shiva Ram Mohan Raju, executed two registered sale deeds in favor of the defendant, Shivjee Sharma, on 07.02.2014 and 17.05.2014 for the sale of two parcels of vacant land in Jamshedpur. The sale deeds, marked as Exhibit 1 and 1/1, stated that the total consideration of Rs. 62,70,000 and Rs. 39,60,000 respectively was paid through eight cheques issued on the dates of execution. The deeds further recited that possession and title had passed to the defendant upon execution and registration.
Key Facts
- The plaintiffs were lawful owners of Schedule I property, having obtained a decree in Title Suit No. 18/2003 of 1973 against the State of Bihar, confirmed by the High Court.
- The two sale deeds covered Schedule II (206 decimals) and Schedule III (132 decimals), both part of Schedule I.
- The cheques mentioned in the sale deeds were handed over to the plaintiffs on the dates of execution but were never presented for encashment.
- On 22.02.2014, the defendant wrote to the plaintiffs stating that payment would be made only after mutation of the property in his name, as the land was recorded in the name of the State of Jharkhand.
- The plaintiffs returned all eight cheques to the defendant on 08.04.2014 and 01.07.2014, with the defendant signing acknowledgments.
- The defendant obtained the original sale deeds from the Registrar’s office using the registration slips, which the plaintiffs had handed over upon registration.
- The defendant never obtained mutation of the property in his name.
- The plaintiffs later entered into an unregistered agreement for sale dated 12.08.2016 with Arun Kumar Thakur for the same land and delivered possession to him.
- The plaintiffs issued a legal notice on 23.08.2016 demanding return of the sale deeds, which the defendant refused on 09.09.2016.
Procedural History
- 07.02.2014: First sale deed executed (Exhibit 1) for Rs. 62,70,000 via four cheques.
- 17.05.2014: Second sale deed executed (Exhibit 1/1) for Rs. 39,60,000 via four cheques.
- 22.02.2014: Defendant’s letter requesting return of cheques due to mutation refusal.
- 08.04.2014: Plaintiffs returned four cheques for first sale deed; defendant signed receipt.
- 01.07.2014: Plaintiffs returned four cheques for second sale deed; defendant signed receipt.
- 12.08.2016: Plaintiffs executed unregistered agreement for sale with Arun Kumar Thakur (Exhibit 3).
- 23.08.2016: Legal notice issued by plaintiffs demanding return of sale deeds.
- 09.09.2016: Defendant’s reply refusing return of deeds.
- 2016: Original Suit No. 212 of 2016 filed before Civil Judge (Sr. Div.) III, Jamshedpur.
- 31.05.2023: Trial Court dismissed the suit.
- 09.06.2023: Decree signed.
- 12.04.2023: First Appeal No. 124 of 2023 filed before Jharkhand High Court.
- 15.12.2025: Appeal reserved.
- 16.03.2026: Judgment pronounced.
The Parties' Positions
Plaintiffs: Argued that since the cheques were returned and no consideration passed, the sale deeds were void ab initio. They claimed possession remained with them and sought return of the deeds. They relied on Kewal Krishan v. Rajesh Kumar and Shanti Devi v. Jagan Devi to assert that a sale without consideration is a nullity.
Defendant: Contended that though cheques were returned, the full consideration of Rs. 1,02,30,000 was paid through cash and bank transfers to the plaintiffs and their creditors. He claimed possession was delivered and the deeds were valid. He relied on Janak Dulari Devi v. Kapildeo Rai to argue that possession of registration slips and deeds confirmed transfer.
Relief Sought
The plaintiffs sought a decree directing the defendant to return the original sale deeds dated 07.02.2014 and 17.05.2014, on the ground that they were void for want of consideration. No claim for possession or declaration of invalidity was made. Court fee of Rs. 250 was paid.
The Legal Issue
The central question was whether a registered sale deed, which explicitly states that consideration was paid through specified cheques, becomes void ab initio when those cheques are returned and no consideration is paid in the manner stipulated, even if the purchaser later claims to have paid through other means.
Arguments Presented
For the Appellant/Petitioner
The appellants argued that under Section 54 of the Transfer of Property Act, a sale requires payment of a price. The sale deeds recited that payment was made through cheques issued on the date of execution. Since the cheques were returned and never encashed, no consideration passed. Relying on Shanti Devi v. Jagan Devi (2025 SCC Online SC 1961) and Kewal Krishan v. Rajesh Kumar (2022 SCC 489), they contended that a sale without consideration is a nullity and requires no formal cancellation. They further argued that the practice of "ta khubzul badlain" recognized in Bihar (now applicable in Jharkhand) requires exchange of equivalents - which did not occur here, as the registration slips were handed over before any payment.
For the Respondent/State
The respondent argued that the consideration was paid in full through cash and bank transfers to the plaintiffs and their creditors, as per their instructions. He cited Janak Dulari Devi v. Kapildeo Rai (2011 SCC 555) to assert that possession of the original deeds and registration slips confirmed transfer. He claimed the plaintiffs were estopped from denying the recitals of the deeds and that the suit was barred under Section 34 of the Specific Relief Act for not seeking possession. He further argued that the plaintiffs had previously filed a title suit for cancellation (withdrawn) and were now attempting to evade ad-valorem court fees.
The Court's Analysis
The Court undertook a meticulous analysis of the sale deeds, the conduct of the parties, and the legal principles governing transfer of immovable property. It emphasized that Section 54 of the Transfer of Property Act defines sale as a transfer of ownership in exchange for a price paid, promised, or part-paid. The recitals in the sale deeds were not mere formalities but integral to the transaction’s validity.
"The sale deeds clearly stipulated that the consideration was paid through cheques issued on the dates of execution. The return of those cheques, acknowledged by the defendant, meant that the consideration contemplated by the parties never materialized."
The Court rejected the defendant’s claim of subsequent payment through cash and bank transfers. The defendant produced no credible evidence - no witness testimony from beneficiaries, no bank records corroborating payments to the plaintiffs, and no proof of the letters (Exhibits A and B) allegedly authored by the plaintiffs. The Court noted that the defendant’s own son admitted the payments were made to third parties for unrelated reasons, including bail conditions and prior advances.
The Court distinguished Janak Dulari Devi v. Kapildeo Rai (2011 SCC 555), which applied the practice of "ta khubzul badlain" in Bihar. While acknowledging that the practice is applicable in Jharkhand post-bifurcation, the Court held that the doctrine requires exchange of equivalents - i.e., the registration receipt must be handed over only upon payment. Here, the registration slips were handed over immediately upon registration, before any payment occurred. The defendant obtained the deeds without any exchange of value.
The Court further held that Section 92 of the Evidence Act does not protect recitals that are factually false. Where the parties’ conduct contradicts the deed - as here, with the return of cheques and no payment - the recitals cannot override reality. The Court cited Prem Singh v. Birbal (2006 SCC 353) and Shanti Devi to affirm that a void sale deed is a nullity and requires no decree for cancellation.
The Court also dismissed the applicability of Section 34 of the Specific Relief Act, noting that the plaintiffs sought only return of the deeds, not possession or declaration. Since the deeds were void, the defendant had no lawful right to retain them.
The Verdict
The appeal was allowed. The Jharkhand High Court set aside the trial court’s judgment dated 31.05.2023 and decreed the suit in favor of the plaintiffs. The defendant is directed to return the original sale deeds bearing No. 705/508 dated 07.02.2014 and No. 2736/2125 dated 17.05.2014 within three months from the date of judgment. Failure to comply will enable the plaintiffs to obtain the deeds through court process. Costs of Rs. 50,000 are awarded to the appellants.
What This Means For Similar Cases
A Sale Deed Is Not a Blank Check
- Practitioners must verify whether the mode of payment stipulated in a sale deed was actually fulfilled. Mere registration does not validate a transaction if the consideration mechanism fails.
- Oral evidence of alternative payment cannot override the express terms of a registered deed unless the deed itself permits such substitution.
Consideration Must Match the Deed’s Terms
- If a deed specifies payment by cheque, and those cheques are returned, the sale is void unless the deed explicitly allows for substitute payment.
- Subsequent payments to third parties, without clear linkage to the sale consideration and without documentary proof, will not cure a void transaction.
Registration Slips Do Not Confer Title
- Possession of registration slips or original deeds does not, by itself, establish valid transfer if the consideration condition was not met.
- The doctrine of "ta khubzul badlain" requires actual exchange of equivalents - not just physical possession of documents.
No Need to Cancel a Void Deed
- A sale deed executed without consideration is a nullity and need not be formally cancelled. A suit for return of the deed is maintainable.
- Courts will not permit parties to use the doctrine of estoppel to enforce a transaction that never legally occurred.
Burden of Proof Lies with the Purchaser
- Once the plaintiff establishes that the stipulated consideration was not paid, the burden shifts to the defendant to prove payment through credible, documented evidence.
- Unsubstantiated claims of cash payments to creditors or relatives, without supporting witnesses or bank records, will be rejected.
