Non-payment of Sale Consideration Cannot Undo a Registered Sale: Allahabad High Court Upholds Rejection of Suit Seeking Cancellation of Sale Deed

“Once title passes by a registered sale deed, non-payment of consideration is not a ground to cancel it”— Delivering a reportable judgment Allahabad High Court decisively upheld the rejection of a suit for cancellation of a registered sale deed, reiterating that non-payment or partial payment of sale consideration does not invalidate a completed sale. Justice Sandeep Jain, sitting in civil appellate jurisdiction, dismissed the appeal under Order 41 Rule 11 CPC, affirming that a plaintiff who has executed a registered sale deed ceases to be the owner, and her remedy, if any, lies in recovery proceedings—not cancellation or injunction.

The Court held that once a registered sale deed has been executed and possession transferred, title vests irrevocably in the vendee, irrespective of whether the full consideration is paid. It ruled that a plea for cancellation of such a sale is barred under law and that a suit based on such a premise is liable to be rejected at the threshold under Order 7 Rule 11 CPC.

"Plaintiff No Longer the Owner—She Cannot Seek Injunction Against True Title Holder" – Permanent Injunction Also Denied as Consequential Relief

The appellant, Smt. Gunjan Agrawal, had filed a suit seeking (i) cancellation of the sale deed dated 30.11.2022, and (ii) a permanent injunction restraining the defendant from interfering with her alleged possession. Her case was that while the sale deed for ₹32.50 lakhs was registered, only ₹20,000 was paid in cash, and the rest of the consideration was represented through post-dated cheques that were later dishonoured. She alleged that since the bulk of the consideration remained unpaid, the sale had failed in its legal effect, and she continued to remain the rightful owner in possession.

The Trial Court had rejected her plaint under Order 7 Rule 11 CPC on the ground that once a registered sale deed is executed and possession delivered, title stands transferred under Section 54 of the Transfer of Property Act, and non-payment of consideration does not affect the validity of such transfer.

The High Court, while affirming the Trial Court’s reasoning, drew heavily from the Supreme Court’s authoritative pronouncements, particularly Dahiben v. Arvindbhai Kalyanji Bhanusali, (2020) 7 SCC 366, and Padhiyar Prahladji Chenaji v. Maniben Jagmalbhai, (2022) 12 SCC 128.

Referring to Dahiben, the Court reiterated: “Even if the entire sale consideration has not in fact been paid, it cannot be a ground for cancellation of a registered sale deed. The plaintiff may have a remedy to recover the unpaid amount, but not to undo the title that has already passed.”

Addressing the plea for injunction, the Court relied on Padhiyar Prahladji Chenaji to clarify that where the primary relief of cancellation is barred, a consequential relief such as injunction must also fail.

“The plaintiff is not entitled to seek injunction against the true owner when she has failed in establishing her right to cancel the sale deed. Lawful possession cannot arise when title no longer exists.”

“Recitals of Registered Document Bind the Executant”—Plaintiff Estopped from Denying Transfer of Possession

The Court found a material contradiction between the plaintiff’s assertion of continued possession and the registered sale deed, which explicitly recorded delivery of possession to the vendee. Invoking Section 92 of the Indian Evidence Act, the Court held that a party to a registered document is estopped from contradicting its terms, unless fraud, coercion, or mistake is pleaded, which was not the case here.

“The plea taken by the plaintiff that she retained possession is contrary to the recitals of the sale deed, and therefore inadmissible under Section 92 of the Evidence Act,” the Court held.

This observation proved critical in demolishing the plaintiff’s case for an injunction as well, as possession was no longer legally tenable.

“A Suit Must Disclose a Right to Sue—Not Just an Expectation to Recover” – Court Applies Test Under Order 7 Rule 11 CPC

Justice Jain stressed that under Order 7 Rule 11 CPC, a plaint must disclose a cause of action, and a suit without legal foundation is not entitled to survive even till trial. Citing the test laid down in Liverpool & London S.P. & I Assn. Ltd. v. M.V. Sea Success I, (2004) 9 SCC 512, the Court held:

“Whether a plaint discloses a cause of action must be found out from reading the plaint itself… if the averments are taken to be true, would a decree be passed?”

The answer, the Court found, was clearly no. The entire structure of the suit crumbled once the plaintiff admitted to having executed a registered sale deed and transferred possession. The only grievance of non-payment of consideration could not sustain a cause for cancellation or injunction, making the plaint liable to be rejected at the threshold.

Appeal Dismissed – Remedy Lies in Civil Recovery Suit

The Court concluded by clarifying that the plaintiff is not without remedy, but it does not lie in cancellation of the sale or injunction against a valid title holder. The proper legal course is to file a suit for recovery of the unpaid sale consideration, should she be able to establish liability through dishonoured cheques or other evidence.

In rejecting the appeal, Justice Sandeep Jain stated:

“It is apparent that the plaintiff is no more the owner of the disputed property, and her reliefs for cancellation and injunction stand extinguished with the passing of title. The trial court has not committed any illegality. The appeal lacks merit and is liable to be dismissed.”

Accordingly, the appeal was dismissed at the admission stage under Order 41 Rule 11 CPC, and the rejection of the plaint under Order 7 Rule 11 CPC was upheld.

This ruling has deep practical implications for property lawyers and civil litigators, especially those dealing with suits seeking cancellation of sale deeds for non-payment. It serves as a clear reminder that execution and registration of a sale deed signify finality of transfer, and that a failed payment is a commercial breach, not a basis to invalidate title.

Where there is no plea of fraud, coercion, or mistake, and where the sale deed recites possession and consideration, the only remedy lies in recovery, not reversal.

Date of Decision: 25 November 2025