Section 55 of the T.P Act contemplates certain rights and Obligations of both buyer and seller to perform within the spirit of agreement executed between them, the obligations imposed by the sanction are covenants and are in the nature of a statutory obligations, the breach of which confers a right on either party to take legal recourse.
Sellers Liabilities before completion of Sell.
A. To disclose material facts (section 55 (1)(a).
The seller is bound to disclose to the buyer any material defect which is present either in the property or in the title of seller to the property. In the words of Tindale C.J “The material defect must be of such a nature that if the buyer had been aware of it, he might not enter contract at all for he would be getting something different from what he contract into buy”
For E.g, the defect in the title may be incumbrances or charge on the property, lieun or existence of an easement or restrictive covenants or the defect in the property may be chocking of the drainage line, water logging existence of nuisance in the neighborhood etc etc.
In other words it is necessary that the defect must be a material defect about which if the buyer had known he would not have purchase that property.
B. To produce the title deeds for inspection section 55(1)(b).
The seller is bound to bring all the documents of title relating to the property in his possession for the inspection of the buyer.the buyer should examine all the documents relating to the property for his own protection the documents may be examine either at sellers place or buyers place, if the buyer doesn’t demand any such document the seller is under no duty to presume them and the court will presume that the buyer is Satisfied with the title authority of the seller.
In the leading case of Muthuri AIR 2003 Orissa page 136, it was held if a buyer doesn’t inspect the title deeds, he would be fixed with the constructive notice of any defects in the sellers powers of transfers, if it is found latter on.
C. To answer questions as to title section 55(1)©.
The seller is bound to answer to the best of his information all the relevant questions nput to him by the buyer in respect of the property or it’s title, the reason being so since the buyer is getting the ownership of the property it is in it’s interest that he must be fully satisfied about the ownership rights of the seller and his authority to transfer. That is why mere inspection of title deeds is not sufficient.
D. To execute the proper conveyance section 55(1)(d).
It is the duty of seller to execute the proper conveyance on the payment of the amount due in respect of the price, conveyance means the transfer of ownership, this is done by signing of the sell deed or putting thumb impression on the sell deed by the seller, the duties of both the seller and buyer under this clause are reciprocal.
E. To take care of property and title deeds section 55(1)(e).
This clause postulates that between the date of contract of sale and the delivery of the property the seller is bound to take as much care of the property and all the documents of title relating to it, which are in his possession as an owner of ordinary prudence would take of such property and documents. The reason being so within this time the property remain with seller but only in trust for buyer, he holds the property as a trustee of the buyer. This duty continues till he gives the possession of the property to the buyer.
F. To pay public charges and rental accrued section 55(1)(g).
This clause say that the seller is bound to pay all the outgoing on the property that is to say public charges and rent accrued or lease charges due in respect of property upto the date of sell, the interest on all the incumbrances on the property.
Buyer Liabilities before completion of sell
A. To disclose facts materially increasing the value of the property. Section 55(5)(a).
Sub section 5 under a of section 55 cost an obligation upon the buyer to disclose to the seller any fact as to the nature or extent of seller interest in the property of which the buyer is aware but the seller is not aware of it and which materially increases the values such interest, the leading case is Summer Vs. Griffihs, where an old lady contracted to seller at much less price believing that her right in the property were not absolute, the buyer had the knowledge of that fact then the old ladies interest in the property was perfect and absolute but he didn’t disclose to the old lady. The buyer was held liable for fraud and the sell was set a side.
B. To pay the price Section 55(5)(b).
Another liability as per section 55(5)(b) is that the buyer is bound to pay or tender at the time and place of completing the sell the purchase money to the seller or to such person as he directs
The price may be paid initially by way of part payment or full amount may be paid before transfer of ownership, it is the buyer liability to pay the price and to get the price predetermined.
Sellers rights before completion of sell.
1. To take rents and profits section 55(4)(a).
This sub section says that the seller is entitled to the rents and profits of the property till the ownership of it’s passes to the buyer, sell is completed when the ownership is transferred to the buyer till them the seller continues the ownership of property and he remains entitled to the rents and profits of the property.
If the buyer takes the possession of the property before completion of the sell the seller has right in such a case to realize interest on unpaid purchase money, the equity requires that the buyer must pay an interest on unpaid purchase money because he can’t have both the benefits of taking rents and profits of the property on one hand and as well keeping the purchase money unpaid on the other hand.
Buyer rights before the completion of sell.
A. To charge for the price prepaid or charge on the property for the price pre-paid, Section 55(6)(b).
According to thjs sub section the buyer is entitled to the charge on the property for the price pre paid to the seller, unless the buyer improperly decline to accept the delivery of the property, The Principle under lined this section is a trite principle of Justice, equity and Good Conscious, the charge would lost or continue untill the conveyance is executed by the seller and the possession is also given the purchaser and ceases only thereafter. This charge is statutory charge in favour of tge buyer, consequently the buyer is entitled to enforce the charge against the property and for that purpose traise the property even in the hands of 3rd party.
Seller liabilities after Completion of Sell
1. To Give Possession Sec 55(1)(f)= The very first liability of the vendor after completion of sell is that he is bound to give the buyer or such person as he directs the possession of the property as it’s nature admits, The seller is to give the possession of the property either to the buyer or to his authorize attorney whenever the buyer so desires in case of tangible immovable property, the physical control is to be given over the property in case of Intangible immovable property The physical control is to be given over the property, in case of Intangible immovable property the possession is symbolic, the possession is to be given after ownership is transferred to the buyer.
2. Implied covenant for title Section 55(2):
Sub sec 2 says that the seller shall be deem to contract with the buyer that the interest with the seller professes to transfer to the buyer subsist and that he has the power to transfer the same. Such a covenant is an implied in every sell of Immovable property and it is not required to be expressly mention in a sell deed.
The legal effects of such covenants are
a. The covenant implies absolute warranty of title.
b. This liability is limited to which the seller professes to transfer.
c. If the defect is found in sellers title after completion of sell, the buyer would become entitle to sue for damages and to claim a return of purchase money if the buyer is dispossessed in consequence of sellers defective title.
d. The covenants runs with the land and it is enforceable by subsequent purchaser of land.
3. To deliver title deeds on receipt of price Sec 55(3): sub sec 3 of Section 55 postulates that when the entire purchase money has been paid to the seller he is bound to deliver to the buyer all docs of title relating to the property which are in the sellers possession or power. In other words after the completion of the seller when the ownership of the property passes on to the buyer and he pays the price of the property, the seller becomes bound to delete all the title deeds relating to that property to the buyer which are in his possession or power.
Proviso: The proviso to this clause lays down
a. Where the seller retains any part of the property comprised in such documents, he is entitled to retain thereon.
b. Where the whole of such property sold to different buyers, the buyer of the a lot of the greatest value is entitled to such documents
But in such cases the seller and buyer of highest value respectively are bound upon request of the buyer or any one of the buyers and at the cost of the person making such request to produce the documents and furnished true copies of it. The seller and buyer of the lot of the greatest value has to keep the documents safe, un cancelled and un defects, unless they are prevented from doing so by fair or other enevitable accident.
Buyer liability after completion of sell sec 55 (C).
1. To bear the loss in respect of the property=
Clause C says where the ownership of the priorpeety has been passed to buyer, the buyer is bound to any loss arising from the ditruction, injuries, decrees of the property not caused by seller, there if any loss occurs to the property either nu way of accidental distraction or fire, after the ownership has vested to the buyer, the buyer will bear the loss.
2. To pay the outgoings public charges and rents: Sec 55(d).
Clause D says where the ownership of the property has passed to the buyer, the buyer is bound to pay all public charges for E.G: Govt Dues, Taxes, rents, lease charges, revenues etc etc.
Seller Right after the completion of sell.
Sec 55 sub clause IV, Charges for the prize in paid.
This clause suggestions where ownership of property…..before payment of the entire purchasef money the seller becomes entitle to a charge upon the property,
A. In the hands of the buyer
B. Any transfer without consideration.
C. Any transferee with notice of Non payment ( he is not a bonafide purchaser)
D. For the amount of purchased money or if any part of purchased money remaining unpaid.
E. For interest of markup on such amount of money or any part unpaid from the date on which the possession has been delivered.
F. By Virtue of this clause this right has been given for the protection of seller who has given possession of property to the buyer but has not received full price, this is known as statutory charge of the seller for the unpaid price, the charge creates a right of payment out of property specified, it may be created by the act of parties or by operation of law under the sub section the charge is created by operation of law and properties specified for securing the money is sell property.
According to lord diplock under this right the seller is not entitle to retain possession, therefore the charge is set to be non possessory lien.
The seller may enforce his charge for recovery of purchased money under sec 100 of T.P Act by a suit against the buyer for sell of the property, however a charge can’t be enforced against any subsequent transferee for value without notice of charge in favor of the seller (Bonafide purchaser) The charges created in favor of the seller is an actionable claim (un secured money debt) and is transferable.
Buyers right after completion of sell section 55 (B)(a).
1. Benefits of increments: according to this clause where the ownership of the property is passed to the buyer, the buyer is entitled to benefits of any improvement in the property or increase in the value of property and to the rents and profits thereof for e.g: accelation in the price of property, land becoming more fertile etc etc.
