I.

INTRODUCTION
The Section 120 of the Transfer of Property Act, 1882 deals with the Rights and

liabilities of parties in exchange. In this section it lays down the assumption that Rights and
liabilities of parties in an exchange is similar to the rights and liabilities of seller and buyer
which is dealt in section 55 of the Transfer of Property Act, 1882. The aim objective of this
project is to be to study and analyze this section, to study case laws related with this section and
to know the merits and pitfalls in this section in relation with the law enabled.
The research methodology adapted is purely doctrinal in nature. The primary sources are statute,
case laws. The secondary sources are articles, internet, journals, etc. This project suggests ways
to overcome the major drawbacks faced in section 120 of the Transfer of Property Act, 1882
II.

MEANING OF EXCHANGE
The exchange of property is defined in section 118 of Transfer of Property Act, 1882

which states as 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. However, such rights and liabilities

emerge in absence of contract to contrary. When the parties are in exchange there arises certain
rights and liabilities between the part who receives and who gives.
A contract between two parties, called, respectively, the seller and the buyer, by which the former
in consideration of the payment or promise of payment of a certain price in money transfers to
the latter the title and possession of property1.
III.

RIGHTS AND LIABILITIES OF PARTIES IN AN EXCHANGE:

Section 1202 which read as " Rights and liabilities of parties Save as otherwise provided

in this Chapter, each party has the rights and is subject to the liabilities of a seller as to that
which he gives, and has the rights and is subject to the liabilities of a buyer as to that which he
takes ".

1 Blacks law dictionary

2 Transfer of Property Act, 1882
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Section 120 has not specifically mentioned the rights and liabilities of the parties to exchange. It
provides only that each party has the rights and is subject to the liabilities of a seller as to that
what he gives and has the rights and Is subject to the liabilities of the parties to the exchange are
sane as that of seller and buyer in case of a sale. In the exchange, one thing is given and another
is taken or received. So each party has rights and liabilities of both the seller as well as buyer.
Where the exchanged properties are movables, the provisions of the sale of goods Act, 1930 may
also apply.
There is no separate section for rights and liabilities of parties in exchange therefore it is
assumed that the rights and liabilities of a party in exchange is similar to that of the rights and
liabilities of buyer and seller. The section 55 of Transfer of Property Act, 1882 confer the rights
and liabilities of parties in exchange. The rights of the person who gives the property enhances
the same rights and liability same as seller and the person who receives the property enjoys the
same rights and liabilities as in case of buyer. There is no change in the rights and liabilities of
the parties in exchange in relation with rights and liabilities of buyer and seller.
In the following topic section 55 has been explained nice section 55 deals with the rights and
liabilities of buyer and seller. The buyer should be taken as the person who receives the property
and the seller is who gives the property. Since the section explains with the name of buyer and
seller therefore it has been explained in the name of buyer of seller instead of party who gives
and receive. The reader must not get confused with the seller, buyer and person who receives and
who gives. For this provision it is explained in the name of seller and buyer.
1. RIGHTS AND LIABILITIES OF BUYER AND SELLER (Rights and Liabilities of
parties in exchange)
This can be said as parties in exchange who receives and gives. Generally rights and
liabilities of the receiver and the person who gives are classified into two
1. before completion of sale (before completion of exchange)
2. after completion of sale (after completion of exchange)
1.1.

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RIGHTS AND LIABILITIES OF SELLER (Party who gives the property)

Following are the and liabilities of seller

(I)Production of documents [section 55(1) (b)]
On buyers request for examination, seller is bound to produce to buyer all documents of title,
which related to immoveable property and which are in sellers possession or power.
Mathurin beta v. primula Roultrar AIR 2003 Ori 135
Mere entry in record of right showing names of predecessor in interest of the the vendor and
vendee will not be conclusive to draw conclusion that suit property was joint family property, the
vendee would derive indefeasible right by virtue of sale from the vendor
(ii) Disclose to the buyer material defect(section55(1)(a))
The is bound to disclose to the buyer any material defect in the property or in the sellers title
thereto of which the seller is and the buyer is not, aware and which the buyer could not with
ordinary care discover.
Flight v. booth (1634) 1 bing Nc 370
Tindal C. J the material defect must be of such a nature that its might be a reasonably supposed
that if the buyer had been aware of it he might not have entered into the contract at all, for he
would be getting something different from what he contracted to buy
(iii) Answer to Questions [section 55(1) (c)]
Seller is bound to answer to best of his information all relevant questions, which buyer puts to
him in respect to immoveable property or title to immoveable property.
(iv) Rent and Profits [Section 55(4) (a)]
The seller is entitled to the rents and profits of the property till the ownership thereof passes to
the buyer.
(V) Care of Immoveable Property and Documents
Between date of contract of sale and delivery of immoveable property, seller is bound to take as
much care of the property and all documents of title as an owner of ordinary prudence would
take care of such property and documents.
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(vi) Delivery of Possession of Immoveable Property

Seller is bound to give possession of immoveable property to buyer or some other person
according to directions of buyer.
(vii) To give Possession section 55(1) (f)
The seller is bound to give on being so required the buyer or such person as he directs, such
possession of the property as its nature admits.
(viii) To pay all public charges [section 55(1) (g)]
The seller is bound to pay all public charges and rent accrued due in respect of the property up to
date of the sale, the interests on all encumbrances on such property due on such date, and except
where the property is sold subject to encumbrances, to discharge all encumbrances on the
property then existing.
Nathu Khan V, Burtonah Singh AIR 1922 PC 176
Unless there is any contrary intention, the seller must discharge all the encumbrances where the
property is sold subject to encumbrances. Where the seller does not pay the outgoing and the
buyer subsequently pays them, the buyer becomes entitled to be reimbursed by the seller.
(ix) To deliver documents
The seller is bound, where the whole of the purchase money has been paid to the seller to deliver
to the buyer all documents of title relating to the property which are in sellers possession or
power.
(x) Subsistence of Interest
Seller is deemed to contract with buyer that interest, which seller professes to transfer to buyer,
subsists and that he has power to transfer such interest. And when sale is made by a person in a
fiduciary character, he is deemed to contract with buyer that seller has done no act whereby
immoveable property is encumbered or whereby he is hindered from transferring it.
(ix) Payment of Purchase money
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When ownership of immoveable property has been passed to buyer before payment of whole of
purchase-money, seller is entitled to a charge upon that property, which is in hands of buyer.
1.2.

RIGHTS AND LIABILITIES OF BUYER (Rights and Liabilities of the

party who receives property):

Following are rights and liabilities of buyer

(i) Right to get benefit of improvement
The buyer is entitled where the ownership of the property has passed to him, to the benefit of any
improvement in or increase in value of the property and to the rents and profits thereof.
(ii) To disclose any fact about property [section 55(5) (a)
The buyer is bound to disclose to the seller any fact as to the nature or extent of the sellers
interest in the property of which the buyer is aware but of which he has reason to believe that the
seller is not aware and which materially increase the value of such interest.
Summers v, Griffins (1866) 35 Beav 27
An old lady, contracted to sell a property at much less price believing that her rights in the
property is not absolute. The buyer had knowledge of the fact that the ladys interest in the
property was perfect and absolute but he did not disclose it to the lady. He was held liable for
fraud and sale was set aside
(iii) Payment or tendering of purchase-money section 55(5) (b)
Buyer is bound to pay or tender purchase-money to seller or some other person according to
directions of seller at time and place of completing sale.
(iv) Bearing of Loss [section 55(5) (c)]
When ownership of immoveable property has been passed to buyer, he is bound to bear any loss,
which arises from destruction, injury or decrease in value of the property when such destruction,
injury or decrease is not caused by seller.
(v) Entitlement to improvement and increase in value of immoveable property section 55(6) (a)
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When ownership of immoveable property has been passed to buyer, he is entitled to benefit of
any improvement in the property or increase in value of the property.
(vi) Entitlement of Rents and Profits
When ownership of immoveable property has been passed to buyer, he is entitled to rents and
profits of the property.
(vii) Entitlement to charge on immoveable property
Buyer is entitled to charge on immoveable property to extent of sellers interest in the property,
to charge for amount of any purchase-money, which is properly paid by buyer in anticipation of
delivery, and to charge for interest on such amount. Such charge is against seller and all persons,
who claim under seller. Here condition is that buyer should not have improperly declined to
accept delivery of the property.
Cases
Roger v. Hose good (1900) 2 Ch 388
In this case the purchaser of a ploy of land covenanted not to erect more than one dwelling house
on the plot which would be used for residential purpose only. The court held that such s covenant
runs with the land and can be enforced by an assignee of the covenanted.
Gajapathi v. Alagia (1886) 9 Mad 89
A sold property to B. After the conveyance, B discovered that under a decree of partition, a
portion of the property had been allotted to C. It was held by the court that the sale was
fraudulent and the conveyance could be set aside.
TIME OF PERFORMANCE
Time of performance is not generally of the essence in transaction relating you immovable
property. The special circumstances of a particular case mat attach importance to time factors.
Where the circumstances are such that even a right delay on the part of the vendor would result
in price escalation, time of performance may be regarded by the court to be of the essence which
was decided in the harvash Singh v. Bhagwan Das3
3 AIR 2006 (NOC) 1364 (MP)(DB)

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1.3.

LIABILITY TO PAY TAXES

The vendor has to pay taxes in respect of the property up to the date of sale. Liability of vendee
to pay taxes arises only form date of sale. A suit for realization of due can be filed by the
municipality in respect of a statutory slchargr created apart from taking recourse to realization of
dues as land revenues
1.4.

COMPLETION OF SALE (completion of exchange)

In case before the Supreme Court the transferees had not paid the sale consideration at the time
of execution of sale deed, and its registration. There was a recital in the sale deed that vendor had
received the entire sale price from the purchaser and had relinquished title and handed over
possession. The Supreme Court said that such a recital was of no consequence. The transferor
had retained the registration receipt to be exchanged in consideration of sale price. Possession
was also not delivered. No sale had taken effect. The transferred repudiation of the transaction
and transfer of the property to another person was valid.
IV.

CONCLUSION

To conclude, it can be stated that rights of seller have not been described in transfer of property
Act. In fact, rights of seller can be determined through liabilities of buyer. That is the person who
gives the property to the part in exchange does not have the rights as the person who receives
therefore by computing the liability of the person who receives the property, then the the right of
the seller that its person who gives the property is discussed according to it. The pitfalls in this
section is considered to be if in case of any conflict with parties of exchange regarding the rights
one has to go back to rights and liabilities of buyer and seller . This is considered to be a main
pitfall in this section. Therefore if it is changed then it will be helpful in case of any conflict with
the parties in exchange.
V.

SUGGESTION:

Since this section doesnt have separate clause in case of any conflict and interpretation in rights
and liabilities of parties in exchange then one has to go back to section 55 of Transfer of Property

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Act. So therefore separate clause for this rights and liabilities of the parties in exchange will be
helpful.
VI.

BIBLIOGRAPHY
TEXTBOOK ON THE TRANSFER OF PROPERTY ACT, FOURTH EDITION, By DR.
AVTAR SINGH

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