Sale is Not a Contract; Minors Can Receive Transfer of Immovable Property: Supreme Court

In the case of Neelam Gupta & Ors. vs. Rajendra Kumar Gupta & Anr., the Supreme Court made an important decision regarding the transfer of immovable property to minors. The Court ruled that there is no legal restriction on transferring property to a minor through a sale deed. The key point is that while a minor cannot enter into contracts under Section 11 of the Indian Contract Act, 1872 (which says a person must be competent to contract), this does not apply to property sales because a sale is not considered a contract under the law.

The Court explained that, according to Section 54 of the Transfer of Property Act, a sale is defined as the transfer of ownership in exchange for a price, whether fully paid, partially paid, or promised. A sale is not treated as a contract, so the rules that prevent minors from entering into contracts do not prevent them from receiving property through a sale deed.

In this case, the defendants/appellants argued that a property transfer to the plaintiffs was not valid because the original owner, Sitaram, had received the property as a minor when he was 17 years old in 1963. Later, in 1968, after he turned 22, Sitaram sold the property to the plaintiffs. The defendants claimed that because Sitaram was a minor when he first got the property, he didn't have the legal right to sell it when he reached adulthood. Both the trial court and the first appellate court agreed with the defendants.

However, the High Court reversed these decisions in a second appeal, ruling that the sale was valid. The Supreme Court upheld the High Court's judgment. The Court said that when Sitaram received the property at 17, there was no legal issue because a minor can legally receive property. Once he became an adult, he had full legal authority to transfer the property to the plaintiffs. The Court further explained that the fact that Sitaram was a minor at the time of the original transfer did not affect his ability to sell the property when he was an adult.

The Supreme Court also addressed the defendants' argument about the property being a benami transaction, which is when property is held in someone else’s name to conceal the true owner. The Court referred to the Benami Transaction Act, 1988, which states that no claim or suit can be filed against the person holding the property under a benami arrangement. Since the property was legally held in Sitaram's name, the defendants' claim of a benami transaction was invalid.

Ultimately, the Court ruled that the sale of the property by Sitaram in 1968 was lawful, and the defendants could not challenge it. The appeal was dismissed, and the Court affirmed that once a minor attains majority, they can legally transfer the property they received as a minor.