Lachman Singh v. Hazari Lal
Rule established
When property is the dominant consideration and money merely supplementary to equalize values, the transaction is an exchange, not a sale
Facts
- A and B exchanged plots of unequal value
- B paid a cash difference to A to equalize the values
- The question was whether the money component converted the transaction from exchange to sale
Issue
- Whether a transaction where property is exchanged with a supplementary cash payment to equalize values is an exchange (S.118) or a sale (S.54).
Held
- It is an exchange. The test is the dominant consideration: if the dominant element is property-for-property and money is merely supplementary (to equalize), the transaction is an exchange. If money is the dominant consideration, it is a sale.
Ratio Decidendi
S.118 contemplates exchanges where "money may form part of the consideration." The section recognizes that property swaps rarely involve equal values; cash adjustment is common. As long as the essence of the transaction is mutual transfer of properties, the supplementary cash does not convert it into a sale.
How to use it in an exam
Use when the problem involves property swap with cash adjustment. Key line: "Property dominant + money supplementary = exchange; money dominant = sale."
Source
Source: Avatar Singh, Law of Transfer of Property
This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.