Anil Kr Garg (Business) 07 May 2012

Mou signed for a property

For sale of an agricultural land, I entered into an MOU with one individual on 1-2-12. Terms included condition to make further payments in Feb and April and also that an agreement on Rs 100 stamp paper shall be executed in Feb. MOU is on pain paper only.

The buyer has not made any payments in these months. Instead he is proposing an agreement in the name of his company (mou is in the name of individual) and wants new payments from his company and reversal of original cheques received from his personal back account. I do NOT want to allow this change of party, and I am very sore about his not making payments in Feb and April as committed.

Also I have been advised that

(1) Mou is not legally enforceable document and will not be treated as agreement by courts

(2) In MP, any document that purports to convey any right in an immovable property needs to be registered without which it is not admissible as evidence in any court

(3) There are two opinions asto whether Mou can at all be registered

On 7th April I sent to him registered notice treating MOU as dead and still giving him a magnanimous offer to make these payments by bank draft within 7 days and send draft of agreement that he wished to execute. I have offered him full refund of the token paid under this MOU against returning of all copies/documents given to him in relation to my property. He has received notice but decided not to respond. He says he is not bound to respect my 7 days deadline given in the notice.

On 1.5.12 I published Public Notice treating Mou as null & void. I expect him to publish counter blaming me for deal and still claiming rights under the MOUs. If he does that, I intend to send him a legal notice seeking immediate reversal failing which to prosecute him for unnecessarily maligning my property as DISPUTED in the market without him showing any serious intention of actually buying it.

Kindly advise if I can sell land to new buyer treating Mou as dead. My prospective buyers would not want to fight in court and would want a clean and peaceful title to the property, and hence, my concern.

Thanking you,

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1 Replies

Adv.R.P.Chugh (Advocate/Legal Consultant (rpchughadvocatesupremecourt@hotmail.com)) 07 May 2012

Mr.Garg,

I opine :-

1. The enforceability of an MoU depends on terms and covenants of the same.

2. The Statement that all MoUs are unenforceable and mere letters of intent, is misconcieved - an MoU can also reflect intention to fall into the clutches of law by creating a legal relationship.

3. Agreement to Sell may be by way of an MoU.

4. Agreement to Sell are not registrable and can validly form the basis of Specific Performance.

5. Time was of the essence - in this contract - is reflected in the way you gave the extension - after he failed to fulfil his obligations within the same, you as per S.55 ICA have the right to rescind which you did, by way of public notice.

6. It may be anticipated that he would file a specific performance suit, but the same can be defended on aforesaid ground mentioned in Cls.5

Hope this would help !

Feel free to talk !