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Naveen Manghani (CS)     03 March 2010

Validity of Term Sheet

Dear Members,


I need your valuable guidance in the following matter:

A Ltd. and B Ltd. entered into a Term Sheet in 2005 wherey A Ltd. agreed to lease a property to B Ltd. upon completion of construction of a Mall.  A covenant was inserted in the Term Sheet that after receipt of Completion Certificate, final Lease Deed will be executed.  The lock-in period for B Ltd. was agreed to be 3 years from the execution of Lease Deed.  And in case of termination within lock-in period, B Ltd. has the right to forfiet security deposit of approx. Rs. 15 lakhs.

B Ltd. has occupied the premises wef March 2009, however, no lease deed has been executed so far.  A Ltd. has also not informed whether the Completion Certificate has been received or not, however, it is understood that it must have been received.

I want to know whether the lock-in period will commence from the execution of Term Sheet as the lease deed has not been executed so far due to failure of A Ltd. to give notice about receipt of CC.  B Ltd. wants to terminate the Term Sheet without losing the security deposit amount.

Kindly give your opinion in the above matter.

Thanks & Regards,

Naveen



Learning

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