About property deal which is not fulfilled
Ashish
(Querist) 24 April 2018
This query is : Resolved
Hello, respected advocate/consultants
I have one question related to my personal life that I am facing. Will go step by step in order to understand easily.
1) Ram (name changed) purchased flat on loan in 2015. He got flat possession in the month of May 2016. After 2/3 months he changed his job and shifted to another city and gave flat on rent to known person (Mohan).
2) In December 2016 Ram got chance to complete his higher studies. So after discusing with Mohan, an idea comes. The idea was, Mohan will purchase the flat, But as he had no money to buy it in one stroke or any other way at that time. Then Mohan agreed to pay the loan installment (emi) regularly on behalf of Ram and remaing amount will be given to Ram,suppose 5 lakh. After one year Mohan will shift loan to his (Mohans) wifes account. (Mohan was private business person so difficult to was get home loan on his name).
3) Deal made orally as both was friends and that time dicided to do stamp paper documents (agreement) about the deal between them after 2 month or whenever they got time.
4) Mohan started paying installment from January 2017. After March 2017 mohan family got in crisis (new born baby) and Mohan wife left job. affter then Mohan was unable to pay installment regularly. He frequently missed the emi.
4) in December 2017 Ram got notice from bank as loan account went NPA. Bank order to pay NPA amount within 15 days. Somehow Ram adjusted some money by his own and pay to bank. Ram said Mohan to pay installment regularly. That time Mohan said I am in very much critical condition and cannot pay installment. You may sell flat to any other person, I will cooperate you accordingly.
4) Due to demonitisation (PM modi decision in November 2016) property rate drops suddenly and Ram not getting the customer giving rate such that he can paid up loan amount (property rate was below loan amount). But in April this month one customer became ready to pay only bank loan. Ram think that he can save himself from atleast bankruptcy. So tell about deal to Mohan.
5) Now Mohan has changed his stance and saying that unless he got the money he paid towads installment he will not vacant flat.
Please give me expert solution.
Ms.Usha Kapoor
(Expert) 24 April 2018
As Mohan failed to clear EMIs you can treat this as breach of contract by Mohan and accordingly rescind the contract and can seek damages from mohan for breach of contract. Now leave Mohan. You-can entrust the task of repayment of loan to the new person who agreed to pay your bank loan on agreed terms. Avail his service and get paid the loan so as to prevent itf from becoming NPA.
Ashish
(Querist) 24 April 2018
We know Mohan has breach of contract. But all the contract condition had done orally. Shall Ram am able to defend it while seeking loss from mohan?
Ashish
(Querist) 24 April 2018
We know Mohan has breach of contract. But all the contract condition had done orally. Shall Ram am able to defend it while seeking loss from mohan?
Ms.Usha Kapoor
(Expert) 24 April 2018
If any witness is there to the contract between Ram and Mohan he will testify in court that mohan agreed to pay loan by EMIs.If you /Ram don't have any documentary proof he will not get any damages if he failed to prove the contract both orally and in writing through documents.Ram needs to focus on some customer agreeing to pay the Bank loan or EMis etc.
Krishnapur Ananth Nagamani
(Expert) 24 April 2018
Although I donot believe it is a real life question and is completely imaginary from the word 'suppose' in your question, I like to clarify in the context of Contract Act, Transfer of Property Act and Registration Act along with Stamp Act. Before embarking on it, I suggest you resolve the issue amicably by treating the instalments paid by byour friend on your behalf as monthly rents and adjust the whole sum paid towards the period he occupied the flat after the oral agreement and ask him to hand over possession peacefully.
Now coming to the legal issues :
1-Contract Act : S. 2(e) interprets every promise and every set of promises, forming the consideration for each other, is an agreement and S. 2(h) says An agreement enforceable by law is a contract.
Therefore although it is only an oral agreement and is not hit by the intervening provisions f-g, it is enforceable. But the contract is only an agreement to sell in the eyes of law.
S. 73 speaks of consequences of breach of contract. "When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby,....". In your case Mohan breached the contract and so Ram is entitled to recover compensation for the loss and damage he suffered.
2. Transfer of Property Act : Title passes only through a registered sale deed, so your property is safe in your hands. Agreement to sell also ought to be registered for Mohan to claim specific performance from Ram and get damages or sale deed. The same reason holds good against your right to get damages from him. However Delhi High Court has held in Paul Nanda & Ors. vs Ritnand Balved Education (https://indiankanoon.org/doc/20729287/) "While in law there is no prohibition against an oral agreement to sell an immovable property, a heavy burden would be placed upon the party asserting such an oral agreement to prove it in the first place."
S. 54 mandates that sale of immovable property of value more than Rs 100 can be made only by a registered agreement.Further by this provision "A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest in or charge on such property." Therefore Even if the whole of the price is not paid but the document is executed and thereafter registered, if the property is of the value of more than Rs. 100/-, the sale would be complete.(see Para 36 Vidhyadhar vs Manikrao & Anr https://indiankanoon.org/doc/1332419/)
3. Registration Act S. 17 mandate - registration of immovable property ov value more than Rs 100; if not registered it has only collateral value in any suit
Trust this is of help to you and many others
Ashish
(Querist) 24 April 2018
Its a real case sir, an agreement was purly on mutual understanding basis. No on can believe easily.
