Seller backing out of a deal after taking token by cheque
Nirav Vora
(Querist) 09 December 2012
This query is : Resolved
Dear sirs,
My query is a bit elaborate. I will state all points for a proper guidance.
We identified a resale flat in a cooperative society in Kolkata on 31 July 2012. On the same day we sat with the seller in the presence of his broker and made a token payment of 5 lacs by cheque. The total amount agreed upon by the seller was 2 crore.
We did not take any receipt from him against this cheque as we assumed that once he deposits the cheque in the bank his intent to sell will be self-explanatory.
He provided us with all the requisite documents following this deals except the NOC which is required in case of a cooperative society. He simply led us on and assured us that he would get it in due time.
Meanwhile we asked him to set up a meeting with the cooperative society secretary and other committee members which he did.
The society met us and agreed to provide the NOC and transfer the membership when the sale was done. But before that we were asked to give an affidavit that we do not own any other residential property as per the rules of the cooperative society, which we did.
We decided we will only make an Agreement in writing after the seller gets the NOC from the society as we did not want to buy this flat w/o NOC.
We kept on pursuing the seller to provide the NOC for 3 months. The seller held on to the cheque for 3 months and finally deposited it on 26th October. During this period he wrote 3 letters to the society asking for the NOC. I have all 3 original letters written by the seller to the society duly signed by the seller. The last letter in which the seller has written that he intends to sell the flat to me was written on 15th November.
On 23rd November the seller informed us that he cannot get the NOC form the society and that if we wanted to buy the flat we have to do it w/o the NOC. We agreed to do that and buy the flat w/o the NOC.
On 25th November the seller called us up and simply told us that now he did not want to sell the flat and that we should take back the token money.
We have not taken back the token money and want to buy the flat and want him to honour the deal. We doubt that the seller has been offered a higher amount by another prospective buyer and so he wants to get out of the deal.
Key points -
The token money- 5 lacs, is still with the seller. He is willing to give it back but we are not taking it and asking him to sell the flat as agreed.
We were formally introduced as the buyers to the full committee in the presence of the seller.
We have the seller's original correspondence with the cooperative society duly signed by the seller stating that he intends to sell the flat to us.
We have not made an Agreement and thus do not have any document which states the price agreed upon by both parties.
We have given the cooperative society the Affidavit as per the rules.
The broker involved is also asking the seller to honour the deal and understands that the seller is at fault
We want to honour the deal and buy the flat but the seller has backed out.
Kindly guide me as to what are my options.
Thanks in advance gentlemen.
Any help would be greatly appreciated.
Thanks again.
prabhakar singh
(Expert) 09 December 2012
I have gone through all that you have authored to find that although no formal agreement to sale in writing was executed yet an oral agreement is established more so by several correspondences made for NOC. Albeit you do not have any correspondence to prove the agreed consideration money.
In entire facts and circumstances of your case your remedy is to file a suit of specific performance after serving a
notice upon him fixing a date of registration stating that you are ready and willing to perform your all parts of the contract.You should visit the registry office on the date fixed by notice and should take a certificate of attendance from registrar paying a fixed fees unless your notice is replied and pleads for any other date or denies the agreement to sale.
I am located in Up where even agreement to sale is required to be by a registered agreement.
But while advising you I presumed that in West Bengal such agreements are not required to be registered and then they can be oral as well as in writing.As regards to consideration money the same can be proved by oral evidence of your's as well as that of the broker involved in the deal.
An other care you should take is that mean while he does not succeed sale it to some one else.If succeeds ,buyer would get defense of bonafide purchaser for value unless you prove that the buyer was aware of agreement with you and even then he purchased.Then to coup this problem make the agreement publish in News Papers of vied circulation in the locality and also
in some you keep the fact on record of the sub registrar available for inspection of others.
All in all you need a very sharp and prudent civil law lawyer to deal it right now.Hence get in touch of one.
Raj Kumar Makkad
(Expert) 09 December 2012
With humble submission, I disagree with the opinion of Mr. Singh which is based upon mere presumption to the effect that in West Bengal, oral agreement to sale is valid.
Transfer of Property mandates all over India to execute a written agreement to sale enforceable under law. Oral agreement for sale of immovable property has no value in the eyes of law even though in the given case, the alleged seller has made many correspondence with his society but all are for the 'intent to sale'. Not even a single letter has been cited by you which may contain that the seller has sold to the author and further the term and conditions of alleged sale.
Agreement means acceptance of both the parties with free will. Fixing of date for registered sale-deed on the part of one of the parties do not give right for specific peformance. Refer to judgment passed by Hon'ble Supreme Court in Brij Mohan and others Versus Sugra Begum and other, (1990) 4 Supreme Court Cases 147, AIR 1956 Cal 147, Govinda Chandra Ghose v. Provabati Ghose, and AIR 1957 Andh Pra 960, S.Ramalingam Pillai v. G.R. Jagadammal).
V.Mahadevan
(Expert) 09 December 2012
A crucial point having a bearing and worthy of attention is the absence of a document which states price(consideration) agreed upon by the parties. Remember the dictum 'no consideration no contract'
V R SHROFF
(Expert) 09 December 2012
Transfer OF PROPERTY:
Agreement must be in writing and Registered.
Oral Agreement have no value.
However, u may issue notice, get reply, and by mistake seller confirm the deal in notice, and offer the 5L cheque amt., it will serve your purpose to prove the Contract. Seller already received part payment, so u can go for specific performance and Injunction order, not to sell to any third party.
NOC is not required to purchase the Flat.
U shd have registered your deal.
As property worth 2 Cr., You must hire a Sr Advocate and file suit after issuing notice.
Raj Kumar Makkad
(Expert) 09 December 2012
Seller is even ready to refund but the question is whether the same shall be treated as a contract or not and according to my view, this is not a contact enforceable with law.
ajay sethi
(Expert) 09 December 2012
practical solution would be to take back the advance amount of rs 5 lakhs from the seller . there is no shortage of flats . you will find a better property .
R.K Nanda
(Expert) 09 December 2012
agree with expert Sethi.
K.K.Ganguly
(Expert) 09 December 2012
1) Unregistered Agreement for Sale has no value in West Bengal also, leave apart oral agreement which can not be proved,
2) Try to settle it with the seller amicably or get back the advance,
3) Bye the bye, you could have registered the sale even without getting NOC from the Society, had the seller been the owner of the flat before the society was formed wherein he became the member & afterwards you should have applied for the membership after complying with all the formalities like payment of membership transfer fees fixed by the Society etc.
Nirav Vora
(Querist) 09 December 2012
Thanks everyone for your valuable advice and to take time out to answer my query.
J K Agrawal
(Expert) 10 December 2012
Dear Sirs
With all due respect i think some what different.
The party has advance earnest money only and the defendant has accepted well the same by his conduct. The Parties are still in process only, to enter upon a 'formal Contract'. The question of registration of agreement to sale and payment of stamp duty thereon arises only when the parties put the agreement in black and white on a paper and not any time before. How can we assume that in prospective agreement ( I am talking about agreement to sale and not 'sale' as distinguished by Ld Makkad sahib), parties will not pay stamp duty or will not get, the agreement to sale, registered?
So I can say that You can file a suit to bind the other party to enter upon an 'agreement to sale' and if so obtained agreement is breached, you can file a further suit for specific performance of sale.
(it may be tough but not impossible)
At the same time I can think some other way also.
When an agreement is enforceable by law, it becomes a contract.
But when it is not enforceable? it still remains an agreement.
So no doubt there is an agreement between the parties.
Remedy of breach of contract is mentioned under section 73, 74 and 75 of the Indian Contract Act But what is the remedy of breach of an agreement?
It is mentioned under section 65 and the all advantages taken by opposite party are recoverable back. If there is any loss due to hike of price of flat, you can successfully recover the same under section 65 of the Contract Act.
