• Regarding agreement of sale

Dear Sir, 

I need some kind guidance. 

We want to sell our house in Kolkata. 

The interested buyer wants us to intially go for an Agreement to Sale because he needs the same for getting a Home Loan ( The interested buyer is a property developer/promoter). 

He is willing to pay 25% payment at the time of the Agreement to Sale and the balance in 60 days. 

Though I will keep a clause in the Agreement to Sale which says that in case the buyer does not pay the balance money in 60 days, the agreement of sale gets CANCELLED and the seller will refund the money after retaining 50% as a forfeiture, my question is :
Can the buyer if he fails to make the payment, go for an injunctuion in court to restrain me ( the seller) from selling the house even after he fails to pay the same. 
Is there is a risk for me - the seller How can we remove any risk for me ( the seller) 

I hope till the time the full payment is made and the actual sale deed is signed, there are no rights of the buyer - especially if he cannot make the balance payment in 60 days - kindly confirm. Thanks You. Kind Re
Asked 4 years ago in Property Law
Religion: Hindu

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22 Answers

1) terms of contract are sacrosanct

2) buyer would not get stay order if time is essence of contract

3)if he fails to make balance payment you can cancel the agreement for sale as per clauses in your agreement

4) forfeit part of advance payment

Ajay Sethi
Advocate, Mumbai
87911 Answers
6207 Consultations

5.0 on 5.0

Hello,

No one can go beyond the terms of the agreement.

If the other person fails to fulfill the terms of the agreement for any reason then you have all the right to cancel the agreement as per the terms of the contract.

He will not get any order from the court, do not worry.

Regards

Anilesh Tewari
Advocate, New Delhi
17940 Answers
377 Consultations

5.0 on 5.0

1. Incorporating the mentioned clauses in the Agreement is routine and ONLY persuasive. HOWEVER that does not translate into a concrete Sale Transaction nor a assured payment on time.

2. To enforce the above, ultimately you would have to file a Civil Suit, since all these are usual tactics to create disputes and delay payments leading to mutual settlement, which would cause loss to you. Best is to avoid such uncertain deals and scout around for concrete deals. Even IF such deals are to be done due to any compulsion, THEN "possession" of property and Final Sale-Deed registration should NOT be done, under any circumstances.

Keep Smiling .... Hemant Agarwal

Hemant Agarwal
Advocate, Mumbai
5612 Answers
25 Consultations

5.0 on 5.0

Surely you will, in a while

Anilesh Tewari
Advocate, New Delhi
17940 Answers
377 Consultations

5.0 on 5.0

Firstly, yes, you have very rightly pointed out in your query as to the rights of the seller for forfeiture of the amount of he buyer doesn’t comply with the terms and conditions of the agreement.

Secondly, he can’t get the injunction of any sort when he himself signed the agreement and now not giving the payment in time.

Thirdly, you are safe just put one more point in the agreement as “if he doesn’t pay on time then he shall also not get extra time for that”.

This would secure you from every hardship in future.

Sanjay Baniwal
Advocate, South Delhi
5464 Answers
13 Consultations

5.0 on 5.0

thanks for your appreciation .

Mr barman / Mr Ganguly are from kolkata . they would surely reply to your query

Ajay Sethi
Advocate, Mumbai
87911 Answers
6207 Consultations

5.0 on 5.0

No in case he fails to perform his agreed part in the contract then in that case he cannot seek stay against the property and seek an interim injunction from the court, kindly register the sale agreement and write specific date before which he has to make the payment. Yes in agreement there is no right of him on the property,

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

Further get the agreement drafted by a professional lawyer so that the strict clauses are made.

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

you can cancel the agreement to sell as the purchaser has failed to comply with the terms and condition of the agreement. The cancellation of an agreement to sell (sale agreement) depends on the terms mentioned in the agreement.In your case, the agreement provides for payment of the balance amount within 2 months, a condition which has been dishonoured by the prospective buyer. Thus, you can proceed to cancel the agreement by issuing a legal notice to him through your lawyer.

Mohammed Mujeeb
Advocate, Hyderabad
19031 Answers
32 Consultations

4.5 on 5.0

Hello,

The court will not prevent you to sale the property if there is a clause which says that the agreement for sale will have no effect on the completion of 60 days upon the non repayment of the amount.

Regards

Swarupananda Neogi
Advocate, Kolkata
2941 Answers
6 Consultations

4.7 on 5.0

1. The clause you are talking about is standard clause but unless the time is made the essence of the contract then mere failure to pay the balance money within stipulated does not ipso facto cancel the agreement.

2. In other words even after 60 days he can claim registration of sale deed and you can not take plea of the expiry of 60 days and forfeit the money.

3. So even if you cancel the agreement after 60 days you will have to refund his money and then proceed to sell someone else.

4. In that event though the buyer has rights to file a suit for specific performance of contract and seek injunction on future selling of the property.

Devajyoti Barman
Advocate, Kolkata
22515 Answers
402 Consultations

5.0 on 5.0

I had already suggested you that in agreement fir sale time should be essence of contract

Section 55: When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified time, the contract, or part of it that has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract.

Ajay Sethi
Advocate, Mumbai
87911 Answers
6207 Consultations

5.0 on 5.0

Relying upon the earlier decisions of supreme court in Gomathinayagam Pillai v. Pallaniswami Nadar [1967 (1) SCR 227] and Govind Prasad Chaturvedi v. Hari Dutt Shastri [1977 (2) SCC 539], this Court further held that fixation of the period within which the contract has to be performed does not make the stipulation as to time the essence of the contract. Where the contract relates to sale of immovable property, it will normally be presumed that the time is not the essence of the contract.

Thereafter this court held that even if time is not the essence of the contract, the Court may infer that it is to be performed in a reasonable time : (i) from the express terms of the contract; (ii) from the nature of the property and (iii) from the surrounding circumstances as for example, the object of making the contract. The intention to treat time as the essence of the contract may however be evidenced by circumstances which are sufficiently strong to displace the normal presumption that time is not the essence in contract for sale of land.

Not mandatory to register agreement for sale

2) your expenses increases if you go in for registration

3) even if agreement for sale is un registered it is admissible in evidence

Not mandatory to register agreement for sale

2) your expenses increases if you go in for registration

3) even if agreement for sale is un registered it is admissible in evidence

Not mandatory to register agreement for sale

2) your expenses increases if you go in for registration

3) even if agreement for sale is un registered it is admissible in evidence

Ajay Sethi
Advocate, Mumbai
87911 Answers
6207 Consultations

5.0 on 5.0

1. Application for injunction can not be filed without filing the mail suit and in the instant case there is no valid ground based on which the said developer will file the suit followed by the application for injunction restraining you in selling the said property to another person.

2. However, the developer can file the suit and application (for that matter anybody can do so), but the same will not be maintainable in the eyes of law.

3. If he files any such suit and application u/o 39 rule 1 & 2 of C.P.C. and also can manage to get a stay order, you shall have ample chance to get the same vacated.

4. You shall have to be very careful while drafting the agreement for sale and cover all the legal loopholes which might be seen later on by him.

Krishna Kishore Ganguly
Advocate, Kolkata
26602 Answers
726 Consultations

5.0 on 5.0

1. The Developers act in the same mischievous way all over India.

2. So, Pan Indian advise may be useful for you in the instant case.

Krishna Kishore Ganguly
Advocate, Kolkata
26602 Answers
726 Consultations

5.0 on 5.0

1. 30 days time to comply with the payment terms of the contract is justified and is binding on him if he agrees to accept the same.

2. The way we have the standard clauses, the developers with ill motive also have standard operating procedure to act illegally to attempt to grab other's properties by harassing them.

3. Such Developers keep lawyers in their monthly master roll for filing such frivolous applications and cases.

4. So, while registering the Agreement for Sale, ensure that all points are adequately covered and also stay prepared to counter any ill attempt of the developer to grab your said property, fittingly.

Krishna Kishore Ganguly
Advocate, Kolkata
26602 Answers
726 Consultations

5.0 on 5.0

1. yes it cancel the agreement but even then a notice is to be served, giving a week or reasonable time so that your intent is clear even if he files a false case.

2. You can take the plea as the both the parties had agreed of the same.

3. Yes only actual damages can be forfeited all the amount cannot be forfeited.

4. On the expiry of the agreement he has no right of the specific performance of the agreement/.

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

A sale agreement is valid for three years.

He may file a suit for specific performance of contract.

Even though you have specified the time in the agreement he can still drag you to court.

If the agreement is by a registered document then you cannot avoid it by any means except breach of contract.

T Kalaiselvan
Advocate, Vellore
78070 Answers
1543 Consultations

5.0 on 5.0

You are absolutely right in your understanding that the buyer can file a suit for specific performance of contract to enforce the agreement even though there's a mention about time as an essential item in this contract.

This law is applicable through out the country and not specifically for west Bengal.

T Kalaiselvan
Advocate, Vellore
78070 Answers
1543 Consultations

5.0 on 5.0

Sale agreement shall be registered with the Sub registrar of your jurisdiction not in court. The registered agreement is legally protected and even on loss of copy a certified can be taken, further the other side cannot deny terms,signature cannot dispute the registered agreement, specific performance can be filed. No demerits of registration just a minimal cost of registration will be incurred.

The seperate stamp duty for the agreement has to be paid. Refer the schedule for the duty. http://www.wbregistration.gov.in/(S(usnq5k5exyfqvbte4svs3tba))/Stamp_duty.aspx

Yes this clause shall protect your right totally the agreement should be registered and the buyer shall pay the cost

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

.1. Get the Agreement for sale registered before the Registrar.

2. It will difficult to deny and dispute the genuineness of the said agreement for sale once it is registered.

3. Since the stamp duty for registering the agreement for sale and also the sale deed will be paid by the buyer, there is no reason why you shall avoid its registration. If it is registered, the buyer will not be able to dispute the execution of the agreement for sale.

4. The stamp duty to be paid for registering the agreement for sale will be adjusted with the stamp duty to be paid while registering the sale deed.

5. The said clause is alright. You should also mention the bank account no. of the buyer in the said agreement for sale from where you have received the payment and collect its IFSC No. (available in his cheque). The said information will be required while net transferring his balance amount in case the agreement is cancelled.

6. It will be prudent on your part to net transfer the balance amount to him first followed by a letter informing him that the saiod agreement for sale hereby stands cancelled for his not complying with its payment terms and that his balance amount has already been refunded to his given account.

7. If you can transfer the said balance amount, you shall stay in an advantageous position legally in connection with the said agreement for sale.

1.You won't have to mention the IFS Code in the agreement for sale. Just mention the account no. from where the chaeque was issued.

2. Collect the IFS Code no. from the cheque and preserve it for your refunding the amount paid by him through net.

3. You can also skip mentioning both of his account no. and IFS Code but carefully collecting the same for your future use.

4. The purpose is that you can return the money to him through net which he won't be able to refuse to accept.

Krishna Kishore Ganguly
Advocate, Kolkata
26602 Answers
726 Consultations

5.0 on 5.0

1. Court is not the registration authority, the sub-registrar is the competent authority to register any document.

2. You cannot register a document in the court hence there is no question of merits or demerits

3. An agreement for sale has to be registered mandatorily as per transfer of property act.

4. The registration fee is different to that of the stamp duty to be paid at the time of registering the document.

The stamp duty to be paid at the time of registering the sale agreement shall be to the value of the sale consideration amount received at that time (advance), and at the time registering the sale deed, you can pay the stamp duty for the balance of sale consideration amount received then.

(The registration charges and the stamp duty shall be borne by the buyer and not the seller.)

The clause what you have mentioned especially the forfeiture clause is not maintainable in law, you cannot forfeit the entire amount just because he could not perform his part of contract, the court will not accept this clause as legally valid, you can deduct the administration charges and cost towards any other incidentals, you cannot forfeit the entire booking amount.

Even though you may mention that time is essence of contract as per the law of limitation, the time limit on such agreements is three years, hence if he approaches court, the court may grant a decree in his favor on the basis of the law of ilimitaiton.

This law is common for entire country and there is no exemption to one of the states of India i.e., West Bengal.

T Kalaiselvan
Advocate, Vellore
78070 Answers
1543 Consultations

5.0 on 5.0

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