• Memorandum of understanding

Hello

I had a old demolition condition building in a very commercial area in Chennai.
I had wished to demolish and re-construct the building .
There were two tenets occupying the ground floor.
One tenet was occupying for more than 10 years and another one for 2 years.
They all very well knew about the condition of the building and I wanted to demolish and reconstruct the building.
I asked them Politely to vacate the building.
I had plans of giving one shop of the same size to the older tenant at little less than current market price.

We both agreed on the terms orally and were about to enter into a MOU.
The other tenant also wanted the shop back but it was only possible to construct two shops on the ground floor out of which one shop is wanted for myself.
He filed an interim injunction against me to stop evacuating him.
He forced me to give me a shop on the ground floor or else he will never Vacate.
I was forced to sacrifice the size of my shop and give him a portion at 25% of the market price.

Now the older tenant came to know about this and even he refused to vacate his shop untill and unless I give him the shop at 25% of the market price.
Since he was the only tenant stuck there and the whole project was in danger I Had to agree on his terms.
Now when they have vacated and I have started my project and I am not able to afford to give them the shops at the agreed price. 

I have taken an advance by cheque from one tenant.

I cannot compromise with the size of my shop now , so there is only one shop left .

What shall I do about this?

What consequences do I have to face if I don't agree to their MOU?

Please give suggestions.

Thanks in advance.
Asked 2 years ago in Property Law from Chennai, Tamil Nadu
it is necessary to go through MOU signed by you to advice . were the terms filed in court? if these terms have been filed in court tenant will take contempt of court proceedings against you .
Ajay Sethi
Advocate, Mumbai
23206 Answers
1218 Consultations
5.0 on 5.0
1)the MOU has been duly signed by you .
2)  under MOU you agreed to give shop at 25%^of market price . 
3)  if you fail to comply the tenant may obtain injunction restraining you from selling , creating third party rights on shop . you have also taken advance cheque from tenant
Ajay Sethi
Advocate, Mumbai
23206 Answers
1218 Consultations
5.0 on 5.0
if mou is signed both of you then it binds both you or you say no mou was signed and the copy which other party has is forged and then you will have to fight it in court,kindly keep this in mind that even if there is no agreement between you and other party and there is correspondence in this regards between you and other party then also they can bound you
Rajeev Bari
Advocate, New Delhi
1506 Answers
92 Consultations
3.5 on 5.0
frankly it is necessary to go through MOU signed by parties to advice . it is doubtful that tenants will keep quiet after having been deprived of the shop they were entitled under the MOU . be ready for long legal battle ahead . the diference between market rate of shop and price paid by tenants would be compensation sought by tenants
Ajay Sethi
Advocate, Mumbai
23206 Answers
1218 Consultations
5.0 on 5.0
he has been tenant in your building for last 10 years . as per MOU you must have offered ownership rights to tenant for the shop . he will claim the maximum amount he can . it is upto court to decide . it would also depend upon terms of your contract
Ajay Sethi
Advocate, Mumbai
23206 Answers
1218 Consultations
5.0 on 5.0
that can be only decided by the facts of the case before the court
Rajeev Bari
Advocate, New Delhi
1506 Answers
92 Consultations
3.5 on 5.0
10 years .
Ajay Sethi
Advocate, Mumbai
23206 Answers
1218 Consultations
5.0 on 5.0
no time frame can be set for this
Rajeev Bari
Advocate, New Delhi
1506 Answers
92 Consultations
3.5 on 5.0
dont create third party rights on shop . dont give it on rent . if you use the shop tenant may ask for appointment of court Receiver and that rent proceeds if any received be deposited in court till suit is heard and finally disposed of
Ajay Sethi
Advocate, Mumbai
23206 Answers
1218 Consultations
5.0 on 5.0
we cannot  forecast what your tenants will do . it all depends upon legal advice received and whether they want to go for litigation or arrive at an amicable settlement
Ajay Sethi
Advocate, Mumbai
23206 Answers
1218 Consultations
5.0 on 5.0
we have advised you at length . dont sell / give on rent . you can use it if you so desire
Ajay Sethi
Advocate, Mumbai
23206 Answers
1218 Consultations
5.0 on 5.0
that you have to decide
Rajeev Bari
Advocate, New Delhi
1506 Answers
92 Consultations
3.5 on 5.0
If the MOU has been made and signed by you, dishonouring it can be remedied by tenant by moving court to seek enforcement of MOU along with monetary damages. On a legal action brought by tenant the court may hold you liable to pay monetary damages to him in addition to complying with the promise(s) made in MOU.
Ashish Davessar
Advocate, Jaipur
18088 Answers
448 Consultations
5.0 on 5.0
Once MOU has been signed it is irreversible and capable of enforcement through a court of law. If either party violates MOU then the suffering party can move to court for enforcing the MOU. Hence, to go back on the promise made in MOU is not an option for you as you will end up paying more than what you undertook in MOU to pay inasmuch as court may order monetary damages in addition to ordering a compliance of MOU.
Ashish Davessar
Advocate, Jaipur
18088 Answers
448 Consultations
5.0 on 5.0
It is for the court to decide the quantum of compensation having regard to well settled principles of law. If you can attempt to delay the case then his lawyer can also play many tricks in book to repel such attempts by you.
Ashish Davessar
Advocate, Jaipur
18088 Answers
448 Consultations
5.0 on 5.0

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