Since GPA is executed in favour of firm and change in constitution of firm would not invalidate the GPA
Hello, We are the land owners of a property and had given this on Joint development to a builder. It is a partnership firm and we have executed a GPA in the firm's name. But now without our knowledge the builder sell his share to some other builder retiring all the partners with new partners. Now my question is the gpa still valid or not. Gpa was represented by the old partner but he is no more in the firm.
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Since GPA is executed in favour of firm and change in constitution of firm would not invalidate the GPA
Is the property ie. Apartment Complex constructed by the Builder before selling his share? As per the general terms of GPA and JDA, the builder is entitled to sell his share described in Sharing Agreement. You can send a legal notice mentioning to revoke the GPA as there is material breach and also file a suit for cancellation of sale deeds, declaration and Injunction.
1. You may file a suit for declaration of the sale deed as void and non est in the civil court and also seek temporary injunction to stop the buyer from creating further third party rights during the pendency of the suit.
2. Also file a FIR under Sections 406 and 420 IPC for criminal breach of trust and cheating.
3. GPA ceases to be valid on the death of the principal unless it is made irrevocable and is coupled with the interest of agent..
1. The GPA is given to a natural person I.e. partners of a firm and not the firm. So check once again your GPA. If it was given to firm then it was void af the first place.
2. Now if it was given to partners then partners of the new firm can not work on this basis anymore.
3. Check your development agreement wherein the earlier firm was entitled to assign its interest to new firm or a new set of partners can step in on place of earlier ones.
4. Since the legal entity of firm is different frfrom registered company with the retirement of earlier partners on mass the partners will have to make new agreement with you.
The sale is not valid if he has sold your share too. You can challenge the sale deed on basis of gpa and partnership deed if any
1. See the GPA is still valid as the firm is in existence and GPA was executed in favor of the firm. In case firm dissolves then GPA is not valid if new partners in same firm are added it is valid.
That GPA might be non transferable, so it becomes invalid now
Yes, its still valid if it is registered because the clause in it must mentioned on Firm's name and not individual. Only the partner's signature must be on behalf of Partnership firm.
GPA has become invalid but purpose of GPA is also over. They have sold their share through POA. Now other builder is exclusive owner of their share. NO need of GPA.
GPA was executed in the name of partner or firm ? Whether sale of share is valid or not, depends on progress of construction and conditions of agreement executed with builder.
It is to see that whether any such clause which allows such a transfer of partners. Also, in absence of the said clause, the GPA is still valid because the GPA is on the name of the FIRM and not on the name of the partners and the managing partners may change from time to time.
1. POA (GPA) was executed in name of partnership firm and hence is valid till partnership firm is dissolved. Here the individual partner has not executed a "personal POA".
2. ALL new incoming partners are bound by previously executed POA, unless & until the firm decides to revoke /rescind the POA, by following due procedures of law.(legal notice, news paper publications, etc.... )
- Since , you have entered into GPA with the builder , that was running under the partnership firm , then all the partners is accountable and bound with the agreement , and without informing you , firm cannot change its partner .
- Further, the sell his share by the builder is also violation of the agreement , if this clause was mentioned in the GPA.
- Further , as the GPA was executed between you and the partnership Firm , hence after retiring the partners this GPA is still valid , and is bound with the new partners of the firm.
- Further , as the partnership firm not dissolved by the builder , hence GPA is valid .
You may note that the GPA was executed in favor of the partnership firm and not in favor of any individual of the firm.
If the firm is retiring its partners or appointing new partners or selling their share of property, it is their own firm's decision which cannot be objected to or you cannot interfere in their own firm's activities.
If the firm is committing any fraud agaisnt you then you have the rights to terminate the Joint development agreement including the GPA.
Therefore you may discuss your actual problem if at all you are seriously looking for some solution to the actual problems.
in JDA Both the parties have liberty to sale the under construction area from their own share to the prospective buyers as well..
When GPA was represented by old partner then it is not valid and you can file suit for recovery of amounts and also criminal cases as follows. Get cancel the sale deeds. Get issue a legal notice and discuss.
Consequential Damages Under The Indian Contract Act, 1872
Section 73 of the Act provides that "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, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss of damage sustained by reason of the breach"It further states that "When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract." The explanation to Section 73 states that "In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by non-performance of the contract must be taken into account."
It appears from Section 73 of the Act that the general principle for assessment of damages is compensatory, i.e. the innocent party is to be placed, so far as money can do, in the same position as if the contract had been performed. However, the question which arises for deliberation is that whether the Defaulting Party can be held liable for the indirect damages / consequential damages suffered by the Non-Defaulting Party?
Consequential damage or loss usually refers to pecuniary loss consequent on physical damage, such as loss of profit sustained due to fire damage in a factory3. It arises due to the existence of certain special circumstances. The basic rule for determining scope and extent of consequential damages, which Defaulting Party would be liable to pay to Non-Defaulting Party, was first elaborated in the judgment of Alderson B., in the English Court of Exchequer, in the case of Hadley v. Baxendale4. In the said case, the plaintiff, were millers and used to run the City Steam-Mills in Gloucester. A crankshaft of a steam engine at the mill had broken and the plaintiff arranged to have a new one made by W. Joyce & Co. in Greenwich, and for the said purpose W. Joyce & Co. required that the broken crankshaft be sent to them in order to ensure that the new crankshaft would fit together properly with the other parts of the steam engine. The plaintiffs contracted with the defendants, who were common carriers, to deliver the crankshaft to engineers for repair by a certain date at a cost of £2 sterling and 4 shillings. The defendants failed to deliver on the date in question, causing the plaintiff to lose business. The plaintiff sued for the profits lost due to the defendant's late delivery, and the jury awarded the plaintiff damages of £25. The defendants appealed, contending that they did not know that the plaintiff would suffer any particular damage by reason of the late delivery. The issue raised by the defendants in the appeal was whether the defendant in breach of contract could also be held liable for the damages that the defendant was not aware and which were suffered by the plaintiff from a breach of the contract.
The Court observed that "Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it. Now, if the special circumstances under which the contract was actually made where communicated by the plaintiffs to the defendants, and thus known to both parties, the damages resulting from the breach of such a contract, which they would reasonably contemplate, would be the amount of injury which would ordinarily follow from a breach of contract under these special circumstances so known and communicated. But, on the other hand, if these special circumstances were wholly unknown to the party breaking the contract, he, at the most, could only be supposed to have had in his contemplation the amount of injury which would arise generally, and in the great multitude of cases not affected by any special circumstances, from such a breach of contract."
The Court further pointed out that "But how do these circumstances show reasonably that the profits of the mill must be stopped by an unreasonable delay in the delivery of the broken shaft by the carrier to the third person? Suppose the plaintiffs had another shaft in their possession put up or putting up at the time, and that they only wished to send back the broken shaft to the engineer who made it; it is clear that this would be quite consistent with the above circumstances, and yet the unreasonable delay in the delivery would have no effect upon the intermediate profits of the mill. Or, again, suppose that, at the time of the delivery to the carrier, the machinery of the mill had been in other respects defective, then, also, the same results would follow. Here it is true that the shaft was actually sent back to serve as a model for the new one, and that the want of a new one was the only cause of the stoppage of the mill, and that the loss of profits really arose from not sending down the new shaft in proper time, and that this arose from the delay in delivering the broken one to serve as a model. But it is obvious that, in the great multitude of cases of millers sending off broken shafts to third persons by a carrier under ordinary circumstances, such consequences would not, in all probability, have occurred; and these special circumstances were here never communicated by the plaintiffs to the defendants" Therefore, applying the aforesaid rule and considering the fact that the special circumstance was not communicated by the plaintiff to the defendants, it was held that the plaintiffs could not recover the loss of profits from the defendants.
A similar question arose in the case of Victoria Laundry (Windsor Ltd.) v. Newman Industries Ltd.5 In the said case, the defendants were to deliver a boiler for the plaintiff and the delivery was delayed by five months. As a result of not having enough laundry capacity, the plaintiff lost a high value cleaning contract from the Ministry of Supply. The plaintiff sued the defendants for the loss of profits on account of (i) the large number of customers which could have been served if the said boiler was delivered on time; and (ii) the amount the plaintiff could have earned if it had received the contract from the Ministry of Supply. In the instant case the defendants were aware that the plaintiff required the boiler for immediate use and therefore, it was held that the defendant as a reasonable man could have foreseen some loss of profit though not the loss of profit resulting from the special circumstance with respect to the Ministry of Supply's contract.
Therefore, the defendant was held liable to compensate for the ordinary loss of profits and not for the extraordinary loss of profits which were on account of the special circumstances.
Analyzing the principles laid down in the aforesaid cases, it is evident that there are two categories of damages which the can be claimed by the Non-Defaulting Party i.e. (1) which can be fairly and reasonably considered arising naturally, i.e., in the usual course of things, from such breach of contract itself; and (ii) which may reasonably be supposed to have been in the contemplation of both the parties, at the time they made the contract, as the probable result of the breach of it. The first category refers to the direct damages and the second category refers towards consequential damages. Consequential damages can only be claimed by the Non-Defaulting Party in case the special circumstances resulting into the consequential damage were already brought into the Defaulting Party's knowledge at the time of executing the contract.
It is also relevant to highlight herein that Section 73 of the Act very clearly provides that compensation is not to be given for any remote and indirect loss of damage sustained by reason of the breach on the contract. However, it also states that the Non-Defaulting Party is entitled to receive from the Defaulting Party the compensation for any loss or damage caused thereby, which the parties knew, when they made the contract, to be likely to result from the breach of it.
It is also evident from the above discussion that the principles laid down in aforesaid case of Hadley v. Baxendale have been adopted by the draftsmen within the language of Section 73 of the Act and the same has also been applied in various Indian cases.
It may be concluded that the general principle with respect to claiming the consequential damages by Non-Defaulting Party is that the Non-Defaulting Party is only entitled to recover / claim such part of the damages or losses resulting from the breach by the Defaulting Party, as was at the time of execution of the contract reasonably foreseeable as liable to result from the breach. Further, the damage or loss "reasonably foreseeable" would inter-alia depend on the knowledge possessed / shared between the parties. It is expected out of a reasonable person to understand and foresee the damage which may be suffered by the Non-Defaulting Party and resulting from the breach by the Defaulting Party in the "ordinary course". However, in case of existence of "special circumstances", which are outside the purview of the "ordinary course" what is of utmost importance, so as to be able to claim the consequential damages, is that the Defaulting Party should be aware of the said "special circumstances" which would result into consequential losses for the Non-Defaulting Party, at the time of executing the contract.
Section 39 of the Indian Contract Act, 1872
An actual breach is one in which there is actual non-performance of the contractual obligations. Section 39 of the Indian Contract Act, 1872 has laid out anticipatory as one where a party has refused to perform or disabled himself from performing the contractual obligations, i.e., repudiation
Section 39 in The Indian Contract Act, 1872
Section 405 in The Indian Penal Code
(a) A, being executor to the will of a deceased person, dishonestly disobeys the law which directs him to divide the effects according to the will, and appropriate them to his own use. A has committed criminal breach of trust.
(b) A is a warehouse-keeper. Z going on a journey, entrusts his furniture to A, under a contract that it shall be returned on payment of a stipulated sum for warehouse room. A dishonestly sells the goods. A has committed criminal breach of trust.
(c) A, residing in Calcutta, is agent for Z, residing at Delhi. There is an express or implied contract between A and Z, that all sums remitted by Z to A shall be invested by A, according to Z’s direction. Z remits a lakh of rupees to A, with directions to A to invest the same in Company’s paper. A dishonestly disobeys the direction and employs the money in his own business. A has committed criminal breach of trust.
(d) But if A, in the last illustration, not dishonestly but in good faith, believing that it will be more for Z’s advantage to hold shares in the Bank of Bengal, disobeys Z’s directions, and buys shares in the Bank of Bengal, for Z, instead of buying Company’s paper, here, though Z should suffer loss, and should be entitled to bring a civil action against A, on account of that loss, yet A, not having acted dishonestly, has not committed criminal breach of trust.
(e) A, a revenue-officer, is entrusted with public money and is either directed by law, or bound by a contract, express or implied, with the Government, to pay into a certain treasury all the public money which he holds. A dishonestly appropriates the money. A has committed criminal breach of trust.
(f) A, a carrier, is entrusted by Z with property to be carried by land or by water. A dishonestly misappropriates the property. A has committed criminal breach of trust. Comments Criminal Conspiracy Sanction for prosecution is not necessary if a public servant is charged for offence of entering into a criminal conspiracy for committed breach of trust; State of Kerala v. Padmanabham Nair, 1999 Cr LJ 3696 (SC). Criminal breach of trust: Meaning and extent It must be proved that the beneficial interest in the property in respect of which the offence is alleged to have been committed was vested in some person other than the accused, and that the accused held that property on behalf of that person. A relationship is created between the transferor and transferee, whereunder the transferor remains the owner of the property and the transferee has legal custody of the property for the benefit of the transferor himself or transferee has only the custody of the property for the benefit of the transferor himself or someone else. At best, the transferee obtains in the property entrusted to him only special interest limited to claim for his charges in respect of its safe retention, and under no circumstances does he acquire a right to dispose of that property in contravention of the condition of the entrustment; Jaswantrai Manilal Akhaney v. State of Bombay, AIR 1956 SC 575. Entrustment The word entrusted in the section is very important unless there is entrustment, there can be no offence under the section; Ramaswami Nadar v. State of Madras, AIR 1958 SC 56.
1. If GPA was executed for sale of builders share then the new developer will become owner of share which was given to developer through GPA.
2. Builder can sell his share without your knowledge or consent because you have given him GPA for this purpose only.
You had executed the gpa in the firm's name and the firm was free to do whatever was to be done in the best interests of the firm.
How can they do such a thing. It is illegal. Therefore file a criminal complaint against them for fraud and criminal breach of trust.
Gpa will not be valid.