Validilty of agreement for sale
M Kumar
(Querist) 07 February 2016
This query is : Resolved
One flat was auctioned by Allahabad Bank for which I was declared the highest bidder. It was undestood that Allahabad Bank being a Financial Institution would have been auctioning the said property having a perfect and marketable title. However Allahabad Bank has auctioned the property having no perfect and marketable title as one Agreement for Sale of same flat was already registered by the defaulter prior to taking the loan from the said bank. As the Agreement for Sale is registered and as per terms & conditions of said agreement, the validity period of the agreement will automatically extend for the period till the possession of said is given to purchaser.
Allahabad Bank is not taking any cognizance of that registered Agreement for Sale. But the said purchaser based on registered agreement for sale may file case as the Bank cannot give clear title of the property.
May please advise on the validity of registered Agreement for Sale and authorisation of Bank to issue clear title of property.
P. Venu
(Expert) 08 February 2016
The query lacks clarity.
Dr J C Vashista
(Expert) 09 February 2016
I agree with expert Mr. P Venu, incomplete information cannot lead to form an opinion and advise the author, therefore, the author should consult a local prudent lawyer.
Rajendra K Goyal
(Expert) 09 February 2016
It was agreement to sale and not a sale deed.
The case of cheating can be filed against the borrower by the agreement holder / you / Bank.
M Kumar
(Querist) 09 February 2016
Defaulter first entered into an agreement for sale (registered) of his flat with third party. After one week, he took loan from Allahabad Bank by mortgaging the same flat. He later defaulted in paying the loan amount. Bank took possession of the flat and auctioned it. I took part in the auction and was declared highest bidder.
Now, as per terms and conditions of agreement for sale (which ownwer entered prior to taking loan from Bank), the validity of agreement will automatically extend till the possession of flat is given to the purchaser.
I requested Allahabad Bank to get the said agreement cancelled by the defaulter so that clear title can be given by Bank for the flat after my deposition of total money to Bank.
As the agreement for sale is still valid and registered,will the title clearance given by Bank for the said flat be absolute and cannot be challenged in court by the purchaser (with whom the agreement for sale was done by the defaulter/owner prior to taking loan from Bank)?
Please advice/suggest.
rajagopal.s
(Expert) 12 February 2016
Hi
If a sale is done under SARFESAI act, then bank has the clear title.
The person who claims to have title to the property through registration by the defaulter need to appeal against the bank. I am surprised how come the person
(who claims to have the registered sale deed from the defaulter) missed the proclamation of sale or the possession notice which should have been issued by the bank prior to auction.
In your case, the bank should register the document in your favour and also give you possession. No worries.
T. Kalaiselvan, Advocate
(Expert) 14 February 2016
The sale agreement cannot confer title to the purchaser. The vendor subsequently mortgaged the property to bank and on being a defaulter, the bank has seized the property and rightfully auctioned the property to discharge the loan on the basis of auction proceeds. No doubt, by mortgage the vendor transferred the title to the bank, the earlier buyer by sale agreement can file a specific performance suit against the vendor and seek return of his advance amount as an alternate.
As a bidder you are entitled to the title and possession of the property, the bank has to handover physical possession and get the sale deed executed on your name at your expenses. You should insist the bank on it or can cancel the purchase.
Dr J C Vashista
(Expert) 14 February 2016
The vendor has cheated not only the Bank but also you, consult a local lawyer for proper analyses of the documents qua title of the property and proceeding.
Guest
(Expert) 14 February 2016
Validity of a registered agreement, of course, cannot be challenged. But, the liability to honour that agreement rests only with the original owner, not the bank or you, as purchaser of the property through auction against default in bank loan taken by that owner.
Also, the bank cannot be expected to get that agreement cancelled, as the bank has no competence to get the agreement cancelled, as entered in to by the original owner and the third party.
About you, having bought the property through sale under SARFESAI Act, your interest cannot also be affected by that agreement, as the bank or you were not the party to the agreement.
