Interest payments
Kirit Shah
(Querist) 22 December 2011
This query is : Resolved
We are a company with four family members as partners. We intended to enter into Joint Development of projects at Bangalore, as I am a Civil Engineer. We entered into a Joint Development Agreement with a Land Owner in 1997. But due to several problems in getting ULC Clearances, change from Agriculture to Non-Agri land use, I.T clearances, etc not received from the land owner, we could not proceed with the works. We eventually agreed to release ourselves from the project and negotiated a settlement of our deposit paid to them and signed a Tri-partite Agreement along with the new developer, us and the land owner, on 2-1-2002.
In that agreement, we were to receive a sum of amount in installments ( as per the payments received by the owner on sale of flats from his share) by 02-10-2003. In case of any delay, we were to receive interest at the rate of 18% per year.
They never sent any payment till the whole period expired and only started paying after 14-3-2004 after a great effort at chasing them on our part. Then onwards, they kept paying various amounts at various dates. The last payment received was on 20-8-2007. The total amount paid in all such installments still does not match the contracted settlement amount.
What I would like to know from you is the following:
Are these installments to be adjusted towards the interest? We did send them a letter saying that these payments will be adjusted towards interest due at the time of its receipt.
Is this interest cumulative? Banks charge it cumulative and add interest to the original Amount every THREE months and charge interest on the revised amount from then on.
Is the interest chargeable from the end of the period by which the whole payment was to be made, viz. 02-10-2007 or from the date of the Tripartite Agreement, viz. 02-01-2002? As I understand, this period allowed to make payments was not utilized at all and no payment was made during the same. As such, they cannot enjoy the interest-free period at all.
Can you please inform me of the correct legal procedure to follow in this scenario?
Also can you please either refer me to any High Court or Supreme Court Judgments or send me copies of the same on my E Mail ID?
Are any charges payable in this advice?
Thanking you, Kirit Shah
ajay sethi
(Expert) 22 December 2011
since you are a company you cna easily afford legal fees .
H.M.Patnaik
(Expert) 23 December 2011
Dear Friend,
Since this is a question involving financial implication of a business venture, it is advisable to go for a paid consultation with a local advocate experienced in these type of arrangements after going through the connected documents , facts & circumstances .
However, for your information in absence of any specific clauses in the agreement in respect of interest, simple interest is charged from the date of liability .
Raj Kumar Makkad
(Expert) 23 December 2011
It shall better for you to kindly post your query in www.caclubindia.com wherein all experts are from financial sector.
