Token advance in property sale

Querist : Anonymous (Querist) 31 May 2020 This query is : Resolved
I have received token money of Rs 5005 for selling my house property for Rs 23 lacs. No paper agreement only by oral deal. Gave photocopy of all documents related to property. I received another offer for Rs 25lacs. Will there be any issue while returning the token advance to that party? Will he compel me to sell the property to him? Whether he can misuse my photocopy document.
Plz guide me.

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You've received a token advance for a property sale based on an oral agreement and have since received a better offer. While oral agreements for immovable property are generally not legally binding in Kerala without registration, there's a moral obligation to honour commitments. It's advisable to try and reach an amicable settlement with the initial buyer to return the token amount and avoid potential disputes, especially concerning the photocopied documents you provided.

K Rajasekharan (Expert) 31 May 2020
In Kerala state, since the year 2013, an agreement for sale of any immovable property must be registered by paying stamp duty for the advance amount received. Therefore no oral agreement is valid as of now.

Raj Kumar Makkad (Expert) 31 May 2020
As the amount is token means not a part of the contract. There shall not be any problem in returning the amount.

Dr J C Vashista (Expert) 01 June 2020
Generally business transactions are through oral agreements.
You have agreed to sell the house for 23 lakh, you must stick to your words, honour your commitment and execute documents in favour of vendee as agreed, leaving aside greed for more money.

P. Venu (Expert) 01 June 2020
Any decision depends upon morality. It is morality that makes Law possible.

SHIRISH PAWAR, 7738990900 (Expert) 01 June 2020
Hello,

You have entered into oral agreement to sale the flat for 23 lakhs so you are bound by it. However have sweet words with the purchaser and return the token amount.

Rajendra K Goyal (Expert) 01 June 2020
The agreement was oral if he is unable to prove you may be under no obligation.

If he can prove through witness or otherwise regarding your consent was given for sale and token money was received by you, you are liable.

Morally or ethically, you should honor your commitment, it is business and contract requirement.

Legally, you are not liable if he is unable to prove the deal.

Try to have amicable settlement before breaking the deal.

Raj Kumar Makkad (Expert) 01 June 2020
Morally you should stand with your promise but legally you are at sound footing as no oral agreement is permissible for the immovable property. Go through the following link wherein the reply of expert Ajay Sethi has been corroborated with the case law:

https://www.lawyersclubindia.com/experts/Specific-performance-of-an-oral-contract--338456.asp

Rajendra K Goyal (Expert) 02 June 2020
Oral agreements are enforceable, onus to prove the contract is on the claimant.
In the case of Alka Bose vs. Parmatma Devi & Ors [CIVIL APPEAL NO(s). 6197 OF 2000], the Supreme Court by coming to the conclusion of the case observed that how oral agreements are valid. A sale agreement can be oral also and valid. It is not necessary that agreement should be written, what is more important is that it should be within the ambit of Section 10 of the Indian Contract Act. All oral and written agreements will be valid if they fulfil the conditions specified in Section 10.

In the case of Y V Narasimha Sarma vs. Soorampalli Appalaraju 1988 Civil (A.P) Court Appeal No. 887 of 1982 held that it is not necessary that a contract should be written only, an oral contract is also valid. Under section 54 of Transfer of Property Act, an oral sale of a contract is true and valid. It is upon the plaintiff who has filed the case to prove that oral agreement is true. He has to show a true evidence in support of his contention. It is true that written contract has some valid authenticity, but if there is some oral agreement of sale, one has to prove it with sufficient evidence. Court also has to scrutinize the matter very carefully to come to any conclusion.

Raj Kumar Makkad (Expert) 02 June 2020
The issue in question, in fact, is no longer res integra in view of the authoritative pronouncement of the Hon'ble Supreme Court as have been taken into consideration by a Co-ordinate Bench of this Court (Sandeep Sharma, J.) in a fairly recent decision in Piar Chand vs. Sant Ram and others 2017 (3) ILR (HP) 250 : 2017 (2) SLC 886 wherein it was observed as under:

"22. At this stage, this Court deems it fit to take note of Sections 17 and 49 of the Registration Act, 1908, which is reproduced hereinbelow:-
"17. Documents of which registration is compulsory. --
(l) The following documents shall be registered, if the property to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act No. XVI of 1864, or the Indian Registration Act, 1866, or the Indian Registration Act, 1871, or the Indian Registration Act, 1877, or this Act came or comes into force, namely:--
(a) instruments of gift of immovable property;
(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property;
.
(c) non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest; and
(d) leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent;
[(e) non-testamentary instruments transferring or assigning any decree or order of a Court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest,whether vested or contingent, r of the value of one hundred rupees and upwards, to or in immovable property:] Provided that the 2[State Government] may, by order published in the[Official Gazette], exempt from the operation of this sub-section any lease executed in any district, or part of a district, the terms granted by which do not exceed five years and the annual rents reserved by which do not exceed fifty rupees.
(1A) The documents containing contracts to transfer for consideration, any immovable property for the purpose of section 53A of the Transfer of Property Act, 1882 (4 of 1882) shall be registered if they have been executed on or after the commencement of the Registration and Other Related laws (Amendment) Act, 2001 and if such documents are not registered on or after such commencement, then, they shall have no effect for the purposes of the said section 53A.]
2) Nothing in clauses (b) and (c) of sub-section (l) applies to--
(i) any composition deed; or
(ii) any instrument relating to shares in a joint stock Company, notwithstanding that the assets of such Company consist in whole or in part of immovable property; or
(iii) any debenture issued by any such Company and not creating, declaring, assigning, limiting or extinguishing any right, title or interest, to or in immovable property except in so far as it entitles .
the holder to the security afforded by a registered instrument whereby the Company has mortgaged, conveyed or otherwise transferred the whole or part of its immovable property or any interest therein to trustees upon trust for the benefit of the holders of such debentures; or
(iv)any endorsement upon or transfer of any debenture issued by any such Company; or
(v) [any document other than the documents specified in sub-section (1A)] not itself creating, declaring, assigning, limiting or extinguishing any right, title or interest of the value of one hundred rupees and upwards to or in immovable property, but merely creating a right to obtain another document which will, when executed, create, declare, assign, limit or extinguish any such right, title or interest; or
(vi) any decree or order of a Court[except a decree or order expressed to be made on a compromise and comprising immovable property other than that which is the subject-matter of the suit or proceeding]; or
(vii)any grant of immovable property by 2[Government];
or
(viii) any instrument of partition made by a Revenue-
Officer; or
(ix) any order granting a loan or instrument of collateral security granted under the Land Improvement Act, 1871, or the Land Improvement Loans Act, 1883; or
(x) any order granting a loan under the Agriculturists, Loans Act, 1884, or instrument for securing the repayment of a loan made under that Act; or [(xa)any order made under the Charitable Endowments Act, 1890, (6 of 1890) vesting any property in a Treasurer of Charitable Endowments or divesting any such Treasurer of any property;

P. Venu (Expert) 02 June 2020
The, above posting is short of what the Hon'ble Supreme Court has authoritatively pronounced. Kindly enlighten.

Rajendra K Goyal (Expert) 02 June 2020
Still there exists moral duty of the author to honor the deal.

Raj Kumar Makkad (Expert) 02 June 2020
In the above-noted judgment, Hon'ble Supreme Court has stressed that the agreement should be got registered under section 17 of the Indian Registration Act.

Rajendra K Goyal (Expert) 03 June 2020
In this case agreement was neither executed nor registered.
Apart from law, it is advised to have amicable settlement with previous purchaser first.

Raj Kumar Makkad (Expert) 03 June 2020
Oral agreement of the immovable property wherein meager an amount of Rs. 5100/- has been deposited with the seller as token amount has no relevance before law.

Rajendra K Goyal (Expert) 04 June 2020
Amicable settlement should be arrived with the person who gave token money.

If not possible, legal position advised by the experts.

Raj Kumar Makkad (Expert) 04 June 2020
Mutual consent shall prevail in the given case wherein it means two parties of sound mind and comprehension, agree in tandem to a contract that can be verbal or written. So mutual consent can relate to anything with such a general definition.

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