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Dr Sunny MP . (Free Consultant)     30 January 2025

Agreement for sale

Dear all,

Whole heartedly I would like to thank the members of this forum for guiding me with my previous legal cases, which really helped me in filing cases.

I have a new situation now and I seek your guidance as before.  Scenario is listed hereunder in the chronological order:

  1. The developer sells/registers a flat to a  ‘A’company in 2021
  2. ‘A’company registers an Agreement for Sale to a ‘B’ Person/s on 4-9-24 for an advance of 10 Lakhs.
  3. Value of sale agreed by both ‘A’ & ‘B’ was 1.60 Cr
  4. Balance of 1.5Cr was to be paid by ‘B’ to ‘A’ by 5-10-24 with Registration of Sale Deed, else, the Agreement for Sale stands terminate automatically.
  5. Both ‘A’ & ‘B’ agrees to honour the point.4 above, else advance of 10 Lakhs paid by ‘B’ shall be forfeited and ‘A’ is at the liberty to sell the flat any potential buyer in market.
  6. I as ‘C’ show interest to buy this flat from ‘A’ and upon enquiry I understand that there’s an existing Agreement for Sale with ‘B’.
  7. ‘B’ sends word through a third party cautioning me not to buy the flat else he will be court or expecting a settlement of 30 Lakhs to return/cancel the existing Agreement for Sale.
  8. In the meanwhile, ‘A’ being a gentleman have contacted ‘B’ to take back his 10Lakhs advance and has requested ‘B’ to return/cancel the existing Agreement for Sale.
  9. Now, I’ve been asked to pay 90% of the price of flat as advance to ‘A’ and get a Agreement for Sale registered.  As E-Katha of the flat is pending with BBMP(Govt Authority) registration are put on hold till digitisation of records.
  10. ‘A’ agreeing to handover the possession of the flat for interiors and occupation thereafter.

I seek your guidance on the following:

  • Is the Agreement for Sale executed between ‘A’ and ‘B’ still valid?
  • If I as ‘C’ enter into a fresh Agreement for Sale or Register Sale Deed with ‘A’ will have any legal complications from  ‘B’?
  • In the scenario explained above, if someone has to reach the court, who could that be ‘A’ or ‘B’ or ‘C’ ?

Thank you once again.

Regards, Dr Sunny MP



 8 Replies

T. Kalaiselvan, Advocate (Advocate)     30 January 2025

Until and unless the sale agreement is cancelled in writing the same remains valid and effective at least till three years from the date of its execution.

B has already warned you of legal action he proposed to initiate against A, hence you will also be trapped in the litigation by paying the sale consideration advance amount.

B will approach court for relief against A and C will become necessary party to the suit

Dr Sunny MP . (Free Consultant)     30 January 2025

Thank you so much sir, for your valuable guidance.

"Until and unless the sale agreement is cancelled in writing the same remains valid and effective at least till three years from the date of its execution."
What's the best method for Cancellation of 'Agreement for Sale'? Can it be by:

  1. Taking back the original 'Agreement for Sale' from 'B' or
  2. Executing a cancellation agreement duly signed by 'B' on a plain paper or stamp paper
  3. Is it required to be cancelled in the registrar's office etc.
  4. Can I buy the flat from 'B' itself

PLease advise.  THank you sir once again.

Regards, Dr Sunny MP

T. Kalaiselvan, Advocate (Advocate)     30 January 2025

The 'A' should send a legal notice to the buyer communicating his decision to cancel the sale registered sale agreement, and then he should issue a public notice to this effect in a local newspaper, after which he can register a cancellation deed before the concerned sub registrar for cancelling the registered sale agreement. 

You cannot buy the property from 'B' because he is not the owner of the property. 

Why are you so much interested to buy the property which apparently appears to involve in a litigation.

Dr. J C Vashista (Advocate )     31 January 2025

Intimate "B" qua intentions of "A" (termination of agreement) through a published and proper legal notice. 

What is your locus standi / concern / problem, if it is not a moot court topic ?

Dr Sunny MP . (Free Consultant)     31 January 2025

Regret delay in reply Sirs.

Hope my understanding is correct here from the advises recieved in the forum:

1) Either cancel the agreement with 'B' or issue a lawyer notice to 'B' mentioning about termination of the agreement.

2) Publish a notice in newspaper.

With this may I assume that property is good/safe to buy.

Dear Kalaiselvan Sir,

Reason for buying this property is for multiple reasons viz. proximity, size, familiy's interest etc.  Moreover, A & C would like to do business jointly in the future :)

REgards,

Dr. Sunny MP

 

Sankalp Tiwari   04 February 2025

The agreement for sale between 'A' and 'B' stipulated that the balance of ₹1.5 crore had to be paid by 5-10-24, failing which the agreement would automatically terminate, permitting 'A' to forfeit the advance of ₹10 lakh and sell the flat to another buyer. Since this date has now expired, and if there was no payment made or sale deed executed by 'B, ' the agreement would seem to have automatically terminated by its own terms. This would, in theory, free 'A' from any obligations to sell the property directly to you, 'C.'

Of course, property disputes rarely are simple. Even if there were a termination clause, 'B' may try to challenge it by arguing that delays in completing the E-Katha registration or other unforeseen factors prevented completion of the deal. Courts, on occasion have entertained such arguments, especially in cases where the seller, 'A', wasn't fully geared up to discharge his part of the contract. The principle which was laid out in K.S. Vidyanadam v. Vairavan is relevant in this case, as time is of the essence in property contracts only when expressly stipulated and strictly followed, which seems to be the case here.

Moreover, you could claim declaratory relief under Section 31 of the Specific Relief Act, if the existing agreement with 'B' creates legal uncertainty affecting your rights. For additional protection, you should insist on 'A' canceling the agreement with 'B' through a formal cancellation and provide documentary evidence of this cancellation. Moreover, you may also seek an indemnity clause in your Agreement for Sale so that you would not be sued by 'B' for any legal claims.

In case of litigations arising, 'B' would certainly be the applicant seeking specific performance or compensation to the court. To avoid the same, a declaration of its termination would indeed be wise, if 'B' continues protesting. In that case, should the matter flare up, 'A' must engage legal advocates to prepare and draw watertight documents to prevent disputes of all kinds in future.

Dr Sunny MP . (Free Consultant)     04 February 2025

Of course, property disputes rarely are simple. Even if there were a termination clause, 'B' may try to challenge it by arguing that delays in completing the E-Katha registration or other unforeseen factors prevented completion of the deal. Courts, on occasion have entertained such arguments, especially in cases where the seller, 'A', wasn't fully geared up to discharge his part of the contract. The principle which was laid out in K.S. Vidyanadam v. Vairavan is relevant in this case, as time is of the essence in property contracts only when expressly stipulated and strictly followed, which seems to be the case here.

Response: Respected Sir, thank you for your response.  Registration was put on hold from 08-10-2024 due to E-Katha but the Agreement came to an end on 05-10-2024. 'A' was reminding 'B' to get the registration at th earliest as there was a communication from the authorities about stopping Registration from 8th due to E-Katha... is the fact here.  Please advise

Warm regards, Dr Sunny MP

P. Venu (Advocate)     06 February 2025

Admittedly, "Balance of 1.5Cr was to be paid by ‘B’ to ‘A’ by 5-10-24 with Registration of Sale Deed, else, the Agreement for Sale stands terminate automatically". Prima facie, B is trying to overreach. To my knowledge and understanding, there is no cause of action for B to the Court of Law seeking specific perfprmance.

Anyhow, to be on the safeside A can terminate the Agreement under intimation to B. An Agreement is ia an act in personam.  As such, it is unnecessary to publish the cancellation of the Agreement.

In short, at present there are legal impediments in A conveying the property to C. B is only making empty gestures.


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