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tanya singh (self employed)     06 January 2010

whe an agreement is cosidered to be valid by law

I have been working for a company which is in computer education business and franchising. I was entrusted with the responsibility of setting up company's operations from zero in one of the states. company had set up two computer training centres in its  ownership and has been collecting service tax from the students and the frachisees. How ever the service tax never got paid for over two and a half years. Company proposed to me that to avoid the service tax liability i become "franchisee" on paper so that in the individual capacity most of the transactions can be executed in cash and service tax can be avoided.

I was not keen on signig the agreement but i had my salary dues of over 3 las to be recovered from the company and i was told that my dues will be cleared moment i sign the agreement. there was a monetary clause of franchisee fees , which i was not supposed to pay(under non-documented mutual understanding). after reading the agreement i signed the draft copy with the corrections done on it in pen for the clauses i did not agree with. later there was a fallout between me and the company , i quit the company and  my salary dues were not cleared and the salary cheques given to me bounced.

i served the legal notice to the company and in return to avoid the payment company has served a notice to me based on that draft agreement  my Questions are as follows

1) can an agreement which has pen corrections on it be considered as valid?

2)There was monetary clause of certain franhisee fees in the agreement but i have not paid it. Can the agreement be considered as executed ?.

3) as it was draft agreement there were no wittness , the sign of the compay MDy was not theere (however company had added the signture now in the copy), the agreement registered to myknowledge for more than three months after it was signed . still can it be considered valid to be produced in court of law?

4)what are my defences ?



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 5 Replies

vikas mishra (ADVOCATE)     06 January 2010

Madam your agreement is valid but I want to know whether when you made corrections with the pen did both the parties counter signed, if not then this would go against you actually any corrections made by pen hold preference over the typed one as per the evidence act.
1 Like

(Guest)

You may better ignore the dilemma about the validity of agreement and immediately launch prosecution u/s.138 N.I. Act against the company for dishonouring cheques issued to you towards your salary arrears.

1 Like

Raghav Sood (Lawyer)     06 January 2010

1) can an agreement which has pen corrections on it be considered as valid?

Ans. Yes if the corrections are consented by the parties and they have their intitals over the corrections

2)There was monetary clause of certain franhisee fees in the agreement but i have not paid it. Can the agreement be considered as executed ?.

Ans. agreement cannot be considered as executed in your case because in agreement their are certain sequence of events/obligation which has to be performed by the parties in the failure of the the first party i.e. your company reagrding the non payment of salary then company cannot thurst upon the second party i.e. you to perform your obligation without performing theirs. a SC law on this point

3) as it was draft agreement there were no wittness , the sign of the compay MDy was not theere (however company had added the signture now in the copy), the agreement registered to myknowledge for more than three months after it was signed . still can it be considered valid to be produced in court of law?

Ans. if it is registered then yes it can be used against you as the registration authority before whom the agreement is registered you definatly has put in your presence the query is not clear

4)what are my defences ?

ansagreement is void

refer to answer no.2

several other defences may emrged after perusal of entire case history

1 Like

Suchitra. S (Advocate)     07 January 2010

As Raghav Sir has said,  information is lacking. Whether there were counter signatures after the corrections made by pen? Whether the agreement was registered? If not, the agreement would be void and cannot be used against you.

tanya singh (self employed)     07 January 2010

no there were no counter signatures on the corrections.

i would give more clarity to the case here that the agreement was signed on "stamp paper" . my major query is if one of the clause of the agreemnt is "payment of the franchisee fees by me to the company" , i haven't paid the same. in this condition can the agreement be considered valid?


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