Upgrad LLM

enforceable unregistered agreement - clarification required


Hi,

        I decided to sell my house, and buy a new house.  So i had a sale agreement with the buyer. Agreement was a 20 rupees unregistered document. I got a advance of Rs.5 lakhs for selling the house. It was written in the agreement that the buyer should settle the remaining amount within 2 months from the date of giving advance money.But orally i told the buyer that i need 10 lakhs within a month, since i need to give advance for my new house. But he didnt give that . As he failed to give that, i wasn't able to buy the new home and i decided not to sell the house. The new house's builder increased the rate of the home, so if i need to buy the new home i have to sell my house for higher price. So i decided to sell it for higher prices. The buyer heard that and after nearly one and a half months he said he is ready to settle the full money.I told him, since he didnt  give 10 lakhs in time, i wasnt able to buy the new house.So i said to him, that im not selling to him and returned the 5 lakhs. But the buyer says, u have put agreement with me, so u have to sell it to only me.Now the agreement period 2 months has got over. So I took DD for 5 lakhs and returned the advance amount that i got from him through lawyer. But the buyer is not accepting it and he says he should sell it to only him and he will put case in the court. Can i legally face him in the court? Now i want to sell my house to another party. But i afraid he will create problems and make me to sell the property to him by going to court. Please tell me what should i do now and how should i safely sell my property to another party. 

I heard that as per new law in tamilnadu, sale agreements are made mandatory from december 2012. But i saw a article in this website --http://www.lawyersclubindia.com/articles/Enforceable-Unregistered-Agreement-5259.asp#.UgOK8fk3Brt , that even if it is unregistered , shall be enforceable in Court of Law within four months by the amendment made by TN Government and after 4 months also valid as collateral evidence. I need to know under conditions , it can be made enforceable. In my case, whether the buyer can Enforce the Unregistered Agreement ?
I dont want to sell my house to him. Pls help me what should i do ? :(

 

 

 
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Advocate

You have meritless case. Take it certainly that the property is now "disputed property". The Buyer stands on the stronger footing as against your right in view of the amendment in the State of Tamil Nadu. The Buyer will now file a Civil Suit for "Specific Performance of Contract" in a court of the competent jurisdiction. The Buyer will also ask for the "Injunction" restraining you from further selling, trasnferring, or alieanting the "disputed property" until further orders by the Court. And generally, when there is a dispute in relation to immovable property, the Court always directs the parties to maintain status quo". One day, the Court may also pass an order for a decree for specific performance, which will oblige you to "execute what is called the sale deed" in his favour. You are stuck up and spoiled everything. And I would say, the prospects for property are now blocked. You cannot sell your property, and you cannot now purchase a new property as well because of your financial position and non realization of money from existing owned property. 


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Thanks for the reply Sir.
the unregistered agreement cannot be enforced in a Court of Law as such it becomes invalid. The new law makes registeration  of sale agreement mandatory. So what do u say abt it ?
Since the agreement is unregistered , how can he go to the court ?

 
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Advocate

There is a statutory requirement of registering the "agreement to sell", provided the value of the immovable property exceeds Rs. 100=00. Obviously, the agreement should have been registered, but the buyer has remained careless in the matter of registration. But, the provision for registration is made under the Act so that there is no evasion of stamp duty. You can set a plea to the effect that the said agreement is not duly registered and thefore unenforceable in law. However, during the trial, if the buyer would like to get the agreement admitted in evidence, he would be requesting the court to refer the said agreement to the Stamp duty Collector for the purpose of levy of the stamp duty. If that is accepted, the said document will be "admissible in evidence". The admission of that evidence with invite a burden for the buyer to prove the facts stated in the agreement to sell. Once, the relevant facts and facts in issue are proved, it would be rather easy for him to argue that such transaction was entered into, and therefore, the seller cannot resile.


Beside this, Honourable the Supreme Court in case of S. Kaladevi has said to the following effect: (This matter is decided in the year 2010)


"The main provision in Section 49 provides that any document which is required to be registered, if not registered, shall not affect any immovable property comprised therein nor such document shall be received as evidence of any transaction affecting such property. Proviso, however, would show that an unregistered document affecting immovable property and required by 1908 Act or the Transfer of Property Act, 1882 to be registered may be received as an evidence to the contract in a suit for specific performance or as evidence of any collateral transaction not required to be effected by registered instrument. By virtue of proviso, therefore, an unregistered sale deed of an immovable property of the value of Rs. 100/- and more could be admitted in evidence as evidence of a contract in a suit for specific performance of the contract. Such an unregistered sale deed can  also be admitted in evidence as an evidence of any collateral transaction not required to be effected by registered document. When an unregistered sale deed is tendered in evidence, not as evidence of a completed sale, but as proof of an oral agreement of sale, the deed can be received in evidence making an endorsement that it is received only as evidence of an oral agreement of sale under the proviso to Section 49 of 1908 Act."

 

If I am not mistaken, or that if I have not misconstrued the ratio decided by the Supreme Court, the same anolofy would apply in your case. Anyway, keep in touch for further clarification on this platform. 

 

 

 

 


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Thanks for the reply sir.
So you are saying that , even if it is unregistered, he can use it as an evidence ?
Or only after registering he can use it  as an evidence ?

 
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Advocate

Paul,

From your query it is very clear that the sale agreement was never acted upon and that you have made an effort to repay the amount received as advance from the buyer . You must preserve these records and this will be a good defence,  if the buyer approaches the court. Even if the buyer approaches the court for specific performance, he is unlikely to succeed as he has not bought the property within the duration of 2 months as entered in the agreement and you have made the necessary efforts to return the money due to him.

On the link you have mentioned in the earlier post, it clearly speaks of an " Indemnity bond " , which protects the interests of the buyer in the event the seller does not act upon the agreement. Hence this post is not applicable to you as the facts are different.

It is true that the Govt of Tamilnadu has made all sale agreements compulsarily registrable from december 2012 and this will inturn aid you, if you have made the sale agreement post december 2012.  

Good luck.


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Actually the buyer says that he was ready to settle the full money within the 2 months, but only i failed to come for registration(Although he never contacted me).
Agreement signed on - 20.5.2013
Agreement expired on - 20.7.2013
Buyer sent a written communication on 21.7.2013,  that he was ready to settle full amount on 22.7.2013.
Meanwhile, i took DD on 22.7.2013 and he received it on 23.7.2013.
Now he sent back the DD stating that he was ready to buy, but only i refused to complete the registration.
Now its 10.8.2013 and he has not put any case in court. Now the DD is with us. 
What should we do now ?
If he approaches court , hereafter , will I succeed ?

 
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Advocate

Contest the suit, if filed by the Buyer. But I still hold a belief based on the judgment of the Supreme Court that even an unregistered agreement to sale can be admitted in evidence for the purpose of asserting the "oral contract". An agreement or a contract can be oral as well. He would be successful in establishing the contract based on the judgment of the supreme court. 

 

The Buyer has rightly served a notice on the following day. He must have alleged in the said notice that you have not performed your role and therefore he was constrained to serve the legal notice. The court would always consider the "proximity of time". The Buyer has not allowed to lapse considerably long period. Hence, his stand may be accepted. And, the Buyer may not accept the refund from you. The prime reason was that he wanted the property. The money that is remitted by you appears to be subsequent to the notice communicated to you. The Buyer had offered that he would still like to fulfill his obligation. Matter ends there. The consolidated effect of all these circumstances, according to me, do not render the right of the Buyer nugatory. 

 
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Hi
I have received Token money from Part "A" for sale of my flat & we have entered into a sale agreement of Rs 100 stamp paper which does not mention any time limit. It just mentions that once title search is clear they will proceed with transaction. Now the title search is clear but they have now given notice in newspaper for claims if any against the flat thus wasting my time. Now Party "B" is ready to buy the flat with quick payment. So can i return the token money & proceed with Party "B". 
The sale agreement is not registered.
Thanks in advance Sir

 
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