TM PREMKUMAR (Retired) 04 November 2012

Sale of property - non performance

04.11.2012

Respected Sir,

I had offered my residential property in Chennai for sale. An Earnest Money Deposit was received in the month of January 2012. After verifying photocopies of documents, an agreement for sale was made out, in February 2012, and part balance was received, agreeing to execute sale deed in May 2012. Inspite of repeated letters, the buyer did not pay the balance amount. Finally, in July 2012 an undated cheque was issued for part balance, asking me to enter the date on instruction from the buyer. On repeated requests for a date, I was asked to fill up the date in the cheque leaf. On presentation of the same, it was dishonoured, not once, but twice within a span of about 25 days.

I would now request the learned legal luminaries to please advise me, which is the right course of action:

(a) to return the money received deducting the earnest money deposit, [depositing the same in a bank], issue a legal notice and terminate the agreement to sell. And in such an event, whether the buyer should agree for termination of the contract? OR

(b) to file a complaint in the Court of law, under section 138 of the N. I Act, and whether in that case, any Court fee stamp should be paid while filing the case?

Thanking you,

Yours respectfully,

[TM Premkumar]

Reply Follow

2 Replies

Nandagopal Rao (Retainer) 05 November 2012

Dear Mr. Premkumar, without reading the Agreement it is not possible to answer your query. Assuming that there is no clause in the agreement for return of money on failure to act by intending purchaser, how can you return the money? You have to file suit for specific performance. If there is clause in agreement that in case the buyer fails to pay the balance money and come forwar to execute sale deed, advance paid will be forfeited or to be returned, then you can return the advance and terminate the agreement. Unless there is forfeiture clause or clause for deduction, you cannot forfeitre or deduct any money. In the present case, you can issue notice u/s 138 of N.I. Act for cheque bouncing. But I think it will not help you in any manner. I advise you to send him notice of termination of the agreement giving him one opportunity to pay the balance amount in 15 days. On his failure, you terminate the agreement and return his money (without any deduction) by cheque and send it by registered post. I hope possession of the property is with you. If you have given the possession, then there is no alternate than to file suit for specific performance.

TM PREMKUMAR (Retired) 05 November 2012

Respected Sir,

[For the kind attention of Shri Nandagopal Rao]

I wholeheartedly thank you for the reply.

When I accepted the Earnest Money Deposit [EMD], a clause was inserted to forfeit the EMD if the sale deed was not executed within 90 days. The EMD was accepted on a Rs 20/- non-judicial stamp paper.

In the next agreement to sell the property, a non-performance clause was incorporated, but return of advance money was not mentioned.

As advised by your goodself, I am not pursuing the intention to file a case under Section 138 of the N.I Act. I had sent notices to the buyer within 30 days of return of cheque, on both the occasions, giving him 15 days notice. The buyer has again not paid the cheque amount, though the 15 day time limit expired two days ago.

Thank you so much.

Yours most respectfully,

[TM PREMKUMAR]