No full refund for buyer who defaulted on property sale pact: HC
The Court also noted that the trial court itself had found that the plaintiff had failed to perform his obligations and lacked readiness and willingness
The Court also noted that the trial court itself had found that the plaintiff had failed to perform his obligations and lacked readiness and willingness. (AI image) Background Trial Court Decree Terms Of Agreement "It clearly shows that the Plaintiff/Respondent did not perform his part of the contract as required, rendering him disentitled to get equitable relief of specific performance." Prusottam Swaroop v. Umesh Kumar Sahu Appearance For the Appellant: Mr. Dhiraj Sagar, Advocate Mr. Santosh Kumar Singh, Advocate For the Respondent: Mr. P.N. Shahi, Sr. Advocate Mr. Bipin Bihari, Advocate (The author of this article, Vatsal Chandra is a Delhi-based Advocate practicing before the courts of Delhi NCR.) The Patna High Court has held that a purchaser who failed to perform his obligations under a property sale agreement cannot seek specific performance of the contract or claim a full refund with additional compensation contrary to the terms agreed between the parties.Justice Jitendra Kumar partly allowed a first appeal filed by the original defendant and modified a trial court decree which had directed refund of Rs.43.30 lakh with 9% interest and payment of an additional compensation of Rs.5 lakh to the purchaser.The High Court held that the purchaser himself had defaulted in performing his obligations under the agreement and was therefore entitled only to the amount payable after deduction of 10% of the advance money, as specifically provided under the contract.The dispute arose out of an agreement for sale executed on 23.08.2010 in respect of a house property standing over land measuring 3 kathas and 10 dhurs. The total sale consideration agreed between the parties was Rs.1.55 crore.The plaintiff, Umesh Kumar Sahu, instituted Title Suit No. 564 of 2011 seeking specific performance of the agreement and execution of the sale deed in his favour.
Alternatively, he sought refund of Rs.43.30 lakh, which had already been paid to the defendant towards the sale consideration, along with interest at 18% per annum.According to the plaintiff, he had performed his obligations under the agreement and had always remained ready and willing to complete the transaction, but the defendant had failed to execute the sale deed.The defendant, however, argued that it was the plaintiff who had defaulted in making payments as stipulated under the agreement, resulting in cancellation of the transaction.After examining oral and documentary evidence adduced by both parties, the trial court partly decreed the suit.While declining the relief of specific performance, the trial court directed the defendant to refund the entire amount of Rs.43.30 lakh along with interest at 9% per annum from 31 December 2010. The court further awarded compensation of Rs.5 lakh to the plaintiff.Aggrieved by this part of the decree, the defendant preferred the present first appeal.Meanwhile, the plaintiff also filed a cross-appeal seeking specific performance. However, the cross-appeal was not pressed after it was brought to the notice of the Court that the subject property had already been sold to third parties and impleadment of such purchasers would delay the proceedings.The High Court noted that under the agreement, out of the total sale consideration of Rs.1.55 crore, Rs.35 lakh had already been paid by the plaintiff at the time of execution.The agreement further required the plaintiff to pay another Rs.25 lakh within four months and an additional Rs.25 lakh within eight months. Only after receipt of the next instalment was the defendant required to redeem the property from an existing mortgage with the State Bank of India and clear liabilities relating to holding tax, electricity dues and land revenue.The agreement also contained a clause stipulating that if the purchaser defaulted in making payments, the seller would be entitled to deduct 10% of the advance money and refund the balance amount.Justice Kumar observed that the contractual terms unambiguously required the plaintiff to pay Rs.25 lakh within four months from the date of execution of the agreement.
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