Unregistered agreement is also enforceable | Business Standard News

Anusaya Developers had purchased agricultural land from several land owners and then converted it to non-agricultural land. These plots were then sold to various buyers for constructing their own houses.

Several persons booked the plots in the year 2008 by paying the earnest deposit of Rs 10,000. The developer then entered into separate agreements for sale with each purchaser. The balance amount was to be paid in thirty monthly instalments.

Subsequently, the developer cancelled all the agreements with the consent of the purchasers, with an assurance to refund the total amount of Rs 161.6 million in three instalments of 30 per cent, 35 per cent and 35 per cent payable in November 2011, February 2012 and May 2012 respectively. The developer paid the first instalment, but failed to pay the remaining two instalments. So the purchasers had a legal notice issued, but the developer claimed he was not liable to make any further payment. Aggrieved, 36 purchasers filed a joint complaint before the Nagpur District Forum.

The developer contested the case, contending that the agreement was executed in 2008, but the complaint was filed in 2014 after a lapse of six years, so it was time barred. The developer claimed that it was the purchasers who had defaulted in making full payment and had requested for a refund, so he had refunded 30 per cent of the amount as a gesture of goodwill, and could not be held liable.

The Forum rejected the developer’s objections and ordered a refund of the balance amount along with interest at 12 per cent a year from February 1, 2012, onwards. Additionally, each of the 35 purchasers was awarded Rs 3,000 as compensation and Rs 2,000 as litigation costs.

Unregistered agreement is also enforceable

The developer challenged this order before the Nagpur Circuit Bench of the Maharashtra State Consumer Disputes Redressal Commission. The plea of limitation was considered. The Commission observed that the agreement for purchase was cancelled through a separate agreement for refund executed in November 2011. The cancellation agreement stipulated that the final instalment of refund would be paid by the end of May 2012. This would mean that the limitation period of two years would commence from May 31, 2012. As the complaint was filed on May 3, 2014, it was held to be in time.

The developer, then, made several other arguments including that the agreement for sale executed in 2008 was invalid since it did not bear the signature of any witness, the purchasers were not consumers as they had purchased the plots for commercial purpose and the agreement had only his signature, and not purchasers’ signatures. However, the Commission held that these submissions had no bearing on the claim for refund under the subsequent deed of cancellation executed by mutual consent. It also said that the absence of signature did not make any difference either, and was legally enforceable. It relied on a judgement of the Supreme Court in the case of Aloka Bose versus Parmatma Devi & Ors, where it had been held that an agreement for sale signed only by the vendor is valid and enforceable by the purchaser.

Accordingly, by its order of April 2, 2018 delivered by B A Shaikh for the Bench along with Jayshree Yengal, the State Commission dismissed the developer’s appeal, holding that the developer had been rightly held liable to refund the balance amount along with interest, compensation and costs.


The writer is a consumer activist

via Unregistered agreement is also enforceable | Business Standard News

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s