Legal Question in Consumer Law in India

I, Samarth Omprakash Sharma, am a Chartered Accountant by profession. I stay with my wife, Poonam Sharma in Mumbai. We both are doing our jobs in Mumbai.

Around November 2008, we started looking for 1 BHK flat in Mumbai � Western Suburbs. We had a budget of 30 to 32 Lacs in our mind and we did not want to exceed by this amount. To our luck, we finalised a deal in May 2009 at Kandivali (E). We finalised the deal for 33, 50,000/- by paying 51,000 / - as token amount. We exceeded this budget because of the some affordability and more convenience. That was the best rate we can afford.

Following were the key points of signed memorandum of understanding, (MOU):

1. Total consideration at Rs. 33, 50,000/-

2. Token amount � Rs. 51,000/-

3. In case either party is unable to perform the contract, the other party can claim maximum upto 51,000/- only i.e. token amount. The payment was made vide cheque no. 952925, dt 23/05/2009 through HDFC Bank.

4. Title transfer charges to borne equally by the both seller and buyer. These are the society share transfer charges.

5. There was no time limit mentioned in the MOU for the performance of the contract.

6. Parties to the MOU � Sudeepa Deb (seller) and Samarth Sharma (buyer)

7. The deal was finalised at the office of Mr. Rajendra and Ashwini Dewan, brokers from seller�s side located at Thakur Village, Kandivali (East).

8. Address of the property � D-216, Bhoomi Hills, Near NG Suncity Phase I, Thakur Village, Kandivali (E), Mumbai - 400101

Kindly read the point no. 4 and 5. The society share transfer fees are to be borne equally which is Rs. 25,000/-. When we entered into the deal, the society was not formed. The builder did not hand over the wings of the flats to the society. In case the seller wants to transfer the property, builder was charging Rs. 500/- per sq ft. The same is approximately Rs. 3, 00,000. Generally the same is borne equally by the parties. To avoid the sum of 3, 00,000 being levied, it was mutually agreed that by the time society gets registered we would stay in the same property on rental basis. The point no 5 is important as there are was surety of the formation of society and hence no time limit was mentioned for the performance of the contract.

The leave and license agreement is registered and the tenure is 1st August 2009 to 30th June 2010. We had regularly paid advance rent from Aug 2009 to January 2010 at Rs. 12,000/- per month and refundable deposit of Rs. 12,000/-. I and my wife have applied for home loan from LIC Housing Finance Ltd. We got the sanction letter in July 2009. Around December last week, we checked with the people in the building who are nominated wing wise to carry out the process of society formation. We were informed that society will be formed by end of January 2010. Starting from August 2009, when we started occupying the place on rental basis, we were in contact of Mr. Meria living in Wing � C about the formation of the society.

On January 16th 2010, time when process of society formation was almost over, Mr. Ashwini Dewan called us to visit their office. Mr. Ashwini Dewan mentioned the seller is asking for Rs. 42, 00,000/- for the property instead of 33, 50,000/- as the rates have increased. We were shocked to hear that. We had a meeting on January 17th 2010 with the seller and the seller is not ready to quote at Rs. 33, 50,000/- but 42, 00,000/-. Neither during the time of entering into the deal we had a clause on price increase nor did seller or the broker send us any reminder in the interim period. Now is the time to execute and seller is backing out.

Though we were loosing our capital by way of payment of rent, we never objected to the payment because it was mutually agreed this way. We would have still paid the rent if the society would not have been formed. Though seller is ready to pay additional 51,000/- as per the MOU, this is unfair on us. The genuineness of the deal is defeated and is putting us in the burdensome situation. Had the rates would have been the same; it would have been a different case. But because the rates have increased, we are not in a position to enter into identical deal with our budget.

We are salaried people and cannot afford to but the property at prevailing rates now. Had the clause for price increase would have been agreed in writing or oral, we would not have entered into the deal and would have searched some other property during the period. Our budget is still the same and in case we need to buy we need to go to areas which are below par than this area. Though there is clause in the MOU that either party can withdraw but it was orally agreed that both the parties will abide by the contract and that is why we never objected to the payment of rent and never forced the seller to prepone the deal. We waited for the society formation.

Considering the urgency and fairness of the problem we need your advice on the same and request you to provide the remedy under fair and natural justice, if possible.


Asked on 1/18/10, 3:34 am

2 Answers from Attorneys
Mantosh Sarkar M.Sarkar & Associates

Since you entered into an agreement and both of you are guided by the understanding.

Price escalation was not a part of your agreement because consideration money was

fixed beforehand. So any excessive claim by seller is against contract norms, though

in your contract form no time frame was mentioned,it should have been,further one poit

if either party fails to comply,he/she will compenstate other a 51,000/- which was paid

as token amount , the seller may make it a point, though it is not maintainable. As per

contract term seller cannot ask any higher price other than agreed amount. In that case

you talk to a local Advocate, he will better defend you,

But more importantly since price escalation has been in real sense, you first try to talk

and apprse the matter amicably by offering some little more but take the legal action as

last resort. Have a nice day

Read more
Answered on 1/18/10, 6:19 am
RAJIV GUPTA (Cell: +91 9811284735) [email protected]

in your circumstances, it is advised that you may file a suit for specific performance of contract and pray the court to direct him to execute the sale at the decided consideration amount only and not the escalated price. along with the suit, you may move an application for stay so that the property is not sold during pendency of the suit.

Read more
Answered on 1/18/10, 11:23 pm


Related Questions & Answers

More Consumer Law questions and answers in India