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What of sale deed for land under acquisition?
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Can the money paid for land under acquisition refunded? answers C.H.Gopinatha Rao
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Photo: Sampath Kumar
Be aware: Keep track of the norms before going in for purchase of property.
Imagine that you have decided to buy a peace of land paid in advance and signed an agreement of sale. You are yet to pay the remaining money and during such time the land you had just bought has been acquired or notification to acquire has been issued. You decide not to pay the remaining part of the money and demand that the advance be returned and the agreement cancelled. How strong is your case and will you get back the money. According to the Supreme Court you can get the money back.
(2007) 3 MLJ 248(SC) Thiriveedhi Channaiah vs Gudipud Venkata Subba Rao( D) By LRs. and others Judgement dated 20th February 2007.
An agreement for sale was entered into by and between the parties on 19-7-1981. ‘in terms of whereof the vendor offered to sell the property admeasuring 2.9 acres for a consideration of Rs.44,000 per acre and the buyer paid an advance of Rs. 50,000. As per the terms of the agreement, the balance consideration had to be paid before 25-2-1982 whereupon a regular sale deed was to be executed. It was agreed that on default of payment to pay the balance of sale consideration on or before 25-2-1982 the said amount of advance shall be forfeited.
Before the sale deed could be executed a notification under section 4(1) of the Land Acquisition Act was issued on 2-1-1982. The purchaser was of the view that the vendor was aware of the intention of the State to acquire the said property, but despite this knowledge he executed the agreement for sale. A notice was issued on behalf of the purchaser on 4-3-1983 that the vendor did not have any transferable title and hence the advance amount of Rs.50,000 with 18% interest should be refunded because the agreement could not be enforced.
The vendor contended that as the buyer has failed to pay the balance amount, the advance money of Rs 50,000 stands forfeited.
The suit filed by the vendor was allowed by the High Court holding that the vendor was justified in forfeiting the amount.
Manifest error
On appeal the Supreme Court held that the High Court committed a manifest error in arriving at the finding that the vendor was justified in forfeiting the said amount and directed the vendor to refund the amount of advance paid within a period of four weeks from the date failing which the same would carry interest at the rate of 12% per annum from the said date till the date of actual payment.
Rationes Decidendi "It would be inequitable to specifically enforce an agreement of sale of property which is the subject of notification for acquisition under section 4(1) of the Land Acquisition Act unless the notification itself is quashed.”
“It would be wrong to deny to the purchaser the right of refund of advance paid when the agreement becomes enforceable due to Government notification for acquisition.”
The author is former National President, Institution of Valuers.
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