2013 (1) TMI 414 - HC - Companies Law

Refund claim of advance payment made for procuring an immovable property - not able to purchase the flat by making the payment within the given time - submitted by the company that since Clause 11 permitted the cancellation to be effected by the end of August, 2012, the liability of the company, could arise only after August 30, 2012 - both the statutory notice and the institution of the present proceedings are premature - Held that - Clause 11 of the agreement only stipulated the time within which the entire consideration in terms of the agreement was to be paid. Such clause did not disentitle the buyer from terminating the agreement prior to August 30, 2012. In this case, the agreement was entered into between the parties on July 1, 2012 and by the mail of July 4, 2012, the petitioner evinced her desire not to go ahead with the transaction. Indeed, the petitioner unilaterally offered the deduction in terms of Clause 11 of the agreement though it would have been understandable for the petitioner even to require a reconsideration of the matter since the termination followed within the days of the execution of the agreement. The company has no defence to the claim and none has been indicated either in the reply to the statutory notice or in the affidavit filed on its behalf - the principal sum of Rs. 9 lakh together with interest thereon at the rate of 15% per annum from July 5, 2012 till payment to be paid over by the company to the petitioner within a week from date, the petition will remain permanently stayed.

Summary

Issues:
1. Claim for refund of advance payment for an immovable property.

Analysis:
The petitioner entered into an agreement to purchase an immovable property for Rs.1,90,33,000, paying an advance of Rs. 14 lakh and issuing a cheque for Rs. 36 lakh. The petitioner later decided not to proceed with the purchase, stopped payment on the cheque, and demanded a refund of the advance amount after deduction as per the agreement terms.

Clause 10 of the agreement allowed specific performance if the petitioner wished to obtain the property and the seller failed to perform. Clause 11 stated that if the buyer failed to pay by August 30, 2012, the agreement would be cancelled, and the seller would refund the amount after deducting Rs. 5 lakh as compensation.

The company claimed that the proceedings were premature as the cancellation could only be effective after August 30, 2012. However, the court found this argument dishonest, stating that the petitioner had the right to terminate the agreement before the specified date. The company failed to provide any defense to the claim.

The court admitted the petition for the principal sum of Rs. 9 lakh with 15% interest per annum from July 5, 2012, till payment. The company was given a week to pay the amount; otherwise, the petition would be advertised. The company requested further time for payment, offering to pay in three installments subject to withdrawing criminal proceedings related to the cheque for Rs. 36 lakh.

The petitioner agreed to accept payment through pay orders in three installments, with the last installment due by the end of the third month. Failure to make any installment payment would result in the petition being advertised as directed by the court.