Is my understanding correct?

[Swetatiger639]

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Swetatiger639
PARTICIPANT
February 26, 2025 at 9:18 am

Hi,

I was planning to sell my apartment in Delhi the sale proceed was agreed for 2.49 cr. The buyer paid 5 lakhs as advance and balance payment needs to be paid before 07/05/2025. In between some of the balance payment apprx 20 lakhs more were paid. Now we don’t want to proceed with the deal as our circumstances has changed. As per the contract wordings below I need to pay double of the advance i.e. 10 Lakhs, right? Not the double of 25 lakhs?

-That the entire consideration amount of the rights, interest, liens and titles of the First Party in the said flat and the same is fixed between the parties at Rs.2,49,00,000/-(Rupees Two Crore Forty Nine Lakhs only) out of which the First Party has received a sum of Rs.5,00,000/- (Rupees Five Lakhs only) as advance at the time of execution of this agreement in the following manner:

Cash. 100000dated 07.10.2024
Cheque Rs.4,00,000/-

-And whereas the balance payment sum Rs.2,44,00,000/- (Rupees Two Crore Forty Four Lakhs only), the above the above said flat will be paid by the Second party on or before 07.03.2025.

-That in the event the Second Party is not ready and willing to pay the balance sale amount/consideration, the advance amount will be forfeited. That in the event the First Party is not ready and willing to sell the said flat, then First Party shall pay the double of the advance amount as penalty to the Second Party.

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[Silentseeker4914]

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Silentseeker4914
PARTICIPANT
February 26, 2025 at 9:23 am

to give an opinion on this, complete agreement is to be read.

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[Swetatiger639]

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Swetatiger639
OP
February 26, 2025 at 9:27 am

Doesn’t allow the attachments here so pasted the important bits from the agreement.

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[Silentseeker4914]

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Silentseeker4914
PARTICIPANT
February 26, 2025 at 9:31 am

As per the clause reproduced by you, it should be 5 lacs only as 5 lacs is mentioned as advance.

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[User_e9c07898]

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User_e9c07898
PARTICIPANT
February 26, 2025 at 10:10 am

Yeah from these limited clauses that interpretation seems to be correct.

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[Swetatiger639]

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Swetatiger639
OP
February 26, 2025 at 12:08 pm

Yes for the amount this is the only clauses we have, rest its all about first party being available when required for registry and stuff.

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[Happyshark11]

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Happyshark11
PARTICIPANT
February 26, 2025 at 12:37 pm

I think it will be alright if you returned the full amount paid by the other side to them. No need to double anything. While your contract does say that you will pay double the advance amount, such a clause is not legally enforceable in court since it is in the form of a penalty. Penal clauses are not valid under contract law and a person can only claim damages for losses actually suffered.

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[Happyshark11]

H

Happyshark11
PARTICIPANT
February 26, 2025 at 12:38 pm

I think it will be alright if you returned the full amount paid by the other side to them. No need to double anything. While your contract does say that you will pay double the advance amount, such a clause is not legally enforceable in court since it is in the form of a penalty. Penal clauses are not valid under contract law and a person can only claim damages for losses actually suffered.

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[Swetatiger639]

S

Swetatiger639
OP
February 26, 2025 at 1:08 pm

Thanks for the information. Surely will look into it.

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