Delays in payment for land purchases in Pakistan can be a challenging issue to navigate, but there are legal remedies available to enforce the terms of the contract and protect your rights. At our law firm, we have extensive knowledge and experience in handling property sales and payment delay disputes in Pakistan, and we can provide you with professional guidance and representation throughout the legal process. As every case is unique, please contact us directly for a free consultation of your matter at aemen@joshandmak.com
Under the Specific Relief Act, 1877, you have the option to file a lawsuit for specific relief at the High Court of your jurisdiction. This legal action seeks to compel the defaulting party to fulfill their payment obligations as agreed upon in the contract. It is essential to note that the Transfer of Property Act, 1882, also plays a significant role in cases where ownership of the property has passed to the buyer before full payment.
In situations where the sale is not yet complete, and only a Bayana (token money) has been given, you can take legal action against the buyer under the Specific Relief Act. Through a mandatory injunction order under Section 55 of the Act, the court can oblige the buyer to honor the payment when you, as the seller, are ready and willing to transfer the property.
If you wish to explore alternative options, like cancelling the contract as per the terms of the contract, you can send a formal notice to the defaulting buyer demanding payment and informing them of the potential consequences of continued default.
It is crucial to document every instance of the buyer’s requests to delay payments after the Bayana is taken. In the real estate business in Pakistan, it is common for property dealers or middlemen to pay a small Bayana upfront and attempt to find a buyer themselves. However, when these property dealers fail to find a buyer, they often resort to requesting payment delays using various pretexts.
The law in Pakistan is clear regarding your rights to receive timely payment for the property you have contracted to sell. Parties entering into a contract are legally bound to fulfill their respective contractual obligations, including making payments as agreed upon. If the buyer fails to fulfill their payment obligations, it constitutes a breach of contract. In such cases, you have the right to cancel the contract and retain the deposit payment.
However, complications may arise when property dealers or middlemen are involved, as they may have entered into contracts with other buyers at a markup, leading to payment delays. These situations require careful consideration and appropriate legal action.
By initiating a lawsuit seeking specific relief, you can pursue the enforcement of the contractual terms and hold the defaulting party accountable for their obligations. It is essential to understand that the outcome of legal proceedings can vary based on the specific circumstances of each case and the application of relevant laws.
At our law firm, we are well-versed in handling property sales and payment delay disputes in Pakistan. We have the expertise to guide you through the legal process, protect your rights, and strive for a favorable resolution. Contact us today for professional legal assistance tailored to your specific circumstances.
We have added to this article a section on how courts have viewed token money in previous case law:
In analyzing these cases, we observe how Pakistani courts have addressed the issues surrounding token money agreements, specifically in the context of agreements to sell immovable property. These cases provide insight into the judicial approach towards the adequacy of proof, the obligations of parties in a sale agreement, and the consequences of non-compliance with such agreements.
2022 SCMR 918 (Supreme Court): This case underscores the importance of proving the tender of payment in agreements to sell. The vendee failed to demonstrate that he had obtained and offered the pay order to the vendors. The absence of the original pay order and lack of credible evidence led to the conclusion that the vendee did not fulfill his contractual obligation. Consequently, the vendee was not entitled to specific performance, highlighting the necessity for parties in a sale agreement to adequately prove their compliance with the terms of the agreement.
2021 CLC 2051 (Karachi High Court – Sindh): In this instance, the court emphasized the need for concrete evidence to substantiate claims of payment and agreement terms. The plaintiff’s inability to produce reliable proof of payment or to adequately establish the execution of the sale agreement resulted in the dismissal of the suit for specific performance. The case illustrates the court’s insistence on rigorous proof standards in transactions involving immovable property.
2021 MLD 15 (Islamabad): The court’s decision here centered on the plaintiff’s failure to deposit the remaining sale consideration. Despite the initial token money payment, the plaintiff’s lack of further action to complete the transaction resulted in the court setting aside the decree in favor of the plaintiff. This case highlights the responsibility of the purchaser to fulfill all contractual obligations, not just the initial token payment.
2020 SCMR 321 (Supreme Court): Although this case revolves around criminal breach of trust and is not directly related to token money agreements in property sales, it still emphasizes the need for clear and substantial evidence in legal proceedings.
2019 PLD 346 (Lahore High Court – Lahore): This ruling underscores the binding nature of a token receipt document in property transactions. The court interpreted the document as a contract, affirming that the receipt of token money can constitute an agreement to sell, provided other contractual elements are present. This case demonstrates the legal significance of token money in forming binding agreements.
2015 CLC 1374 (Quetta High Court – Balochistan): This case is about the nature of dower in marriage and is not directly relevant to token money agreements in property transactions.
2012 CLC 1902 (Karachi High Court – Sindh): This case illustrates the complications that can arise when token money is paid, but the terms of the sale agreement are contested. The court’s direction for the deposit of the token money with the Nazir reflects the approach to safeguard the buyer’s interests when there is uncertainty about the sale transaction’s completion.
2010 MLD 458 (Lahore High Court – Lahore) and 2010 YLR 2306 (Karachi High Court – Sindh): These cases demonstrate the courts’ approach in instances where agreements to sell property are not honored. The courts consider the specifics of the agreement and the actions (or inactions) of the parties involved. The forfeiture of token money and the obligations of the parties to fulfill their contractual duties are key considerations.
2010 CLC 1226 (Karachi High Court – Sindh): This case emphasizes the importance of territorial jurisdiction in property disputes. The court ruled that the jurisdiction to decide a suit for specific performance lies with the courts where the property is situated. The payment of token money or the publication of an advertisement in a different location does not confer jurisdiction to courts outside the property’s location. This decision underscores the principle that legal actions related to property must be brought in the court with proper territorial jurisdiction.
2008 MLD 378 (Lahore High Court – Lahore): In this case, the court dealt with a situation where the agreement to sell included a clause regarding the outcome of a pending lawsuit. The court highlighted that full disclosure and clear stipulations between parties in the agreement, especially regarding the pending lawsuit’s outcome, are crucial. This case illustrates how courts consider the specific terms of an agreement, including conditions related to token money, in determining the parties’ obligations.
2003 PTD 1242 (Income-Tax Appellate Tribunal – Pakistan): This case, though not directly related to property sale agreements, sheds light on the definition of ‘assets’ and ‘business activity’ for tax purposes. The Tribunal held that charging a token money for non-business activities, such as providing facilities for sports and social welfare, does not classify as a business activity. This decision provides insight into the broader legal interpretation of ‘token money’ beyond property transactions.
2001 PLD 449 (Supreme Court): The Supreme Court granted leave to appeal to consider the application of the principle of lis pendens in a property sale agreement. The case involved an earlier oral agreement and the payment of token money, with the contention that the High Court misapplied the lis pendens principle. This highlights the court’s willingness to reconsider lower court decisions in complex property transaction cases involving earlier agreements and token money.
1990 SCMR 28 (Supreme Court): This case illustrates the legal interpretation of agreements and proposals. The Supreme Court held that an “Iqrarnama” (promise document) lacking clear acceptance and specific consideration details is merely a proposal and not an enforceable agreement. The decision reflects the court’s strict adherence to the legal requirements for an agreement to be valid and enforceable, especially in the context of property transactions.
In summary, these cases from Pakistani courts demonstrate a meticulous approach to evaluating token money agreements in property transactions. The courts emphasize the necessity of clear, enforceable agreements, the importance of jurisdictional considerations, and the need for substantial evidence to support claims in disputes related to property sales. These decisions collectively ensure that property transactions are conducted with due diligence and legal compliance, safeguarding the interests of all parties involved.
