If you are stuck in such a situation, here is what to do.

Mr. and Mrs. Khanna, who are based overseas, were in the final stages of selling their apartment in the city of Avantika. The potential buyer, Mr. Alok Singh, and his agent were insistent on receiving all the original property documents for the purpose of legal due diligence. The Khannas were hesitant and offered notarized copies, but Mr. Singh’s team did not agree. Consequently, during her next visit to India, Mrs. Khanna carried the original documents and presented them for inspection at a lawyer’s office designated by Mr. Singh.

Everything seemed to be proceeding smoothly. However, just as they were about to finalize the sale deed and registration, Mr. Singh unexpectedly presented a long list of repairs and renovations he wanted done in the apartment at the Khannas’ expense. This came as a surprise, as property sales in India are typically conducted on an “as is, where is” basis unless specified otherwise. Soon after, Mr. Singh became unresponsive. The Khannas suspected this was a last-minute tactic to negotiate a lower price. Feeling pressured and uncertain, they decided to withdraw from the deal. They subsequently found a new buyer and successfully sold the property.

Months later, the Khannas started receiving emails from Mr. Singh, demanding a reimbursement of Rs. 60,000, which he claimed were his legal expenses for the due diligence. It is important to note that no formal, written Agreement to Sell was ever signed between the Khannas and Mr. Singh; the offer was only accepted through an email exchange.

Advice in such cases

If you find yourself in a similar situation as the seller, here are some steps to consider:

• Review all communication, including emails, text messages, and letters exchanged with the buyer. This will help establish whether a concluded contract was ever formed.
• Determine if any preliminary document, like a Memorandum of Understanding (MoU) or a term sheet, was signed that might obligate you to cover such costs.
• Do not admit any liability or make any promises to pay in your communications. Any admission can be used against you later.
• It is advisable to respond formally to the buyer’s demand, preferably through a lawyer, clearly stating your position and denying any liability. Ignoring the communication might be misconstrued.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think

Applicable Sections of Law

This issue is governed primarily by civil law, specifically the Indian Contract Act, 1872, and property laws.

• Indian Contract Act, 1872: For a valid contract to exist, there must be an offer, acceptance, consideration, and an intention to create legal relations. An email exchange can form a contract, but for immovable property, the terms must be clear and unequivocal. In this case, the buyer introducing new conditions (the “snag list”) could be seen as a counter-offer, which means the original agreement was never fully concluded.
• Transfer of Property Act, 1882: Section 54 of the Act deals with the sale of immovable property. A contract for sale does not, of itself, create any interest in or charge on such property.
• Registration Act, 1908: An Agreement to Sell for an immovable property, to be enforceable for specific performance, generally needs to be in writing and registered. An unregistered agreement, like an email exchange, has limited evidentiary value for enforcing the sale.

This is a civil dispute, and criminal laws like the Bharatiya Nyaya Sanhita (BNS) would not apply unless there is an element of fraud or criminal cheating, which does not appear to be the case here.

If you are the complainant

If you are the buyer (like Mr. Singh) who has incurred costs and believes the seller backed out unfairly:

• Compile all evidence, including emails, messages, and any other correspondence that suggests a concluded agreement to sell.
• Preserve receipts and invoices from the lawyer to prove the expenses incurred for due diligence.
• Your legal standing would depend on proving that the seller’s withdrawal from the deal was a breach of a concluded contract.
• Send a formal legal notice to the seller demanding reimbursement before proceeding to court.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think

If you are the victim

If you are the seller (like the Khannas) facing such a demand:

• Do not ignore the emails or legal notices. A lack of response can be viewed unfavourably if the matter proceeds to court.
• Gather all your records of communication. Highlight the parts where the buyer introduced new, unreasonable demands post-agreement, which led to the deal falling through.
• The main defence is that there was no legally binding and concluded contract, as the final terms were never mutually agreed upon. The principle of “as is, where is” is a strong point in your favour if it’s the standard practice.
• Have a lawyer draft a formal reply to the buyer, refuting their claim and stating that the deal was terminated due to the buyer’s own actions and introduction of new conditions.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think

How the police behave in such cases

The police will not intervene in such matters. This is a purely civil dispute related to a breach of an alleged contract. The police do not have the jurisdiction to handle cases of monetary recovery or contract enforcement. If either party approaches the police, they will be directed to resolve the matter in a civil court.

FAQs people normally have

What evidence is required?

For the buyer, key evidence would include the email where the offer was accepted, proof of payment to the lawyer for due diligence, and any communication showing the seller’s withdrawal. For the seller, the crucial evidence would be the communication where the buyer introduced new demands (the repair list) and any correspondence showing that the terms of the sale were not finalized.

How long will the investigation take?

There is no police investigation in such a case. If the buyer decides to pursue the matter legally, they would have to file a civil suit for recovery of money in a competent court. The Indian judicial process for civil suits is lengthy and can take several years to reach a final verdict, progressing through stages of pleadings, evidence, and arguments.

Advocate Sudhir Rao, Supreme Court of India