Contract Law Case: Tirtha Rajkumari Rana v. Ram Shanker Shrestha, NKP 2040, No.7, P.298,
D.N.1682
Case: Registration of deed as per contract
Plaintiff: Ram Shanker Shrestha
Defendant: Tirtha RajKumari Rana
Decision No: 1682
This case is related with Execution and Registration of Deed as per Contract (Karar Bamojim Likhat Pass Gari Paun)
Facts of the Case:
Since 2020 BS, plaintiff (Ram Shanker) and defendant (Tirtha Rajkumari) along with her son (Keshav Shumsher) had a partnership running a hotel/club in Lazimpat. In 2027 BS, Son and mother left the business partnership, making Ram Shanker as sole operator under a lease valid until 2035 BS. In 2034-04-13 BS, defendant, Tirtha Raj Kumari Rana, agreed to sell her share of the land and house to plaintiff. The total sale price was fixed at Rs. 3,800,000 (38 Lakhs). plaintiff paid an advance of Rs. 1,600,000 (16 Lakhs). The written document stated that neither party could alter the price or back out, and the transaction had to be completed within 6 months of lease expiry (by 2036-06-09 BS).
On 2035-04-03 BS, another receipt showed that an additional Rs. 700,000 was paid by plaintiff to defendant. Despite multiple requests, defendant refused to execute and officially register final deed of transfer (Rajinama) within agreed deadline. Plaintiff then filed a lawsuit, depositing the remaining balance of Rs. 1,500,000 into court.
Plaintiff’s Argument: Plaintiff claimed that the document signed on 2034-04-13 BS is a valid contract under Contract Act, 2023 BS. Since plaintiff fulfilled his end of bargain and deposited the remaining Rs. 1,500,000 in court. Court should order defendant to execute and register the land transfer deed (Rajinama). Alternatively, if defendant refuses, Court should order registration based on disputed document itself. If registration is legally impossible, Court should order refund of the principal amount paid (Rs. 1,600,000 + Rs. 700,000) along with interest.
Defendant’s Arguments: Defendant claimed she had no knowledge of the 2034-04-13 BS document or the 2035-04-03 BS receipt, stating she had no financial need to sell. She argued her son had taken her signature under the pretext of needing a power of attorney to sell his own plot, and plaintiff misused that signature fraudulently. She argued the document was explicitly titled a “Bayanapatra” (Earnest Money Receipt) and not a “Kararnama” (Contract). A contract requires the signature of both parties, whereas this was signed only by one side. The document failed to state the official survey plot numbers (Kitta Number) and only vaguely mentioned an area of 10 Ropanis, 2 Annas. She claimed that under the Registration Mahal of the Muluki Ain, right to file a lawsuit forcing someone to register a domestic deed had been abolished. Furthermore, the property sits within 300 yards of the Narayanhiti Royal Palace, which legally required prior royal approval before any sale approval that was never obtained. Defendant’s lawyers argued that Nepal does not have a Specific Relief Act. Therefore, under Section 15 of Contract Act, 2023 BS, Only remedy for a breach of contract is monetary compensation not Specific Performance.
Legal Issues:
- Whether the disputed earnest money deed (Bainapatra) of 2034 B.S. can be considered a contract (Kararnama) under Contract Act, 2023 B.S.?
- If the document is deemed a contract, is the defendant bound to execute the deed as requested by plaintiff?
Decisions of the Courts:
Kathmandu District Court (2037-04-29 BS):
Ruled in favor of plaintiff, stating the document fulfills the criteria of a contract, and ordered defendant to fulfill her obligations.
Central Regional Court (2038-03-20 BS):
Central regional court upheld District Court’s decision.
Supreme Court Division Bench:
Justice Dhanendra Bahadur Singh: Ruled that the document was a contract and the defendant must register the deed.
Justice Babbar Prasad Singh: Disagreed the opinion, stating court cannot order Specific Performance because Contract Act only provides for monetary compensation under Section 15 in case of a breach. Due to this conflicting opinion/split (रायबाझी), the case went to Full Bench.
Full Bench of Supreme Court:
Full Bench upheld opinion of Justice Dhanendra Bahadur Singh of Division Bench and ruled in favor of Plaintiff. The main conclusions of court are as follows:
An Earnest Money Deed (Bainapatra) is also a Contract: Even though the document is titled Bainapatra, it contains essential elements of a contract, such as mutual consent, price, and terms. Therefore, it is legally recognized as a contract.
The Claim of Deceptive Signature is Invalid: Since Defendant’s son and daughter-in-law also signed the document as witnesses, it cannot be assumed that a literate person was deceived into signing it. Furthermore, if she had been deceived, she had legal option to challenge it in court within the limitation period set by Contract Act, which she failed to do.
Court Can Enforce Specific Performance: Although Nepal lacks a separate Specific Relief Act, Section 10(1) of Contract Act, 2023 B.S. states that “the obligation under a contract can be enforced.” Enforcing this obligation falls under the jurisdiction of the court. Accepting the argument that court cannot enforce the land transfer would render this statutory provision meaningless.
Final Verdict
Supreme Court ordered that defendant must execute and officially register the deed of property transfer to plaintiff as per the terms of the 2034-04-13 BS contract.
Established Principles:
- Meeting of the Minds as a core element of a contract: The true essence of a contract is mutual agreement and alignment of thoughts between the parties (Meeting of Minds) to do or not do a specific act.
- Flexibility of Contractual Format: In the absence of a strictly prescribed statutory layout, a contract does not require a specific, rigid template or format to be valid under the law.
- Judicial Authority to Order “Specific Performance”: Even in the absence of a dedicated codification like a Specific Relief Act, courts possess the inherent legal authority to order “Specific Performance” to ensure justice.
- Estoppel in Claims of Fraud or Deception: A claim of fraud, misrepresentation, or deception cannot be used as a convenient defense if the party’s subsequent actions contradict that claim, and if they failed to seek legal remedy within the statutory limitation period.
