Contract Law Case: Badriraj Pandey vs Nabaraj Koirala, NKP 2044, P. 277, D.N. 3016
Case: Execution of Document and Registration
Plaintiff: Navaraj Koirala
Defendant: Badri Raj Pandey
Decision No: 3016
This case is related with performance of contract, execution of document and registration.
Facts of the Case:
On 2024/07/14 BS, defendant executed an earnest money (Bainabatta) agreement in favor of plaintiff.According to the agreement, defendant agreed to sell his land located in Karsiya, Morang, at the rate of Rs. 2,000 per Bigha. He received Rs. 2,000 as earnest money on the same day and agreed to execute the final registration deed within 15 days upon receiving the remaining amount.
On 2024/07/28 BS, within the agreed 15-day period, plaintiff paid an additional Rs. 9,000 to defendant, for which defendant issued a formal receipt (Bharpai). The receipt stated that a total of Rs. 11,000/- had been received, and the remaining amount would be calculated and paid once the exact measurement of the land was finalized. Defendant later refused to measure the land and execute the registration deed. Consequently, Plaintiff approached court under Contract Act, 2023.
Plaintiff’s Claim:
Plaintiff claimed that she fulfilled her contractual obligation by paying a total of Rs. 11,000 to defendant. Under Section 10(1) of Contract Act, 2023 the parties are legally bound to fulfill their obligations under a contract. Since, defendant refused to fulfill his promise, plaintiff petitioned to court to order defendant to measure the land, accept any remaining balance based on final measurement, execute the sale deed (Rajinama), and officially register it.
Defendant’s arguments:
Defendant argued that Contract Act and the Registration chapter of Muluki Ain do not apply to this dispute. He claimed that for a contract to be valid, both sides must fulfill mutual conditions, and the seller must hold explicit title to the property. He argued that he did not personally own any land in Morang under his name. He mentioned that the land actually belonged to his wife (Chet Kumari) via a partition deed (Bandapatra) from 2016 BS. He claimed he had offered to provide her land if it suited plaintiff’s husband, or asked them to take their money back and tear up the receipt, but plaintiff delayed. Therefore, he claimed the lawsuit was false and should be dismissed.
Legal Issues:
- When parties enter into a valid contract, are they bound to fulfill specific obligations created by that agreement under the Contract Act, 2023?
- Does court have the authority to issue an order for specific performance to compel a party to execute and register a land deed based on a mutual agreement?
Decision of courts:
Kathmandu District Court:
Court ruled against the plaintiff and dismissed the lawsuit. It decided that plaintiff did not paid the money within the initial 15 day deadline. Furthermore, it noted that the land had already gone to defendant’s wife (Chet Kumari) through a family property division, meaning that defendant did not have legal right to sell it.
Bagmati Zonal Court:
The contracted object is not entitled to defendant so, the decision of district court is justifiable, defendant has admitted Rs. 11,000/- from plaintiff so he must made a registration of deed of taking that amount.
Central Regional Court:
Upheld the decision of Bagmati Regional Court.
Supreme Court full bench:
The Full Bench of Supreme Court ruled in favor of Plaintiff clarifying and modifying the rationale of previous courts. Court found that the Bainabatta document dated 2024/07/14 BS was a valid contract. Plaintiff proved her commitment by paying Rs. 11,000, but defendant failed to fulfill his obligation to pass the land. The Full Bench held that court has full authority to grant Specific Performance under Section 10(1) of Contract Act, 2023. Therefore, Supreme Court ordered that defendant must execute and register the sale deed (Rajinama) for the portion of land equivalent to Rs. 11,000 received from plaintiff, as per the rate agreed upon in contract. The ultimate conclusion of division bench’s decision was upheld, and defendant’s claim was dismissed.
Established principles:
Creation of Mutual Obligations: When two parties enter into an agreement, the contract creates reciprocal legal obligations. Each party holds a responsibility to fulfill the terms they voluntarily accepted.
Right to Remedy and Specific Performance: If one party fails to perform their contractual duties, the aggrieved party has legal right to seek a remedy from court. Under Section 10(1) of Contract Act, 2023.
